Cal-Maine Foods Reports Third Quarter Fiscal 2016 Results

JACKSON, Miss.--()--Cal-Maine Foods, Inc. (NASDAQ: CALM) today reported results for the third quarter and nine months ended February 27, 2016.

Net sales for the third quarter of fiscal 2016 were $449.8 million, a 2.8 percent increase compared to $437.6 million for the third quarter of fiscal 2015. The Company reported net income of $64.2 million, or $1.33 per basic and diluted share, for the third quarter of fiscal 2016 compared to $50.9 million, or $1.06 per basic share and $1.05 per diluted share, for the third quarter of fiscal 2015.

For the first nine months of fiscal 2016, net sales were $1,605.6 million compared to $1,173.1 million for the prior-year period. The Company reported net income of $316.4 million, or $6.57 per basic share and $6.54 per diluted share, for the first nine months of fiscal 2016 compared to net income of $115.1 million, or $2.39 per basic share and $2.38 per diluted share, for the year-earlier period.

Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, Inc., stated, “Cal-Maine Foods delivered another solid performance for the third quarter of fiscal 2016, demonstrating consistent execution of our strategy in changing market conditions. Our sales were up 2.8 percent for the third quarter and up 36.9 percent for the first nine months of fiscal 2016. These increases primarily reflect higher average selling prices compared with the same periods last year. While average selling prices for shell eggs for the third quarter of fiscal 2016 have dropped considerably from the historically high record levels we experienced earlier in the fiscal year, they were still up 4.3 percent over the third quarter of fiscal 2015. For the fiscal year-to-date period, average selling prices were up 35.6 percent over the same period a year ago. Our sales volumes have continued to trend higher each quarter of fiscal 2016; however, they were down 1.9 percent in the third quarter compared with the prior-year period.

“Our industry continues to deal with the reduced hen supply and other market disruptions caused by the Avian Influenza (AI) outbreaks in the upper Midwestern United States during the spring of 2015. While the supply has been steadily moving back up, the current national laying hen flock recently reported by the USDA is still approximately 3.0 percent lower than it was a year ago. Industry-wide, retail demand trends for shell eggs have been favorable in spite of the supply disruptions; however, egg prices have been negatively affected by increased egg supplies due to demand erosion for egg products, increased egg imports and reduced egg exports. Egg inventories have continued to build, and we expect market prices will remain volatile until the industry has more clarity on future supply levels.

“We continue to diligently monitor the situation related to AI, and we are working with egg industry associations and government officials to identify ways to mitigate the risk of future outbreaks. There have been no positive tests for AI at any of the Cal-Maine Foods locations; however, we have strengthened our biosecurity measures at all of our facilities. Importantly, we are very focused on our customers, and we continue to make the necessary adjustments to ensure their needs are met following the recent market disruptions.

“Specialty eggs have been a key driver of our growth throughout this fiscal year, with volumes up 13.7 percent for the third quarter compared with the prior-year period,” added Baker. “Specialty egg sales accounted for 23.6 percent of the dozens of shell eggs sold and 31.0 percent of total shell egg sales revenue for the third quarter of fiscal 2016, compared with 20.3 percent of the dozens of shell eggs sold and 26.9 percent of total shell egg sales revenue for the third quarter of fiscal 2015. We continue to pursue additional opportunities to market and sell specialty eggs, especially in light of changing demand trends. As the food service industry, restaurant chains and major retailers are increasingly demanding more cage-free eggs in response to market forces, we are working with our customers to facilitate a smooth transition to meet this demand. We believe Cal-Maine Foods is well positioned to respond to dynamic market conditions and future demand trends. In addition to cage-free eggs, we provide our customers with a full selection of conventional, nutritionally enhanced and organic eggs, and we will continue to enhance our product mix to meet the needs of our customers.

“Overall, our operations continued to perform very well in the third quarter with more favorable market conditions than we experienced a year ago. Operating income for the third quarter of fiscal 2016 was $85.8 million, up 19.2 percent compared with $72.0 million for the third quarter of fiscal 2015. These results reflect lower feed and farm production costs and consistent execution of our strategy to be an efficient, low-cost producer across all of the Company’s operations. Our feed costs per dozen produced were 5.0 percent lower than the third quarter of fiscal 2015 and 6.7 percent lower through the first nine months of this fiscal year. These lower costs reflect more plentiful grain supplies as a result of near record corn and soybean crops harvested in the United States last fall. Looking ahead, industry consultants are projecting increased planting acreage for both corn and soybeans. With favorable weather conditions during this year’s growing season, we should continue to have an adequate feed supply.”

