1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended
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The aggregate market value, as reported by The Nasdaq Global Select Market, of the registrant’s Common Stock, $0.01 par value, held by non-
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DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Part III of this Form 10-K is incorporated herein by reference from the registrant’s Definitive Proxy Statement
for its 2025 annual meeting of stockholders which will be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal
year covered by this report.
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TABLE OF CONTENTS
Item
Page
Number
1.
1A.
1B.
1C.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
15.
16.
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PART I.
FORWARD -LOOKING STATEMENTS
This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our business, including
estimated future production data, expected construction schedules, projected construction costs, potential future supply of and
demand for our products, potential future corn and soybean price trends, potential future impact on our business of the resurgence
in United States (“U.S.”) commercial table egg layer flocks of highly pathogenic avian influenza (“HPAI”), potential future
impact on our business of inflation and changing interest rates, potential future impact on our business of new legislation, rules
or policies, potential outcomes of legal proceedings, including loss contingency accruals and factors that may result in changes
in the amounts recorded, other projected operating data, including anticipated results of operations and financial condition, and
potential future cash returns to stockholders including the timing and amount of any repurchases under our share repurchase
program. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,”
“may,” “should,” “plans,” “projected,” “contemplates,” “anticipates,” or similar words. Actual outcomes or results could differ
materially from those projected in the forward-looking statements. The forward-looking statements are based on management’s
current intent, belief, expectations, estimates, and projections regarding the Company and its industry. These statements are not
guarantees of future performance and involve risks, uncertainties, assumptions, and other factors that are difficult to predict and
may be beyond our control. The factors that could cause actual results to differ materially from those projected in the forward-
looking statements include, among others, (i) the risk factors set forth in Item 1A. Risk Factors and elsewhere in this report as
well as those included in other reports we file from time to time with the Securities and Exchange Commission (the “SEC”)
(including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell
egg business (including disease, pests, weather conditions, and potential for product recall), including but not limited to the
current outbreak of HPAI affecting poultry in the U.S., Canada and other countries that was first detected in commercial flocks
in the U.S. in November 2023 and that first impacted our flocks in December 2023, (iii) changes in the demand for and market
prices of shell eggs and feed costs, (iv) our ability to predict and meet demand for cage-free and other specialty eggs, (v) risks,
changes, or obligations that could result from our recent or future acquisition of new flocks or businesses, such as our acquisition
of Echo Lake Foods completed June 2, 2025, and risks or changes that may cause conditions to completing a pending acquisition
not to be met, (vi) our ability to successfully integrate and manage the business of Echo Lake Foods and realize the expected
benefits of the acquisition, including synergies, cost savings, reduction in earnings volatility, margin expansion, financial returns,
expanded customer relationships, or sales or growth opportunities, (vii) our ability to retain existing customers, acquire new
customers and grow our product mix including our prepared foods product offerings, (viii) the impacts and potential future
impacts of government, customer and consumer reactions to recent high market prices for eggs, (ix) potential impacts to our
business as a result of our Company ceasing to be a “controlled company” under the rules of The Nasdaq Stock Market on April
14, 2025, (x) risks relating to potential changes in inflation, interest rates and trade and tariff policies, (xi) adverse results in
pending litigation and other legal matters, (xii) global instability, including as a result of the war in Ukraine, the conflicts involving
Israel and Iran, and attacks on shipping in the Red Sea. The actual timing, number and value of shares repurchased under our
share repurchase program will be determined by management in its discretion and will depend on a number of factors, including
but not limited to, the market price of our Common Stock and general market and economic conditions. The share repurchase
program may be suspended, modified or discontinued at any time without prior notice. Readers are cautioned not to place undue
reliance on forward-looking statements because, while we believe the assumptions on which the forward-looking statements are
based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. Further, forward-
looking statements included herein are made only as of the respective dates thereof, or if no date is stated, as of the date hereof.
Except as otherwise required by law, we disclaim any intent or obligation to update publicly these forward-looking statements,
whether because of new information, future events, or otherwise.
ITEM 1. BUSINESS
Our Business
We are the largest producer and distributor of shell eggs in the United States. Our mission is to be the most sustainable producer
and reliable supplier of consistent, high quality fresh shell eggs, egg products and prepared foods in the United States. Our
operating approach is built around operational excellence, a "Culture of Sustainability" and creating value for our stockholders,
customers, team members and communities. We sell most of our products throughout much of the United States (“U.S.”) and
aim to maintain efficient, state-of-the-art operations located close to our customers. We were founded in 1957 and are
headquartered in Ridgeland, Mississippi.
The Company has one operating and one reporting segment, which is the production, packaging, marketing and distribution of
shell eggs, egg products and prepared foods. Our integrated operations consist of hatching chicks, growing and maintaining flocks
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of pullets, layers and breeders, manufacturing feed, and producing, processing, packaging, and distributing shell eggs. Layers are
mature female chickens, pullets are female chickens usually less than 18 weeks of age, and breeders are male and female chickens
used to produce fertile eggs to be hatched for egg production flocks. Our total flock as of May 31, 2025 consisted of approximately
48.3 million layers and 11.5 million pullets and breeders.
Many of our customers rely on us to provide most of their shell egg needs, including specialty and conventional eggs. Specialty
eggs encompass a broad range of products. We classify cage-free, organic, brown, free-range, pasture-raised and nutritionally
enhanced eggs as specialty eggs for accounting and reporting purposes. We classify all other shell eggs as conventional products.
While we report separate sales information for these egg types, there are many cost factors that are not specifically available for
conventional or specialty eggs due to the nature of egg production. We manage our operations and allocate resources to these
types of eggs on a consolidated basis based on the demands of our customers.
We believe that one of our important competitive advantages is our ability to meet our customers’ evolving needs with a favorable
product mix of conventional and specialty eggs, including cage-free, organic, brown, free-range, pasture-raised and nutritionally-
enhanced eggs, as well as egg products and prepared foods. While a small part of our current business, demand for the free-range
and pasture-raised eggs we produce and sell continues to grow. They represent attractive offerings to a subset of consumers, and
therefore our customers, and help us continue to serve as the trusted provider of quality food choices. We have expanded our
prepared foods product offerings, including with our strategic investment in Crepini Foods, LLC in September 2024, and our
acquisition of Echo Lake Foods, LLC (formerly Echo Lake Foods, Inc.) and certain related companies (collectively “Echo Lake
Foods”) subsequent to the end of our 2025 fiscal year.
Throughout the Company’s history, we have acquired other businesses in our industry. Since 1989, we have acquired and
integrated 25 businesses. Subsequent to the end of our 2025 fiscal year, we acquired our 26
th
Lake Foods. For information on our recent acquisitions, refer to
When we use “we,” “us,” “our,” or the “Company” in this report, we mean Cal-Maine Foods, Inc. and our consolidated
subsidiaries, unless otherwise indicated or the context otherwise requires. The Company’s fiscal year-end is on the Saturday
closest to May 31. Our fiscal year 2025 ended May 31, 2025, and the first three fiscal quarters of fiscal 2025 ended August 31,
2024, November 30, 2024, and March 1, 2025. All references herein to a fiscal year means our fiscal year and all references to a
year mean a calendar year.
Industry Background
According to the U.S. Department of Agriculture (“USDA”) Agricultural Marketing Service, in 2024 approximately 71% of table
eggs produced in the U.S. were sold as shell eggs, with 57% sold through food-at-home outlets such as grocery and convenience
stores, 12% sold to food-away-from home channels such as restaurants and 2% exported. The USDA estimated that in 2024
approximately 29% of eggs produced in the U.S. were sold as egg products (shell eggs broken and sold in liquid, frozen, or dried
form) to institutions (e.g. companies producing baked goods). For information about egg producers in the U.S., see “Competition”
below.
Our industry has been greatly impacted by several outbreaks of highly pathogenic avian influenza (“HPAI”) in recent years. For
additional information regarding HPAI and its impact on our industry and business, see
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - HPAI
Given historical consumption trends, we believe that general demand for eggs in the U.S. increases basically in line with the
overall U.S. population growth; however, specific events can impact egg supply and consumption in a particular period, as
occurred with the 2015 HPAI outbreak, the COVID-19 pandemic (particularly during 2020), and the most recent HPAI outbreaks
starting in early 2022. For fiscal 2025, shell egg household penetration is approximately 97%. According to the USDA’s
Economic Research Service, estimated annual per capita consumption in the United States between 2020 and 2024 varied, ranging
from 271 to 288 eggs which is directly impacted by available supply. The USDA calculates per capita consumption by dividing
total shell egg disappearance in the U.S. by the U.S. population.
The most significant shift in demand in recent years has been among specialty eggs, particularly cage-free eggs. For additional
information, see “Specialty Eggs” below.
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Prices for Shell Eggs
Wholesale shell egg sales prices are a critical component of revenue for the Company. Wholesale shell egg prices are volatile,
cyclical, and impacted by a number of factors, including consumer demand, seasonal fluctuations, the number and productivity
of laying hens in the U.S. and outbreaks of agricultural diseases such as HPAI. We believe the majority of conventional shell
eggs sold in the U.S. in the retail and foodservice channels are sold at prices that take into account, in varying ways, independently
quoted and certified wholesale market prices, such as those published by Urner Barry Publications, Inc. (“UB”) or the USDA for
shell eggs; however, grain-based or variations of cost plus arrangements are also commonly utilized.
Wholesale prices for cage-free eggs are quoted by independent sources such as UB and USDA. There is no independently quoted
wholesale market price for other specialty eggs such as nutritionally enhanced, organic, pasture-raise and free-range eggs.
Specialty eggs are typically sold at prices and terms negotiated directly with customers and in the case of cage-free eggs, can be
sold at prices that take into account independently quoted markets. Historically, prices for specialty eggs have generally been
higher due to customer and consumer willingness to pay more for specialty eggs.
The weekly average price for the southeast region for large white conventional shell eggs as quoted by UB is shown below for
the past three fiscal years along with the five-year average price. The actual prices that we realize on any given transaction will
not necessarily equal quoted market prices because of the individualized terms that we negotiate with individual customers which
are influenced by many factors. As further discussed in
, egg prices in fiscal 2023 through fiscal 2025 were significantly impacted by HPAI.
Our pricing for shell eggs is negotiated with our customers on individual terms. We sell our shell eggs at prices based on formulas
that take into account, in varying ways, independently quoted regional wholesale market prices for shell eggs, formulas related
to our costs of production, such as grain-based and variations of cost-plus arrangements, or hybrid models including cost of
production and wholesale market prices.
The majority of our conventional eggs are priced and sold under frameworks that generally utilize market-based formulas tied to
independently quoted regional wholesale market quotes. The majority of our specialty eggs are sold under frameworks that do
not utilize market-based formulas, although we do have some customers that prefer market-based pricing for cage-free eggs. As
a result, specialty egg prices typically do not fluctuate as much as conventional pricing. We do not sell eggs directly to consumers
or set the prices at which eggs are sold to consumers.
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Depending on market conditions, input costs and individualized contract terms, the price we receive per dozen eggs in any given
transaction may be more than or less than our production cost per dozen.
Feed Costs for Shell Egg Production
Feed is a primary cost component in the production of shell eggs and represented 53.4% of our fiscal 2025 farm production costs.
We routinely fill our feed storage bins during harvest season when prices for feed ingredients, primarily corn and to a lesser extent
soybean meal, are generally lower. To ensure continued availability of feed ingredients, we may enter into contracts for future
purchases of corn and soybean meal, and as part of these contracts, we may lock-in the basis portion of our grain purchases
several months in advance. Basis is the difference between the local cash price for grain and the applicable futures price. The
difference can be due to transportation costs, storage costs, supply and demand, local conditions and other factors. A basis contract
is a common transaction in the grain market that allows us to lock-in a basis level for a specific delivery period and wait to set
the futures price at a later date. Furthermore, due to the more limited supply for organic ingredients, we may commit to purchase
organic ingredients in advance to help assure supply. Ordinarily, we do not enter into long-term contracts beyond a year to
purchase corn and soybean meal or hedge against increases in the prices of corn and soybean meal. As the quality and composition
of feed is a critical factor in the nutritional value of shell eggs and health of our chickens, we formulate and produce the vast
majority of our own feed at our feed mills located near our production plants. Our annual feed requirements for fiscal 2025 were
2.1 million tons of finished feed, of which we manufactured 1.9 million tons. We currently have the capacity to store 215 thousand
tons of corn and soybean meal, and we replenish these stores as needed throughout the year.
Our primary feed ingredients, corn and soybean meal, are commodities that are subject to volatile price changes due to weather,
various supply and demand factors, transportation and storage costs, speculators, agricultural, energy and trade policies in the
U.S. and internationally, and global instability that could disrupt the supply chain. We purchase the vast majority of our corn and
soybean meal from U.S sources but may be forced to purchase internationally when U.S. supplies are not readily available. Feed
grains are currently available from an adequate number of sources in the U.S. As a point of reference, a multi-year comparison
of the average of daily closing prices per Chicago Board of Trade for each quarter in our fiscal years 2021-2025 are shown below
for corn and soybean meal:
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Shell Egg Production
Our percentage of dozens produced to sold was 88.6% of our total shell eggs sold in fiscal 2025. We supplement our production
through purchases of eggs from others when needed. The quantity of eggs purchased will vary based on many factors such as our
own production capabilities and current market conditions. In fiscal 2025, 90.8% of our production came from Company-owned
facilities, and 9.2% from contract producers. The majority of our contract production is with family-owned farms for organic,
pasture-raised and free-range eggs. Under a typical arrangement with a contract producer, we own the flock, furnish all feed and
critical supplies, own the shell eggs produced and assume market risks. The contract producers own and operate their facilities
and are paid a fee based on production with incentives for performance.
The commercial production of shell eggs requires a source of baby chicks for laying flock replacement. We supply the majority
of our chicks from our breeder farms and hatch them in our hatcheries in a computer-controlled environment and obtain the
balance from commercial sources. The chicks are grown in our own pullet farms and are placed into the laying flock once they
reach maturity.
After eggs are produced, they are cleaned, graded and packaged. Substantially all our farms have modern “in-line” facilities which
mechanically gather, clean, grade and package the eggs at the location where they are laid. The in-line facilities generate
significant efficiencies and cost savings compared to the cost of eggs produced from non-in-line facilities, which process eggs
that have been laid at another location and transported to the processing facility. The in-line facilities also produce a higher
percentage of USDA Grade A eggs, which sell at higher prices. Eggs produced on farms owned by contractors are brought to our
processing plants to be graded and packaged. We maintain a Safe Quality Food (“SQF”) Management Program which is overseen
by our Food Safety Department and senior management team. As of May 31, 2025, every Company-owned processing plant was
SQF certified. Because shell eggs are perishable, we do not maintain large egg inventories. Our egg inventory averaged five days
of sales during fiscal 2025. We believe our constant focus on production efficiencies and automation throughout our vertically
integrated operations enable us to be a low-cost supplier in our markets.
We are proud to have created, implemented and maintained what we believe is a leading poultry Animal Welfare Program
(“AWP”). We have aligned our AWP with regulatory, veterinary and our third-party certifying bodies’ guidance to govern the
welfare of animals in our direct care and our contract farmers’ care. We continually review our program to monitor and evolve
standards that guide how we hatch chicks, rear pullets and nurture breeder and layer hens. At each stage of our animals’ lives, we
are dedicated to providing welfare conditions aligned to our commitment to the principles of the internationally recognized
Five
Freedoms of Animal Welfare
.
We do not use artificial hormones in the production of our eggs. Hormone use in the poultry and egg production industry has
been effectively banned in the U.S. since the 1950s. We have an extensive written protocol that allows the use of medically
important antibiotics only when animal health is at risk, consistent with guidance from the United States Food and Drug
Administration (“FDA”) and the Guidance for Judicious Therapeutic Use of Antimicrobials in Poultry, developed by the
American Association of Avian Pathologists. When antibiotics are medically necessary, a licensed veterinary doctor will approve
and administer approved doses for a restricted period. We do not use antibiotics for growth promotion or performance
enhancement.
Specialty Eggs
We are one of the largest producers and marketers of value-added specialty shell eggs in the U.S., which continues to be a
significant and growing segment of the market. We classify cage-free, organic, brown, free-range, pasture-raised and nutritionally
enhanced as specialty eggs for accounting and reporting purposes. Specialty eggs are intended to meet the demands of consumers
sensitive to environmental, health and/or animal welfare issues and to comply with state requirements for cage-free eggs.
Ten states in the U.S. have passed legislation or regulations mandating minimum space or cage-free requirements for egg
production or mandated the sale of only cage-free eggs and egg products in their states, with implementation of these laws ranging
from January 2022 to January 2030. These states represent approximately 27% of the U.S. total population according to the 2020
U.S. Census. California, Massachusetts, Colorado, Michigan, Oregon, Washington, and Nevada, which collectively represent
approximately 23% of the total estimated U.S. population, have cage-free legislation in effect. Due to the national egg shortage
caused by HPAI, Nevada temporarily suspended its cage-free egg mandate and other states are considering similar actions.
A significant number of our customers previously announced goals to either exclusively offer cage-free eggs or significantly
increase the volume of cage-free egg sales in the future, subject in most cases to availability of supply, affordability and consumer
demand, among other contingencies. Our customers typically do not commit to long-term purchases of specific quantities or types
of eggs with us, and as a result, it is difficult to accurately predict customer requirements for cage-free eggs. We are focused on
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adjusting our cage-free production capacity with a goal of meeting the future needs of our customers in light of changing state
requirements and our customer’s goals. As always, we strive to offer a product mix that aligns with current and anticipated
customer purchase decisions. We are engaging with our customers to help them meet their announced goals and needs. We have
invested significant capital in recent years to acquire and construct cage-free facilities, and we expect our focus for future
expansion will continue to include cage-free facilities. Our volume of cage-free egg sales has continued to increase and account
for a larger share of our product mix. Cage-free egg revenue represented approximately 22.5% of our total net shell egg sales for
fiscal year 2025. At the same time, we understand the importance of our continued ability to provide affordable conventional
eggs in order to provide our customers with a variety of egg choices and to address hunger in our communities.
Branded Eggs
We are a member of the Eggland’s Best, Inc. cooperative (“EB”) and produce, market, distribute and sell
Egg-Land’s Best®
Land O’ Lakes®
and offerings include nutritionally enhanced, cage-free, organic, pasture-raised and free-range eggs.
Land O’ Lakes®
eggs are produced by hens that are fed a whole-grain vegetarian diet and include brown, organic and cage-free eggs.
In 2024, EB was the third best-selling dairy brand in the U.S. The top three best-selling branded specialty egg SKUs in 2024 were
EB branded eggs and seven out of 10 best-selling SKUs were EB branded eggs. In 2024, our sales (including sales from affiliates)
represented approximately 50% of EB branded eggs and 46% of
Land O’ Lakes®
branded eggs nationwide.
Our
Farmhouse Eggs
® brand eggs are produced at our facilities by hens that are provided with a vegetarian diet. Our offerings
of
Farmhouse Eggs
® include cage-free, organic and pasture raised eggs. We market organic, vegetarian and omega-3 eggs under
our
4-Grain®
Sunups®
Sunny Meadow®
brands are sold as
conventional eggs.
We also produce, market and distribute private label specialty and conventional shell eggs to several customers.
Egg Products and Prepared Foods
Our egg product offerings include liquid and frozen egg products, as well as prepared foods such as hard-cooked eggs, egg wraps,
protein pancakes, crepes and wrap-ups. Liquid and frozen egg products are primarily sold to the institutional, foodservice and
food manufacturing sectors in the U.S. Prepared foods are sold primarily within the retail and foodservice channels.
