Shares of Cal-Maine Foods, the leading egg producer in the United States, experienced a decline in after-hours trading on Tuesday following the disclosure that it is currently under investigation by the antitrust division of the U.S. Department of Justice.
The company, headquartered in Ridgeland, Mississippi, confirmed that it was notified of the investigation regarding the surge in egg prices last month and stated that it is fully cooperating with the authorities.
During after-hours trading, Cal-Maine's stock dropped by over 4%.
Egg prices have soared to unprecedented levels in recent months, mainly due to a bird flu outbreak that led to the culling of more than 166 million birds, predominantly egg-laying chickens.
In February, the average cost of a dozen Grade A eggs in U.S. cities reached $5.90, marking a 10.4% increase from a year earlier, surpassing the previous record of $4.95 set in January.
The substantial price hikes in eggs have attracted greater scrutiny towards Cal-Maine, which supplies approximately 20% of the country's eggs.
In their fiscal third quarter that ended on March 1, Cal-Maine reported almost doubled sales of $1.42 billion. The surge was attributed primarily to higher egg prices, which averaged $4.06 per dozen during the quarter compared to $2.25 per dozen a year ago.
Despite the positive sales figures, Cal-Maine fell short of Wall Street expectations, failing to reach the forecasted $1.43 billion in sales as per analysts surveyed by FactSet.
The company revealed that it achieved a record-breaking sale of 331.4 million dozen eggs in the third quarter, a 10% rise from the corresponding period of the previous year.
Cal-Maine disclosed progress in combating the impacts of bird flu through initiatives such as escalating the number of layer hens and chicks hatched and recovering from the flu-induced shutdown of facilities in Texas and Kansas. Additionally, the company witnessed decreased feed costs during the quarter.
In comparison to the prior year, Cal-Maine's net income for the third quarter surged to $508.5 million, more than tripling the figure. However, the earnings of $10.38 per share fell short of analysts' projected $10.72 per share profit.