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How Did Cal-Maine’s Specialty Egg Business Perform in 4Q16?

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Value-added specialty egg business

Cal-Maine Foods (CALM) is strategizing to pursue additional opportunities to market and sell specialty eggs due to changing consumer demand trends. It expects to benefit from higher and less cyclical selling prices. Specialty eggs are nutritionally enhanced organic cage-free eggs.

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Performance in 4Q16

Specialty eggs have been an important factor in driving revenue growth in fiscal 2016. It showed steady growth in fiscal 2016. Specialty eggs’ volume rose 14.7% for fiscal 2016. They accounted for 23% of the total number of shell eggs sold for fiscal 2016. They also contributed to 29% of the total shell egg revenue for the quarter. Even though specialty egg prices remained strong during fiscal 2016, there was some margin and volume pressure on specialty egg sales—driven by lower non-specialty egg prices.

Management also mentioned that “Cal-Maine Foods is well positioned to respond to demand trends for specialty eggs, as many food service customers, large restaurant chains and major retailers, including our largest customers, have committed to exclusive offerings of cage-free eggs by specified future dates.”

Management added that “We are working with our customers to ensure a smooth transition to meet this demand as a trusted supplier of cage-free eggs. Also, our product mix provides a wide variety of healthy choices for consumers including conventional, nutritionally enhanced and organic eggs.”

Cal-Maine Foods’ privately held peers include Rose Acre Farms, Michael Foods Group, and Moark. The PowerShares Dynamic Food and Beverage (PBJ) invests 5% in Hormel Foods (HRL) and Tyson Foods (TSN). The Global X SuperDividend U.S. ETF (DIV) invests 1.9% in Cal-Maine Foods.

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