Business Context and Reporting Period
Company: Cal-Maine Foods, Inc. (CALM)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended May 30, 2026 (52 weeks)
Business Overview: The largest egg company in the United States, operating in three reportable segments: Conventional Shell Eggs, Specialty Shell Eggs, and Prepared Foods. The company recently reorganized its internal reporting to reflect these product categories. Major acquisitions in the fiscal year included Echo Lake Foods (Prepared Foods), Creighton Brothers (Shell Eggs/Products), Clean Egg, and Van's Foods.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Net Sales | $2,911.6 million | $4,261.9 million | (31.7)% |
| Gross Profit | $672.0 million | $1,850.9 million | (63.7)% |
| Operating Income | $350.2 million | $1,536.5 million | (77.2)% |
| Net Income (Attributable to Cal-Maine) | $316.7 million | $1,220.0 million | (74.0)% |
| Diluted EPS | $6.63 | $24.95 | (73.4)% |
| Cash from Operating Activities | $479.8 million | $1,224.7 million | (60.8)% |
| Cash and Cash Equivalents (End of Period) | $107.2 million | $499.4 million | (78.5)% |
| Working Capital | $1,376.0 million | $1,659.7 million | (17.1)% |
| Current Ratio | 7.7 | 6.4 | 20.3% |
| Long-Term Debt | $0 | $0 | N/A |
Note: The company maintains a $250 million revolving credit facility with no borrowings outstanding as of May 30, 2026.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 31.7% primarily due to a 50.9% drop in average conventional shell egg prices as the U.S. layer flock repopulated following HPAI outbreaks in the prior year. This was partially offset by volume growth from acquisitions.
- Profitability Compression: Operating income fell 77.2% to $350.2 million. The decline was driven by lower egg prices, partially mitigated by a decrease in the cost of outside egg purchases and lower feed costs.
- Segment Performance:
- Conventional Shell Eggs: Sales dropped 51.1% to $1.35 billion; segment income fell 83.2% to $216.6 million.
- Specialty Shell Eggs: Sales decreased 7.3% to $1.07 billion; segment income declined 45.6% to $181.5 million.
- Prepared Foods: Sales surged 5,944.5% to $244.8 million, driven by the acquisition of Echo Lake Foods. Segment income turned positive at $33.9 million.
- Acquisitions: The company spent approximately $452.6 million on acquisitions in fiscal 2026, including Echo Lake Foods ($289.5M), Creighton Brothers ($129.3M), Clean Egg ($23.7M), and Van's Foods ($24.8M).
Guidance, Outlook, Risks, and Contingencies
- Dividend Policy: Due to a cumulative loss position following the fourth quarter, the company will not pay a cash dividend for Q4 2026. Dividends will resume only when the company is profitable on a cumulative basis from the last dividend payment date. Cumulative losses to be recovered are $35.9 million.
- Share Repurchases: The company repurchased $131.1 million of stock in fiscal 2026. Approximately $320.7 million remains available under the $500 million authorization.
- HPAI Risks: Highly Pathogenic Avian Influenza remains a significant risk. In March 2026, an outbreak at a Maryland pullet facility resulted in the depopulation of 352,000 pullets. The company notes that HPAI is widespread in wild bird populations.
- Legal Proceedings:
- Antitrust Investigation: The company settled a DOJ investigation regarding egg price inflation in June 2026. The settlement involved donating 30 million eggs to food banks and paying $1.5 million to settling states. The company denied wrongdoing. The State of Washington did not join the settlement.
- Class Actions: The company is a defendant in multiple class-action lawsuits alleging price-fixing and manipulation of industry benchmarks. These cases have been consolidated in the Western District of Wisconsin.
- Environmental Litigation: A settlement was reached with the State of Oklahoma regarding watershed pollution, involving an environmental relief fund and operational restrictions. The company does not expect a material financial impact.
- Outlook: Management expects prepared foods production capacity to grow by over 30% by 2028 through expansion projects at Echo Lake and Crepini. The company continues to invest in biosecurity and cage-free capacity.
Investor Verification Checklist
- Price Volatility: Verify the current wholesale shell egg price trends and the company's exposure to market-based vs. cost-plus pricing contracts.
- HPAI Impact: Monitor ongoing HPAI outbreak reports and their potential impact on flock depopulation and supply constraints.
- Legal Exposure: Track the status of the consolidated class-action antitrust lawsuits and the outcome of the State of Washington investigation.
- Acquisition Integration: Assess the integration progress and synergy realization of the Echo Lake Foods and Creighton Brothers acquisitions.
- Dividend Resumption: Monitor quarterly earnings to determine when the cumulative loss threshold ($35.9M) is cleared to resume dividend payments.
- Feed Costs: Review corn and soybean meal price trends, as feed constitutes over 50% of shell egg production costs.