Cal-Maine Foods, Inc. (NASDAQ: CALM) today reported results for
the third quarter and thirty-nine weeks ended February 25,
2017.
Net sales for the third quarter of fiscal 2017 were $306.5
million, a 31.8 percent decrease, compared with $449.8 million for
the third quarter of fiscal 2016. The Company reported a net income
of $4.1 million, or $0.09 per basic and diluted share, for the
third quarter of fiscal 2017, compared with net income of $64.2
million, or $1.33 per basic and diluted share, for the third
quarter of fiscal 2016.
For the thirty-nine weeks ended February 25, 2017, net
sales were $799.9 million compared with $1,605.6 million for the
prior-year period. The Company reported a net loss of $49.8
million, or $1.03 per basic and diluted share, for the thirty-nine
weeks ended February 25, 2017, compared with net income of
$316.4 million, or $6.57 per basic share and $6.54 per diluted
share, for the year-earlier period.
Dolph Baker, chairman, president and chief executive officer of
Cal-Maine Foods, Inc., stated, “Our results for the third quarter
of fiscal 2017 reflect the volatile market conditions the egg
industry has experienced throughout this fiscal year. Our results
were affected by lower market prices and weaker demand trends
compared with the third quarter last year. Market prices moved
significantly higher after Thanksgiving, but dropped back down
after Christmas, and our average customer selling prices for the
third quarter of fiscal 2017 were down 27.9 percent from the same
period a year ago.
“The egg markets have remained under pressure, and we do not
expect to see any meaningful improvement until there is a better
balance of supply and demand. Following the 2015 avian influenza
(AI)-related laying hen losses, United States Department of
Agriculture (USDA) data showed that the egg industry repopulated
farms and laying hen numbers were reported to approach pre-AI
levels. The younger, more productive hen population has resulted in
a greater number of eggs. Additionally, in February 2017, the USDA
issued revised data that showed the size of the laying hen flock
for 2015 and 2016 was actually meaningfully higher in both years
than previously reported. Overall, market demand trends have not
kept pace with these higher production levels. According to Nielsen
data, retail customer demand for shell eggs has remained strong.
The USDA reports that egg export demand has improved since the
beginning of fiscal 2017; however, it has still not fully recovered
to levels prior to the AI outbreak. Additionally, we have
experienced reduced demand for egg products, as many of our
commercial customers reformulated their products to use fewer eggs
when prices spiked and have been slow to resume previous egg usage.
Together, these factors have created an oversupply of eggs, with
continued pressure on market prices. However, recent USDA reports
show the chick hatch has been trending down, suggesting there may
be a moderation in the size of the laying hen flock as the year
progresses.
“Specialty eggs, excluding co-pack sales, accounted for 23.6
percent of our total sales volume for the third quarter of fiscal
2017, the same proportion as the third quarter last year. Specialty
eggs revenue was 40.8 percent of total shell egg revenues, compared
with 31.0 percent for the third quarter of fiscal 2016. The average
selling price for specialty eggs, which is typically higher and
less volatile, was down 5.2 percent over the third quarter of last
year, while the average selling price for non-specialty eggs was
down 38.7 percent over the prior-year period.
“Our specialty egg business is a primary focus of our growth
strategy. We have continued to make significant investments across
our operations to meet anticipated demand for cage-free eggs, as
food service providers, national restaurant chains and major
retailers, including our largest customers, have stated objectives
to exclusively offer cage-free eggs by future specified dates.
While we expect the multi-year conversion to cage-free production
will present new challenges and higher costs for our industry, we
believe it also provides additional market opportunities for
Cal-Maine Foods. We are working with our customers to facilitate a
smooth transition to meet this demand. Our latest joint venture
with Rose Acre Farms in Texas is expected to reach full capacity in
the production of cage-free eggs during our fiscal 2018 first
quarter. In addition to cage-free eggs, our product mix provides a
wide variety of healthy choices for consumers including
conventional, nutritionally enhanced and organic eggs. As such, we
believe Cal-Maine Foods is well positioned to respond to future
demand trends and meet the needs of all of our customers.”
