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Cal-Maine chalks up net loss of $10.1 million

By JACK WEATHERLY

Still struggling with a market oversupplied with eggs, Cal-Maine Foods Inc. on Monday reported a net loss of $10.1 million, or 21 cents per share, for the second quarter of fiscal 2020, compared with a net income of $21.8 million, or 45 cents per share a year earlier.

Net sales for the quarter ending Nov. 30 were $311.5 million, a 12.5 percent decrease from $356 million a year earlier.

The FactSet consensus was a 3 percent profit, so Cal-Maine shares on the NasdaqGS market fell, by $3.34, closing at $39.11. The 52-week range of the stock is $36.65 to $47.

“While our sales volumes remained relatively flat in the second quarter compared to last year, our financial results reflect lower average selling prices compared with the same period of fiscal 2019,” Dolph Baker, chairman and chief executive officer, stated in a news release.

The quarterly loss was the second straight for the Jackson-based company, the largest producer of eggs in the United States.

“The Southeast large market average price for conventional eggs dropped 12.7 percent for the second quarter of fiscal 2020 compared [with] the second quarter of fiscal 2019. At the same time, our average sales price was down 11.5 percent, due to an unfavorable balance of egg supply and demand,” Baker said.

“Hen numbers, as reported by the USDA Chickens and Eggs report as of December 23, 2019, are 340.5 million, which is 4.6 more million hens than a year ago. The increase in the number of hens continues to contribute to the oversupply of eggs.”

“During the second quarter of fiscal 2020, we lost a portion of our sales of non-specialty eggs to a major customer in the Southeast region, representing 4.6 percent of total shell egg dozens and 6.1 percent of non-specialty egg dozens for fiscal 2019,” Baker said. This did not materially affect sales during the second quarter of fiscal 2020.

“Our specialty egg business remains a key component of our growth strategy in fiscal 2020. For the second quarter, specialty eggs, excluding co-pack sales, were $109.4 million accounting for 36 percent of our sales revenue, compared with $120.8 million, or 35 percent of sales revenue, in the second quarter of fiscal 2019.

Bloomberg News quoted Cal-Maine Chief Financial Officer Max Bowman as being hopeful that the market “has found a bottom, and we’ll begin to pick up a bit.”

Bowman did not immediately return a call Monday left by the Mississippi Business Journal.

Cal-Maine is banking on specialty eggs, particularly cage-free eggs. “We are preparing for the additional demand created by legislation in California, Washington and Oregon requiring cage-free eggs, as well as three other states with similar laws defining minimum space requirements. We have invested over $314 million to expand our cage-free production and continue to make progress with our expansion plans in Florida, Texas and Utah, which will provide significant additional processing, pullet and cage-free capacity upon completion.”

“We continue to pursue our strategy to grow our business through selective acquisitions as well as focused expansion and conversion of our existing farms, based on a timeline to meet our customers’ needs.”

Because of the loss, the company will not pay a dividend.

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About Jack Weatherly