Cal-Maine Foods Inc.
04/08/2025 | Press release | Distributed by Public on 04/08/2025 14:17
Business/Financial Results (Form 8-K)
-MORE-
Contacts:
Sherman Miller, President and CEO
Max P. Bowman, Vice President and CFO
(601) 948-6813
CAL-MAINE FOODS REPORTS FINANCIAL AND OPERATIONAL RESULTS
FOR THIRD QUARTER FISCAL 2025 AND ANNOUNCES DEFINITIVE
AGREEMENT TO ACQUIRE ECHO LAKE FOODS, INC.
RIDGELAND, Miss. (April 8, 2025) - Cal-Maine Foods, Inc. (NASDAQ: CALM) ("Cal-Maine Foods" or the
"Company"), today reported financialand operational results forthe third quarter offiscal 2025 (thirteen
weeks) ended March1, 2025. Subsequentto the endof the fiscalquarter, the Companyalso announced it
entered into a definitive agreement to acquire Echo Lake Foods, Inc. ("Echo Lake Foods").
Third Quarter Fiscal 2025 Financial, Operational and Business Highlights
●
Quarterly net sales of $1.4 billion and net income of $508.5 million, or $10.38 per diluted share
●
Strongconsumerdemandduringthequarterledtorecordtotaldozenssold,astheCompany
honored long-standing pricing frameworks with valued customers
●
Significant progresson proactivesteps tohelp mitigatethe tightegg supplysituation acrossthe
country, resulting in:
o
A 14%increasein theaverage numberof layerhens duringthe quartercompared tothe
prior-year quarter, reflecting both organic and inorganic expansion
o
A 33% increase inthe Company's breederflocks as of theend of the thirdquarter of fiscal
2025 compared to the end of the prior-year quarter
o
A 24% increase in total chicks hatched during the third quarter offiscal 2025 compared to
the prior-year quarter
o
Expected completion in calendar 2025 of approximately $60 million in ongoing expansion
projects within theCompany's current operationsthat are expectedto add approximately
1.1 million cage-free layer hens and 250,000 pullets
o
Recoveryfromhighlypathogenicavianinfluenza(HPAI)-relatedshutdownsofthe
Company's Kansas and Texas facilities
o
SuccessfulconversionofaneweggprocessingfacilityandhatcheryinDexter,Missouri,
projected to add additional capacity of 1.2 million free range hens by calendar year end
o
Rapidintegrationandexpectedcontinuedproductionrampupfromrecentlyacquired
assets, including the processing facilities from ISE America, Inc. and feed mills from Deal-
Rite Feeds, Inc.
o
Continuedinvestmentsinbest-in-classbiosecuritytechnology,equipment,procedures,
and training, with over $70 million spent since 2015 to address ongoing HPAI threats
●
Approved a $500million share repurchaseprogram to expandthe options foruses of capitalunder
the Company's disciplined capital allocation strategy
●
Declaredacashdividendofapproximately$170million,orapproximately$3.46pershare,
pursuant to the Company's established dividend policy
●
Announced anagreement withthe Company'sFounding Familyfor aprocess forpossible share
conversions that, if executed, will result in the Company becoming a non-controlled company
Commentingonthethirdquarteroffiscal2025results,ShermanMiller,presidentandchief
executiveofficerofCal-MaineFoods,stated,"DynamicmarketconditionsandHPAI-relatedsupply
shortages persisted this quarter. However, the entire Cal-Maine Foods team did an outstanding job in
Cal-Maine Foods Reports Third Quarter Fiscal 2025 Results and Announces Definitive Agreement toAcquire Echo
Lake Foods
Page 2
April 8, 2025
-MORE-
maximizing production through aperiod of high demand,while operating safely andmaintaining diligence
on biosecurity measures. We were fortunate to have the ability to utilize our existing operational scale and
tobenefitfromrecentacquisitions,whichhelpedincreaseourproductioncapacityinthischallenging
supplyenvironment.Aboveall, westayedfocusedonmeetingtheneedsofourvaluedcustomers,while
honoring our long-standing pricing frameworks.
"Alongside our ownefforts to addressthe current supplysituation, we greatlyappreciate the current
administration'srecentlyannouncedplantoaddressthevolatilityinourvitalindustry.Itisclearthe
administration recognizes theimportance ofeggs asa low-cost,high-value, unprocessed proteinfor feeding
ournation'sfamilies.Cal-MaineFoods'unwaveringmissionistobethecountry'smostsustainable
producer and reliable supplier of this valuable source of nutrition," added Miller.
Definitive Agreement to Acquire Echo Lake Foods, Inc.
