Like the rest of the country, Mississippi’s publicly-traded companies are keeping a close watch on national market conditions.
Last week, the Mississippi Business Journal spoke with Cal-Maine Foods, Callon Petroleum, Parkway Properties and Sanderson Farms and finds them all optimistic about this year’s outlook.
“We have a positive outlook for our business in the year ahead,” says Cal-Maine Foods vice president/chief financial officer Timothy A. Dawson. “Egg prices have been high, providing profitable margins. Our costs of production have also been much higher primarily due to higher costs for our main feed ingredients, corn and soybean meal.”
Although Cal-Maine Foods has no major expansion plans for the next few years, the company will continue to evaluate acquisition and other expansion opportunities as they present themselves. Based in Jackson, Cal-Maine has approximately 1,600 employees company wide with approximately 200 located in Mississippi.
“Our business provides steady employment throughout the year with minimum seasonal fluctuation,” Dawson says. “We try to be a good corporate citizen in the communities in which we operate.”
Callon Petroleum Company
In the high-profile energy industry, Callon Petroleum Company of Natchez says its overall outlook for the balance of 2008 and beyond is very good as greater cash flow allows it to re-invest in finding new and additional oil and gas reserves to produce in the future.
“We are affected by the general economic markets like all other businesses, as higher consumer-level energy prices impact our execution of our exploration business,” says company spokesman Terry Trovato. “Our costs to drill and complete wells are increasing just like costs in other sectors of the economy, and increasing costs will continue to affect us and will make finding future oil and gas reserves more expensive.”
Callon, a fixture in Natchez for more than half a century, is in the final phases of developing a large Gulf of Mexico deepwater field, Entrada, which was originally discovered in 2000.
“We expect production to commence from this field in early 2009. Based upon engineering estimates of initial production levels, when Entrada is brought online we could see our existing daily oil and gas production double,” Trovato says. “We continue to pursue our base exploration business, which is primarily in the Gulf of Mexico shelf area.”
With 86 employees at this time, Callon’s combined payroll, financial gifts to charitable and civic organizations and state franchise taxes paid during 2007 totaled in excess of $12 million.
A real estate investment trust, Parkway Properties is headquartered in Jackson, but 95% of its business comes from the markets of Atlanta, Chicago and Houston, according to president and chief executive officer Steven G. Rogers.
“I think it’s a good time to be in commercial real estate,” he says. “People shouldn’t run for the hills. In light of long-term investing, it’s solid, asset-backed value that hasn’t changed. They should keep Wall Street in perspective and make decisions on long-term fundamentals, not day-to-day fundamentals.”
Rogers says Parkway Properties tends to rely more on the relative value of real estate, which doesn’t directly correlate to the overall movement of the stock market.
“With big-picture items, the market moving down causes some relationship — the profitability of firms that comprise those indexes, so we’re affected as well in a general way,” added. “Most subprime mortgage problems have had little impact on us. We’re in commercial real estate. The only place it affected us is with some people we rent to who are mom-and-pop mortgage lenders, and that’s measured in pennies for us.”
Parkway is projecting an increase in its shares this year along with an increase in funds from operations. “As long as we’re not in a recession, we’ll keep on investing and being mindful of conservative measures that we routinely do,” Rogers says. “I don’t think Mississippi will be affected by the mortgage meltdown, much like we were not affected by the dot.com meltdown a few years ago.”
Based in Laurel, Sanderson Farms has more than 6,500 employees in the state and 500 contract growers who are a significant part of the company’s operation.
“We’re doing pretty well — we’re rocking,” says Mike Cockrell, chief financial officer and treasurer. “We opened a new facility in Waco, Texas, last August even though things are challenging for the poultry industry with the high costs of grain and soybean mill. We expect those costs will be over $170 million this year, and increased fuel costs have some impact because we have more than 500 trucks.”
He says the industry and Sanderson Farms must find a way to offset those increased costs as supply and demand dictate. “We will adjust production downward to offset from the industry and remain viable by getting chicken prices to where it will do that,” he says. “We may experience pain for a while.”
Although the company isn’t ready to announce plans for more expansion, it is currently conducting due diligence on a location in North Carolina. “We’re always doing homework for expanding,” Cockrell says. “We will continue to run at full capacity in our Mississippi plants. We’re fortunate to have good conditions in our operations here and enjoy very good relationships with the communities that are mutually beneficial.”
Danny Williams, a certified financial planner with Woodridge Capital Portfolio Management of Ridgeland, says some of the state’s public companies are doing very well because they fit into sectors such as energy, commodities, precious metals and global fixed-income that are areas of strength.
“Each one must be analyzed individually, and of course, the investor needs to understand that even a good performing stock today may put their capital at a risk of loss and the stock needs to be an appropriate fit for the overall investment plan,” he says. “We love to invest in local companies when possible. This supports our local economy and creates opportunities for our citizens. However, when we evaluate stocks for our client portfolios, we have no regional or national allegiance.”
Market conditions affect Mississippi public companies as they do all companies, he observes, including interest rates, employment, consumer sentiment, presidential and local elections and how the Iraq war is progressing.
“It also just cost me 70 bucks to fill up my tank,” he added.
A certified mutual fund councilor and financial educator, Chris McAlpin of Financial Strategies Group feels the market has been in an extreme position for the past year.
“The stocks of the real estate companies and banks have had terrible market conditions,” he says. “While the commodities industry has had a growing market, this has positively affected the farming and meat production companies. This occurrence is typical of a bear market.”
Contact MBJ contributing writer Lynn Lofton at email@example.com.