Cal-Maine Foods, Inc.

Good morning, everyone, and welcome to the Call Maine Foods first quarter fiscal 2026 earnings conference call. All participants are in a listen-only mode. After today's prepared remarks, there will be a question and answer session. At that time, I will provide instructions for those wishing to ask a question. Please note, this call is being recorded. I will now turn the call over to Sherman Miller, President and Chief Executive Officer of Cal Maine Foods. Please go ahead.

Good morning and thank you for joining us today. We appreciate your interest in Cal Maine Foods and the opportunity to share our results and outlook. This is an important milestone for us as it marks our first ever earnings call. It's an important part of our commitment to a more robust investor relations strategy aimed at increasing visibility into the institutional investment community and providing stakeholders with increased transparency into our business. Before we begin, I want to remind everyone that today's remarks may include forward-looking statements. These are based on management's current expectations and are subject to risk and uncertainties described in our SEC filings. I want to start the call today with an expression of humbleness and gratitude. I'm humbled each morning and realizing the dedication and strength of our CalMain family. I'm truly grateful to have the opportunity to represent each and every one of them on this call today. I'd like to recognize a few folks that have been a huge part of building the CalMain Foundation, which is the platform that we operate from today. CalMain has always been about people, our over 4,000 employees, our customers, our communities, and our shareholders. Every day our team demonstrates the discipline, accountability, and frugalness that have defined this company from the very beginning. We stand on the shoulders of our founder, Fred Adams, and leaders like Dolph Baker, who remains an important guide as board chair. Also, there is a long list that have mentored both me and our management team as a whole. I'd like to name just a few. Steve Storm, Bob Scott, Jack Self, David Jenkins, Mark Ashby, all previous vice presidents of operations. Bobby Raines and Tim Dawson, previous CFOs. Jeff Harden and Kim Paramore, both previous vice president of sales. Ken Looper, former president. Joe White, former vice president of feed mills. Charlie Collins and Mike Cassaberry, both former controllers. There are many more to thank, but for the sake of time, I just want to say a very simple and humble thank you to all of our employees, both past and present. Each has contributed to building a strong foundation that is in place today. The cornerstones of that foundation are simple. We have broad scale which provides us significant benefits. Our vertically integrated model allows us to manage every step of production which keeps costs low, enables supply reliability, safeguards quality and food safety, and gives us the flexibility to optimize output. This is also a significant competitive advantage. Our culture, what we refer to as the Cal Mainway, is one focused on operational excellence. We define operational excellence as an unwavering focus on the fundamentals. That means investing in modernization, embedding biosecurity, and applying the Cal Mainway of accountability across our operations. With respect to biosecurity, we've invested more than $80 million in equipment, procedures, and training to safeguard flock health and mitigate the risk of highly pathogenic avian influenza since 2015. Unfortunately, High Path AI remains a reality for the industry. Financially, we're operating from a position of strength with a great balance sheet and enough cash to opportunistically pursue acquisitions in furtherance of our strategy. Finally, as I mentioned, We have a fantastic team with significant depth and experience. Speaking of our team, I'd like to welcome Melanie Bolden and Kira Lombardo to CalMain. Melanie, who joins our board of directors, has deep expertise in the food and beverage industry and nearly three decades of global business management, brand building, and experience at companies like Coca-Cola, Kraft, and most recently, Tyson. Kira was recently appointed as the company's first ever chief strategy officer. Like Melanie, Kira has significant experience working with consumer-facing companies. She will work with our senior leadership team to further accelerate and shape enterprise priorities, building on Cal Mean Foods' leadership role in a rapidly changing marketplace. Our foundation and strong business momentum allowed us to deliver the strongest first quarter in our history and also reflects the benefits of diversification. the strength of our operations, and the progress we've made in positioning CalMain for the future. Specifically, our results were driven by strong growth in specialty eggs and the expansion of our prepared foods platform, supported by solid performance in conventional eggs. Together, specialty eggs and prepared foods accounted for nearly 40% of net sales, underscoring their central role in CalMain's strategy and long-term financial performance. These results show CalMain Advancing is a diversified, consumer-driven food company. Our conventional egg business continues to provide stability and scale, while specialty eggs and prepared foods are increasingly shaping the future of our portfolio. Specialty eggs and prepared foods are positioned as growth engines. shifting our mix toward higher value categories. And across it all, our vertical integration and financial strength ensure that we can execute with discipline and resilience. With that, let me turn the call over to our Chief Financial Officer, Max Bowman, to drill down into our results for the quarter and discuss our capital allocation framework.

