JACKSON, MISS. — Higher egg prices and a bump in volumes propelled net sales for Cal-Maine Foods, Inc. in the second quarter ended Nov. 28. During the period, Cal-Maine Foods had net income of $109,230,000, equal to $2.27 per share on the common stock, which compared with $36,603,000, or 76c per share, in the prior-year period. Net sales advanced more than 44% to $545,975,000 from sales of $378,617,000 for the comparable quarter.
|Dolph Baker, chairman, president and c.e.o. of Cal-Maine|
“While egg prices were still at much higher than normal levels at the beginning of our second quarter, they dropped considerably in October before moving back up due to higher demand related to the Thanksgiving holiday,” said Dolph Baker, chairman, president and chief executive officer. “Even with this volatile behavior during the second quarter, our average selling prices for shell eggs were up 42.9% compared with the same period a year ago; however, they were down 12.2% on a sequential basis compared with the first quarter of fiscal 2016. Egg prices have declined since the end of the second quarter.”
The industry continues to face a significant reduction in national laying hen flock related to the outbreaks of avian influenza earlier this year, Mr. Baker said. The supply is gradually growing but remains approximately 9% lower than it was a year ago, according to a recent report from the U.S. Department of Agriculture.
“Egg prices have moved lower than expected in spite of the reduced supply, and we expect prices will remain volatile until the industry has more clarity on future supply levels,” Mr. Baker said. “While there have been no further reported U.S. outbreaks of highly pathogenic A.I., we continue to closely monitor the situation, and we are working with egg industry associations and government officials to identify ways to mitigate the risk of future outbreaks. There have been no positive tests for A.I. at any of the Cal-Maine Foods locations; however, we have strengthened our biosecurity measures at all of our facilities.”
During the quarter, specialty eggs accounted for a higher percentage of the company’s overall sales volumes, Mr. Baker noted.
“Our customers look to us to provide a product mix that meets changing consumer demand, and we have continued to position Cal-Maine Foods to effectively meet this demand,” he said. “We have a number of major capital projects under way across our operations to expand our cage-free capacity to meet increased customer demand for this product and to reduce our dependence on spot market purchases. In addition to cage-free eggs, we offer a full complement of conventional, nutritionally enhanced and organic eggs, and we remain focused on pursuing additional opportunities to market and sell specialty eggs in fiscal 2016.”
Cal-Maine Foods expects to expand its cage-free egg production in the coming months through its joint venture with Rose Acre Farms in Texas.“As planned, our initial flock for this joint venture was placed in early November, and we are on schedule for continued placements in the months ahead,” Mr. Baker said. “The additional capacity will significantly increase the availability of cage-free eggs and provide new market opportunities for Cal-Maine Foods.”