In a press release dated July 19th Cal-Maine Foods (CALM) announced results for the 4th Quarter and FY 2021 ending 2021.   

Cal-Maine serves as a bellwether for the shell egg sector as the only public-quoted 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)

Note  1. Tax Benefit $1.7 million

          2. Tax Expenditure 4.3 million

52-Week Range in Share Price:  $34.42 to $46.66      50-day Moving average  $36.62

Market Close Friday July 16th pre-release $36.21.

Monday July 19th post-release open  $35.00

Trailing P/E  26.2                  Beta 0.2

Shares short of float June 30th 18.6 percent.

For FY 2021 CALM earned $2.06 million on revenue of $1,349 million with an EPS of $0.04. Comparable values for FY 2020 were $18.4 million on revenue of $1,352 million with an EPS of $0.38.

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):-

• Dozen shell eggs sold (million): 255,851 (282,422; -9.4%)
• Average selling price of all shell eggs: $1.34 per dozen; ($1.58 per dozen; -15.2%).
• Average selling price of specialty eggs (excluding co-pack) calculated from data released: $1.89 cents per dozen; ($1.97 per dozen;  -4.1%).
• Average selling price of generic eggs calculated from data released: $1.13 cents per dozen; ($1.47 cents per dozen; -23.1%).
• Differential between generic and specialty eggs: $0.76 cents per dozen; ($0.50 per dozen; +52.0%)
• Specialty eggs as a proportion of volume sold: 27.4%; (24.4%; +12.3%)
• Specialty eggs as a proportion of sales value: 38.7%; (29.9 %; +29.4%)
• Proportion of eggs sold actually produced by Cal-Maine flocks: 93.7%  (86.0% +0.0%;).
• Feed cost per dozen 51.7 cents (40.5 cents +27.7%)

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

The following observations relate to the comparison of Q4 2021 with the corresponding quarter in 2020:-

• Q4 of FY 2021 was a difficult comparison to Q4 2020 based on higher prevailing prices for shell eggs during the corresponding quarter, influenced by COVID-related demand
• Gross profit was impacted adversely by lower unit revenue and higher costs with feed up by a significant amount
• Profit was supported by the relatively high proportion of specialty eggs sold that generate a higher margin compared to generics.
• In a down market the relative contribution of specialty eggs is amplified and Cal Maine achieved an increase in sales in this category
• Responding to the down market in Q4 in FY 2021 Cal Maine reduced purchase of eggs
• Apart from family-trust shareholding the major investors are Black Rock (12.7%); Nuance, (12.3%); Vanguard, (9.2%); Diamond, (6.5%) and 5 other funds combined (19.6%)

Dolph Baker, Chairman and CEO of Cal-Maine Foods, Inc. noted, “while retail demand has been strong for most of this fiscal year, that trend began to change in the fourth quarter as consumers started dining out again and preparing fewer meals at home. As a result, food service demand has improved as retail demand has slowed down, with overall demand for shell eggs approaching a more normalized balance that is closer to pre-pandemic levels”

In regard to production Baker stated “hen numbers reported by the USDA as of June 1, 2021, were 315.7 million, which represents 5.3 million fewer hens than the adjusted number a year ago. The egg industry has experienced several years of unfavorable finances, resulting in the lowest national supply of laying hens since October 2016. The USDA also reported that the hatch from January 2021 through May 2021increased 4.4 percent as compared to the prior-year period, and as of June 1, 2021, eggs in incubators were up 2.5 percent over the same period last year.

 Baker confirmed the purchase of the remaining 50 percent membership interest in Red River Valley Egg Farm, LLC., commenting, “with approximately 1.7 million cage-free laying hens and cage-free pullet capacity, Red River Valley Egg Farm offers us additional opportunities to expand our cage-free production capacity and further enhance our ability to provide exceptional service and distribution capabilities to our customers. Including this purchase, we have invested over $476 million in facilities, equipment, and related operations to expand our cage-free production since 2008.”

 Baker concluded, “looking ahead, we will continue to execute our growth strategy in fiscal 2022 and focus on managing the aspects of our operations under our control, regardless of market conditions. We believe retail consumer demand for eggs will be more consistent with typical seasonal trends, and we are optimistic that more restaurants and food service operators are getting back to pre-pandemic business schedules. Our specialty egg business is a key driver of our growth, and we will continue to make the strategic investments to expand our capacity, especially for cage-free egg production”.