SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2016
SANDERSON FARMS, INC.
(Exact name of registrant as specified in its charter)
Mississippi | 1-14977 | 64-0615843 | ||
State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
127 Flynt Road Laurel, Mississippi |
39443 | |||
(Address of principal executive offices) | (Zip Code) |
(601) 649-4030
(Registrants telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 Financial Information
Item 2.02 Results of Operations and Financial Condition.
On February 25, 2016, the Registrant issued a press release announcing its earnings for its fiscal quarter ended January 31, 2016. The press release is furnished herewith as Exhibit 99.1. Also on February 25, 2016, the Registrant held a conference call to discuss its earnings for its fiscal quarter ended January 31, 2016. A transcript of the conference call is furnished herewith as Exhibit 99.2. The information in the press release and transcript is not to be considered filed for purposes of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into the Registrants filings under the Securities Act of 1933, as amended.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are furnished with this Current Report:
Exhibit |
Description | |
99.1 | Press release of Sanderson Farms, Inc. dated February 25, 2016. | |
99.2 | Transcript of conference call held by Sanderson Farms, Inc. on February 25, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SANDERSON FARMS, INC.
(Registrant)
Date: February 29, 2016 | By: | /s/ D. Michael Cockrell | ||||
D. Michael Cockrell | ||||||
Treasurer and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press release of Sanderson Farms, Inc. dated February 25, 2016. | |
99.2 | Transcript of conference call held by Sanderson Farms, Inc. on February 25, 2016. |
Exhibit 99.1
Contact: | Mike Cockrell |
Treasurer & Chief Financial Officer |
(601) 649-4030 |
SANDERSON FARMS, INC. REPORTS
RESULTS FOR FIRST QUARTER OF FISCAL 2016
LAUREL, Miss. (February 25, 2016) Sanderson Farms, Inc. (NASDAQ: SAFM) today reported results for the first quarter of fiscal 2016 ended January 31, 2016.
Net sales for the first quarter of fiscal 2016 were $605.2 million compared with $667.4 million for the same period a year ago. The Company reported net income of $10.7 million, or $0.47 per share, for the quarter compared with net income of $66.5 million, or $2.87 per share, for the first quarter of fiscal 2015.
Our results for the first quarter reflect significantly weaker market prices for products sold from our big bird deboning plants compared with last years first quarter, said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. Poultry market prices for our tray pack products sold to retail grocery store customers were only slightly lower when compared with the same period a year ago, and we also experienced lower grain costs. As a result, margins on tray pack products remained strong. On the other hand, the food service market is over supplied, primarily as a result of continued weak export demand. Poultry products that would normally be directed for sale in the export markets are instead being sold in the domestic food service market. While conditions improved in January, headwinds remain in the export market even though most avian-influenza related bans on United States poultry products have been lifted. Currency issues, political issues and weak oil prices remain.
The Companys results were also affected by a higher effective tax rate. The Companys effective tax rate for the three months ended January 31, 2016, was 44.9 percent as compared with 35.2 percent for the three months ended January 31, 2015. The increase in the effective tax rate is primarily attributable to the Companys decision to take advantage of legislation enacted during December 2015 that allowed for bonus depreciation to be taken on qualifying assets placed in service during the 2015 calendar year. This legislation, and the Companys election to accelerate depreciation on these items, resulted in a favorable impact on the Companys first quarter income tax receivable, but had an unfavorable effect on tax deductions that are based on or limited by levels of taxable income. The higher effective tax rate cost approximately $2.0 million, or $0.09 per share, net of income tax. Had the Company not elected to take advantage of the legislation, the effective tax rate would have been 35.1 percent, and the Company expects its effective tax rate to return to approximately 35.1 percent for the balance of fiscal 2016.
According to Sanderson, overall market prices for poultry products were lower during the first quarter compared with the same period last year. Compared with the first fiscal quarter of 2015, the average Georgia dock price for whole chickens was approximately 0.8 percent lower, boneless breast meat prices were approximately 21.6 percent lower, the average market price for bulk leg quarters decreased by approximately 48.4 percent, and jumbo wing prices were lower by 2.7 percent. The Companys average feed cost per pound of poultry products processed decreased 2.9 cents per pound, or 10 percent, compared with the first quarter of fiscal 2015, and prices paid for corn and soybean meal, the Companys primary feed ingredients, decreased 1.8 percent and 20.9 percent, respectively, compared with the first quarter of fiscal 2015.
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Sanderson Farms Reports Results for First Quarter of Fiscal 2016
Page 2
February 25, 2016
Near record corn and soybean crops harvested in the United States last fall contributed to healthy soybean and corn balance tables headed into the 2016 planting season, added Sanderson. Lower grain prices provided a significant tail wind during fiscal 2015, and had we priced all of our fiscal 2016 grain needs at yesterdays prices, our grain costs would be lower by $61.4 million during fiscal 2016 compared with fiscal 2015.
Broiler egg sets have been only slightly higher than the previous years levels in recent weeks and, we believe, reflect caution on the part of some in light of the challenging export market environment. In addition to weak export markets, food service markets weakened as well at the end of the calendar year. Stock market volatility and uncertainty regarding the global economy affected consumer behavior as restaurants reported weaker sales numbers in December, and these factors and severe weather across much of the United States affected traffic through food service establishments in January.
Construction of our new St. Pauls, North Carolina, complex is on schedule to allow us to open the plant during next years first fiscal quarter, while we continue to move toward full production at our new Palestine, Texas, complex. We will begin the second shift in Palestine starting in April, and we expect the plant to reach full production in the Companys fourth fiscal quarter. We look forward to the opportunities the new facilities will create, added Sanderson.