Subsequent to theend of thethird quarter, theCompany signed adefinitive agreementto acquire
EchoLakeFoodsforapproximately$258million,excludingexpectedtaxassetsresultingfromthe
transaction, to be funded with available cash on hand. Echo Lake Foods was founded in 1941 and acquired
bytheMeinerzfamilyin1981.BasedinBurlington,Wisconsin,EchoLakeFoodsproduces,packages,
marketsanddistributesready-to-eateggproductsandbreakfastfoods,includingwaffles,pancakes,
scrambledeggs,frozencookedomelets,eggpatties,toastanddiced eggs.EchoLakeFoodshadannual
revenuesofapproximately$240millionin2024withafive-yearCAGRofapproximately10%.The
transaction has been approvedby both companies' boardsof directors and isexpected to close bythe end
of fiscal2025 followingcompletion ofregulatory approvalsand subjectto customaryclosing conditions.
The transaction is not subject to shareholder approval.
Highlights of the Transaction:
Compelling Strategic Rationale
●
AllowsCal-MaineFoodstoenterthelarge,growingandhighlystablevalue-addedfood
portion of the egg category
●
Expandsstrategiccustomerrelationshipswithretail,quickservicerestaurantandother
foodservice customers
●
Leverages Cal-Maine Foods' extensive sales and supply chain distribution capabilities
●
Echo LakeFoods willoperate asa stand-alonecomponent ofCal-Maine Foods'integrated
operations with its four production facilities strategically located across the Midwest
●
KathyBrodhagen,currentchiefexecutiveofficerofEchoLakeFoods,tojoinCal-Maine
Foods' senior management team as President of Echo Lake Foods
Attractive Financial Returns
●
Providesaccesstoadditionallong-termgrowthopportunities,whilereducingearnings
volatility
●
Expect significant synergies from egg purchasing and other operational efficiencies
●
Expect to beat least mid-singledigit accretive toCal-Maine Foods' earningsstarting in fiscal
2026, with a return on equity in excess of the Company's cost of capital
Cal-Maine Foods Reports Third Quarter Fiscal 2025 Results and Announces Definitive Agreement toAcquire Echo
Lake Foods
Page 3
April 8, 2025
-MORE-
Commenting onthe proposedtransaction withEcho LakeFoods, Millerstated, "Thistransaction
represents an exciting growth opportunity and importantinflection point for Cal-Maine Foods, advancing
our strategy to expand and diversify our product portfolio and customer mix. Echo Lake Foods is aleading
innovator with a long history of providing qualityready-to-eat egg products and breakfast foods toa blue-
chipcustomerbase.Thecombinedproductlinesandcapabilitiesofthetwocompaniesarehighly
complementaryand, importantly,weshare similarvalues ofpursuing operatingexcellenceand meeting
the needs of our customers. We believe the potential acquisition of Echo Lake Foods meets our disciplined
setofinvestmentcriteria,includingrelevantgeographicmarkets,operatingsynergies,productmix,
proximity to customers and expected financial returns.
"TheadditionofEchoLakeFoodswillsupplementourotherready-to-eateggproductofferings,
includinghard-cookedeggsforretail,quickservicerestaurantandotherfoodserviceneedsfromour
expandedMeadowCreekFoodsoperation,andready-to-eateggproductsincludingeggwraps,protein
pancakes, crepes, and wrap-ups fromour joint venture with CrepiniFoods LLC. Importantly, diversifying
our product portfoliooffers a strong, high-returnpotential that complementsour existing organic growth
opportunities.TheEchoLakeFoodsteamhasbuiltaterrificbusiness,andwelookforwardtoworking
togetheronasuccessfulintegrationanddeliveringonauniqueopportunityforourcustomersand
shareholders," added Miller.
Kathy Brodhagen,chief executiveofficer ofEcho LakeFoods, added,"We areexcited tohave the
opportunity forEcho LakeFoods tojoin Cal-MaineFoods andcontinue toexpand ourmarket reachfor
qualityready-to-eateggproductsandbreakfastfoods.Thisbusinesscombinationwillbenefiteveryone
associated with Echo LakeFoods, especially ourdedicated employees and valuedcustomers. As the leading
producer and distributorof fresh shelleggs in thenation, Cal-Maine Foodshas an excellentreputation with
aprovenrecordofsuccess.Weareextremelyproudtojointheirteam,andwelookforwardtothe
significant growth opportunities ahead of us."
Goldman Sachs& CoLLC isserving asCal-Maine Foods,Inc.'s exclusivefinancial advisorand Sidley
Austin LLP and Jones Walker LLP as its legal advisors.
Key Third Quarter Fiscal 2025 Financial Drivers
Net income attributable to Cal-Maine Foodsfor the third quarter offiscal 2025 was $508.5 million,
or $10.38 perdiluted share, compared with$146.7 million, or$3.00 per dilutedshare, for the thirdquarter
of fiscal 2024. Net sales for the third quarter of fiscal 2025 were $1.4 billion compared with $703.1 million
for the same periodlast year. The higher netsales were primarily drivenby an increase inthe net average
selling priceof shelleggs andalso byhigher volumes.The highermarket pricesare adirect resultof the
reduced supply of shell eggs across the industry dueto HPAI during a period of peak seasonal demandfor
eggs and egg products.
