JACKSON — Cal-Maine Foods Inc. (NASDAQ: CALM) has released its results for the third quarter and nine months ended March 1, 2014.
Net sales for the third quarter of fiscal 2014 were $395.5 million, compared with net sales of $360.4 million for the third quarter of fiscal 2013. The company reported net income of $42.9 million, or $1.78 per basic share and $1.77 per diluted share, compared with $30.6 million, or $1.27 per basic and diluted share, for the third quarter of fiscal 2013.
For the first nine months of fiscal 2014, net sales were $1,069.3 million, compared with net sales of $962.2 million for the prior-year period. The company reported net income of $77.7 million, or $3.23 per basic share and $3.22 per diluted share, compared with net income of $54.3 million, or $2.26 per basic and diluted share, for the year-earlier period.
Dolph Baker, chairman, president and CEO of Cal-Maine, said, “The higher sales reflect both improved volumes through the holiday season and higher average selling prices compared with the third quarter of fiscal 2013. Consumer demand for shell eggs has been strong at the retail level for both generic and specialty eggs, supported by below average temperatures across the country. In addition, the egg products segment of the industry has continued to experience strong demand due to the introduction of breakfast items at many quick serve restaurants, as well as increased exports.
“Sales of specialty eggs have increased throughout this fiscal year and were up 9.0 percent for the third quarter. Specialty egg sales accounted for 17.4 percent of dozen eggs sold and 23.7 percent of total shell egg sales revenue for the third quarter of fiscal 2014, compared with 16.7 percent of dozen eggs sold and 23.6 percent of total shell egg sales revenue for the third quarter of fiscal 2013. We believe the performance of specialty eggs will continue to be a key driver of our growth as we capitalize on favorable consumer demand trends. We remain focused on identifying additional opportunities to market and sell specialty eggs and enhance our product mix.
“We are pleased with our improved operating performance during the third quarter. We were able to benefit from lower feed costs compared with the same period last year. Operating income was $46.6 million for the third quarter of fiscal 2014, up 51 percent compared with $30.9 million for the third quarter of fiscal 2013. Overall, our operations have continued to run well and our Board recently approved production expansion projects for our existing operations in Florida, Texas and Kentucky. These expansions will enhance our operating efficiencies and the additional capacity will allow us to purchase fewer eggs in the spot egg market where prices may be more expensive.”
As previously announced, on March 1, the company completed the acquisition of 50 percent of the membership interests of Delta Egg Farm, LLC from Sunbest Foods of Iowa Inc., a Moark, LLC affiliate. Delta Egg Farm, LLC was previously an unconsolidated joint venture of the company. As a result of this transaction, Delta Egg Farm, LLC, is now a wholly owned subsidiary of the company. For the third quarter of fiscal 2014, the company recorded a non-recurring, non-cash gain of $4.0 million in other income for the excess of the purchase price over the carrying value of the company’s 50 percent investment in the joint venture. This gain is non-taxable, and therefore resulted in a $1.5 million reduction to the company’s income tax expense for the third quarter of fiscal 2014. Additionally, the company recorded a $3.7 million decrease to deferred income tax liabilities related to the tax basis of the equity investment in the joint venture. Delta Egg’s assets include a feed mill and egg production complex with capacity for approximately 1.2 million laying hens, located near Delta, Utah, and an organic egg production complex with capacity for approximately 400,000 laying hens located near Chase, Kan.
For the third quarter of fiscal 2014, Cal-Maine will pay a cash dividend of approximately $0.591 per share to holders of its common and Class A common stock. The dividend is payable May 15 to shareholders of record on April 30.