Cal-Maine Foods(CALM) - 2022 Q1 - Quarterly Report

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) The company reported a net loss of $18.0 million, with total assets at $1.21 billion and operating cash flow a net use of $24.1 million Condensed Consolidated Balance Sheets Total assets decreased to $1.21 billion from $1.23 billion, primarily due to reduced cash, with equity at $995.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 28, 2021 | May 29, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $16,684 | $57,352 | | Total current assets | $460,469 | $519,931 | | Property, plant & equipment, net | $667,963 | $589,417 | | Total Assets | $1,211,730 | $1,229,174 | | Liabilities & Equity | | | | Total current liabilities | $97,543 | $90,097 | | Total liabilities | $216,163 | $216,393 | | Total stockholders' equity | $995,567 | $1,012,781 | | Total Liabilities and Stockholders' Equity | $1,211,730 | $1,229,174 | Condensed Consolidated Statements of Operations Net sales increased to $331.7 million, but rising costs sharply reduced gross profit to $6.6 million, resulting in a net loss of $18.0 million Statement of Operations Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Aug 28, 2021 | Thirteen Weeks Ended Aug 29, 2020 | | :--- | :--- | :--- | | Net sales | $331,704 | $292,782 | | Gross profit | $6,645 | $16,765 | | Operating loss | $(39,667) | $(27,223) | | Net loss | $(18,026) | $(19,399) | | Net loss per share (Basic & Diluted) | $(0.37) | $(0.40) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $24.1 million, with investing activities using $16.5 million, leading to a $40.7 million decrease in cash and equivalents Cash Flow Summary (in thousands) | Activity | Thirteen Weeks Ended Aug 28, 2021 | Thirteen Weeks Ended Aug 29, 2020 | | :--- | :--- | :--- | | Net cash used in operations | $(24,112) | $(14,800) | | Net cash used in investing activities | $(16,485) | $(20,471) | | Net cash used in financing activities | $(71) | $(50) | | Net change in cash and cash equivalents | $(40,668) | $(35,321) | | Cash and cash equivalents at end of period | $16,684 | $42,809 | Notes to Condensed Consolidated Financial Statements Notes detail the $48.5 million acquisition of Red River Valley Egg Farm, revenue breakdown by egg type, dividend policy, and ongoing legal proceedings - Effective May 30, 2021, the Company acquired the remaining 50% of Red River Valley Egg Farm, LLC for $48.5 million in cash. This resulted in the recognition of $8.5 million in goodwill and a $4.5 million gain from remeasuring its previously held equity interest[37][38][40] Revenue by Product Category (in thousands) | Product Category | Thirteen Weeks Ended Aug 28, 2021 | Thirteen Weeks Ended Aug 29, 2020 | | :--- | :--- | :--- | | Conventional shell egg sales | $182,549 | $155,384 | | Specialty shell egg sales | $138,657 | $129,245 | | Egg products | $9,366 | $6,705 | | Other | $1,132 | $1,448 | | Total | $331,704 | $292,782 | - The company's dividend policy requires it to be profitable on a cumulative basis. As of the end of Q1 fiscal 2022, there were $22.3 million in cumulative losses to be recovered before dividend payments can resume[55] - The company's total flock consisted of approximately 40.8 million layers and 10.3 million pullets and breeders as of August 28, 2021[54] Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales increased due to higher prices, but significant cost increases, particularly in feed, impacted profitability, while cage-free expansion continues Key Operational Metrics Comparison | Metric | Q1 FY2022 | Q1 FY2021 | % Change | | :--- | :--- | :--- | :--- | | Net average selling price per dozen | $1.238 | $1.078 | +14.8% | | Farm production costs per dozen | $0.898 | $0.716 | +25.4% | | Feed costs per dozen | $0.545 | $0.388 | +40.5% | | Specialty dozens sold (thousands) | 74,898 | 68,756 | +8.9% | | Conventional dozens sold (thousands) | 184,487 | 195,238 | -5.5% | - The primary driver of increased costs was higher feed ingredient prices. The average CBOT daily market price for corn increased 81.8% and soybean meal increased 26.1% compared to the first quarter of fiscal 2021[112] - The company is continuing its expansion of cage-free production, with approved projects totaling $138.7 million, of which $39.3 million remains to be spent[152] - The company incurred $553 thousand in direct costs related to the COVID-19 pandemic in Q1 FY2022, down from $832 thousand in Q1 FY2021. These costs were primarily for additional labor and increased packaging material expenses[106] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposure were reported during the quarter compared to the prior fiscal year's Annual Report - There have been no material changes in the company's market risk exposure since the 2021 Annual Report[159] Item 4. Controls and Procedures Disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[157] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[158] Part II. Other Information Item 1. Legal Proceedings The company is involved in ongoing legal proceedings, including antitrust and environmental cases, with management assessing the risk of material loss as generally remote - The company is involved in several legal proceedings, including antitrust cases and environmental litigation, which are detailed in Note 13 of the financial statements[161][80][88] Item 1A. Risk Factors No material changes to the company's previously disclosed risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[162] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 404 shares at $36.34 per share to satisfy employee tax withholding obligations related to restricted stock vesting Q1 2022 Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | 05/30/21 to 06/26/21 | — | $— | | 06/27/21 to 07/24/21 | 404 | $36.34 | | 07/25/21 to 08/28/21 | — | $— | | Total | 404 | $36.34 | - Share repurchases were made to satisfy tax withholding obligations for employees in connection with the vesting of restricted common stock[163] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data - Exhibits filed with the report include CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and Inline XBRL documents[166]