Strong consumer demand for shell eggs and quick-service demand for egg products lift Cal-Maine sales.
CAL-Maine Foods Inc. has reported financial results for its fiscal 2014 third quarter and nine months ended March 1.
Net sales for the 2014 third quarter were $395.5 million, compared with $360.4 million in the 2013 third quarter. The company reported net income of $42.9 million, or $1.77 per share, versus $30.6 million, or $1.27 per share, for the third quarter of 2013.
Dolph Baker, Cal-Maine chairman, president and chief executive officer, said, "Cal-Maine Foods delivered a solid performance for the third quarter of fiscal 2014, with our net sales up 10% over the same period last year. The higher sales reflect both improved volumes through the holiday season and higher average selling prices compared with the third quarter of fiscal 2013."
For the first nine months of fiscal 2014, net sales were $1.069 billion, compared with net sales of $962.2 million for the prior-year period; net income was $77.7 million, or $3.22 per share, compared with net income of $54.3 million, or $2.26 per share, for the year-earlier period.
"Consumer demand for shell eggs has been strong at the retail level for both generic and specialty eggs, supported by below-average temperatures across the country. In addition, the egg products segment of the industry has continued to experience strong demand due to the introduction of breakfast items at many quick-serve restaurants, as well as increased exports," Baker said.
"Sales of specialty eggs have increased throughout this fiscal year and were up 9.0% for the third quarter," Baker added. "Specialty egg sales accounted for 17.4% of dozen eggs sold and 23.7% of total shell egg sales revenue for the third quarter of fiscal 2014, compared with 16.7% of dozen eggs sold and 23.6% of total shell egg sales revenue for the third quarter of fiscal 2013. We believe the performance of specialty eggs will continue to be a key driver of our growth as we capitalize on favorable consumer demand trends. We remain focused on identifying additional opportunities to market and sell specialty eggs and enhance our product mix."
Cal-Maine had operating income of $46.6 million for the 2014 third quarter, up 51% from operating income of $30.9 million for the third quarter of 2013. The company reported that it benefited from lower feed costs compared with the same period last year.
"Overall, our operations have continued to run well, and our board recently approved production expansion projects for our existing operations in Florida, Texas and Kentucky. These expansions will enhance our operating efficiencies, and the additional capacity will allow us to purchase fewer eggs in the spot egg market, where prices may be more expensive," Baker noted.
On March 1, Cal-Maine completed its previously announced acquisition of 50% of membership interests in Delta Egg Farm LLC from Sunbest Foods of Iowa Inc., which is an affiliate of Moark LLC.
Delta Egg Farm was previously an unconsolidated joint venture of the company. As a result of this transaction, Delta Egg Farm is now a wholly owned subsidiary of Cal-Maine.
For the third quarter of 2014, the company recorded a non-recurring, non-cash gain of $4.0 million in other income for the excess of the purchase price over the carrying value of its 50% investment in the joint venture.
Delta Egg Farm's assets include a feed mill and egg production complex with capacity for approximately 1.2 million laying hens located near Delta, Utah, and an organic egg production complex with capacity for approximately 400,000 laying hens located near Chase, Kan.
"We are pleased to assume the full ownership and management of Delta Egg Farm LLC as we integrate these additional facilities into our operations," Baker said. "This transaction further advances our strategy to expand our capacity and grow our business through selective acquisitions. We look forward to the additional market opportunities ahead for Cal-Maine Foods in fiscal 2014."