Cal-Maine Foods Reports Second Quarter Fiscal 2022 Results

Rhea-AI Summary

Cal-Maine Foods reported a 12.5% increase in net sales for Q2 FY2022, totaling $390.9 million, compared to $347.3 million in Q2 FY2021. However, net income dropped significantly to $1.2 million from $12.2 million year-over-year. For the first half of FY2022, net sales were $722.6 million, with a net loss of $16.9 million. The company noted increased average selling prices for eggs but also faced higher production costs, leading to an operating loss of $2.1 million. Despite challenges, strategic investments and a focus on specialty egg sales indicate potential for growth.

Positive

• Net sales increased by 12.5% to $390.9 million in Q2 FY2022.
• Specialty egg sales rose to $155.9 million, comprising 41.1% of total revenue.
• Sales volumes improved to 276.1 million dozens sold in Q2 FY2022.
• Investment in MeadowCreek Foods enhances product offerings in egg products sector.
• Approved $23 million capital project to expand cage-free egg production.

Negative

• Net income dropped to $1.2 million from $12.2 million year-over-year.
• Reported a net loss of $16.9 million for the first half of FY2022.
• Operating loss of $2.1 million in Q2 FY2022 compared to $14.5 million operating income in Q2 FY2021.
• Farm production costs per dozen increased by 21.6% due to rising feed costs.

RIDGELAND, Miss.--(BUSINESS WIRE)-- Cal-Maine Foods, Inc. (NASDAQ: CALM) today reported results for the second quarter of fiscal 2022 (thirteen weeks) and 26-week period ended November 27, 2021.

Net sales in the second quarter of fiscal 2022 increased 12.5 percent to $390.9 million compared to $347.3 million in the second quarter of fiscal 2021. The Company reported net income of $1.2 million, or $0.02 per basic and diluted common share, for the second quarter of fiscal 2022, compared to net income of $12.2 million, or $0.25 per basic and diluted common share, for the second quarter of fiscal 2021.

For the twenty-six weeks ended November 27, 2021, net sales were $722.6 million compared to $640.1 million for the prior-year period. The Company reported a net loss of $16.9 million, or $0.34 per basic and diluted common share, for the twenty-six weeks ended November 27, 2021, compared with a net loss of $7.2 million, or $0.15 per basic and diluted common share, for the prior-year period.

Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc., stated, “We were pleased to report higher sales for the second quarter of fiscal 2022 compared with the prior year, driven by improved shell egg pricing. For the second quarter of fiscal 2022, the net average selling price for all eggs increased 11.9 percent to $1.373 per dozen compared with $1.227 per dozen in the prior-year period. Our sales volumes also improved compared to the previous record sales volumes in the second quarter of fiscal 2021. We are pleased that our operating results helped drive a return to modest profitability in the second quarter despite the impacts of higher costs for feed ingredients, processing, packaging, transportation and labor.

“In the second quarter of fiscal 2022, our total dozens sold increased to 276.1 million versus 273.7 million in the prior-year period. Food service demand has continued to improve steadily, resulting in better overall egg supply and demand balance as restaurant traffic increased. In addition, a stronger export market supported demand for shell eggs and egg products.

“The table egg layer hen inventory reported by the USDA as of December 1, 2021, was 327.8 million, an increase versus the prior year and trending below the five-year-average. The USDA also reported that the egg-type chick hatch from July 2021 through November 2021 decreased 2.0 percent compared to the prior-year period. As of December 1, 2021, eggs in incubators totaled 48.4 million, down 9.1 percent year over year.

"For the second quarter of fiscal 2022, specialty egg sales totaled $155.9 million, accounting for 41.1 percent of total shell egg revenue, compared with $134.1 million, or 39.7 percent, for the prior-year quarter. Specialty egg dozens sold were 30.3 percent of total dozens sold in the second quarter of fiscal 2022 compared with 26.4 percent in the second quarter of fiscal 2021. Higher specialty egg revenue reflects a 15.7 percent increase in specialty dozens sold in the second quarter of fiscal 2022 compared to the prior-year period, while specialty egg prices were relatively flat, up 0.4 percent versus the second quarter of fiscal 2021. We continue to focus on offering a favorable product mix that meets the needs of our customers, including conventional, cage-free, organic and other specialty eggs and egg products. Consumer preference for specialty eggs, including cage-free eggs, continues to expand. Cage-free egg sales comprised 24.0 percent of total sales in second quarter fiscal 2022 and 23.8 percent of total sales fiscal year-to-date.

