Good morning, everyone, and welcome to the Cal-Maine Foods, Inc. third quarter fiscal 2026 earnings conference call. All participants are in a listen-only mode. To ask a question, please follow the operator instructions during the Q&A. Please note this call is being recorded. I will now turn the call over to Sherman Miller, President and Chief Executive Officer of Cal-Maine Foods, Inc. Please go ahead.

Good morning. Thank you for joining us today. I want to remind everyone that today’s remarks may include forward-looking statements. These are based on management’s current expectations and are subject to risks and uncertainties described in our SEC filings. Let me start by sincerely thanking our teams across the organization whose execution, focus, and commitment to excellence drive the operational and financial performance that underpins everything we do. Their hard work and dedication continue to set us apart, and these results are a direct reflection of their efforts. In February, we shared the sad news of the passing of longtime board member Jim Poe. Over more than two decades, Jim made a lasting impact on the company, and we extend our heartfelt condolences to his family and loved ones. Today, we announced the appointment of Dudley Woolley to the board to fill the vacancy left by Jim. Dudley brings deep expertise in risk management and governance along with a strong track record of leading growth-oriented organizations and driving operational performance. We look forward to the perspective he will add as we continue to strengthen our business, enhance earnings visibility, and focus on long-term value creation. Before Max walks you through our results in detail and provides additional color on our financial performance, I would like to spend a few minutes discussing how we think about the long-term direction of the business and how the strategy we are executing is designed to create durable value over time. When investors evaluate Cal-Maine Foods, Inc., they often focus on the consistency of our execution. That reputation has been built over time, not in any single quarter. It reflects the accountability, operational excellence, and continuous improvement embedded across the organization. At Cal-Maine Foods, Inc., our objective is straightforward: to compound intrinsic value per share…

Thanks, Sherman, and good morning, everyone. As a reminder, we published our third quarter earnings release and the 10-Q this morning. Additionally, we published a brief earnings presentation on our website. These documents contain detailed information on our financial results. I will touch on the highlights for 2026Q3. Unless otherwise indicated, all comparisons are to the comparable period of fiscal 2025. For 2026Q3, net sales were $667.0 million compared to $1.4 billion, down 53%. Conventional egg sales were $283.2 million compared to $1.0 billion, down 72.1%, with 70.1% lower selling prices and 6.7% lower sales volumes. Specialty egg sales were $289.1 million compared to $328.9 million, down 12.1%, with 16.9% lower selling prices and 5.8% higher sales volume. Our average breeder flocks grew 13%, total chicks hatched rose 41.7%, and the average number of layer hens expanded 2%. Prepared foods sales were $63.6 million compared to $11.8 million, up 441.2% year-over-year, and compared to $71.7 million, down 11.2% quarter-over-quarter. Our majority-owned subsidiary, Kupini Foods, delivered strong momentum with sales increasing by 283%, contributing positively to the overall prepared foods portfolio. In prepared foods, Q3 represents a trough driven by the timing of previously announced planned network optimization and expansion activities. The near-term margin pressure is largely volume-driven, reflecting temporary downtime and under-absorption of fixed cost, along with some mix headwinds as the network transitions and we increase the use of cost-type pricing arrangements that enhance stability. As capacity comes back online, we expect a progressive recovery beginning in Q4, with margins trending back toward baseline through fiscal 2027 and 2028 as scale and network efficiencies are realized. We expect prepared foods capacity to increase more than 30% over the next 18 to 24 months. Importantly, demand remains intact. This is a function of execution timing, not structural weakness, and these…

Thanks, Max. Looking ahead, we believe Cal-Maine Foods, Inc. is well positioned to benefit from durable shifts shaping the egg category. By building on the structural strength of our core shell egg platform while expanding across specialty eggs, egg products, and prepared foods, we believe we are strengthening the resilience and quality of our business over time. This progression is expected to help enhance the durability of our earnings profile and position Cal-Maine Foods, Inc. to deliver sustainable growth and long-term value creation. With that, I will turn the call back over to the operator to begin the Q&A portion of today’s call.

