MISSISSIPPI: Cal-Maine Foods Inc. reported a surge in profit and revenue in its fiscal second-quarter, as the southern egg producer continues to benefit from higher egg prices.
Still, the results came in below Wall Street expectations, and shares of Cal-Maine—up 12% over the past year—fell 4.2% to $47.50 in after-hours trading.
The Jackson, Miss.-based company’s results have benefited in recent quarters from an outbreak of avian flu that has routed some competitors’ flocks and sent egg prices upward, though it also has had to spend more on monitoring to guard against its chickens getting the bird flu.
In the latest quarter, egg prices jumped 43% to $1.97 a dozen, lifted in part by Thanksgiving demand. Cal-Maine sold 264.2 million eggs, up slightly from 263.5 million last year.
Looking ahead, Chief Executive Dolph Baker said egg prices have declined in the current quarter. Mr. Baker said laying hen flock levels have been recovering in the wake of the avian flu but remain below prior-year levels.
“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.
For the period ended Nov. 28, Cal-Maine reported a profit of $109.2 million, or $2.26 a share, up from $36.6 million, or 76 cents a share, a year earlier.
Revenue rose 44% to $546 million.
Analysts polled by Thomson Reuters had forecast earnings of $2.40 a share on $552.3 million in revenue.
Specialty eggs continued to make up a bigger chunk of Cal-Maine’s business, accounting for 24.6% of egg sales compared with 21% in the year-earlier period.
A quirk of the Jackson, Miss.-based company is its variable-dividend policy, meaning its payouts are tied to earnings and fluctuate with its income—it pays one-third of its profit out to its shareholders. Most companies have a fixed dividend policy and therefore committed to paying out set amounts each quarter. Cal-Maine adopted the policy in November 2007, in an effort to take into account the cyclical nature of the business.