“We are focusing on opportunities to enhance our product portfolio. During the second quarter of fiscal 2022, we announced a strategic investment in a new business, MeadowCreek Foods, an egg products operation located in Neosho, Missouri, with an initial focus on offering hard-cooked eggs. Cal-Maine Foods will serve as the preferred provider to supply specialty and conventional eggs that MeadowCreek needs to manufacture egg products. This is an exciting opportunity to expand our presence in the egg products sector. We believe we have the right team in place to execute this strategy and look forward to extending our market reach to provide egg products for institutional, food service and retail needs. Our focus on hard-cooked offerings allows us to harness more value from medium grade eggs typically produced in the pre-peak phase of lay and augment our expansion into this nutritious and portable protein category.

“We have also worked hard to identify further growth opportunities in line with expanding consumer demand and state requirements for cage-free eggs. In October, we announced that our Board of Directors approved a $23.0 million capital project to expand the Company’s cage-free egg production at our Okeechobee, Florida, facility, which will add capacity for approximately 400,000 cage-free hens and 210,000 pullets. This most recent expansion project in Florida supports our strategy to position Cal-Maine Foods as an industry leader in meeting the growing demand for specialty egg offerings, including cage-free eggs.

“We are also pleased to announce that effective December 5, 2021, we made an additional investment in Southwest Specialty Eggs, LLC, to acquire warehouse and distribution capability to expand Southwest Specialty Egg’s total customer base in the southern California, Arizona and Nevada markets. Given the cage-free egg requirement in California will take effect on January 1, 2022, we believe this investment will be immediately accretive given our enhanced ability to better utilize our cage-free egg offerings and support the sales and distribution of other specialty eggs into these important retail markets.

“For second quarter fiscal year 2022, we reported an operating loss of $2.1 million compared with operating income of $14.5 million for the prior-year period. Our results reflect the current inflationary environment with higher costs for feed, labor, packaging and delivery. Farm production costs per dozen for the second quarter of fiscal 2022 were up 21.6 percent compared to the second quarter of fiscal 2021, an increase primarily tied to higher feed costs per dozen produced, which were up 29.0 percent compared with the prior-year period. For the second quarter of fiscal 2022, the average Chicago Board of Trade (“CBOT”) daily market price was $5.43 per bushel for corn and $338 per ton for soybean meal, representing an increase of 38.4 percent and decrease of 5.9 percent, respectively, compared to the average daily CBOT prices for the second quarter of fiscal 2021. Corn and soybean supplies remained tight relative to demand, primarily related to higher export demand, as well as weather-related shortfalls in production and yields. We expect market prices for our primary feed ingredients to remain volatile this fiscal year, given the ongoing disruptions related to the COVID-19 global pandemic, weather fluctuations, geopolitical issues and overall reduced carryout levels for primary feed ingredients.

“In spite of current and expected inflationary headwinds, we remain focused on what we can control by managing our costs and running efficient operations. We are extremely proud of our teams across our operations who have demonstrated resilience throughout the challenges of the COVID-19 global pandemic and have continued to meet the needs of our customers. Due to their efforts, our operations have run very well with strong key performance metrics. While we continue to face a challenging environment, our mission is still the same – to be the most efficient and sustainable producer of fresh shell eggs and egg products. We are mindful of our essential role to support the nation’s food supply with nutritious and affordable protein. We are confident we have the right strategy in place to meet this objective, with a proven operating model that will drive long-term growth. Importantly, we have sufficient capital to fund internal expansion projects and consider potential acquisitions to support our strategy. Above all, we will strive to meet the demands of our valued customers and deliver greater value to our shareholders,” added Baker.

Pursuant to Cal-Maine Foods’ variable dividend policy, for each quarter in 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 most recent quarter for which a dividend was paid. Therefore, the Company will not pay a dividend with respect to the second quarter of fiscal 2022. As of November 27, 2021, the total cumulative loss to be recovered before payment of a dividend was $21.1 million.