We will now begin the question-and-answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. We ask that each participant limit themselves to one question and one follow-up. Once your questions have been answered, please reenter the queue if you would like to ask additional questions. We will pause for a moment while we compile our Q&A roster. Our first question comes from Heather Jones with Heather Jones Research LLC. Your line is open.

Good morning. Thanks for the question. Congratulations on the quarter. I want to start with specialty pricing. That was where much of the upside was relative to our estimate for the quarter. The California price had rallied nicely over the course of a few weeks, but it has recently begun to pull back, though still not back to the Q3 lows. Would you expect Q4 specialty price to be similar to Q3, or is there some other dynamic that we need to consider there?

Good morning, Heather. Thank you for the question. Specialty eggs continue to be extremely exciting for us, and as we move into Q4 and beyond, we see that as a huge part of our differentiation and our ability to diversify. The specialty prices, as we have mentioned before, have a smaller piece of that category tied to the market, and if that market moves up and down, there is some flex. But for the most part, those prices are a lot more stable. Max, you might want to give a little bit more color on that.

Yes. As Sherman said, Heather, our specialty pricing does not fluctuate that much. We call out that the vast majority of our specialty pricing is either grain-based or a fixed-price type arrangement—cost-plus—so it stays pretty flat. There is a component that, as you call out, ties to the cage-free California market. It varies from quarter to quarter, but roughly I would say about 12% or in that range. Depending on how that price reacts this quarter and coming quarters, that will largely drive a lot of that movement, but we expect specialty price to stay pretty consistent.

Okay. Thank you for that. And then on my follow-up, it is just on the prepared foods business. I think I caught you saying that you expect the margin for that business to trend back to baseline through 2027 into 2028. Are you not expecting it to fully get back there until 2028? And when you say baseline, there were some quarters where it was north of 20%, but I believe your baseline is 19%. Is it unlikely to get back to where it was a few quarters ago, and how should we update our thinking on baseline?

I will take that one. We think Q3 represents a trough quarter. What you are seeing is anticipated impacts of some of the network expansion and capacity initiatives that we have mentioned. In the quarter, we saw lower volumes and then margin pressure as we go through these reconfigurations. When you have lower volumes, the first thing that happens is under-absorption of fixed cost, and that was one of the major headwinds for the quarter. As we roll into Q4 2026, we expect to see some of that rebound begin to come back online. It will be tempered a little bit, as sales mix tied to the end of the school year will partially offset some of that margin recovery, and that is just a normal seasonal dynamic. It is not an execution issue. We are currently, because of these reconfigurations, having a slightly less desirable product mix that is impacting our margins, but that will improve over time too. All these things are transitional and not reflective of underlying demand, which we still believe to be strong. We continue to migrate from market-based pricing towards grain-based and longer-term pricing arrangements. This moderates near-term pricing upside, but we are looking at the long-term durability and stability of our business, and we think it enhances that. As we begin to see this recovery in Q4 2026, we will see higher capacity and better utilization of that capacity. That margin recovery will really start showing up toward 2027 and into 2028, when the volumes we have talked about through the additional investment that we are making in Echo Lake as well as Kupini will be fully online. When you speak of the 19% to 20% margin, that was the margin we had called out at Echo Lake. Kupini is coming along, and the other elements of our prepared foods we continue to work on as well. We think we are taking some short-term pain now for better long-term positioning and gain in the future. We feel more positive as we go into 2027 and early 2028 that we will really see the fruits of that, along with the 30% growth that we had talked about from these investments.

Thank you, Max. The only thing I will add, Heather, is just getting the nuts and bolts in the right place for long-term performance and growth and having streamlined operations and really strategically placing the four Echo Lake facilities in the right manner—to have our flour products to the northern two facilities and the egg-type products in the southern two facilities, which happen to be very close to Creighton Brothers, which can supply the eggs long term. So a lot of good progress there.

Okay. Thank you so much.

One moment for our next question. Our next question comes from Pooran Sharma with Stephens Inc. Your line is open.