During March 2023, MeadowCreek Food, LLC (“Meadowcreek”), a majority-owned subsidiary, began operations with a focus
on being a leading provider of hard-cooked eggs. During second fiscal quarter 2025, we acquired the remaining ownership interest
in MeadowCreek and it became a wholly-owned subsidiary.
Effective on September 9, 2024, we completed a strategic investment with Crepini LLC, establishing a new egg products and
prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout the U.S. and in Mexico featuring egg wraps,
protein pancakes, crepes, and wrap-ups, which are sold online and in over 3,500 retail stores. The new entity, located in Hopewell
Junction, New York, operates as Crepini Foods LLC (“Crepini”). We capitalized Crepini with approximately $6.75 million in
cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the new
venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
Subsequent to fiscal 2025, we acquired Echo Lake Foods for approximately $258 million. Echo Lake Foods is based in
Burlington, Wisconsin and produces, packages, markets and distributes prepared foods, including waffles, pancakes, scrambled
eggs, frozen cooked omelets, egg patties, toast and diced eggs. For additional information regarding our acquisition of Echo Lake
Foods, see
and Part II. Item 8. Notes to Consolidated Financial Statements,
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Summary of Product Sales
The following table sets forth the contribution as a percentage of revenue and volumes of dozens sold of conventional and
specialty shell eggs and egg products and prepared food sales for the following fiscal years:
2025
2024
2023
Revenue
Volume
Revenue
Volume
Revenue
Volume
Conventional Eggs
Branded
6.0
%
5.1
%
4.3
%
4.9
%
6.6
%
6.4
%
Private-label
53.8
49.7
46.8
54.4
52.9
52.6
Other
7.1
8.5
4.4
5.8
5.7
6.3
Total Conventional Eggs
66.9
%
63.3
%
55.5
%
65.1
%
65.2
%
65.3
%
Specialty Eggs
Branded
12.2
%
17.0
%
20.3
%
17.4
%
18.0
20.4
%
Private-label
14.1
17.8
18.5
16.3
11.3
12.9
Other
1.3
1.9
1.0
1.2
1.1
1.4
Total Specialty Eggs
27.6
%
36.7
%
39.8
%
34.9
%
30.4
%
34.7
%
Egg Products and Prepared Foods
4.6
%
3.8
%
3.9
%
Marketing and Distribution
In fiscal 2025, we sold our products in 40 states through the southwestern, southeastern, mid-western, mid-Atlantic and
northeastern regions of the U.S. as well as Puerto Rico through our extensive distribution network to a diverse group of customers,
including national and regional grocery store chains, club stores, companies servicing independent supermarkets in the U.S.,
foodservice distributors and egg product consumers. Some of our sales are completed through co-pack agreements – a common
practice in the industry whereby production and processing of certain products are outsourced to another producer.
The majority of eggs sold are based on the daily or short-term needs of our customers. Most sales to established accounts are on
payment terms ranging from seven to 30 days. Although we have established long-term relationships with many of our customers,
most of them are free to acquire shell eggs from other sources.
The shell eggs we sell are either delivered to our customers’ warehouse or retail stores, by our own fleet or contracted refrigerated
delivery trucks, or are picked up by our customers at our processing facilities.
We are a member of the Eggland’s Best, Inc. cooperative and produce, market, distribute and sell
Egg-Land’s Best®
Land
O’ Lakes®
exclusive license agreements in Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi and Texas, and in portions of
Arkansas, California, Kansas, Nevada, North Carolina, Oklahoma and South Carolina. We also have an exclusive license in New
York City in addition to exclusivity in select New York metropolitan areas, including areas within New Jersey and Pennsylvania.
As discussed above under “Branded Eggs,” we also sell our own
Farmhouse Eggs
® and
4-Grain
® branded eggs.
Customers
Our top three customers accounted for an aggregate of 49.2%, 49.0% and 50.1% of our net sales dollars for fiscal 2025, 2024,
and 2023, respectively. Our largest customer, Walmart Inc. (including Sam's Club), accounted for 33.6%, 34.0% and 34.2% of
net sales dollars for fiscal 2025, 2024 and 2023, respectively.
For shell egg sales in fiscal 2025, approximately 86% of our revenue related to sales to retail customers and 13% to sales to
foodservice providers. Retail customers include primarily national and regional grocery store chains, club stores, and companies
servicing independent supermarkets in the U.S. Foodservice customers include primarily companies that sell food products and
related items to restaurants, healthcare and education facilities and hotels.
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Competition
The production, processing, and distribution of shell eggs is an intensely competitive business, which has traditionally attracted
large numbers of producers in the U.S. Shell egg competition is generally based on price, service and product quality. The shell
egg production industry remains highly fragmented. According to
Egg Industry Magazine
, the ten largest producers owned
approximately 54% of industry table egg layer hens at calendar year-end 2024 and 2023.
Seasonality
Retail sales of shell eggs historically have been highest during the fall and winter months and lowest during the summer months.
Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during the spring
and early summer. Historically, shell egg prices tend to increase with the start of the school year and tend to be highest prior to
holiday periods, particularly Thanksgiving, Christmas and Easter. Consequently, and all other things being equal, we would
expect to experience lower selling prices, sales volumes and net income (and may incur net losses) in our first and fourth fiscal
quarters ending in August/September and May/June, respectively. Accordingly, we generally expect our need for working capital
to be highest during those quarters.
Growth Strategy
Our growth strategy is centered on both organic growth and growth through acquisitions while also diversifying our product
portfolio. Organic growth is a core, ongoing focus area for us which is grounded in our culture of operational excellence to
streamline workflows, reduce waste, optimize resources and enhance productivity. We are committed to investing in our existing
operations to strive for improved profitability by increasing sales, lowering costs and maintaining exceptional customer service.
We have continued to grow our production of cage-free shell eggs and other higher value specialty eggs such as pasture-raised,
free-range and organic shell eggs. In addition to organic efforts, we believe that we can continue to expand the market reach of
our shell egg and egg product businesses, as well as grow our prepared foods business through accretive acquisitions that deliver
favorable returns through our operating model emphasizing synergies and efficient operations.
Trademarks and License Agreements
We own the trademarks
Farmhouse Eggs®
,
Sunups®
,
Sunny Meadow®
4Grain®
. We produce and market
Egg-Land's Best
®
and
Land O’ Lakes
® branded eggs under license agreements with EB. We believe these trademarks and license agreements are
important to our business.
Government Regulation
Our facilities and operations are subject to regulation by various federal, state, and local agencies, including, but not limited to,
the FDA, USDA, Environmental Protection Agency (“EPA”), Occupational Safety and Health Administration (“OSHA”) and
corresponding state agencies. The applicable regulations relate to grading, quality control, labeling, sanitary control and reuse or
disposal of waste. Our shell egg facilities are subject to periodic USDA, FDA, EPA and OSHA inspections. Our feed production
facilities are subject to FDA, EPA and OSHA regulation and inspections. We maintain inspection programs and in certain cases
utilize independent third-party certification bodies to monitor compliance with regulations, our own standards and customer
specifications. It is possible that we will be required to incur significant costs for compliance with such statutes and regulations.
In the future, additional rules could be proposed that, if adopted, could increase our costs.
A number of states have passed legislation or regulations mandating minimum space or cage-free requirements for egg production
or have mandated the sale of only cage-free eggs and egg products in their states. For further information refer to the heading
“Specialty Eggs” within this section.
Environmental Regulation
Our operations and facilities are subject to various federal, state, and local environmental, health and safety laws and regulations
governing, among other things, the generation, storage, handling, use, transportation, disposal, and remediation of hazardous
materials. Under these laws and regulations, we must obtain permits from governmental authorities, including, but not limited to,
wastewater discharge permits. We have made, and will continue to make, capital and other expenditures relating to compliance
with existing environmental, health and safety laws and regulations and permits. We are not currently aware of any material
capital expenditures necessary to comply with such laws and regulations; however, as environmental, health and safety laws and
regulations are becoming increasingly more stringent, including those relating to animal wastes and wastewater discharges, it is
possible that we will have to incur significant costs for compliance with such laws and regulations in the future.
12
Human Capital Resources
As of May 31, 2025, we had 3,828 employees, of whom 3,064 worked in egg production, processing, and marketing, 231 worked
in feed mill operations and 533, including our executive officers, were administrative employees. Approximately 3.8% of our
personnel are part-time, and we utilize temporary employment agencies and independent contractors to augment our
staffing needs when necessary. For fiscal 2025, we had 1,975 average monthly contingent workers. As of May 31, 2025, 43
employees were covered by a collective bargaining agreement. We consider our relations with employees to be good.
Culture and Values
We are proud to be contributing corporate citizens where we live and work and to help create healthy, prosperous communities.
Our colleagues help us continue to enhance our community contributions, which are driven by our longstanding culture that
strives to promote an environment that upholds integrity and respect and provides opportunities for each colleague to realize full
potential. These commitments are encapsulated in the Cal-Maine Foods’
Human
Rights Statement.
Health and Safety
Our top priority is the health and safety of our employees, who continue to produce high-quality, affordable products for our
customers and contribute to a stable food supply. Our enterprise safety committee is comprised of two corporate safety managers,
and seven local site compliance managers. The committee that oversees health and safety reviews our written policies and
changes to OSHA regulation standards annually and shares information as it relates to outcomes from incidents monthly with all
our facilities to improve future performance and our health and safety practices. The committee’s goals include working to help
ensure that our engagements with customers and regulators evidence our strong commitment to our workers’ health and safety.
Our commitment to our colleagues’ health includes a strong commitment to on-site worker safety, including a focus on accident
prevention and life safety. Our Safety and Health Program is designed to promote best practices that help prevent and minimize
workplace accidents and illnesses. The scope of our Safety and Health Program applies to all enterprise colleagues. Additionally,
to help protect the health and well-being of our colleagues and people in our value chain, we require that any contractors or
vendors acknowledge and agree to comply with the guidelines governed by our Safety and Health Program. At each of our
locations, our general managers are expected to uphold and implement our Safety and Health Program in alignment with OSHA
requirements. We believe that this program, which is reviewed annually by our senior management team, contributes to strong
safety outcomes. As part of our Safety and Health Program, we conduct multi-lingual training that covers topics such as slip-and-
fall avoidance, respiratory protection, prevention of hazardous communication of chemicals, the proper use of personal protective
equipment, hearing conservation, emergency response, lockout and tagout of equipment and forklift safety, among others. We
have also installed dry hydrogen peroxide biodefense systems in our processing facilities to help protect our colleagues’
respiratory health. To help drive our focus on colleague safety, we developed safety committees at each of our sites with employee
representation from each department.
We review the success of our safety programs on a monthly basis to monitor their effectiveness and the development of any
trends that need to be addressed.
People
Our strength as a company comes from our employees at all levels and we have a long-established culture that values each
individual’s contributions and encourages productivity and growth. This culture is driven by our Board of Directors (the “Board”)
and executive management team. Our Policy against Harassment, Discrimination, Unlawful or Unethical Conduct and
Retaliation; Reporting Procedure affirms our commitment to supporting our employees regardless of race, color, religion, sex,
national origin or any other basis protected by applicable law.
We are an Equal Opportunity Employer that prohibits any violation of applicable federal, state, or local law regarding
employment. Discrimination on any basis protected by applicable law is prohibited. We maintain strong protocols to help our
colleagues perform their jobs free from harassment and discrimination. We are committed to offering our colleagues opportunities
commensurate with our operational needs and their experiences, goals and contributions.
Recruitment, Development and Retention
We believe in compensating our colleagues with fair and competitive wages, in addition to offering competitive benefits.
Approximately 79% of our employees are paid at hourly rates, which are all paid at rates above the federal minimum wage
13
requirement. We offer our full-time eligible employees a range of benefits, including company-paid life insurance. The Company
provides a comprehensive self-insured health plan and pays approximately 76% of the costs of the plan for participating
employees and their families as of December 31, 2024. Recent benchmarking of our health plan indicates comparable benefits,
at lower employee contributions, when compared to an applicable Agriculture and Food Manufacturing sector grouping, as well
as peer group data. In addition, we offer employees the opportunity to purchase an extensive range of other group plan benefits,
such as dental, vision, accident, critical illness, disability and voluntary life. After six months of employment, full-time employees
who meet eligibility requirements may elect to participate in our KSOP retirement plan, which offers a range of investment
alternatives and includes many positive features, such as automatic enrollment with scheduled automatic contribution increases
and loan provisions. Regardless of the employees’ elections to contribute to the KSOP, the Company contributes shares of
Company stock or cash equivalent at 3% of participants’ eligible compensation for each pay period that hours are worked.
We
provide extensive training and development related to safety, regulatory compliance, and task training.
We
invest in
developing our future leaders through our Management Intern, Management Trainee and informal mentoring programs.
Sustainability
We understand that climate, and the potential consequences of climate change, freshwater availability and preservation of global
biodiversity, in addition to responsible management of our flocks, are vital to the production of high-quality eggs and egg products
and to the success of the Company. We have engaged in agricultural production for more than 60 years. Our agricultural practices
continue to evolve as we continue to strive to meet the need for nutritious, affordable foods to feed a growing population even as
we exercise responsible natural resource stewardship and conservation. We published our most recent sustainability report for
our fiscal 2024 in July 2025, which is available on our website. Information contained on our website is not a part of this report
on Form 10-K.
Our Corporate Information
We maintain a website at www.calmainefoods.com where general information about our business and corporate governance
matters is available. The information contained in our website is not a part of this report. Our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and all amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, through our website as soon as
reasonably practicable after we file them with, or furnish them to, the SEC. In addition, the SEC maintains a website at
www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. Cal-Maine Foods, Inc. is a Delaware corporation, incorporated in 1969.
ITEM 1A. RISK FACTORS
Our business and results of operations are subject to numerous risks and uncertainties, many of which are beyond our
control. The following is a description of the known factors that may materially affect our business, financial condition or results
of operations. They should be considered carefully, in addition to the information set forth elsewhere in this Annual Report on
Form 10-K, including under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations, in making any investment decisions with respect to our securities. Additional risks or uncertainties that are not
currently known to us, or that we are aware of but currently deem to be immaterial or that could apply to any company could
also materially adversely affect our business, financial condition or results of operations.
INDUSTRY RISK FACTORS
Market prices of wholesale shell eggs are volatile, and decreases in these prices can adversely impact our revenues and
profits.
Our operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside our
control. As a result, our prior performance should not be presumed to be an accurate indication of future performance. Under
certain circumstances, small increases in production, or small decreases in demand, within the industry might have a large adverse
effect on shell egg prices. Low shell egg prices adversely affect our revenues and profits.
Market prices for wholesale shell eggs have been volatile and cyclical. Shell egg prices have risen in the past during periods of
high demand such as the initial outbreak of the COVID-19 pandemic and periods when high protein diets are popular. Shell egg
prices have also risen during periods of constrained supply, such as during outbreaks of highly pathogenic avian influenza
(“HPAI”). During times when prices are high, the egg industry has typically geared up to produce more eggs, primarily by
14
increasing the number of layers, which historically has ultimately resulted in an oversupply of eggs, leading to a period of lower
prices.
As discussed above in
, seasonal fluctuations impact shell egg prices. Therefore, comparisons
of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful
comparisons.
A decline in consumer demand for shell eggs can negatively impact our business.
We believe high-protein diet trends, industry advertising campaigns, the improved nutritional reputation of eggs and an increase
in at-home consumption of eggs during the COVID-19 pandemic, have all contributed at one time or another to increased shell
egg demand. However, it is possible that the demand for shell eggs will decline in the future. Adverse publicity relating to health
or safety concerns and changes in the perception of the nutritional value of shell eggs, changes in consumer views regarding
consumption of animal-based products, as well as movement away from high protein diets, could adversely affect demand for
shell eggs, which could have a material adverse effect on our future results of operations and financial condition.
Feed costs are volatile and increases in these costs can adversely impact our results of operations.
Feed costs are the largest element of our shell egg (farm) production cost, ranging from 53% to 63% of total farm production cost
in the last five fiscal years.
Although feed ingredients, primarily corn and soybean meal, are available from a number of sources, we do not have control over
the prices of the ingredients we purchase, which are affected by weather, various global and U.S. supply and demand factors,
transportation and storage costs, speculators, agricultural, energy and trade policies in the U.S. and internationally, and global
instability, including as a result of the war in Ukraine, the conflicts involving Israel and Iran and attacks on shipping in the Red
Sea. For example, while feed costs declined during fiscal 2025, we saw higher prices for corn and soybean meal over the last five
fiscal years as a result of weather-related shortfalls in production and yields, ongoing supply chain disruptions, and the Russia-
Ukraine war and its impact on the export markets. Our costs for corn and soybean meal are also affected by local basis prices.
Increases in feed costs unaccompanied by increases in the selling price of eggs can have a material adverse effect on the results
of our operations and cash flow. Alternatively, low feed costs can encourage egg industry overproduction, possibly resulting in
lower egg prices and lower revenue.
Agricultural risks, including outbreaks of avian diseases such as HPAI, have harmed and in the future could harm our
business.
Our shell egg production activities are subject to a variety of agricultural risks. Unusual or extreme weather conditions, disease
and pests can materially and adversely affect the quality and quantity of shell eggs we produce and distribute. Outbreaks of avian
influenza among poultry occur periodically worldwide and have occurred sporadically in the U.S. Recent HPAI outbreaks in the
U.S. caused significant depopulation of U.S. commercial table egg layer flocks, lower shell egg supplies and higher shell egg
prices. During the third and fourth quarters of fiscal 2024, we experienced HPAI outbreaks within our facilities located in Kansas
and Texas, which are now fully operational. For additional information, refer to
We maintain controls and procedures designed to reduce the risk of exposing our flocks and employees to harmful diseases;
however, despite these efforts, outbreaks of avian diseases can and do still occur and have adversely impacted, and may in the
future adversely impact, the health of our flocks and could in the future adversely impact the health of our employees. Continued
or intensified spread of HPAI could have a material adverse impact on our financial results by increasing government restrictions
on the sale and distribution of our products and requiring us to euthanize the affected layers. Negative publicity from outbreaks
within our industry can negatively impact customer perception. If a substantial portion of our layers or production facilities are
affected by any of these factors in any given quarter or year, our business, financial condition, and results of operations could be
materially and adversely affected.
Shell eggs and shell egg products are susceptible to microbial contamination, and we may be required to, or we may
voluntarily, recall contaminated products.
Shell eggs and shell egg products are vulnerable to contamination by pathogens such as Salmonella Enteritidis. The Company
maintains policies and procedures designed to comply with the complex rules and regulations governing egg production, such as
The Final Egg Rule issued by the FDA “Prevention of Salmonella Enteritidis in Shell Eggs During Production, Storage, and
Transportation,” and the FDA’s Food Safety Modernization Act. Shipment of contaminated products, even if inadvertent, could
15
result in a violation of law and lead to increased risk of exposure to product liability claims, product recalls and scrutiny by federal
and state regulatory agencies. We have little, if any, control over proper handling once the product has been shipped or
delivered. In addition, products purchased from other producers could contain contaminants that might be inadvertently
redistributed by us. This has occurred in the past and we were required to recall eggs redistributed to our customers. As such, we
might decide or be required to recall a product if we, our customers or regulators believe it poses a potential health risk. Any
product recall could result in a loss of consumer confidence in our products, adversely affect our reputation with existing and
potential customers and have a material adverse effect on our business, results of operations and financial condition. We currently
maintain insurance with respect to certain of these risks, including product liability insurance, business interruption insurance,
product recall insurance and general liability insurance, but in many cases such insurance is expensive, difficult to obtain and no
assurance can be given that such insurance can be maintained in the future on acceptable terms, or in sufficient amounts to protect
us against losses due to any such events, or at all.
Our profitability may be adversely impacted by increases in other input costs such as packaging materials, delivery
expenses, construction materials and equipment, including as a result of inflation and tariffs.