Sanderson Farms will hold a conference call to discuss this press release today, February 25, 2016, at 10:00 a.m. Central, 11:00 a.m. Eastern. Investors will have the opportunity to listen to a live Internet broadcast of the conference call through the Companys website at www.sandersonfarms.com. To listen to the live call, please go to the website at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, an Internet replay will be available shortly after the call and continue through March 24, 2016. Those who would like to participate in the call can do so by dialing 888-271-8604; confirmation code 2434364.
Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and further processed and partially cooked chicken products. Its shares trade on the NASDAQ Global Select Market under the symbol SAFM.
This press release includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are based on a number of assumptions about future events and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs, projections and estimates expressed in such statements. These risks, uncertainties and other factors include, but are not limited to those discussed under Risk Factors in the Companys Annual Report on Form 10-K for the year ended October 31, 2015, and the following:
(1) Changes in the market price for the Companys finished products and feed grains, both of which may fluctuate substantially and exhibit cyclical characteristics typically associated with commodity markets.
(2) Changes in economic and business conditions, monetary and fiscal policies or the amount of growth, stagnation or recession in the global or U.S. economies, either of which may affect the value of inventories, the collectability of accounts receivable or the financial integrity of customers, and the ability of the end user or consumer to afford protein.
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Sanderson Farms Reports Results for First Quarter of Fiscal 2016
Page 3
February 25, 2016
(3) Changes in the political or economic climate, trade policies, laws and regulations or the domestic poultry industry of countries to which the Company or other companies in the poultry industry ship product, and other changes that might limit the Companys or the industrys access to foreign markets.
(4) Changes in laws, regulations, and other activities in government agencies and similar organizations applicable to the Company and the poultry industry and changes in laws, regulations and other activities in government agencies and similar organizations related to food safety.
(5) Various inventory risks due to changes in market conditions including, but not limited to, the risk that market values of live and processed poultry inventories might be lower than the cost of such inventories, requiring a downward adjustment to record the value of such inventories at the lower of cost or market as required by generally accepted accounting principles.
(6) Changes in and effects of competition, which is significant in all markets in which the Company competes, and the effectiveness of marketing and advertising programs. The Company competes with regional and national firms, some of which have greater financial and marketing resources than the Company.
(7) Changes in accounting policies and practices adopted voluntarily by the Company or required to be adopted by accounting principles generally accepted in the United States.
(8) Disease outbreaks affecting the production, performance and/or marketability of the Companys poultry products, or the contamination of its products.
(9) Changes in the availability and cost of labor and growers.
(10) The loss of any of the Companys major customers.
(11) Inclement weather that could hurt Company flocks or otherwise adversely affect its operations, or changes in global weather patterns that could impact the supply of feed grains.
(12) Failure to respond to changing consumer preferences.
(13) Failure to successfully and efficiently start up and run a new plant or integrate any business the Company might acquire.
Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. Each such statement speaks only as of the day it was made. The Company undertakes no obligation to update or to revise any forward-looking statements. The factors described above cannot be controlled by the Company. When used in this press release or in the related conference call, the words believes, estimates, plans, expects, should, could, outlook, and anticipates and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Examples of forward-looking statements include statements of the Companys belief about future earnings, grain prices, supply and demand factors, growth plans and other industry conditions.
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Sanderson Farms Reports Results for First Quarter of Fiscal 2016
Page 4
February 25, 2016
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended January 31, |
||||||||
2016 | 2015 | |||||||
Net sales |
$ | 605,166 | $ | 667,363 | ||||
Cost and expenses: |
||||||||
Cost of sales |
555,061 | 526,201 | ||||||
Selling, general and administrative |
30,294 | 38,105 | ||||||
|
|
|
|
|||||
585,355 | 564,306 | |||||||
|
|
|
|
|||||
Operating income |
19,811 | 103,057 | ||||||
Other income (expense): |
||||||||
Interest income |
| 26 | ||||||
Interest expense |
(431 | ) | (427 | ) | ||||
Other |
3 | 34 | ||||||
|
|
|
|
|||||
(428 | ) | (367 | ) | |||||
|
|
|
|
|||||
Income before income taxes |
19,383 | 102,690 | ||||||
Income tax expense |
8,702 | 36,187 | ||||||
|
|
|
|
|||||
Net income |
$ | 10,681 | $ | 66,503 | ||||
|
|
|
|
|||||
Earnings per share: |
||||||||
Basic |
$ | 0.47 | $ | 2.87 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.47 | $ | 2.87 | ||||
|
|
|
|
|||||
Dividends per share |
$ | 0.22 | $ | 0.22 | ||||
|
|
|
|
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Sanderson Farms Reports Results for First Quarter of Fiscal 2016
Page 5
February 25, 2016
SANDERSON FARMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
January 31, 2016 |
October 31, 2015 |
|||||||
(unaudited) | (1) | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 155,105 | $ | 196,659 | ||||
Accounts receivable, net |
119,895 | 112,924 | ||||||
Inventories |
209,772 | 198,753 | ||||||
Refundable income taxes |
42,260 | 16,414 | ||||||
Deferred income taxes |
3,735 | 4,709 | ||||||
Prepaid expenses and other current assets |
35,421 | 33,331 | ||||||
|
|
|
|
|||||
Total current assets |
566,188 | 562,790 | ||||||
Property, plant and equipment |
1,341,944 | 1,318,530 | ||||||
Less accumulated depreciation |
(653,938 | ) | (636,196 | ) | ||||
|
|
|
|
|||||
688,006 | 682,334 | |||||||
Other assets |
6,224 | 6,337 | ||||||
|
|
|
|
|||||
Total assets |
$ | 1,260,418 | $ | 1,251,461 | ||||
|
|
|
|
|||||
Liabilities and stockholders equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 76,069 | $ | 62,816 | ||||
