Market Overview

Cal-Maine Foods Reports Fourth Quarter and Fiscal 2018 Results

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Cal-Maine Foods, Inc. (NASDAQ:CALM) today reported results for the
fourth quarter and fifty-two weeks ended June 2, 2018.

Net sales for the fourth quarter of fiscal 2018 were $443.1 million, a
61.4 percent increase, compared with $274.6 million for the fourth
quarter of fiscal 2017. The Company reported net income of $71.8
million, or $1.48 per basic and diluted share, for the fourth quarter of
fiscal 2018, compared with a net loss of $24.5 million, or $0.51 per
basic and diluted share, for the fourth quarter of fiscal 2017. The
fourth quarter of fiscal 2018 was a 13-week period compared with 14
weeks for the same period in fiscal 2017.

For the fiscal year ended June 2, 2018, net sales were $1,502.9 million
compared with $1,074.5 million for the prior-year period. The Company
reported net income of $125.9 million, or $2.60 per basic and diluted
share, for fiscal 2018, compared with net loss of $74.3 million, or
$1.54 per basic and diluted share, for the year-earlier period. Fiscal
2018 included 52 weeks compared with 53 weeks for fiscal 2017. Results
for fiscal 2018 were favorably affected by a $43.0 million, or $0.89 per
basic and diluted share, tax benefit related to the Tax Cuts and Jobs
Act (TCJA) tax reform legislation and the subsequent revaluation of the
Company's deferred tax liabilities at the new, lower corporate tax rate.
The Company recorded provisional adjustments related to the TCJA in the
third quarter and recorded adjustments related to the completed analysis
in the Company's fourth quarter. These results also include an after-tax
charge of $54.8 million, or $1.13 per basic and diluted share, recorded
in the second quarter of fiscal 2018, related to the settlement of
certain previously disclosed antitrust litigation.

Dolph Baker, chairman, president and chief executive officer of
Cal-Maine Foods, Inc., stated, "We are pleased with our financial and
operating performance for the fourth quarter, marking a strong finish to
fiscal 2018. Notably, these results represent the best fourth quarter
performance in the Company's history. The impressive sales gains reflect
strong consumer demand and significantly higher average selling prices
compared with the same period a year ago. The Easter holiday and retail
grocery promotions featuring shell eggs were key drivers of sales for
the fourth quarter along with good foodservice demand. These favorable
market conditions supported our business with a significant improvement
in profitability compared with a year ago. Importantly, our financial
performance allows us to resume our quarterly cash dividend payment to
our shareholders.

"Market prices were exceptionally strong during the first part of the
quarter, but fell significantly following the Easter holiday. Overall,
average customer selling prices were up 74.1 percent compared with the
fourth quarter last year. According to reports from IRI, a consumer
market research firm, retail demand has been favorable throughout this
period, especially around the Easter holiday season. Export demand
remained at near historical levels during the fourth quarter. Together,
these demand trends have supported market prices at recent production
levels. However, according to recent USDA reports, the chick hatch rate
has been up for the last eight months, and has increased by
approximately 10 percent since the beginning of calendar 2018. Given
these trends, the projected increase in the U.S. laying hen flock and
potential excess shell egg supply could create additional pricing
pressure."

Baker continued, "Specialty eggs, excluding co-pack sales, accounted for
25.5 percent of our sales volumes for the fourth quarter, compared with
22.7 percent a year ago. Specialty egg revenue was 29.0 percent of total
shell egg revenue, compared with 42.0 percent for the fourth quarter of
fiscal 2017, reflecting significantly higher market prices for
non-specialty eggs in the current period. Specialty eggs remain a
primary focus of our growth strategy, and we strive to offer a favorable
product mix that reflects consumer demand trends. As the egg industry
moves forward in anticipation of the expected increase in demand for
cage-free eggs, we are working closely with our customers to ensure
their needs are met through this transition. As such, we intend to make
the required investments in our operations and adjust our cage-free
production capacity in line with expected demand.

"We are also closely monitoring industry developments surrounding a
proposed referendum that will be on the ballot for voters in California
later this calendar year. This referendum mandates, over a period of
time, that all egg production in California must be cage-free with
specific space requirements for laying hens. In addition, if passed, the
referendum will require that all eggs and egg products sold in the state
of California must be cage-free by a certain future date. This
referendum, if adopted, could affect sourcing and production of eggs in
California, which would create uncertainty surrounding supply and
pricing in other areas of the country.

