Cal-Maine sells more eggs than ever, and the stock rallies

By Claudia Assis

Consumers look at eggs as an 'affordable protein option,' egg producer says

Shares of Cal-Maine Foods Inc. rallied 7% in the extended session Tuesday after the egg producer blew past Wall Street quarterly estimates, notching record sales volume on increased demand and lower egg prices.

"Demand for shell eggs has remained strong as consumers look for an affordable and nutritious protein option," Cal-Maine (CALM) Chief Executive Sherman Miller said.

Cal-Maine earned $146.4 million, or $3.01 a share, in the fiscal third quarter, compared with $323.2 million, or $6.62 a share, in the year-ago quarter. Revenue fell to $703.1 million, from $997.5 million a year ago.

Analysts expected the company to report earnings of $2.45 a share on sales of $692 million in the quarter.

The revenue decline was mostly due to the "significant" drop in egg prices compared to a year ago, Cal-Maine said. However, prices have moved higher recently, thanks to bird-flu impact as well as seasonality, the company said.

Sales volumes rose 3.2% year-on-year, with sales of conventional eggs up 2.6% while sales of specialty eggs rose 4.4%. The results represented the highest total dozens sold and highest specialty dozens sold in any quarter for Cal-Maine Foods, the company said.

Earlier Tuesday, Cal-Maine said it had detected the bird flu pathogen at a plant in Texas, leading to the culling of 1.6 million laying hens and 337,000 pullets, or young hens.

Cal-Maine in December said it had detected the pathogen at a factory in Kansas.

The Ridgeland, Miss., company is the U.S. largest producer and distributor of fresh shell eggs, selling most of its shell eggs in states across the Southwest, Southeast, Midwest and Mid-Atlantic regions.

The company said it also benefited from 20% lower feed prices, and current indications point to potentially lower corn prices in the near term, it said.

"However, as we continue to face uncertain external forces including weather patterns and global supply-chain disruptions, price volatility could remain," and soybean meal supply has remained tight relative to demand in the quarter, the company said.

The net average selling price was $2.152 for a dozen conventional eggs in the fiscal third quarter, down 41.5% compared with $3.678 a dozen a year ago. The net average selling price for specialty eggs was $2.415 a dozen, compared with $2.616 a dozen a year ago, a decline of 7.7%.

The share of specialty-egg dozens sold grew to 36.1% of total dozens sold, compared with 35.7% in the prior-year period.

Shares of Cal-Maine are up about 2% so far this year, compared with an advance of around 9% for the S&P 500 index SPX in the same period.

-Claudia Assis

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04-02-24 2015ET

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