Cal-Maine Foods reported results for its first quarter of fiscal 2021 ended Aug. 29, 2020, showing an improved balance sheet compared to the same period last year. However, the company said it continues to face headwinds due to the COVID-19 pandemic.
Net sales for the 2021 first quarter were $292.8 million, a 21.4% increase compared to $241.2 million for the first quarter of fiscal 2020. The company reported a net loss of $19.4 million, or 40 cents per basic and diluted share, for the first quarter of 2021, compared to a net loss of $45.8 million, or 94 cents per basic and diluted share, for the first quarter of 2020.
“Our results for the first quarter of fiscal 2021 reflect continued challenging market conditions as we proactively monitor and manage our operations in the face of the COVID-19 pandemic,” Cal-Maine chairman and chief executive officer Dolph Baker said. “Our top priority is the health and safety of our employees, who continue to work hard every day to produce eggs for our customers, and we are proud of their dedicated efforts to contribute to a stable food supply.”
For the first quarter, total dozens sold were up 3.8% over the same period last year, primarily due to continued strong retail demand as consumers are still preparing more meals at home, he noted.
While demand from foodservice customers is improving as many restaurants have resumed limited service, Baker said foodservice demand is still well below pre-quarantine levels, which he believes has constrained the price of shell eggs in the retail market.
“Market prices for eggs remained volatile over the first quarter and decreased overall compared to prices at the end of fiscal 2020, which reflected increased consumer purchases due to the COVID-19 pandemic and seasonal demand due to Easter falling in the fourth quarter,” Baker said.
The Southeast large market average price for conventional eggs for the 2021 first quarter was 95 cents/doz., up 13.1% compared to 84 cents for the 2020 first quarter. Cal-Maine’s average sales price was up 17.8% from the year-ago first quarter, which was a period of record low prices and an oversupply of eggs.
According to Baker, the overall egg supply has declined significantly, and overall demand is expected to improve as foodservice sales return to pre-COVID-19 levels. Hen numbers reported by the U.S. Department of Agriculture as of Sept. 1, 2020, were 317.4 million, which represents 15.1 million fewer hens than a year ago, when USDA also reported high flock productivity. USDA reported that the hatch from January through August 2020 decreased 2.7% versus the same period last year, which will likely further reduce future egg supply levels.
For its 2021 first quarter, Cal-Maine said sales of specialty eggs totaled $129.2 million, accounting for 45.2% of its egg sales revenue, compared with $111.2 million, or 47.5% of egg sales revenue, in the first quarter of 2020. The higher specialty egg revenue reflects a 15.5% increase in specialty dozens sold and a 1.1-cent increase in the net average selling price per dozen in the first quarter of 2021 versus the same period in 2020. Baker said demand for specialty eggs was positively affected by the higher conventional egg prices compared to the same period in the prior year.
"An important competitive advantage for Cal-Maine Foods is our ability to offer our customers choice by providing a favorable product mix in a sustainable manner, including conventional, cage-free, organic and other specialty eggs," he said. "In recent years, a significant number of large restaurant chains, foodservice companies and grocery chains, including our largest customers, announced goals to transition to an exclusively cage-free egg supply chain by specified future dates.”
Additionally, he said several states, representing 23% of the U.S. total population, have passed legislation requiring cage-free eggs by specified future dates, and other states are considering such legislation.
“We are working with our customers to ensure a smooth transition in meeting their goals," he said. "Since 2008, we have invested over $389.9 million in facilities, equipment and related operations to expand our cage-free production.”
Looking ahead, Baker said the company remains focused on managing operations in an efficient and sustainable manner, despite the unprecedented challenges created by the COVID-19 pandemic.
“We understand the challenges and difficult economic environment facing the families in the communities where we live and work, and we are committed to helping where we can,” Baker said.
Cal-Maine is trying to help by providing food assistance to those in need and has donated more than 900,000 doz. eggs in its 2021 first quarter.
“We will continue to pursue our growth strategy and the further expansion of our specialty egg business as we work to safely meet the needs of our customers with outstanding products and service. We look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2021,” Baker added.