Incorporating Land O’Lakes MoArk acquisition of last year into Golden Oval Eggs, Renville, Minn., is both “easier and more difficult than we expected,” says Rob Harrington, Golden Oval’s chief operating officer and executive vice president of marketing. Incorporating each individual operation “is more difficult than we expected,” Harrington says, because each unit was operated individually “as city states.” But in terms of incorporating MoArk people into Golden Oval, “we’re above expectations,” he says. MoArk is not yet contributing to Golden Oval’s bottom line, Harrington says, and he is prohibited by Securities and Exchange Commission rules from predicting when that might occur.
For the second fiscal quarter 2007 ended February 28, Golden Oval’s net income was a negative $4.7 million compared to a profit of $545,000 for the same quarter in 2006. For the six months, the company showed a net loss of $8.4 million compared to a $2.1 million profit for the same period in 2006.
Net sales for the second quarter of fiscal 2007 were $45.4 million, an increase of $26.4 million, or 138% over the prior fiscal year. More than 90% of the increase, or $24 million, is due to the inclusion of results of operations from the MoArk acquisition, which was completed on June 30, 2006, in the fourth quarter of fiscal 2006. The remainder of the increase or $2.4 million is due to higher average selling prices for liquid eggs at the company’s Renville, Minn., and Thompson, Iowa facilities, and an increase in sales resulting from higher feed costs from the company’s interest in United Mills.
Pounds sold in the second quarter were 91.3 million, an increase of 37.6 million, or 70% more than the same period a year earlier. Pounds from the facilities acquired from MoArk accounted for all of the increase, offsetting a 6% decline in production from the Renville and Thompson facilities caused by decreased flock sizes associated with an increase in the space allotted to each bird in compliance with animal care guidelines promulgated by industry groups, the company says.
The average selling price for the quarter increased from 32.7 cents to 46.8 cents, an increase of 43.1% over the prior year, with 11.7 cents due to the inclusion of further processed products which command a higher selling price in the marketplace, as well as overall strengthening in liquid whole egg prices.
Net sales for the first six months of fiscal 2007 were $94.1 million, an increase of $55.9 million or 147% over the sales of the first half of the prior year. More than 94% of the increase is due to the inclusion of results from operations from the MoArk acquisition. Pounds sold in the first half were 198.5 million, an increase of 93.2 million, or 89% more than the same period a year earlier.