Select operating statistics for the second quarter of fiscal 2022 compared with the prior-year period are shown below:

	13 Weeks Ended								26 Weeks Ended
	November 27, 2021				November 28, 2020				November 27, 2021				November 28, 2020
Dozen Eggs Sold (000)		276,108				273,651				535,493				537,645
Dozen Eggs Produced (000)		256,786				251,914				493,244				483,075
% Specialty Sales (dozen)		30.3	%			26.4	%			29.6	%			26.2	%
% Specialty Sales (dollars)		41.1	%			39.7	%			42.0	%			42.2	%
Net Average Selling Price (per dozen)	$	1.373			$	1.227			$	1.308			$	1.154
Net Average Selling Price Specialty Eggs (per dozen)	$	1.862			$	1.854			$	1.857			$	1.866
Feed Cost (per dozen)	$	0.529			$	0.410			$	0.537			$	0.399

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing, marketing and distribution of fresh shell eggs, including conventional, cage-free, organic, free-range, pasture-raised and nutritionally enhanced eggs. The Company, which is headquartered in Ridgeland, 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, (vi) risks relating to the evolving COVID‐19 pandemic, including without limitation increased costs and growing inflationary rates and (vii) 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 SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (In thousands, except per share amounts)
SUMMARY STATEMENTS OF OPERATIONS
		13 Weeks Ended								26 Weeks Ended
		November 27, 2021				November 28, 2020				November 27, 2021				November 28, 2020
Net sales		$	390,903			$	347,328			$	722,607			$	640,110
Cost of sales			347,156				288,877				672,215				564,894
Gross profit			43,747				58,451				50,392				75,216
Selling, general and administrative			47,780				43,873				94,305				87,838
(Gain) loss on disposal of fixed assets			(1,968	)			99				(2,181	)			122
Operating income (loss)			(2,065	)			14,479				(41,732	)			(12,744	)
Other income, net			2,533				1,438				8,336				3,136
Income (loss) before income taxes			468				15,917				(33,396	)			(9,608	)
Income tax (expense) benefit			(677	)			3,762				(16,515	)			(2,364	)
Net loss (loss)			1,145				12,155				(16,881	)			(7,244	)
Less: Loss attributable to noncontrolling interest			(28	)			—				(28	)			—
Net income (loss) attributable to Cal-Maine Foods, Inc.		$	1,173			$	12,155			$	(16,853	)		$	(7,244	)
Net income (loss) per common share:
Basic		$	0.02			$	0.25			$	(0.34	)		$	(0.15	)
Diluted		$	0.02			$	0.25			$	(0.34	)		$	(0.15	)
Weighted average shares outstanding:
Basic			48,857				48,501				48,859				48,501
Diluted			49,016				48,645				48,859				48,501

CAL-MAINE FOODS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) (In thousands)
SUMMARY BALANCE SHEETS
		November 28, 2021				May 29, 2021
ASSETS
Cash and short-term investments		$	85,156			$	169,510
Receivables, net			152,958				126,639
Inventories			236,201				218,375
Prepaid expenses and other current assets			6,814				5,407
Current assets			481,129				519,931
Property, plant and equipment, net			667,250				589,417
Other noncurrent assets			83,615				119,826
Total assets		$	1,231,994			$	1,229,174
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses		$	115,619			$	89,191
Current portion of lease obligations			769				906
Current liabilities			116,388				90,097
Lease obligations, less current maturities			1,124				1,472
Deferred income taxes and other liabilities			117,059				124,824
Stockholders' equity			997,423				1,012,781
Total liabilities and stockholders' equity		$	1,231,994			$	1,229,174

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211228005153/en/

Dolph Baker, Chairman and CEO

Max P. Bowman, Vice President and CFO

(601) 948-6813

Source: Cal-Maine Foods, Inc.

FAQ

What were Cal-Maine Foods' sales for the second quarter of fiscal 2022?

Cal-Maine Foods reported net sales of $390.9 million for the second quarter of fiscal 2022.

How did Cal-Maine Foods perform in terms of net income in Q2 FY2022?

In Q2 FY2022, Cal-Maine Foods had a net income of $1.2 million, a significant decrease from $12.2 million in Q2 FY2021.

What is the net loss reported by Cal-Maine Foods for the first half of fiscal 2022?

Cal-Maine Foods reported a net loss of $16.9 million for the first half of fiscal 2022.

What challenges did Cal-Maine Foods face regarding production costs?

Cal-Maine Foods faced an increase in farm production costs per dozen by 21.6% in Q2 FY2022, largely due to rising feed costs.

What investments did Cal-Maine Foods make in Q2 FY2022?

Cal-Maine Foods announced a $23 million capital project to expand cage-free egg production and a strategic investment in MeadowCreek Foods.