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Cal-Maine Foods Reports on Q4 and FY 2020

07/19/2020

Cal-Maine Foods Reports on Q4 and FY 2020

In a press release dated July 20th Cal-Maine Foods (CALM) announced results for the 4th quarter and Fiscal 2020 ending May 30th 2020.

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 US$ x 1,000 except EPS)

 

4th Quarter Ending

May 30th 2020

June 1st 2019

Difference (%)

Sales:

$453,333

$280,573

+61.6

Gross profit:

$121,501

$12,755

+852.6

Operating income:

$76,092

$(30,420)

+350.1

Pre-tax Income

Net Income

$77,551

$60,4631

$(27,943)

$(19,522)2

+377.5

+409.7

Diluted earnings per share:

$1.24

$(0.41)

+402.4

Gross Margin (%)

26.8

4.6

+482.6

Operating Margin (%)

16.8

(10.8)

+255.6

Profit Margin (%)

13.3

(7.0)

+290.0

Long-term Debt:

$2,387

$858

+178.2

12 Months Trailing:

Return on Assets (%)

-5.3

Return on Equity (%)

-6.3

Operating Margin (%)

-8.3

Profit Margin (%)

-5.2

Total Assets

$1,206,694

$1,156,278

178.2

Market Capitalization

$2,164,000

Note 1. C-M received $2.4 million in CARES funding.

 

Note 2. C-M received a tax benefit of $8.4 million.

For FY 2020 CALM earned $18.4 million on sales of $1,352 million with an EPS of $0.38. For comparison in FY 2019 Net earnings attained $54.2 million on sales of $1,361million with and EPS of $1.12.

52-Week Range in Share Price: $30.74 to $46.65 50-day Moving average $43.67

 

Market Close Friday July17th $44.18. Open Monday July 20th post-release $44.93

Beta 0.2

In reviewing the CALM quarterly report the following calculated values* represent key data for the 4th Quarter. (Q4 Fiscal 2019 and difference in parentheses):-


Dolph Baker, Chairman and CEO

  • Dozen shell eggs sold: 282,422,000 (254,722,000; +10.8%)
  • Average selling price of all shell eggs: $1.57 per dozen; ($1.08 per dozen; +45.3%).
  • Average selling price of specialty eggs calculated from data released: $1.93 cents per dozen; ($1.80 per dozen; +7.2%).
  • Average selling price of generic eggs calculated from data released: $1.46 cents per dozen; ($0.80 cents per dozen; +82.5%).
  • Differential between generic and specialty eggs: $0.47 cents per dozen; ($1.00 per dozen; -53%)
  • Specialty eggs as a proportion of volume sold: 24.4%; (24.5%; +0.4%)
  • Specialty eggs as a proportion of sales value: 9%; (44.1%; -32.2%)
  • Proportion of eggs sold actually produced by Cal-Maine flocks: 86.0%; (87.6%; -1.8%).
  • Feed cost per dozen 40.5 cents (41.1 cents; -1.5%)

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


In commenting on results for the quarter and year Dolph Baker, Chairman and CEO of Cal-Maine Foods, Inc., stated, “Fiscal 2020 demonstrated Cal-Maine Foods’ resiliency in the face of challenging business conditions and volatile egg prices. After three fiscal quarters characterized by an oversupply of eggs and depressed market prices, demand for eggs increased and market prices rose 62.4 percent during our fourth fiscal quarter over the average price for the first three quarters, as consumers purchased more eggs for preparing meals at home in response to the COVID-19 pandemic. This demand trend also coincided with higher seasonal demand during the peak Easter season. As a result, our sales volumes were up 10.9 percent compared with the fourth quarter of fiscal 2019.

The Southeast large market average price for conventional eggs for the fourth quarter of fiscal 2020 increased to $1.71 compared to $0.86 for the fourth quarter of fiscal 2019, with a high of $3.18 and a low of $1.02. For fiscal 2020 the Southeast large market average price for conventional eggs was $1.22 compared to $1.23 for fiscal 2019, with a high of $3.18 and a low of $0.62.

"Specialty eggs are an important part of our growth strategy, and we strive to provide a favorable product mix in line with consumer demand. We have continued to position Cal-Maine Foods to meet the expected additional demand for cage-free eggs. California, Colorado, Washington, Oregon, Massachusetts, Rhode Island and Michigan have all passed minimum space and/or cage-free requirements, mandating sale of only cage-free eggs with implementation of these laws ranging from January 2022 to January 2026. These states represent approximately 22.9 percent of the U.S. total population according to the U.S. Census Bureau. Legislation is also pending in Arizona and Hawaii for cage-free requirements. We have invested over $371.7 million in facilities, equipment and related operations to expand our cage-free production starting with our first facility in 2008. Throughout the next two years, additional cage-free capacity will come online in Florida, Texas and Utah, which will provide significant additional processing, pullet and production capacity in time to meet expected customers’ needs.

Operating income was $76.1 million in the fourth quarter compared to an operating loss of $30.4 million in the prior-year fourth quarter. We also benefitted from a more favorable effective tax rate in fiscal 2020 and in the fourth quarter, as we recorded a tax benefit of $2.4 million related to the carryback provisions of the Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES Act). Overall, our farm production costs per dozen were down 0.8 percent over the fourth quarter of fiscal 2019, reflecting a 1.5 percent drop in feed costs. We believe we will continue to have an adequate supply of ingredients in fiscal 2021. However, current ongoing uncertainties and supply chain disruptions related to the COVID-19 outbreak, weather fluctuations and geopolitical issues surrounding trade agreements and international tariffs may lead to further price volatility.

 As the coronavirus continues to spread and reach more rural communities where we operate, it is critical that we provide a safe working environment, and we continue to implement appropriate protections taking into account protocols recommended by the Centers for Disease Control (CDC) and other government health agencies. For fiscal 2020, we incurred expenses of approximately $2.8 million related primarily related to supplemental pay. We are committed to making the necessary investments to support and protect all Cal-Maine Foods employees.

Baker concluded “while we are facing an uncertain environment, we will continue to execute our growth strategy in fiscal 2021 - provide a favorable product mix, including cage-free and other specialty eggs, invest in our operations, identify acquisition or other growth opportunities that enhance our production, and manage our operations in a responsible and sustainable manner.