September 29,  2020

Cal-Maine Foods reports first quarter fiscal 2021 results

Cal-Maine Foods, Inc. has reported results for the first quarter of fiscal 2021 (13 weeks) ended August 29, 2020.

Net sales for the first quarter of fiscal 2021 were US$292.8 million, a 21.4% increase compared to US$241.2 million for the first quarter of fiscal 2020. The company reported a net loss of US$19.4 million, or US$0.40 per basic and diluted share, for the first quarter of fiscal 2021, compared to a net loss of US$45.8 million, or US$0.94 per basic and diluted share, for the first quarter of fiscal 2020.

Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc., made the following statements:

"Our results for the first quarter of fiscal 2021 reflect continued challenging market conditions as we proactively monitor and manage our operations in the face of the COVID-19 pandemic. Our top priority is the health and safety of our employees, who continue to work hard every day to produce eggs for our customers, and we are proud of their dedicated efforts to contribute to a stable food supply. For the first quarter of fiscal 2021, total dozens sold were up 3.8% over the same period last year, primarily due to continued strong retail demand as consumers are still preparing more meals at home. While demand from food service customers is improving as many restaurants have resumed limited service, food service demand is still well below pre-quarantine levels, which we believe has constrained the price of shell eggs in the retail market.

"Market prices for eggs remained volatile over the first quarter and decreased overall compared to prices at the end of fiscal 2020, which reflected increased consumer purchases due to the COVID-19 pandemic and seasonal demand due to Easter falling in the fourth quarter. The Southeast large market average price for conventional eggs for the first quarter of 2021 was US$0.95 per dozen, up 13.1% compared to US$0.84 for the first quarter of fiscal 2020. Our average sales price was up 17.8% compared with the prior year first quarter, which was a period of record low prices and an oversupply of eggs.

"The overall supply of eggs has declined significantly, and overall demand is expected to improve as food service sales return to pre-COVID-19 levels. Hen numbers reported by the United States Department of Agriculture (USDA) as of September 1, 2020, were 317.4 million, which represents 15.1 million less hens than reported a year ago, when the USDA also reported high flock productivity. The USDA reported that the hatch from January through August 2020 decreased 2.7% as compared to the same period last year, which will likely further reduce future egg supply levels.

"For the first quarter of fiscal 2021, sales of specialty eggs totaled US$129.2 million, accounting for 45.2% of our egg sales revenue, compared with US$111.2 million, or 47.5% of egg sales revenue, in the first quarter of fiscal 2020. The higher specialty egg revenue reflects a 15.5% increase in specialty dozens sold and a US$0.011 increase in net average selling price per dozen in the first quarter of fiscal 2021 as compared to the same period in fiscal 2020. Demand for specialty eggs was positively affected by the higher conventional egg prices as compared to the same period in the prior year.

"An important competitive advantage for Cal-Maine Foods is our ability to offer our customers choice, by providing a favorable product mix in a sustainable manner, including conventional, cage-free, organic and other specialty eggs. In recent years, a significant number of large restaurant chains, food service companies and grocery chains, including our largest customers, announced goals to transition to an exclusively cage-free egg supply chain by specified future dates. Additionally, several states representing 23% of the US total population, have passed legislation requiring cage-free eggs by specified future dates, and other states are considering such legislation. We are working with our customers to ensure a smooth transition in meeting their goals. Since 2008, we have invested over US$389.9 million in facilities, equipment and related operations to expand our cage-free production.

"Our farm production costs per dozen produced for the first quarter of fiscal 2021 decreased 4.3%, or US$0.032 per dozen, compared to the first quarter of fiscal 2020. This was primarily due to lower feed costs and lower amortisation costs due to selling flocks early in fiscal 2020 in response to market conditions. According to USDA reports, current supplies of corn and soybeans are favorable, and we believe we will continue to have an adequate supply of both grains in fiscal 2021. However, current ongoing uncertainties and supply chain disruptions related to the COVID-19 outbreak, weather fluctuations and geopolitical issues surrounding trade agreements and international tariffs may lead to further price volatility.

"We remain focused on managing our operations in an efficient and sustainable manner, despite the unprecedented challenges created by the COVID-19 pandemic. We understand the challenges and difficult economic environment facing the families in the communities where we live and work, and we are committed to helping where we can. One way we can do this is by providing food assistance to those in need, and Cal-Maine Foods has donated over 900,000 dozen eggs in the first quarter of 2021. We will continue to pursue our growth strategy and the further expansion of our specialty egg business as we work to safely meet the needs of our customers with outstanding products and service. We look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2021."

- Cal-Maine