Accrued expenses |
45,311 | 88,431 | ||||||
Current maturities of long-term debt |
10,000 | 10,000 | ||||||
|
|
|
|
|||||
Total current liabilities |
131,380 | 161,247 | ||||||
Claims payable |
8,100 | 7,500 | ||||||
Deferred income taxes and other liabilities |
81,768 | 52,853 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common Stock |
22,572 | 22,521 | ||||||
Paid-in capital |
115,230 | 111,687 | ||||||
Retained earnings |
901,368 | 895,653 | ||||||
|
|
|
|
|||||
Total stockholders equity |
1,039,170 | 1,029,861 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity |
$ | 1,260,418 | $ | 1,251,461 | ||||
|
|
|
|
(1) | The Condensed Consolidated Balance Sheet at October 31, 2015, was derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. |
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Exhibit 99.2
THOMSON REUTERS STREETEVENTS
EDITED TRANSCRIPT
SAFM Q1 2016 Sanderson Farms Inc Earnings Call
EVENT DATE/TIME: FEBRUARY 25, 2016 / 04:00PM GMT
1 | ||||
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
CORPORATE PARTICIPANTS
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
CONFERENCE CALL PARTICIPANTS
Ken Goldman JPMorgan Analyst
Farha Aslam Stephens Inc. Analyst
Michael Piken Cleveland Research Company Analyst
Ken Zaslow Bank of Montreal Analyst
Brett Hundley BB&T Capital Markets Analyst
Francesco Pellegrino Sidoti & Company Analyst
PRESENTATION
Operator
Good day, everyone, and welcome to the Sanderson Farms first-quarter 2016 conference call. Todays call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Joe Sanderson, Chairman and CEO. Please go ahead, sir.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Thank you. Good morning, and welcome to Sanderson Farms first-quarter conference call. This morning, we announced net income of $10.7 million, or $0.47 per share, for our first quarter of fiscal 2016. This compares to net income of $66.5 million, or $2.87 per share, for our first quarter of fiscal 2015.
I will begin the call with comments about general market conditions and grain costs, and then turn the call over to Lampkin and Mike for a more detailed account of the quarter.
Before we make any further comments, I will ask Mike to give the cautionary statement regarding forward-looking statements.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Thank you, Joe, and good morning, everyone. This call will contain forward-looking statements about the business, financial condition and prospects of the Company. Examples of forward-looking statements include statements regarding supply and demand factors, future grain and chicken market prices, economic conditions, production levels and our future growth plan. The actual performance of the Company could differ materially from that indicated by the forward-looking statements as a various risks and uncertainties. These risks and uncertainties are described in our most recent annual report on Form 10-K and on the Companys quarterly report on Form 10-Q filed with the SEC this morning in connection with our first fiscal quarter.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Thank you, Mike. Results for the first quarter reflect lower market prices compared to the start of fiscal 2015. Demand from retail grocery store customers has remained stable, and that stability is reflected in a Georgia dock (inaudible) bird price that was only slightly lower than during last years first quarter.
On the other hand, market prices for food service and export products were significantly lower compared to last years first quarter. While those markets improved somewhat in January, they remained oversupplied primarily as a result of weak export demand.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Quoted market prices for boneless breasts, tenders, wings and leg quarters were all lower during the quarter compared to last years first fiscal quarter. While overall market prices for chicken were lower during the quarter compared to last year, market prices for corn and soybean mill were also lower. Our feed costs were down almost $0.03 per pound of chicken processed during our first fiscal quarter. Market prices for corn and soybean meal have moved lower as a result of last years near-record harvest. And both corn and soybean balance tables are healthy as we move into the 2016 planning season.
The next advanced grain markets are what we will watch are the South American harvest, the March supply and demand report, and the March 31 planning intentions report.
The South American crops are progressing well, and expectations now are for good crops from that region. At its 2016 Agricultural Outlook Forum this morning, the USDA estimated corn acres in 2016 will be up 2 million acres to 90 million and that acreage planted in soybeans would be down slightly to 82.5 million acres. Both estimates were in line with market expectations. It is not unusual for the USDA to significantly revise its outlook before the March 31 planting intentions report. So we will be watching for that report.
Farmers remain reluctant sellers at current values. Expanded on-farm storage capacity has allowed them to hold onto grain, but projected carryout ratios for both corn and soy support current market prices. We have bought a portion of our soybean meal through September and corn through March. Based on our costs through the first fiscal quarter and what we have priced so far, when combined with prices we could have locked in to the balance of the year at yesterdays close, our grain costs for fiscal 2016 would be approximately $61.4 million less than during fiscal 2015. This total decrease of prices paid for grain and lower estimated basis in fiscal 2016 would translate into a $0.015 cents per pound decrease in our cost per processed pound of poultry.
At our annual shareholders meeting two weeks ago, I told our shareholders we are focused on several things as we start fiscal 2016. As I just mentioned, we are watching the quality and the quantity of the South American crops, and we will be watching the March 31 planting intentions report. We will of course watch chicken production numbers and consumer spending behavior. The USDA is projecting that our industry will produce 2% to 2.5% more chicken during calendar 2016 than last year.
Pullet placements have trended higher than this, but we believe eggs from some of these breeders are earmarked for Mexico. Export markets continue to face the same headwinds they have faced since January 2015, including avian influenza-related bans, a strong US dollar, low oil prices and politics. While some countries have lifted AI-related bans and exports have improved, some products that might normally be sold in the export market are instead still being sold domestically, and the food-service market is oversupplied.
