Cal-Maine Foods to increase cage-free capacity with $148m investment

US-based egg supplier Cal-Maine Foods has announced an investment of $148m to expand its three facilities to boost its cage-free capacity.

The Nasdaq-listed firm made this announcement in conjunction with third-quarter and nine-month results. The expansion plan was approved by the company’s board.

The project will see the creation of facilities for two million cage-free hens, a processing plant, an additional pullet capacity and renovation of existing capacity for another 1.4 million cage-free hens in Delta, Utah.

The initial expansion phase is expected to come online later this year and completion is expected by early 2022.

The egg producer is investing to meet requirements set by the California State Government.

Last November, California passed Proposition 12, according to which a minimum space is required per hen beginning from 2020. The California Government also made it mandatory that all eggs and egg products sold in the state are to be cage-free by 2022.

Cal-Maine Foods chairman and CEO Dolph Baker said: “We continue to invest in our operations, and we are well positioned to expand our own capacity or consider potential acquisitions to support our future growth.

“Above all, we are focused on meeting the demands of our valued customers with a favourable product mix, including cage-free and other speciality eggs.”

Upon completion of the expansion project, the Delta facility will have approximately 3.4 million cage-free hens that will help the company to meet the growing demand of the California market.

The board also approved cage-free capacity for one million hens in Pittsburg, Texas, as well as the construction of cage-free pullet housing in Zephyrhills, Florida.

The company intends to finance its expansion projects with available cash on hand, investments and operating cash flow.

The company posted a 2% rise in net sales over the nine months to $1.08bn, of which Q3 recorded $383.9m.

Operating income climbed to $76.2m over the nine months ended 2 March 2019 compared with $11.4m in the corresponding period of the previous year, while net income before non-controlling interests surged to $74.6m compared with $54.1m.

In March 2017, Cal-Maine Foods completed the acquisition of all Happy Hen Egg Farms assets and all capacities relating to commercial production, processing, distribution and sales.