Cal-Maine Foods Reports Third Quarter Fiscal 2022 Results

Rhea-AI Summary

Cal-Maine Foods reported a strong performance for Q3 of fiscal 2022, with net sales rising by 33.0% to $477.5 million, compared to $359.1 million in Q3 of fiscal 2021. Net income soared to $39.5 million, or $0.81 per share, up from $13.5 million, or $0.28 per share in the previous year. The average selling price for all eggs increased by 29.4% to $1.612 per dozen. Gross margin improved to 19.2%, reflecting favorable market conditions and expense management.

Positive

• Net sales increased by 33.0% to $477.5 million.
• Net income surged to $39.5 million, or $0.81 per share.
• Gross margin improved by approximately 600 basis points to 19.2%.
• Total dozens sold rose by 2.8% in Q3.
• Specialty egg sales grew to $182.9 million, comprising 39.4% of total shell egg revenue.

Negative

• Production costs per dozen increased by 16.9%, primarily due to higher feed costs.
• Year-to-date total dozens sold decreased modestly by 0.7%.

RIDGELAND, Miss.--(BUSINESS WIRE)-- Cal-Maine Foods, Inc. (NASDAQ: CALM) today reported results for the third quarter of fiscal 2022 (thirteen weeks) and 39-week period ended February 26, 2022.

Net sales in the third quarter of fiscal 2022 increased 33.0 percent to $477.5 million compared to $359.1 million in the third quarter of fiscal 2021. The Company reported net income of $39.5 million, or $0.81 per basic and diluted common share, for the third quarter of fiscal 2022, compared to net income of $13.5 million, or $0.28 per basic and diluted common share, for the third quarter of fiscal 2021.

For the thirty-nine weeks ended February 26, 2022, net sales were $1,184.2 million compared to $999.2 million in the prior-year period. The Company reported net income of $22.7 million, or $0.46 per basic and diluted common share, for the thirty-nine weeks ended February 26, 2022, compared with net income of $6.3 million, or $0.13 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 are pleased to report a strong performance for the third quarter of fiscal 2022. Net sales of $477.5 million represented a third-quarter revenue record, driven by improved shell egg pricing. The net average selling price for all eggs increased 29.4 percent to $1.612 per dozen compared with $1.246 per dozen in the prior-year period. Cal-Maine Foods also delivered growth in shell egg volumes. Total dozens sold in the third-quarter increased 2.8 percent versus the prior-year quarter, led by an approximate 1.4 percent improvement within the retail sales channel that outpaced the industry, which experienced shell egg volume declines of 6.4 percent.¹

“Our fiscal third quarter gross margin of 19.2 percent improved approximately 600 basis points compared to the prior-year quarter. This increase reflects overall improved market conditions, strong growth in our specialty egg sales, our continued focus on expense management and our ability to leverage our owned production capabilities.

“In the third quarter of fiscal 2022, our total dozens sold increased to 287.7 million versus 279.7 million in the prior-year quarter, reflecting an increase in specialty egg dozens sold, partially offset by a decrease in conventional egg dozens sold. In the third quarter, industry retail demand for shell eggs decreased slightly as compared to the strong demand of the “stay-at-home” COVID-19 period. However, with improving demand for food service breaking stock, overall demand is returning to a more consistent, historical pattern. Year-to-date, our total dozens sold decreased modestly to 811.8 million, or 0.7 percent, driven by a 5.2 percent decrease in conventional volumes, partially offset by an 11.7 percent increase in specialty egg volumes. Our year-to-date shell egg sales volumes within the retail sales channel were down 2.5 percent as compared with a 7.6 percent volume decline in the retail shell egg market for the comparable period.² We attribute our ability to support our sales volumes, in part, to continued investment in our specialty egg business, including cage-free capabilities, and strategic expansion of our distribution network through our recent additional investment in Southwest Specialty Eggs in the southern California, Arizona and Nevada markets.

“The table egg layer hen inventory reported by the USDA as of March 1, 2022, was 322.7 million, a decrease of 1.6 percent versus the prior year and trending below the five-year average. The USDA also reported that the egg-type chick hatch from October, 2021 through February, 2022 decreased 5.5 percent compared to the prior years’ comparable periods. As of March 1, 2022, table-type eggs in incubators totaled 55.4 million, a decrease of 7.6 percent year over year.

