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Cal-Maine misses sales target; shares take a hit

By Jack Weatherly

Cal-Maine Foods Inc. reported a net income of $21.8 million, or 45 cents per share, for the second quarter of fiscal 2019, compared with a loss of $26.1 million, or 54 cents per share a year earlier.

Net sales for the quarter that ended Dec.1 were $356 million, a 1.4 percent decrease from $361.2 million for the second quarter of fiscal 2018.

Sales missed the target set by analysts, according to MarketWatch.

The company, the nation’s largest producer of in-shell eggs, noted that results for the second quarters include charges for certain legal after-tax settlements of $1.7 million and $52.8 million, respectively.

Excluding these items, net income was $23.7 million, or 49 cents per share, and $26.6 million, or 55  cents per share, respectively. FactSet’s adjusted earnings per share was 48 cents.

The report released before the Nasdaq market opened on Friday has led to a drop in share price. On Monday, there was a fall of $1.99, or 4.57 percent, per share. The consensus was earnings of 48 cents per share with one-time exclusions.
The 52-week range of the shares is $39.90 to $52.30. They have fallen 4.8 percent in the past three months, according to MarketWatch.

The company states on its website that “in fiscal 2018, we sold approximately 1,037.7 million dozen shell eggs, which we believe represented approximately 20 [percent] of domestic shell egg consumption.”

Dolph Baker, chairman and chief executive officer of Cal-Maine, stated in the release that “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 has risen to near historic levels, but the USDA reports that the hatch is up 10 percent year to date, though the actual hen inventory is up only 2.8 percent. Hen numbers are forecast to continue trending upward for the next several months, which may continue to affect market prices into 2019.

Sales of specialty eggs were up 3.7 percent over the year-earlier period. Specialty egg prices were up 2.9 percent. These eggs — cage-free, nutritionally enhanced and organic — comprised 35 percent of total shell egg revenue, compared with 32.3 percent a year earlier, Baker said. That excludes co-pack sales for certain private brands, he said.

“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.”

For the second quarter of fiscal 2019, Cal-Maine will pay a cash dividend of approximately about 15 cents per share to holders of its common and Class A common stock. The dividend is payable on Feb. 14 to holders of record on Jan. 30.

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About Jack Weatherly

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