Benjamin Mayhew

Benjamin Mayhew asked about the decline in Cal-Maine Foods' outside egg purchases, the resulting cost benefits, and how the company plans to utilize outside purchases moving forward as its own supply recovers and egg prices normalize.

Answer

VP and CFO Max Bowman explained that the company is returning to a 90% produced-of-sales ratio, aiming for 93-95% in the near term, which naturally reduces outside purchases. He clarified that outside purchases are primarily opportunistic 'gap fillers' driven by market conditions and customer demand. Regarding bird flu, Mr. Bowman stated that while layer numbers might suggest a decrease, the virus presence remains globally strong, with 26 countries reporting losses and 496 outbreaks since October 1st. President and CEO Sherman Miller added that incidence rates in November 2026 were comparable to 2022, affecting smaller flocks, and the industry remains vigilant.

Benjamin Mayhew inquired about the health of the consumer and asked for more details on the company's commentary about having 'unmet demand' for its products.

Answer

CEO Russell Diez-Canseco explained that despite macro headwinds, their product is an accessible purchase where they effectively communicate value. He defined 'unmet demand' as the gap that has formed between a recent, substantial increase in brand awareness and the conversion to new households. This gap was created by supply limitations in the first half of the year, which they now aim to fill.

Benjamin Mayhew asked for more color on how the company's guidance accounts for potential impacts on consumer spending from global economic tensions. He also inquired about the farmer recruitment and onboarding process as the company scales to a much larger farm network.

Answer

President and CEO Russell Diez-Canseco expressed confidence in the brand's resilience, stating that consumers are less willing to trade down from Vital Farms products and that the brand has high exposure to more insulated high-income households. He affirmed that farmer recruitment is proceeding on schedule, driven by a strong field team and a well-established process with a 9-to-12 month lead time from contract to production.

Benjamin Mayhew sought more detail on how the company's guidance accounts for potential impacts on consumer spending from global trade tensions. He also asked about the farmer recruitment and onboarding process as the network continues to scale.

Answer

CEO Russell Diez-Canseco expressed confidence in the brand's insulation from macro pressures, citing its strong consumer connection and exposure to high-income households. He confirmed that farmer recruitment is proceeding as planned, driven by a robust field team and a well-established process, with current production reflecting farm additions made 9-12 months prior.

Benjamin Mayhew of BMO Capital Markets inquired about the rationale for acquiring the remaining stake in the ethanol assets now, how the deal aligns with long-term strategy and the new EPS target, the fundamental outlook for ethanol margins, and how the Port of Houston soybean meal export investment works amid lower prices.

Answer

President & CEO William Krueger explained that acquiring the known assets minimized integration risk and was a better capital deployment. EVP & CFO Brian Valentine clarified the shift from an EBITDA to an EPS target, noting the deal now provides 100% of the earnings and cash flow benefit. Krueger added that the ethanol outlook for H2 2025 looks stronger due to demand and that the Houston project benefits from the need to export surplus U.S. soybean meal, a situation where lower prices can actually increase competitiveness.

Benjamin Mayhew asked about the Q2 2025 profit outlook for the Fertilizer business compared to the last two years, the factors causing the corn basis differential between the Eastern and Western belts, and the performance drivers for the renewable diesel feedstock trading desk ahead of a potential RVO announcement.

Answer

President and CEO William Krueger explained that the Fertilizer business is well-positioned for a strong Q2 due to a good start to the planting season, expanded geographic reach with Skyland, and increased corn acres. He attributed the higher corn basis in the East to reduced demand in the West from lower sorghum and wheat exports and fewer cattle on feed. Regarding renewable diesel, Krueger noted that while industry visibility on the RVO is limited, there is a positive sentiment driving more activity in the feedstock market.

Benjamin Mayhew from BMO Capital Markets questioned the state of the renewable diesel feedstock market post-45Z guidelines, the attractiveness of the ethanol plant M&A environment, and the general sentiment and merchandising outlook for the U.S. farmer in 2025.

Answer

President and CEO William Krueger noted that while the renewable diesel feedstock market has seen more activity, caution persists due to tax credit uncertainty. Regarding ethanol M&A, he stated that prices for plants with carbon sequestration access have risen, reinforcing the company's disciplined strategy of targeting large, technologically advanced plants in key origination geographies. Krueger assessed the U.S. farmer's outlook as optimistic, citing recent price rallies and good planting conditions, which should benefit the merchandising environment.

Benjamin Mayhew from BMO Capital Markets inquired about the potential impact of the cane sugar versus high-fructose corn syrup (HFCS) debate on demand and asked for an update on the sale of the company's Pakistan asset.

Answer

President & CEO Jim Zallie stated they expect no noticeable impact on HFCS demand, as the new cane sugar product is a complementary, premium offering, not a replacement. He noted that U.S. beverage HFCS is only about 4% of total sales. Regarding the Pakistan asset, EVP & CFO Jim Gray confirmed the sale process for the Raiffon Mays business is progressing with three interested parties.

Benjamin Mayhew from BMO Capital Markets inquired about the 2025 sweetener contracting environment and asked if Ingredion would consider more transformative M&A given its strong cash position.

Answer

President and CEO James Zallie noted that 2025 contracting is proceeding slower than last year but that higher industry capacity utilization provides a favorable backdrop. On M&A, Zallie stated the company's strategy is focused on becoming the 'go-to provider for Texture and Healthful Solutions,' and any acquisition would be to enhance those capabilities. EVP and CFO Jim Gray reinforced the company's disciplined approach to M&A.