In a press release dated March 29th Cal-Maine Foods (CALM) announced results for the 3rd Quarter of FY 2022 ending February 26th 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. $1.72 million tax benefit FY 2021and $13.5 million additional income in Q3 FY 2022 compared to $12.3 million in Q3 FY 2021

52-Week Range in Share Price: $33.85 to $52.80 50-day Moving average $43.76

Market Close, Tuesday, March. 29th pre-release: $51.96.

After hours trading Feb. 29th post-release: $51.00 (down 1.9 percent)

In reviewing the CALM quarterly report the following calculated values represent key data for the most recent Quarter. (Q3 Fiscal 2021 and percent difference in parentheses):-

• Shell egg sales attained $463.16 million in Q3 2022 assuming that this category represented 97 percent of total revenue. ($348.31 million in Q3 2021, up in value by 33.0 percent)
• Thousand dozen shell eggs sold : 287,651 (279,716; +2.8%)
• Average selling price of all shell eggs: $1.61 per dozen; ($1.25 per dozen; +28.8%).
• Average selling price of specialty eggs (excluding co-pack) calculated from data released: $1.92 per dozen; ($1.89 per dozen; +1.6%).
• Average selling price of generic eggs calculated from data released: $1.46 per dozen; ($1.00 per dozen; +46.0%).
• Differential between generic and specialty eggs: $0.46 per dozen; ($0.89 per dozen; -48.3%)
• Specialty eggs as a proportion of volume sold: 33.1%; (27.4%; +20.8%)
• Specialty eggs as a proportion of sales value: 39.4%; (41.5 %; -5.1%)
• Proportion of eggs sold actually produced by Cal-Maine flocks: 91.9% (88.7% +3.6%;).
• Feed cost per dozen 56.2 cents (46.7 cents +20.3%)

The following observations relate to the comparison of Q3 2022 with the corresponding quarter in 2021:-

• Q3 of FY 2022 represented a more favorable marketing comparison to Q3 2021 based on higher prices for shell eggs during the most recent quarter, as influenced by partial restoration of institutional and consumer demand 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 expenditure on labor, fuel and packaging.
• Gross margin and hence net income were enhanced by the relatively high proportion of specialty eggs sold that generated a higher margin compared to generics.
• In an up-market for generics the relative contribution of specialty eggs is less pronounced compared to a down-market.
• Responding to the market in Q3 2022 Cal-Maine purchases of eggs was higher than in the corresponding quarter of FY 2021 to meet demand.
• Apart from family-trust shareholding of 14.7 percent, institutions hold 92.1 percent of equity. Shares short of float December 15th attained 21.5 percent. CALM generated adequate net income to offset accumulated quarterly losses and declared a dividend of $0.125 per share.

In commenting on results Dolph Baker, chairman and CEO of Cal-Maine Foods, Inc., stated, “We are pleased to report strong performance for the third quarter of fiscal 2022. Net sales of $477.5 million represented a third-quarter revenue record, driven by improved shell egg pricing. Our fiscal third quarter gross margin of 19.2 percent improved approximately 600 basis points compared to the prior-year quarter. This increase reflects overall improved market conditions, strong growth in our specialty egg sales, our continued focus on expense management and our ability to leverage our owned production capabilities.

Baker continued “In the third quarter, industry retail demand for shell eggs decreased slightly as compared to the strong demand of the “stay-at-home” COVID-19 period. However, with improving demand for food service breaking stock, overall demand is returning to a more consistent, historical pattern. We attribute our ability to support our sales volumes, in part, to continued investment in our specialty egg business, including cage-free capabilities, and strategic expansion of our distribution network through our recent additional investment in Southwest Specialty Eggs in the southern California, Arizona and Nevada markets”.

In considering future events Baker stated, “We continue to focus on offering a favorable product mix that meets the needs of our customers, including conventional, cage-free, organic and other specialty eggs and egg products” In relation to the extreme risk of disease he added, “We are closely monitoring the recently reported outbreaks of highly pathogenic avian influenza (“HPAI”). We are also working closely with egg industry associations and government officials to mitigate the risk of future outbreaks and effectively manage our response, if needed.

He concluded, “Going forward market indications point to corn and soybean pricing pressures and higher volatility tied to the Russia-Ukraine war and export demand, which will result in continued pressure on the stock-to-use ratio for corn. Despite input cost pressures and other market uncertainties, we remain focused on managing our operations as efficiently and safely as possible. Importantly, we have the financial strength to support our organic growth and expansion opportunities and consider potential acquisitions that are accretive to our business.”

Since 2008, Cal-Maine Foods has invested more than $480 million in facilities, equipment, and related operations to expand cage-free production and distribution capability.