Afternoon, everyone. I'm Peter Galbo, Bank of America's Food, Beverages, and Protein Equity Analyst. We'd like to thank you for joining us today for a discussion with Cal-Maine Foods, the largest producer of shell and specialty eggs in the United States. Before we begin, we have a quick disclaimer. Some of the statements Cal-Maine may make today may be considered forward-looking and are based on assumptions as of today. Cal-Maine undertakes no obligation to update them. Please refer to Cal-Maine's Form 10-K for a discussion of the risk factors that may affect results and Bank of America's website for important research disclosures. With us today from Cal-Maine, our CEO and Chairman, Dolph Baker, and CFO, Max Bowman. We're very excited to have them today. Thanks very much to both of you for being with us. The format of today's call will be a quick slide presentation from the team, followed by Q and A, and we'll wrap after about 40 minutes. If you do have any questions at any point during the call today, you can submit them through the portal on your screen or email me at peter.galbo@bofa.com. With that, Dolph and Max, I'll turn it to you guys for the slides, and then we'll hop into the Q and A. Okay, Peter, thanks for hosting us today and the opportunity to tell the Cal-Maine story. We're actually in a quiet period right now, and we'll release our third-quarter results March 29th. We'd encourage everybody to look at our 10-K filings on our website. A few comments before we get into the Q and A. We'll start with page three of the deck. You can put that on the screen. There you go. Our company was founded by Fred Adams in 1957. Fred merged his company, Adams Foods, with Dairy Fresh in California and Maine Egg Farms in Lewiston, Maine, to form Cal-Maine Foods in 1969. Our company has primarily grown through acquisitions. We've had 22 acquisitions since 1989. We are fully integrated. We have locations in 16 states. We focus on the Sun Belt. We own our own feed mills, breeder flocks, hatcheries, pullet facilities, production and processing facilities, distribution, and sales and marketing. We've been public since 1996 under the symbol CALM. We are a controlled public company with the Adams and Baker family controlling 57% of the vote. Mr. Adams passed away in March of last year. It forced us to have a secondary, which we had in August, in order to pay the estate taxes owed. The family intends to carry on Fred's legacy going forward. We are the largest producer and marketer of shell eggs in the U.S. We have approximately 19% share of the shell egg market. We have 42 million laying hens and about nine million pullets growing. That's 51 million on the slide. In fiscal 2020, we sold approximately $1.4 billion in revenue, over a billion dozen sold. We have no debt today. At the end of our second quarter, we had $232 million in cash and investments on our balance sheet and a $100 million unused credit facility to execute our growth strategy. We'll go to page four. We have the best customer lists in the egg industry, longstanding relationships. We work hard every day to earn their trust. Walmart, Sam's, H-E-B, and Publix are our top customers. 92% of our sales go into retail channels. It's growing. The IRI data as of the first week of February shows that the fresh shell egg category was up 5.7%. Eggs continue to be the least cost source of high-quality protein. We sell a mix of conventional eggs. About 67% of our eggs are conventional. 37% are specialty eggs. We try to match market demand and give our customers and consumers choice. Our products address 96% of the shell eggs at retail. We currently have a 34% market share of specialty eggs sold at retail in the U.S. If we go to the next page, it's the cage-free movement. There are currently seven states with about 23% of the total U.S. populations that have adopted cage-free legislation, with implementation targeted for 2022 through 2026. California leads the way, January 1, 2022. Currently, USDA reports that 26% of the total U.S. hen population is cage-free. The industry projects for the entire industry to go cage-free would require a $6.5+ billion investment. Cal-Maine has invested $405 million to expand our cage-free production since 2008. We believe this cage-free conversion is a big opportunity. The egg industry is very fragmented, it's mostly family businesses. There's generational turnover in these families. The capital requirements to convert to cage-free are a huge commitment. We think there are great opportunities that lie ahead. I'll turn it. Max, you have a comment on? Yes. If you turn to slide six, I'll cover some of the key margin drivers and some other cost elements for Cal-Maine. Obviously, our gross margin is impacted by the sales price of eggs and by our volume. You can see from the chart at the top left there that in FY 2020 we saw our gross margins pressured on relatively strong volumes versus the prior year. We have been increasing our production capacity and as that production, produced to sold has increased, that has helped somewhat with the gross margin percentages. On the SG&A front, you can see that we try to maintain a solid expense discipline for the three years prior. We've been running in that 12%-13% with SG&A as a% of our sales. We'll continue to look for ways to manage our SG&A activities and to build and maintain capabilities to help ensure our spending aligns with our corporate mission and our responsibilities to all our stakeholders, employees, customers, our communities, and our investors. If you dig into our cost elements, and I'm sure we'll get some of this in the Q&A, so I won't hit this too hard, but our feed ingredient cost is obviously the biggest cost element in our cost of sales. The bottom left chart shows sort of what that