Market Overview

Cal-Maine Foods Reports Fourth Quarter and Fiscal 2017 Results

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Cal-Maine Foods, Inc. (NASDAQ:CALM) today reported results for the
fourth quarter and fifty-three weeks ended June 3, 2017.

Net sales for the fourth quarter of fiscal 2017 were $274.6 million, a
9.4 percent decrease, compared with $303.0 million for the fourth
quarter of fiscal 2016. The Company reported a net loss of $24.5
million, or $0.51 per basic and diluted share, for the fourth quarter of
fiscal 2017, compared with net loss of $376,000, or $0.01 per basic and
diluted share, for the fourth quarter of fiscal 2016. These results
include a payment of $5.5 million included in other income for the final
BP settlement from the Deepwater Horizon oil spill in 2010. The fourth
quarter of fiscal 2017 was a 14-week period compared with 13 weeks for
the same period in fiscal 2016.

For the fifty-three weeks ended June 3, 2017, net sales were $1,074.5
million compared with $1,908.7 million for the prior-year period. The
Company reported a net loss of $74.3 million, or $1.54 per basic and
diluted share, for the fifty-three weeks ended June 3, 2017, compared
with net income of $316.0 million, or $6.56 per basic share and $6.53
per diluted share, for the year-earlier period. Fiscal 2017 included 53
weeks compared with 52 weeks for fiscal 2016.

Dolph Baker, chairman, president and chief executive officer of
Cal-Maine Foods, Inc., stated, "Our results for the fourth quarter of
fiscal 2017 reflect the volatile and challenging egg market fundamentals
that have prevailed throughout this fiscal year. While our volumes were
up due to the extra week of sales, our average customer selling prices
for the fourth quarter of fiscal 2017 were down 15.5 percent from the
same period a year ago. For fiscal 2017, average customer selling prices
were down 42.0 percent compared with fiscal 2016.

"The egg markets have been affected by increased production levels, as
producers repopulated their flocks after the 2015 avian influenza
(AI)-related laying hen losses, and the younger, more productive hen
population has produced a higher number of eggs. Overall, market demand
trends have not kept pace with these production levels. According to
Nielsen data, retail customer demand for shell eggs has remained
seasonal. However, relatively weak institutional and export demand have
placed additional pressure on the egg markets. During the AI-related
price spike, institutional egg customers reformulated their products to
use fewer eggs, and while egg prices have since come down, these
customers have not returned to their previous usage levels. While the
USDA reports that egg export demand has improved since the beginning of
fiscal 2017, U.S. egg exports are still below the peak levels prior to
the AI outbreak. Together, these factors have created an oversupply and
market prices have fallen accordingly. We do not expect to see any
meaningful improvement until there is a better balance of supply and
demand. However, we are encouraged by recent USDA reports indicating the
chick hatch has been trending down for the last 10 out of 11 months,
suggesting there may be a moderation in the size of the laying hen flock
as we move forward.

"Specialty eggs, excluding co-pack sales, accounted for 22.7 percent of
our total sales volume for the fourth quarter of fiscal 2017, compared
with 23.3 percent for the same period a year ago. Specialty egg revenue
was 42.0 percent of total shell egg revenues, compared with 40.2 percent
for the fourth quarter of fiscal 2016. The average selling price for
specialty eggs, which is typically higher and less volatile than
conventional eggs, was down 9.3 percent over the fourth quarter of last
year. For the year, specialty eggs accounted for 43.6 percent of total
shell egg revenues, compared with 29.1 percent last year, and specialty
egg prices were down 12.4 percent compared with fiscal 2016 prices.

"Our specialty egg business has continued to be a primary focus of our
growth strategy. We have made 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. However, with the recent
low prices of conventional eggs and typical seasonal fluctuations,
demand trends for cage-free eggs slowed down in the fourth quarter,
resulting in a higher supply of specialty eggs. We have adjusted our
production levels to meet the demands of our customers who still prefer
cage-free eggs, and we are well positioned to serve our customers as
demand trends change. 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."

Baker continued, "In spite of challenging market conditions, we have
remained focused on managing our operations in an efficient and
responsible manner. We were able to benefit from lower grain costs for
the past year due to favorable harvest results. For the fourth quarter
of fiscal 2017, our feed costs per dozen were down 3.8 percent compared
with a year ago, and our overall farm production costs per dozen were
down 1.0 percent over the fourth quarter of fiscal 2016. For the year,
feed costs per dozen were down 3.6 percent, while overall farm
production costs per dozen were at the same level as the prior year,
even with higher capital expenditures for recent conversion and other
improvement projects. Looking ahead, we expect to have an adequate
supply of our primary feed ingredients in fiscal 2018 while grain prices
remain volatile.