“Specialty egg sales totaled $182.9 million in the third quarter of fiscal 2022, comprising 39.4 percent of total shell egg revenue, compared with $145.2 million, or 41.5 percent of revenue, for the prior-year quarter. Specialty egg dozens sold increased to 95.1 million, or 24.1 percent, versus the prior year and represented 33.1 percent of total dozens sold in the third quarter of fiscal 2022 compared with 27.4 percent in the prior-year quarter. The specialty egg net average selling price per dozen increased to $1.923, or 1.5 percent, versus the third quarter of fiscal 2021. Specialty egg sales remain an integral part of our growth strategy. Consumer preference for specialty eggs, including cage-free eggs, continues to expand with more consumers willing to pay premium prices for these products. Cage-free egg sales comprised 24.1 percent of total net shell egg sales in the third quarter of fiscal 2022 and 23.0 percent of total net shell egg sales fiscal year-to-date. 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.

“We are closely monitoring the recently reported outbreaks of highly pathogenic avian influenza (“HPAI”). As of Monday, March 28, 2022, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service, (“APHIS”), reported that approximately 11.5 million commercial table egg layer hens, or about 3.6 percent of the table egg layer flock based on February 2022 reported layer numbers, have been depopulated given the impacts of HPAI. Pullets impacted comprise approximately 830,000, or about 0.7 percent of the pullet inventory. According to the U.S. Centers for Disease Control and Prevention, these detections do not present an immediate public health concern. There have been no positive tests for HPAI at any Cal-Maine Foods’ owned or contracted production facility to date. We continue to maintain robust biosecurity programs across our locations in accordance with APHIS guidelines. We are also working closely with egg industry associations and government officials to mitigate the risk of future outbreaks and effectively manage our response, if needed.

“For the third quarter of fiscal 2022, we reported operating income of $39.6 million compared with an operating loss of $493,000 for the prior-year quarter. Our results reflect the current inflationary environment with higher costs for feed, labor, packaging and delivery. Farm production costs per dozen for the third quarter of fiscal 2022 increased 16.9 percent compared to the third quarter of fiscal 2021, primarily tied to higher feed costs per dozen produced, which increased 20.3 percent compared with the prior-year period. For the third quarter of fiscal 2022, the average Chicago Board of Trade (“CBOT”) daily market price was $6.13 per bushel for corn and $412 per ton for soybean meal, representing an increase of 23.5 percent and decrease of 2.5 percent, respectively, compared to the average daily CBOT prices for the third quarter of fiscal 2021. While we experienced these production cost headwinds, we managed our selling, general and administrative expense well, which reflects our continued focus on achieving enterprise efficiencies.

“Supplies of corn and soybean remained tight relative to demand in our fiscal third quarter as evidenced by the near-record-low stock-to-use ratio for corn, as well as weather-related shortfalls in production and yields, and the ongoing disruptions related to the COVID-19 global pandemic. Going forward: market indications point to corn and soybean pricing pressures and higher volatility tied to the Russia-Ukraine war and export demand, which will result in continued pressure on the stock-to-use ratio for corn.

“Despite input cost pressures and other market uncertainties, we remain focused on managing our operations as efficiently and safely as possible. We have continued to deliver against our key performance metrics, and we commend the work of our managers and employees across our operations for consistent execution in challenging conditions. Our commitment to be the most reliable and sustainable producer of fresh shell eggs and egg products remains unwavering. Cal-Maine Foods’ differentiated product mix and proven operating model continue to support our ability to meet changing customer demand and extend our market reach. Importantly, we have the financial strength to support our organic growth and expansion opportunities and consider potential acquisitions that are accretive to our business,” added Baker.

For the third quarter of fiscal 2022, Cal-Maine Foods will pay a cash dividend of approximately $0.125 cents per share to holders of its common and Class A common stock. 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. The amount paid per share will vary based on the number of outstanding shares on the record date. The dividend is payable on May 12, 2022, to holders of record on April 27, 2022.

