Cal-Maine Swings to Loss as Egg Prices Collapse
Cal-Maine Foods reported a fourth-quarter net loss of $35.9 million as conventional egg prices fell 70.9% from a year earlier, ending a run of pandemic-era profits.
Cal-Maine Foods (CALM) posted a fourth-quarter net loss attributable to the company of $35.9 million, reversing net income of $342.5 million a year earlier, as the largest U.S. egg producer absorbed the full unwind of the pricing spike that followed the 2022-2023 avian flu outbreaks.
The quarter capped a year of steadily worsening comparisons rather than a sudden shock. Net sales fell 49.9% year-over-year to $552.6 million, a smaller percentage decline than Q3's 53.0% drop but still deep enough to push the company from profit to loss, following a 19.4% decline in Q2. Operating results told the same story in sharper relief: Cal-Maine posted an operating loss of $58.8 million, a margin of negative 10.6%, compared with operating income of $435.9 million, a 39.5% margin, in the year-ago quarter. That followed Q3 operating income of $35.9 million and Q2 operating income of $123.9 million, both down sharply from the prior year — three consecutive quarters of margin erosion that culminated in an outright loss.
The driver was price, not demand. Conventional Shell Eggs' average selling price per dozen fell 70.9% year-over-year in the quarter, the steepest quarterly decline of the fiscal year and well beyond the 50.9% drop for the full year, even as volume in the segment grew 3.1%. That combination pushed Conventional Shell Eggs to an operating loss of $40.6 million, a negative 19.3% margin, down from operating income of $370.5 million, a 52.8% margin, a year earlier, and a further sequential decline from $19.2 million in Q3 and $69.8 million in Q2 — four straight quarters of eroding segment profitability. Gross margin companywide collapsed to roughly 6.2% from 48.2% a year earlier, after Q3's 17.9% and Q2's 27.0%, marking a trough after three consecutive quarters of year-over-year deterioration.
Specialty Shell Eggs and Prepared Foods offered a partial offset. Specialty volume declined 5.9% year-over-year and price per dozen fell 16.5%, though the reversal was due to an unusually strong prior-year comparison rather than softening demand, and full-year specialty volume still grew 2.4%. Specialty segment operating margin has nonetheless compressed every quarter this fiscal year, from 23.3% in the first quarter to 7.3% in the fourth, down from 28.6% in the prior-year period. Prepared Foods, by contrast, improved sequentially in the quarter as sales prices and volume both rose and network optimization initiatives took hold, lifting segment operating income to $8.8 million from $2.8 million in Q3, after a decline from $13.2 million in Q1. Prepared Foods' share of net sales rose to 10.9% from 9.5% in Q3, and combined with Specialty Shell Eggs, the two segments exceeded half of net sales for the first time, at 53.0%.
Cal-Maine also adopted a new three-segment reporting structure — Conventional Shell Eggs, Specialty Shell Eggs and Prepared Foods — effective with the quarter, replacing the single reportable segment it had used through the prior release.
The company is leaning further into diversification. It disclosed a new $54 million investment to expand Prepared Foods production capacity by about 30% starting in the first half of fiscal 2028, on top of the $36 million, 30% capacity expansion announced last quarter, bringing total planned Prepared Foods capacity growth to more than 60% by that date. Separately, Cal-Maine acquired additional Eggland's Best franchise territory in the Northeast after fiscal year-end, expected to add about 5% in annual Specialty Shell Egg volume growth.
The pricing collapse reached shareholder returns. Cal-Maine declared no dividend in the quarter, a reversal from payouts of roughly $34.3 million in Q2 and $16.8 million in Q3, as the fourth-quarter loss must be recovered before dividends resume under its variable payout policy. The company did continue buying back stock, repurchasing 396,083 shares for $30.1 million in the quarter, leaving $320.7 million available under its $500 million authorization.