Contradicciones en las llamadas de resultados de Q2 de 2026: Cambios en la mezcla de huevos especializados, preparación para casos de HPAI y márgenes de los alimentos preparados.

Date of Call: Not provided in transcript

Financials Results

• Revenue: Q2 FY26: $769.5M, down 19.4% YOY; H1 FY26: $1.7B, down 2.8% YOY
• EPS: Q2 FY26: $2.13 per diluted share, down 52.3% YOY; H1 FY26: $6.26 per diluted share, down 17% YOY
• Gross Margin: Not explicitly provided as a percentage; Q2 FY26 gross profit decreased 41.8% YOY; H1 FY26 gross profit decreased 14% YOY
• Operating Margin: Q2 FY26: 16.1%; H1 FY26: 22.1%

Guidance:

• Prepared foods segment EBITDA margin expected to be ~19% for the full year despite Q2 slippage.
• Q3 FY26 expected to show continued pullback in prepared foods volumes/costs as expansion projects ramp; growth to emerge in Q4 and build over next 12 months.
• Specialty eggs and prepared foods combined expected to grow and drive sales mix shift.
• Total prepared foods capacity expected to increase >30% over next 18-24 months via expansions.

Business Commentary:

Based on the transcript of the Cal-Maine Foods Q2 2026 Earnings Call, here are the key themes, trends, and their underlying causes:

• Sales Mix Shift & Business Diversification:
• In Q2, net sales were $769.5M. Shell egg sales represented 84.4% of total net sales compared to 94.7% in the prior year period. The combined share of specialty eggs and prepared foods accounted for 46.4% of net sales vs. 31.2%, reflecting a significant diversification shift. This trend accelerated in the first half, with shell egg sales at 85% of total and specialty/prepared foods at 42.8%.

• This strategic shift is driven by the deliberate execution of a long-term plan to grow specialty eggs and accelerate value-added prepared foods, aiming to build a more resilient portfolio and steady earnings.

• Prepared Foods Growth & Expansion Impact:

• Prepared foods sales were $71.7M in Q2, up 586.4% year-over-year but down 14.5% sequentially. Echo Lake Foods contributed significantly, but volumes and costs are temporarily lower due to announced expansion projects.

• The company is investing $36M in a capacity expansion project expected to add 17M lbs of annual scrambled egg production by mid-fiscal 2027, aiming for 30% capacity growth over 18-24 months. This is expected to position the business for sustained double-digit volume growth, though it causes short-term earnings pressure.

• Financial Performance & Earnings Resilience:

• Net income attributable to Cal-Maine Foods was $102.8M in Q2, down 53.1% year-over-year. Diluted EPS was $2.13 vs. $4.47 prior year. The decline follows a tough comparison against the prior year's high prices and supply imbalances.

• The company's strengthened balance sheet, growth in specialty/prepared foods, hybrid pricing models, and operational execution position it as a "different company" compared to past downturns, aiming to weather low egg price cycles without generating losses and with improved mid-cycle earnings.

• Egg Market & Supply Chain Dynamics:

• Conventional egg sales were down significantly, with selling prices 26.5% lower in Q2 and volumes down 2.2%. Specialty egg sales were relatively flat with flat volumes and prices.

• The market faces ongoing volatility from High Path AI, which remains a "structural reality" globally. This reinforces the need for scale and reliability, as customers value consistent supply over spot pricing. Despite lower egg prices, the company sees a "huge win" in holding specialty volumes flat against a tough prior-year comparison.

• Capital Allocation & Strategic Positioning:

• The company maintains a strong, unlevered balance sheet and returned $74.8M to shareholders via share repurchases in Q2. It also declared a $0.72 per share dividend.
• Capital allocation balances returning capital with reinvestment in growth, focusing on specialty eggs and prepared foods to drive mix shift, scale efficiencies, and long-term value creation. Future M&A is expected to continue expanding consumer choice and channel reach.

Sentiment Analysis:

Overall Tone: Positive

• Executives emphasize 'real momentum,' 'solid results,' 'resilience,' and a 'stronger, more durable company.' They highlight strategic progress: 'Our story is clear,' 'We built real momentum,' 'We are more diversified and more resilient,' and 'We're creating, durable, diversified and positioned to lead the category's next decade of growth.'

Q&A:

• Question from Heather Jones (Heather Jones Research): Given depressed egg prices, how do portfolio changes (prepared foods, cost-plus models) affect earnings trajectory and ability to avoid losses?
  Response: Management believes the company is fundamentally different now with a stronger balance sheet, diversification, and hybrid pricing models, positioning it to weather down markets without losses and improve mid-cycle performance.

