A one-time charge of $17 million related to the settlement of an egg antitrust class action claim led to a fourth-quarter loss at Cal-Maine Foods, Inc. while also adversely affecting full-year results.
Net income in the year ended June 1 was $50,423,000, equal to $2.10 per share on the common stock, down 44% from $89,735,000, or $3.76 per share, in fiscal 2012. Excluding the settlement charge in 2013 as well as a one-time gain of approximately $27 million related to the joint venture between Eggland’s Best, Inc. and Land O’Lakes, Inc., Cal-Maine Foods’ income for fiscal 2013 was $67.5 million, up from $62.7 million in fiscal 2012.
Net sales for fiscal 2013 were $1,288,104,000 up 16% from $1,113,116,000 from fiscal 2012.
During the fourth quarter, Cal-Maine Foods sustained a loss of $3,833,000, which compared with income of $37,256,000 in the same period a year ago. Sales during the fourth quarter increased to $325,933,000 from $275,245,000.
“For the year, we were pleased to exceed our previous year’s sales record with $1.3 billion in sales,” said Dolph Baker, chairman, president and chief executive officer. “We experienced strong demand for shell eggs throughout the year from our retail, egg product and export customers. Sales of specialty eggs accounted for 16.4% of our total number of eggs sold and 23.7% of our shell egg sales revenue for the year. Specialty eggs have been an important area of strategic focus for Cal-Maine and, as a result, we achieved a 7.8% increase in specialty egg volume for the year and a 6.1% increase in specialty egg selling prices. Overall, our average selling prices were up 7.9% in fiscal 2013. We expect specialty eggs, which have a higher retail selling price, will continue to gain market share over regular eggs as more consumers are willing to pay for these premium products.”
Mr. Baker said operations have continued to run well in fiscal 2013, in spite of experiencing higher and more volatile feed costs primarily related to a tight national corn supply.
“For the year, our feed costs per dozen were up 15% compared with fiscal 2012, and the higher input costs adversely affected our gross profit margins,” he said. “In spite of these cost pressures, our management team has continued to focus on making Cal-Maine an efficient, low-cost producer with consistent operating results. Looking ahead, we are cautiously optimistic about the yield of this year’s corn and soybean crops, which could provide some relief to our feed costs in fiscal 2014.”
Mr. Baker said Cal-Maine has worked hard to integrate the operations of both the Pilgrim’s Pride and Maxim egg operations, and is pleased with the operating synergies the company has achieved from the acquisitions. In addition, Cal-Maine has the opportunity to leverage the additional capacity from the facilities and expand market reach,” he said.
As part of the settlement reached July 23, Cal-Maine agreed to make a single payment of $28 million, which amounts to a charge of $17 million, after tax. Mr. Baker said the settlement was in the best interest for the company and its shareholders.
“With this distraction behind us we will focus on our business strategy and the opportunities ahead in fiscal 2014,” he said.
