Cal-Maine Foods, Inc. Completes Acquisition of Assets from Tyson Foods, Inc.

Rhea-AI Summary

Cal-Maine Foods, Inc. (CALM) has finalized the acquisition of a broiler processing plant, hatchery, and feed mill in Dexter, Missouri, previously closed by Tyson Foods, Inc. The company aims to revamp these assets for shell egg and egg products production, signaling a strategic move for expansion and diversification.

Insights

Market Research Analyst

The acquisition of a broiler processing plant, hatchery and feed mill by Cal-Maine Foods represents a strategic expansion that could have significant implications for the company's market position and operational capabilities. By repurposing these assets for shell egg and egg products production, Cal-Maine is diversifying its production capabilities and potentially increasing its production capacity.

This move may be interpreted as a proactive approach to meet growing consumer demand for eggs and egg products, which has been on the rise due to factors such as increased protein consumption and the versatility of eggs as an ingredient. It's also worth noting that the acquisition of facilities previously owned by a major player like Tyson Foods could provide Cal-Maine with advanced technologies and infrastructure that may enhance efficiency and reduce production costs over time.

However, investors should be aware of the risks associated with such expansions, including the time and capital required to remodel and repurpose the facilities, as well as the potential for unforeseen operational challenges. The impact on Cal-Maine's financials will depend on how effectively the company can integrate these new assets and realize anticipated synergies.

Financial Analyst

From a financial perspective, Cal-Maine Foods' completion of this acquisition is a significant capital investment that could affect the company's short-term liquidity and leverage ratios. The long-term success of this investment will hinge on the company's ability to increase production volumes and sales while managing the costs associated with the remodeling and repurposing of the acquired assets.

Investors should monitor Cal-Maine's forthcoming financial statements for changes in capital expenditures, any increases in debt and the impact on cash flow. Additionally, the company's return on investment will be a critical factor to watch, as it will indicate how effectively Cal-Maine is utilizing these new assets to generate profit.

It is also important to consider the competitive landscape of the egg industry and how this acquisition might alter Cal-Maine's market share. If the repurposed facilities lead to significant cost savings or product innovations, Cal-Maine could strengthen its competitive edge against other producers.

Agricultural Economist

The completion of this acquisition by Cal-Maine Foods can be seen as a strategic move within the agricultural sector, particularly within the poultry and egg production industry. The decision to repurpose existing facilities rather than building new ones can be a more cost-effective and faster approach to expanding production capacity.

Given that the egg market is subject to fluctuations based on feed costs, disease outbreaks and consumer trends, Cal-Maine's investment in additional production infrastructure could provide more flexibility to respond to market changes. This could be particularly advantageous in managing the volatility associated with feed prices, as owning a feed mill may allow for better cost control.

However, the integration of these new operations into Cal-Maine's existing business model will require careful management to avoid disruption to current operations. The company's ability to navigate the regulatory environment, including environmental and food safety standards, will also be important in determining the success of this venture.

RIDGELAND, Miss.--(BUSINESS WIRE)-- Cal-Maine Foods, Inc. (NASDAQ: CALM) (“Cal-Maine Foods” or the “Company”), the largest producer and distributor of fresh shell eggs in the United States, today announced it has completed the previously announced acquisition of a broiler processing plant, hatchery and feed mill in Dexter, Missouri, that were closed by Tyson Foods, Inc. (NYSE: TSN) (“Tyson”) in 2023. The Company plans to remodel and repurpose the assets for use in shell egg and egg products production.

Sherman Miller, president and chief executive officer of Cal-Maine Foods, Inc., stated, “We are pleased to join the Dexter community and are excited about the opportunities to expand our operations. We intend to partner with the existing strong network of local contract growers who can support our shell egg production capabilities. Dexter’s central geographic location and strong work force will enhance our supply and distribution capabilities for customers in Missouri and surrounding markets. Importantly, we will also benefit from closer proximity to sources for our primary feed ingredients. We look forward to the new production opportunities, including the potential for additional free-range capacity, in this new community and market for Cal-Maine Foods.”

About Cal-Maine Foods

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packaging, marketing and distribution of fresh shell eggs, including conventional, cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. The Company, which is headquartered in Ridgeland, Mississippi, is the largest producer and distributor of fresh shell eggs in the United States and sells the majority of its shell eggs in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.

Forward Looking Statements

Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on management’s current intent, belief, expectations, estimates and projections regarding our company and our industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and may be beyond our control. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include, among others, (i) the risk factors set forth in the Company’s SEC filings (including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell egg business (including disease, pests, weather conditions and potential for recall), including but not limited to the most recent outbreak of highly pathogenic avian influenza affecting poultry in the U.S., Canada and other countries that was first detected in commercial flocks in the U.S. in February 2022 and that first impacted our flocks in December 2023, (iii) changes in the demand for and market prices of shell eggs and feed costs, (iv) our ability to predict and meet demand for cage-free and other specialty eggs, (v) risks, changes or obligations that could result from our future acquisition of new flocks or businesses and risks or changes that may cause conditions to completing a pending acquisition not to be met, (vi) risks relating to increased costs, and higher and potentially further increases in inflation and interest rates, (vii) our ability to retain existing customers, acquire new customers and grow our product mix, (viii) adverse results in pending litigation matters, (ix) global instability including as a result of the wars in Ukraine and Israel and attacks on shipping in the Red Sea, and (x) any potential resurgence of COVID-19. SEC filings may be obtained from the SEC or the Company’s website, www.calmainefoods.com. Readers are cautioned not to place undue reliance on forward-looking statements because, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. Further, the forward-looking statements included herein are only made as of the respective dates thereof, or if no date is stated, as of the date hereof. Except as otherwise required by law, we disclaim any intent or obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240314968262/en/

Sherman Miller, President and CEO

Max P. Bowman, Vice President and CFO

(601) 948-6813

Source: Cal-Maine Foods, Inc.

FAQ

What acquisition did Cal-Maine Foods, Inc. (CALM) recently complete?

Cal-Maine Foods, Inc. (CALM) completed the acquisition of a broiler processing plant, hatchery, and feed mill in Dexter, Missouri.

Which company closed the assets acquired by Cal-Maine Foods, Inc. (CALM)?

The assets were closed by Tyson Foods, Inc. (NYSE: TSN) in 2023.

What are Cal-Maine Foods, Inc.'s (CALM) plans for the acquired assets?

Cal-Maine Foods, Inc. (CALM) intends to remodel and repurpose the assets for shell egg and egg products production.

Who is the president and CEO of Cal-Maine Foods, Inc. (CALM)?

Sherman Miller is the president and chief executive officer of Cal-Maine Foods, Inc.