Cal-Maine stock drops, as lower egg prices hit quarterly results

The company reported fiscal second-quarter net income of $16.6 million, or 35 cents a share, compared with $198.3 million, or $4.07 a share, in the same quarter last year. Revenue fell to $523.2 million from $801.7 million in the prior-year quarter.

Analysts polled by FactSet expected Cal-Maine to earn 83 cents a share, on revenue of $525 million.

“Our sales reflect a different market environment from a year ago, with significantly lower average selling prices,” Chief Executive Sherman Miller said in a statement.

“However, our total volumes sold were up slightly over a year ago, as consumer demand for shell eggs continued to be favorable in the quarter, especially leading up to the Thanksgiving holiday,” he said.

Shares lost 8.4% after hours on Wednesday. The stock has fallen 4.2% over the past 12 months.

The company reported after a spike in food costs nearly two years ago that has gnawed at shoppers ever since. The report also came after the year-end holiday baking season — which generally uses up a lot of eggs — and a massive avian flu outbreak in 2022 that killed large portions of the nation’s hen population and led to a jump in egg prices.

However, in November, egg prices were down 22.3% when compared to where they stood a year earlier, according to government data released last month. But those prices still rose 2.2% from October to November.

Last month, Cal-Maine said that one its facilities in Kansas tested positive for avian flu, affecting about 684,000 laying hens, or 1.6% of its flock overall. Production at that facility was temporarily halted, the company said at the time, adding that it was “working to secure production from other facilities to minimize disruption to its customers.”

On Wednesday, the company offered more details. Cal-Maine said that it had an avian flu outbreak “within its facilities in Kansas, resulting in depopulation of approximately 1.5 million laying hens and 240,000 pullets, or approximately 3.3% of its total flock, subsequent to quarter end.” Pullets are hens that are less than a year old.

Cal-Maine did not immediately respond to a request for more information.

“Outbreaks of HPAI have continued to occur in U.S. poultry flocks,” the company said in its earnings release, referring to highly pathogenic avian influenza. Cal-Maine said that it believes “that it can mitigate the loss of production through flock rotations.”

“The company remains dedicated to robust biosecurity programs across its locations; however, no farm is immune from HPAI,” it said. “HPAI is still present in the wild bird population and the extent of possible future outbreaks, with heightened risk during the migration seasons, cannot be predicted.” The company, citing the U.S. Centers for Disease Control and Prevention, said the detections “do not present an immediate public-health concern.”

In November, a jury found that Cal-Maine and others conspired to raise prices of egg products from 1998 to 2008. On Dec. 1, the jury awarded the plaintiffs — which included Kraft Heinz Co.
KHC,
-0.10%,
Nestle and General Mills Inc.
GIS,
-0.03%
— around $17.8 million in damages.

According to Bloomberg Law, the law dictates that that award increases three-fold. The outlet said the alleged scheme involved efforts to slaughter chickens early, increase exports and adjust cage and hen-house capacity.

Cal-Maine said the decision was not final, but that it was “disappointed with the verdict as Cal-Maine Foods continues to believe that the company did nothing wrong.”

Last month, Cal-Maine said it agreed to buy a broiler processing plant, hatchery and feed mill in Dexter, Mo., that were recently shuttered by Tyson Foods Inc.
TSN,
-1.66%.
In October, Cal-Maine bought virtually all the assets of Fassio Egg Farms, including egg-production facilities.