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Cal-Maine Plunges as Labor, Feed Costs Dent Earnings

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By Dhirendra Tripathi

Investing.com – Cal-Maine stock (NASDAQ:CALM) plummeted 7.3% in Wednesday’s pre-market trading after the egg-producer’s second-quarter earnings fell short of estimates.

Higher costs for feed ingredients, processing, packaging, transportation and labor weighed on the earnings even as the company sold more eggs at higher prices.

The company warned of market prices for its primary feed ingredients remaining volatile this financial year, blaming the ongoing disruptions related to the pandemic, weather fluctuations and geopolitical issues among factors behind the outlook.

The company’s dividend policy led them to skip a dividend payout again this quarter, which also weighed on the stock. The company aims to get back to a cumulative profit dating from the last quarter they paid a dividend, which came in last winter's quarter. The total cumulative loss remaining to be offset before Cal-Maine pays a dividend is $21.1 million.

For the second quarter ended November 27, net average selling price for all eggs rose 12% to $1.37 per dozen. Total dozens sold increased to 276 million compared to around 274 million in the prior-year period, according to a company release.

Chairman and Chief Executive Officer Dolph Baker attributed higher volume sales to continuous improvement in food service demand as restaurant traffic increased. In addition, a stronger export market supported demand for shell eggs and egg products, he said.

Farm production costs per dozen for the second quarter were up around 22%, which the company was owing to 29% higher feed costs per dozen produced.

Net sales in the second quarter rose over 12% to $391 million. The company managed to report a profit of $1.17 million, less than a tenth of its profit in the second quarter of last financial year.

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