CALM's Q3 Profit Plunges 90% Amidst Sales Decline

TL;DR

**CALM's earnings are cracking, despite strategic acquisitions; expect continued volatility as the market digests these results.**

AI Summary

CAL-MAINE FOODS INC reported a significant decline in financial performance for the thirteen and thirty-nine weeks ended February 28, 2026, compared to the prior year. Net sales for the thirteen weeks plummeted to $666.95 million from $1.41 billion, a 52.9% decrease. Similarly, net income for the thirteen weeks fell sharply to $51.12 million from $508.15 million, an 89.9% reduction. For the thirty-nine weeks, net sales decreased to $2.36 billion from $3.16 billion, a 25.3% drop, and net income decreased to $353.15 million from $876.10 million, a 59.7% decline. The company completed two significant acquisitions: Echo Lake Foods, LLC for $275.41 million on June 2, 2025, adding prepared foods, and certain assets of Clean Egg, LLC for $23.7 million on October 10, 2025, expanding its brown cage-free and free-range layer operations. Despite these acquisitions, cash and cash equivalents decreased from $499.39 million at May 31, 2025, to $392.16 million at February 28, 2026, and total current assets decreased by $218.62 million.

Why It Matters

This significant drop in CALM's net income and sales signals a challenging period for the company, potentially impacting investor confidence and future dividend payouts, which are tied to net income. The acquisitions of Echo Lake Foods and Clean Egg indicate a strategic pivot towards diversification and cage-free production, a competitive response to evolving consumer preferences and market demands. However, the immediate financial results suggest these investments have yet to translate into improved profitability, raising questions about integration and market conditions. Employees might face pressure if the downturn persists, while customers could see changes in product offerings as CALM integrates its new businesses.

Risk Assessment

Risk Level: high — The company experienced a 89.9% decrease in net income for the thirteen weeks ended February 28, 2026, falling to $51.12 million from $508.15 million in the prior year. This substantial decline, coupled with a 52.9% drop in net sales to $666.95 million from $1.41 billion, indicates significant operational and market challenges, posing a high risk to future profitability and investor returns.

Analyst Insight

Investors should exercise caution and closely monitor CALM's next earnings report for signs of stabilization or recovery. Consider reducing exposure if the strategic acquisitions do not show signs of contributing positively to the bottom line in the near term, as the current financial performance is a red flag.

Financial Highlights

revenue

$2.36B

operating Margin

17.3%

total Assets

$3.14B

net Income

$353.15M

eps

$7.37

gross Margin

27.0%

cash Position

$392.16M

revenue Growth

-25.3%

Key Numbers

• $666.95M — Net Sales (13 weeks) (Down 52.9% from $1.41B in prior year)
• $51.12M — Net Income (13 weeks) (Down 89.9% from $508.15M in prior year)
• $2.36B — Net Sales (39 weeks) (Down 25.3% from $3.16B in prior year)
• $353.15M — Net Income (39 weeks) (Down 59.7% from $876.10M in prior year)
• $275.41M — Echo Lake Foods Acquisition Cost (Strategic investment in prepared foods)
• $23.7M — Clean Egg Acquisition Cost (Investment in brown cage-free and free-range layers)
• $392.16M — Cash and Cash Equivalents (Decreased from $499.39M at May 31, 2025)
• $1.07 — Basic EPS (13 weeks) (Significantly lower than $10.42 in prior year)
• $7.37 — Basic EPS (39 weeks) (Significantly lower than $17.99 in prior year)
• $30.1M — Goodwill from Echo Lake Foods (Attributable to projected synergies)

Key Players & Entities

• CAL-MAINE FOODS INC (company) — registrant
• Echo Lake Foods, LLC (company) — acquired business
• Clean Egg, LLC (company) — acquired business
• NASDAQ Global Select Market (regulator) — exchange where CALM is registered
• Financial Accounting Standards Board (regulator) — accounting standards issuer
• $666,951 (dollar_amount) — net sales for thirteen weeks ended Feb 28, 2026
• $1,417,685 (dollar_amount) — net sales for thirteen weeks ended Mar 1, 2025
• $51,118 (dollar_amount) — net income for thirteen weeks ended Feb 28, 2026
• $508,153 (dollar_amount) — net income for thirteen weeks ended Mar 1, 2025
• $275,406 (dollar_amount) — cash consideration for Echo Lake Foods acquisition

