LONDON, UK / ACCESSWIRE / September 28, 2016 / Active Wall St. announces its post-earnings coverage on Cal-Maine Foods, Inc. (NASDAQ: CALM). The company posted its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 26, 2016. The Jackson Mississippi-based company's Q1 FY17 revenues declined 60.7% on y-o-y basis, missing market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on August 27, 2016, Cal-Maine's reported total sales of $239.85 million compared to total sales of $609.90 million recorded at the end of Q1 FY16. Total sales numbers underperformed market estimate of $274.6 million. The first quarter revenue was affected by a decline of 58% in the average selling prices of eggs together with a drop in co-pack business and a marginal fall in specialty egg volume.

The egg-seller reported Q1 FY17 net loss of $30.94 million, or $0.64 loss per diluted share, compared to a net income of $143.02 million, or $2.95 per diluted share, in the prior-year's comparable quarter. The company's net loss for the reported quarter was almost double of the market net loss expectation of $0.33 loss per diluted share.

In his commentary in the earnings results, Dolph Baker, chairman, president, and chief executive officer of Cal-Maine Foods stated:

"Our results for the first quarter of fiscal 2017 reflect a disappointing shell egg market with more challenging market conditions and significantly lower market prices than the first quarter of fiscal 2016."

Operational Metrics

In the reported quarter, consumer demand remained for eggs were favorable; however, the headwinds in institutional demand for egg products together with declining exports increased the inventory levels higher, creating additional pressure on price. The company sold 242.33 million dozens of eggs in Q1 FY17, lower than 258.77 million in the last year quarter.

In the reported period, specialty eggs contributed 22.9% to total number of shell eggs sold, while it accounted for 46.7% of the total shell eggs revenue. Net average selling price of eggs decline from $2.243 per dozen in Q1 FY16 to $0.95 per dozen in Q1 FY17.

During the reported quarter, Cal-Maine recorded operating loss of $49.83 million compared to operating income of $220.11 million in the year ago comparable quarter. Gross loss for Q1 FY17 came in at $9.57 million versus gross profit of $263.07 million in Q1 FY16.

Cal-Maine experienced higher farm production costs with feed cost inching up to $0.431 per dozen in Q1 FY17 from $0.419 per dozen in Q1 FY16. The company attributed this increase to the ongoing capital improvement and conversion projects.

Egg-O-Nomics

In 2015, the supply of eggs declined due to the outbreak of the avian influenza, or bird flu, which sent price of eggs soaring to all time high. But since then egg prices have tumbled on increased supply as producers looked to cover the loss incurred. The Urner Barry egg price index also hit a decade-low level in the previous quarter.

Source: United States Department of Agriculture (USDA)

As per data provided by USDA in August 2016, egg production was up by 10% y-o-y and totaled 8.58 billion.

Balance Sheet

As on August 27, 2016, Cal-Maine's had cash and cash equivalents of $306.85 million compared to $389.55 million as on May 28, 2016. Furthermore, the company had reported long-term debt amounting to $8.13 million as on August 27, 2016 versus $9.25 million as on May 28, 2016.

Acquisition

On August 02, 2016, Cal-Maine announced that it was in the process of acquiring assets of Foodonics International, Inc. and its related entities that form the Dixie Egg Company. The company said that the acquisition will provide additional processing facilities of 1.6 million laying hens and feed production together with milling and distribution facilities in Georgia, Alabama, and Florida.

Stock Performance

Cal-Maine Foods' stock is trading slightly down by 0.68%, closing Tuesday's session at $40.80 on volume of 943.59 thousand shares. The company's shares are trading a PE ratio of 6.25 and have a dividend yield of 4.31%.

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SOURCE: Active Wall Street