• Question from Pooran Sharma (Stephens): What is the expected gross margin for prepared foods for the rest of the year, and will the M&A pipeline be affected by lower egg markets?
  Response: Prepared foods still expected to achieve ~19% EBITDA margin for the year despite near-term slippage. M&A pipeline remains open but focuses on stability; growth avenues include conventional, specialty, and prepared foods.

• Question from Leah Jordan (Goldman Sachs): What is the capacity growth and mix shift outlook for specialty eggs, and can you provide more detail on prepared foods expansion progress and costs?
  Response: Specialty eggs expected to grow double-digit CAGR and potentially exceed 50% of shell egg sales long-term. Prepared foods expansion involves a 18-24 month project with temporary volume/cost impacts; long-term growth of 30% targeted with 9-10% CAGR and 19% EBITDA margin.

• Question from Benjamin Klieve (Benchmark StoneX): Why were specialty volumes flat in Q2 despite growth trends, and how receptive are retailers to cost-plus pricing models now?
  Response: Flat specialty volumes were a 'huge win' given tough prior-year comparisons when conventional eggs were scarce. Retailer receptivity to hybrid pricing models depends on their go-to-market strategy and long-term supply reliability.

• Question from Heather Jones (Heather Jones Research): What is the expected step-down for prepared foods in H2 FY26, and how should we think about SG&A expense run rate?
  Response: Q3 FY26 prepared foods will see continued pullback, with growth emerging more in Q4. SG&A may remain elevated due to professional fees and potential increased promotional activity as supply stabilizes.

• Question from Benjamin Mayhew (BMO Capital Markets): Should we expect ongoing COGS benefits from lower outside egg purchases, and why has High Path AI decreased?
  Response: Outside egg purchase benefits are not expected to be ongoing; they are opportunistic based on market conditions. High Path AI presence remains strong globally; the decrease in reported cases is misleading due to smaller flock sizes affected, not absence of the virus.

Contradiction Point 1

Specialty Eggs Long-Term Sales Mix Target

This constitutes a significant change in a key strategic growth metric. The shift from a general expectation of growth to a specific, aggressive target of over 50% signals a material change in the company's strategic priorities and market positioning for its core product segments.

What is the capacity growth strategy for specialty eggs (organic vs. M&A, e.g., Clean Egg acquisition), and what is the long-term sales mix target? - Leah Jordan (Goldman Sachs)

20260107-2026 Q2: Specialty eggs aim for >50% of total shell egg sales long-term. - Sherman Miller(CEO), Max Bowman(CFO)

What is your target long-term mix between conventional and specialty products? - Leah Jordan (Goldman Sachs Group, Inc., Research Division)

2026Q1: While specific long-term mix percentages are hard to predict due to potential acquisitions, specialty eggs are expected to continue growing as a percentage of total sales. - Max Bowman(CFO)

Contradiction Point 2

HPAI (Bird Flu) Outbreak Risk and Preparedness

This is a substantial shift in risk assessment and preparedness outlook. The change from highlighting improved industry-wide preparedness to emphasizing persistent, high structural risk with underestimated challenges directly alters the perceived threat to future operations and financial stability.

Why has bird flu (High Path AI) declined rapidly—is it due to industry actions or luck? - Benjamin Mayhew (BMO Capital Markets)

20260107-2026 Q2: The virus remains globally prevalent... The structural risk is still high, and flock recoveries are being underestimated. - Sherman Miller(CEO), Max Bowman(CFO)

Is there potential for a similar magnitude given the industry's current state? - Pooran Sharma (Stephens Inc., Research Division)

2026Q1: The industry as a whole is better prepared due to significant investments in biosecurity since 2015... While preparedness has improved, the company focuses on executing its own strict biosecurity protocols daily. - Sherman Miller(CEO), Max Bowman(CFO)

Contradiction Point 3

Prepared Foods Segment Gross Margin Trajectory

This represents a direct contradiction in financial forecasting for a critical growth segment. The shift from declaring strong, indicative margins to acknowledging near-term pressure and slippage from restructuring creates uncertainty about the segment's profitability and growth story.

What is the expected gross margin trajectory for the prepared foods segment following Q2's decline? - Pooran Sharma (Stephens)

20260107-2026 Q2: The 19% EBITDA margin target for prepared foods remains valid for the full year. Q3 may see slight slippage due to ongoing restructuring... Growth is expected to build in Q4 and beyond. - Sherman Miller(CEO), Max Bowman(CFO)

Will there be significant sequential revenue growth for Echo Lake? Were cost or timing factors behind the margin performance, or is the current gross margin sustainable? - Heather Jones (Heather Jones Research LLC)

2026Q1: Echo Lake's performance is in line or exceeding initial benchmarks. The gross margin at Echo Lake is indicative of its strong positioning. - Max Bowman(CFO)