Cal-Maine Foods(US:CALM)2022-09-26 16:00Part I. Financial Information Financial Statements The company's financial statements for the thirteen weeks ended August 27, 2022, reflect a significant turnaround with net income of $125.1 million and total assets of $1.55 billion Condensed Consolidated Balance Sheets As of August 27, 2022, total assets increased to $1.55 billion, total liabilities to $366.8 million, and stockholders' equity to $1.19 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 27, 2022 | May 28, 2022 | | :--- | :--- | :--- | | Total Current Assets | $778,888 | $661,519 | | Total Assets | $1,554,729 | $1,427,489 | | Total Current Liabilities | $230,431 | $184,674 | | Total Liabilities | $366,766 | $323,144 | | Total Stockholders' Equity | $1,187,963 | $1,104,345 | Condensed Consolidated Statements of Operations For the thirteen weeks ended August 27, 2022, net sales more than doubled to $658.3 million, resulting in a gross profit of $217.5 million and net income of $125.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | Net Sales | $658,344 | $324,986 | | Gross Profit | $217,490 | $6,645 | | Operating Income (Loss) | $163,850 | $(39,667) | | Net Income (Loss) Attributable to Cal-Maine | $125,287 | $(18,026) | | Diluted EPS | $2.57 | $(0.37) | Condensed Consolidated Statements of Cash Flows For the first thirteen weeks of fiscal 2023, net cash from operations was $172.8 million, leading to a $76.9 million increase in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operations | $172,812 | $(24,112) | | Net cash used in investing activities | $(59,122) | $(16,485) | | Net cash used in financing activities | $(36,753) | $(71) | | Net change in cash and cash equivalents | $76,937 | $(40,668) | Notes to Condensed Consolidated Financial Statements Key notes detail revenue sources, including $425.6 million from conventional shell eggs, dividend policy, and legal contingencies with remote risk of material loss Disaggregation of Revenue (in thousands) | Product Category | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | Conventional shell egg sales | $425,589 | $182,030 | | Specialty shell egg sales | $200,820 | $132,458 | | Egg products | $27,640 | $9,366 | | Other | $4,295 | $1,132 | | Total | $658,344 | $324,986 | - For the first quarter of fiscal 2023, the company will pay a cash dividend of approximately $0.853 per share, with a policy to pay one-third of quarterly net income5455 - The company is a defendant in several legal cases, including antitrust litigation and a deceptive trade practices lawsuit, but management believes the risk of material loss is remote788488 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes record first-quarter results to significantly higher shell egg prices, offsetting increased production costs, while actively managing HPAI risks and investing in cage-free facilities Executive Overview and Market Conditions Record gross profit of $217.5 million in Q1 FY2023 was driven by a 133.8% increase in egg prices due to HPAI supply reduction and strong demand, alongside growth in specialty egg sales - Conventional egg prices rose 133.8% in Q1 FY2023 due to decreased supply from the HPAI outbreak110 - As of September 27, 2022, no Cal-Maine Foods' facilities tested positive for HPAI, though the industry-wide outbreak led to the depopulation of approximately 35.6 million commercial layer hens102 - Ten states have mandated cage-free egg sales, with cage-free eggs representing 19.4% of the company's shell egg revenues in Q1 FY2023104105 Results of Operations Record net sales of $658.3 million, driven by higher conventional and specialty egg prices, led to an operating income of $163.9 million despite increased cost of sales and SGA expenses Shell Egg Sales Analysis (Q1 FY2023 vs Q1 FY2022) | Category | Net Average Selling Price per Dozen | Dozens Sold (thousands) | | :--- | :--- | :--- | | Conventional | $2.368 (up 139%) | 179,712 (down 2.3%) | | Specialty | $2.101 (up 12%) | 95,605 (up 35.1%) | | All Shell Eggs | $2.275 (up 84%) | 275,317 (up 8.1%) | Farm Production Costs per Dozen Produced | Cost Component | Q1 FY2023 | Q1 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Feed | $0.667 | $0.545 | 22.4% | | Other | $0.379 | $0.353 | 7.4% | | Total | $1.046 | $0.898 | 16.5% | - SGA expenses increased by $7.1 million (15.2%), primarily due to a $6.0 million (42.9%) rise in delivery expenses from higher fuel and labor costs137141 Liquidity and Capital Resources The company's financial position strengthened with $172.8 million in operating cash flow, no long-term debt, and $150.9 million remaining for cage-free expansion projects - Net cash provided by operating activities was $172.8 million for the quarter, a significant improvement from the $24.1 million used in the prior-year period150152 - The company had no long-term debt outstanding and access to a $250 million senior secured revolving credit facility as of August 27, 2022155 Approved Material Construction Projects (in thousands) | Project Type | Total Projected Cost | Cost Incurred to Date | Remaining Projected Cost | | :--- | :--- | :--- | :--- | | Cage-Free Expansions | $293,858 | $143,003 | $150,855 | Quantitative and Qualitative Disclosures About Market Risk The company reported no material changes in its market risk exposure during the thirteen weeks ended August 27, 2022 - There have been no material changes in the company's market risk exposure during the first quarter of fiscal 2023161 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of August 27, 2022, with no material changes to internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the quarter162 - No material changes to the internal control over financial reporting occurred during the quarter163 Part II. Other Information Legal Proceedings This section incorporates by reference the detailed discussion of legal proceedings found in Note 11 of the financial statements - Information regarding legal proceedings is detailed in Note 11 of the financial statements166 Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its 2022 Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the 2022 Annual Report167 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 FY2023, the company repurchased 895 shares at an average price of $50.74 to satisfy employee tax withholding obligations for vested restricted stock - The company repurchased 895 shares during the quarter to satisfy employee tax withholding obligations related to vested restricted stock168 Exhibits This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL data files