Finally, we will focus our efforts on our growth. Palestine is up and running, and we will move that plant to full production by the fourth fiscal quarter of 2016. We will also continue construction of our newest plant in St. Pauls. I remain optimistic about 2016. I believe grain markets will at worst be benign. The chill pack environment remains strong, and supply and demand for tray pack products seem balanced.
Food service and export demand are the wild cards for 2016. Lower gasoline prices help consumers. But recent stock market volatility and uncertainty about the global economy are hampering food service demand. The restaurant associations Restaurant Performance Index fell sharply in December and stood below 100 for the first time since February 2013, which signifies contraction in key industry indicators. The contraction continued in January, as at least one survey shows traffic decline year over year by 1.8% at casual dining and by almost 1% in QSRs. At least a portion of that decline, however, was probably due to severe weather in many parts of the country in January.
Regardless of the markets, however, our plan for the balance of the year is to remain focused on what we can control, focus on our strategic growth plans and let the markets take care of themselves.
At this point, I will turn the call over to Lampkin for a more detailed discussion of the chicken markets and our operations during the quarter.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
Thank you, Joe, and good morning, everyone. As Joe mentioned, market prices for poultry products were lower during the quarter when compared our first quarter last year. The Georgia dock price for a whole bird reflected continued strong chill pack demand during the quarter and averaged $1.13 per pound compared to last years $1.14 per pound. Bulk leg quarter prices during our first quarter averaged $0.218 per pound, compared to $0.422 per pound last year. Final numbers for calendar 2015 reflected the volume of all broiler parts exported during the year was lower by 16% when compared with 2014.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
The average price for jumbo wings was also lower during our first fiscal quarter compared to last year. Jumbo wing prices averaged $1.57 per pound during our first quarter this year, compared to $1.61 per pound during last years first quarter. Boneless breast prices averaged $1.11 per pound during the 2016 first quarter, compared to $1.42 last year.
We sold 860.3 million pounds of poultry products during the first quarter, a 12.2% increase from the 766.8 million pounds sold during last years first quarter. Our processed pounds were up from 774.9 million to 855 million pounds. This was almost 6% higher than our previous guidance, as live weights and yields were both better than estimated.
We expect to process approximately 892.7 million pounds during our second quarter, up from 864.4 million processed during last years second quarter.
Prepared food sales were up 3.6 million on 1.9 million more pounds sold, offset by a slight decrease in our sales price per pound of [0.24%]. Our prepared food plant continues to perform well and is operating at near full capacity.
We operated well during the first quarter, and, despite weaker markets, the year is off to a good start in terms of operations. We will continue to look for efficiency improvements and will do everything we can to meet our goal of performing at the top of the industry.
At this point, I will turn the call over to Mike to discuss our financial statements.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Thank you, Lampkin. Net sales for the quarter totaled $605.2 million, and thats down from $667.4 million for the same quarter during fiscal 2015. Our net income of $0.47 per share during the quarter compares to $2.87 per share during last years first quarter.
Our cost of sales for poultry products for the three months ended January 31 as compared to the same three months a year ago increased 5.5%. This increase is a result of the increase in pounds sold offset by the lower feed costs. Our feed costs per pound of poultry products processed decreased 10% to $0.262 per share, and that compares to $0.291 per share per pound last year; Im sorry.
While our feed costs per pound of poultry products processed were lower by $0.029 per pound, our sales price per pound of poultry products decreased 20.2%, or $0.165 per pound, compared to last year. This combination obviously resulted in significantly lower margins during this years first quarter, and, as Joe mentioned, that was primarily at our big bird plants.
SG&A expenses for the first quarter of 2016 were $7.8 million lower than the same three months a year ago. This decrease is a result of lower startup costs, as startup costs at St. Pauls were $1 million during the quarter. And at Palestine last year in the first quarter, they were $4.8 million. We estimate startup costs at St. Pauls will be approximately $1.5 million in the second quarter, $2.2 million in the third quarter and $2.8 million in the fourth quarter.
Accruals under our equity compensation plans were lower by $3.1 million. The Company booked no accrual for performance shares that were granted on November 1, 2014. Those performance shares will be earned as certain return-on-equity and return-on-sales targets are reached when we average fiscal 2015 performance with fiscal 2016 performance. We are too early into fiscal 2016 to determine whether or not its probable that those targets are going to be reached. And we will reevaluate that judgment at the end of the second quarter. Should we determine that the targets become probable, the accrual will range between $1.1 million and $4.5 million.
Our balance sheet remains strong. At the end of the quarter, shareholders equity was $1.04 billion and net working capital was $434.8 million. The only debt on our balance sheet is $10 million in current debt, and we will pay that off in April. We ended the quarter with $155 million in cash, and we also collected $34 million in a tax refund in February after the quarter ended.
We spent $25.3 million on CapEx during the first quarter and have approved $212.6 million for the fiscal year. That fiscal 2016 capital budget includes $139.7 million in St. Pauls. And of the $25.3 million in CapEx during the quarter, $5.4 million was spent at St. Pauls. Our depreciation and amortization during Q1 was $19.9 million, and we expect approximately $85 million for the year.