Baker continued, “Our operations ran well during the third
quarter as we continued to focus on efficient and responsible
management and respond to dynamic market conditions. For the third
quarter of fiscal 2017, our feed costs per dozen were down 4.3
percent compared with a year ago, and our overall farm production
costs were down 1.3 percent over the third quarter of fiscal
2016.
“Another key aspect of our growth strategy is to expand our
business through selective acquisitions. Importantly, we have a
strong balance sheet and the financial strength to support
this strategy. During the third quarter, we completed the
acquisition of substantially all of the assets of Happy Hen Egg
Farms, Inc., relating to their commercial production, processing,
distribution and sale of shell eggs. The acquired assets include
commercial egg production and processing facilities with current
capacity for approximately 350,000 laying hens and related
distribution facilities located near Harwood and Wharton, Texas.
Located near our other Texas locations, Happy Hen Egg Farms’
current site is designed for capacity of up to 1.2 million laying
hens, and we intend to capitalize on specific market opportunities
created by this additional production capacity. We look forward to
the opportunity to extend our market reach and deliver greater
value to both our customers and shareholders,” added Baker.
Over the past month, there have been reported outbreaks of AI in
certain poultry operations located in southeastern states. None of
these outbreaks has affected the commercial table egg layer flock,
and there have been no positive tests for AI at any Cal-Maine Foods
locations. Since the spring 2015 AI outbreaks, Cal-Maine Foods
significantly enhanced its biosecurity measures at all of its
locations, and its flocks are being monitored and tested according
to state and federal guidelines. The Company continues to work
closely with state and federal agencies and other interested
parties to monitor developments and seek to prevent the occurrence
of the disease at Cal-Maine Foods’ facilities.
Pursuant to Cal-Maine Foods’ variable dividend policy, for each
quarter for which the Company reports net income, the Company pays
a cash dividend to shareholders in an amount equal to one-third of
such quarterly income. Following a quarter for which the Company
does not report net income, the Company will not pay a dividend
with respect to that quarter or for a subsequent profitable quarter
until the Company is profitable on a cumulative basis computed from
the date of the last quarter for which a dividend was paid.
Therefore, the Company did not pay a dividend with respect to the
fourth quarter of fiscal 2016, or the first and second quarters of
fiscal 2017, and will not pay a dividend for the third quarter of
fiscal 2017. At February 25, 2017, cumulative losses that must
be recovered prior to paying a dividend were $50.2 million.
Selected operating statistics for the third quarter and
year-to-date period of fiscal 2017 compared with the prior-year
periods are shown below:
13 Weeks Ended 39
Weeks Ended
February 25,
2017
February 27,
2016
February 25,
2017
February 27,
2016
Dozen Eggs Sold (000) 263,613 277,574
758,114 800,520 Dozen Eggs Produced (000) 222,492
213,285 633,246 620,356 % Specialty Sales (dozen)* 23.6 % 23.6 %
23.0 % 22.8 % % Specialty Sales (dollars)* 40.8 % 31.0 % 44.1 %
27.0 % Net Average Selling Price (dozen) $ 1.130 $ 1.568 $ 1.020 $
1.919 Net Average Selling Price Specialty Eggs (dozen) $ 1.965 $
2.073 $ 1.980 $ 2.279 Feed Cost (dozen) $ 0.396 $ 0.414 $ 0.406 $
0.420
*Excludes co-pack specialty eggs
Cal-Maine Foods, Inc. is primarily engaged in the production,
grading, packing and sale of fresh shell eggs, including
conventional, cage-free, organic and nutritionally-enhanced eggs.
The Company, which is headquartered in Jackson,
Mississippi, is the largest producer and distributor of fresh shell
eggs in the United States and sells the majority of
its shell eggs in states across the southwestern, southeastern,
mid-western and mid-Atlantic regions of the United States.
