Cal-Maine Foods (CALM) presented an overview of the U.S. egg industry in the context of   Cal-Maine facilities and financial performance at the Burkenroad Reports Investment Conference on April 29th 2022.

Details of the U.S. market and Cal-Maine Q1 Fiscal 2022 results can be retrieved from the SEARCH block on EGG-NEWS. Industry reports, including production data and costs are incorporated in the Egg Week and Egg Monthly postings respectively.

Cal-Maine Foods is the largest shell egg producer in the U.S. and the World with approximately 43 million hens.  The company operates 41 production facilities, three breeding farms, and two hatcheries.  Feed is supplied to flocks from 25 feed mills and product is packed at 44 installations including in-line complexes. Production is supplemented by nine percent contract production. 

The Company holds a 19 percent share of the shell-egg market with 58 percent of 1.073 billion dozens sold as conventional (generic) shell eggs.  Approximately 40 percent of sales comprise specialty eggs, including the nutritionally enriched Eggland’s Best ™ and other brands established by Cal-Maine.  Egg products represent three percent of annual sales. Cal-Maine supplies the ten top retailers and distributors with the three largest customers representing 48 percent of revenue with Walmart/Sam’s Club contributing thirty percent of revenue.

Cal-Maine production facilities are concentrated in the Southeast including Florida, Georgia, Alabama, Mississippi, Texas, and New Mexico with additional complexes located in Utah, Kansas, Kentucky, Ohio, and South Carolina.  Cal-Maine holds Eggland’s Best (™) specialty franchises in Southern California, Arizona, New Mexico, Texas, Louisiana, Mississippi, Alabama, Georgia, South Carolina, and Caribbean nations including Cuba and Puerto Rico.

Cal-Maine has steadily increased production of specialty eggs from 25 percent of volume in 2019 to 30 percent in 2022.  Specialty eggs represent a disproportionately higher unit price benefiting the company when generic prices are low over successive months or quarters.  In 2022, Cal-Maine will market 71 percent of volume as commodity, white, and caged brown, eight percent as nutritionally enhanced, fifteen percent as cage free and organic, and six percent as free-range and pasture-raised categories.

Slightly over ninety percent of housing used to produce eggs marketed under Cal-Maine and private banners is Company-owned. Cal-Maine Foods has progressively increased the proportion of eggs sold from their own production facilities.  In 2022 it is estimated that 93 percent of eggs marketed will be derived from Cal-Maine Farms compared to 84 percent in 2019.  Despite capital investment in company owned facilities, the cost of self-production offers a higher margin, especially from in-line complexes.

The presentation emphasized the high proportion of cost represented by feed.  During the third quarter of Fiscal 2022, ending March 29th, feed cost per dozen was 56.2 cents, approximately 20 percent higher than the 46.7 cents for the corresponding third quarter in FY2021. 

Cal-Maine was unaffected uring the 2015 highly pathogenic avian influenza (HPAI) epornitic.  A similar situation is evident in 2022 to date with no reported infections.  This is due partly to the location of Cal-Maine production facilities in relation to migratory waterfowl that are disseminating virus, but also to intensive biosecurity procedures representing the highest standards in the industry.  At the time of the presentation approximately 26 million table egg layers had been culled as a result of HPAI representing over eight percent percent of the nominal 320 million producing table egg flock at he beginning of the epornitic.

At of February 26th marking the end of Q1 of 2022, Cal-Maine posted total assets of $1,282 million with no long term debt and lease obligations of $953 million against a market capitalization on April 29th of $2,770 million.  CALM considered a bellwether for the pure-play shell-egg segment of the industry has traded in a 52 week range of $33.85 to $59.95 with a 50-day moving average of $50.40.  Approximately 15 percent of the shares are held by insiders and 94.5 percent by institutions with 14.1 percent of the float short as of April 14th.  On a trailing 12 month basis, profit margin was -0.5 percent, operating margin -3.8 percent, return on assets -2.8 percent, and return on equity -0.8 percent.