Cal-Maine Foods on March 30 reported an increase in net income and net sales for the third quarter of fiscal year 2015. The quarter ended February 28.
The egg production company reported net income of $50.9 million, or $1.06 per basic share and $1.05 per diluted share, for the third quarter of fiscal 2015 compared with $42.9 million, or $0.89 per basic and diluted share, for the third quarter of fiscal 2014. The third quarter of fiscal 2014 included $4 million in other income and a $4.8 million tax reduction related to the company’s purchase of the remaining 50 percent interest in Delta Egg Farm.
Net sales for the third quarter of fiscal 2015 were $437.6 million, compared with net sales of $395.5 million for the third quarter of fiscal 2014.
Cal-Maine ahead of 2014 pace for first 9 months of FY 2015
For the first nine months of fiscal 2015, net sales were $1,173.1 million compared with net sales of $1,069.3 million for the prior-year period. The company reported net income of $115.1 million, or $2.39 per basic share and $2.38 per diluted share, for the first nine months of fiscal 2015 compared with net income of $77.7 million, or $1.61 per basic and diluted share, for the same period in fiscal 2014.
The net income per share numbers for the third quarter and nine month periods for fiscal 2015 and fiscal 2014 reflect the two-for-one stock split for shares of the company’s common stock and Class A common stock, effective October 31, 2014.
Cal-Maine delivered ‘a very solid performance,’ CEO says
Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, Inc., stated: “Cal-Maine Foods delivered a very solid performance for the third quarter of fiscal 2015 with our net sales up 10.6 percent over the same period last year. The higher sales reflect improved volumes through the holiday season with total dozen shell eggs sold up 5.2 percent over the same period last year. While the national hen flock has reached record levels, the strong demand for shell eggs from the three major market sectors - retail, egg products and exports - was enough to absorb the market’s increased supply. We also benefited from 6.1 percent higher average selling prices compared with the third quarter of fiscal 2014.
“Specialty egg volumes have increased throughout this fiscal year and were up 22.6 percent for the third quarter compared with the prior year,” added Baker. “Specialty egg sales accounted for 20.3 percent of dozen shell eggs sold and 26.9 percent of total shell egg sales revenue for the third quarter of fiscal 2015, compared with 17.4 percent of dozen shell eggs sold and 23.7 percent of total shell egg sales revenue for the third quarter of fiscal 2014. We believe the strong performance of specialty eggs will continue to be a key driver of our growth as we capitalize on favorable consumer demand trends. We provide a wide variety of healthy choices that meet this demand. We will continue to make the appropriate investments to expand our production capabilities for specialty eggs and identify ways to further enhance our product mix.
“Overall, our operations have continued to perform very well in the third quarter with more favorable market conditions than we experienced a year ago. Our feed costs per dozen produced were 5.0 percent lower than the third quarter of fiscal 2014 and 9.1 percent lower through the first nine months of this fiscal year. These lower costs reflect the record corn and soybean crops harvested in the United States last fall, which sufficiently restocked grain supplies ahead of this year’s planting season. Operating income for the third quarter of fiscal 2015 was $72.0 million compared with $46.6 million for the third quarter of fiscal 2014. These results reflect our lower feed and production costs and consistent execution of our strategy to be an efficient, low-cost producer across all of the Company’s operations. We continue to move forward with our expansion projects in Florida, Kansas, Kentucky and Texas, and we look forward to the growth opportunities the enhanced production and improved efficiencies will provide the company. The additional capacity for specialty eggs at both the Kansas and Kentucky facilities will further support our ability to meet the growing demands of our customers.”
Proposition 2 impact on egg markets
Commenting on the impact of California’s Proposition 2 on Cal-Maine Foods and the egg industry in general, Baker said: “Everyone in the egg industry has been focused on the January 1, 2015, effective date for the implementation of Proposition 2 and Assembly Bill 1437 related to egg production standards and sales in California. As expected, this event created an initial disruption in market supply in January, with a higher than normal spike in market prices for the California market. Prices have since moderated, and the shell egg market in California seems to be striking a more favorable balance of supply and demand as producers adjust to the new standards.”
Dividend to be paid to Cal-Maine shareholders
For the third quarter of fiscal 2015, Cal-Maine Foods will pay a cash dividend of approximately $0.35 per share to holders of its common and Class A common stock. Pursuant to Cal-Maine Foods’ 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. The amount paid could vary slightly based on the amount of outstanding shares on the record date. The dividend is payable May 14, to shareholders of record on April 29.
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