March 29, 2011

Cal-Maine's Q3 returns slide 2.7% on higher feed costs

Cal-Maine Foods Inc.'s fiscal Q3 income decreased by 2.7% as the eggs and egg product producer reported a 16% jump in the cost of raw materials while selling prices continue to ease.

The owner of Eggland's Best and Farmhouse egg brands was hit by a nationwide egg recall and higher feed costs that hurt profits last year, though sales improved as prices recovered from the recession's slumping levels.

Cal-Maine, whose quarterly dividend is linked to profits, will pay holders US$0.47 a share for the latest quarter, up from US$0.212 in the fiscal second quarter.

President and Chief Executive Dolph Baker said retail demand remained strong and higher-priced specialty egg sales continued to grow, accounting for nearly 24%% of revenue and nearly 18% of total dozens sold.

For the quarter ended February 26, the egg producer and distributor reported a profit of US$33.6 million, or US$1.40 a share, down from US$34.5 million, or US$1.45 a share, a year earlier. The latest period included US$11.6 million in other income, while the prior year included US$3.4 million.

Analysts most recently forecast earnings of US$1.10 a share. Revenue increased 1.3% to US$274.7 million.

Gross margin fell to 23.9% from 27.6% amid the higher feed costs. Net average selling prices weakened 0.3% after increasing 2.7% a year earlier. Sales volume grew 2%.

Shares closed Friday (Mar 25) at US$27.82 and were inactive premarket. The stock is down 25% in the past year.