Cal-Maine inventory drops, as decrease egg costs hit quarterly outcomes

The firm reported fiscal second-quarter web earnings of $16.6 million, or 35 cents a share, in contrast with $198.3 million, or $4.07 a share, in the identical quarter final 12 months. Revenue fell to $523.2 million from $801.7 million within the prior-year quarter.

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

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

“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 stated.

Shares misplaced 8.4% after hours on Wednesday. The inventory has fallen 4.2% over the previous 12 months.

The firm reported after a spike in meals prices almost two years in the past that has gnawed at buyers ever since. The report additionally got here after the year-end vacation baking season — which usually makes use of up loads of eggs — and a large avian flu outbreak in 2022 that killed massive parts of the nation’s hen inhabitants and led to a bounce in egg costs.

However, in November, egg costs have been down 22.3% when in comparison with the place they stood a 12 months earlier, in line with authorities information launched final month. But these costs nonetheless rose 2.2% from October to November.

Last month, Cal-Maine stated that one its services in Kansas examined optimistic for avian flu, affecting about 684,000 laying hens, or 1.6% of its flock total. Production at that facility was briefly halted, the corporate stated on the time, including that it was “working to secure production from other facilities to minimize disruption to its customers.”

On Wednesday, the corporate provided extra particulars. Cal-Maine stated 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 which are lower than a 12 months previous.

Cal-Maine didn’t instantly reply to a request for extra info.

“Outbreaks of HPAI have continued to occur in U.S. poultry flocks,” the corporate stated in its earnings launch, referring to extremely pathogenic avian influenza. Cal-Maine stated 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 stated. “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 firm, citing the U.S. Centers for Disease Control and Prevention, stated the detections “do not present an immediate public-health concern.”

In November, a jury discovered that Cal-Maine and others conspired to boost costs of egg merchandise 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%
— round $17.8 million in damages.

According to Bloomberg Law, the regulation dictates that that award will increase three-fold. The outlet stated the alleged scheme concerned efforts to slaughter chickens early, enhance exports and regulate cage and hen-house capability.

Cal-Maine stated the choice was not remaining, however that it was “disappointed with the verdict as Cal-Maine Foods continues to believe that the company did nothing wrong.”

Last month, Cal-Maine stated it agreed to purchase a broiler processing plant, hatchery and feed mill in Dexter, Mo., that have been lately shuttered by Tyson Foods Inc.
TSN,
-1.66%.
In October, Cal-Maine purchased nearly all of the property of Fassio Egg Farms, together with egg-production services.