In addition to feed ingredient costs, other significant input costs include costs of packaging materials and delivery expenses. Our
costs of packing materials increased during the past three fiscal years due to inflation and higher labor costs, and during 2022
also as a result of supply chain constraints initially caused by the pandemic, and these costs may continue to increase. We also
experienced increases in delivery expenses during fiscal 2023 and 2022 due to increases in fuel and labor costs for both our fleet
and contract trucking, and these costs may continue to increase. Changes in U.S. trade and tariffs policies may cause higher costs
for construction materials, equipment, packaging and other items. Increases in these costs are largely outside of our control and
could have a material adverse effect on our profitability and cash flow.
BUSINESS AND OPERATIONAL RISK FACTORS
Our acquisition growth strategy subjects us to various risks.
As discussed in
, we plan to continue to pursue a growth strategy that includes, in part,
selective acquisitions of other businesses engaged in the production and sale of shell eggs, with a priority on those that will
facilitate our ability to expand our cage-free shell egg production capabilities in key locations and markets. We may over-estimate
or under-estimate the demand for cage-free eggs, which could cause our acquisition strategy to be less-than-optimal for our future
growth and profitability. The number of existing businesses with cage-free capacity that we may be able to purchase is limited,
as most production of shell eggs by other companies in our markets currently does not meet customer demands or legal
requirements to be designated as cage-free. Conversely, if we acquire cage-free production capacity, which is more expensive to
purchase and operate, and customer demands or legal requirements for cage-free eggs were to change, the resulting lack of
demand for cage-free eggs may result in higher costs and lower profitability.
Acquisitions require capital resources and can divert management’s attention from our existing business. Acquisitions also entail
an inherent risk that we could become subject to contingent or other liabilities, including liabilities arising from events or conduct
prior to our acquisition of a business that were unknown to us at the time of acquisition. We could incur significantly greater
expenditures in integrating an acquired business than we anticipated at the time of its purchase.
We cannot assure you that we:
●
will identify suitable acquisition candidates;
●
can consummate acquisitions on acceptable terms;
●
can successfully integrate an acquired business into our operations; or
●
can successfully manage the operations of an acquired business.
No assurance can be given that businesses we acquire in the future will contribute positively to our results of operations or
financial condition. In addition, federal antitrust laws require regulatory approval of acquisitions that exceed certain threshold
levels of significance, and we cannot guarantee that such approvals would be obtained.
The consideration we pay in connection with any acquisition affects our financial results. If we pay cash, we could be required
to use a portion of our available cash or credit facility to consummate the acquisition. To the extent we issue shares of our
Common Stock, existing stockholders may be diluted. In addition, acquisitions may result in additional debt. Our ability to access
any additional capital that may be needed for an acquisition may be adversely impacted by higher interest rates and economic
uncertainty.
16
We may not realize the anticipated benefits of our acquisition of Echo Lake Foods and our strategy to diversify our
product mix to include more prepared foods.
As discussed elsewhere in this report, we completed our acquisition of Echo Lake Foods on June 2, 2025. Although we had
already diversified our business with some prepared foods product offerings, the acquisition of Echo Lake Foods represented a
significant expansion of this strategy. Accordingly, we may experience unexpected challenges in integrating and managing the
business of Echo Lake Foods. Integrating Echo Lake Foods’ business may be more costly or time consuming than we expect.
Even if the business of Echo Lake Foods is successfully integrated, we may not realize the benefits we expect from the acquisition,
including the synergies, cost savings, reduction in earnings volatility, margin expansion, financial returns, expanded customer
relationships, or sales or growth opportunities. Our experience managing prepared foods businesses is much more limited than
our experience managing our shell egg and egg products businesses, and our strategy to diversity our product mix to include more
prepared foods may not produce the favorable financial and other results that we anticipate. For additional information regarding
our acquisition of Echo Lake Foods, see
Global or regional health crises including pandemics or epidemics could have an adverse impact on our business and
operations.
The effects of global or regional pandemics or epidemics can significantly impact our operations. Although demand for our
products could increase as a result of restrictions such as travel bans and restrictions, quarantines, shelter-in-place orders, and
business and government shutdowns, which can prompt more consumers to eat at home, these restrictions could also significantly
increase our cost of doing business due to labor shortages, supply-chain disruptions, increased costs and decreased availability of
packaging supplies or feed, and increased medical and other costs. We experienced these impacts as a result of the COVID-19
pandemic, primarily during our fiscal years 2020 and 2021. The pandemic recovery also contributed to higher inflation and
interest rates, which persist and may continue to persist. The impacts of health crises are difficult to predict and depend on
numerous factors including the severity, length and geographic scope of the outbreak, resurgences of the disease and variants,
availability and acceptance of vaccines, and governmental, business and individuals’ responses. A resurgence of COVID-19
and/or variants, or any future major public health crisis, would disrupt our business and could have a material adverse effect on
our financial results.
Our largest customers have accounted for a significant portion of our net sales volume. Accordingly, our business may be
adversely affected by the loss of, reduced purchases by, or pricing pressure from, one or more of our large customers.
Our customers, such as supermarkets, warehouse clubs and food distributors, have continued to consolidate and consolidation is
expected to continue. These consolidations have produced larger customers and potential customers with increased buying power
that are more capable of operating with reduced inventories, opposing price increases, and demanding lower pricing, increased
promotional programs and specifically tailored products. Because of these trends, our volume growth could slow or we may need
to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results.
Our top three customers accounted for an aggregate of 49.2%, 49.0% and 50.1% of our net sales dollars for fiscal 2025, 2024 and
2023, respectively. Our largest customer, Walmart Inc. (including Sam's Club), accounted for 33.6%, 34.0% and 34.2% of net
sales dollars for fiscal 2025, 2024 and 2023, respectively. Although we have established long-term relationships with most of our
customers who continue to purchase from us based on our ability to service their needs, they are generally free to acquire shell
eggs from other sources. If, for any reason, one or more of our large customers were to purchase significantly less of our shell
eggs in the future, terminate their purchases from us or demand significantly lower pricing, and we were not able to sell our shell
eggs to new customers at comparable levels, it would have a material adverse effect on our business, financial condition, and
results of operations.
The recent high market prices for eggs, primarily caused by the HPAI-related reduction in supply, led to pressure from
customers to change long-standing market-based pricing frameworks and/or otherwise reduce the price of our eggs. A
material change in our sales arrangements with key customers could have a material adverse effect on our revenues, gross
profits and net income. Other reactions to high egg prices, including by state or federal government agencies, may also
adversely impact our business.
Market prices for wholesale shell eggs have been volatile and cyclical over time. Market prices for eggs tend to increase during
and following outbreaks of agricultural diseases in the egg industry that reduce the supply of eggs, which has occurred during the
current HPAI outbreak, until the supply and demand balance is restored. Many of our sales arrangements with customers,
particularly for conventional eggs, are based on formulas that take into account, in varying ways, independently quoted regional
wholesale market prices for eggs. The recent high market prices for eggs have led to pressure from customers to change
17
longstanding market-based pricing frameworks and/or otherwise reduce the price of our eggs. To remain competitive and retain
our customers and gain new ones, we must consider our customer relationships and the reactions and potential reactions of
competitors. A material change in our sales arrangements with key customers could have a material adverse effect on our revenues
and gross profits.
Other reactions to high egg prices may also adversely impact our business. On February 26, 2025, the U.S. Secretary of
Agriculture announced a $1 billion comprehensive strategy to curb HPAI, protect the U.S. poultry industry, and lower egg prices.
The Secretary’s five-pronged strategy includes an additional $500 million for biosecurity measures, $400 million in financial
relief for affected farmers, and $100 million for vaccine research, actions to reduce regulatory burdens, and exploring temporary
egg import options. In March 2025, we received a civil investigative demand in connection with a widely publicized investigation
by the Antitrust Division of the Department of Justice (“DOJ”) into the causes behind nationwide increases in egg prices. In
addition, persistent high egg prices may cause some consumers to purchase fewer eggs. Persistent high-price cycles and the
existence of the DOJ investigation may also increase attention on the egg industry, and the Company specifically, by state and
federal government agencies, which may lead to additional government investigations or related activities. The potential impacts
of these reactions on our business are unclear, unpredictable and may divert our resources and attention from our core business
activities, and they may have an adverse effect that could be material.
Our business is highly competitive.
The production and sale of fresh shell eggs, which accounted for 94.3% to 95.3% of our net sales in our last three fiscal years, is
intensely competitive. We compete with a large number of competitors that may prove to be more successful than we are in
producing, marketing and selling shell eggs. We cannot provide assurance that we will be able to compete successfully with any
or all of these companies. Increased competition could result in price reductions, greater cyclicality, reduced margins and loss of
market share, which would negatively affect our business, results of operations, and financial condition. In addition, our growth
strategy includes expansion of our product offerings including prepared foods. The prepared foods business is intensely
competitive and includes competition from other prepared food companies and other suppliers of prepared and convenience foods
including restaurants, grocery stores and convenience stores, many of which have more experience operating prepared and
convenience foods businesses.
We are dependent on our management team, and the loss of any key member of this team may adversely affect the
implementation of our business plan in a timely manner.
Our success depends largely upon the continued service of our senior management team. The loss or interruption of service of
one or more of our key executive officers could adversely affect our ability to manage our operations effectively and/or pursue
our growth strategy. We have not entered into any employment or non-compete agreements with any of our executive officers.
Competition could cause us to lose talented employees, and unplanned turnover could deplete institutional knowledge and result
in increased costs due to increased competition for employees.
Our business is dependent on our information technology systems and software, and failure to protect against or
effectively respond to cyber-attacks, security breaches, or other incidents involving those systems, could adversely affect
day-to-day operations and decision making processes and have an adverse effect on our performance and reputation.
The efficient operation of our business depends on our information technology systems, which we rely on to effectively manage
our business data, communications, logistics, accounting, regulatory and other business processes. If we do not allocate and
effectively manage the resources necessary to build and sustain an appropriate technology environment, our business, reputation,
or financial results could be negatively impacted. In addition, our information technology systems may be vulnerable to damage
or interruption from circumstances beyond our control, including systems failures, natural disasters, terrorist attacks,
viruses, ransomware, security breaches or cyber incidents. Cyber-attacks are becoming more sophisticated and are increasing in
the number of attempts and frequency by groups and individuals with a wide range of motives. We have experienced and expect
to continue to experience attempted cyber-attacks of our information technology systems or networks.
We regularly engage with third-party service providers as part of our operations to provide a high level of service to our customers.
We have implemented certain practices and policies to minimize the potential risks associated with the exchange of information
with contracted vendors. Despite these practices and policies, we cannot guarantee that information technology systems of our
third-party service providers will prevent and detect all cybersecurity breaches and incidents. Although we require third-party
service providers to notify us upon a potential breach or incident, there is a potential risk that our business, reputation, or financial
results could be negatively impacted by cybersecurity incidents at their businesses.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity
risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated systems
18
and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or
integrated businesses, and it may be difficult to integrate businesses into our information technology environment and security
program.
Our information technology systems also subject us to numerous data privacy obligations. We may at times fail (or be perceived
to have failed) in our efforts to comply with our data privacy obligations. If we or the third parties on which we rely fail, or are
perceived to have failed, to address or comply with applicable data privacy obligations, we could face significant consequences,
including but not limited to government enforcement actions and litigation. A security breach of sensitive information could result
in damage to our reputation and our relations with our customers or employees. Any such damage or interruption could have a
material adverse effect on our business.
Technology and related business and regulatory requirements continue to change rapidly. Failure to update or replace legacy
systems to address these changes could result in increased costs, including remediation costs, system downtime, third party
litigation, regulatory actions or cyber security vulnerabilities which could have a material adverse effect on our business.
Labor shortages or increases in labor costs could adversely impact our business and results of operations.
Our success is dependent upon recruiting, motivating, and retaining staff to operate our farms. Approximately 79% of our
employees are paid at hourly rates, often in entry-level positions. While all our employees are paid at rates above the federal
minimum wage requirements, any significant increase in local, state or federal minimum wage requirements could increase our
labor costs. In addition, any regulatory changes requiring us to provide additional employee benefits or mandating increases in
other employee-related costs, such as unemployment insurance or workers compensation, would increase our costs. A shortage
in the labor pool, which may be caused by competition from other employers, the remote locations of many of our farms,
decreased labor participation rates or changes in government-provided support or immigration laws or policies, particularly in
times of lower unemployment, could adversely affect our business and results of operations. A shortage of labor available to us
could cause our farms to operate with reduced staff, which could negatively impact our production capacity and efficiencies. In
fiscal 2022, our labor costs increased primarily due to the COVID-19 pandemic and its effects, which caused us to increase wages
in response to labor shortages. In fiscal 2024 and 2025, labor wages continued to rise due to inflation and low unemployment.
Accordingly, any significant labor shortages or increases in our labor costs could have a material adverse effect on our results of
operations.
LEGAL AND REGULATORY RISK FACTORS
Pressure from animal rights groups regarding the treatment of animals may subject us to additional costs to conform our
practices to comply with developing standards or subject us to marketing costs to defend challenges to our current
practices and protect our image with our customers. In particular, changes in customer preferences and state legislation
have accelerated an increase in demand for cage-free eggs, which increases uncertainty in our business and increases our
costs.
We and many of our customers face pressure from animal rights groups, such as People for the Ethical Treatment of Animals and
the Humane Society of the United States, to require companies that supply food products to operate their businesses in a manner
that treats animals in conformity with certain standards developed or approved by these groups. In general, we may incur
additional costs to conform our practices to address these standards or to defend our existing practices and protect our image with
our customers. The standards promoted by these groups change over time, but typically require minimum cage space for hens,
among other requirements, and some of these groups have led successful legislative efforts to ban any form of caged housing in
various states.
As discussed in
, ten states have passed minimum space and/or cage-free
requirements for hens, and other states are considering such requirements. In addition, a significant number of our customers
have announced goals to either exclusively offer cage-free eggs or significantly increase the volume of cage-free egg sales in the
future, subject in most cases to availability of supply, affordability and consumer demand, among other contingencies. While we
anticipate that our retail and foodservice customers will continue to transition to selling cage-free eggs given publicly stated goals,
there is no assurance that this transition will take place or take place according to the timeline of current cage-free goals. For
example, customers may accelerate their transition to stocking cage-free eggs, which may challenge our ability to meet the cage-
free volume needs of those customers and result in a loss of shell egg sales. Similarly, customers who commit to stock greater
proportional quantities of cage-free eggs are under no obligation to continue to do so, which may result in an oversupply of cage-
free eggs and result in lower specialty egg prices, which could reduce the return on our capital investment in cage-free production.
In addition, on July 9, 2025, the DOJ filed a lawsuit against the State of California alleging that California’s cage-free laws
“impose burdensome red tape on the production of eggs and poultry products nationally in violation of the Supremacy Clause of
19
the U.S. Constitution” and lead to higher egg prices for U.S. consumers. The outcome of this litigation could further complicate
and the cage-free egg landscape and affect our ability to successfully navigate these issues.
Changing our infrastructure and operating procedures to conform to consumer preferences, customer demands, laws and
challenges to these laws. has resulted and will continue to result in additional costs, including capital and operating cost increases.
The USDA reported that the estimated U.S. cage-free flock was 129.2 million hens as of May 31, 2025, which is approximately
44.9% of the total U.S. table egg layer hen population. According to the USDA Agricultural Marketing Service, as of December
2024 approximately 221.4 million hens, or about 73% of the U.S. non-organic laying flock would have to be in cage-free
production to meet projected cage-free commitments from the retailers, foodservice providers and food manufacturers that have
stated goals to transition to cage-free eggs.
In response to our customers’ announced goals and increased legal requirements for cage-free eggs, we have increased capital
expenditures to increase our cage-free production capacity. We are also enhancing our focus on cage-free capacity when
considering acquisition opportunities. Our customers typically do not commit to long-term purchases of specific quantities or
type of eggs with us, and as a result, we cannot predict with any certainty which types of eggs they will require us to supply in
future periods. The production of cage-free eggs is more costly than the production of conventional eggs, and these higher
production costs contribute to the prices of cage-free eggs, which historically have typically been higher than conventional egg
prices. Many consumers prefer to buy less expensive conventional shell eggs. These consumer preferences, in addition to the
regulatory landscape, may in turn influence our customers’ future needs for cage-free and conventional eggs. Due to these
uncertainties, we may over-estimate future demand for cage-free eggs, which could increase our costs unnecessarily, or we may
under-estimate future demand for cage-free eggs, which could harm us competitively. If our competitors obtain non-cancelable
long-term contracts to provide cage-free eggs to our existing or potential customers, then there may be decreased demand for our
cage-free eggs due to these lost potential sales. If we and our competitors increase cage-free egg production and there is no
commensurate increase in demand for cage-free eggs, this overproduction could lead to an oversupply of cage-free eggs, reducing
the sales price for specialty eggs and our return on capital investments in cage-free production.
Failure to comply with applicable governmental regulations, including environmental regulations, could harm our
operating results, financial condition, and reputation. Further, we may incur significant costs to comply with any such
regulations.
We are subject to federal, state and local regulations relating to grading, quality control, labeling, sanitary control, waste disposal,
and other areas of our business. As a fully-integrated shell egg producer, our shell egg facilities are subject to regulation and
inspection by the USDA, OSHA, EPA and FDA, as well as state and local health and agricultural agencies, among others. All of
our shell egg production and feed mill facilities are subject to FDA, EPA and OSHA regulation and inspections. In addition, rules
are often proposed that, if adopted as proposed, could increase our costs.
Our operations and facilities are subject to various federal, state and local environmental, health, and safety laws and regulations
governing, among other things, the generation, storage, handling, use, transportation, disposal, and remediation of hazardous
materials. Under these laws and regulations, we are required to obtain permits from governmental authorities, including, but not
limited to wastewater discharge permits and manure and litter land applications.
If we fail to comply with applicable laws or regulations, or fail to obtain necessary permits, we could be subject to significant
fines and penalties or other sanctions, our reputation could be harmed, and our operating results and financial condition could be
materially adversely affected. In addition, because these laws and regulations are becoming increasingly more stringent, it is
possible that we will be required to incur significant costs for compliance with such laws and regulations in the future.
Climate change and legal or regulatory responses may have an adverse impact on our business and results of operations.
Extreme weather events, such as derechos, wildfires, drought, tornadoes, hurricanes, storms, floods or other natural disasters
could materially and adversely affect our operating results and financial condition. In fact, derechos, fires, floods, tornadoes and
hurricanes have affected our facilities or the facilities of other egg producers in the past. Increased global temperatures and more
frequent occurrences of extreme weather events, which may be exacerbated by climate change, may cause crop and livestock
areas to become unsuitable, including due to water scarcity or high or unpredictable temperatures, which may result in much
greater stress on food systems and more pronounced food insecurity globally. Lower global crop production, including corn and
soybean meal, which are the primary feed ingredients that support the health of our animals, may result in significantly higher
prices for these commodity inputs, impact our ability to source the commodities we use to feed our flocks, and negatively impact
our ability to maintain or grow our operations. Climate change may increasingly expose workers and animals to high heat and
humidity stressors that adversely impact poultry production and our costs. Increased greenhouse gas emissions may also
negatively impact air quality, soil quality and water quality, which may hamper our ability to support our operations, particularly
in higher water- and soil-stressed regions.
