Cal-Maine Shows Resilience In Tough Egg Market

Cal-Maine Foods, Inc. (NASDAQ:CALM) stock rose Wednesday after the egg producer delivered a second-quarter earnings beat, easing investor concerns over falling egg prices even as revenue and profitability slid sharply year over year.

The company reported second-quarter earnings per share of $2.13, beating the analyst consensus estimate of $1.94.

Quarterly sales of $769.50 million (down 19.4% year over year) missed the Street view of $826.395 million.

“With lower egg prices, our increasingly diversified business model, paired with disciplined execution, proved to be a source of resilience,” said Sherman Miller, president and chief executive officer of Cal-Maine Foods.

Shell egg sales were $649.6 million, down 28.1%. Prepared foods sales rose to $71.7 million from $10.4 million, up 586.4%.

Gross profit was $207.4 million, down 41.8%, and the gross profit margin was 27.0%. The decrease in gross profit was primarily driven by 26.5% lower shell egg selling prices and 2.2% lower shell egg sales volume.

Operating income totaled $123.9 million, down 55.5%, with an operating income margin of 16.1%. Both profit and operating leverage weakened sharply versus the prior period.

“We expect the ongoing sales mix shift across our portfolio, visible throughout the first half of the fiscal year, will enhance the durability and predictability of our earnings over time,” Miller added. 

The company exited the quarter with $1.14 billion in cash and short-term investments.

For the second quarter, Cal-Maine Foods said it will pay a cash dividend of approximately 72 cents per share to holders of its common stock, pursuant to the company’s variable dividend policy. The dividend is payable on February 12.

During the quarter, Cal-Maine Foods bought back 846,037 shares of its common stock for $74.8 million. The repurchases were made under the company’s existing $500 million authorization, with $375.2 million still available for future buybacks.

Cal-Maine stated it is steadily evolving from a commodity-focused egg business into a higher-value, more stable earnings platform, supported by rising demand for specialty eggs, premium offerings, hybrid pricing, and prepared foods, while its core shell-egg business remains the foundation.

CALM Price Action: Cal-Maine Foods shares were up 2.04% at $80.69 during premarket trading on Wednesday, according to Benzinga Pro data.

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