Baker added, “We are pleased with the continued progress with respect to our joint venture with Rose Acre Farms in Texas. This important joint venture has allowed us to significantly expand our production of cage-free eggs while sharing the costs and risks with an experienced partner. As planned, our initial flock was placed in early November, and we are on schedule for continued placements until we reach our full expected capacity in early calendar 2017. In addition, we have a number of major capital projects underway across our operations to further expand our cage-free capacity to meet expected customer demand and reduce our dependence on spot market purchases. We look forward to the new market opportunities these projects will provide for Cal-Maine Foods.”

For the third quarter of fiscal 2016, Cal-Maine Foods will pay a cash dividend of approximately $0.441 per share to holders of its common and Class A common stock. Pursuant to Cal-Maine Foods’ variable dividend policy, in 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. No dividends are paid in a quarter for which the Company does not report net income. The amount paid could vary slightly based on the amount of outstanding shares on the record date. The dividend is payable May 12, 2016, to shareholders of record on April 27, 2016.

Selected operating statistics for the third quarter and year-to-date periods of fiscal 2016 compared with the prior-year periods are shown below:

   

 

       
13 Weeks Ended 39 Weeks Ended

February 27,

2016

February 28,

2015

February 27,

2016

February 28,

2015

Dozen Eggs Sold (000) 277,574 283,032 800,520 798,203
Dozen Eggs Produced (000) 213,285 203,581 620,356 597,080
 
% Specialty Sales (dozen) 23.6 % 20.3 % 22.8 % 19.4 %
% Specialty Sales (dollars) 31.0 % 26.9 % 27.0 % 26.8 %
Net Average Selling Price (dozen) $ 1.568 $ 1.503 $ 1.919 $ 1.415
Feed Cost (dozen) $ 0.414 $ 0.436 $ 0.420 $ 0.450
 

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) risks, changes or obligations that could result from our future acquisition of new flocks or businesses, and (v) 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 update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

       
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
 
SUMMARY STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

13 Weeks Ended 39 Weeks Ended

February 27,

2016

February 28,

2015

February 27,

2016

February 28,

2015

Net sales $ 449,760 $ 437,556 $ 1,605,630 $ 1,173,117
Gross profit 132,726 112,517 607,394 286,327
Operating income 85,771 72,025 472,038 168,785
Other income 11,744 5,049 14,143 7,585
Income before income taxes and noncontrolling interest 97,515 77,074 486,181 176,370
Income before income taxes attributable to Cal-Maine Foods, Inc. 97,337 76,997 484,256 175,505
 
Net income $ 64,164 $ 50,882 $ 316,417 $ 115,140
 
Net income per share:
Basic $ 1.33 $ 1.06 $ 6.57 $ 2.39
Diluted $ 1.33 $ 1.05 $ 6.54 $ 2.38

Weighted average shares outstanding:

Basic   48,204   48,137   48,177   48,134
Diluted   48,367   48,447   48,359   48,416

 

 

 

SUMMARY BALANCE SHEETS

 

February 27,

2016

May 30,

2015

ASSETS
Cash and short-term investments $ 387,049 $ 258,628
Receivables 110,765 101,977
Inventories 154,165 146,260
Prepaid expenses and other current assets   2,289   2,099
Current assets 654,268 508,964
 
Property, plant and equipment (net) 382,271 358,790
Other noncurrent assets   87,693   60,899
Total assets $ 1,124,232 $ 928,653
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 91,726 $ 86,193
Current maturities of long-term debt 6,159 10,065
Income tax payable 7,946 5,288
Deferred income taxes   21,796   30,391
Current liabilities 127,627 131,937
 
Long-term debt, less current maturities 21,081 40,795
Deferred income taxes and other liabilities 59,508 51,359
Stockholders' equity   916,016   704,562
Total liabilities and stockholders' equity $ 1,124,232 $ 928,653

Contacts

Cal-Maine Foods, Inc.
Dolph Baker, Chairman, President and CEO
or
Timothy A. Dawson, Vice President and CFO
601-948-6813

Contacts

Cal-Maine Foods, Inc.
Dolph Baker, Chairman, President and CEO
or
Timothy A. Dawson, Vice President and CFO
601-948-6813