FAQ

Risk Factors

• Fluctuations in Egg Prices [high — market]: The company's financial performance is highly sensitive to fluctuations in the average selling prices of eggs. A significant decrease in egg prices, as seen in the reported periods with net sales down 52.9% for the thirteen weeks and 25.3% for the thirty-nine weeks, directly impacts revenue and profitability. This volatility is a primary driver of the sharp decline in net income.
• Disease Outbreaks and Flock Health [high — operational]: Avian diseases, such as Highly Pathogenic Avian Influenza (HPAI), pose a significant threat to the company's layer flocks. Disease outbreaks can lead to substantial flock depopulation, impacting production capacity and resulting in significant financial losses due to lost sales and costs associated with disease control and repopulation.
• Animal Welfare and Environmental Regulations [medium — regulatory]: Increasing consumer demand and regulatory scrutiny regarding animal welfare, cage-free housing, and environmental sustainability present ongoing challenges. Compliance with evolving standards, such as those related to cage-free egg production, requires significant capital investment and can impact operational costs and product mix.
• Acquisition Integration and Debt Management [medium — financial]: The company has undertaken significant acquisitions, such as Echo Lake Foods for $275.41 million and Clean Egg, LLC for $23.7 million. Successful integration of these businesses is crucial. Furthermore, managing the financial implications of these acquisitions, including potential goodwill impairment and ensuring adequate cash flow to service any associated debt, is a key financial risk.
• Feed Costs and Availability [medium — operational]: The cost and availability of feed ingredients, primarily corn and soybean meal, are critical to the company's profitability. Fluctuations in commodity markets can significantly increase cost of sales, impacting gross margins. The company's ability to manage these costs through hedging or other strategies is essential.

Industry Context

The U.S. egg industry is characterized by significant price volatility driven by supply and demand dynamics, disease outbreaks (like avian influenza), and shifts in consumer preferences towards cage-free and specialty eggs. Cal-Maine Foods is the largest producer and distributor of fresh shell eggs in the United States, operating in a highly competitive environment where operational efficiency and flock health are paramount. The trend towards value-added products and sustainable practices is also shaping the industry landscape.

Regulatory Implications

Cal-Maine Foods faces regulatory oversight related to food safety, animal welfare, and environmental standards. Evolving cage-free mandates and potential future regulations on environmental impact could necessitate significant capital expenditures and operational adjustments. Compliance with these regulations is crucial to maintain market access and consumer trust.

What Investors Should Do

1. Monitor egg price trends and industry supply/demand dynamics.
2. Evaluate the integration success and financial impact of recent acquisitions (Echo Lake Foods, Clean Egg).
3. Assess the company's ability to manage feed costs and flock health.
4. Analyze the impact of the shift towards cage-free and specialty eggs.

Key Dates

• 2026-02-28: End of the thirteen and thirty-nine weeks reporting period — Reported significant declines in net sales and net income compared to the prior year, reflecting market conditions and acquisition impacts.
• 2026-02-28: Acquisition of certain assets of Clean Egg, LLC — Expanded brown cage-free and free-range layer operations for $23.7 million.
• 2025-06-02: Acquisition of Echo Lake Foods, LLC — Acquired for $275.41 million, adding prepared foods capabilities and $30.1 million in goodwill.
• 2025-05-31: Prior fiscal year end — Cash and cash equivalents stood at $499.39 million, and total assets were $3.08 billion.

Glossary

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net assets. It represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. (The company recorded $30.1 million in goodwill from the Echo Lake Foods acquisition, primarily attributed to projected synergies.)

Net Sales

The total revenue generated from the sale of goods or services, net of returns, allowances, and discounts. (A key indicator of the company's top-line performance, which saw a significant decrease of 52.9% for the thirteen weeks ended February 28, 2026.)

Net Income

The profit remaining after all expenses, including taxes and interest, have been deducted from total revenue. (Reflects the company's overall profitability. It experienced a sharp decline of 89.9% for the thirteen weeks ended February 28, 2026.)

Basic EPS

Earnings per share calculated by dividing net income by the weighted-average number of outstanding common shares. (Indicates the profitability attributable to each outstanding share of common stock. It significantly decreased from $10.42 to $1.07 for the thirteen weeks ended February 28, 2026.)

Available-for-sale securities

Investments in debt or equity securities that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income. (The company holds a substantial amount of these securities ($759.77 million as of Feb 28, 2026), which decreased from $892.71 million at May 31, 2025.)

Involuntary Conversions

Gains or losses recognized when assets are involuntarily converted into cash or other assets, often due to casualty events like fires or natural disasters. (The company reported a gain of $7.97 million from involuntary conversions for the thirty-nine weeks ended February 28, 2026, which is a non-recurring item impacting operating income.)

Year-Over-Year Comparison

Compared to the prior year, Cal-Maine Foods Inc. has experienced a substantial downturn in financial performance. Net sales for the thirteen weeks ended February 28, 2026, plummeted by 52.9% to $666.95 million, and net income saw an even steeper decline of 89.9% to $51.12 million. For the thirty-nine weeks, net sales decreased by 25.3% to $2.36 billion, with net income falling 59.7% to $353.15 million. This performance decline occurred despite significant acquisitions, which added $30.1 million in goodwill, and was accompanied by a reduction in cash and cash equivalents from $499.39 million to $392.16 million.

