Cal-Maine Foods, a leading egg producer, experienced a noticeable increase in shares early Wednesday after announcing its fiscal second-quarter results, which showcased substantial growth compared to the previous year. The surge in financial performance was primarily attributed to robust demand for shell eggs alongside rising prices. For the three-month period ending November 30, Cal-Maine posted a net income of $4.47 per share, significantly up from $0.35 from the same quarter last year.
This result surpassed the analyst consensus, which had projected GAAP EPS at $4.05, as reported by three analysts on FactSet. Following the announcement, the stock rose by 3.8% in premarket trading. Sales figures also reflected a considerable increase, advancing to $954.7 million from $523.2 million in the year-ago quarter.
This growth exceeded the expectations of two FactSet analysts, who had anticipated sales of $751.5 million. According to Chief Financial Officer Max Bowman, the elevation was largely driven by an increase in the net average selling price for shell eggs and a rise in the total number of dozens sold. "Robust demand for shell eggs resulted in a significant increase in dozens sold for the quarter, which included the seasonal boost leading up to the Thanksgiving holiday and sales from our latest acquisition completed in June," stated Chief Executive Sherman Miller.
He added, "Our results also reflect higher market prices, which have continued to rise this fiscal year as supply levels of shell eggs have been restricted due to recent outbreaks of highly pathogenic avian influenza." During this fiscal quarter, Cal-Maine sold 329.8 million dozen shell eggs, a rise from the 288.2 million sold in the prior-year quarter.
Furthermore, production also climbed, reaching 288 million dozen eggs, compared to 265.1 million in the previous year. The net average selling price for a dozen eggs surged to $2.74, up from $1.73, while the price for specialty eggs increased to $2.39 from $2.28. In terms of costs, selling, general, and administrative expenses rose to $77.6 million from $76.6 million last year.
Nevertheless, farm production expenses per dozen dropped by 8.5% compared to the previous year, which Bowman attributed to more favorable commodity pricing for essential feed ingredients. Feed costs per dozen eggs saw a decline of approximately 13% year over year. Miller emphasized, "As demand continues to outpace supply, we remain focused on making additional strategic investments to expand our operations." The company is poised to allocate $60 million towards new capital projects aimed at increasing its cage-free capacity, as well as plans to invest $15 million to enhance its egg products processing facility located in Georgia. The facilities in Kansas and Texas, which were affected by the bird flu virus in fiscal 2024, are now reported to be fully operational.
Miller assured, "We are steadfast in our efforts to effectively manage our operations and promote responsible and sustainable production.".