"While we faced extraordinary market conditions in fiscal 2017, we
continued to demonstrate consistent execution of our growth strategy. We
will follow this same direction in the year ahead, and we believe
Cal-Maine Foods is well positioned to benefit from improved market
conditions. As always, our top priority is to meet the demands of our
customers with exceptional service. We will continue to manage our
operations efficiently and provide a favorable product mix, including
cage-free and other specialty eggs, in line with customer demand.
Importantly, our strong balance sheet provides us with the
flexibility to pursue acquisitions and additional growth opportunities
that add value to our operations. Together, we believe these efforts
will reward both our customers and shareholders in fiscal 2018," Baker
concluded.

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 through third quarters of fiscal 2017, and will not pay a dividend
for the fourth quarter of fiscal 2017. At June 3, 2017, cumulative
losses that must be recovered prior to paying a dividend were $74.7
million.

Selected operating statistics for the fourth quarter and fiscal 2017
compared with the prior-year periods are shown below:

   
14 and 13 Weeks Ended   53 and 52 Weeks Ended
June 3, 2017   May 28, 2016   June 3, 2017   May 28, 2016
Dozen Eggs Sold (000) 273,015   253,077 1,031,130   1,053,597
Dozen Eggs Produced (000) 237,006 198,950 870,252 819,307
% Specialty Sales (dozen)* 22.7 % 23.3 % 22.9 % 22.9 %
% Specialty Sales (dollars)* 42.0 % 40.2 % 43.6 % 29.1 %
Net Average Selling Price (dozen) $ 0.973 $ 1.152 $ 1.007 $ 1.735
Net Average Selling Price Specialty Eggs (dozen) $ 1.823 $ 2.011 $ 1.939 $ 2.213
Feed Cost (dozen) $ 0.381 $ 0.396 $ 0.399 $ 0.414
 

*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 SUBSIDIARIES
FINANCIAL HIGHLIGHTS

(Unaudited)

(In thousands, except per share amounts)

SUMMARY STATEMENTS OF OPERATIONS
 
 
14 and 13 Weeks Ended   53 and 52 Weeks Ended
June 3, 2017     May 28, 2016   June 3, 2017     May 28, 2016
Net sales $ 274,584 $ 303,020 $ 1,074,513 $ 1,908,650
Gross profit 12,006 40,680 45,550 648,074
Operating income (loss) (38,291 ) (1,965 ) (132,094 ) 471,877
Other income 5,141 3,034 17,800 15,372
Income (loss) before income taxes and noncontrolling interest (33,151 ) 1,068 (114,294 ) 487,249
Income (loss) before income taxes attributable to Cal-Maine Foods,
Inc.
(33,011 ) 987 (114,145 ) 485,243
 
Net income (loss) $ (24,471 ) $ (376 ) $ (74,278 ) $ 316,041
 
Net income (loss) per share:
Basic $ (0.51 ) $ (0.01 ) $ (1.54 ) $ 6.56
Diluted $ (0.51 ) $ (0.01 ) $ (1.54 ) $ 6.53
Weighted average shares outstanding
Basic 48,329   48,247   48,362   48,195
Diluted 48,329   48,247   48,362   48,365
 
     

SUMMARY BALANCE SHEETS

 
June 3, 2017   May 28, 2016
ASSETS
Cash and short-term investments $ 156,026 $ 389,545
Receivables 64,509 67,448
Income tax receivable 52,691 11,830
Inventories 160,692 154,799
Prepaid expenses and other current assets 2,288   2,661
Current assets 436,206 626,283
 
Property, plant and equipment (net) 458,184 392,274
Other noncurrent assets 138,704   93,208
Total assets $ 1,033,094   $ 1,111,765
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 59,853 $ 67,131
Current maturities of long-term debt 4,826   16,320
Current liabilities 64,679 83,451
 
Long-term debt, less current maturities 6,113 9,250
Deferred income taxes and other liabilities 117,809 101,703
Stockholders' equity 844,493   917,361
Total liabilities and stockholders' equity $ 1,033,094   $ 1,111,765
 

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