20
Increasing frequency of severe weather events, whether tied to climate change or any other cause, may negatively impact our
ability to raise poultry and produce eggs profitably or to operate our transportation and logistics supply chains. Regulatory controls
and market pricing may continue to drive the costs of fossil-based fuels higher, which could negatively impact our ability to
source commodities necessary to operate our farms or plants and our current fleet of vehicles. These changes may cause us to
change, significantly, our day-to-day business operations and our strategy. Climate change and extreme weather events may also
impact demand for our products given evolution of consumer food preferences. Even if we take measures to position our business
in anticipation of such changes, future compliance with legal or regulatory requirements may require significant management
time, oversight and enterprise expense. We may also incur significant expense tied to regulatory fines if laws and regulations are
interpreted and applied in a manner that is inconsistent with our business practices. We can make no assurances that our efforts
to prepare for these adverse events will be in line with future market and regulatory expectations and our access to capital to
support our business may also be adversely impacted.
Current and future litigation and other legal matters could expose us to significant liabilities and adversely affect our
business reputation.
We and certain of our subsidiaries are involved in various legal proceedings and other legal matters. Litigation, government
investigations and other legal matters are inherently unpredictable, and although we believe we have meaningful defenses in these
matters, we may incur liabilities due to adverse judgments or penalties or we may enter into settlements of claims, which could
have a material adverse effect on our results of operations, cash flow and financial condition. For a discussion of our ongoing
legal proceedings see
and defend, divert management’s attention, and may result in significant adverse judgments, penalties or settlements. Legal
proceedings may expose us to negative publicity, which could adversely affect our business reputation and customer preference
for our products and brands.
FINANCIAL AND ECONOMIC RISK FACTORS
Weak or unstable economic conditions, including continued high inflation and interest rates, could negatively impact our
business.
Weak or unstable economic conditions, including continued high inflation and interest rates, may adversely affect our business
by:
●
Limiting our access to capital markets or increasing the cost of capital we may need to grow or operate our business;
●
Changing consumer spending and habits and demand for eggs, particularly higher-priced eggs;
●
Restricting the supply of energy sources or increasing our cost to procure energy; or
●
Reducing the availability of feed ingredients, packaging material, and other raw materials, or increasing the cost of these
items.
Deterioration of economic conditions could also negatively impact:
●
The financial condition of our suppliers, which may make it more difficult for them to supply raw materials;
●
The financial condition of our customers, which may decrease demand for eggs or increase our bad debt expense; or
●
The financial condition of our insurers, which could increase our cost to obtain insurance, and/or make it difficult for or
insurers to meet their obligations in the event we experience a loss due to an insured peril.
According to the U.S. Bureau of Labor Statistics, from May 2021 to May 2022, the Consumer Price Index for All Urban
Consumers (“CPI-U”) increased 8.5 percent, the largest 12-month increase since the period ending December 1981. The CPI-U
increased 4.1%, 3.3%, and 2.4% annually from May 2022 to May 2025. Inflationary costs have increased our input costs, and if
we are unable to pass these costs through to the customer it could have an adverse effect on our business.
We hold significant cash balances in deposit accounts with deposits in excess of the amounts insured by the Federal Deposit
Insurance Corporation (“FDIC”). In the event of a bank failure at an institution where we maintain deposits in excess of the FDIC-
insured amount, we may lose such excess deposits.
The loss of any registered trademark or other intellectual property could enable other companies to compete more
effectively with us.
We utilize intellectual property in our business. For example, we own the trademarks
Farmhouse Eggs®
,
4Grain®, Sunups®
,
and
Sunny Meadow®
. We produce and market
Egg-Land’s Best®
Land O’ Lakes
® under license agreements with EB. We
21
have invested a significant amount of money in establishing and promoting our trademarked brands. The loss or expiration of any
intellectual property could enable our competitors to compete more effectively with us by allowing them to make and sell products
substantially similar to those we offer. This could negatively impact our ability to produce and sell those products, thereby
adversely affecting our operations.
Impairment in the carrying value of goodwill or other assets could negatively affect our results of operations or net worth.
Goodwill represents the excess of the cost of business acquisitions over the fair value of the identifiable net assets
acquired. Goodwill is reviewed at least annually for impairment by assessing qualitative factors to determine whether the
existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit
is less than its carrying amount. As of May 31, 2025, we had $46.8 million of goodwill. While we believe the current carrying
value of this goodwill is not impaired, future goodwill impairment charges could adversely affect our results of operations in any
particular period and our net worth.
Events beyond our control such as extreme weather and natural disasters could negatively impact our business.
Fire, bioterrorism, pandemics, extreme weather or natural disasters, including droughts, floods, excessive cold or heat, water
rights restrictions, hurricanes or other storms, could impair the health or growth of our flocks, decrease production or availability
of feed ingredients, or interfere with our operations due to power outages, fuel shortages, discharges from overtopped or breached
wastewater treatment lagoons, damage to our production and processing facilities, labor shortages or disruption of transportation
channels, among other things. Any of these factors could have a material adverse effect on our financial results.
RISK FACTORS RELATING TO OUR COMMON STOCK
Provisions of our certificate of incorporation, bylaws, and Delaware law may make an acquisition of us or a change in our
management more difficult.
Certain provisions of our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition or other
change in control that stockholders may consider favorable, including transactions in which an investor might otherwise receive
a premium for its shares. These provisions also could limit the price that investors might be willing to pay in the future for shares
of our Common Stock, thereby depressing the market price of our Common Stock. Stockholders who wish to participate in these
transactions may not have the opportunity to do so. Furthermore, these provisions could prevent or frustrate attempts by our
stockholders to replace or remove our management. These provisions:
●
provide for the division of the Board into three classes as nearly equal in size as practicable with staggered three-year
terms and limit the removal of directors and the filling of vacancies;
●
authorize our Board to set the terms of and issue preferred stock, without stockholder approval, that could be issued to
persons friendly to management or could operate as a “poison pill” to dilute the stock ownership of a potential hostile
acquirer to prevent an acquisition that is not approved by our Board;
●
prohibit stockholder action by written consent;
●
prohibit stockholders from calling special meetings of stockholders;
●
establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can be
acted on at stockholder meetings; and
●
require the approval of the holders of at least 66-2/3% of the voting power of all then outstanding shares of capital stock
of the Company entitled to vote generally in the election of directors, voting together as a single class, in order to amend
our certificate of incorporation and bylaws.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless
certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from
merging or combining with us for a prescribed period of time.
The loss of controlled company status could disrupt our business.
Until April 14, 2025, our Company was controlled by members of the family of our founder, Fred R. Adams, Jr. since its founding
and since it became a public company. As described in Part II. Item 8. Notes to the Consolidated Financial Statements, Note 11
– Equity, on April 14, 2025, the Company ceased to be a “controlled company” under the rules of The Nasdaq Stock Market
when all of the outstanding shares of Class A Common Stock, all of which were controlled by the family, were converted to
Common Stock. Immediately prior thereto, members of the family-controlled shares of Class A Common Stock and Common
Stock that resulted in voting power of 53.2%. After the conversion of the Class A Common Stock and the subsequent sale by
family members in a registered public offering of 2,978,740 shares of Common Stock on April 17, 2025, and as reported on an
22
amendment to Schedule 13D, the family beneficially owned approximately 6.1% of our outstanding Common Stock. Adolphus
B. Baker, Board Chair and a family member, has indicated that he is willing to serve as executive Board Chair at least through
our 2027 annual meeting of stockholders. The effect of the loss of controlled company status on the trading price of our Common
Stock and on our business is uncertain, including our ability to retain and hire key personnel and maintain relationships with
customers and suppliers, and on our operating results. In addition, our business may be more likely to be disrupted by persons
seeking to influence or effect a change of control, change of management or change in governance of our Company. Any such
disruptions to our business could have a material adverse effect on our operations and financial results.
The price of our Common Stock may be affected by the availability of shares for sale in the market, and investors may
experience significant dilution as a result of future issuances of our securities, which could materially and adversely affect
the market price of our Common Stock.
The sale or availability for sale of substantial amounts of our Common Stock could adversely impact the price of our Common
Stock. Our Fourth Amended and Restated Certificate of Incorporation authorizes us to issue 120,000,000 shares of our Common
Stock and 10,000,000 shares of preferred stock. As of July 22, 2025, there were 48,497,477 shares of our Common Stock
outstanding and no shares of preferred stock outstanding. Accordingly, a substantial number of shares of our Common Stock
remain authorized for issuance and could become available for sale in the market. Our Fourth Amended and Restated Certificate
of Incorporation authorizes our Board to set the terms of and issue preferred stock, without stockholder approval, and such shares
if issued could dilute the voting and economic interests of holders of Common Stock. In addition, 2,791,854 shares of our
Common Stock held by the family of our late founder remain subject to the registration rights provided by the Agreement
Regarding Conversion, dated February 25, 2025, by and among the Company, DLNL, LLC and such family members. Also, we
may be obligated to issue additional shares of our Common Stock in connection with employee benefit plans (including equity
incentive plans or under our KSOP).
In the future, we may decide to raise capital through offerings of our Common Stock, preferred stock, additional securities
convertible into or exchangeable for our Common Stock of preferred stock, or rights to acquire those securities or our Common
Stock or preferred stock. We may also issue such securities as consideration in an acquisition. The issuance of such securities
could result in dilution of existing stockholders’ equity interests in us. Issuances of substantial amounts of our Common Stock or
preferred stock, or the perception that such issuances could occur, may adversely affect prevailing market prices for our Common
Stock.
The price of our Common Stock may fluctuate significantly.
The market price of our Common Stock has fluctuated significantly and may continue to do so for various reasons including, but
not limited to, the following, many of which are beyond our control:
●
our quarterly or annual earnings or those of other companies in our industry;
●
the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
●
changes in recommendations by research analysts who track our Common Stock or the stock of other companies in our
industry, or a decision by such an analyst to reduce or cease coverage regarding our Common Stock;
●
changes in general conditions in the U.S. and global economy, financial markets or our industry, including those resulting
from changes in trade and tariff policies, changes in fuel prices or fuel shortages, war, incidents of terrorism, pandemics
or responses to such events;
●
changes in the competitive landscape for our business, including any changes resulting from industry consolidation
whether or not involving us;
●
our liquidity position;
●
future sales of our Common Stock;
●
any changes in our dividend policy or share repurchase program; and
●
the other risks described in this Risk Factors section.
The actual timing, number and value of shares repurchased under our share repurchase program will be determined by
management in its discretion and will depend on a number of factors, including but not limited to, the market price of our Common
Stock and general market and economic conditions. The share repurchase program may be suspended, modified or discontinued
at any time without prior notice.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
23
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We understand the importance of cybersecurity and its role in the success of our Company. Our business operations depend on
the effective use of our information systems in order to properly serve our customers, manage our business and track and report
our financial results. Our technology operations consider risks from cybersecurity threats in the implementation and execution of
our business processes. We consider and assess the risks from cybersecurity threats as part of our overall risk assessment
using the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.
In order to identify, assess and manage material risks arising from cybersecurity threats, we maintain internal resources to monitor
and quickly respond to such threats. We perform vulnerability scans and penetration testing designed to test the effectiveness of
our security practices. We
-party service providers to assist in the evaluation of our internal controls over our
information systems through audit and consulting services to test the design and operational effectiveness of security controls.
We continually monitor our systems to detect and identify cybersecurity threats. Prior to contracting with third-party vendors, we
perform risk assessments of the vendors and require the vendors to manage cybersecurity risks to our business operations as well
as notify us of any potential or known cybersecurity risks. We also require our employees to complete training programs to
increase their awareness of and sensitivity to cybersecurity threats. These training programs include the identification of such
threats and the proper responses to a potential cybersecurity beach that aligns with our adopted processes.
The Company has implemented a response process in the event of a cybersecurity incident through its crisis management plan.
The process includes the cooperation of the information technology team and our management team to properly detect and
respond to these incidents. These responses include determination of the potential impact and materiality of the incident, potential
disclosure and litigation matters, and mitigation of actual or potential damage to our systems or reputation arising from the
incident. An action plan is implemented to respond to any potential cybersecurity breach in order to continue to effectively serve
our customers and conduct our operations with as little interruption as practicable. The information technology team reviews the
response process on a regular basis to ensure that it is designed to be effective and to encompass current or new cybersecurity
threats.
As of July 22, 2025, we are
t aware of any risks from cybersecurity threats, including as a result of prior cybersecurity incidents,
that have materially affected or that we believe are reasonably likely to materially affect the Company, including our business
strategy, results of operations or financial condition. See
cybersecurity threats.
Governance
The Board is responsible for the oversight of management’s process for identifying and mitigating risks related to cybersecurity
threats.
On a quarterly basis, the Director of Information Technology provides a report to the Audit Committee regarding ongoing
processes to improve and update our current cybersecurity protocols, new cybersecurity threats, results of internal assessments,
and any recent cybersecurity incidents.
The
or appropriate in order for the Board to effectively oversee the Company’s cybersecurity risk management and strategy.
The Director of Information Technology and the team he manages are responsible for the operation and maintenance of our
information systems, including the assessment, identification and management of risks from cybersecurity threats.
Together, the
Director of Information Technology and his team have over 150 years of experience in the information technology and security
environment. Our
, to whom the Director of Information Technology reports, has served as Chief Financial
Officer and a Board member since 2018 and has over 40 years of risk management experience.
24
ITEM 2. PROPERTIES
The table below provides summary information about the primary operational facilities we use in our business as of May 31,
2025.
Type
Quantity
Production Capacity
Location
Breeding Facilities
2
House up to 215,000 hens
MS
Feed Mills
30
Production capacity of 1,000 tons of
feed per hour
AL, AR, FL, GA, KS, KY, MO, MS, NC,
NJ, OH, OK, SC, TN, TX, UT
Hatcheries
2
Hatch up to 712,600 chicks per
week
MO, MS
Processing and Packaging
50
Approximately 674,700 dozen shell
eggs per hour
AL, AR, FL, GA, KS, KY, LA, MD,
MO, MS, NJ, OH, OK, SC, TX, UT
Pullet Facilities
37
House up to 14.3 million pullets
AR, DE, FL, GA, KS, KY, MD, MS, NJ,
OH, SC, TX, UT
Shell Egg Production
49
House up to 51.8 million layers
AL, AR, FL, GA, KS, KY, LA, MD, MS,
NJ, OH, OK, SC, TX, UT
Egg Products and Prepared
Foods Processing Facilities
5
Production capacity of 72,700 lbs.
per hour
GA, MO, NY, SC, TX
(a)
We own and operate all of these facilities. The table does not include idled facilities or contract production and
growers.
We also have ongoing construction projects to further expand the Company’s cage-free egg production capabilities. These
projects include expanding our cage-free egg production at existing farms or converting conventional housing into cage-free
production. These projects will phase into production through fiscal 2026. For additional information, see
As of May 31, 2025, we owned approximately 33.2 thousand acres of land. There are no material mortgages or liens on our
properties.
ITEM 3. LEGAL PROCEEDINGS
Refer to the description of certain legal proceedings under Part II. Item 8. Notes to the Consolidated Financial Statements,
, which discussion is incorporated herein by reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
We began fiscal year 2025 with two classes of capital stock, Common Stock and Class A Common Stock. During fiscal year
2025, we retired our Class A Common Stock following the conversion of all of these shares into Common Stock. Our Common
Stock trades on the Nasdaq Global Select Market under the symbol “CALM”.
With the conversion of Class A Common Stock, we are no longer a “controlled company” under the rules of The Nasdaq Stock
Market. For additional information, see
holders of our Common Stock and approximately 97,658 beneficial owners whose shares were held by nominees or broker
dealers. For additional information about our capital structure and the conversion of our Class A Common Stock into Common
Stock, see
25
Dividends
Cal-Maine has a variable dividend policy adopted by the Board. Pursuant to the policy, Cal-Maine pays a dividend to stockholders
of its Common Stock (and, when it was outstanding, Class A Common Stock) on a quarterly basis for each quarter for which the
Company reports net income attributable to Cal-Maine Foods, Inc. computed in accordance with generally accepted accounting
principles (“GAAP”) in the U.S., in an amount equal to one-third (1/3) of such quarterly net income. Dividends are paid to
stockholders of record as of the 60th day following the last day of such quarter, except for the fourth fiscal quarter. For the fourth
quarter, the Company pays dividends to stockholders of record on the 65th day after the quarter end. Dividends are payable on
the 15th day following the record date. Following a quarter for which the Company does not report net income attributable to
Cal-Maine Foods, Inc., the Company will not pay a dividend for a subsequent profitable quarter until the Company is profitable
on a cumulative basis computed from the date of the last quarter for which a dividend was paid. Under the Company's Credit
Facility, dividends are restricted to the amount permitted under the Company’s current dividend policy, and may not be paid if a
default exists or will arise after giving effect to the dividend or if the sum of cash and cash equivalents of the Company and its
subsidiaries plus availability under the Credit Facility equals less than $50 million.
Stock Performance Graph
The Company utilized the (i) Russell 2000 Total Return, and (ii) S&P Composite 1500 Food Products Industry Index to
benchmark the Company’s total shareholder return. The Company is a member of each of these indexes and believes the other
companies included in these indexes provide products and services similar to Cal-Maine Foods. The graph presents total
shareholder return and assumes $100 was invested on May 29, 2020 in the stock or index and dividends were reinvested.
May 29, 2020
May 28, 2021
May 27, 2022
June 2, 2023
May 31, 2024
May 30, 2025
Cal-Maine Foods, Inc.
$
100.00
$
78.41
$
108.43
$
117.77
$
158.30
$
264.77
Russell 2000 Total Return
100.00
164.56
138.45
136.40
156.55
158.40
S&P Composite 1500 Food
Products Industry Index
100.00
124.39
133.27
140.76
128.16
118.82
26
Issuer Purchases of Equity Securities
The following table is a summary of our fourth quarter 2025 shares repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Approximate
Shares Purchased
Dollar Value of
Total Number
Average
as Part of Publicly
Shares that May Yet
of Shares
Price Paid
Announced Plans
Be Purchased Under
Period
Purchased
per Share
or Programs
the Plans or Programs (a)
3/02/25 to 3/29/25
—
$
—
—
$
—
3/30/25 to 4/26/25
551,876
90.60
551,876
450,000,034
4/27/25 to 5/31/25
—
—
—
—
551,876
$
—
551,876
$
450,000,034
(a) On February 25, 2025, the Company announced a $500 million share repurchase program. The share repurchase program
authorizes the Company, in management’s discretion, to repurchase shares of Common Stock from time to time for an aggregate
purchase price up to $500 million (exclusive of any fees, taxes, commissions or other expenses related to such repurchases),
subject to market conditions and other factors. The share repurchase program does not obligate the Company to repurchase any
specific amount of shares, does not have an expiration date, and may be suspended, modified or discontinued at any time without
prior notice. For additional information regarding the shares repurchased under the program during the fourth quarter of 2025,
see
Recent Sales of Unregistered Securities
Except as previously disclosed relating to the issuance of Common Stock upon conversion of the Class A Common Stock, no
sales of securities without registration under the Securities Act of 1933 occurred during our fiscal year ended May 31, 2025.
Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
(a)
(b)
(c)
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
Weighted average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a))
Equity compensation plans
approved by stockholders
—
$
—
813,298
Equity compensation plans not
approved by stockholders
—
—
—
Total
—
$
—
813,298
(a) There were no outstanding options, warrants or rights as of May 31, 2025. There were 212,717 shares of restricted
stock outstanding under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan as of May 31, 2025.
(b) There were no outstanding options, warrants or rights as of May 31, 2025.
(c) Reflects shares available for future issuance as of May 31, 2025 under our Amended and Restated 2012 Omnibus
Long-Term Incentive Plan.
For additional information, see
Statements.
27
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RISK FACTORS; FORWARD -LOOKING STATEMENTS
For information relating to important risks and uncertainties that could materially adversely affect our business, securities,
financial condition, operating results, or cash flow, reference is made to the disclosure set forth under
. In addition, because the following discussion includes numerous forward-looking statements relating to our business,
securities, financial condition, operating results and cash flow, reference is made to the disclosure set forth under
“
.”