For the thirdquarter offiscal 2025, thenet average sellingprice perdozen was $4.060compared
with$2.247ayearago.Thenetaveragesellingpricegenerallyreflectsablendofhighermarket-based
prices formost conventionaleggs withlower negotiated-pricearrangements forspecialty eggs,based on
long-standing pricing frameworkswith customers thatthe Company hashonored throughout thevarious
cycles that characterize the egg industry.
The Company sold arecord 331.4 million dozenshell eggs, representing a10.2% increase, including
the contributionfrom acquisitions,compared with300.8 milliondozens forthe thirdquarter offiscal 2024.
Sales of conventional eggs totaled 213.2 million dozens, compared with 192.2 million dozensfor the prior-
year period, an increaseof 11.0%. Specialty eggvolumes also increased by8.8% to 118.1 milliondozens sold
forthethirdquarteroffiscal2025comparedwith108.6milliondozenssoldfortheprior-yearperiod.
Cal-Maine Foods Reports Third Quarter Fiscal 2025 Results and Announces Definitive Agreement toAcquire Echo
Lake Foods
Page 4
April 8, 2025
-MORE-
Demand was strong during thethird fiscal quarter, which istypically a period of higherseasonal demand.
TheCompanybelievesthatotherfactorspositivelyimpactingdemandincludedsevereweatherevents
duringthequarter,includingthehistoricsnowstormsinthesouthernU.S.inJanuary2025,which
prompted families to stock up on staples includingeggs, and reported recommendations of eggsas a good
source of lean protein for individuals taking GLP-1 medications.
Thirdquarterfarmproductioncostsperdozenwere5.7%lowerthantheprior-yearperiod,
primarily due to more favorable commodity pricing for key feed ingredients. Forthe third quarter of fiscal
2025, feedcosts perdozen weredown 9.6%compared withthe thirdquarter offiscal 2024.Costs foroutside
egg purchases increased significantly quarter-over-quarter, primarily due to higher shell egg prices and an
increase in dozens of shell eggs purchased to satisfycustomer demand while the nation experienced lower
overall supply due to HPAI.
MaxBowman,vicepresidentandchieffinancialofficerofCal-MaineFoods,commented,"Our
industry has alwaysbeen prone tovolatility dueto external factorssuch as diseaseoutbreaks, fluctuating
feed and other productioncosts, and changes inconsumer demand. At Cal-MaineFoods, we emphasize the
importance of managing theaspects of our businessthat we can directly impactoperationally. During the
quarter, our team didan outstanding job withour focused efforts tohelp mitigate the eggsupply constraint
andpreventthespreadofHPAItoourfacilities.Alloftheseunderlyingactivitiesmadeasignificant
contribution to our results for the quarter."
Additional details on the third quarter fiscal 2025 financial drivers are shown in the chart below.
Third Quarter Fiscal 2025 and Year-To-Date Fiscal 2025 Key Statistics
13 Weeks Ended
39 Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Dozen Eggs Sold (000)
331,395
300,779
971,218
862,078
Conventional Dozen Eggs Sold (000)
213,247
192,182
622,833
566,174
Specialty Dozen Eggs Sold (000)
118,148
108,597
348,385
295,904
Dozen Eggs Produced (000)
293,087
259,527
847,962
774,984
% Specialty Sales (dozen)
35.7
%
36.1
%
35.9
%
34.3
%
% Specialty Sales (dollars)
24.4
%
38.8
%
29.2
%
42.8
%
Net Average Selling Price (per dozen)
$
4.060
$
2.247
$
3.079
$
1.866
Net Average Selling Price Conventional
Eggs (per dozen)
$
4.766
$
2.152
$
3.401
$
1.624
Net Average Selling Price Specialty Eggs
(per dozen)
$
2.784
$
2.415
$
2.505
$
2.328
Feed Cost (per dozen)
$
0.492
$
0.544
$
0.489
$
0.564
HPAI Comments
OutbreaksofHPAIhavecontinuedtooccurinU.S.poultryflocks.Incalendaryear2024,40.2
million commerciallayer hensand pulletswere depopulateddue toHPAI, andin calendaryear 2025,an
additional32.9millioncommerciallayerhensandpulletshavebeendepopulatedthroughMarch.The
USDA reported that theestimated table-egg layer flockwas approximately 285 millionas of March 1,2025,
the lowest level sinceSeptember 2015. HPAI iscurrently widespread in thewild bird population worldwide
and nofarmis immunefrom HPAI.Theextentofpossiblefuture outbreaksincommerciallaying hens,
with heightened riskduring migration seasons,cannot be predicted.The widely reportedspread of HPAI
in dairy cattle increases risks to Cal-MaineFoods' operations and those of otheregg producers. According
Cal-Maine Foods Reports Third Quarter Fiscal 2025 Results and Announces Definitive Agreement toAcquire Echo
Lake Foods
Page 5
April 8, 2025
-MORE-
to the U.S.Centers for DiseaseControl and Prevention,the human healthrisk to theU.S. public fromthe
HPAIvirusisconsideredtobelow.Also,accordingtotheUSDA,HPAIcannotbetransmittedthrough
safely handled and properly cooked eggs. There is no known risk related to HPAI associated with eggs that
are currently in the market and no eggs have been recalled.