Statements contained in this press release that are not
historical facts are forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements are based on management’s current
intent, belief, expectations, estimates and projections regarding
our company and our industry. These statements are not guarantees
of future performance and involve risks, uncertainties, assumptions
and other factors that are difficult to predict and may be
beyond our control. The factors that could cause actual results to
differ materially from those projected in the forward-looking
statements include, among others, (i) the risk factors set forth in
the Company’s SEC filings (including its Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K), (ii) the risks and hazards
inherent in the shell egg business (including disease, pests,
weather conditions and potential for recall),
(iii) changes in the demand for and market prices of shell
eggs and feed costs, (iv) our ability to predict and meet demand
for cage-free and other specialty eggs, (v) risks, changes or
obligations that could result from our future acquisition of
new flocks or businesses and risks or changes that may cause
conditions to completing a pending acquisition not to be met, and
(vi) adverse results in pending litigation matters. SEC
filings may be obtained from the SEC or the Company’s
website, www.calmainefoods.com. Readers are cautioned not to
place undue reliance on forward-looking statements because,
while we believe the assumptions on which the
forward-looking statements are based are reasonable, there can
be no assurance that these forward-looking statements will prove to
be accurate. Further, the forward-looking
statements included herein are only made as of the respective
dates thereof, or if no date is stated, as of the date
hereof. Except as otherwise required by law, we disclaim any
intent or obligation to publicly update these forward-looking
statements, whether as a result of new information, future
events or otherwise.
CAL-MAINE FOODS, INC. AND
SUBSIDIARIESFINANCIAL HIGHLIGHTS(Unaudited)(In
thousands, except per share amounts)
SUMMARY STATEMENTS OF
OPERATIONS
13 Weeks Ended
39 Weeks Ended
February 25,
2017
February 27,
2016
February 25,
2017
February 27,
2016
Net sales $ 306,540 $ 449,760 $ 799,929 $ 1,605,630 Gross profit
39,165 132,726 33,544 607,394 Operating income (loss) (4,573 )
85,771 (92,441 ) 472,038 Other income 8,738 11,744 11,298 14,143
Income (loss) before income taxes and noncontrolling interest 4,165
97,515 (81,143 ) 486,181 Income (loss) before income taxes
attributable to Cal-Maine Foods, Inc. 4,173 97,337 (81,134 )
484,256 Net income (loss) $ 4,139 $ 64,164 $ (49,807
) $ 316,417 Net income (loss) per share: Basic $ 0.09
$ 1.33 $ (1.03 ) $ 6.57 Diluted $ 0.09 $ 1.33 $ (1.03 ) $
6.54 Weighted average shares outstanding Basic 48,286 48,204
48,285 48,177 Diluted 48,417 48,367 48,285
48,359
SUMMARY BALANCE SHEETS
February 25, 2017
May 28, 2016 ASSETS Cash and short-term investments $
189,575 $ 389,545 Receivables 79,179 67,448 Income tax receivable
49,919 11,830 Inventories 163,818 154,799 Prepaid expenses and
other current assets 2,310 2,661 Current assets 484,801 626,283
Property, plant and equipment (net) 461,378 392,274 Other
noncurrent assets 139,096 93,208 Total assets $ 1,085,275 $
1,111,765 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable and accrued expenses $ 77,128 $ 67,131 Current maturities
of long-term debt 15,449 16,320 Current liabilities 92,577 83,451
Long-term debt, less current maturities 7,302 9,250 Deferred
income taxes and other liabilities 117,034 101,703 Stockholders'
equity 868,362 917,361 Total liabilities and stockholders' equity $
1,085,275 $ 1,111,765
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version on businesswire.com: http://www.businesswire.com/news/home/20170327005151/en/
Cal-Maine Foods, Inc.Timothy A. Dawson, 601-948-6813Vice
President and CFOorDolph Baker, 601-948-6813Chairman, President and
CEO
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