Cal-Maine net income improves 40 percent during 3rd quarter
Egg producer Cal-Maine Foods reports improved net sales for third quarter and first nine weeks of fiscal year 2014
Cal-Maine Foods has reported a 40 percent increase in net income for the third quarter of fiscal year 2014, recording a net income of $42.9 million. The Cal-Maine Foods third quarter ended March 1.
Cal-Maine Foods also reported improved net income for the first nine months of the fiscal year, with the Cal-Maine Foods net income jumping to $77.7 million, compared to the net income of $54.3 million recorded during the first nine months of fiscal year 2013.
Net sales for the third quarter of fiscal 2014 were $395.5 million, compared with net sales of $360.4 million for the third quarter of fiscal 2013. For the first nine months of fiscal 2014, net sales were $1,069.3 million compared with net sales of $962.2 million for the prior-year period.
Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, stated, "Cal-Maine Foods delivered a solid performance for the third quarter of fiscal 2014 with our net sales up 10 percent 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. 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.
"Sales of specialty eggs have increased throughout this fiscal year and were up 9.0 percent for the third quarter," added Baker. "Specialty egg sales accounted for 17.4 percent of dozen eggs sold and 23.7 percent of total shell egg sales revenue for the third quarter of fiscal 2014, compared with 16.7 percent of dozen eggs sold and 23.6 percent 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."
Baker added that Cal-Maine Foods was able to benefit from lower feed costs compared with the same period in 2013, and that operations have continued to run well. The Cal-Maine Foods board recently approved production expansion projects for our existing operations in Florida, Texas and Kentucky, which will further enhance operating efficiencies and allow Cal-Maine Foods to purchase fewer eggs in the spot egg market where prices may be more expensive, added Baker.
As previously announced, Cal-Maine Foods on March 1 completed the acquisition of 50 percent of the membership interests of Delta Egg Farm from Sunbest Foods of Iowa, Inc., a Moark affiliate. 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 Foods. For the third quarter of fiscal 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 the company's 50 percent investment in the joint venture. This gain is non-taxable, and therefore resulted in a $1.5 million reduction to the company's income tax expense for the third quarter of fiscal 2014. Additionally, the company recorded a $3.7 million decrease to deferred income tax liabilities related to the tax basis of the equity investment in the joint venture. Delta Egg'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.
Baker added, "We are pleased to assume the full ownership and management of Delta Egg Farm, LLC as we integrate these additional facilities into our operations. 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."