Cal-Maine Foods: A New Acquisition, Negative Margins, Cash Burn - And Where's The Dividend?

Source: Food Business News
Cal-Maine Foods (Nasdaq: CALM) announced a definitive agreement to acquire egg production assets of Happy Hen Egg Farms, Inc. As stated, the assets in the deal include commercial egg production and processing facilities with current capacity for approximately 350,000 laying hens, and related distribution facilities. These facilities are located near Harwood, Texas:

Source: Cal-Maine announcement, Google Maps
And Wharton Texas:

Source: Cal-Maine announcement, Google Maps
The two benefits of this acquisition include proximity to Cal-Maine's other Texas locations for supply and distribution. The other benefit is the ability to increase the current laying hen capacity from 350,000 to 1.2 million, as the site is designed for such a capacity increase.
Some investors may be wondering what type of price tag this deal will incur, especially as Cal-Maine has witnessed a strong increase in its cash-burn over the previous two consecutive quarters. Cal-Maine has made some deals of late. Most recently the company completed the acquisition of Foodonics International, Inc. and its related entities doing business as Dixie Egg Co. of Jacksonville, Florida.
At the time, terms of the deal were not disclosed, like the Happy Hen Egg Farms agreement. The company's fiscal year 2017 second quarter filing disclosed that the deal was consummated through a cash consideration paid of $68.6 million.
The acquired assets for Foodonics... Read more

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