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The call reflects a company navigating a cyclical trough in commodity egg prices with substantial short‑term financial deterioration (large YoY declines in sales, margins, operating income and EPS), but also strong strategic progress: meaningful shift into specialty and prepared foods, record specialty volumes, active M&A and capacity expansion, solid liquidity and disciplined capital allocation. Management frames near‑term margin pressure in prepared foods and spot price weakness as transitional and expects recovery as new capacity and pricing structures take effect over 2027–2028.
The company guided that prepared foods is a near-term trough with a progressive recovery beginning in Q4 FY2026 and margins expected to trend back toward baseline through FY2027–FY2028 (management referenced a ~19% baseline at Echo Lake); prepared foods capacity is expected to increase by more than 30% over the next 18–24 months driven by Echo Lake’s ~17 million pounds of annual scrambled-egg capacity in FY2027, a high-speed pancake line adding ~12 million pounds in FY2027, and Kupini’s $7.0 million investment through FY2028 to add ~18 million pounds (collectively supporting the >30% capacity target); Q3 prepared foods sales were $63.6 million (up 441.2% YoY) and represented 9.5% of net sales (9.3% YTD), specialty eggs comprised 50.5% of shell egg sales in Q3 (42.7% YTD) and specialty + prepared foods made up 52.9% of net sales in Q3 (45.7% YTD), specialty pricing is expected to remain relatively stable (only ~12% tied to the CA market), produced-to-sold rose 3.1 percentage points to 91.5%, and the company reiterated capital priorities including returning capital (approx. $0.36/share variable dividend payable May 2026), $24.3 million of Q3 buybacks (329,830 shares) with ~$350.8 million remaining authorization, and a strong liquidity position with ~$1.152 billion cash and temporary investments.
Specialty eggs accounted for 50.5% of shell egg sales in 2026Q3 vs 24.4% a year ago; prepared foods were 9.5% of net sales vs 0.8% prior year. Specialty + prepared foods combined were 52.9% of net sales vs 24.0% prior-year quarter (first three quarters combined: 45.7% vs 28.6%).
Prepared foods sales were $63.6M in 2026Q3, up 441.2% YoY (though down 11.2% Q‑Q). Kupini Foods sales increased 283% and management expects prepared foods capacity to increase >30% over the next 18–24 months (Echo Lake ~17M lbs scrambled capacity in FY2027, high-speed pancake line ~12M lbs, Kupini ~18M lbs via $7M investment).
Specialty sales totaled $289.1M (down 12.1% YoY) with selling prices down 16.9% but volumes up 5.8%; management notes specialty pricing is largely grain-based or fixed arrangements (only ~12% tied to volatile CA market) and reported a record specialty quarter and ~6% specialty volume growth for the quarter.
Company metrics show breeder flocks +13%, total chicks hatched +41.7%, and average number of layer hens expanded ~2%. Percentage produced-to-sold increased 3.1 percentage points to 91.5%, reducing outside egg purchases.
Ended quarter with $1.152B cash and temporary investments, virtually debt free. Share repurchases of $24.3M in the quarter (329,830 shares) with $350.8M remaining on a $500M authorization; announced variable dividend of ~$0.36 per share.
Approximately $1.0B of capital allocated over the trailing 12 months: ~38% ($384M) to dividends, ~30% ($299M) to acquisitions (Echo Lake, Clean Egg, Creighton Brothers), ~17% ($117M) to CapEx (including $35M maintenance), and ~15% (~$150M) to repurchases, demonstrating a balanced allocation approach.
Retail egg volumes up ~3% year-to-date (through late February); foodservice beginning to recover with January traffic +1% and dollars +4%; management cites broad-based growth across value and premium segments.
Acquisition of Creighton Brothers and Crystal Lake assets expands geographic scale of shell egg platform and adds nearby liquid egg capacity to support prepared foods vertical integration and supply security.
Good morning, everyone, and welcome to the Cal-Maine Foods, Inc. third quarter fiscal 2026 earnings conference call. All participants are in a listen-only mode. To ask a question, please follow the operator instructions during the Q&A. Please note this call is being recorded. I will now turn the call over to Sherman Miller, President and Chief Executive Officer of Cal-Maine Foods, Inc. Please go ahead.
Good morning. Thank you for joining us today. I want to remind everyone that today’s remarks may include forward-looking statements. These are based on management’s current expectations and are subject to risks and uncertainties described in our SEC filings. Let me start by sincerely thanking our teams across the organization whose execution, focus, and commitment to excellence drive the operational and financial performance that underpins everything we do. Their hard work and dedication continue to set us apart, and these results are a direct reflection of their efforts. In February, we shared the sad news of the passing of longtime board member Jim Poe. Over more than two decades, Jim made a lasting impact on the company, and we extend our heartfelt condolences to his family and loved ones.
Today, we announced the appointment of Dudley Woolley to the board to fill the vacancy left by Jim. Dudley brings deep expertise in risk management and governance along with a strong track record of leading growth-oriented organizations and driving operational performance. We look forward to the perspective he will add as we continue to strengthen our business, enhance earnings visibilit...