Cal-Maine Foods (CALM) Q2 2026 Earnings Transcript

Core Insights - The company is experiencing a shift in its sales mix, with specialty eggs and prepared foods becoming a larger portion of total net sales, indicating a strategic focus on diversification and growth in these segments [2][11][27] Sales Performance - In 2026, shell egg sales accounted for 85% of total net sales, down from 94.5% in 2025, while specialty eggs represented 39.6% of shell egg sales, up from 33% [1][2] - Specialty eggs and prepared foods combined made up 42.8% of net sales, compared to 32.4% in the previous year [1] Financial Results - For 2026, net sales were reported at $769.5 million, a decrease of 19.4% from $954.7 million in 2025 [17] - Gross profit fell to $207.4 million, down 41.8%, primarily due to lower shell egg selling prices [19] - Operating income decreased by 55.5% to $123.9 million, with a net income of $102.8 million, down 53.1% [19] Growth Strategies - The company is investing in expanding its prepared foods capabilities, including a $15 million project to increase scrambled egg production by 17 million pounds annually by mid-fiscal 2027 [7][9] - The acquisition of Clean Egg LLC is expected to enhance specialty egg capacity and support local sourcing [11] Market Trends - There is a growing consumer preference for high-quality, convenient protein sources, with younger consumers treating eggs as a staple [6] - The company is evolving into a more resilient and diversified portfolio, focusing on specialty eggs and value-added prepared foods [7][12] Operational Efficiency - The company maintains a strong balance sheet and is virtually debt-free, allowing for flexibility in capital allocation and investment in growth opportunities [22] - The focus on cost drivers and efficiency is aimed at protecting margins through market cycles [14] Future Outlook - The company anticipates continued growth in specialty eggs and prepared foods, with expectations of specialty eggs exceeding 50% of total shell egg net sales in the long term [40] - The prepared foods segment is projected to achieve a 19% EBITDA margin, despite short-term fluctuations [42]