Contact: | Dolph Baker, Chairman, President and CEO |
| Timothy A. Dawson, Vice President and CFO |
| (601) 948-6813 |
CAL-MAINE FOODS REPORTS THIRD QUARTER FISCAL 2016 RESULTS
JACKSON, Miss. (March 28, 2016) 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.
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“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
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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.