A little bit about that effective tax rate. The Companys effective tax rate for the three months ended January 31 was 44.9%, and that is higher than our guidance and it compares to 35.2% for the three months ended January 31, 2015. As of January 31, 2016, the Companys long-term deferred income tax liability was $81 million, and that compares to $52.2 million at October 31, 2015, an increase of $28.8 million.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
The increase in both the effective tax rate and the long-term deferred tax liability is primarily attributable to the Companys decision to take advantage of legislation enacted during the first quarter of fiscal 2016 that allowed for bonus depreciation to be taken on qualifying assets placed in service during the 2015 calendar year. This legislation and the Companys election to accelerate depreciation on those items resulted in a favorable impact on the Companys first-quarter income tax receivable, but had an unfavorable effect on the tax deductions that are based on levels of pretax income, most especially the Internal Revenue Code Section 199 Domestic Production Activities Deduction. Had the Company not elected to take advantage of this legislation, our effective tax rate would have been approximately 35.1%.
The higher tax rate cost approximately $2 million during the quarter, or $0.09 per share after income tax. The Company expects this effective rate for the remainder of the fiscal year to be approximately 35.1%, and, as I mentioned earlier, we did collect that $34 million refund in February after the quarter ended.
With that, Nikki, our prepared remarks are over, and you can open the line for questions.
QUESTION AND ANSWER
Operator
(Operator Instructions) Ken Goldman, JPMorgan.
Ken Goldman JPMorgan Analyst
Two questions for me. Lampkin, you mentioned that as a Company you are always looking for efficiency improvements; thats nothing new. But as you look at what some of the packaged food producers are doing, companies like Campbell, [Mondo Lees] I wont go as far as Kraft. But are there things you can learn from them in terms of your own cost structure? Again, I realize making chicken is pretty different than producing corn flakes. But just looking at some of these margin numbers coming in, does it make you does it incent you to be more, I guess, aggressive with your own P&L?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
I understand. The businesses you mentioned, I dont know anything about them. We capture and identify opportunities by looking at just about everything that goes on in our industry, and thats through Agri Stats. So thats between looking at Agri Stats and comparing our own operations, as improvements materialize thats where we develop our targets for opportunities.
Ken Goldman JPMorgan Analyst
Okay. I will follow-up on that one afterward. But my second question is you highlighted market prices for Georgia dock as reasonably close to last years levels. Im curious, the prices in the quarter that you actually received for tray pack, where they at similar levels to these market prices or did they trail a bit? And I guess how are those prices trending into 2Q as well?
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
I would say they are very similar to what we
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Tray pack was about like last year, the prices, particularly in November and December we were selling boneless breasts off of $1.11 Urner Barry, and we were selling leg quarters off the market was $0.15 for November and December. And that is a no-go. That doesnt work. January, we got about a nickel to about a nickel-a-pound improvement in leg quarters, and we got $0.10 improvement in boneless breasts. And I think you all know how many pounds a week we do of boneless breasts and leg quarters
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
16 million pounds of leg quarters and about 12 million pounds of boneless breasts.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And you multiply that times a nickel a pound and times $0.10 a pound, and January was a much better month. And it doesnt take but a little bit to make that work. And but tray pack was about the same.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
Ken, as far as the realized prices versus the Georgia dock, our realized prices are going to track very close to that. The only thing that would mess or makes that different is the number of add features that there are during any particular month or quarter. And during the first quarter, we were 5% realized value or below
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
(inaudible) because we are not insulated from the (inaudible) on our future price.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
What happens in November and December, though, you have got hams and turkeys. So you have excess product in November and December. And you dont have chicken as so thats your problem in November and December. You dont have adds every week.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And those features that we negotiate with our retail customers at prices below the Georgia dock, obviously, for the things that will mess you up versus the Georgia dock, but we come in pretty close to that.
Ken Goldman JPMorgan Analyst
Great. Thank you for the color.
Operator
Ken Zaslow, Bank of Montreal.
(technical difficulty)
(operator instructions) And Ken has stepped away. The next question comes from Farha Aslam with Stephens.
Farha Aslam Stephens Inc. Analyst
A couple questions. The first one is volume for the year I know you have saved it for the second quarter. Do you have a read for the year?
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes. For the year, we anticipate pounds will be 200 no, Im sorry, 3.653 billion in 2016, and thats up 6.1% from $3.44 billion in 2015.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Farha Aslam Stephens Inc. Analyst
Thats very helpful. Thank you. And then Joe, could you help us with the export markets? They seem to be recovering a little bit better than we had anticipated, highlighting your better-than-anticipated pricing in the quarter. Any color you give us on whats driving that right now in your outlook for exports?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Well, we are exports are much better. Of course, we havent had theres been one outbreak of AI in Indiana, and it did not cause any disruptions other than
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
South Korea.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
South Korea, who we thought was going to open remained closed. And, of course, China remains closed, although that doesnt affect leg quarters. But the AI ban is still in place there.
But product is going into South Africa. Thats a new market. Thats taken a little pressure off. And these other countries that had AI bans in place have either they have either opened up or at least considered regions, and only banned regions.
So all of that has impacted dark meat prices. The other thing that has impacted dark meat is more and more whole eggs are being sold domestically, and more and more deboned dark meat is being sold domestically. Leg quarter inventories were down in the cold storage report. And some of it is better exports, and some of it is fewer product being produced in different in other forms.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
Fewer leg quarters available for exports.
Farha Aslam Stephens Inc. Analyst
And your outlook for prices?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
We are we probably averaged $0.15 a pound during this first quarter net FOB. And those prices have moved up into the 20s. We are booking right now 23 to 26. And we think, post-Easter, it has room to get up into the high 20s. We still have headwinds from cheap oil and those economies that are impacted and currency the strong dollar still impacting exports.
Farha Aslam Stephens Inc. Analyst
Great. And my last question and Ill pass it on. Mike, I didnt think I would ever ask this question in the first quarter this year, but you have no bonus accruals. It looks like pricing is strengthening a little bit better than we had anticipated. What are the thresholds that Sanderson would have to meet that you have to start across the bonuses?
