Cal-Maine Foods(US:CALM)2022-12-27 16:00Part I. Financial Information This section presents the unaudited condensed consolidated financial statements for Cal-Maine Foods, Inc. for the quarterly period ended November 26, 2022 Item 1. Financial Statements Presents Cal-Maine Foods' unaudited condensed consolidated financial statements for Q2 FY2023, highlighting significant growth in assets, sales, and profitability due to record egg prices Condensed Consolidated Balance Sheets Total assets increased to $1.76 billion from $1.43 billion, with stockholders' equity rising to $1.32 billion, reflecting strong retained earnings growth Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | Nov 26, 2022 | May 28, 2022 | | :--- | :--- | :--- | | Total Current Assets | $974,010 | $661,519 | | Total Assets | $1,763,440 | $1,427,489 | | Total Current Liabilities | $306,549 | $184,674 | | Total Liabilities | $443,135 | $323,144 | | Total Stockholders' Equity | $1,320,305 | $1,104,345 | Condensed Consolidated Statements of Operations Net sales for the quarter more than doubled to $801.7 million, resulting in a net income of $198.6 million, driven by significantly higher egg prices Statement of Operations Summary (in thousands USD, except per share data) | Metric | Thirteen Weeks Ended Nov 26, 2022 | Thirteen Weeks Ended Nov 27, 2021 | Twenty-six Weeks Ended Nov 26, 2022 | Twenty-six Weeks Ended Nov 27, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $801,700 | $381,723 | $1,460,044 | $706,709 | | Gross Profit | $317,849 | $43,747 | $535,339 | $50,392 | | Operating Income (Loss) | $259,868 | $(2,065) | $423,718 | $(41,732) | | Net Income (Loss) Attributable to Cal-Maine | $198,587 | $1,173 | $323,874 | $(16,853) | | Diluted EPS | $4.07 | $0.02 | $6.63 | $(0.34) | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly improved to $344.8 million, primarily due to higher net income, with cash and cash equivalents increasing to $178.6 million Cash Flow Summary for Twenty-six Weeks Ended (in thousands USD) | Cash Flow Activity | Nov 26, 2022 | Nov 27, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operations | $344,787 | $(15,492) | | Net cash used in investing activities | $(146,703) | $(26,255) | | Net cash used in financing activities | $(78,533) | $(121) | | Net change in cash and cash equivalents | $119,551 | $(41,868) | | Cash and cash equivalents at end of period | $178,635 | $15,484 | Notes to Condensed Consolidated Financial Statements Provides detailed information on accounting policies, investment securities, revenue recognition, and legal contingencies, including revenue disaggregation and litigation updates Disaggregation of Revenue by Product (in thousands USD) | Product Category | Thirteen Weeks Ended Nov 26, 2022 | Thirteen Weeks Ended Nov 27, 2021 | Twenty-six Weeks Ended Nov 26, 2022 | Twenty-six Weeks Ended Nov 27, 2021 | | :--- | :--- | :--- | :--- | :--- | | Conventional shell egg sales | $541,917 | $221,142 | $967,506 | $403,172 | | Specialty shell egg sales | $227,778 | $146,917 | $428,598 | $279,375 | | Egg products | $28,052 | $11,401 | $55,692 | $20,767 | | Other | $3,953 | $2,263 | $8,248 | $3,395 | | Total | $801,700 | $381,723 | $1,460,044 | $706,709 | - The company is involved in several legal proceedings, including antitrust litigation with Kraft Foods and others, and a watershed pollution case with the State of Oklahoma; management believes the risk of material loss from these matters is remote or cannot be estimated at this time757885 Inventory Breakdown (in thousands USD) | Inventory Type | Nov 26, 2022 | May 28, 2022 | | :--- | :--- | :--- | | Flocks, net of amortization | $156,782 | $144,051 | | Eggs and egg products | $28,343 | $26,936 | | Feed and supplies | $95,457 | $92,329 | | Total | $280,582 | $263,316 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes record Q2 FY2023 financial performance to significantly higher egg prices due to HPAI-driven supply reduction and strong demand, despite rising production costs - The ongoing HPAI outbreak has been a primary driver of market conditions, depopulating approximately 43.3 million commercial layer hens in the U.S. as of December 2022, leading to near-record high prices104107 - The company is focused on expanding its cage-free production to meet legislative mandates and customer commitments, noting that some customers have extended their cage-free transition timelines109110 Results of Operations Net sales for Q2 FY2023 reached a record $801.7 million, a 110% increase YoY, driven by higher egg prices, despite increased cost of sales and SGA expenses Shell Egg Sales Analysis (Q2 FY2023 vs Q2 FY2022) | Metric | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Net Average Selling Price / Dozen | | | | | Conventional | $2.883 | $1.151 | +150.5% | | Specialty | $2.370 | $1.898 | +24.9% | | Dozens Sold (thousands) | | | | | Conventional | 187,976 | 192,135 | -2.2% | | Specialty | 96,110 | 77,420 | +24.1% | - Atypically, the average selling price for conventional eggs ($2.883/dozen) exceeded that of specialty eggs ($2.370/dozen) due to the rapid market response of conventional egg pricing to the supply shortage caused by HPAI112125 Farm Production Costs per Dozen Produced (Q2 FY2023 vs Q2 FY2022) | Cost Component | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Feed | $0.685 | $0.529 | +29.5% | | Other | $0.386 | $0.349 | +10.6% | | Total | $1.071 | $0.878 | +22.0% | Liquidity and Capital Resources The company's financial position strengthened with working capital increasing to $667.5 million, robust cash flow from operations, and continued investment in cage-free facilities - Working capital increased to $667.5 million at November 26, 2022, from $476.8 million at May 28, 2022, demonstrating enhanced liquidity177 - The company had no long-term debt outstanding and had access to a $250 million senior secured revolving credit facility, under which no amounts were borrowed181 Material Construction Projects for Cage-Free Facilities (as of Nov 26, 2022, in thousands USD) | Projected Completion | Total Projected Cost | Spent to Date | Remaining Cost | | :--- | :--- | :--- | :--- | | Fiscal 2023 | $156,572 | $140,381 | $16,191 | | Fiscal 2024 | $42,591 | $2,057 | $40,534 | | Fiscal 2025 | $95,806 | $22,526 | $73,280 | | Total | $294,969 | $164,964 | $130,005 | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposure were reported for the period compared to the prior fiscal year's Annual Report - No material changes in market risk exposure were reported for the period188 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective at a reasonable assurance level as of the end of the quarter189 - There were no material changes to the company's internal control over financial reporting during the quarter190 Part II. Other Information This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings Refers to detailed discussions of legal proceedings in Note 9 of the financial statements and the 2022 Annual Report - For information on legal proceedings, the report directs readers to Note 9 of the financial statements193 Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported compared to the 2022 Annual Report on Form 10-K - No material changes in risk factors were disclosed compared to the 2022 Annual Report194 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No purchases of Common Stock were made by or on behalf of the company or any affiliated purchaser during Q2 FY2023 - There were no company stock repurchases during the second quarter of fiscal 2023195 Item 6. Exhibits Lists exhibits filed with the Quarterly Report, including CEO and CFO certifications and Inline XBRL documents - Lists various exhibits filed with the report, such as officer certifications and XBRL data files196