Thank you and congrats on the quarter here. I wanted to focus on pricing for the conventional eggs. It did come in a little bit higher than we were modeling, and you have stated in the past that your new hybrid pricing model gives you a better floor. Looking at the price ratio between your conventional egg pricing and what we track with the USDA, we just have not seen it this high in over a decade. Could you help us and the investment community understand how to think about your cost of production for your conventional eggs based on some of the disclosures you have in your filings, and then marry that with what kind of high-level rate of return you generally expect from these types of assets?

Good morning, and thank you for the question. I will start off and then pass it to Max. I think you pegged it very well. You are seeing reduced volatility, and as we mentioned with hybrid pricing, there are trade-offs. On the top side there is an opportunity, but on the bottom side there is as well, and that is what you are seeing in this quarter. Market realization certainly benefits from this as well as, as we have mentioned before, having longer-term arrangements. So any top-side slippage is certainly balanced with downside uplift. That depends heavily upon the type of arrangement, and the real win here is us working with customers to not only benefit the type of eggs you are talking about, but also specialty eggs and prepared foods that we also value very highly. On the cost side, there is certainly a lot going on geopolitically around the world. Grain is one of the things that has come up in the news over the last few weeks, particularly tied to fertilizer, and our consultants assured us that probably 90% of the inputs have already been locked. So fertilizer costs for this planting season should not cause too much disruption, but fuel transporting not only grains but everything else is certainly in the news and is real. The reassuring piece is that we have been here many times before, and we navigate that not only by using our scale, but also by using things like our warehousing and our inventory and managing through situations like this. Max, what would you add?

Pooran, when you talk about hybrid pricing, you are talking primarily about our conventional eggs. As you know, we only report one segment today, so we do not give complete margin information and returns on conventional versus specialty. But hybrid pricing does exactly what you called out and what we have said before. What we hope to get is more stable and resilient, continuous profit. I am not saying it will always be a profit, but certainly we are taking some off the top for high returns from conventional and trading that for longer-term, more stable earnings. As we grow, that is a piece of the puzzle, and where we look for really good growth and even better returns would be from our specialty and our prepared foods business. We look at the conventional business as our baseline. It is important because of its size and scale that it is strong and operates profitably and consistently, and that is what the hybrid pricing does. Then we continue to invest in prepared foods and specialty where we hope to get higher returns. We do not disclose individual returns for conventional and specialty at this time, but we have said in the past that our return on invested capital is double digit, well above our cost of capital. We feel good about the returns as we sit today, not only from conventional, but the opportunities in specialty and prepared foods.

I appreciate the detail there, Sherman and Max. From a capital allocation front, you still have a strong balance sheet. In our recent conversations, you had called out liquids as an area of focus. As you are looking across the M&A landscape, does that remain an area that you want to continue to build, or are you looking at it more opportunistically in terms of what is out there in conventional, specialty, or more prepared foods assets?

I will start by commenting on Creighton Brothers. As we pointed out, there is liquid egg capacity there, and it is very close to our prepared foods operations that ultimately will be producing egg products in the southern two plants. Our capital allocation hierarchy still remains intact to pursue selective, accretive M&A where returns are compelling. We believe that we have more ways to grow than ever before, including conventional eggs, specialty eggs, prepared foods, the ingredients that you mentioned, and also brands tied to prepared foods. On the ingredient piece, we want to, over time, closely align our needs within Echo Lake. As we mentioned before, there are some arrangements that we are working through that we inherited, but we think that Creighton Brothers is certainly a very strategic move in making that come to pass.

In the materials we published, we have an investor deck with a few slides that recap our capital allocation for the last twelve months ending at the end of our third quarter. There is a lot of balance there, and it shows that in a lot of ways, we are putting our money where our mouth is. It represents about $1.0 billion of capital that was allocated. About 38%, or $384.0 million, went to dividends to our shareholders. About $299.0 million, or 30%, went to acquisitions, including Echo Lake, Clean Egg, and Creighton Brothers that we just announced. Remember, we have been in a time when acquisitions are sometimes considered tougher because of the very good markets we have been in, yet we have been able to deploy capital toward these acquisitions that we believe really advance our goals for the long term. On the CapEx side, we allocated about $117.0 million, or 17%, including about $35.0 million of maintenance CapEx. Our share repurchases were about 15%, or over $150.0 million. That gives a good view of where we are spending our money. As Sherman says, our focus is really long-term shareholder value. We look at things opportunistically, and we want to do the things that we think clearly enhance our earnings quality and portfolio growth and resiliency.

