Egg Industry News and Commentary

  —  Jun 15

 
Highlights of Cal-Maine Comments at the 2017 Stephens Spring Investment Conference

    

Cal-Maine represented by Dolph Baker, Chairman, President and CEO accompanied by senior executives commented on the state of the egg industry in a June 6th presentation at the 2017 Stephens Spring Investment Conference.

In introductory comments, Baker outlined events of the last three years noting the fluctuation in egg prices resulting from depletion of hens during the 2015 HBAI outbreak and the subsequent drop in unit revenue following repopulation. He alluded to the stable and relatively low cost of feed as a saving grace.

  

Commenting specifically on Cal-Maine Baker noted:

  • The company has a reserve of cash as noted in the balance sheet to be used to purchase competitors. The company is obviously not currently leveraged with respect to debt but subject to a suitable opportunity, Cal-Maine is not adverse to assuming debt to effect a strategic acquisition.
  • Baker observed that despite the low price of generic shell eggs, his Company has managed to withstand prolonged low prices based on inherent efficiency, scale of operation and a commitment to specialty eggs which generate higher margins than undifferentiated generics. The approach by Cal-Maine can be summarized in a comment that “egg men can be creative.”
  • Cal-Maine sees continuing consolidation at a slow and steady rate based on a depressed market.

A ray of optimism was expressed by Cal-Maine executives in that they believe the market has bottomed and following seasonal trends, an improvement in pricing should be obtained in late July through the beginning of August. Retail demand has continued at a strong level partly due to food price deflation at the supermarket level. In contrast, food service has been depressed as evidenced by declining same-store sales recorded by QSRs and casual dining restaurants as more consumers prepare and eat  food at home.

Quarterly reports issued by Cal-Maine, the only pure-play public traded egg company are reviewed on release by EGG-CITE with postings documenting results and incorporating company comments.