quarterly cost per dozen has been going all the way back to 2015. It's been relatively stable during that time in the upper 30s to low 40s. We reported at the end of our second fiscal quarter that feed costs and ingredients were increasing at that quarter and that we expected that to continue on into the balance of the calendar and fiscal years. We've included a sensitivity analysis chart on the bottom right there that really shows the impact of changing feed ingredient prices. The center of the chart there is just showing the $0.41 that we finished 2020 at. The important thing to note, and this again is published in our 10-K, that basically for every $0.28 increase in the price of corn per bushel or $27.50 per ton increase in soybean meal, each of those changed our price per dozen roughly by $0.01. I think most of you know that we've seen increases in those feed ingredients since the start of our fiscal year. If you turn to the next slide and just in summary before we turn it back over to Peter, I'd just say that we're pleased to be here today as the largest producer and distributor of fresh shell eggs in the U.S. We do believe that we are positioned to serve our customers, particularly in the strong retail channel where we have a large presence. We believe we have significant growth opportunities organically as well as acquisitions. As Dolph said, we participate in a highly fragmented market. We've got a very strong balance sheet that can support these growth initiatives, and we've got a long track record of best-in-class management systems and teams with many decades of collective experience. We look forward to these conversations today and in spending more time with your questions. Peter, we'll turn it back over to you at this point. Great. Thanks very much, guys. Very comprehensive and having that sensitivity I'm sure is helpful for folks. Dolph, maybe just to start, it's been a tumultuous past 15 months going back to the start of 2020. Cal-Maine is, I think, seeing a lot of ups and downs along with a number of other sectors in food and beverage. Just take us through that time period for people who aren't as familiar with the story, and then maybe what you've just seen here up through your reported results in fiscal 2021. Okay, Peter. First, I'd like to acknowledge the hard work of all of our employees who've continued to meet our customer demand through this terrible COVID times. Our top priority is the health and safety of our employees. Calendar 2019 was a very difficult year for egg producers. We had record hen inventories, and those record hen inventories forced some supply adjustments. In March of 2020, the hen inventory was about 12 million under the previous year. The stay-at-home orders and the proximity to Easter sparked tremendous demand at retail and record Urner Barry prices for a few weeks. It didn't take long before the food service and hospitality demand shut down and Urner Barry market moved down drastically. The national hen inventory continued to adjust down and bottomed at 314 million in August. Even with those big supply adjustments and record retail demand, it was not enough to offset the food service and hospitality demand. The Urner Barry market did move higher in September and October, but was not sustainable for the Thanksgiving and Christmas holiday. January and February prices have been more favorable and the egg market has moved up the last few weeks and a little bit this week. It's been a wild ride, but we're proud of our people and don't know what the future will bring, but I think with the food service and hospitality demand coming back it should create a more favorable supply-demand balance. Maybe we can touch on that first here. Obviously, one of the questions we get on Cal-Maine is they sell 90% of their eggs through the retail channel and with food service coming back, does that help or hurt them? Based on your comments, it would seem like the food service recovery actually helps because it firms up some of that supply. Just wanted to get your perspective on that. Yeah. We have experienced record retail demand, and I think that will continue. Eggs are good for you. Again, they're the least expensive protein, and I think that with the vaccination and restaurants opening and travel, that there's a lot of pent-up demand out there, and there are only so many eggs, and it should improve the supply-demand balance for both retail and food service, the overall industry. Got it. No, that's helpful. I think one of the themes that we've been hearing a lot of, and this goes certainly back to the Consumer Analyst Group conference last month, each of the food companies have kind of taken a different perspective on how they're seeing the world post-COVID. Just wanted to get your thoughts, where you're viewing normalized demand, any habits or your day parts you've seen that have changed as a result of people being in lockdown that you're expecting to stick around even post-vaccination. Yeah. Again, I think that demand at retail has been good. People are cooking a lot at home. I don't see that changing much. An interesting thing that's happening is the national break is starting to pick up. Eggs broken. We'll get the report this afternoon. Where that has been averaging over 240,000 fewer cases broken the last few months compared to a year ago, that's getting closer. It's down to 100,000, close to 100,000. There's good demand on the product side. There's good export demand for both products and shell eggs. Again, with the different states opening up, it should get the supply-demand in much better balance. Great. No, good to hear. Max, maybe I'll toss this one to you, but just obviously there were some disruptions throughout the Southeast and in Texas from the winter storms, something that we