COMPANY OVERVIEW
Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packaging, marketing and distribution of fresh shell eggs,
including conventional, cage-free, organic, brown, free-range, pasture-raised and nutritionally-enhanced eggs, as well as egg
products and a variety of prepared foods. Our fiscal year end is the Saturday closest to May 31. The fiscal years 2025 and 2024
included 52 weeks and fiscal year 2023 included 53 weeks. The Company, which is headquartered in Ridgeland, Mississippi, is
the largest producer and distributor of fresh shell eggs in the United States (“U.S”). In fiscal 2025, we sold approximately
1.3 billion dozen shell eggs, which we believe represented approximately 24% of domestic shell egg consumption. Our total flock
as of May 31, 2025 of approximately 48.3 million layers and 11.5 million pullets and breeders is the largest in the U.S. We sell
most of our shell eggs to a diverse group of customers, including national and regional grocery store chains, club stores, companies
servicing independent supermarkets in the U.S., food service distributors, and egg product consumers throughout the majority of
the U.S.
The Company has one operating and one reportable segment, which is the production, packaging, marketing and distribution of
shell eggs, egg products and prepared foods. Many of our customers rely on us to provide most of their shell egg needs, including
specialty and conventional eggs. We have recently expanded our prepared foods product offerings, as described in this report.
For further description of our business, refer to
ACQUISITIONS
During the first quarter of fiscal 2025, we acquired substantially all the commercial shell egg production, processing and egg
products breaking assets of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial shell
egg production and processing facilities with a capacity at the time of acquisition of approximately 4.7 million laying hens,
including 1.0 million cage-free, and 1.2 million pullets, feed mills, approximately 4,000 acres of land, inventories and an egg
products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and
Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. These production assets
are our first in Maryland, New Jersey and Delaware. We believe this acquisition provides us with an opportunity to significantly
enhance our market reach in the Northeast and Mid-Atlantic states.
During the second quarter of fiscal 2025, we completed a strategic investment with Crepini LLC, establishing a new egg products
and prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout the U.S. and Mexico featuring egg wraps,
protein pancakes, crepes, and wrap-ups, which are sold online and in over 3,500 retail stores. The new entity, located in Hopewell
Junction, New York, operates as Crepini Foods LLC (“Crepini”). We capitalized Crepini with approximately $6.75 million in
cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the new
venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
In fiscal 2022, we announced a strategic investment in a new entity, MeadowCreek Food, LLC (“MeadowCreek”), which became
a majority-owned subsidiary of the Company. During the fourth quarter of fiscal 2023, MeadowCreek began operations with a
focus on being a leading provider of hard-cooked eggs. During the second quarter of fiscal 2025, we acquired the remaining
ownership interests in MeadowCreek and it became a wholly-owned subsidiary of the Company.
During the third quarter of fiscal 2025, we acquired certain assets of Deal-Rite Foods, Inc. and certain of its affiliates (“Deal-
Rite”). The assets acquired included two feed mills, storage facilities, usable grain, vehicles, related equipment and a retail feed
sales business located in North Carolina. The acquired assets will produce and deliver feed to our nearby shell egg production
operations.
28
In the second quarter of fiscal 2024, we acquired the assets of Fassio Egg Farms, Inc. (“Fassio”) related to its commercial shell
egg production and processing business. Fassio owned and operated commercial shell egg production and processing facilities
with a capacity at the time of acquisition of approximately 1.2 million laying hens, primarily cage-free, a feed mill, pullets, a
fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. This acquisition provided
us with an opportunity to expand our market presence in Utah and the western U.S., particularly for cage-free eggs.
In the fourth quarter of fiscal 2024, we acquired a broiler processing plant, hatchery and feed mill in Dexter, Missouri, which we
repurposed for use in shell egg production.
For additional discussion of our acquisitions during fiscal 2024 and 2025, see
Consolidated Financial Statements.
In addition, subsequent to our fiscal 2025, the Company acquired Echo Lake Foods, LLC (formerly Echo Lake Foods, Inc.) and
certain related companies (collectively “Echo Lake Foods”). Echo Lake Foods is based in Burlington, Wisconsin and produces,
packages, markets and distributes prepared foods, including waffles, pancakes, scrambled eggs, frozen cooked omelets, egg
patties, toast and diced eggs. The purchase price was approximately $258 million and was funded with available cash on hand.
Refer to
HPAI
Outbreaks of HPAI have continued to occur in U.S. poultry flocks. Since the HPAI outbreaks in 2015, there were no reported
significant outbreaks of HPAI in the commercial table egg layer flocks until the February – December 2022 time period.
Thereafter, there were no HPAI cases affecting commercial layers until November 2023. In calendar year 2024, 40.2 million
commercial layer hens and pullets were depopulated due to HPAI, and in calendar year 2025, an additional 39.0 million
commercial layer hens and pullets were depopulated through May due to HPAI. The United States Department of Agriculture
(the “USDA”) reported that the estimated table-egg layer flock as of June 1, 2025 was approximately 285.5 million, compared to
304.3 million, 321.6 million, 311.5 million and 330.5 million as of June 1, 2024, 2023, 2022 and 2021, respectively.
HPAI is currently widespread in the wild bird population worldwide. We remain dedicated to robust biosecurity programs across
our locations and have invested more than $75 million in biosecurity technology, equipment, procedures, and training across our
locations since the last major HPAI outbreak in 2015. However, no farm is immune from HPAI. For example, during the third
and fourth quarters of fiscal 2024, we experienced HPAI outbreaks within our facilities located in Kansas and Texas, which are
now fully operational. According to the U.S. Centers for Disease Control and Prevention (“CDC”), as of June 5, 2025, there were
outbreaks in 1,073 herds of dairy cows in 17 states, and 70 human cases in the U.S., almost entirely among poultry and dairy
workers. In 2024, one of the human cases resulted in severe illness after the patient was exposed to sick and dead birds in backyard
flocks. The patient, who was reported to have underlying health conditions, died in January 2025. There have been no reported
cases of person-to-person spread. According to the CDC, the human health risk to the U.S. public from the HPAI virus is
considered to be low. The rate of depopulations slowed during our fourth quarter fiscal 2025 compared to our third quarter fiscal
2025 and there were no reported significant depopulations in June and through July 22, 2025. However, the extent of possible
future outbreaks among U.S. commercial egg layer flocks, with heightened risk during migration seasons, cannot be predicted.
According to the USDA, HPAI cannot be transmitted through safely handled and properly cooked eggs. There is no known risk
related to HPAI associated with eggs that are currently in the market and no eggs have been recalled. For additional information,
refer to
We have taken proactive steps to help mitigate the tight egg supply situation across the country. Our efforts resulted in a 18%
increase in the average number of layer hens (reflecting re-start of prior year facility outages and both organic and inorganic
expansion) and a 56% increase in total chicks hatched during the fourth quarter of fiscal 2025 compared to the prior-year quarter.
Our breeder flocks increased 48% as of the end of fiscal 2025 compared to the end of fiscal 2024. We also continue to invest in
expansion projects within our current operations that are expected to add approximately 1.1 million cage-free layer hens and
250,000 pullets by the end of calendar 2025, and added production support through the integration of recently acquired assets,
including the processing facilities from ISE and feed mills from Deal-Rite.
29
Executive Overview of Results – Fiscal Years Ended May 31, 2025, June 1, 2024 and June 3, 2023
Fiscal Year Ended
May 31, 2025
June 1, 2024
June 3, 2023
Net sales (in thousands)
$
4,261,885
$
2,326,443
$
3,146,217
Gross profit (in thousands)
$
1,850,885
$
541,571
$
1,196,457
Net income attributable to Cal-Maine Foods, Inc.
$
1,220,048
$
277,888
$
758,024
Net income per share attributable to Cal-Maine Foods, Inc.
Basic
$
25.04
$
5.70
$
15.58
Diluted
$
24.95
$
5.69
$
15.52
Net average shell egg price
(a)
$
3.134
$
1.932
$
2.622
Average UB Southeast Region - Shell Eggs - White Large
$
4.474
$
2.049
$
3.115
Feed costs per dozen produced
$
0.490
$
0.550
$
0.676
(a) The net average shell egg selling price is the blended price for all sizes and grades of shell eggs, including graded and
non-graded shell egg sales, breaking stock and undergrades.
For fiscal 2024, net sales decreased to $2.3 billion, gross profit to $541.6 million and net income to $277.9 million. The decreases
compared to fiscal 2023 were primarily a result of a decrease in average egg selling prices. The average UB southeastern large
index price for fiscal 2024 decreased 34% compared to fiscal 2023. The decrease is due in large part to the recovery of the egg
supply following the HPAI outbreaks during most of calendar year 2022. However, the resurgence of HPAI beginning in
November 2023 resulted in the UB southeastern large index price being 9.1% higher in the fourth quarter of fiscal 2024 compared
to the fourth quarter of fiscal 2023.
Our dozens sold for fiscal 2024 remained relatively flat compared to fiscal 2023. We had an increase in production capacity with
the acquisition of the commercial shell egg production and processing business of Fassio Egg Farms, Inc. during fiscal 2024,
which was offset by the temporary decrease in production due to the HPAI outbreaks at our facilities.
For fiscal 2025, we recognized net sales of $4.3 billion and net income of $1.2 billion. We recorded a gross profit of $1.9 billion
compared to $541.6 million for fiscal 2024, primarily driven by an increase in the net average selling price of shell eggs, primarily
conventional egg prices, as well as an increase in total dozens sold. Our results were also positively impacted by lower feed costs
and our recent acquisitions discussed above, and were partially offset by an increase in the volume and price of outside egg
purchases.
Our net average selling price per dozen for fiscal 2025 was $3.134 compared to $1.932 in fiscal 2024. Conventional egg prices
per dozen were $3.490 compared to $1.730 for the prior year, and specialty egg prices per dozen were $2.519 compared to $2.309
for the prior year. Egg prices in fiscal 2025 were elevated compared to fiscal 2024, primarily due to the resurgence of HPAI
outbreaks, which decreased supply during the higher seasonal demand cycle. According to the USDA, the size of the layer hen
flock was 285.5 million hens at June 1, 2025, compared to the five-year average of 313.1 million hens. The daily average price
for the Urner Barry southeast large index for fiscal 2025 increased 118.3% from fiscal 2024.
Our dozens sold for fiscal 2025 increased 11.8% compared to fiscal 2024. We had an increase in production capacity with the
acquisitions of the commercial shell egg production and processing business of ISE during the first quarter of fiscal 2025. In
addition, sales increased in part due to increased volumes of outside egg purchases to provide shell eggs to our customers during
the peak of HPAI outbreaks during the second and third quarters of fiscal 2025.
Our feed costs per dozen produced decreased to $0.490 in fiscal 2025, compared to $0.550 in fiscal 2024. For fiscal year 2025,
the average Chicago Board of Trade (“CBOT”) daily market price was $4.38 per bushel for corn and $311 per ton for soybean
meal, representing decreases of 8.1% and 20.1%, respectively, compared to the daily average CBOT prices for fiscal 2024. Our
egg purchases and other cost of sales increased $439.4 million compared to fiscal 2024, primarily due to higher shell egg prices
as well as an increase in dozens purchased to supply eggs for our customers, including those acquired in our ISE acquisition,
during the higher seasonal demand cycle while the nation experienced lower supply due to HPAI.
30
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal years indicated, certain items from our Consolidated Statements of Income expressed
as a percentage of net sales.
Fiscal Year Ended
May 31, 2025
June 1, 2024
Net sales
100.0
%
100.0
%
Cost of sales
56.6
%
76.7
%
Gross profit
43.4
%
23.3
%
Selling, general and administrative
7.4
%
10.9
%
Gain on involuntary conversions
—
%
(1.0)
%
Operating income
36.0
%
13.4
%
Total other income
1.6
%
2.0
%
Income before income taxes
37.6
%
15.4
%
Income tax expense
9.0
%
3.6
%
Net income
28.6
%
11.8
%
Less: Net loss attributable to noncontrolling interest
—
%
(0.1)
%
Net income attributable to Cal-Maine Foods, Inc.
28.6
%
11.9
%
Fiscal Year Ended May 31, 2025 Compared to Fiscal Year Ended June 1, 2024
NET SALES
Total net sales for fiscal 2025 were $4.3 billion compared to $2.3 billion for the prior fiscal year.
Shell egg sales represented 94.3% and 95.3% of total net sales in fiscal 2025 and 2024, respectively. The Company’s shell egg
offerings, for both branded and private-label products, include specialty and conventional shell eggs. Specialty shell eggs include
cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced shell eggs. Conventional shell eggs sales
represent all other shell egg sales not sold as specialty shell eggs. The Company’s egg products and prepared foods offerings
include liquid and frozen egg products and prepared foods such as hard-cooked eggs, egg wraps, protein pancakes, crepes and
wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.
The table below presents net sales in key categories (in thousands, except percentage data):
Fiscal Year Ended
May 31,
2025
June 1, 2024
% Change
Shell Eggs
$
4,019,910
$
2,217,408
81.3
Egg products and prepared foods
198,833
89,009
123.4
Other
43,142
20,026
115.4
Total net sales
$
4,261,885
$
2,326,443
%
31
The table below presents an analysis of our shell egg sales (in thousands, except percentage data):
May 31, 2025
June 1, 2024
Shell egg sales
Conventional
$
2,835,423
70.5
%
$
1,291,743
58.3
%
Specialty
1,184,487
29.5
%
925,665
41.7
%
Total shell egg sales
4,019,910
100.0
%
2,217,408
100.0
%
Dozens sold
Conventional
812,396
63.3
%
746,687
65.1
%
Specialty
470,215
36.7
%
400,946
34.9
%
Total dozens sold
1,282,611
100.0
%
1,147,633
100.0
%
Net average selling price per dozen
Conventional
$
3.490
$
1.730
Specialty
$
2.519
$
2.309
All shell eggs
$
3.134
$
1.932
Shell egg sales
-
For fiscal 2025, shell egg sales increased $1.8 billion compared to fiscal 2024, primarily due to the increase in net
average selling prices for conventional eggs, and to a lesser extent the increase in dozens sold.
-
For fiscal 2025, conventional egg sales increased $1.5 billion, or 119.5%, compared to fiscal 2024, primarily due to the
increase in conventional egg prices. Changes in price resulted in a $1.4 billion increase in net sales and changes in
volume resulted in a $114 million increase in net sales. Conventional egg prices increased significantly during fiscal
2025 due to a resurgence of HPAI outbreaks, which decreased the supply.
-
Specialty egg sales increased $258.8 million, or 28.0%, for fiscal 2025 compared to fiscal 2024, primarily due to a 17.3%
increase in the volume of specialty dozens sold, and to a lesser extent a 9.1% increase in price. Changes in volume
resulted in a $159.9 million increase in net sales and changes in price resulted in a $98.7 million increase in net sales.
-
Our dozens sold for fiscal 2025 increased 11.8% compared to fiscal 2024. We had an increase in production capacity
with the acquisition of the commercial shell egg production and processing business of ISE during the first quarter of
fiscal 2025 as well as the resumption of full operations at our facilities in Chase, KS, and Farwell, TX, which were shut
down in the third and fourth quarters of fiscal 2024 due to HPAI outbreaks.
Egg products and prepared foods sales
-
Egg products and prepared foods sales increased $109.8 million, or 123.4% compared to fiscal 2024, primarily due to a
138.7% increase in sales of liquid eggs, which had a $54.9 million positive impact on net sales, and a 41.4% increase in
volume of liquid egg products sold. The increase in volume, which had a $23.3 million positive impact on net sales, is
primarily related to the acquisition of ISE, which included a breaking facility.
-
Our egg products net average selling price increased in fiscal 2025, compared to fiscal 2024 as the supply of shell eggs
used to produce egg products decreased due to the resurgence of HPAI outbreaks.
-
Sales from hard-cooked eggs increased $22.7 million or 137.3% to 39.1 million in fiscal 2025, compared to fiscal 2024,
as more processing capabilities came online throughout fiscal 2025 from our investments in MeadowCreek.
Other
-
Other sales increased compared to the prior year period primarily due to higher feed sales related to our ISE acquisition.
32
COST OF SALES
Cost of sales consists of costs directly related to producing, processing and packing shell eggs, purchases of shell eggs from
outside sources, processing and packing of egg products and other non-egg costs. Farm production costs are those costs incurred
at the egg production facility, including feed, facility (including labor), hen amortization and other related farm production costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Fiscal Year Ended
May 31, 2025
June 1, 2024
% Change
Cost of Sales
Farm production
$
1,035,638
$
987,861
4.8
%
Processing, packaging, and warehouse
396,116
335,949
17.9
Egg purchases and other cost of sales
819,619
380,200
115.6
Egg products and prepared foods
159,627
80,862
97.4
Total cost of sales
$
2,411,000
$
1,784,872
35.1
%
Farm production costs (per dozen produced)
Feed
$
0.490
$
0.550
(10.9)
%
Other
$
0.428
$
0.433
(1.2)
%
Total farm production cost
$
0.918
$
0.983
(6.6)
%
Outside egg purchases (average cost per dozen)
$
3.67
$
2.16
69.9
%
Dozens produced
1,135,955
1,018,835
11.5
%
Percent produced to sold
88.6%
88.8%
(0.2)
%
Farm Production
-
Feed costs per dozen produced decreased 10.9% in fiscal 2025 compared to fiscal 2024, primarily due to lower feed
ingredient prices. The decrease in feed cost per dozen resulted in a decrease in cost of sales of $68.2 million compared
to the prior year.
-
For fiscal 2025, the average daily CBOT market price was $4.38 per bushel for corn and $311 per ton of soybean meal,
representing decreases of 8.1% and 20.1%, respectively, as compared to the average daily CBOT prices for fiscal 2024.
-
Other farm production costs per dozen produced decreased primarily due to lower flock amortization. Feed costs
reached their peak in the second quarter of fiscal 2023 and have since trended downward. Lower costs resulted in
lower capitalized values of the flocks during the grow out phase, which reduced amortization cost over time.
Current indications for corn and soybean project a neutral stocks-to-use ratio in the near term compared with the levels prevailing
today; however, as long as outside factors remain uncertain (including weather patterns and global supply chain disruptions),
volatility could remain.
Processing, packaging, and warehouse
-
Processing, packaging, and warehouse costs increased primarily due to an 11.7% increase in the volume of processed
dozens as well as an increase in costs of packaging materials.
Egg purchases and other cost of sales
-
Costs in this category increased primarily due to higher shell egg prices as the average cost per dozen of outside egg
purchases increased 69.9% compared to fiscal 2024, as well as due to an increase of 27.6% in dozens purchased. Dozens
purchased increased due to purchasing more eggs to supply our customers while the nation experienced lower supply
due to HPAI.
33
GROSS PROFIT
Gross profit, as a percentage of net sales, was 43.4% for fiscal 2025, compared to 23.3% for fiscal 2024. The increase was
primarily due to higher net average selling prices, particularly for conventional eggs, and higher volumes, as well as lower feed
ingredient prices, partially offset by the increase in volume and price of outside egg purchases.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative (“SGA”) expenses include costs of delivery, marketing, and other general and administrative
expenses. Delivery expense includes contract trucking expense and all costs to maintain and operate our fleet of trucks to deliver
products to customers including the related payroll expenses. Marketing expense includes franchise fees that are submitted to
Eggland’s Best, Inc. (“EB”) to support the EB brand, brokerage and commission fees, and other general marketing expenses such
as payroll expenses for our in-house sales team. Other general and administrative expenses include corporate payroll related
expenses and other general corporate overhead costs. The following table presents an analysis of our SGA expenses (in
thousands):
Fiscal Year Ended
May 31, 2025
June 1, 2024
$ Change
% Change
Delivery expense
$
93,460
$
72,742
$
20,718
28.5
%
Marketing expense
53,861
52,285
1,576
3.0
%
Litigation loss contingency accrual
—
19,648
(19,648)
%
Other general and administrative expenses
167,128
107,950
59,178
54.8
%
Total
$
314,449
$
252,625
$
61,824
24.5
%
N.M. - Not Meaningful
Delivery expense
-
The increased delivery expense is primarily due to an increase in our sales volumes of egg and egg products compared
to fiscal 2024. Contract trucking expenses increased in connection with our acquisition of ISE and our facilities in Chase,
KS and Farwell, TX being fully operational in fiscal year 2025.
