In a press release dated January 3^rd Cal-Maine Foods Inc. (CALM) announced results for the 2^nd Quarter of FY 2024 ending December 2^nd 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 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: $0.5 million ‘other income,’ Q2 2024 compared to $1.1 million in Q2 FY2023:

$ 0.30 million royalty Income, Q2 2024 compared to $0.34 million Q2 FY2023

$7.0 million interest income, Q2 FY2024 compared to $9.9 million Q2 FY2023

$0.4 million loss on non-controlling interest Q2 2024 compared to $0.3 million Q2 FY2023

Fassio Farms acquisition in Q2 2024: 1.2 million hens, housing, packing plant and feed mill etc.

for $53.7 million representing $44.80/hen

Trailing P/E 4.4

52-Week Range in Share Price: $42.25 to $61.91 50-day Moving average $50.28

Market Close, Wednesday, January 3^rd $54.86 pre-release.

Post release, after-hours 18H15, down 7.6 percent to $50.69.

In reviewing the CALM Q2 2024 quarterly report and the SEC Q-10 submission the following calculated values represent key data for the most recent Quarter of FY 2024. (Q2 for FY 2023 and percentage differences in parentheses):-

• Shell egg sales attained $498,504 million in Q2 2024 based on shell eggs comprising 95.3 percent of total revenue. ($769,695 million, in Q2 2023, based on 96.0 percent of revenue). (Sales value for shell eggs down 35.2% reflecting lower average unit value).

• Dozen shell eggs sold (thousands): 288,173 (284,086; +1.4%)
• Average selling price of all shell eggs: $1.73 per dozen; ($2.71 per dozen; -36.2%).
• Average selling price of specialty eggs (excluding co-pack): $2.28 cents per dozen; ($2.37 per dozen; -3.8%).
• Average selling price of generic eggs: $1.46 cents per dozen; ($2.89 cents per dozen; -49.5%).
• Differential between specialty eggs and generic eggs: +$0.82 cents per dozen; (-$0.52 per dozen; +257.7%)
• Specialty eggs as a proportion of volume sold: 33.2%; (33.8%; -1.8%)
• Specialty eggs as a proportion of sales value: 43.3%; (29.4%; +47.2%)
• Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q2 FY2024 : 92.0% (92.0%; no change).
• Farm feed cost: 55.4 cents per dozen, (68.5 cents per dozen, -19.1%) Includes specialty and breeder diets.
• Other farm costs attained 43.11 cents per dozen (38.6 cents per dozen; +11.6%) due to higher labor, facility and flock amortization costs
• Egg product sales in Q2 FY 2024 attained $20.0 million or 6.1% of sales value at a unit price of $1.18 per lb. For Q2 2023, sales of $28.1 million represented 3.5% of sales, down 28.8% with a unit price of $1.79 per lb. down 34.0% in unit value.
• Cal-Maine Foods maintained a flock of 41.2 million hens on average during FY 2023 with 10.8 million pullets plus parent breeders representing less than two percent of the total flock. 

The following observations relate to the comparison of Q2 2024 with the corresponding Q2 FY2023:-

• Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or FY 2023. During Late December 2023 (Q3 FY 2024) the Chase, KS. Complex comprising 1.5 million hens and 240,000 pullets, representing 3.3% of the total flock was depopulated as a result of HPAI.
• Q2 of FY 2024 represented a less favorable marketing comparison to Q2 FY 2023 based on lower prices for shell eggs as flocks were re-populated, coupled with restoration of normal consumer demand.
• Comparing Q2 FY 2024 with Q2 FY 2023 gross profit was impacted negatively by lower unit revenue for generic eggs although with a benefit from specialty eggs. The 19.1 percent lower feed cost to 55.4 cents per dozen was partly offset by 11.6 percent higher farm production costs attaining 43.1 cents per dozen, Comparable farm production costs were $0.99 and $1.07 per dozen respectively for Q2 2024 and Q2 2023.
• In a market characterized by low unit prices, the relative contribution of specialty eggs is more important to net earnings in contrast to an up-market for conventional eggs. Normality was restored in Q2 FY 2024 with generic eggs at a 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 December 15^th comprised 14.2 percent of float.

In commenting on Q2 results Sherman Miller, president and CEO stated, “Cal-Maine Foods delivered solid financial and operating performance for the second quarter of fiscal 2024 in the face of dynamic market conditions. Our sales reflect a different market environment from a year ago, with significantly lower average selling prices. 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. As always, we strive to offer consumers a wide range of quality choices in shell eggs as well as enhanced egg products offerings. Our ability to meet changing demand trends with a favorable product mix has been an important differentiator for Cal-Maine Foods. With solid execution, we continued to meet the needs of our customers. We commend our managers and employees across our production facilities who continued to efficiently manage our operations and keep pace with changing demand”.

In relation to expansion Miller stated “During the second quarter, we completed the acquisition of the assets of Fassio Egg Farms, Inc. a shell egg production and processing business located in Erda, Utah, outside of Salt Lake City. The additional production capacity, especially for cage-free eggs, will enhance our ability to serve our valued customers in this important market area. Following the end of the second quarter, we announced a definitive agreement to acquire from Tyson Foods, Inc. a recently closed broiler processing plant, hatchery and feed mill located in Dexter, Missouri. We expect to complete the acquisition in our third fiscal quarter and to repurpose the assets for use in egg and egg products production”.

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 $127 million has been committed with $73 million to be expended.

During late 2022 Cal-Maine Foods 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.