Q1 2021: Cal-Maine reports net loss despite increase in sales

The results for the quarter, which ended on August 29, were released on September 28.

(Terrence O'Keefe)
(Terrence O'Keefe)

Cal-Maine Foods reported a decline in net earnings despite an increase in sales for the first quarter of fiscal year 2021. The results for the quarter, which ended on August 29, were released on September 28.

Net sales for the first quarter of fiscal 2021 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 $0.40 per basic and diluted share, for the first quarter of fiscal 2021, compared to a net loss of $45.8 million, or $0.94 per basic and diluted share, for the first quarter of fiscal 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,” said Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc.

For the first quarter of fiscal 2021, total dozens sold were up 3.8% over the same period last year, Baker contributed this to continued strong retail demand as consumers are still preparing more meals at home.

He explained that while demand from food service customers is improving as many restaurants have resumed limited service, food service demand is still well below pre-quarantine levels, and may have contributed to the constrained 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. The Southeast large market average price for conventional eggs for the first quarter of 2021 was $0.95 per dozen, up 13.1% compared to $0.84 for the first quarter of fiscal 2020. Our average sales price was up 17.8% compared with the prior year first quarter, which was a period of record low prices and an oversupply of eggs,” he said.

Egg supply levels expected to decrease

Egg supply has declined substantially, and overall demand is projected to improve as food service sales revert to pre-COVID-19 level, Baker explained. As of September 1, the United States Department of Agriculture (USDA), reported hen numbers were 317.4 million, which is 15.1 million less birds than a year ago. The USDA also reported high flock productivity. The USDA reported that the hatch from January through August 2020 decreased 2.7% as compared to the same period last year, which will likely further reduce future egg supply levels.

Specialty egg sales

"For the first quarter of fiscal 2021, sales of specialty eggs totaled $129.2 million, accounting for 45.2% of our egg sales revenue, compared with $111.2 million, or 47.5% of egg sales revenue, in the first quarter of fiscal 2020. The higher specialty egg revenue reflects a 15.5% increase in specialty dozens sold and a $0.011 increase in net average selling price per dozen in the first quarter of fiscal 2021 as compared to the same period in fiscal 2020. Demand for specialty eggs was positively affected by the higher conventional egg prices as compared to the same period in the prior year,” Baker said.

Production cost

The company reported that its farm production costs per dozen produced for the first quarter of fiscal 2021 decreased 4.3%, or $0.032 per dozen, compared to the first quarter of fiscal 2020. "This was primarily due to lower feed costs and lower amortization costs due to selling flocks early in fiscal 2020 in response to market conditions. According to USDA reports, current supplies of corn and soybeans are favorable, and we believe we will continue to have an adequate supply of both grains in fiscal 2021. However, current ongoing uncertainties and supply chain disruptions related to the COVID-19 outbreak, weather fluctuations and geopolitical issues surrounding trade agreements and international tariffs may lead to further price volatility,” he explained.

Cal-Maine remains focused on managing operations in an effective and sustainable way, despite the unparalleled challenges created by COVID-19.

“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. One way we can do this is by providing food assistance to those in need, and Cal-Maine Foods has donated over 900,000 dozen eggs in the first quarter of 2021. 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 concluded.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

 

 

 
 
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