Marketing expense
-
Marketing expense increased slightly in fiscal 2025 compared to fiscal 2024 primarily due to an increase in franchise
fees as specialty sales increased.
Litigation loss contingency accrual
-
In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in
pending anti-trust litigation. See further discussion in
Notes to Consolidated Financial Statements.
Other general and administrative expenses
-
The increase in other general and administrative expense is primarily due both to an increase in the accrual for anticipated
employee bonuses and to a $15 million increased adjustment to the fair value of contingent consideration associated
with the Fassio acquisition. See further discussion in
Consolidated Financial Statements.
(GAIN) LOSS ON INVOLUNTARY CONVERSIONS
For fiscal 2025 and 2024, we recorded a loss of $156 thousand and gain of $23.5 million, respectively. The gain recorded in fiscal
2024 was due to recoveries under indemnity and insurance programs that exceeded the amortized book value of the covered assets
and our direct costs, primarily related to the HPAI outbreaks at our Kansas and Texas facilities.
34
OPERATING INCOME
As a result of the above, our operating income was $1.5 billion for fiscal 2025, compared to $312.5 million for fiscal 2024.
OTHER INCOME (EXPENSE)
Total other income (expense) consists of items not directly charged to, or related to, operations such as interest income and
expense, equity in income or loss of unconsolidated entities, and patronage dividends, among other items. Patronage dividends
are paid to us from our membership in the EB cooperative.
The Company recorded interest income of $48.7 million in fiscal 2025, compared to $32.3 million in fiscal 2024, primarily due
to significantly higher cash and cash equivalents and investment securities available-for-sale balances and yields. We recorded
interest expense of $612 thousand and $549 thousand in fiscal 2025 and 2024, respectively, primarily related to commitment fees
on our Credit Facility described below.
INCOME TAXES
For the fiscal year ended May 31, 2025, our pre-tax income was $1.6 billion, compared to $360.0 million for fiscal 2024. Income
tax expense of $384.9 million was recorded for fiscal 2025 with an effective tax rate of 24.0%. For fiscal 2024, income tax
expense was $83.7 million with an effective tax rate of 23.2%.
Items causing our effective tax rate to differ from the federal statutory income tax rate of 21% are state income taxes, certain
federal tax credits and certain items included in income or loss for financial reporting purposes that are not included in taxable
income or loss for income tax purposes, including tax exempt interest income, certain nondeductible expenses, and net income
or loss attributable to noncontrolling interest.
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
Net loss attributable to noncontrolling interest was $1.8 million for fiscal 2025 compared to a $1.6 million net loss for fiscal 2024.
NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.
As a result of the above, net income attributable to Cal-Maine Foods, Inc. for fiscal 2025 was $1.2 billion, or $25.04 per basic
and $24.95 per diluted share, compared to $277.9 million, or $5.70 per basic and $5.69 per diluted share for fiscal 2024.
Fiscal Year Ended June 1, 2024 Compared to Fiscal Year Ended June 3, 2023
The discussion of our results of operations for the fiscal year ended June 1, 2024 compared to the fiscal year ended June 3, 2023
can be found in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in the
Company’s fiscal 2024 Annual Report on Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
We aim to maintain a strong balance sheet and liquidity, particularly given the cyclical nature of our business. We believe a strong
balance sheet supports our growth opportunities and stockholder returns. Our priorities for the use of cash in recent periods have
included the payment of dividends pursuant to our variable dividend policy, inorganic growth through acquisitions of businesses,
organic growth including construction and conversion of cage-free facilities and investment in value-added products, and
maintenance capital expenditures.
Working Capital and Current Ratio
Our working capital at May 31, 2025 was $1.7 billion, compared to $1.0 billion at June 1, 2024. The calculation of working
capital is defined as current assets less current liabilities. Our current ratio was 6.4 at May 31, 2025 compared to 5.5 at June 1,
2024. The current ratio is calculated by dividing current assets by current liabilities. The increase in our current ratio is primarily
due to the increase in total current assets, which increased by $726.3 million to $2.0 billion at May 31, 2025, due to increases in
cash and cash equivalents and investment securities available-for-sale. Due to seasonal factors described in
, we generally expect our need for working capital to be highest in the fourth and first fiscal quarters ending
in May/June and August/September, respectively.
35
Cash Flows from Operating Activities
Net cash provided by operating activities was $1.2 billion for fiscal 2025, compared to $451.4 million for fiscal 2024. The increase
in cash flow from operating activities resulted primarily from higher net average selling prices per dozen, particularly for
conventional eggs, increased volume of sales and a decrease in feed ingredient costs compared to the prior year, partially offset
by the increase in volume and price of outside egg purchases.
Cash Flows from Investing Activities
For fiscal 2025, $575.5 million was used in investing activities, primarily due to purchases of investment securities, purchases of
property, plant and equipment and the acquisition of assets of ISE compared to $412.6 million used in investing activities in fiscal
2024, primarily due to purchases of investment securities, purchases of property, plant and equipment and the Fassio acquisition.
Purchases of investment securities were $1.2 billion in fiscal 2025 compared to $573.6 million in fiscal 2024. Sales and maturities
of investment securities were $907.6 million in fiscal 2025, compared to $358.9 million for fiscal 2024. The increase in sales and
maturities of investment securities is primarily due to the maturities of short-term investments during fiscal 2025. Cash paid for
business acquisitions was $116.2 million in fiscal 2025, primarily related to the ISE acquisition, and $53.7 million in fiscal 2024,
related to the Fassio acquisition. Purchases of property, plant and equipment were $161.3 million and $147.1 million in fiscal
2025 and 2024, respectively, primarily reflecting progress on our construction projects.
Cash Flows from Financing Activities
We paid dividends totaling $330.3 million and $91.9 million in fiscal 2025 and 2024, respectively. During fiscal 2025, we
repurchased $54.0 million in shares of Common Stock, primarily under our share repurchase program. See “Share Repurchase
Program,” below.
Increase (decrease) in Cash and Cash Equivalents
As of May 31, 2025, cash increased $261.5 million since June 1, 2024, compared to a $54.9 million decrease during fiscal 2024.
The increase is primarily due to the increase in net sales during fiscal 2025.
Acquisition of Echo Lake Foods
Subsequent to our fiscal 2025 year-end, we acquired Echo Lake Foods. The purchase price was approximately $258 million and
was funded with available cash on hand. For additional information, refer to Part II. Item 8. Notes to the Consolidated Financial
Statements,
Credit Facility
On November 15, 2021, we entered into an Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with
a five-year term. The Credit Agreement provides for a senior secured revolving credit facility (the “Credit Facility”), in an initial
aggregate principal amount of up to $250 million. As of May 31, 2025, no amounts were borrowed under the Credit Facility. As
of May 31, 2025, we had $4.7 million in outstanding standby letters of credit, which were issued under our Credit Facility for the
benefit of certain insurance companies. On March 25, 2025, we entered into the Second Amendment to the Credit Facility to
amend the definition of Change of Control to exclude the conversion of all outstanding shares of Class A Common Stock into
Common Stock. Refer to Part II. Item 8. Notes to the Financial Statements,
regarding our long-term debt.
Share Repurchase Program
On February 25, 2025, the Board approved a new $500 million share repurchase program. The share repurchase program
authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for an aggregate purchase
price up to $500 million (exclusive of any fees, taxes, commissions or other expenses related to such repurchases), subject to
market conditions and other factors. The actual timing, number and value of shares repurchased under the program will be
determined by management in its discretion and will depend on a number of factors, including, but not limited to, the market
price of the Common Stock and general market and economic conditions.
36
The Company expects to strategically and opportunistically repurchase shares from time to time through solicited or unsolicited
transactions in the open market, in privately negotiated transactions or by other means in accordance with securities laws. The
Company expects that share repurchases under the program will be funded from one or a combination of existing cash balances
and future free cash flow. The share repurchase program does not obligate the Company to repurchase any specific amount of
shares, does not have an expiration date, and may be suspended, modified or discontinued at any time without prior notice. During
fiscal 2025, the Company repurchased approximately $50 million in shares under the program. See
Dividends
In accordance with our variable dividend policy, we will pay a cash dividend totaling approximately $114.2 million, or
approximately $2.362 per share, to holders of our Common Stock with respect to our fourth quarter of fiscal 2025. The amount
paid per share will vary based on the number of outstanding shares on the record date. The dividend is payable on August 19,
2025 to holders of record on August 4, 2025.
Material Cash Requirements
Material cash requirements for operating activities primarily consist of feed ingredients, processing, packaging and warehouse
costs, employee related costs, and other general operating expenses, which we expect to be paid from our cash from operations
and cash and investment securities on hand for at least the next 12 months. While volatile egg prices and feed ingredient costs,
among other things, make long-term predictions difficult, we have substantial liquid assets and availability under our Credit
Facility to fund future operating requirements.
Our material cash requirements for capital expenditures consist primarily of our projects to increase our cage-free production
capacity. We continue to monitor the increasing demand for cage-free eggs and to engage with our customers in efforts to help
them achieve their announced timelines for cage-free egg sales. The following table presents material construction projects
approved as of May 31, 2025 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of
May 31, 2025
Remaining
Projected Cost
Feed Mill
Fiscal 2026
$
9,800
$
4,936
$
4,864
Egg Products Expansion
Fiscal 2026
19,576
10,958
8,618
Cage-Free Layer & Pullet Houses
Fiscal 2026
219,004
179,281
39,723
$
248,380
$
195,175
$
53,205
As of May 31, 2025, we had $75.5 million of purchase obligations outstanding, all of which is due within one year. Purchase
obligations primarily include contractual agreements to purchase feed ingredients and commitments to make capital expenditures.
Timing of payments and actual amounts paid may be different depending on the timing of the receipt of goods or services or
changes to agreed-upon amounts for some obligations.
We believe our current cash balances, investments, projected cash flows from operations, and available borrowings under our
Credit Facility will be sufficient to fund our capital needs for at least the next 12 months and to fund our capital commitments
currently in place thereafter.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
For information on changes in accounting principles and new accounting principles, see “
New Accounting Pronouncements and
Policies
” in Part II. Item 8. Notes to Consolidated Financial Statements,
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ materially from these estimates. Critical accounting estimates
are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are
reasonably likely to have a material impact on the financial condition or results of operations. Our critical accounting estimates
are described below.
37
BUSINESS COMBINATIONS
The Company applies the acquisition method of accounting, which requires that once control is obtained, all the assets acquired
and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at
the date of acquisition. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as
goodwill.
We typically use the income method approach for intangible assets acquired in a business combination. Significant judgment
exists in valuing certain intangible assets and the most significant assumptions requiring judgment involve estimating the amount
and timing of future cash flows, growth rates, discount rates selected to measure the risks inherent in the future cash flows and
the asset’s expected useful lives.
The fair values of identifiable assets and liabilities are generally determined internally and requires estimates and the use of
various valuation techniques. When a market value is not readily available, our internal valuation methodology considers the
remaining estimated life of the assets acquired and significant judgment is required as management determines the fair market
value for those assets.
Due to inherent industry uncertainties including volatile egg prices and feed costs, unanticipated market changes, events, or
circumstances may occur that could affect the estimates and assumptions used, which could result in subsequent impairments.
INVENTORIES
Inventories of eggs, feed, supplies and flocks are valued principally at the lower of cost or net realizable value. If market prices
for eggs and feed grains move substantially lower, we record adjustments to write down the carrying values of eggs and feed
inventories to fair market value. The cost associated with flock inventories, consisting principally of chick purchases or hatching
costs, feed, labor, contractor payments and overhead costs, are accumulated during the hatching and growing periods of
approximately 22 weeks. Capitalized flock costs are then amortized over the flock’s productive life, generally one to two
years. Judgment exists in determining the flock’s productive life including factors such as laying rate and egg size, molt cycles,
and customer demand. Furthermore, other factors such as hen type or weather conditions could affect the productive life. These
factors could make our estimates of productive life differ materially from actual results. Flock mortality is charged to cost of sales
as incurred. High mortality from disease or extreme temperatures will result in abnormal write-downs to flock
inventories. Management continually monitors each flock and attempts to take appropriate actions to minimize the risk of
mortality loss.
GOODWILL
As a result of acquiring businesses, the Company had $46.8 million of goodwill as of May 31, 2025, representing 1.5% of total
assets and 1.8% of stockholders’ equity. Goodwill is evaluated for impairment annually (or more frequently if impairment
indicators arise) by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. After
assessing the totality of events or circumstances, if we determine it is more likely than not that the fair value of a reporting unit
is less than its carrying amount, then we perform additional quantitative tests to determine the magnitude of any impairment.
During our annual impairment test, which was the first day of the fourth quarter, we determined that goodwill passed the
qualitative assessment and therefore no quantitative analysis of goodwill impairment was necessary in fiscal 2025.
The Company has determined that all of our locations share similar economic characteristics and support each other in the
production of eggs and customer support. Therefore, we aggregate all our locations as a single reporting unit for testing goodwill
for impairment. When the Company acquires a new location, we determine whether it should be integrated into our single
reporting unit or treated as a separate reporting unit. Historically, we have concluded that acquired operations should be integrated
into our single reporting unit due to the operational changes, redistribution of customers, and significant changes in management
that occur when we acquire businesses, which result in the acquired operations sharing similar economic characteristics with the
rest of our locations. Once goodwill associated with acquired operations becomes part of goodwill of our single reporting unit, it
no longer represents the particular acquired operations that gave rise to the goodwill. We may conclude that a business acquired
in the future should be treated as a separate reporting unit, in which case it would be tested separately for goodwill impairment.
Judgment exists in management’s evaluation of the qualitative factors which include macroeconomic conditions, the current egg
industry environment, cost inputs such as feed ingredients and overall financial performance. Furthermore, judgment exists in the
evaluation of the threshold of whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount. Uncertainty exists due to uncontrollable events that could occur that could negatively affect our operating conditions.
38
REVENUE RECOGNITION
Revenue recognition is completed upon satisfaction of the performance obligation which generally occurs upon shipment or
delivery to a customer based on terms of the sale.
Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for delivery of the
products. The Company periodically offers sales incentives or other programs such as rebates, discounts, coupons, volume-based
incentives, guaranteed sales and other programs. The Company records an estimated allowance for costs associated with these
programs, which is recorded as a reduction in revenue at the time of sale using historical trends and projected redemption rates
of each program. The Company regularly reviews these estimates and any difference between the estimated costs and actual
realization of these programs would be recognized in the subsequent period.
As the estimates noted above are based on historical information, we do not believe that there will be a material change in the
estimates and assumptions used to recognize revenue. However, if actual results varied significantly from our estimates, it could
expose us to material gains or losses.
LOSS CONTINGENCIES
The Company evaluates whether a loss contingency exists, and if the assessment of a contingency indicates it is probable that a
material loss has been incurred and the amount of the loss can be reasonably estimated, the estimated loss would be accrued in
the Company’s financial statements. The Company expenses the costs of litigation as they are incurred.
Except for the $19.6 million litigation loss contingency accrual in fiscal 2024, there were no loss contingency accruals for the
past three fiscal years. Our evaluation of whether loss contingencies exist primarily relates to litigation matters. The outcome of
litigation is uncertain due to, among other things, uncertainties regarding the facts will be established during the proceedings,
uncertainties regarding how the law will be applied to the facts established, and uncertainties regarding the calculation of any
potential damages or the costs of any potential injunctive relief. If the facts discovered or the Company’s assumptions change,
future accruals for loss contingencies may be required. Results of operations may be materially affected by losses or a loss
contingency accrual resulting from adverse legal proceedings.
INCOME TAXES
We determine our effective tax rate by estimating our permanent differences resulting from differing treatment of items for tax
and accounting purposes. Judgment and uncertainty exist with management’s application of tax regulations and evaluation of the
more-likely-than-not recognition and measurement thresholds. We are periodically audited by taxing authorities. An adverse tax
settlement could have a negative impact on our effective tax rate and our results of operations.
39
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
COMMODITY PRICE RISK
Our primary exposure to market risk arises from changes in the prices of conventional eggs, which are subject to significant price
fluctuations that are largely beyond our control. We are focused on growing our specialty shell egg business, in part because the
selling prices of specialty shell eggs are generally not as volatile as conventional shell egg prices. Our exposure to market risk
also includes changes in the prices of corn and soybean meal, which are commodities subject to significant price fluctuations due
to market conditions that are largely beyond our control. To ensure continued availability of feed ingredients, we may enter into
contracts for future purchases of corn and soybean meal, and as part of these contracts, we may lock-in the basis portion of our
grain purchases several months in advance and commit to purchase organic ingredients to help assure supply. Ordinarily, we do
not enter long-term contracts beyond a year to purchase corn and soybean meal or hedge against increases in the price of corn
and soybean meal. The following table outlines the impact of price changes for corn and soybean meal on feed costs per dozen
as feed ingredient pricing varies:
Change in price per bushel of corn
$
(0.84)
$
(0.56)
$
(0.28)
$
0.00
$
0.28
$
0.56
$
0.84
Change
per ton
soybean
meal
$
(76.38)
0.43
0.44
0.45
0.46
0.47
0.48
0.49
$
(50.92)
0.44
0.45
0.46
0.47
0.48
0.49
0.50
$
(25.46)
0.45
0.46
0.47
0.48
0.49
0.50
0.51
$
0.00
0.46
0.47
0.48
0.49
(a)
0.50
0.51
0.52
$
25.46
0.47
0.48
0.49
0.50
0.51
0.52
0.53
$
50.92
0.48
0.49
0.50
0.51
0.52
0.53
0.54
$
76.38
0.49
0.50
0.51
0.52
0.53
0.54
0.55
(a)
Based on 2025 actual costs, table flexes feed cost inputs to show $0.01 impacts to per dozen egg feed production costs.
INTEREST RATE RISK
We have a $250 million Credit Facility, borrowings under which would bear interest at variable rates. No amounts were
outstanding under that facility during fiscal 2025 or fiscal 2024. Under our current policies, we do not use interest rate derivative
instruments to manage our exposure to interest rate changes.
FIXED INCOME SECURITIES RISK
At May 31, 2025, the effective maturity of our cash equivalents and investment securities available for sale was 8.6 months, and
the composite credit rating of the holdings are A+ / A1 / A+ (S&P / Moody’s / Fitch). Generally speaking, rising interest rates
decrease the value of fixed income securities portfolios. As of May 31, 2025, the estimated fair value of our fixed income
securities portfolio was approximately $892.7 million and reflected net unrealized losses of approximately $149 thousand. For
additional information see
Available-for-Sale” and
Statements.
CONCENTRATION OF CREDIT RISK
Our financial instruments exposed to concentrations of credit risk consist primarily of trade receivables. Concentrations of credit
risk with respect to receivables are limited due to our large number of customers and their dispersion across geographic areas,
except that at May 31, 2025 and June 1, 2024, 28.1% and 26.8%, respectively, of our net accounts receivable balance was due
from Walmart Inc. (including Sam’s Club). No other single customer or customer group represented 10% or greater of net
accounts receivable at May 31, 2025 and June 1, 2024.
