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Cal-Maine Foods Reports on Q4 and FY 2022

07/19/2022

In a press release dated July 19th Cal-Maine Foods (CALM) announced results for the 4th Quarter and FY 2022 ending May 28th 2022.

 

Cal-Maine serves as a bellwether for the shell egg sector as the only public-quoted almost pure-play company in the industry. 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)

4th Quarter Ending

May 28th 2022

May 29th 2021

Difference (%)

Sales:

$592,964

$349,798

+69.5

Gross profit:

$195,085

$37,929

>400

Operating income (loss):

$145,699

$(13,026)

>1,000

Pre-tax income (loss)

Net income (loss)

$146,363

$109,986

$(12,173)

$(4,244)

>2,500

>2,500

Diluted earnings (loss) per share:

$2.25

$(0.09)

>2,500

Gross Margin (%)

32.9

10.8

+205

Operating Margin (%)

24.6

(3.7)

+764

Profit (Loss) Margin (%)

18.5

(1.2)

<1,500

Long term debt:

nil

nil

-

12 Months Trailing:

     

Return on Assets (%)

(0.8)

   

Return on Equity (%)

1.8

   

Operating Margin (%)

(1.0)

   

Profit Margin (%)

1.2

   

Total Assets May 28th 2022/May 29th 2021

$1,427,489

$1,229,174

+16.1

Market Capitalization July 19th 2022

$2,600,000

 

Notes: $0.6 million ‘other income’ Q4 2022 and $0.9 million in Q4 FY2021:

$2.3 million gain on disposal of assets Q4 2022 and a $2.5 million loss in Q4 2021.

For FY 2022 CALM earned $132.7 million on revenue of $1,777 million with a diluted EPS of $2.72. Comparable figures for FY 2021 were net earnings of $2.1 million on revenue of $1,349 million with a diluted EPS of $0.04

 

52-Week Range in Share Price: $33.85 to $59.95 50-day Moving average $48.79

Market Close, Tuesday, July 19th pre-release: $52.33.

After hours trading post-release: $52.60 (up 0.5 percent)

 

In reviewing the CALM quarterly report the following calculated values represent key data for the most recent Quarter. (Q4 Fiscal 2021 and percent difference in parentheses):-

  • Shell egg sales attained $563,063 million in Q4 2022 assuming that this category represented 95.0 percent of total revenue. ($337,212 million in Q4 2021, assuming 96.4 percent of sales up in value by 67.0 percent)
  • Dozen shell eggs sold (thousands): 271,968 (255,851; +6.2%)
  • Average selling price of all shell eggs calculated from data released: $2.07 per dozen; ($1.32 per dozen; +56.8%).
  • Average selling price of specialty eggs (excluding co-pack) calculated from data released: $2.01 cents per dozen; ($1.87 per dozen; +7.5%).
  • Average selling price of generic eggs calculated from data released: $2.10 cents per dozen; ($1.11 cents per dozen; +90.0%).
  • Differential between generic and specialty eggs: -$0.08 cents per dozen; ($0.77 per dozen; >1.000%)
  • Specialty eggs as a proportion of volume sold: 34.0%; (27.4%; +24.0%)
  • Specialty eggs as a proportion of sales value: 32.9%; (38.7 %; -15.0%)
  • Proportion of eggs sold that were produced by Cal-Maine flocks: 97.3% (93.6% +4.0%;).
  • Feed cost per dozen at 64.1 cents corresponded to $360 per ton1 (51.7 cents corresponding to $290 per ton; +24.0%)
  1. Using 80% average flock production and 0.23 lb. per hen consumption per day

 

The following observations relate to the comparison of Q4 2022 with the corresponding quarter in 2021:-

  • Cal-Maine Foods was unaffected by the 2022 avian influenza epornitic.
  • Q4 of FY 2022 represented a more favorable marketing comparison to Q4 2021 based on higher prices for shell eggs, as influenced by depopulation of 28.2 million hens during Q4. Institutional and consumer demand was largely restored with evident recovery from COVID restrictions.
  • Gross profit was impacted positively by higher unit revenue for generic eggs but offset by significantly higher feed cost and obviously inflation in labor, fuel and packaging.
  • In a market characterized by high unit prices the relative contribution of specialty eggs is less important to net earnings in contrast to a down market as in Q2 of the recently completed FY 2022.
  • Responding to the shortage of available eggs and their cost in Q4 2022 Cal-Maine purchases of eggs for packing and sale fell to 2.7 percent of volume compared to 6.4 percent during the corresponding quarter in FY 2021.
  • Apart from the Family-trust shareholding of 14.7 percent, institutions hold 92.1 percent of equity. Shares short on June 30th attained 14.5 percent of float.
  • Cal-Maine Foods generated adequate net earnings to offset accumulated losses and declared a dividend of $0.75 per share.

 

In commenting on Q4 results Dolph Baker, Chairman and CEO of Cal-Maine Foods, commented, “Our fourth quarter marked a strong finish to fiscal 2022 for Cal-Maine Foods. Record quarterly revenue performance was driven by significantly higher average selling prices and record quarterly specialty shell egg sales, supported by solid demand compared with the prior-year quarter.

 

He added “We continue to perform at the top of our industry as an efficient operator, despite inflationary market conditions in North America and economic uncertainties globally. We have built an exceptional management team that drives our commitment to be the most reliable producer and distributor of fresh shell eggs and egg products in the United States. Our operating model is proven and offers a favorable product mix that meets the needs of our valued customers. Notably, we have maintained a strong financial position to support our continued growth, and we will look for additional opportunities to extend our market reach in fiscal 2023,” concluded Baker.

 

The report included information on future conversion to cage-free production: “Cal-Maine Foods continues to offer a differentiated product mix to meet the needs of our customers. The Company maintains its specialty egg business focus as a key driver of growth. In line with expanding consumer demand and state requirements for cage-free eggs, the Company has continued to make significant investments in production capacity to position Cal-Maine Foods as an industry leader to supply the growing demand for specialty egg offerings, including cage-free eggs. Cage-free egg sales comprised 20.3% of total net shell egg sales in fourth quarter 2022 and represented 22.1% of total net shell egg sales in fiscal 2022”.

 

The report added “Subsequent to the end of fourth quarter 2022, the Company’s Board of Directors approved a capital project to expand the Company’s cage-free production capabilities. The proposed project at Chase, Kansas, will convert existing conventional layer capacity to cage-free capacity for approximately 1.5 million cage-free hens and include remodels of all remaining pullet facilities. Work is expected to commence immediately with project completion expected by year-end 2025. The Company plans to fund the proposed project for an estimated $55.3 million through a combination of available cash on hand as well as operating cash flow. The investment will augment the Company’s strategy to expand cage-free capabilities to better serve the growing demand for this specialty product. Including this project, since 2008, Cal-Maine Foods has allocated approximately $681.1 million for facilities, equipment and related operations to expand cage-free production and distribution capabilities. This includes approximately $165.1 million allocated to projects scheduled for completion through fiscal 2025”.