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
$10.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Its right at $10 a share, Farha. We have a long way to go to get there.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
20% on $1 billion in equity.
Farha Aslam Stephens Inc. Analyst
Thank you very much.
Operator
Michael Piken, Cleveland Research.
Michael Piken Cleveland Research Company Analyst
Just wanted to dig a little bit deeper into your expectations for expansion this year. I know youd mentioned 2% to 2.5% in terms of total pounds. But how do you see the entire North American protein complex, and is that a comfortable amount? Given that there is more beef, I would expect it to come on the market later this year.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
We think right now the industry has been very cautious about putting setting eggs. Eggs sets are running less than 1%, and we think thats going to continue.
Weights are running in aggregate. USDA weights are running about 1.25% higher than a year ago. Ive been thinking that we are not going to be that much weight gain, but it appears there is. Agri Stats is showing 2% heavier birds, and I think Agri Stats is probably closer than USDA. So I think well have 2.5% more pounds of chicken available in the market this year.
The question is, to me, the biggest deal are exports going to are they going to be domestic? Are pounds going to be in are they going to get shipped offshore? Right now, exports are better than deboned dark meat. Deboned thighs are not really any better than leg quarter shipped offshore. And by it was for about six or eight months, but not anymore. The price on that deboned dark meat has declined significantly. And the only thing we are deboning is to satisfy our customer needs. And there is that deboned dark meat is actually cannibalizing wait till see what its doing to price of boneless breasts. But we feel pretty good about what prices are going to do post-Easter.
Michael Piken Cleveland Research Company Analyst
Okay, great. And then just your thoughts on the impact of more beef on the market. Is it your view that chicken is cheaper, and it still wont matter, or
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
We I dont think theres going to be a huge impact. I always you know what Ive always said. They are not going to eat chicken seven days a week, and I dont think they are going to eat beef seven days a week either.
And prices the price of beef is still pretty high. The price of beef hasnt gone down dramatically at the grocery store. The grocers are keeping their margins on beef and pork.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
What will probably happen is well, I dont you might see some more features at the grocery store. But for March, we are going to be short of tray pack all of March. We have an Easter cut in there, but we are going to be short of tray pack product for the whole month of March. Weve got ads booked for almost every week of March. So Im not I dont think were going to get overrun by beef in 2016.
Michael Piken Cleveland Research Company Analyst
Okay, great. And then lastly, could you provide an update on the Chinese fall market and any thoughts on timing or anything along those lines? Thanks.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Well, weve been thinking it was going to be 2017 before China opened back up, and I think thats a conservative way to look at that. There is a possibility if it could open before that, but I think the conservative thing is to think 2017. We were told that last summer and out of Washington, and I still Im holding onto that.
Michael Piken Cleveland Research Company Analyst
All right. Thank you.
Operator
Ken Zaslow, Bank of Montreal.
Ken Zaslow Bank of Montreal Analyst
(inaudible) question is and I know your answer to the first part will be that you are not seeing any business, but let me just ask you. As you are seeing more and more companies trying to change how they are pricing their products to consumers, I know you are not going to change your way of doing things. But does that open up an opportunity, or does that make things harder for you? How does that change how you operate within the environment given that you will consistently stay with your strategy?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Price which prices, Ken? You mean the way our competitors price product (technical difficulty)?
Ken Zaslow Bank of Montreal Analyst
There are competitors out there that are not pricing as much on Georgia dock, not pricing as much on Urner Barry. And I know its a little bit different of a segment, but does that create opportunity for you to undercut the pricing and come in and find more customers? Does it find it more that you have to (multiple speakers)
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Im not aware.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes, we are not familiar with how they price it, Ken.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Everything all of ours (technical difficulty). Yes, we bid against really mainly its two other people
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
For tray pack.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
For tray pack. And everybody its always based off the Georgia dock.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Though, when we compete for food service distributors business, we quote Urner Barry and our competition. Urner Barry based (multiple speakers). Whats that?
Ken Zaslow Bank of Montreal Analyst
No, go ahead. You go ahead.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Well, I was going to say some further processors will take flat prices for 12 months; quotes based on flat prices. And then retail breast chicken for retail based off the Georgia dock, and thats what we see when we in a competitive bid, thats what we see.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes, we dont anticipate change in the way we do business.
Ken Zaslow Bank of Montreal Analyst
Yes, I figured that. I didnt know if there was opportunity because there seems to be one fairly large player out there who has kind of more stabilized and longer-term margin structure with how they are changing the pricing. Or at least it seems
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Their product mix is different than ours. But what they sell in our category, they sell it just like we do. Mainly what they sell is tray pack like we do. When they sell fast food, they usually sell at cost-plus or they sell it flat price, and we dont do that. We dont do that. Then they Im sure they sell their further process, kind of like we do. And right now, thats pretty good. Youve got low-price grain and youve got low-cost raw material coming in to your further processing plant, that works. Thats good.
That model changes, though, when youve got $6 corn. Or boneless breasts is at $1.75 or $1.85. Right now, its beautiful.
Ken Zaslow Bank of Montreal Analyst
Okay. Fair enough. And then just to make sure I get this, the chicken industry if you go back into history, there was only so much volatility year to year, that one year you could lose money and other year you could make money.
But this time around, you didnt we had a very quick period of time where you kind of hit the bottom November, December. It already seems like its already recovering. Is there something that and I always hate to be the person that says, oh, this time its different. But I guess what Im trying to figure out is why do we why did we not go into the losses that you historically see, given how strong the profitability was six to nine months ago. And can you help us understand maybe its a changing of the industry dynamics how do you see it?