40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Ridgeland, Mississippi
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Cal-Maine Foods, Inc. and Subsidiaries as of May
31, 2025 and June 1, 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash
flows for each of the three years in the period ended May 31, 2025, and the related consolidated notes and schedule listed in the
Index at Items 15(a)(1) and 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of Cal-Maine Foods, Inc. and
Subsidiaries as of May 31, 2025 and June 1, 2024, and the results of their operations and their cash flows for each of the three
years in the period ended May 31, 2025, in conformity with accounting principles generally accepted in the United States of
America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Cal-Maine Foods, Inc. and Subsidiaries’ internal control over financial reporting as of May 31, 2025,
based on the criteria established in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated July 22, 2025 expressed an unqualified opinion.
Basis for Opinion
These consolidated financial statements are the responsibility of the entities’ management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to Cal-Maine Foods, Inc. and Subsidiaries in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our
audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to
accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing
a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Contingent Liabilities – Litigation and Claims – Refer to Note 16 in the Consolidated Financial Statements
Critical Audit Matter Description
Cal-Maine Foods, Inc. and Subsidiaries record liabilities for legal proceedings and claims in those instances where they
can reasonably estimate the amount of the loss and when the liability is probable. Where the reasonable estimate of the probable
loss is a range, Cal-Maine Foods, Inc. and Subsidiaries record the most likely estimate of the loss, or the low end of the range if
there is no one best estimate. Cal-Maine Foods, Inc. and Subsidiaries either disclose the amount of a possible loss or range of loss
41
in excess of established accruals if estimable, or states that such an estimate cannot be made. Cal-Maine Foods, Inc. and
Subsidiaries disclose significant legal proceedings and claims even where liability is not probable or the amount of the liability
is not estimable, or both, if Cal-Maine Foods, Inc. and Subsidiaries believe there is at least a reasonable possibility that a loss
may be incurred.
We identified litigation and claims as a critical audit matter because of the challenges auditing management’s judgments
applied in determining the likelihood of loss related to the resolution of such claims. Specifically, auditing management’s
determination of whether any contingent loss arising from the related litigation and claims is probable, reasonably possible, or
remote, and the related disclosures, is subjective and requires significant judgment due to the sensitivity of the issue.
How the Critical Audit Matter was addressed during the Audit
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of the controls
relating to the Cal-Maine Foods, Inc. and Subsidiaries’ evaluation of the liability related to legal proceedings and claims, including
controls over determining the likelihood of a loss and whether the amount of loss can be reasonably estimated, as well as financial
statement disclosures over the legal proceedings and claims. These procedures also included obtaining and evaluating the letters
of audit inquiry with external legal counsel, evaluating the reasonableness of Cal-Maine Foods, Inc. and Subsidiaries’ assessment
regarding whether an unfavorable outcome is reasonably possible or probable, and reasonably estimable, evaluating the
sufficiency of Cal-Maine Foods, Inc. and Subsidiaries’ disclosures related to legal proceedings and claims and evaluating the
completeness and accuracy of Cal-Maine Foods, Inc. and Subsidiaries’ legal contingencies.
We have served as the Company’s auditor since 2007.
Little Rock, Arkansas
July 22, 2025
42
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except for par value amounts)
May 31, 2025
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
$
Investment securities available-for-sale
Receivables:
Trade receivables, net
Income tax receivable
Other
Total receivables, net
Inventories, net
Prepaid expenses and other current assets
Total current assets
Property, plant & equipment, net
Investments in unconsolidated entities
Goodwill
Intangible assets, net
Other assets
Total assets
$
$
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable
$
$
Dividends payable
Accrued wages and benefits
Income tax payable
Accrued expenses and other current liabilities
Total current liabilities
Other liabilities
Deferred income taxes
Total liabilities
Commitments and contingencies - see
Note 16
—
—
Stockholders’ equity:
Common stock ($
Common stock – authorized
2025 and 2024, respectively
Class A convertible common stock – authorized and issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
(1,007 )
(1,773 )
Common stock in treasury, at cost –
respectively
(85,893 )
(31,597 )
Total Cal-Maine Foods, Inc. stockholders’ equity
Noncontrolling interest in consolidated equity
(3,104 )
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
See Notes to Consolidated Financial Statements.
43
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share amounts)
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Net sales
$
$
$
Cost of sales
Gross profit
Selling, general and administrative
(Gain) loss on involuntary conversions
(23,532 )
(3,345 )
(Gain) loss on disposal of fixed assets
(259 )
(131 )
Operating income
Other income (expense):
Interest expense
(612 )
(549 )
(583 )
Interest income
Patronage dividends
Equity in income of unconsolidated entities
Other, net
Total other income
Income before income taxes
Income tax expense
Net income
Less: Net loss attributable to noncontrolling interest
(1,816 )
(1,606 )
(1,292 )
Net income attributable to Cal-Maine Foods, Inc.
$
$
$
Net income per share attributable to Cal-Maine Foods, Inc.:
Basic
$
$
$
Diluted
$
$
$
Weighted average shares outstanding:
Basic
Diluted
See Notes to Consolidated Financial Statements.
44
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of
Comprehensive Income
(in thousands)
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
Net income
$
$
$
Other comprehensive income (loss), before tax:
Unrealized holding gain (loss) available-for-sale securities, net of
reclassification adjustments
(1,714 )
(Increase) decrease in accumulated post-retirement benefits obligation, net of
reclassification adjustments
(27 )
Other comprehensive income (loss), before tax
(1,741 )
Income tax expense (benefit) related to items of other comprehensive income
(loss)
(451 )
Other comprehensive income (loss), net of tax
(1,290 )
Comprehensive income
Less: comprehensive loss attributable to the noncontrolling interest
(1,816 )
(1,606 )
(1,292 )
Comprehensive income attributable to Cal-Maine Foods, Inc.
$
$
$
See Notes to Consolidated Financial Statements.
45
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(in thousands)
Accum.
Other
Common Stock
Comp.
Shares
Amount
Class A
Shares
Class A
Amount
Treasury
Shares
Treasury
Amount
Paid In
Capital
Retained
Earnings
(loss)
Noncontrolling
Interest
Total
Balance at May 28, 2022
$
$
$
(28,447 )
$
$
$
(1,596 )
$
(206 )
Stock compensation plan transactions
—
—
—
—
(44 )
(1,561 )
—
—
—
Dividends ($
Common
—
—
—
—
—
—
—
(227,993 )
—
—
(227,993 )
Class A common
—
—
—
—
—
—
—
(24,773 )
—
—
(24,773 )
Net income (loss)
—
—
—
—
—
—
—
—
(1,292 )
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
(1,290 )
—
(1,290 )
Balance at June 3, 2023
—
(30,008 )
(2,886 )
(1,498 )
Stock compensation plan transactions
—
—
—
—
(55 )
(1,589 )
—
—
—
Dividends ($
Common
—
—
—
—
—
—
—
(83,565 )
—
—
(83,565 )
Class A common
—
—
—
—
—
—
—
(9,040 )
—
—
(9,040 )
Net income (loss)
—
—
—
—
—
—
—
—
(1,606 )
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
—
Balance at June 1, 2024
(31,597 )
(1,773 )
(3,104 )
Stock compensation plan transactions
—
—
—
—
(7 )
(3,900 )
—
—
—
Conversion of Class A Shares
(4,800 )
(48 )
—
—
—
—
—
—
—
Repurchase of Shares
—
—
—
—
(50,396 )
—
—
—
—
(50,396 )
Contributions to Crepini Foods LLC
—
—
—
—
—
—
—
—
—
Acquisition of noncontrolling interest in
MeadowCreek Foods LLC
—
—
—
—
—
—
—
(3,826 )
—
—
Dividends ($
Common
—
—
—
—
—
—
—
(378,062 )
—
—
(378,062 )
Class A common
—
—
—
—
—
—
—
(28,627 )
—
—
(28,627 )
Net income (loss)
—
—
—
—
—
—
—
—
(1,816 )
Other comprehensive income, net of tax
—
—
—
—
—
—
—
—
—
Balance at May 31, 2025
$
—
$
—
$
(85,893 )
$
$
$
(1,007 )
$
$
See Notes to Consolidated Financial Statements.
46
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Cash flows from operating activities:
Net income
$
$
$
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Deferred income taxes
(9,672 )
Stock compensation expense, net of amounts paid
Loss on change in fair value contingent consideration
Other operating activities, net
(15,426 )
(6,908 )
(1,491 )
Change in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in trade receivables
(104,997 )
(27,570 )
(Increase) decrease in inventories
(12,224 )
(21,102 )
Increase (decrease) in income taxes payable/receivable
(45,946 )
(42,218 )
Increase in accounts payable and current accrued expenses
Decrease in other operating assets and liabilities
(5,334 )
(553 )
(2,890 )
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of investments
(1,213,593 )
(573,565 )
(530,781 )
Sales of investments
Acquisition of businesses, net of cash acquired
(116,193 )
(53,746 )
Investment in unconsolidated entities
(363 )
(1,673 )
Distributions from unconsolidated entities
Purchases of property, plant and equipment
(161,255 )
(147,116 )
(136,569 )
Net proceeds from disposal of property, plant and equipment
Net cash used in investing activities
(575,469 )
(412,586 )
(375,111 )
Cash flows from financing activities:
Principal payments on long-term debt
(2,481 )
Principal payments on finance lease
(214 )
(224 )
Purchase of common stock by treasury
(53,953 )
(1,688 )
(1,643 )
Payments of dividends
(330,290 )
(91,856 )
(252,292 )
Net cash used in financing activities
(386,724 )
(93,758 )
(254,159 )
Increase (decrease) in cash and cash equivalents
(54,946 )
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
$
$
$
Supplemental information:
Income taxes paid
$
$
$
See Notes to Consolidated Financial Statements.
47
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Operations
Cal-Maine Foods, Inc. (“we,” “us,” “our,” or the “Company”) is primarily engaged in the production, grading, packaging,
marketing and distribution of fresh shell eggs, including conventional, cage-free, organic, brown, free-range, pasture-raised and
nutritionally-enhanced eggs, as well as egg products and a variety of prepared foods. The Company, which is headquartered in
Ridgeland, Mississippi, is the largest producer and distributor of fresh shell eggs in the United States and sells most of its shell
eggs throughout the majority of the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of all wholly-owned subsidiaries and of majority-owned subsidiaries
over which we exercise control. All significant intercompany transactions and accounts have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year-end is on the Saturday closest to May 31. The fiscal years ending on May 31, 2025 and June 1, 2024
included
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”)
in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash
equivalents. We maintain bank accounts that are insured by the Federal Deposit Insurance Corporation up to $
. The
Company routinely maintains cash balances with certain financial institutions in excess of federally insured amounts. The
Company has not experienced any loss in such accounts. The Company manages this risk through maintaining cash deposits and
other highly liquid investments in high quality financial institutions.
Investment Securities Available-for-Sale
The Company has determined that its debt securities are available-for-sale investments and are classified as current because the
amounts invested are available for current operations. Available-for-sale securities are carried at fair value, based on quoted
market prices as of the balance sheet date, with unrealized gains and losses recorded in other comprehensive income. The
amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity and is recorded
in interest income. The Company regularly evaluates changes to the rating of its debt securities by credit agencies and economic
conditions to assess and record any expected credit losses through allowance for credit losses, limited to the amount that fair
value was less than the amortized cost basis.
The cost basis for realized gains and losses on available-for-sale securities is determined by the specific identification method.
Gains and losses are recognized in other income (expense) as “Other, net” in the Company’s Consolidated Statements of Income.
Interest and dividends on securities classified as available-for-sale are recorded in “Interest income” in the Company’s
Consolidated Statements of Income.
Trade Receivables
Trade receivables are stated at their carrying values, which include a reserve for credit losses. At May 31, 2025 and June 1, 2024,
reserves for credit losses were $
on an evaluation of each customer’s financial condition and credit history. Collateral is generally not required. The Company
minimizes exposure to counter party credit risk through credit analysis and approvals, credit limits, and monitoring procedures.
In determining our reserve for credit losses, receivables are assigned an expected loss based on historical loss information adjusted
48
as needed for economic and other forward-looking factors. At May 31, 2025 and June 1, 2024,
approximately
% and
% of the Company’s trade accounts receivable, respectively.
Inventories
Inventories of eggs, feed, supplies and flocks are valued principally at the lower of cost or net realizable value. The cost of
inventories is determined by either the first-in, first-out method or the weighted-average method.
The cost associated with flocks, consisting principally of chicks, feed, labor, contractor payments and overhead costs, are
accumulated during a growing period of approximately
lives of the flocks, generally
one
. As the amortization period of the flocks is relatively short, disclosure of the gross
cost and accumulated amortization is omitted. Flock mortality is charged to cost of sales as incurred.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided by the straight-line method over the estimated useful
lives, which are
that significantly extend the useful life of the related assets are capitalized. Normal repairs and maintenance are expensed as
incurred. When property, plant, and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related
accumulated depreciation are removed from the accounts and any gain or loss is included in operations. When certain events or
changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the
recoverability of the carrying amounts.
Investments in Unconsolidated Entities
The equity method of accounting is used when the Company can exert significant influence over an entity, but does not control
its financial and operating decisions. Under the equity method, original investments are recorded at cost and adjusted by the
Company’s share of undistributed earnings or losses of these entities. Equity investments without readily determinable fair values,
when the Company does not have the ability to exercise significant influence over the investee, are recorded at cost, less
impairment, plus or minus observable price changes.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is
evaluated for impairment at least annually or more frequently if impairment indicators arise by first performing a qualitative
assessment to determine whether a quantitative goodwill test is necessary. After assessing the totality of events or circumstances,
if we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform
additional quantitative tests to determine the magnitude of any impairment.
Intangible Assets
Intangible assets are initially recorded at fair value in business acquisitions, which include franchise rights, customer relationships,
non-compete agreements, trademarks and right of use intangibles. They are amortized over their estimated useful lives of
years. The gross cost and accumulated amortization of intangible assets are removed when the recorded amounts are fully
amortized and the asset is no longer in use or the contract has expired. When certain events or changes in operating conditions
occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Indefinite life assets are recorded at fair value in business acquisitions and represent water rights. They are not amortized, but
are reviewed for impairment at least annually or more frequently if impairment indicators arise.
Insurance Liabilities and Restricted Cash
The Company uses a combination of insurance and self-insurance programs, including a wholly-owned captive insurance
subsidiary (the “Captive”) to provide coverage for the potential liabilities for workers’ compensation, auto liability and general
liability risks. Liabilities associated with these risks that are retained by the Company are not discounted and are estimated, in
part, by considering historical claims experience, severity factors and other actuarial assumptions. These liabilities are recorded
within “Accrued expenses and other current liabilities” in the Company’s Consolidated Balance Sheets and were $
and $
49
The Captive maintains certain levels of cash and cash equivalents which are restricted in use to secure the insurer’s obligations
for workers’ compensation, auto liability and general liability programs. As of May 31, 2025, restricted cash was $
and is recorded within “Prepaid expenses and other current assets” in the Company’s Consolidated Balance Sheets.
The Company also maintains a medical plan covering substantially all full-time employees. Under the plan, the Company self-
insures its portion of medical claims and uses stop-loss insurance to limit its portion of medical claims to $
Liabilities associated with these risks are estimated in part by considering historical claims experience, medical cost trends,
demographic factors, severity factors and other actuarial assumptions. The Company’s expenses including accruals for incurred
but not reported claims were approximately $
respectively. The liability recorded for incurred but not reported claims was $
and June 1, 2024, respectively and are classified within “Accrued expenses and other current liabilities” in the Company’s
Consolidated Balance Sheets.
Dividend Payable
Dividends are accrued at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors
(“Board”). The Company pays a dividend to stockholders of its Common Stock on a quarterly basis for each quarter for which
the Company reports net income attributable to Cal-Maine Foods, Inc., computed in accordance with GAAP, in an amount equal
to
one-third
day of such quarter, except for the fourth fiscal quarter. For the fourth quarter, the Company pays dividends to stockholders of
record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date. Following a quarter
for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will not pay a dividend
for a subsequent profitable quarter until the Company is profitable on a cumulative basis computed from the date of the most
recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board.
Revenue Recognition
The Company recognizes revenue through sale of its products to customers through retail, foodservice and other distribution
channels. The majority of the Company’s revenue is derived from agreements or contracts with customers based upon the
customer ordering its products with a single performance obligation of delivering the product. The Company believes the
performance obligation is met upon delivery and acceptance of the product by our customers, which generally occurs upon
shipment or delivery to a customer based on terms of the sale. Costs paid to third party brokers to obtain agreements are expensed
as the Company’s agreements are generally less than one year.
Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for delivery of the
products. The Company periodically offers sales incentives or other programs such as rebates, discounts, coupons, volume-based
incentives, guaranteed sales and other programs. The Company records an estimated allowance for costs associated with these
programs, which is recorded as a reduction in revenue at the time of sale using historical trends and projected redemption rates
of each program. The Company regularly reviews these estimates and any difference between the estimated costs and actual
realization of these programs would be recognized the subsequent period.
Shipping and Distribution
Costs to deliver product to customers are included in selling, general and administrative expenses in the accompanying
Consolidated Statements of Income and totaled $
2023, respectively.
Income Taxes
Income taxes are accounted for using the liability method. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The Company’s policy with respect to evaluating uncertain tax positions is based upon whether management
believes it is more likely than not the uncertain tax positions will be sustained upon review by the taxing authorities. The tax
positions must meet the more-likely-than-not recognition threshold with consideration given to the amounts and probabilities of
the outcomes that could be realized upon settlement using the facts, circumstances and information at the reporting date. The
Company will reflect only the portion of the tax benefit that will be sustained upon resolution of the position and applicable
interest on the portion of the tax benefit not recognized. The Company initially and subsequently measures the largest amount of
tax benefit that is greater than 50% likely to be realized upon settlement with a taxing authority that has full knowledge of all
relevant information. The Company records interest and penalties on uncertain tax positions as a component of income tax
50
expense. Based upon management’s assessment, there are no uncertain tax positions expected to have a material impact on the
Company’s consolidated financial statements.
Business Combinations
The Company applies the acquisition method of accounting, which requires that once control is obtained, all the assets acquired
and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at
the date of acquisition. We determine the fair values of identifiable assets and liabilities internally, which requires estimates and
the use of various valuation techniques. When a market value is not readily available, our internal valuation methodology
considers the remaining estimated life of the assets acquired and what management believes is the market value for those assets.
We typically use the income method approach for intangible assets acquired in a business combination. Significant estimates in
valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates, discount
rates and useful lives. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill.
Gain (Loss) on Involuntary Conversions
The Company maintains insurance for both property damage and business interruption relating to catastrophic events, such as
fires, hurricanes, tornadoes and other acts of God, and is eligible to participate in U.S. Department of Agriculture (“USDA”)
indemnity and compensation programs for certain losses due to disease outbreaks such as highly pathogenic avian influenza
(“HPAI”). Specifically, the Animal Health Protection Act authorizes the USDA to provide indemnity payments to producers for
birds and eggs that must be destroyed during a disease response. Payments received under these programs are based on the fair
market value of the poultry and/or eggs at the time that HPAI virus is detected in the flock. Other covered costs include feed,
depopulation and disposal costs, and virus elimination costs. The USDA does not provide indemnity for income or production
losses suffered due to downtime or other business disruptions nor for indirect continuing expenses. Recoveries received for
property damage, business interruption and disease outbreaks in excess of or less than the net book value of damaged assets,
including poultry, clean-up and demolition costs, and other direct post-event costs are recorded within “Gain (loss) on involuntary
conversions” in the period received or committed when all contingencies associated with the recoveries are resolved.