Max? Thanks, Sherman, and good morning, everyone. Thanks for tuning into our first live earnings call. This is a new format to us and is part of an increased focus on our part to deliver increased transparency to all of our stakeholders. As a reminder, we published our earnings release in 10Q this morning. Additionally, we have published a brief earnings presentation on our website. These documents contain detailed information on our financial results. I'll touch on the highlights for the first quarter of fiscal 2026. Net sales were $922.6 million, up 17.4% from $785.9 million last year. The increase was driven by increase in shell egg sales and from contributions from our recent acquisitions in the prepared food space. Shell egg sales were $789.4 million, up 6.5%, driven by a 3.9% increase in net average selling price for shell eggs and a 7.5% increase in specially egg sales volume. Shell eggs represented 85.6% of total net sales. That's down 880 basis points from last year as our portfolio mix diversified into prepared foods. Specially eggs generated 283.5 million in sales, up 10%, with double-digit growth in cage-free and pasture-raised. Specialty eggs account for more than 30% of net sales. Conventional egg sales generated $505.9 million in sales, up 4%. Prepared foods delivered $83.9 million in sales, an increase of over 800%, with Echo Lake Foods contributing sales of $70.5 million. Prepared foods represented more than 9% of our net sales this quarter. This shift in mix demonstrates how specialty eggs and prepared foods are shaping our portfolio towards higher margin categories. Gross profit was 311.3 million, or 33.7% of net sales, up from 247.2 million, or 31.5% of net sales last year. This nearly 26% improvement in gross profit was driven primarily by higher shelf egg selling prices growth in our specially egg sales volume, lower feed costs, and contributions from prepared foods. Operating income was $249.2 million or 27% of net sales compared with $187 million or 23.8% a year ago, a 320 basis point improvement. Net income was $199.3 million or $4.12 per diluted share, up from $150 million or $3.06 per diluted share last year. These improvements were driven by higher average selling prices for shell eggs and the incremental contributions from prepared foods. Turning to cost and expenses, our feed costs were actually a source of support this quarter. On a per dozen basis, feed costs decreased about 4% year over year, driven primarily by lower soybean mill prices. That reduction translated into roughly $6 million of savings in cost of sales. SG&A expenses increased modestly, up about 12% from the prior year. This was largely tied to higher sales volumes and the integration of Echo Lake Foods, which drove higher delivery expense and other overhead. Marketing was essentially unchanged. Importantly, these added SG&A costs directly supported growth in both shell eggs and prepared foods. In fact, SG&A as a percentage of sales decreased slightly from the prior year. On the production side, capacity expansion and rebuild post-HPAI is also supporting our growth. Breeder flocks increased 46 percent, chicks hatch were up 77 percent, and the average number of layer hens rose 10 percent. We sold 2.5 percent more dozens year over year. with specialty dozens increasing 7.5%. Our growth is not only driven by pricing, but also by real volume expansion supported by long-term investments in our capacity. We continue to see tangible benefits from our modernization initiatives and in-line facilities. These investments enhance yields, improve our productivity, and reinforce our low-cost positioning. The Cal Maine way, embedding best practices and process innovation, remains central to our ability to operate efficiently. Operating cash flow was very strong at $278.6 million, more than double last year's level of $117.5 million. We ended the quarter with $252 million in cash and equivalents and $1 billion in investments, and we remain virtually debt-free. Our capital allocation approach is centered on maximizing total shareholder return, and we view it through five lenses. First, our dividends. Consistent with our standing dividend policy, we will pay a dividend of $1.37 per share payable November 13th to shareholders of record on October 29th. Second, share repurchases. We plan to take an opportunistic approach to share repurchases. guided by our broader commitment to discipline capital deployment. Depending on circumstances, we may use different methods to execute buyback, such as open market purchases, accelerated programs, or prearranged trading plans. Third, earnings per share growth. This is supported by discipline, reinvestment in our business, particularly in modernization, margin expansion initiatives, and efficiency programs. Fourth, M&A. We are focused on related areas, geographic expansion, and opportunities that meet strict financial return thresholds while strengthening our supply position. Prepared foods is a great example of this. Where the best investment is in ourselves and the fast-growing subcategories we are building. And finally, multiple expansion. Over time, as we shift our mix and deliver higher quality, more predictable earnings, we believe Cal Maine Foods will be positioned for a valuation that reflects that improvement. In short, our strong cash generation allows us to fund growth, support our dividend, be opportunistic on repurchases, and pursue disciplined M&A. In turn, these actions create even more cash flow for future deployment. That concludes my review of the financial results. I will now turn it Call back to Sherman for additional commentary on where we're going strategically.