Higher Feed Costs Hurt Cal-Maine Foods in Q2 Fiscal 2013

Andrew Klips  |

Shares of Cal-Maine Foods, Inc. (CALM) are trading lower on Monday after the shell egg producer reported a 38.6 percent decline in second-quarter fiscal 2013 earnings, citing higher costs for primary feed costs and additional expenses related to recent acquisitions.

The severe drought this summer months took corn prices to record highs, aiding in feed costs per dozen climbing 23.4 percent during the quarter compared to the year prior period. The Jackson, Mississippi-based company said that it expects costs to remain high throughout the remainder of the year.

Net sales during the quarter increased by 13.3 percent to $328.9 million from $290.4 million in the second quarter the year prior as the number of dozens of eggs sold increased by 9.1% to 238.1 million. Average selling price for a dozen eggs increased by 4.0 percent in the recent quarter compared to the 2012 quarter. Net income in the latest quarter totaled $14.3 million, or $0.60 per share, compared to $23.3 million, or $0.97 per share, during Q2 fiscal 2012.

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Wall Street analysts were predicting the company to earnings of 90 cents per share in Q2 fiscal 2013.

For the first six months of the year, net sales were up from $534.2 million in 2012 to $601.8 million in fiscal 2013. Net income was $23.7 million, or 99 cents per share, compared to $26.4 million, or $1.11 per share, in the first half of fiscal 2012.

"We are pleased with the continued growth in sales for the second quarter of fiscal 2013; however, our operating results also reflect challenging market conditions and increased input costs,” said Dolph Baker, chairman, president and chief executive at Cal-Maine Foods.

Sales of healthier specialty eggs, a product line that has higher and less cyclical retail selling prices, grew by 4.8 percent in the most recent quarter.

For the second quarter of fiscal 2013, Cal-Maine Foods will pay a cash dividend of approximately $0.199 per share to holders of its common and Class A common stock.

Shares of CALM are off by 9 percent around $40 with the worse-than-expected results in early afternoon trading on Monday. Even with the drop today, shares are still up about 25 percent in 2012.

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