spoke about. Just any update there in terms of operations, or anything else you'd point out. Peter, I'll take it. I can't say enough about the job our team did during the winter storms. We were prepared as much as we could be. We had all of our feed on the farms, our bins filled. It was a difficult situation. Our team did a great job. We had generators from all over the country for backup, in addition to the ones we always have on the farms. The weather was tough. Getting people to the farms was difficult. We did get all the birds fed. We got all the eggs processed, even with the rolling blackouts. There were disruptions with our customers shutting down their distribution centers. We had eggs back up on us, but the following week, we had a record sales week. All those eggs moved out, and again, we were helping our customers, whether they were warehouse deliveries, we were doing store door routes for them, anything that we could. It's really pretty much back to normal now. We're gearing up for Easter in a few weeks. We have a lot of heroes to thank out in the field. They did an outstanding job. Good. No, glad to hear things have normalized, and you're ready for Easter. Maybe in terms of grain, this is something that Max brought up in the prepared remarks, and Dolph, I'd love to get your view here as well, but higher grain through the rest of at least calendar 2021 seems to be the consensus view. We had a presentation yesterday that kind of said maybe calendar 2022 is maybe not as high, but still an elevated grain year. Just curious with the 10-Ks we reported out yesterday how you're thinking about grains from a higher level. Yeah, you're right. It's been an extremely hot topic throughout the year. As I said in opening remarks, corn and soybean meal are our most important and biggest cost input. We watch those markets very closely on a daily basis. When we reported our second quarter results that while the cost for the quarter were still pretty much in line with prior quarters at about $0.41, the trend at the end of the quarter was definitely up. We said at that time that we expected volatility to continue for the remainder of our both fiscal 2021 and beyond through the full calendar year. Certainly nothing has happened since then to change our view. We've dealt with the supply chain disruptions caused by COVID. There were a lot of weather events at harvest this past year. We've had all the geopolitical issues and trade agreements and some of the weather events have not only been in the U.S., but in some of the large grain-producing places in South America. It's been crazy. Just to remind everyone, when we started the year, I think the CBOT corn price was $3.23 a bushel, and the soybean meal price was about $283 a ton. We're now looking at corn in the $5.50 range and soybean meal at $4.10. You can take that sensitivity analysis that's in our presentation and do your calculations and know that it has impacted our cost this year and will for the balance of the year. Our strategy has stayed the same. We always stay pretty close and don't purchase too far ahead. That's what we've done throughout this year and anticipate going forward. Maybe we could talk about some of the positive offsets from higher grain, whether that's keeping the hen numbers down, if that's putting working capital constraints on some of the smaller guys. Obviously, not looking for you to divulge too much, but just how, from a macro level, we should view the positive offsets from higher grain. Yeah. Well, as I always say, we can't really speak much about what other producers do or will do, but I can tell you what Cal-Maine is doing, and what we can comment on is public information out there. I think it clearly is having an impact. As Dolph reported the hen numbers, we look at that chicken and eggs report, and we're still looking at hen numbers that are, as they were reported on February 26th, down to 327.4 million hens in the inventory. While that's up a little bit over the previous month, we're still 7 million hens or 2.1% below the same time last year. The hatch was also reported down in February. The eggs in machines were up about 6%. When the USDA reduced its table egg production numbers in mid-February, they brought those numbers down a bit and stated one of the reasons was some of the expected higher grain costs. Those numbers are pretty much in line, slightly up from 2020. When you look back to 2019, they're about 1.7% below 2019 kind of numbers. LEP and others are calling for lower production and lower hen numbers pretty much through calendar year 2021. LEP particularly called out the number of pullets to be placed. Again, while the numbers were up slightly in 2020, they were down substantially from the 3.7% decrease from those pullet placements in 2019. Overall, we do believe that some of these grain prices are affecting our market and put us in a challenging expense environment. It helps us deal with some of this food service uncertainty that's coming back. Overall, should bring the market into better balance. Historically, the industry's made more money with higher feed costs. Projections continue to suggest supply discipline given the expense environment that we're in and the lack of industry profitability the last couple of years. Hopefully history will repeat itself. No, sounds promising. I guess on higher prices as well, you're obviously going to be comping against a pretty tough pricing environment from last year given March. You are getting close to Easter, though, seasonally a high point, I guess. Are you hearing anything from your retail customers or any of your customers around what Easter might look like this year, whether that's in comparison to last year or even 2019? With vaccination, CDC saying grandparents can see