In a press release dated October 3rd Cal-Maine Foods Inc. (CALM) announced results for the 1st Quarter of FY 2024 ending September 2nd 2023. 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 pure-play company in the industry, supplying 21 percent of domestic shell egg demand. 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)

Sherman Miller, CEO and president

Notes: $7.5 million ‘other income,’ Q1 FY 2024 compared to $1.6 million in Q1 FY2023:

$ 0.5 million royalty Income, Q1 FY2024 compared to $0.4 million Q1 FY2023

$7.3 million interest income, Q1 FY2024 compared to $0.1 million Q1 FY2023

$27 million capital expenditure Q1 FY 2023 compared to $27 million Q1 2023

$0.5 million loss on non-controlling interest Q1 2024 compared to $0.2 million Q1 FY2023

No acquisitions in Q4 2023

Trailing P/E 3.1

52-Week Range in Share Price: $43.29 to $65.32 50-day Moving average $47.09

Market Close, Tuesday, September 3^rd $47.50 pre-release. After-hours, post release at 18H20, down 11.8 percent to $41.88.

In reviewing the CALM Q1 2024 quarterly report and the SEC Q-10 submission the following values represent key data for the most recent Quarter of FY 2024. (Q1 for Fiscal 2023 and percent difference in parentheses):-

• Shell egg sales attained $437.295 million in Q1 2024 comprising 95.2 percent of total revenue, driven by unit price. ($630.694 million, in Q1 2023, based on 95.0 percent of revenue). (Sales value for shell eggs down 30.7%).

• Dozen shell eggs sold (thousands): 273,126 (275,317; -0.8%)
• Average selling price of all shell eggs: $1.59 per dozen; ($2.28 per dozen; -30.3%).
• Average selling price of specialty eggs (excluding co-pack): $2.28 cents per dozen; ($2.10 per dozen; +9.0%).
• Average selling price of generic eggs: $1.24 cents per dozen; ($2.37 cents per dozen; -47.7%).
• Differential between specialty eggs and generic eggs: +$1.04 cents per dozen; (-$0.27 per dozen; +485%)
• Specialty eggs as a proportion of volume sold: 33.5%; (34.7%; -3.5%)
• Specialty eggs as a proportion of sales value: 47.7%; (31.8%; +50.0%)
• Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q1 FY2024 =91.7% (93.6%; -2.0%).
• Outside egg purchase averaged $1.65 per dozen in Q1 FY2024 ($2.37 per dozen in Q1 FY2023; -30.3%)
• Farm feed cost: 59.7 cents per dozen, (66.7 cents per dozen, -10.5%)
• Egg product sales in Q1 FY2024 attained $22.42 million or 4.8 of sales value at a unit price of $1.15 per lb. ($27.64 million, in Q1 FY2023 down18.9 percent in value; $0.94 per lb. up 22.3% in unit value)
• 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 Q1 FY2024 with the corresponding quarter in FY2023:-

• Cal-Maine Foods was not affected by the HPAI epornitic during either FY 2022 or FY 2023.
• Q1 of FY 2024 represented a less favorable marketing comparison to Q1 2023 based on lower prices for shell eggs, as influenced by depopulation of hens prior to Q1. 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 negatively by lower unit revenue for generic eggs but with a small benefit from specialty eggs. Average price for all eggs was 30.3 percent lower compared to Q1 FY2023.
• The 10.5 percent lower feed cost to 59.7 cents per dozen was offset by 15.5 percent higher farm production costs attaining 43.9 cents per dozen, compared to Q1 FY2023. Comparable farm production costs were $1.04 and $1.05 per dozen respectively for Q1 2024 and Q1 2023.
• 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. Normality was restored in Q1 FY2024 with generic eggs at lower unit price and presumably margin compared to specialty eggs.
• The Family-trust and other insider shareholding comprised 10.9 percent of equity, with institutions holding 98.5 percent. Shares short on September 15^th comprised 15.6 percent of float.

In commenting on Q1 results Sherman Miller, president and CEO stated, “Our results for the first quarter of fiscal 2024 reflect the current dynamic market conditions. After reaching record high levels in fiscal 2023, average selling prices for shell eggs have since returned to more normalized levels as the overall egg supply recovers from the most recent highly pathogenic avian influenza (“HPAI”) outbreak, which depleted the national hen supply. Customer demand has been favorable with conventional egg volumes higher than a year ago, offset by lower sales of specialty eggs. We continue to focus on offering customers a wide range of quality choices in shell eggs, as well as egg products offerings, with a favorable product mix in line with changing consumer demand trends.

Miller added. “In addition to our organic growth initiatives, we have continued to expand our business through selective acquisitions. Following the end of the first quarter, we announced a definitive agreement to acquire substantially all the assets of Fassio Egg Farms, Inc., related to its commercial shell egg production, and processing business, located in Erda, Utah, outside of Salt Lake City”.

The Q-10 Report documented approved capital investment of $201 million for cage-free conversions and additional upgrades to processing for FY 2024 through FY 2027. Of this total $101 million has been committed with $100 million to be expended.

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.