Cal-Maine Foods (CALM) Stephens 26th Annual Investment Conference | NASH2024 summary

Business overview and industry context

• Leading US egg producer and distributor, controlling 21% of domestic shell egg consumption and 15% of US laying hens as of August 2024.

• Operates with a long-term, family-owned culture and pays one-third of net earnings as dividends.

• Eggs benefit from strong health endorsements and remain cost-competitive, with FDA approval to label them as healthy.

• Specialty and cage-free eggs are a growing focus, with significant investments and legislative transitions underway.

• The US egg industry remains highly fragmented, with the top five players holding about 45% market share.

Growth strategy and capital allocation

• Growth is driven by organic expansion, strategic M&A, and specialty/value-added products.

• Recent expansions include new facilities in Utah, Kansas, and Kentucky, and acquisitions such as Fassio, Dexter, and ISE America.

• Over $808 million invested in cage-free initiatives since 2008, with 40.8% of the US flock cage-free as of October 2024.

• Maintains a strong cash position, balancing dividends, maintenance CapEx, and long-term growth investments.

• M&A targets are evaluated for geography, operational compatibility, synergies, and asset condition.

Market dynamics and supply challenges

• Highly pathogenic avian influenza (HPAI) has reduced hen numbers, causing supply constraints and elevated prices.

• Wild birds and dairy cattle are major vectors for HPAI, complicating containment and recovery.

• Hen numbers remain below the five-year average, with projections suggesting continued tight supply through 2025.

• Recovery from supply shocks can be rapid, but ongoing outbreaks and tight hatch space slow expansion.

• Fixed costs and strong demand drive producers to restock quickly despite risks.