Cal-Maine Foods(CALM)2023-03-27 16:00Financial Performance - For Q3 fiscal 2023, the company recorded a gross profit of $463.0 million, a significant increase from $91.6 million in the same period of fiscal 2022, primarily due to higher shell egg prices [122]. - Total net sales for the third quarter of fiscal 2023 were $997.5 million, a 109.0% increase from $477.5 million in the same period of fiscal 2022 [144]. - For the thirty-nine weeks ended February 25, 2023, total net sales reached $2.46 billion, compared to $1.18 billion for the same period in fiscal 2022, marking a 108.5% increase [145]. - Net income for the third quarter of fiscal 2023 was 32.3% of total net sales, compared to 8.3% in the same period of fiscal 2022 [144]. - Operating income for Q3 FY2023 was $407.8 million, compared to $39.6 million for the same period in FY2022 [224]. - Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended February 25, 2023, was $647.1 million, or $13.31 per basic share, compared to $22.6 million or $0.46 per basic share for the same period of fiscal 2022 [229]. - The company recorded a pre-tax income of $852.6 million for the thirty-nine weeks ended February 25, 2023, compared to $19.7 million for the same period of fiscal 2022 [227]. Sales and Pricing - Conventional egg sales increased by $408.4 million, or 145.5%, in the third quarter of fiscal 2023, primarily due to a $415.9 million increase in prices [149]. - Specialty egg sales rose by $89.3 million, or 48.8%, in the third quarter of fiscal 2023, driven by a 36.0% increase in prices and a 9.4% increase in volume sold [149]. - Egg products net sales increased by $19.8 million, or 155.6%, for the third quarter of fiscal 2023, primarily due to a 142.8% increase in selling prices [152]. - The average net selling price per dozen for Q3 fiscal 2023 was $3.298, compared to $1.612 in the prior-year period, with conventional egg prices at $3.678 and specialty egg prices at $2.616 [3]. - Total dozens sold increased by 1.3% to 291.4 million dozen in Q3 fiscal 2023, with specialty dozens sold rising by 9.4% [4]. Production and Costs - Farm production costs per dozen produced increased by 18.2%, or $0.166, in the third quarter of fiscal 2023, mainly due to higher feed ingredient costs [143]. - Cost of sales for the third quarter of fiscal 2023 was $534.5 million, up from $385.9 million in the same period of fiscal 2022 [154]. - The increase in payroll, taxes, and benefits expense was primarily due to an increase in the accrual for anticipated performance-based bonuses and increased wages due to inflation [195]. - Labor costs increased by 36% due to higher use of contract labor and wage increases in Q3 fiscal 2023 [6]. - Packaging material costs increased by 15.5% and labor costs rose by 13.7% due to inflation and labor shortages [215]. Market Conditions - The outbreak of highly pathogenic avian influenza (HPAI) has led to the depopulation of approximately 43.3 million commercial layer hens since February 2022, impacting overall egg supply [138]. - The USDA reported a decrease of 3.8% in layer hen inventory compared to the previous year, with current numbers at 312.9 million [139]. - The company expects to continue facing volatility in market prices for eggs and feed grains, which significantly impacts financial results [133]. - The company expects continued upward pricing pressures on corn and soybean due to tight supplies and market volatility [214]. - Corn and soybean supplies remained tight in Q3 FY2023, leading to upward pricing pressures and market volatility affecting feed costs [214]. Strategic Initiatives - The company announced a strategic investment of $18.5 million in Meadow Creek Foods, LLC, to support the growing demand for hard-cooked eggs [117]. - The company is focused on expanding cage-free facilities to meet customer demand, with some customers aiming for 70% cage-free eggs by the end of 2030 [121]. - The company is enhancing its product mix to include free-range and pasture-raised eggs, catering to evolving consumer preferences [136]. - The company formed a new egg farmer cooperative, ProEgg, to enhance market presence in the western United States [7]. - The company is participating in the ProEgg cooperative to improve supply chain stability and customer support in the western states [137]. Interest and Dividends - The company earned $9.4 million of interest income for the thirty-nine weeks ended February 25, 2023, compared to $702 thousand for the same period of fiscal 2022, driven by higher investment balances and interest rates [198]. - The company recorded $6.3 million in interest income for Q3 FY2023, a significant increase from $205 thousand in the same period of FY2022 [225]. - The company paid dividends of $144.6 million for the thirty-nine weeks ended February 25, 2023 [207].