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Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
I dont know. This is a the I dont know why it there isnt an expansion going on. It looked like it was the pullet placements. But we might be at a capacity wall. And some of the larger players may be at capacity. And have not added any capacity, and some of the smaller ones might be at capacity. Wheres the egg set?
If you look at your 19 stated egg set, the industry hasnt set what is the biggest egg set in the last four years? 211 million?
Unidentified Company Representative
Yes, last summer, 211.6.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And that may be it. Weve added a couple of plants, but nobody else has really done that. And the USDA did not come out with the new line speeds. And so you may be at a capacity. Since back in 2007, on the 19-state total, the industry was setting 220 million eggs. That was the max. Since that time, there are three or four plants shuttered.
And I dont know what the capacity is right now, but we think its less than 220 million eggs. We thought it was going to be 215 million or 216 million, frankly. But I dont know if its because in November and December there were several companies losing money, big bird typically, and exports were not favorable. And so everybody some people are being very cautious, particularly in the big bird arena. It does feel different.
Ken Zaslow Bank of Montreal Analyst
Yes, it definitely does. And then my very last question is if Mexican margins dont or continue to be weak, are you worried that farms will not be moving as much to Mexico? And I will leave it there.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
(multiple speakers) Say that again, Ken. Im sorry.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
We cant hear you.
Ken Zaslow Bank of Montreal Analyst
Yes. If Mexican profitability
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Mexican
Ken Zaslow Bank of Montreal Analyst
Profitability. Not that you guys do any business in Mexico, but you guys said that (multiple speakers) down in Mexico. If the Mexican profitability comes down
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Oh, oh.
Ken Zaslow Bank of Montreal Analyst
Are you worried that the pullet may not be from the US may not be moving to Mexico?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Well, you mean the eggs or the export eggs? Oh.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
We think thats
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
I think theyre going to have to have eggs. Where else are they going to set them? If you build a breeder operation in the United States specifically to produce egg for your Mexican operation, and margins are bad there, there is not hatchery capacity for them to go into. They will do the same thing big-bird deboners were doing in November and December: they will break eggs.
Lampkin Butts Sanderson Farms, Inc. President, COO and Board Member
Yes, they will break eggs.
Ken Zaslow Bank of Montreal Analyst
Okay, thanks. Fair enough. (multiple speakers)
Operator
Brett Hundley, BB&T Capital Markets.
Brett Hundley BB&T Capital Markets Analyst
I wanted to go back to volumes during the quarter. They were much bigger than we were expecting, and of course you guys talked about how they were about 6% above your expectation on the processing side due to weight and yields. And 6% is a pretty big number, and so I was just wondering what were the key drivers of that excess during the quarter, and why are they not moving into Q2? Your guidance on processed pounds for Q2 is in line with what you gave last quarter.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes, Brett, this is Mike. Our head processed were actually right on what we anticipated. Our live weights were up by about 1.5% more than what we had forecast, and the rest of it was yields. Our plants are yielding very, very well. And, to be perfectly honest, when they come in with their estimate every quarter, they ask me, do you want me to continue you want me to build in a higher yield than what weve done. And I say, no, lets just leave it at our target. So thats my fault. But yields were much better than I estimated that they would be.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Brett Hundley BB&T Capital Markets Analyst
So then do you think
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Thats not a bad problem.
Brett Hundley BB&T Capital Markets Analyst
No, no, not at all. It really helps your earnings within our model. And do you think, then, that the number that Lampkin gave again for Q2 is going to prove conservative there? And really, Joe, you talked about it, how weights are ticking up above your expectation, it sounds like. Is it just low-price speed or is it something else out there?
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Well, I think part of it is breed. The breed we have there are a lot of people switching to that breed, not only in big-bird deboning but also in tray pack. Over the last year, there have been a lot of companies theres been a lot of growth in the use of that breed, and the breed has performed exceedingly well. And it I think that has helped a lot. The growth rate is not the rate of growth but performance of that bird in feed conversion and in yield has been superb. And I think that has something to do with it.
Brett Hundley BB&T Capital Markets Analyst
Okay. Another story that is maybe gaining some steam here recently is coming out of Brazil. And with their currency where it is with the crops that theyve had, the country has been exporting a lot of corn. And corn prices are really starting to tick up locally. And one of the thoughts that we had had was potentially that US chicken processors will become more competitive with their Brazilian counterparts on the global market here as the year unfolds, given that relative feed cost profile that is basically proliferating in Brazil right now versus the US.
We spoke with a Brazilian processor the other day, and he said it is plausible that US chicken processors could become more competitive this year and that you could see US exports tick up on a relative basis. Do you guys have an opinion on that? Are your export guys talking about this at all? I would just be curious to get your thoughts. And then I just have one more question.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
We dont compete so much with Brazil. Brazil mainly ships whole birds around the world whole chickens. And we ship mainly leg quarters. And there is Brazils labor cost has gone up over the years. And they dont have 10 years ago but even the products are different, and we ship different products and kind of go even to different markets. And Ive never considered Brazil a big competitor with US products. They dont have a market for the boneless breast meat like we do. And so they cant they dont ship a lot of leg quarters. They ship a little bit, but not a lot like we do. And so Ive never really considered them a competitor in the export market.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
(technical difficulty) compete with even a $0.25 leg quarter.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
No, a $0.25 leg quarter, they dont they cant do anything with that.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Brett Hundley BB&T Capital Markets Analyst
I had thought that the US was trying to push more whole birds into the Middle East, for instance, as an export opportunity, but maybe Im (multiple speakers)
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Well, thats true for some processors, but its not a that is not a big, huge market. Leg quarters compared to whole birds is I mean, thats not even close.