Key Financial Figures

• $0.01 — nge on which registered Common Stock, $0.01 par value per share CALM The NASDAQ

Filing Documents

• calm-20260228.htm (10-Q) — 1602KB
• exhibit311.htm (EX-31.1) — 16KB
• exhibit312.htm (EX-31.2) — 16KB
• exhibit32.htm (EX-32) — 8KB
• 0001562762-26-000046.txt ( ) — 7178KB
• calm-20260228.xsd (EX-101.SCH) — 35KB
• calm-20260228_cal.xml (EX-101.CAL) — 54KB
• calm-20260228_def.xml (EX-101.DEF) — 123KB
• calm-20260228_lab.xml (EX-101.LAB) — 448KB
• calm-20260228_pre.xml (EX-101.PRE) — 249KB
• calm-20260228_htm.xml (XML) — 1568KB

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets - February 28, 2026 and May 31, 2025 3 Condensed Consolidated Statements of Income - Thirteen and Thirty-nine Weeks Ended February 28, 2026 and March 1, 2025 4 Condensed Consolidated Statements of Comprehensive Income - Thirteen and Thirty-nine Weeks Ended February 28, 2026 and March 1, 2025 5 Condensed Consolidated Statements of Cash Flows - Thirty-nine Weeks Ended February 28, 2026 and March 1, 2025 6 Notes to Condensed Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of

Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 32 Item 4.

Controls and Procedures

Controls and Procedures 32 Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 33 Item 1A.

Risk Factors

Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 5. Other Information 33 Item 6. Exhibits 34

Signatures

Signatures 35 Index 3 PART I. FINANCIAL INFORMATION ITEM 1.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS Cal-Maine Foods, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except for par value amounts) (Unaudited) February 28, 2026 May 31, 2025 Assets Current assets: Cash and cash equivalents $ 392,159 $ 499,392 Investment securities available-for-sale 759,768 892,708 Trade and other receivables, net 185,176 259,304 Income tax receivable 49,722 13,057 Inventories 348,910 295,670 Prepaid expenses and other current assets 13,751 7,979 Total current assets 1,749,486 1,968,110 Property, plant & equipment, net 1,221,162 1,026,684 Investments in unconsolidated entities 9,182 11,095 Goodwill 87,059 46,776 Intangible assets, net 53,361 15,157 Other long-term assets 19,011 16,797 Total Assets $ 3,139,261 $ 3,084,619 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 106,494 $ 101,033 Accrued wages and benefits 36,618 60,263 Dividends payable 16,841 114,163 Accrued expenses and other liabilities 53,025 32,912 Total current liabilities 212,978 308,371 Other noncurrent liabilities 34,625 55,582 Deferred income taxes, net 184,526 154,651 Total liabilities 432,129 518,604 Commitments and contingencies - see Note 10 — — Stockholders' equity: Common stock ($ 0.01 par value) - authorized 120,000 shares, issued 75,061 shares 751 751 Paid-in capital 84,382 80,845 Retained earnings 2,800,993 2,565,928 Accumulated other comprehensive income (loss), net of tax 1,404 ( 1,007 ) Common stock in treasury at cost – 27,686 shares at February 28, 2026 and 26,567 shares at May 31, 2025 ( 187,362 ) ( 85,893 ) Total Cal-Maine Foods, Inc. stockholders' equity 2,700,168 2,560,624 Noncontrolling interest in consolidated entity 6,964 5,391 Total stockholders' equity 2,707,132 2,566,015 Total Liabilities and Stockholders' Equity $ 3,139,261 $ 3,084,619 See Notes to Condensed Consolidated Financial Statements

business

business combination accounting during the second quarter of fiscal 2026, which resulted in immaterial measurement period adjustments. The following table summarizes the consideration paid for Echo Lake Foods and the value of assets acquired and liabilities assumed recognized at the acquisition date (in thousands): Cash consideration paid $ 275,406 Recognized amounts of identifiable assets acquired and liabilities assumed Cash $ 115 Investment securities available-for-sale 14,147 Accounts receivable 31,923 Inventories 21,601 Prepaid expenses and other current assets 3,131 Property, plant & equipment 151,697 Intangible assets 36,800 259,414 Accounts payable and other current liabilities ( 14,114 ) Total identifiable net assets 245,300 Goodwill 30,106 $ 275,406 Cash and accounts receivable acquired along with liabilities assumed were valued at their carrying value which approximates fair value due to the short maturity of these instruments. Inventories consisted primarily of raw materials, supplies and finished goods. Raw materials and supplies were valued at their carrying value as management believes that their carrying value best approximates their fair value. Finished goods were valued using both the bottom-up and top-down approach. The bottom-up approach measures the value of inventory as the value created by the target company (i.e., the costs incurred, profit realized, and tangible and intangible assets utilized) pre-acquisition date. The top-down approach measures the value of inventory as the incremental inventory value created by the market participant buyer as part of its selling effort to an end customer (i.e., the costs that will be incurred, the profit that will be realized, and the tangible and intangible assets that will be utilized) post-acquisition date. Property, plant and equipment were valued utilizing the cost approach and market approach. Machinery a

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