Cal-Maine's CEO Optimistic about Further Growth30 July 2013
US - In its report covering the fourth quarter and fiscal year 2013, the Chairman of egg company, Cal-Maine Foods, expressed satisfaction at the results, despite a period of high feed prices. Sales were boosted, in part, by acquisitions.
Cal-Maine Foods, Inc. has announced financial results for the fourth quarter and fiscal year ended June 1, 2013.
For the fourth quarter of fiscal 2013, net sales were $325.9 million compared with net sales of $275.2 million for the fourth quarter a year ago. The Company reported a net loss of $3.8 million, or $0.16 per basic share, for the fourth quarter of fiscal 2013 compared with net earnings of $37.3 million, or $1.56 per basic share, for the same period last year. Results for the fourth quarter of 2013 include a one-time charge of $17.0 million, or $0.71 per basic share, after tax, related to the settlement of a direct purchaser class claim against the Company.
Results for the fourth quarter of fiscal 2012 included a one-time gain of approximately $27.0 million, or $1.12 per share, after tax, as a result of a distribution from Eggland’s Best, Inc. related to the joint venture between Eggland’s Best, Inc. and Land O’Lakes, Inc., announced on 1 May 2012.
Excluding these one-time items, net earnings were $13.2 million, or $0.55 per basic share, for the fourth quarter of fiscal 2013 compared with $10.3 million, or $0.44 per basic share, for the fourth quarter of fiscal 2012. The fourth quarter of fiscal 2013 had 13 weeks compared with 14 weeks in the prior year period.
For the fiscal year 2013, net sales were $1.3 billion compared with net sales of $1.1 billion for fiscal 2012. The Company reported net income of $50.4 million, or $2.10 per basic share, for fiscal 2013 compared with net income of $89.7 million, or $3.76 per basic share, in fiscal 2012. Excluding the one-time items described above for the fourth quarter of each fiscal year, net income for fiscal 2013 was $67.5 million, or $2.81 per basic share, compared with $62.7 million, or $2.64 per basic share, in fiscal 2012. Fiscal 2013 had 52 weeks compared with 53 weeks in fiscal 2012.
As announced on 23 July 2013, the Company reached a settlement in an egg antitrust class action claim, whereby the Company has agreed to make a single payment of $28.0 million, which amounts to a charge of $17.0 million, or $0.71 per basic share, after tax.
Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, Inc., stated: “We believe we have negotiated a settlement for an amount that is in the best interest of our Company and our shareholders. While the one-time charge related to the settlement affected our fourth quarter and fiscal 2013 financial results, we had a solid operating performance and we do not expect any material future impact on our operations. With this distraction behind us, we will focus on our business strategy and the opportunities ahead in fiscal 2014.”
Commenting on the results for the fourth quarter and fiscal 2013, Mr Baker said: “We were pleased with our results with our fourth quarter sales up 18 per cent over the same period a year ago. These results reflect higher volumes related to acquisitions with a six per cent increase in eggs produced and sold compared with the same period a year ago. Notably, we achieved this growth even though we had an extra week of sales in the previous year’s fourth quarter.
“For the year, we were pleased to exceed our previous year’s sales record with $1.3 billion in sales,” Mr Baker noted. “We experienced strong demand for shell eggs throughout the year from our retail, egg product and export customers. Sales of specialty eggs accounted for 16.4 per cent of our total number of eggs sold and 23.7 per cent of our shell egg sales revenue for the year. Specialty eggs have been an important area of strategic focus for Cal-Maine and, as a result, we achieved a 7.8 per cent increase in specialty egg volume for the year and a 6.1 per cent increase in specialty egg selling prices. Overall, our average selling prices were up 7.9 per cent in fiscal 2013. We expect specialty eggs, which have a higher retail selling price, will continue to gain market share over regular eggs as more consumers are willing to pay for these premium products.
“Our operations have continued to run well in fiscal 2013, in spite of experiencing higher and more volatile feed costs primarily related to a tight national corn supply. For the year, our feed costs per dozen were up 15 per cent compared with fiscal 2012, and the higher input costs adversely affected our gross profit margins. In spite of these cost pressures, our management team has continued to focus on making Cal-Maine an efficient, low-cost producer with consistent operating results. Looking ahead, we are cautiously optimistic about the yield of this year’s corn and soybean crops which could provide some relief to our feed costs in fiscal 2014.
“Overall, we are very pleased with Cal-Maine’s performance in fiscal 2013 and our ability to execute our strategy in the marketplace. We have worked hard this year to integrate the operations of both the Pilgrim’s Pride and Maxim egg operations and we are pleased with the operating synergies we have achieved from these acquisitions. In addition, we have the opportunity to leverage the additional capacity from these facilities and expand our market reach.
“We have many reasons to be optimistic for continued growth in the year ahead. Our strong balance sheet provides us with the flexibility to pursue our growth strategy. We will look for additional strategic acquisition opportunities that meet our criteria and add value to our operations. And, we will continue to manage our operations efficiently and identify ways to improve our product mix and expand our sales of specialty eggs. Together, we believe these efforts will reward both our customers and shareholders in fiscal 2014 and beyond,” Mr Baker concluded.
Pursuant to Cal-Maine’s variable dividend policy, in each quarter for which the Company reports net income, the Company pays a cash dividend to shareholders in an amount equal to one-third of such quarterly income. No dividends are paid in a quarter for which the Company does not report net income. Therefore, the Company will not pay a dividend for the fourth quarter of fiscal 2013. Cal-Maine paid a total of $18.1 million in dividends, or $0.75 per share, in fiscal 2013.
As previously disclosed, on 10 August 2012, and 15 November 2012, the Company purchased the commercial egg assets of Pilgrim’s Pride Corporation and Maxim Production Co., Inc., respectively. On a comparable basis, excluding the acquisitions, for the 13-week period ended 1 June 2013, net sales were $288.0 million and dozens sold were 210.5 million, and for the 52-week period ended 1 June 2013, net sales were $1,187.1 million and dozens sold were 866.0 million.
Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing and sale of fresh shell eggs, including conventional, cage-free, organic and nutritionally-enhanced eggs. The Company, which is headquartered in Jackson, Mississippi, is the largest producer and distributor of fresh shell eggs in the United States and sells the majority of its shell eggs in approximately 29 states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.
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