Brett Hundley BB&T Capital Markets Analyst
Thats understandable, thats understandable. All right, I appreciate your perspective. And then just last question, your prepared foods business continues to grow. Clearly, you are growing on the fresh side as well with the plants that youre building. Im just curious is it Sandersons intention to keep pace on the fresh side with prepared foods? In other words, do you always want your prepared foods business to be a certain percentage mix of your total sales? Or is it okay for your fresh meat growth to outpace prepared over time in your view? Thank you.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
We actually want prepared foods to be at about 10% of our total sales. Last year, it was about 7%. With Palestine and St. Pauls coming on, its going to fall further behind. So we need to increase our volume of prepared foods.
Brett Hundley BB&T Capital Markets Analyst
Would you buy something, Joe?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Yes.
Brett Hundley BB&T Capital Markets Analyst
Thank you.
Operator
Francesco Pellegrino, Sidoti and Company.
Francesco Pellegrino Sidoti & Company Analyst
I was wondering if you could provide some color in regards to chicken supplies in cold storage and what this could possibly even be in regards to a possible read-through, given that we are at a record level of cold storage levels.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
What was the total?
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
800.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
800, yes.
Francesco Pellegrino Sidoti & Company Analyst
Yes, 825?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
I looked at it; I just didnt see the total. I think the one thing the one product thats in there, the leg quarters are not a problem. Its that amount, probably about four or five boats worth of leg quarters.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Yes, leg quarters are down.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Its the boneless breast.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Boneless breast ticked up, but
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Dont you think that is further processors?
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
We know of some
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Thats probably the boneless breast is probably being put in there by further processors that thought that first quarter was the bottom of the boneless breast market. And they put it in there, and they will bring it out in the spring and summer, and put it in when boneless breast is higher. I dont know what I looked at it, but I dont remember the other category. Five make the other category was
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
It was big. From a year ago, down from December, right?
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
But the boneless breast is one I noticed. And thats we are putting some of that up for somebody. And but its not for us. We dont ever
Francesco Pellegrino Sidoti & Company Analyst
I saw that wings were up 52% year over year; boneless breast was up 17%. It sounded that the boneless breast meat is up just due to some of the favorable pricing that weve experienced over the past couple of months. And, as you said, its going to further processing. Any insight on maybe the wings in cold storage?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
What about the wings? I dont know about the wings.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
I think a year ago wings got high enough that people put some in the freezer for safety stock to get them through the Super bowl. And I think that number will start working its way down now that the Super Bowl is over. And we get March madness behind us, I think that number will come down.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And then they will go back up in the summer.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
You build inventory in wings in the summertime.
Francesco Pellegrino Sidoti & Company Analyst
All right. Maybe I will crunch some match on my end, but I thought wing consumption for the Super Bowl was only supposed to be up 2.5%. But I wasnt sure why the jump would be that much for wing inventory in cold storage. But I will crunch some numbers; maybe we can circle back a little bit later about that.
In addition, can you provide us with a little bit of a recap in regards to where maybe the top 15 international countries are in regards to their bans of US broiler meat exports?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Bans?
Francesco Pellegrino Sidoti & Company Analyst
Yes like
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Russia would be they were, what, 300
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
250,000 metric tons.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
250,000 metric tons. China was a it was all paws and wing tips, but it was significant moneywise.
Francesco Pellegrino Sidoti & Company Analyst
Can we make this easier? Who has lifted the bans? I know last quarter was South Korea, South Africa. Russia sounded as if its something thats going to be there for quite some time.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Yes, Russia is done.
Francesco Pellegrino Sidoti & Company Analyst
Who has lifted (multiple speakers)
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
South Korea has a ban in place with the whole USA, and China does.
Francesco Pellegrino Sidoti & Company Analyst
Okay.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And everybody else has either lifted the ban or they regionalized. They consider the United States by regions.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
Everybody else is open. So as long as they we are the only countries we cannot export to right now are South Korea and China.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
And Russia.
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
And Russia. Right.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
Francesco Pellegrino Sidoti & Company Analyst
And just my last question. Not sure if its going to be anything material a material opportunity for the US broiler industry. But given the new trade deal with Iran, when I look at the chart of the Middle East region in regards to US broiler meat exports, obviously Iran has not been on this chart for a couple of years. Is there any type of opportunity there for the US broiler industry? I saw that Russia has just signed a trade agreement for poultry exports to Iran. Anything material there?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
We dont have anything in the works, but it certainly would be an opportunity to
Mike Cockrell Sanderson Farms, Inc. Treasurer, CFO and Board Member
We used to ship (multiple speakers) yes.
Francesco Pellegrino Sidoti & Company Analyst
And any idea of the size of that market in metric tons?
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
No. Last year Iraq bought 6,500. So I dont think its huge, but it would help be helpful.
Francesco Pellegrino Sidoti & Company Analyst
All right. Didnt think it would be that big; wasnt necessarily sure. I appreciate the color, guys. Thanks again.
Operator
And there appears to be no further questions at this time. Mr. Sanderson, I would like to turn the conference back to you for any additional or closing remarks.
Joe Sanderson Sanderson Farms, Inc. CEO and Chairman
Good. Thank you for joining us this morning, and we look forward to reporting our second-quarter results later on this year. Thank you all.
Operator
Thank you, sir. And that does conclude todays conference. Thank you for your participation and you may now disconnect.
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FEBRUARY 25, 2016 / 04:00PM GMT, SAFM - Q1 2016 Sanderson Farms Inc Earnings Call
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