Cal-Maine shares drop as DOJ probes egg pricing
The company’s stock prices have fallen over 4% after disclosure of antitrust investigation.
USA – Shares of Cal-Maine Foods dropped after the company revealed it is under investigation by the antitrust division of the U.S. Department of Justice (DOJ).
The Mississippi-based egg supplier stated that it received a notice about the probe in March and is cooperating with the authorities.
Following the disclosure, Cal-Maine’s stock declined by more than 4% after market close.
The DOJ’s investigation comes amid growing scrutiny over the spike in egg prices, which have soared in recent months due to a widespread outbreak of avian influenza.
The bird flu crisis has resulted in the culling of more than 166 million birds across the U.S., mostly hens used in egg production.
In February, the average cost of a dozen Grade A eggs in American cities reached US$5.90 (US dollars), marking a 10.4% increase compared to the same month in 2024.
This price surpassed the previous record set in January, when a dozen eggs averaged US$4.95 (US dollars).
Cal-Maine, which supplies roughly 20% of the eggs consumed in the U.S., has seen its role in the industry come under increased attention.
Q3 financials and Echo Lake acquisition
On the same day it disclosed the DOJ probe, Cal-Maine released its third-quarter results for the fiscal year ending March 1, reporting a sharp rise in revenue to US$1.42 billion (US dollars), nearly double the figure from a year earlier.
The company attributed the increase in revenue mainly to elevated egg prices, which averaged US$4.06 (US dollars) per dozen in the quarter, up from US$2.25 (US dollars) the previous year.
However, sales still came in slightly below analysts’ expectations of US$1.43 billion (US dollars), according to FactSet.
The company sold 331.4 million dozen eggs during the quarter, a record volume and a 10% increase from the same period in the previous fiscal year.
Cal-Maine also reported that it had made gains in addressing the impact of bird flu, including the reopening of facilities in Texas and Kansas and an increase in the number of layer hens.
Feed costs also declined during the quarter, contributing to stronger financial performance.
Net income for the quarter reached US$508.5 million (US dollars), more than three times higher than the same period last year, but earnings per share of US$10.38 (US dollars) fell short of the projected US$10.72 (US dollars).
Separately, Cal-Maine announced a US$258 million (US dollars) agreement to purchase Echo Lake Foods Inc., a Wisconsin-based manufacturer of breakfast items and processed egg products.
The acquisition is set to close before the end of fiscal 2025 and will be funded entirely through Cal-Maine’s existing cash reserves.
Echo Lake Foods generated revenue of approximately US$240 million (US dollars) in fiscal 2024, with an annual growth rate of around 10% over the past five years, according to Cal-Maine.
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