Dividend Payment and Share Repurchases
Forthethirdquarteroffiscal2025,Cal-MaineFoodswillpayacashdividendofapproximately
$3.46 pershare toholders ofits CommonStock andClass ACommon Stock.The dividendis payableon
May 15, 2025, to holders of record on April 30, 2025. The final amount paid per share will be based on the
number of outstanding shares on the record date.
PursuanttoCal-MaineFoods'variabledividendpolicy,foreachquarterinwhichtheCompany
reports net income, the Company pays a cash dividend to shareholdersin an amount equal to one-third of
suchquarterlyincome.FollowingaquarterinwhichtheCompanydoesnotreportnetincome,the
Company willnot paya dividendwith respectto that quarteror fora subsequentprofitable quarteruntil
the Companyis profitableon acumulativebasis computedfrom thedateof themost recentquarter for
which a dividend was paid.
On February 25,2025, theCompany announced thatits Board ofDirectors approveda new share
repurchase programthat authorizesrepurchases ofup to$500 million ofCal-Maine Foods'Common Stock.
Theactualtiming,value,andmannerofsharerepurchaseswillbedeterminedbymanagementinits
discretion.TheCompanyexpectstoopportunisticallyrepurchasesharesfromtimetotimeintheopen
market, subject tomarket conditions andother factors. TheCompany could alsouse a portionof the new
share repurchase program to repurchase someof the Founding Family members' CommonStock as part of
thefamily'sportfoliodiversificationefforts.Anyrepurchasesfromthefamilymemberswouldrequire
approval from a Special Committee of Cal-Maine Foods' Board of Directors.
The Company did not repurchase any shares pursuant to the share repurchase programduring the
third quarter of 2025.
Civil Investigative Demand
InMarch2025,theCompanyreceivedacivilinvestigativedemandinconnectionwithawidely
publicizedinvestigationbytheAntitrustDivisionoftheDepartmentofJusticeintothecausesbehind
nationwide increases in egg prices. The Company is cooperating with the investigation.
Looking Ahead
Miller added, "We are proud of our team's ability to manage our operations and navigate through a
very tough environment. Weare encouraged by thesupport of the UnitedStates Department of Agriculture
(USDA), which recently announced up to$1.0 billion of investments acrossthe industry to address HPAI,
includingsupportingexpandedbiosecuritymeasures,regulatoryreliefforfarmers,increasedvaccine
research and otheroptions to support thedomestic egg supply. Whilethese measures willrequire further
study and taketime to implement,we believe theyrepresent animportant first steptoward reaching amore
favorable balance of supply and demand.
"We havelearned manythings frombeing inthe cyclicalshell eggbusiness forover 60years, but
especiallytheimportanceofconsistentlymanagingouroperationsinasafe,efficientandsustainable
manner, whiledoing everythingwe canto alignproduction capacitywith customerdemand andstaying
disciplinedinourinvestments.Ourprovenoperatingmodelhassustainedourbusinessinadynamic
environment, and this quarter wasno exception. Our shell eggbusiness will remain the coreof Cal-Maine
Cal-Maine Foods Reports Third Quarter Fiscal 2025 Results and Announces Definitive Agreement toAcquire Echo
Lake Foods
Page 6
April 8, 2025
-MORE-
Foods, but we areexcited to diversify ourproduct mix, reduce financialvolatility and add anothergrowth
opportunity tothe Companywith theproposed EchoLake Foodstransaction. Thisaddition representsa
terrific fit with ourexisting business, and welook forward to welcomingthe Echo Lake Foodsteam to the
Cal-Maine Foods family," concluded Miller.
About Cal-Maine Foods
Cal-MaineFoods,Inc.isprimarilyengagedintheproduction,packaging,marketingand
distributionoffreshshelleggs,includingconventional,cage-free,organic,brown,free-range,pasture-
raised andnutritionallyenhancedeggs, aswellas avarietyofready-to-eat eggproducts.TheCompany,
which is headquartered inRidgeland, Mississippi, is the largestproducer and distributor of freshshell eggs
in the nation and sells most of its shell eggs throughout the majority of the United States.