MW Holidays and higher egg prices lift Cal-Maine's results and stock

By Bill Peters

Results reflected 'seasonal boost leading up to the Thanksgiving holiday' as well as higher prices due to bird-flu outbreak

Shares of Cal-Maine Foods Inc. rose after hours on Tuesday after the egg producer reported quarterly results that topped expectations, as holiday demand and higher egg prices due to a nationwide bird-flu outbreak led to massive gains in profit and sales.

The company reported fiscal second-quarter net income of $219.1 million, or $4.47 a share, compared with $17 million, or 35 cents a share, in the same quarter last year. Revenue came in at $954.7 million, a jump from $523.2 million in the same quarter that ended in 2023.

Analysts polled by FactSet expected Cal-Maine to earn $4.05 a share, on sales of $751.5 millions.

Shares (CALM) gained 3.6% after hours. The stock is up around 90% over the past 12 months, as a nearly three-year-long nationwide avian-flu outbreak thins out flocks and, in turn, drives up the price of eggs.

Cal-Maine has tried to increase production, while following through on bigger plans to grow through acquisitions. It has also tried to grow through prepared products, like egg wraps and crepes.

"Robust demand for shell eggs resulted in a significant increase in dozens sold for the quarter, which included the seasonal boost leading up to the Thanksgiving holiday and sales from our latest acquisition completed in June," Chief Executive Sherman Miller said in a statement on Tuesday.

"Our results also reflect higher market prices, which have continued to rise this fiscal year as supply levels of shell eggs have been restricted due to recent outbreaks of highly pathogenic avian influenza," he continued.

The outbreak has affected more than 130 million poultry and other birds since January 2022, according to government data. As of Monday, according to Centers for Disease Control and Prevention data, there were 66 confirmed human cases of the H5N1 bird flu in the U.S. since last year and 67 since 2022. The first such death from the virus in the U.S. was reported on Monday.

Cal-Maine on Tuesday said it had around $60 million worth of new projects aimed at expanding its cage-free egg production resources. Those projects include five new facilities in Florida, Georgia, Utah and Texas.

During a conference in November, when asked why the virus was so hard to contain, Miller said that a bird-flu outbreak from 2015 to 2016 was largely caused by spreading from one farm to the next.

"But this time, 85% of it is direct wild birds, so the biosecurity programs definitely have to spread from producer to producer but the wild-bird introduction still exists," he said. "And when it possibly could have been slowing down, dairy cattle has come on the same and there are new hosts."

"Dairy cattle were infected directly from wild birds, the first herd," he added. "And then, it is spread from herd to herd, and that virus can spread from dairy cattle to chickens. ... So, a lot of dynamics at play there."

-Bill Peters

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January 07, 2025 16:30 ET (21:30 GMT)

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