The market responded favorably to Cal-Maine second quarter results for FY 2010. Shares rose 8.1% to close at $33.31 after peaking during the trading day at $34.11. When Cal-Maine reported a loss for the 1st quarter of FY 2010 the share price fell by 11% to $24.
For the 13 weeks ended November 28, Cal-Maine earned $126.1 million on sales of $229.2 million. This compares with net income of $27.2 million on sales of $238.3 million in the corresponding quarter of FY 2009.
The Company generated a gross margin of 20.4% (compared to 24.3% in FY 2009). The difference was due to a 12% lower unit revenue of $1.057 for the past quarter compared to $1.209 for the second quarter of FY 2009. Feed cost per dozen declined by 9% between the quarters from 38.5 cents to 34.7 cents. It is noted that specialty eggs representing 13.7% of volume contributed to sales by a disproportionate 20.5%
Fred Adams Jr., Chairman of Cal-Maine, was optimistic in forecasting "a favorable balance between egg supply and egg demand." He added, "Feed costs will continue to be volatile and relatively high."
In reviewing the financial data, the balance sheet is strong with a current ratio of 2.2 and long term debt of $112.3 million compared to equity of $339.3 million. In comparing the second quarters of FY 2010 and FY 2009, inventories and long term debt remained essentially constant. Cash and short term investments increased by 84% to $151.7 million attesting to prudent financial management.