"Our operations have performed well throughout fiscal 2018, as our
managers across all Cal-Maine Foods locations have maintained a
consistent focus on efficient and responsible management. For the fourth
quarter, operating income was $91.3 million compared with an operating
loss of $38.3 million a year ago. Our feed costs for the fourth quarter
were up 9.2 percent over last year, due to the higher cost of feed
ingredients, primarily soybean meal, and a slightly lower feed
conversion rate. Our overall farm production costs per dozen for the
fourth quarter were also slightly higher than a year ago. Feed costs
have been volatile since the end of our fiscal year, but have come down
recently. Looking ahead, the current corn and soybean crops are ahead of
schedule, and favorable growing conditions should support lower prices
for feed ingredients. However, the current geopolitical risks associated
with the recently imposed and additional proposed tariffs are creating
more price volatility and uncertainty.

"We are proud of our accomplishments for fiscal 2018, as we continued to
execute our growth strategy with favorable results. Looking ahead, we
will remain focused on this same strategy: manage our operations
efficiently and responsibly, provide a favorable product mix, including
cage-free and other specialty eggs, and look for acquisition or other
growth opportunities that enhance our operations. Above all, we are
focused on meeting the needs of our customers and providing excellent
service. We have a strong balance sheet, including a new five-year, $100
million revolving credit facility, that provides additional financial
flexibility to support our growth strategy, and we look forward to the
opportunities ahead for Cal-Maine Foods in fiscal 2019," said Baker.

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. At the end of the Company's third
quarter of fiscal 2018, cumulative losses to be recovered prior to
paying a dividend were $20.5 million. The Company's net income for the
fourth quarter of 2018 was $71.8 million. Therefore, for the fourth
quarter of fiscal 2018, the Company will pay a dividend of $17.1
million, or $0.351 per share, to holders of its common and Class A
common stock. The dividend is payable on August 21, 2018 to holders of
record on August 6, 2018.

Selected operating statistics for the fourth quarter and fiscal 2018
compared with the prior-year periods are shown below:

          13 Weeks Ended     14 Weeks Ended     52 Weeks Ended     53 Weeks Ended
June 2, 2018     June 3, 2017     June 2, 2018     June 3, 2017
Dozen Eggs Sold (000) 251,955     273,015     1,037,713     1,031,130
Dozen Eggs Produced (000) 215,729 237,006 873,307 870,252
% Specialty Sales (dozen)* 25.5 % 22.7 % 23.5 % 22.9 %
% Specialty Sales (dollars)* 29.0 % 42.0 % 32.0 % 43.6 %
Net Average Selling Price (dozen) $ 1.694 $ 0.973 $ 1.397 $ 1.007
Net Average Selling Price Specialty Eggs (dozen) $ 1.941 $ 1.823 $ 1.916 $ 1.939
Feed Cost (dozen) $ 0.416 $ 0.381 $ 0.394 $ 0.399

*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
 
         

13 Weeks

Ended

   

14 Weeks

Ended

   

52 Weeks

Ended

   

53 Weeks

Ended

June 2,

2018

June 3,

2017

June 2,

2018

June 3,

2017

Net sales $ 443,095 $ 274,584 $ 1,502,932 $ 1,074,513
Gross profit 141,216 12,006 361,046 45,550
Operating income (loss) 91,315 (38,291 ) 102,675 (132,094 )
Other income 2,575 5,141 14,662 17,800
Income (loss) before income taxes and noncontrolling interest 93,890 (33,151 ) 117,337 (114,294 )
Income (loss) before income taxes attributable to Cal-Maine Foods,
Inc.
93,561 (33,011 ) 117,073 (114,145 )
 
Net income (loss) $ 71,767 $ (24,471 ) $ 125,932 $ (74,278 )
 
Net income (loss) per share:
Basic $ 1.48 $ (0.51 ) $ 2.60 $ (1.54 )
Diluted $ 1.48 $ (0.51 ) $ 2.60 $ (1.54 )
Weighted average shares outstanding
Basic 48,289 48,329   48,353 48,362  
Diluted 48,495 48,329   48,468 48,362  
 
 
 
 
 
 

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
FINANCIAL
HIGHLIGHTS

(Unaudited)
(In thousands)

 
SUMMARY BALANCE SHEETS
 
          June 2, 2018     June 3, 2017
ASSETS
Cash and short-term investments $ 331,017 $ 156,026
Receivables 85,839 64,509
Income tax receivable 52,691
Inventories 168,644 160,692
Prepaid expenses and other current assets 2,020   2,288  
Current assets 587,520 436,206
 
Property, plant and equipment (net) 425,384 458,184
Other noncurrent assets 137,543   138,704  
Total assets $ 1,150,447   $ 1,033,094  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 86,856 $ 59,853
Income taxes payable 17,446
Current maturities of long-term debt 3,536   4,826  
Current liabilities 107,838 64,679
 
Long-term debt, less current maturities 2,554 6,113
Deferred income taxes and other liabilities 84,373 117,809
Stockholders' equity 955,682   844,493  
Total liabilities and stockholders' equity $ 1,150,447   $ 1,033,094  
 
 
 
 

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