Great. Thank you for the detail.

One moment for our next question. Our next question comes from Leah Jordan with Goldman Sachs. Your line is open.

Thank you. Good morning. I wanted to ask about demand. You talked about it being resilient in the quarter, but could you provide more color on the trends you are seeing within your branded portfolio specifically? What are the growth opportunities you still see there, including any potential opportunity to gain more contracts or exclusivity over time?

Good morning, Leah. Thank you for that question, and I will certainly get to the branded. At a higher level, retail egg volumes are up about 3% year to date through late February. The incredible thing about that is it is broad across segments—from conventional, cage-free, free-range, and pasture-raised. Foodservice is also showing early signs of recovery, with January marking a clear inflection point—traffic up about 1% year-over-year with dollars up about 4%. Eggs continue to be well positioned with the long-term consumer shift toward high-protein diets, supported by their strong nutritional profile, and affordability is a huge plus for us right now as a tailwind. On our branded side, we continue to grow through establishing production to support it. As Max has mentioned, the projects that are coming online now and in the next few months set us up to be able to continue to grow that. We have seen growth this quarter and are planning future growth as well. Max, what would you add?

I would say that our specialty, not just branded but specialty, was up 6% for the quarter. That is higher than the overall market for specialty. As Sherman says, it is broad-based across cage-free, free-range, and pasture-raised. Importantly for us, from a volume perspective, it was a record specialty quarter, which I think is notable, particularly considering that lower conventional prices sometimes temper specialty growth because the consumer goes for the cheaper egg, yet we were still able to get some growth. I did not mention our nutrient-enhanced or our branded relationship with EB, but that is something we continue to work to grow and think there is opportunity for some more regional growth into the fourth quarter and beyond. The projects we have called out—the 1.1 million cage-free hens we are adding at five locations—are progressing. A couple were done; one will finish late in this fourth quarter, and another will finish in August of this year, after this fiscal year. We still see growth in our specialty business ahead and think there is great opportunity there.

Thank you. That is very helpful detail. For a follow-up, switching over to feed, given the shift in grain markets in recent weeks, could you provide more color on how you are thinking about your feed costs over the coming quarters and as you start to plan into FY 2027? Any mitigation you have there should we see costs continue to rise?

Yes. We continue to measure and mitigate risk, and that includes utilizing our grain warehousing, basis locks, or hedging strategies where applicable. These grain-based agreements help offset the effect of grain price changes. The planting intentions report yesterday was viewed by some as fairly neutral. Compared to last year’s predictions, it is very close to what actually got planted—corn down about 3.5 million acres and beans up about 3.5 million. We really focus on the carryout; a 14% stocks-to-use is bearish. Geopolitical effects can change things in a hurry—from the Middle East to fertilizer and fuel costs—but we have been through this many times and continue to utilize all of our tools to mitigate risk the best we can, and we will continue to do that.

I think you have covered it, Sherman.

Great. Thank you.

One moment for our next question. Our next question comes from Benjamin Mayhew with BMO Capital Markets. Your line is open.

Hi, good morning. Thanks for the questions. First, can you help us better frame up the current supply environment, particularly in the specialty egg category? Competition seems to have picked up there quite a bit year to date, with more promotional activity seen. What is your view on the sustainability of the supply growth rates we are seeing?

Ben, good morning. Thank you for that question. As we mentioned a few minutes ago, specialty is an area we continue to grow. The first step is having supply, so as some of these projects come online, that certainly indicates that we are going to be prepared for that type of growth. The last few years have been very light on promotions—there was a shortage of eggs and promotions were not needed. Going forward, we promoted across all sets for the last few years, so we will continue to fall back into that routine and see good results coming from it. Max, anything to add on that question?

