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Cal-Maine Foods Reports on Q2 of FY 2019

01/04/2019

In a press release dated January 4th Cal-Maine Foods (CALM) announced results for the 2nd Quarter of Fiscal 2019 ending December 1st 2018.

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)

 

 

 

2nd Quarter Ending.

December 1st 2018

December 2nd 2018

Difference (%)

Sales:

$356,040

$361,172

-1.4

Gross profit:

$70,353

$82,396

-14.6

Operating income:

$25,334

$(40,464)

+162.6

Net Income

$21,807

$(26,136)

+183.4

Diluted earnings per share:1

$0.45

$(0.54)

+183.4

Gross Margin (%)

19.8

22.8

-13.2

Operating Margin (%)

7.1

(11.2)

+163.4

Profit Margin (%)

6.1

(7.2)

+184.7

Long-term Debt:

$713,000

$2,254,000

-72.0

12 Months Trailing:

     

Return on Assets (%)

12.8

   

Return on Equity (%)

17.3

   

Operating Margin (%)

14.0

   

Profit Margin (%)

9.8

   

Total Assets

$1,163,227

$1,150,447

+1.1

Market Capitalization

$2,050,000

   

Norte 1. Q2 FY 2018 included a class action legal settlement of $81 million.

52-Week Range in Share Price: $ 39.5 to $52.3

Market Close Jan. 3rd $42.10 Jan. 4th post-release at 10H00 $41.77 Down 0.9 percent)

CALM missed consensus expectations on sales but exceeded on net profit. CALM declined 4.8 percent during the past quarter compared with 16 percent lower on the S&P.

Forward P/E: 23.0 Beta -0.2

For the first half of FY 2019 CALM posted a net profit of $34.2 million ($(42.1) during FH FY 2018) on sales of $696.6 million ($624.0 million). EPS attained $0.71 compared with a negative $0.87 for FH FY 2018.

In reviewing the CALM quarterly report the following calculated values 1 represent key data for the most recent Quarter. (Q2 Fiscal 2018 in parentheses):-

  • Dozen shell eggs sold: 262,263,000: (263,086,000: -0.3%)?

  • Average selling price of all shell eggs2: $1.33 per dozen; ($1.35 per dozen: -1.5%).?

  • Average selling price of specialty eggs calculated from data released: $1.98 cents per dozen: ($1.92 per dozen; +3.1%).?

  • Average selling price of generic eggs calculated from data released: $1.13 cents per dozen; ($1.18 cents per dozen; -4.2%).?

  • Differential between generic and specialty eggs: $0.85 cents per dozen; ($0.74 per dozen; +14.9%)?

  • Specialty eggs as a proportion of volume sold: 23.5%; (22.6%; +3.9%)?

  • Specialty eggs as a proportion of sales value: 35.0%; (32.3%; +8.3%)?

  • Proportion of eggs sold actually produced by Cal-Maine flocks: 85.0%; (84.7%; +0.4%).?

  • Feed cost: 41.5 cents per dozen (38.8 cents per dozen; +7.0%)?

    NOTES 1. Assumes that 98 percent of sales value was derived from shell eggs.

    2. Based on stated proportions of volumes and revenue for specialty and generic eggs.

In commenting on results, Dolph Baker, Chairman and chief executive officer of Cal-Maine Foods, Inc., stated, "Cal-Maine Foods had solid financial and operating performance for the second quarter of fiscal 2019 amidst less favorable market conditions than the same time last year. Our sales for the second quarter were down 1.4 percent, reflecting a modest decline in volumes and lower average customer selling prices for conventional eggs compared with a year ago.

"While we experienced volatility in market prices during the quarter, our overall average customer selling price for shell eggs was down only 0.8 percent, compared with the second quarter of fiscal 2018. Per capita egg consumption is up near historical levels, but supply concerns appear to be affecting market prices. According to the USDA, the hatch is up 10 percent year to date, but the actual hen inventory is up only 2.8 percent. Hen numbers are forecasted to continue trending upwards for the next several months, which may continue to affect market prices into 2019.

Baker continued "we are pleased with the trends in our specialty egg business, as total dozens sold of specialty eggs during the quarter, excluding co-pack sales, were up 3.7 percent over the same period last year. Specialty eggs continue to be popular with consumers who are willing to pay higher prices compared with conventional eggs. Specialty egg prices were up 2.9 percent in the second quarter of fiscal 2019, compared with the same period a year ago. Specialty egg revenue was 35.0 percent of our total shell egg revenue, compared with 32.3 percent for the second quarter of fiscal 2018. As demand trends change, we will continue to provide our customers with a favorable product mix of healthy and affordable options including conventional, cage-free, nutritionally enhanced and organic eggs.

"We continue to invest in our operations to improve overall efficiency and to prepare for the expected continued increase in demand for specialty eggs, especially cage-free eggs. We are near completion of several major capital projects at Cal-Maine Foods' facilities and will continue to strategically expand our production capacity.

"We are closely monitoring industry developments surrounding the recent passing of Proposition 12 in California, which mandates that all eggs or egg products sold in California must be cage-free by 2022. While this referendum will clearly affect sourcing and production of eggs in California, we also expect it to affect future supply and pricing in other areas of the country. With our strong balance sheet and proven management systems, Cal-Maine Foods is well positioned to capitalize on this opportunity to expand our operations or consider potential acquisitions.