In a press release dated July 25^th Cal-Maine Foods Inc. (CALM) announced results for the 4^th Quarter and FY 2023 ending June 3^rd 2023. The Company exceeded both the topline consensus estimate by 2.5 percent and the analysts’ projected EPS by 2.8 percent. This report summarizes data provided in the Company release and the concurrently filed Q-10 Report

Cal-Maine represents a bellwether for the shell egg sector as the only public-quoted mainly pure-play company in the industry, supplying 21 percent of domestic shell egg consumption. The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Notes:

$9.7 million ‘other income,’ Q4 2023 compared to $0.6 million in Q4 FY2022:

$ 0.3 million royalty Income, Q3 2023 compared to $0.3 million Q3 2022.

$10.3 million patronage dividend 2023 compared to $10.1 million Q3 2022.

$6.1 million interest income, Q3 FY 2023 compared to $0.1 million 2022

$86.2 million capital expenditure Q3 2023 compared to $49 million Q3 2022

$396,000 loss on non-controlling interest Q4 2023 compared to $118,000 in Q4 2022.

No acquisitions in Q4 2023

For FY 2023 Cal-Maine Foods earned $758.0 million on sales of $3,146 million with a diluted EPS of $15.52. Corresponding financial data for FY 2022 included net income of $132.4 million on sales of $1,777 million with a diluted EPS of $2.72.

Trailing P/E 2.9

52-Week Range in Share Price: $43.29 to $65.32 50-day Moving average $46.32

Market Close, Tuesday, July 25^th pre-release: $45.09.

Open , Wednesday 26^th, post release up 4.1 percent to $46.94.

In reviewing the CALM Q4 2023 quarterly report and the SEC Q-10 submission the following calculated values represent key data for the most recent Quarter or for FY 2023. (Q4 or for Fiscal 2022 and percent difference in parentheses):-

• Shell egg sales attained $661.82 million in Q4 2023 based on this category representing 96.1 percent of total revenue, driven by unit price. ($575,18 million, in Q4 2022, based on 97.0 percent of revenue. (Sales value up by 15.1 percent)

• Dozen shell eggs sold (thousands): 296,544 (271,961; +9.0%)
• Average selling price of all shell eggs calculated from data released: $2.23 per dozen; ($2.12 per dozen; +5.2%).
• Average selling price of specialty eggs (excluding co-pack) calculated from data released: $2.52 cents per dozen; ($2.05 per dozen; +22.9%).
• Average selling price of generic eggs calculated from data released: $2.07 cents per dozen; ($2.15 cents per dozen; -3.7%).
• Differential for specialty eggs against generic eggs: +$0.45 cents per dozen; (+$0.10 per dozen; +35.0%)
• Specialty eggs as a proportion of volume sold: 34.6%; (34.0%; +1.0%)
• Specialty eggs as a proportion of sales value: 39.1%; (32.9%; +18.8%)
• Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in FY 2023: 92.3% (94.3%; -2.1%).
• Outside egg purchase averaged $3.02 per dozen in FY 2023 ($1.72 per dozen in FY 2022; up 75.6%)
• Farm feed cost: 67.1 cents per dozen, (64.1 cents per dozen, +4.7%)
• Egg product sales in FY 2023 attained $122,270 or 3.9 of sales value at a unit piece of $1.75 per lb. ($60,040, in FY 2022 up 103.7 percent; $0.94 per lb. up per lb. up 87.2 percent)
• Cal-Maine Foods maintained a flock of 41.2 million hens on average during FY 2023 with 10.8 million pullets including parent breeders representing less than two percent of the total.. 

The following observations relate to the comparison of Q4 2023 with the corresponding quarter in 2022:-

• Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or during 2023.
• Q4 of FY 2023 represented a less favorable marketing comparison to Q4 2022 based on lower prices for shell eggs, as influenced by depopulation of 44 million hens in the U.S. prior to and during Q4, coupled with high consumer demand. The benchmark price discovery value for Southeast large was down 13.8 percent in Q4 2023 to $2.16 per dozen compared to Q4 2022. Restrictions due to COVID on institutional and consumer segments were in large measure removed during Q4 of FY 2022 raising demand.
• Gross profit was impacted positively by higher unit revenue for generic eggs but offset by significantly higher farm production costs including feed (67.6 cents per dozen, up 18.3 percent from Q4 2022) and additionally by inflation in labor, fuel packaging and consumables (39.6 cents per dozen up 12.5 percent from Q4 2022).
• In a market characterized by high unit prices, the relative contribution of specialty eggs is less important to net earnings in contrast to a down market as in previous years. Normality was restored in Q4 of 2023 with generic eggs at lower unit price and presumably margin compared to specialty eggs.
• The Family-trust and other insider shareholding amounted to 10.9 percent of equity, with institutions holding 98.5 percent. Shares short on June 30^th comprised 22.6 percent of float.

In commenting on Q4 results Sherman Miller, president and CEO stated, “Our fourth quarter performance marked a solid finish to a strong fiscal year for Cal-Maine Foods. Our results for fiscal 2023 reflect the extreme market conditions we faced, with significantly higher average selling prices compared with the prior-year period, primarily due to the highly pathogenic avian influenza (“HPAI”) outbreak and higher grain and other input costs. Prices in the fourth quarter have decreased significantly from the fiscal year’s highest levels as the egg industry begins to recover from the effects of HPAI. At the same time, strong consumer demand for shell eggs supported higher sales for the fourth quarter, which included the busy Easter holiday season”. He added “Our operations continued to run well in the fourth quarter despite a challenging environment with inflationary pressures affecting our feed and other production costs. Cal-Maine Foods has a proven operating model that has sustained our business throughout various economic cycles, and we remain focused on managing the aspects of our business that we can control”. Miller concluded “The added challenges of the HPAI outbreak have adversely affected the overall egg supply, and we have continued to navigate through the related disruptions to meet the needs of our valued customers. Cal-Maine Foods has robust biosecurity measures in place across our operations, and we continue to invest in additional resources necessary to reduce risk.”

The Q-10 Report documented approved capital investment of $190 million for cage-free conversions and additional upgrades to processing for FY 2024 through FY 2027. Of this total $85 million had been committed with $104 million to be assigned.

The Company joined in the formation of ProEgg, Inc. a Capper-Volstead Act Farmers’ Cooperative to distribute eggs in 13 western states. The objective is to enhance service to customers in the region by ensuring a secure supply chain.