Cal-Maine Foods Inc (NASDAQ: CALM) shares dropped 3.4% before the opening bell Monday, July 22, after the company posted a higher-than-expected fourth quarter loss amid oversupply of eggs.

The nation’s biggest egg producer saw revenue fall 37% on a year-over-year basis to $280.6 million in the quarter, as selling prices per dozen eggs slumped.

As of 12:31 p.m. ET, the shares were down 19 cents, or 0.48% to $39.19. The stock has lost more than 7% since the beginning of the year.

Cal-Maine Foods Earnings

The company reported a loss of $19.8 million, or $0.41 per share, in the quarter, compared to net income of $71.8 million, or $1.48 per share, in the prior-year quarter. On average, analysts polled by Refinitiv were expecting a loss of $0.34 per share in the quarter.

Revenue was down 37% to $280.6 million from $443.1 million in the same period last year. Analysts on Wall Street had been expecting the company to post revenue of $297 million in the quarter.

Cal-Maine said it sold 255 million dozen eggs in the quarter, up 1.2% compared to 252 million dozen eggs in the previous year. The average market price for conventional eggs in the Southeast declined 52% in the quarter, compared to 17.1% in the earlier-year. Meanwhile, the average selling price for specialty eggs dropped 1.2% to $1.917 per dozen year on year.

Cal-Maine will not pay dividends until a subsequent profitable quarter pursuant to the Q4 2019 loss. It pays a third of its quarterly income as cash dividend.

Cal-Maine CEO comments

Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc., stated in a press release. “Our disappointing results for the fourth quarter reflect more challenging market conditions. The average market price in the Southeast for conventional eggs dropped 52.0 percent for the fourth quarter of 2019 compared to the fourth quarter of 2018 and was down 17.1 percent for the year.”

“The unfavorable supply and demand balance and anticipated future egg supply growth trends have continued to affect market prices and our business. Over the past five quarters, we have noted our concern about the growing hatch rate pointing to a potential significant increase in laying hens and an oversupply of eggs,” Baker added

Cal-Maine Foods Inc Profile

Cal-Maine Foods Inc produces and sells shell eggs. Its main market is United States. The company’s product portfolio contains nutritionally enhanced, cage-free, organic, and brown eggs.

Cal-Maine Foods markets the shell eggs to a diverse group of customers, including grocery-store chains, club stores, and foodservice distributors. The company’s brands are: Egg-Land’s Best, Land O’ Lakes, Farmhouse, and 4-Grain. – Warrior trading news.