Cal-Maine Foods (NASDAQ:CALM) reported a first-quarter fiscal 2027 net loss as an oversupplied conventional egg market pressured wholesale prices, while the company continued investing in specialty eggs and prepared foods to build a more diversified earnings base.
For the quarter, Cal-Maine posted net sales of $539.6 million, down 41.5% from the prior-year period. The company reported a gross profit of $403,000, compared with $311.3 million a year earlier, and an operating loss of $82.2 million, versus operating income of $249.2 million in the prior-year quarter. Net loss attributable to Cal-Maine was $58.6 million, or $1.26 per diluted share, compared with net income of $199.3 million, or $4.12 per diluted share, a year earlier.
Conventional Egg Prices Weigh on Results
According to data cited by the company from the American Egg Board, the U.S. layer flock was estimated at roughly 336 million to 343 million birds, about 4 million below the prior estimate. August hatch numbers were down about 12% year over year, while cancellations had become more frequent. Average production over the past three months was estimated at about 19.9 million cases per month, a modest decline from the prior report.
Miller said those indicators do not confirm a market turn. He also noted that highly pathogenic avian influenza could affect the timing of a supply adjustment, as virus activity has historically risen during the fall wild-bird migration period.
“The issue today is that supply remains greater than even that healthy demand can absorb,” Miller said during the call.
Conventional shell egg sales totaled $201.7 million, down 59.5% from the prior-year period. The segment posted an operating loss of $71 million and a negative 35.2% operating margin. Cal-Maine’s percent produced to sold for conventional and specialty shell eggs combined was 98.2%.
Chief Financial Officer Max Bowman said conventional price realization for external customers was 99% of the daily average Urner Barry Southeast market price, compared with 101% in the preceding quarter. He attributed the sequential change to timing, as much of the company’s conventional egg business is priced with a lag to market movements.
Higher feed costs also added pressure. Miller said feed cost was up 4.3% from the first quarter of fiscal 2026. In response to an analyst question, management said changes in feed costs generally begin flowing through cost-plus pricing arrangements within two weeks to a month, although some agreements can involve a quarterly look-back period.
Demand Trends Remain Constructive
Despite excess supply, Cal-Maine said demand data across retail, food service and exports remained favorable. NielsenIQ data cited by the company showed retail egg volume rose about 4% year to date through August. In the four weeks ended Aug. 29, national retail egg dozens remained slightly higher year over year even as average price per dozen declined about 27%.
Specialty egg demand outpaced the overall category. Combined retail sales volumes for cage-free, organic, free-range and pasture-raised eggs increased about 6% year to date, according to NielsenIQ. The company also cited American Egg Board data showing quick-service restaurant egg servings increased 2.4% through July and U.S. egg export volume rose 29% year to date.
Specialty shell egg sales were $236.9 million, down 14% from a particularly strong prior-year period, when Cal-Maine supplied customers during industry shortages. The segment generated operating income of $14.9 million and a 6.3% operating margin.
Miller said the decline reflected difficult comparisons and noted that a low-double-digit percentage of the specialty business remains tied to conventional market pricing. Management expects specialty volumes to trend more closely with broader market growth over time.
Prepared Foods Expansion Continues
Prepared foods generated $63 million in sales, down 13% year over year, while operating income was $7.8 million and operating margin was 12.4%. Prepared foods accounted for about 12% of total net sales during the quarter, while specialty shell eggs and prepared foods together represented approximately 54% of revenue.
Cal-Maine expects prepared-foods production capacity to increase more than 60% by the first half of fiscal 2028 compared with the end of fiscal 2026. The planned expansion includes approximately 12 million pounds of annual pancake capacity through early fiscal 2027, 17 million pounds of scrambled egg capacity through fiscal 2027, and 18 million pounds of additional production capacity at Egg Corp through fiscal 2028.
John Zoeller, CFO of Prepared Foods, said upfront commissioning and startup costs will continue in the second quarter as new capacity comes online. He said those costs should moderate in the second half of the fiscal year, while the company begins to benefit from commercializing the additional volume.
Chief Strategy Officer Keira Lombardo said Cal-Maine continues to evaluate acquisition opportunities but is focused on integrating acquired businesses, commercializing new capacity and building customer demand at a pace that supports long-term execution. The company has previously expanded its prepared-foods platform through the Echo Lake, Crepini, Creighton Brothers and Van’s acquisitions.
Cash Position Supports Investment
Cal-Maine ended the quarter with $767.6 million in cash and temporary cash investments and said it remained virtually debt-free. Cash used in operating activities totaled $101.4 million, compared with cash provided by operating activities of $278.6 million a year earlier. Capital expenditures were $26.6 million, and the company spent $25 million to acquire additional EB franchise territory in the Northeast.
The company repurchased 66,601 shares for about $5 million during the quarter. About $315.7 million remained available under its $500 million share repurchase authorization at quarter-end. After the quarter closed, Cal-Maine repurchased an additional 204,888 shares for $14.9 million.
Under its variable dividend policy, Cal-Maine said it will not pay a cash dividend until it returns to cumulative profitability. The cumulative loss to be recovered stood at $94.5 million at the end of the first quarter.
Miller said the company’s objective is not to eliminate exposure to the egg cycle, but to increase the contribution from specialty eggs and prepared foods over time. “Current results therefore reflect both commodity pressure and investment ahead of growth,” he said.
About Cal-Maine Foods (NASDAQ:CALM)
Cal-Maine Foods, Inc is a leading producer and distributor of shell eggs in the United States. The company manages a vertically integrated business that includes egg production, processing, packaging, marketing and distribution. Its products are sold to retail grocery chains, foodservice customers, food processors and institutional buyers.
Cal-Maine offers conventional shell eggs as well as specialty products, including cage-free, organic, brown, free-range and nutritionally enhanced eggs.
