US egg producer, Cal-Maine Foods, has reported increased sales in the first quarter of fiscal 2015 ended August 30, 2014.
For the first quarter of fiscal 2015, net sales were $356.9 million, an increase of 12% compared with net sales of $319.5 million for the first quarter of fiscal 2014. The company reported net income of $27.7 million, or $1.15 per basic share and $1.14 per diluted share, for the first quarter of fiscal 2015 compared with net income of $8.8 million, or $0.36 per basic and diluted share, for the year-earlier period.
Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, stated, "We are pleased with our financial and operating performance for the first quarter, marking a strong start to fiscal 2015. Our increased sales reflect higher volumes and higher average selling prices compared with the first quarter last year. Consumer demand for eggs has been very favorable and we experienced continued strong demand from all the major market segments including retail, egg product and exports. Sales of specialty eggs have continued to trend higher and accounted for 18.8% of our total number of shell eggs sold and 26.8% of our shell egg sales revenue for the first quarter of fiscal 2015."
As previously announced on July 25, 2014, the company entered into a new joint venture for specialty egg sales with Hickman's Egg Ranch, based in Buckeye, Arizona. The new joint venture, known as Southwest Specialty Eggs, acquired the Egg-Land's Best franchise for the state of Arizona. On September 12, 2014, Southwest Specialty Eggs announced the acquisition of the Egg-Land's Best franchise for the southern California market region that includes Clark County and Las Vegas, Nevada. As a result of these acquisitions, Southwest Specialty Eggs has licensing agreements for the sale of Egg-Land's Best and Land O' Lakes branded specialty eggs, as well as 4Grain, Farmhouse Eggs and other premium brands in these market regions.
Baker added, "These transactions are commensurate with our growth strategy to expand our market reach in specialty egg sales. Consumer demand for specialty eggs has continued to grow and Cal-Maine Foods is well positioned to meet this demand with a variety of healthy choices for our customers. We will continue to focus on enhancing our product mix with a full complement of conventional, cage-free, organic and nutritionally enhanced eggs.
"Our operations have run well this summer and we were able to benefit from lower feed costs in the first quarter of fiscal 2015 compared with the same period last year. Our average feed costs were 48.4 cents per dozen, down 11% from the first quarter of fiscal 2014. However, we continue to pay relatively high basis levels for our primary feed ingredients, particularly soybean meal, and we expect this trend to continue until the fall harvest is in and supplies are replenished. Operating income was $41.2 million for the first quarter compared with $11.1 million a year ago. These results reflect our lower feed costs and our management team's focused efforts throughout our operations to be an efficient, low-cost producer.
"Looking ahead to the remainder of the year, we are monitoring macroeconomic conditions that could have an impact on Cal-Maine Foods and the egg industry. The current USDA reports indicate the national laying flock is at a record high level, which could increase the future egg supply and put downward pressure on egg prices. Additionally, the pending implementation of Proposition 2 and Assembly Bill 1437 related to egg production standards and sales in California is expected to be effective January 1, 2015. While the final outcome is still uncertain, this legislation could have a significant impact on egg production throughout the country and is being closely watched by everyone in our industry.
"We are pleased with Cal-Maine Food's performance to date, and we believe the fundamentals of our business support continued growth and profitability for fiscal 2015," added Baker. "The expansion projects for our operations in Florida, Kansas, Kentucky and Texas are moving forward, and the additional capacity and improved efficiencies will result in less dependence on outside egg purchases. In addition, we will significantly expand our capacity for specialty eggs at both the Kansas and Kentucky facilities. The more favorable growing conditions this summer should improve the yield of this year's corn and soybean crops and support lower feed costs for the remainder of this fiscal year once the harvest season is over. Additionally, we believe our focused marketing efforts to expand specialty egg sales will enhance our ability to meet the changing demands of our customers. Overall, we believe we have the right growth strategy in place and look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2015."