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Cal-Maine Foods Reports on Q1 2020

10/02/2019

In a press release dated September 30th Cal-Maine Foods (CALM) announced results for the 1st Quarter of Fiscal 2020 ending August 31st 2019

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

 

 

 

 

1st Quarter Ending

August 31st 2019

Sept. 1st 2018

Difference (%)

Sales:

$241,166

$340,583

-29.2

Gross profit:

$(21,125)

$57,128

-136.9

Operating income:

$(63,470)

$12,677

-600.7

Pre-tax Income

Net Income*

$(60,492)

$(45,760)

$16,493

$12,405

-810.8

-627.8

Diluted earnings per share:

$(0.94)

$0.26

-460.5

Gross Margin (%)

(8.8)

16.8

-152.4

Operating Margin (%)

(26.3)

3.7

-810.8

Profit Margin (%)

(19.0)

3.6

-627.8

Long-term Debt:

$2,227

$858

+159.6

12 Months Trailing:

     

Return on Assets (%)

-1.6

   

Return on Equity (%)

-0.4

   

Operating Margin (%)

-2.2

   

Profit Margin (%)

-0.3

   

Total Assets

$1,096,872

$1,156,278

-5.1

Market Capitalization

$1,830,000

   

* Q1 2020 included $14.7 million tax benefit and $3.0 million in "other income" ($3.8million Q1 2019)

52-Week Range in Share Price: $36.65 to $50.69

Market Close Friday Sept 27th pre-release $45.56.

Close Monday September 30th post-release $40.43 (down 11.3 percent)

Forward P/E 25.4 Beta 0.6

In reviewing the CALM quarterly report the following calculated values* represent key data for the most recent Quarter. (Q1 Fiscal 2018 and difference in parentheses):-

  • Dozen shell eggs sold: 254,424,000 (250,059,000 +1.8)
  • Average selling price of all shell eggs: $0.93 per dozen; ($1.33 per dozen; -30.1%).
  • Average selling price of specialty eggs (excluding co-pack) calculated from data released: $1.88 cents per dozen; ($1.92 per dozen; -2.1%).
  • Average selling price of generic eggs calculated from data released: $0.66 cents per dozen; ($1.15 cents per dozen; -42.6%).
  • Differential between generic and specialty eggs: $1.22 cents per dozen; ($0.77 per dozen; +58.4%)
  • Specialty eggs as a proportion of volume sold: 22.2%; (23.8%; -6.7%)
  • Specialty eggs as a proportion of sales value: 44.9%; (34.2%; -31.3%)
  • Proportion of eggs sold actually produced by Cal-Maine flocks: 84.2%; (83.7%; -+0.6%).
  • Feed cost per dozen 41.1cents (41.3 cents -0.5%)

*Assumes that 98 percent of sales value derived from shell eggs.


In reviewing Q1 results Dolph Baker, Chairman and CEO of Cal-Maine Foods, Inc., stated, "Our financial and operating results for the first quarter reflect the very challenging market conditions that prevailed throughout the summer. While our sales volumes were up 1.7 percent over the first quarter last year, the extreme drop in market prices adversely affected our results. The Southeast large market average price for conventional eggs dropped 40.7 percent for the first quarter of fiscal 2020 compared to the first quarter of fiscal 2019. At the same time, our average sales price was down 30.0 percent for the first quarter compared to the same period last year. The significant drop in market prices reflects the oversupply of eggs that began to affect the market starting in early calendar 2018. This trend has continued as the most recent USDA Chickens and Eggs Report showed 331.4 million laying hens as of September 1, 2019, which was approximately 800,000 more hens than a year ago.

Consistent with the data tabulated above Baker noted "our specialty egg business will continue to be a primary focus of our growth strategy in fiscal 2020".

Baker continued, "In spite of challenging conditions, we have remained focused on efficient and responsible management across our operations. For the first quarter, our farm production costs per dozen were up 2.3 percent over the first quarter last year. A majority of the increase was due to flock rotation adjustments, as we sold flocks early in response to market conditions, and higher labor costs. Our feed costs per dozen have remained relatively flat since the first quarter of fiscal 2019. Based on the USDA's current yield and harvest estimates for the calendar 2019 corn and soybean crops, we expect to have an adequate supply of both grains in fiscal 2020. However, ongoing uncertainties and geopolitical issues surrounding trade agreements and international tariffs could create more price volatility in the coming year.

Baker concluded "we remain committed to offering a favorable product mix that meets the changing demands of our customers. As a result of California Proposition #12 and other industry changes, we are preparing for the expected higher demand for cage-free eggs. Throughout the first quarter, we have made considerable progress with our expansion plans designed to increase our cage-free capacity. As previously announced, we have capital projects underway in Florida, Texas and Utah, which on completion, will provide significant additional processing, pullet and cage-free capacity."