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Cal-Maine still struggling against market effects of 2015 flu outbreak

By JACK WEATHERLY

Cal-Maine Foods Inc. reported on Monday that net sales for the quarter ending Feb. 25 were $306.5 million – a 31.8 percent decrease compared with $449.8 million for the year-earlier period.

That in part is because of the lingering market effects of the outbreak of avian influenza in 2015, which hurt U.S. exports of eggs, including those of Cal-Maine, the nation’s largest producer of in-shell eggs, the Jackson-based firm said in a release.

“Over the past month, there have been reported outbreaks of [avian influenza] in certain poultry operations located in southeastern states. None of these outbreaks has affected the commercial table egg layer flock, and there have been no positive tests for AI at any Cal-Maine Foods locations,” Dolph Baker, chairman, president and chief executive officer, said.

“Since the spring 2015 AI outbreaks, Cal-Maine Foods significantly enhanced its biosecurity measures at all of its locations, and its flocks are being monitored and tested according to state and federal guidelines.”

Fifty million birds, primarily laying hens, had to be destroyed in the Midwest two years ago, but Cal-Maine was able to avoid the virus.

Cal-Maine reported net income for the quarter of $4.1 million, or nine cents per share, compared with net income of $64.2 million, or $1.33 per share of the corresponding period in fiscal 2016. Analysts had forecast earnings of 20 cents per share on revenue of $325 million, according to TheStreet.

The company will not pay a dividend for the fourth consecutive quarter.

Shares were up 15 cents, closing at $37.50 on the NasdaqGS market on Monday. Earnings were released before the opening of the market.

“Our results . . . were affected by lower market prices and weaker demand trends compared with the third quarter last year,” said Baker. “Our average customer selling prices for the third quarter of fiscal 2017 were down 27.9 percent from the same period a year ago.”

“The USDA reports that egg export demand has improved since the beginning of fiscal 2017,” Baker said. “However, it has still not fully recovered to levels prior to the AI outbreak. Additionally, we have experienced reduced demand for egg products, as many of our commercial customers reformulated their products to use fewer eggs when prices spiked and have been slow to resume previous egg usage.

For the thirty-nine weeks ended Feb. 25, net sales were $799.9 million compared with $1.6 billion for the prior-year period. The company reported a net loss of $49.8 million, or $1.03 per share, for the thirty-nine-week period, compared with net income of $316.4 million, or $6.54 per share, for the year-earlier period.

“The egg markets have remained under pressure, and we do not expect to see any meaningful improvement until there is a better balance of supply and demand.

During the third quarter, Cal-Maine completed the acquisition of substantially all of the assets of Happy Hen Egg Farms, Inc in Texas.

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About Jack Weatherly

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