Cal-Maine Foods expands with strategic feed mill acquisition amid record-breaking Q2 growth

Cal-Maine Foods, Inc. (NASDAQ: CALM), the largest producer and distributor of fresh shell eggs in the United States, is strengthening its operational capabilities with the acquisition of key feed mill assets in North Carolina. The company has acquired two feed mills, along with storage facilities, usable grain, vehicles, and a retail feed sales business from Deal-Rite Feeds, Inc. and its affiliated entities. These assets, located in Statesville and Union Grove, North Carolina, will be integrated into Cal-Maine Foods’ supply chain, further optimizing its production processes.

The acquisition, funded through available cash reserves, is a strategic move to enhance efficiency in shell egg production. By securing a direct feed supply, Cal-Maine Foods aims to reduce costs, improve quality control, and minimize transportation distances, reinforcing its commitment to sustainable and cost-effective operations.

Sherman Miller, president and chief executive officer of Cal-Maine Foods, emphasized the significance of the purchase, stating, “Feed is one of the most substantial cost components in shell egg production, and this acquisition allows us to streamline feed procurement while ensuring optimal nutrition for our hens. Proximity to our North Carolina facilities enhances our ability to produce and deliver feed efficiently, reducing costs and improving overall productivity.”

What fueled Cal-Maine Foods’ record-breaking second-quarter financial performance?

The feed mill acquisition coincides with Cal-Maine Foods’ record-breaking financial results for the second quarter of fiscal 2025, reflecting the company’s resilience and ability to capitalize on industry dynamics. For the quarter ending November 30, 2024, the company reported net sales of $954.7 million, a substantial increase from $523.2 million in the same period last year. This growth was primarily driven by a higher net average selling price of shell eggs and increased demand across key markets.

The company posted a net income of $219.1 million, or $4.47 per diluted share, compared to $17.0 million, or $0.35 per diluted share, in the prior-year quarter. The sharp rise in profitability reflects strong market conditions, particularly as egg prices surged due to supply constraints caused by the ongoing outbreak of highly pathogenic avian influenza (HPAI).

Max Bowman, vice president and chief financial officer of Cal-Maine Foods, provided insight into the company’s financial trajectory, noting, “We have effectively managed costs and leveraged our scale to navigate supply chain challenges. The increase in specialty egg sales and strategic acquisitions have contributed to our strong financial position, positioning us for continued growth.”

How is Cal-Maine Foods responding to rising demand for shell eggs?

During the quarter, Cal-Maine Foods sold 329.8 million dozens of shell eggs, a significant rise from 288.2 million dozens in the same quarter of fiscal 2024. Specialty eggs—including organic, cage-free, and free-range varieties—witnessed a notable increase, with sales climbing to 120.2 million dozens, up from 95.7 million dozens in the previous year.

The egg industry growth has been fueled by evolving consumer preferences and regulatory shifts toward cage-free production. Recognizing this trend, Cal-Maine Foods has committed to expanding its cage-free egg production capacity, directing approximately $60 million toward new infrastructure projects. These projects, set to be completed by late summer 2025, will add capacity for an additional 1.1 million cage-free layer hens and 250,000 pullets across multiple states, including Florida, Georgia, Utah, and Texas.

The company is also investing $15 million to expand its egg products processing facility in Blackshear, Georgia, which will include capabilities for extended shelf-life liquid egg production. Additionally, Cal-Maine Foods is repurposing a recently acquired facility in Dexter, Missouri, for shell egg production, with operations expected to commence in the next fiscal quarter.

How does Cal-Maine Foods plan to sustain long-term growth?

The feed mill acquisition is part of a broader strategic expansion plan that includes both organic growth and acquisitions aimed at strengthening Cal-Maine Foods’ position in the egg industry. The company continues to explore opportunities that enhance its operational efficiencies, product diversification, and market reach.

“Acquisitions and strategic investments have played a key role in our ability to navigate challenges and drive egg industry growth,” Miller stated. “We are focused on identifying opportunities that align with our long-term objectives, whether through geographic expansion, operational synergies, or enhancing our product offerings.”

Beyond traditional shell egg production, Cal-Maine Foods is expanding its egg products portfolio to cater to shifting consumer preferences. The company’s strategic investment in Crepini, a producer of egg wraps, protein pancakes, and crepes, reflects its commitment to broadening its reach in both retail and foodservice markets.

The company’s financial strength—bolstered by consistent revenue growth and a strong balance sheet—allows it to make calculated investments that support its long-term expansion strategy.

What challenges and opportunities lie ahead for Cal-Maine Foods?

Despite its robust performance, Cal-Maine Foods remains cautious about potential market fluctuations. Commodity prices, particularly for corn and soybeans, continue to be a critical factor influencing feed costs. While recent supply levels suggest a favorable stocks-to-use ratio, external variables such as weather patterns, global supply chain disruptions, and geopolitical factors could introduce price volatility.

Moreover, the highly pathogenic avian influenza (HPAI) continues to pose a threat to industry stability. While Cal-Maine Foods has successfully managed risks associated with outbreaks, the company remains proactive in implementing biosecurity measures to mitigate potential disruptions.

Miller reaffirmed the company’s commitment to responsible and sustainable production, stating, “We are focused on optimizing the areas within our control, leveraging our scale, and maintaining the highest standards in food safety and animal welfare. Cal-Maine Foods is well-positioned to meet evolving consumer demands while strengthening its leadership in the industry.”

As demand for shell eggs and egg products continues to rise, Cal-Maine Foods’ strategic investments and acquisitions will play a pivotal role in shaping the company’s future growth trajectory.