grandchildren, just how you're thinking about it. Well, yeah. Coming into March, we definitely had a higher variable price than the year before, and it's been good. Since March, we've seen our market start moving up, including this week. We went into this week and got over the $1.60 per dozen for a large grade A egg in the Southeast. That's ahead at this point. Now, last year, as you noted, we're sort of at the start of where COVID hit, and by the end of March last year, we had a Southeastern market for a large grade A egg that got to $3.18. Now, we don't expect that kind of run. That was a bit of an unusual circumstance, obviously, as people stocked for the COVID-19 pandemic and were eating at home, that price went up hard in March but then fell back. Overall, it's been a better pricing environment. We can't predict exactly how the rest of Easter is going to play out. We still got some time, Signs are now for a reasonably good Easter market over the next several weeks. I think it's going to be important to kind of watch that break. As Dolph mentioned earlier, it's been trending up over the last several weeks, indicating more eggs moving back into the food industry. Hopefully that will continue and help keep our market in good balance. Perfect. Maybe let's shift topics a little bit and talk about cage-free. Dolph, you had some prepared remarks there. I think the $6 billion-$6.5 billion number for the industry to convert is pretty daunting. We're a year or two away from more prominent actions coming into place requiring cage-free. You gave us Cal-Maine's update, just what's your view on the status of cage-free, whether that's going to drive more conversions or the opportunities that you're seeing? Well, historically, and I believe going forward, that producers will comply with whatever federal, state, and local mandates are out there for production methods. As you mentioned, there are seven states with a couple more right behind them that have said all cage-free production and sales within those states. Those states represent, Dolph said, I think about 23% of the country's growth of the consumer. There is a lot of demand for cage-free eggs out there. As a producer, what Cal-Maine tries to do, obviously, first and foremost is, as Dolph said, is we want to produce eggs that our customers want to buy. We have to match our production to their demand. We believe strongly in offering them the choices that they want to have. We've also said we spent over $400 million in preparing for cage-free market. Ultimately, we have to look at our customer base. Our customer base, as most of you know that follow the company, is largely in the Southeast, is in Texas and Florida. Frankly, other states where there hasn't been a big move or certainly a mandate towards cage-free, at least at this time. We'll continue to monitor those things. We'll continue to position ourselves to be ready as best we can for what our customers demand. We think we're in as good a position as anybody. As I always say, I like the hand we're dealt. We've been able to manage the cage-free expansion we've done to this point, basically financed out of cash flow. We've still got a healthy cash balance. We've got an untapped credit facility, as Dolph mentioned. We are a public company with access to the capital and debt market. While I'm not suggesting we could take on this whole $6.5 billion that's estimated. We certainly feel like we can do our part and see it as somewhat of an opportunity to further grow our business going forward. I can't really comment, I'll just say on that $6.5, that is the estimate that you can back into from what UEP and others have said, where 70% of the birds will have to be converted by 2026, basically tripling our current numbers. That seems very ambitious. We'll have to see how it plays out, but we're going to keep our ear to the ground and what our customers say and try to make sure Cal-Maine matches our production to those demands. Maybe, you guys have a recent announcement out in the past couple of months about your new Kentucky facility. Just give us a sense on timing for that capital project, whether it's incremental capacity. I think whenever you have capacity announcements in a commodity industry, that's when investors maybe get a little bit more skittish. Just wanted to give you a chance to explain that to the broader group. Well, through Dolph's leadership and our board, we're trying to make sure, most importantly, we match our production and our future production capability to what our customers demand. The Guthrie project is, I think, a good example of that. We're leaning forward a little bit, trying to get ready for cage-free. Guthrie's positioned so that we can get eggs into the Northeast or even to the West, throughout the country, really. It's a good, logical place to start. It is a conversion project. It's not incremental. We're taking conventional facilities, and we're converting them to cage-free. What we said was that was about 1.5 million cage-free hens we'll be adding and then some pullet capacity, about 300,000 pullets. The timing of that is ultimately going to be dictated a little bit about how things play out. Ideally, you want to not add all that production at one time because then you end up with hens of similar ages and more medium eggs maybe than you want. You want to be able to stage them in. That's our plan is to sort of go slow with this conversion. It has already started. Ultimately, we'll try to match it up with what our customers tell us they want and need. Okay. Dolph, maybe I'll toss this next one to you, but big topical question is pasture-raised eggs. A category Cal-Maine currently doesn't play in, but it's certainly drummed up a lot of interest and curious not only what you think the future of that