I think that pretty much covers it.

And thinking about your organic growth investments, how do you view the trade-offs between investing in productivity enhancements up and down your value chain versus adding more capacity at this point? Given the current market environment, how are you thinking about deploying your capital there?

Back to capital allocation, capital is allocated to the opportunities that most clearly enhance our earnings quality, portfolio resilience, and long-term shareholder value. There are more ways than ever for us to consider that. We consider five buckets: conventional eggs—we continue to grow, and the Creighton Brothers acquisition had additional conventional eggs that fit very nicely, especially in the liquid piece; specialty eggs—those organic projects have been going on, as well as we have had M&A through Creighton, where we also picked up about 500,000 cage-free hens; prepared foods—we have $36.0 million of expansion projects going on there as well as continuing to look for M&A and opportunities; and ingredients—a big opportunity for us to make sure that our production is aligned. We do not just focus on specialty eggs, but we know we must have the supply needed to grow those, and I believe we are in the right position to do that.

You covered it. The only thing I will add about productivity is our culture with roughly 50 operating locations. We are always ranking those one against the other, trying to learn what one is doing that is really good, or if there is one underperforming, how we can get that underperformer to duplicate the results of the top third of our business. It is a constant analysis of productivity and looking for ways to bring our whole enterprise up as we identify things across it. Scale and the opportunity to look at 50 locations gives you a lot of opportunity for continuous improvement. That is always part of our focus.

Great. Thank you, guys. Have a great rest of your day.

One moment for our next question. Our next question comes from Ben Klieve with Benchmark. Your line is open.

Hi, thanks for taking my questions and congratulations on a nice quarter. My first question is a follow-up to the conversation around the hybrid pricing model in conventional eggs. Could you elaborate on the behavior of your retail partners as commodity egg prices came down intra-quarter—sub-$1.00 at various points? Have those retailers that moved to contract-based pricing over the past year or two reconsidered that move in the face of low commodity prices, or has the willingness to move from market-based to contract-based remained consistent?

Good morning, Ben. Thank you for that question. This quarter was certainly a test for whatever strategy a retailer had, with the market ranging up to $2.69 all the way down to $0.85 within the same quarter in the Southeast market. Strategies were definitely tested. As we have mentioned, there is protection for our customers on the upside, and on the downside there is protection for us. Depending on their go-to-market strategy—whether it is high-low or everyday low price—different arrangements favor one retailer versus the next. Overall, the strategies performed exactly like they were designed to, and you are seeing some of that benefit in our market realization this quarter.

Very good. My follow-up question pivots to prepared foods. You educated us on the state of this market, and after Echo Lake you announced another acquisition a few weeks ago. Can you educate us on the size of the addressable market and the degree of fragmentation within it? Are you looking to continue this acquisition pace, or have you reached a reasonable level of market share within this space?

Ben, we certainly have not topped out here. Crystal Lake, which came with Creighton Brothers, as noted in our announcement, was more a distribution of Echo Lake products, so I would not really say it is doubling down at this point. We do continue to grow that both organically and through M&A as opportunities present themselves. We will be very strategic and make sure that we stay concentric while we do that in the breakfast channel. We will not get too far outside of our core competencies.

Very good. I appreciate you taking my questions. Congratulations again on a nice quarter. I will get back in the queue.

Thank you.

I am not showing any further questions at this time. I would like to turn the call back over to Sherman.

Thanks, everybody. It was an exciting quarter for us, and we are very grateful for everybody’s attendance today and your continued interest in Cal-Maine Foods, Inc. Operator, we are ready to conclude the call.

This concludes the question-and-answer session. A replay of today’s call will be available via webcast in approximately two hours after this call. The webcast will be available on demand for a year. It can be accessed by going to the company’s website, Investor Relations section. In addition, a transcript of today’s call will also be posted on Cal-Maine Foods, Inc.’s website, Investor Relations section. Thank you for joining us today. You may now disconnect.