Cal-Maine Foods Inc. (CALM) shares are trading lower after the company reported weak first-quarter results. The company's business was impacted by weakness in the conventional egg cycle and investments made ahead of the full earnings contribution from prepared foods.

While Cal-Maine does not provide specific guidance, it expects supply-demand conditions to gradually stabilize despite elevated feed costs and market volatility.

• Cal-Maine Foods stock is testing lower boundaries. What's pressuring CALM?

Expects Near-Term Results To Be Pressured

During the earnings call, the company said it expects near-term results to remain pressured by low conventional wholesale egg prices, higher input costs and the ongoing supply imbalance.

Much of Cal-Maine's conventional business is priced behind the market, so changes in the daily average Urner Barry price flow into realized prices with a lag. Management said it is not attempting to predict the exact bottom of the egg cycle.

Management expects earnings to become more diversified as specialty shell eggs and prepared foods gain a larger share of results. Current performance does not yet capture the full potential of new capacity, the broader portfolio or a potential recovery in the shell egg market.

Cal-Maine identified two key drivers for future earnings: normalization of the conventional egg cycle and contributions from specialty eggs and prepared foods. While the timing of the former remains uncertain, management has greater control over the latter through capital allocation, capacity expansion, commercialization, utilization and specialty egg growth.

Prepared Food Business to Support Earnings

The company expects prepared foods capacity to grow more than 60% by the first half of fiscal 2028 from the end of fiscal 2026.

Cal-Maine expects new pancake and scrambled egg production capacity to come online progressively and support earnings growth.

Its high-speed pancake line is expected to add about 12 million pounds of annual capacity through early fiscal 2027, while the network optimization project should add roughly 17 million pounds of scrambled egg capacity through fiscal 2027.

The Crepini investment is expected to add another 18 million pounds progressively through fiscal 2028, alongside $54 million of additional prepared foods investments announced in the prior quarter.

Earnings Snapshot

Cal-Maine reported a loss of $1.26 per share, missing the Wall Street estimate for a loss of 64 cents.

Net sales fell 41.5% year over year to $539.6 million, missing the analyst consensus estimate of $574.8 million.

Cal-Maine will not pay a cash dividend for the fiscal 2027 first quarter under its variable dividend policy.

The company said it will not resume dividend payments following a profitable quarter until it returns to cumulative profitability from the date of the last quarter in which it paid a dividend.

As of Aug. 29, Cal-Maine had a cumulative loss of $94.5 million that must be recovered before it can pay another dividend under the policy.

CALM Stock Price Activity: Cal-Maine Foods shares were down 2.64% at $66.74 at the time of publication on Wednesday.