market, but what the potential foray could be for Cal-Maine in that space. Yeah, there has been a lot of interest. There is demand for pasture-raised eggs, although it's small. A small part of the market. It represents 4% or 5% of the category. I commented earlier that we play in 96% of the space at retail. We have not been aggressive on the pasture side, but we're listening to our customers, and we're here to provide them what they ask for. Animal welfare and food safety is top of mind for both ourselves and our customers. It is an interesting space and has got a lot of attention. It's got a lot of egg producers' attention, and we'll see how it plays out. I would say there's probably going to be more competition in that space than we've had in the past. Fair enough. Maybe just with the time we have remaining, guys, I'd like to focus on capital allocation. The company has been very acquisitive over the years and Dolph, you've certainly been instrumental in that. Haven't done a deal here in the past 18, 24 months. Just curious, your appetite for M&A, it kind of comes full circle on grain. You're one of the better capitalized producers in the space. Maybe some other guys are struggling. Just help us shape the M&A environment today. Do you want to? I'll - Go ahead. No, we have grown our company mainly through acquisitions. We don't chase them. Again, most of these are family businesses, and there's usually an event within the family that determines if they want to sell their company. We've been in the space a long time. We have a good track record. We're usually on the top of the list to call when that decision's made. It's really been a little quiet, to be honest. We haven't made an acquisition since Mahard. We have to be selective in the acquisitions. I think that everybody's trying to get through the fall holidays and Easter, and it might heat up a little bit as we go through the summer. We're open. Yeah. We don't chase. Yeah, I'd just say, we kind of have to balance our acquisition strategy, as Dolph suggests with, again, back to that, what do our customers want? We're trying to grow our specialty business, and that seems to be what customers want, including cage-free. When acquisitions aren't available that have specialty eggs or cage-free eggs, that has been part of the reason we've spent this money on growing our own capabilities in those areas and investing in our cage-free facilities. We'll balance those two. If we do make acquisitions, we're looking for expense synergies or enhanced service or customer opportunities and like we got out of the Mahard acquisition and that's what we'll continue to look for going forward. Okay. Maybe we'll finish on the last one, probably the most topical question that I've gotten, but the dividends. Variable dividend company, Max, it seems like fundamentals have maybe turned a corner here. Help us explain, maybe not timing, but just how you're feeling about it, where you stand, how much more in terms of losses you have to cover from the past year or so. Anything you can help us with there. Sure. Well, just to sort of restate our position, people always ask me, "When are you going to pay a dividend? Is your policy changed not to pay a dividend?" Of course, I always say that we have a variable dividend policy. We've had the same policy for years. I think it's a great policy for a company like Cal-Maine. It simply says that we're going to pay a third of the money that we earn out as a dividend, and we do that on a cumulative basis. If we have a quarter where we've made money up to that point and we make money in that quarter, a third of it's going out in a dividend. If we lose money, then we have to make up that amount before we're able to start back with a dividend. We started this quarter down about $8.6 million of cumulative losses to overcome before we pay a dividend. As Dolph said, we've been in a pretty challenging environment really for the last several years. Most of that was closed in the third, I guess fourth quarter last year, COVID. We had a really good quarter, but not quite enough to get us over the hump. As Dolph said, we'll be releasing our earnings late this month, and we'll see. Again, Peter, we're positioned well and like that capital allocation policy, but that's where we stand right now. All right. We'll look more. We did have one question come in from the web here that we'd like to throw out to you guys, asking about industry exports. It seems like maybe they've picked up due to avian flu picking up in Asia, but just any color on the strength you've seen in exports recently and what you're expecting here maybe in the short term. Yeah. There's been a lot of interest in Japan with avian influenza, South Korea, and there's been good interest in Canada and Mexico. I don't know what volumes, but I just see the market reporters reporting it on a weekly basis. Generally, only 3.5%-4% of eggs produced are exported in shell and products. It's all incremental business and it always helps that supply-demand balance when they pick up. I think that the projections are that they should be good this year. Yeah. From the LEP report and some others, USDA also. We saw one report that said Japan's flock been impacted by, I think about 7% already from AI. There's certainly across Europe and Japan and others, a disruption in their flocks because of AI, which should help. All right. Well, that's what we have time for today. Guys, I want to thank you both very much for coming on with us today and for the presentation. Very helpful and thoughtful. If you do have any questions from the webcast or want to follow up with the team, please feel free to reach out to us and we'll happy to connect. With that, we'll close the session. Thanks very much again. Thank you, Peter. Thank you.