Cal Maine Foods, Inc. (CALM) swung to a net loss for the quarter ended Nov. 26, 2016. The company has made a net loss of $23.01 million, or $ 0.48 a share in the quarter, against a net profit of $109.23 million, or $2.26 a share in the last year period.
Revenue during the quarter plunged 53.56 percent to $253.54 million from $545.98 million in the previous year period. Gross margin for the quarter contracted 3720 basis points over the previous year period to 1.56 percent. Operating margin for the quarter stood at negative 15 percent as compared to a positive 30.43 percent for the previous year period.
Operating loss for the quarter was $38.04 million, compared with an operating income of $166.16 million in the previous year period.
Dolph Baker, chairman, president and chief executive officer of Cal-Maine Foods, Inc., stated, "Our results for the second quarter of fiscal 2017 reflect extremely challenging market fundamentals in the egg industry. Following the 2015 avian influenza (AI)-related laying hen losses, USDA data shows the egg industry has repopulated farms with laying hen numbers beginning to approach pre-AI levels. However, market demand trends have not kept pace with the higher production levels. While retail customer demand has been steady, egg export demand has not fully recovered following the aftermath of the AI outbreak. We have also experienced reduced demand for egg products, as many commercial customers reformulated their products to use fewer eggs when prices spiked, and have been slow to resume previous egg usage. Together, these factors have created an oversupply of eggs, and prices have fallen dramatically from the record high levels last year. For the second quarter of fiscal 2017, our average customer selling prices were down 50.7 percent from the same period of fiscal 2016. While the egg market has been in oversupply, recent USDA reports show the chick hatch has been down for three consecutive months over prior-year levels, so we expect to see a moderation in the size of the laying hen flock. Egg prices have also risen sharply since the end of our second quarter."
Working capital declines
Cal Maine Foods, Inc. has witnessed a decline in the working capital over the last year. It stood at $402.21 million as at Nov. 26, 2016, down 18.72 percent or $92.66 million from $494.88 million on Nov. 28, 2015. Current ratio was at 5.87 as on Nov. 26, 2016, up from 3.02 on Nov. 28, 2015.
Days sales outstanding went up to 55 days for the quarter compared with 29 days for the same period last year.
Debt comes down
Cal Maine Foods, Inc. has recorded a decline in total debt over the last one year. It stood at $22.51 million as on Nov. 26, 2016, down 21.76 percent or $6.26 million from $28.77 million on Nov. 28, 2015. Total debt was 2.12 percent of total assets as on Nov. 26, 2016, compared with 2.41 percent on Nov. 28, 2015. Debt to equity ratio was almost stable at 0.03 as on Nov. 26, 2016, when compared with the last year.
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