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

		13 Weeks Ended								39 Weeks Ended
		February 26, 2022				February 27, 2021				February 26, 2022				February 27, 2021
Dozen Eggs Sold (000)			287,651				279,715				811,821				817,360
Dozen Eggs Produced (000)			264,433				248,130				757,677				731,205
% Specialty Sales (dozen)			33.1	%			27.4	%			30.0	%			26.6	%
% Specialty Sales (dollars)			39.4	%			41.5	%			40.2	%			42.0	%
Net Average Selling Price (per dozen)		$	1.612			$	1.246			$	1.414			$	1.185
Net Average Selling Price Specialty Eggs (per dozen)		$	1.923			$	1.895			$	1.900			$	1.876
Feed Cost (per dozen)		$	0.562			$	0.467			$	0.546			$	0.422

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, rising inflation and interest 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.

1)		IRI Unify. U.S. multi-outlet sales, 13 weeks ended February 27, 2022. Egg category less non-egg products.
2)		IRI Unify. U.S. multi-outlet sales, May 31, 2021 through February 27, 2022. Egg category less non-egg products.

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
(In thousands, except per share amounts)
SUMMARY STATEMENTS OF OPERATIONS
		13 Weeks Ended								39 Weeks Ended
		February 26, 2022				February 27, 2021				February 26, 2022				February 27, 2021
Net sales		$	477,485			$	359,080			$	1,184,195			$	999,189
Cost of sales			385,903				311,563				1,042,221				876,457
Gross profit			91,582				47,517				141,974				122,732
Selling, general and administrative			52,686				47,656				146,991				135,494
(Gain) loss on disposal of fixed assets			(674	)			354				(2,855	)			476
Operating income (loss)			39,570				(493	)			(2,162	)			(13,238	)
Other income, net			13,478				12,325				21,814				15,462
Income before income taxes			53,048				11,832				19,652				2,224
Income tax expense (benefit)			13,594				(1,716	)			(2,921	)			(4,080	)
Net income			39,454				13,548				22,573				6,304
Less: Loss attributable to noncontrolling interest			(63	)			—				(91	)			—
Net income attributable to Cal-Maine Foods, Inc.		$	39,517			$	13,548			$	22,664			$	6,304
Net income per common share:
Basic		$	0.81			$	0.28			$	0.46			$	0.13
Diluted		$	0.81			$	0.28			$	0.46			$	0.13
Weighted average shares outstanding:
Basic			48,886				48,530				48,888				48,511
Diluted			49,036				48,659				49,035				48,649

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(Unaudited)
(In thousands)
SUMMARY BALANCE SHEETS
		February 26, 2022			May 29, 2021
ASSETS
Cash and short-term investments		$	96,714		$	169,510
Receivables, net			180,037			126,639
Inventories			240,087			218,375
Prepaid expenses and other current assets			5,872			5,407
Current assets			522,710			519,931
Property, plant and equipment, net			671,373			589,417
Other noncurrent assets			87,912			119,826
Total assets		$	1,281,995		$	1,229,174
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses		$	120,665		$	89,191
Current portion of lease obligations			708			906
Current liabilities			121,373			90,097
Lease obligations, less current maturities			953			1,472
Deferred income taxes and other liabilities			129,426			124,824
Stockholders' equity			1,030,243			1,012,781
Total liabilities and stockholders' equity		$	1,281,995		$	1,229,174

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220329005954/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' Q3 2022 earnings results?

Cal-Maine Foods reported net sales of $477.5 million and net income of $39.5 million, or $0.81 per share, for Q3 of fiscal 2022.

How did Cal-Maine's specialty egg sales perform in Q3 2022?

Specialty egg sales totaled $182.9 million in Q3 2022, accounting for 39.4% of total shell egg revenue, with a 24.1% increase in dozens sold.

What are the future projections for Cal-Maine Foods?

Cal-Maine Foods is focused on managing operations efficiently despite increased input costs and market uncertainties, with plans for organic growth and potential acquisitions.

When will Cal-Maine Foods pay the cash dividend?

Cal-Maine Foods will pay a cash dividend of approximately $0.125 per share on May 12, 2022, to shareholders on record as of April 27, 2022.

What were the impacts of avian influenza on Cal-Maine Foods?

As of March 28, 2022, there have been no positive tests for avian influenza at Cal-Maine Foods' production facilities, and the company maintains robust biosecurity practices.