Loss Contingencies
Certain conditions may exist as of the date the consolidated financial statements are issued that may result in a loss to the Company
but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal
counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such
proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well
as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability
can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment
indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material,
would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which
case the nature of the guarantee would be disclosed.
The Company expenses the costs of litigation as they are incurred.
New Accounting Pronouncements and Policies
In November 2023, the Financial Accounting Standards Board (“FASB ”) issued Accounting Standards Update (“ASU”) 2023-
07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
. This ASU requires enhanced disclosures
about significant segment expenses regularly provided to the chief operating decision maker that are included within each reported
measure of segment profit or loss, and requires all annual disclosures currently required by Topic 280 to be included in interim
periods. The Company adopted ASU 2023-07 effective fiscal year 2025. The pronouncement was adopted retrospectively to all
prior periods presented. For additional information, refer to
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740) – Improvements to Income Tax Disclosures
. This
ASU requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate
reconciliation and income taxes paid. The ASU is intended to enhance the transparency and decision usefulness of income tax
51
disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently
evaluating the impact of ASU 2023-09 on its consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03,
Income Statement
—
Reporting Comprehensive Income
—
Expense
Disaggregation Disclosures (Subtopic 220-40)
. The objective of ASU 2024-03 is to improve disclosures about a public entity’s
expenses, primarily through additional disaggregation of income statement expenses. Additionally, in January 2025, the FASB
further clarified the effective date of ASU 2024-03 with the issuance of ASU 2025-01. ASU 2024-03 is effective for annual
periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15,
2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently
evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.
Note 2 – Acquisitions
Acquisition of ISE America, Inc. Assets
Effective
, the Company acquired substantially all of the commercial shell egg production, processing and egg
products breaking facilities of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial
shell egg production and processing facilities with a capacity at the time of acquisition of approximately
including
products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and
Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. The Company accounted
for the acquisition as a business combination.
The following table summarizes the consideration paid for the ISE assets and the amounts of assets acquired and liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
Property, plant and equipment
Intangible assets
Liabilities assumed
(308 )
Total identifiable net assets
$
Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value as management believes that its carrying value best approximates its fair value. Feed ingredients, packaging and egg
inventory were all valued based on market prices as of June 28, 2024.
Property, plant and equipment were valued utilizing the cost approach which is based on replacement or reproduction costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible assets consisted primarily of customer lists acquired. Customers lists were valued using the income method approach.
Acquisition of Deal-Rite Feeds, Inc. Assets
Effective
, the Company acquired certain assets of Deal-Rite Feeds, Inc. and certain of its affiliates (“Deal-Rite”)
for approximately $
equipment and a retail feed sales business located in North Carolina. The acquired assets will produce and deliver feed to our
nearby shell egg production facilities. The Company accounted for the acquisition as a business combination.
Property, plant and equipment were valued utilizing the cost approach which is based on replacement or reproduction costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
52
Goodwill recorded in connection with the Deal-Rite acquisition is primarily attributable to improved efficiencies from integrating
the assets of Deal-Rite with the operations of the Company. The Company recognized goodwill of $
acquisition.
Other Acquisitions and Investments
Effective
, the Company completed a strategic investment with Crepini LLC, establishing a new egg products
and prepared foods venture. The new entity, located in Hopewell Junction, New York, operates as Crepini Foods LLC (“Crepini”).
The Company capitalized Crepini with approximately $
and fund working capital in exchange for a
% interest in the new venture. Crepini LLC contributed its existing assets and
business in exchange for a
% interest in the new venture.
Effective November 30, 2024, the Company acquired the remaining
% interest in our majority-owned subsidiary,
MeadowCreek Foods LLC.
Acquisition of Fassio Egg Farms, Inc. Assets
Effective
, the Company announced the acquisition of the assets of Fassio Egg Farms, Inc. (“Fassio”), related to
its commercial shell egg production and processing business. Fassio owned and operated commercial shell egg production and
processing facilities with a capacity at the time of acquisition of approximately
feed mill, pullets, a fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. The
Company accounted for the acquisition as a business combination.
The following table summarizes the consideration paid for the Fassio assets and the amounts of assets acquired and liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Fair value of contingent consideration
Total estimated purchase consideration
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventory
$
Property, plant and equipment
Intangible assets
Other long-term assets
Liabilities assumed
(143 )
Total identifiable net assets
Goodwill
$
Inventory consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value as management believes that its carrying value best approximates its fair value. Feed ingredients, packaging and egg
inventory were all valued based on market prices as of September 30, 2023.
Property, plant and equipment were valued utilizing the cost approach which is based on replacement or reproduction costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible assets consisted primarily of water rights within the property acquired. Water rights were valued using the sales
comparison approach.
Contingent consideration liability was recorded and represents potential future cash payment to the sellers contingent on the
acquired business meeting certain return on profitability milestones over a
three-year
53
acquisition. The initial fair value of the contingent consideration was estimated using a discounted cash flow model. This liability
is recorded within “Other liabilities” in the Company’s Consolidated Balance Sheets.
Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets
acquired. Goodwill recorded in connection with the Fassio acquisition is primarily attributable to improved efficiencies from
integrating the assets of Fassio with the operations of the Company. The Company recognized goodwill of $
of the acquisition.
Note 3 - Investment Securities Available-for-Sale
The following presents the Company’s investment securities available-for-sale as of May 31, 2025 and June 1, 2024 (in
thousands):
May 31, 2025
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Treasury bills
Total current investment securities
$
$
$
$
June 1, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
Proceeds from the sales and maturities of available-for-sale securities were $
during fiscal 2025, 2024, and 2023, respectively. Gross realized gains for fiscal 2025, 2024, and 2023 were $
thousand, and $
2024, and 2023 were $
June 1, 2024.
Actual maturities may differ from contractual maturities as some borrowers have the right to call or prepay obligations with or
without penalties. Contractual maturities of investment securities at May 31, 2025 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Note 4 - Fair Value Measures
The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value
hierarchy. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated,
knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would
be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle
the liability with the creditor.
54
●
Level 1
●
Level 2
directly or indirectly, including:
o
Quoted prices for similar assets or liabilities in active markets
o
Quoted prices for identical or similar assets in non-active markets
o
Inputs other than quoted prices that are observable for the asset or liability
o
Inputs derived principally from or corroborated by other observable market data
●
Level 3
to the fair value of the assets or liabilities
The disclosure of fair value of certain financial assets and liabilities recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
short maturity of these instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and
liabilities that are required to be measured at fair value on a recurring basis as of May 31, 2025 and June 1, 2024 (in thousands):
May 31, 2025
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Treasury bills
Total investment securities available-for-sale
measured at fair value
$
$
$
$
Liabilities
Contingent consideration
Total liabilities measured at fair value
$
$
$
$
June 1, 2024
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total investment securities available-for-sale
measured at fair value
$
$
$
$
Liabilities
Contingent consideration
Total liabilities measured at fair value
$
$
$
$
Investment securities available-for-sale are all classified as Level 2 and consist of securities with maturities of three months or
longer when purchased. Observable inputs for these securities are yields, credit risks, default rates, and volatility.
55
Contingent consideration classified as Level 3 consists of the potential obligation to pay an earnout to the sellers of Fassio
contingent on the acquired business meeting certain return on profitability milestones over a
three-year
the date of the acquisition. The fair value of the contingent consideration is estimated using a discounted cash flow model. Key
assumptions and unobservable inputs that require significant judgement used in the estimate include weighted average cost of
capital, egg prices, projected revenue and expenses over the period for which the contingent consideration is measured, and the
probability assessments with respect to the likelihood of achieving the forecasted projections. See further discussion in
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
Fair value adjustments
Balance, May 31, 2025
$
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
consolidated statements of income.
Note 5 - Inventories
Inventories consisted of the following (in thousands):
May 31, 2025
June 1, 2024
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
We grow and maintain flocks of layers (mature female chickens), pullets (female chickens under 18 weeks of age), and breeders
(male and female chickens used to produce fertile eggs to hatch for egg production flocks). Our total flock at May 31, 2025 and
June 1, 2024, consisted of approximately
layers, respectively.
The Company expensed amortization and mortality associated with the flocks to cost of sales as follows (in thousands):
May 31, 2025
June 1, 2024
June 3, 2023
Amortization
$
$
$
Mortality
Total flock costs charged to cost of sales
$
$
$
Note 6 - Property, Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
May 31, 2025
June 1, 2024
Land and improvements
$
$
Buildings and improvements
Machinery and equipment
Construction-in-progress
Less: accumulated depreciation
$
$
56
Depreciation expense was $
and June 3, 2023, respectively.
Note 7 - Investment in Unconsolidated Entities
As of May 31, 2025 and June 1, 2024, the Company owned
% of Specialty Eggs, LLC (“Specialty Eggs”) and of Southwest
Specialty Eggs, LLC (“Southwest Specialty Eggs”), which are accounted for using the equity method of accounting. Specialty
Eggs owns the Egg-Land’s Best franchise for most of Georgia and South Carolina, as well as a portion of western North Carolina
and eastern Alabama. Southwest Specialty Eggs owns the Egg-Land’s Best franchise for Arizona, southern California and Clark
County, Nevada (including Las Vegas).
Equity method investments are included in “Investments in unconsolidated entities” in the accompanying Consolidated Balance
Sheets and totaled $
Equity in income of unconsolidated entities of $
in the Consolidated Statements of Income for fiscal 2025, 2024, and 2023, respectively.
The following relates to the Company’s transactions with these unconsolidated affiliates (in thousands):
For the fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Sales to unconsolidated entities
$
$
$
Purchases from unconsolidated entities
Distributions from unconsolidated entities
May 31, 2025
June 1, 2024
Accounts receivable from unconsolidated entities
$
$
Accounts payable to unconsolidated entities
Note 8 - Goodwill and Other Intangible Assets
Goodwill and other intangibles consisted of the following (in thousands):
Other Intangibles
Franchise
Customer
Non-compete
Water
Total
Goodwill
rights
relationships
agreements
rights
Trademark
intangibles
Balance June 3, 2023
$
$
$
$
$
$
$
Additions
—
—
50
2,222
—
Amortization
—
(1,627 )
(362 )
(134 )
(50 )
(2,173 )
Balance June 1, 2024
Additions
—
—
Amortization
—
(1,596 )
(353 )
(157 )
(52 )
(2,158 )
Balance May 31, 2025
$
$
$
$
$
$
$
57
For the Other Intangibles listed above, the gross carrying amounts and accumulated amortization are as follows (in thousands):
May 31, 2025
June 1, 2024
Gross carrying
Accumulated
Gross carrying
Accumulated
amount
amortization
amount
amortization
Other intangible assets:
Franchise rights
$
$
(19,093 )
$
$
(17,497 )
Customer relationships
(745 )
(2,292 )
Non-compete agreements
(683 )
(876 )
Water rights *
—
—
Trademark
(17 )
(365 )
Total
$
$
(20,538 )
$
$
(21,030 )
* Water rights are an indefinite life intangible asset.
No significant residual value is estimated for these intangible assets. Aggregate amortization expense for fiscal years 2025, 2024,
and 2023 totaled $
The following table presents the total estimated amortization of intangible assets for the five succeeding years (in thousands):
For fiscal year
Estimated amortization expense
2026
$
2027
2028
2029
2030
Thereafter
Total
$
Note 9 - Employee Benefit Plans
KSOP
The Company has a KSOP plan that covers substantially all of the Company’s employees (the “Plan”). The Company makes
contributions to the Plan at a rate of
% of participants’ eligible compensation, plus an additional amount determined at the
discretion of the Board. Contributions can be made in cash or the Company’s Common Stock, and vest immediately. The
Company’s cash contributions to the Plan were $
respectively. The Company did
t make direct contributions of the Company’s Common Stock in fiscal years 2025, 2024, or
2023. Dividends on the Company’s Common Stock are paid to the Plan in cash. The Plan acquires the Company’s Common
Stock, which is listed on the Nasdaq Global Select Market, by using the dividends and the Company’s cash contributions to
purchase shares in the public markets. The Plan sells Common Stock on the Nasdaq to pay benefits to Plan
participants. Participants may make contributions to the Plan up to the maximum allowed by Internal Revenue Service
regulations. The Company does not match participant contributions.
Deferred Compensation and Other Postretirement Plans
The Company maintains several deferred compensation and other postretirement plans for certain officers and a select group of
management and highly compensated employees of the Company. The liability recorded related to these agreements was $
million and $
current liabilities” and “Other liabilities” in the Company’s Consolidated Balance Sheets. The related expense for these plans
was $
Note 10 - Credit Facility
For fiscal years 2025, 2024 and 2023, interest expense was $
primarily related to commitment fees on the Credit Facility described below.
58
On November 15, 2021, we entered into an Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) with
a five-year term. The Credit Agreement provides for a senior secured revolving credit facility (the “Credit Facility” or “Revolver”)
in an initial aggregate principal amount of up to $
letters of credit and a $
with the consent of BMO Harris Bank N.A. (the “Administrative Agent”), an increase in the Credit Facility in the aggregate up
to $
commitments under the Revolver.
during fiscal 2025 or fiscal 2024. The Company had $
Facility at May 31, 2025.
On May 26, 2023, we entered into the First Amendment (the “First Amendment”) to the Credit Agreement, which replaced the
London Interbank Offered Rate interest rate benchmark with the secured overnight financing rate as administered by the Federal
Reserve Bank of New York or a successor administrator of the secured overnight financing rate (“SOFR”). The interest rate in
connection with loans made under the Credit Facility is based on, at the Company’s election, either the Adjusted Term SOFR
Rate plus the Applicable Margin or the Base Rate plus the Applicable Margin. The “Adjusted Term SOFR” means with respect
to any tenor, the per annum rate equal to the sum of (i) Term SOFR as defined in the Credit Agreement plus (ii)
% (10 basis
points); provided, if Adjusted Term SOFR determined as provided above shall ever be less than the Floor, then Adjusted Term
SOFR shall be deemed to be the Floor. The “Floor” means the rate per annum of interest equal to
%. The “Base Rate” means
a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus
% per annum, (b) the prime rate of interest
established by the Administrative Agent, and (c) the Adjusted Term SOFR for a
one
-month tenor plus
%. The “Applicable
Margin” means
% to
% per annum for Base Rate Loans and
% to
% per annum for SOFR Loans, in each case
depending upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date. The Company will
pay a commitment fee on the unused portion of the Credit Facility payable quarterly from
% to
%, in each case depending
upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date.
The Credit Facility is guaranteed by substantially all the current and future wholly-owned direct and indirect domestic subsidiaries
of the Company (the “Guarantors”), and is secured by a first-priority perfected security interest in substantially all of the
Company’s and the Guarantors’ accounts, payment intangibles, instruments (including promissory notes), chattel paper, inventory
(including farm products) and deposit accounts maintained with the Administrative Agent.
The Credit Agreement contains customary covenants, including restrictions on the incurrence of liens, incurrence of additional
debt, sales of assets and other fundamental corporate changes and investments. The Credit Agreement requires maintenance of
two financial covenants: (i) a maximum Total Funded Debt to Capitalization Ratio tested quarterly of no greater than
%; and
(ii) a requirement to maintain Minimum Tangible Net Worth at all times of $
% of net income (if net income
is positive) less permitted restricted payments for each fiscal quarter after November 27, 2021.
On March 25, 2025, the Company entered into the Second Amendment (the “Second Amendment”) to the Credit Agreement.
Under the Credit Agreement, a Change of Control is an event of default. The Second Amendment amended the definition of
Change of Control to exclude from that definition the conversion (the “Class A Conversion”) of all outstanding shares of the
Company’s Class A Common Stock into Common Stock which occurred on April 14, 2025.
The Second Amendment states that after the Class A Conversion, Change of Control will mean any of the following: (i) the
acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) at any time of beneficial ownership of 30.0% or more of the outstanding capital stock or other equity interests
of the Company on a fully-diluted basis, (ii) the failure of individuals who are members of the Board (or similar governing body)
of the Company on the effective date of the Second Amendment (together with any new or replacement directors whose initial
nomination for election was approved by a majority of the directors who were either directors on the effective date of the Second
Amendment or previously so approved) to constitute a majority of the Board (or similar governing body) of the Company, or (iii)
any “Change of Control” (or words of like import), as defined in any agreement or indenture relating to any issue of Material
Indebtedness of any Loan Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.
Further, under the terms of the Credit Agreement, payment of dividends under the Company’s current dividend policy of one-
third of the Company’s net income, computed in accordance with GAAP, and payment of other dividends or repurchases by the
Company of its capital stock is allowed, as long as after giving effect to such dividend payments or repurchases no default has
occurred and is continuing and the sum of cash and cash equivalents of the Company and its subsidiaries plus availability under
the Credit Facility equals at least $
59
The Credit Agreement also includes customary events of default and customary remedies upon the occurrence of an event of
default, including acceleration of the amounts due under the Credit Facility and foreclosure of the collateral securing the Credit
Facility.
At May 31, 2025, we were in compliance with the covenant requirements of the Credit Agreement.
Note 11 - Equity
As of May 31, 2025, the Company’s authorized shares of capital stock consisted of
million shares of preferred stock, par value $
Prior to the conversion of all of the Company’s outstanding shares of Class A Common Stock into Common Stock (the “Class A
Conversion”), which occurred on April 14, 2025, the Company had
Common Stock, which were similar in most respects except that the Common Stock had
Common Stock had
Common Stock at the option of the holder at any time, and, generally, would automatically convert into Common Stock upon
transfer outside of the control of the family of Fred R. Adams Jr., the Company’s late founder. Prior to the Class A Conversion,
Mr. Adams’ family controlled all of the outstanding shares of Class A Common Stock, all of which were held by DLNL, LLC, a
Delaware limited liability company (“Daughters’ LLC”), and thereby controlled a majority of the Company’s total voting power;
as a result, the Company was a “controlled company” under the rules of The Nasdaq Stock Market.
On February 25, 2025, the Company entered an Agreement Regarding Conversion (the “Conversion Agreement”) by and among
the Company, Daughters’ LLC and its members, namely Fred R. Adams Jr.’s four daughters and Adolphus B. Baker, Board Chair
and Mr. Adams’ son-in-law (the “Members” and together with Daughters’ LLC, the “Stockholder Parties”). The Company’s
entry into the Conversion Agreement was a result of the Members informing the Company that they were potentially interested
in diversifying their respective financial portfolios, including through the potential sale of all or a portion of the shares of the
Company’s Common Stock underlying the Class A Common Stock, as most of them have become more focused on their
individual estate planning efforts and philanthropic endeavors.
The Conversion Agreement provided for the following:
●
The approval by the Board, and approval by Daughters’ LLC by majority written consent, of the Third Amended and
Restated Certificate of Incorporation of the Company (“Third Amended and Restated Charter”), which became effective
upon filing with the Delaware Secretary of State on March 27, 2025.
●
The approval by the Board of the Amended and Restated Bylaws of the Company, which became effective when the
Third Amended and Restated Charter became effective.
●
The agreement by the Stockholder Parties not to convert any shares of Class A Common Stock into shares of Common
Stock prior to the later of (i) the effective date of the Third Amended and Restated Charter or (ii) the date the Company
obtained an amendment to its Credit Agreement such that the Class A Conversion, defined below, would not result in a
“Change of Control” within the meaning of the Credit Agreement. Both conditions were met on March 27, 2025.
●
The agreement by the Stockholder Parties that if Daughters’ LLC converted any Class A Common Stock into Common
Stock, it would simultaneously convert all (but not less than all) Class A Common Stock into Common Stock (the
“Class A Conversion”).
●
After the effective date of the Class A Conversion (the “Class A Conversion Date”), and ending on the 12-month
anniversary of the Class A Conversion Date (or, if earlier, December 31, 2026), certain registration rights of the
Members to offer or sell Common Stock in a registered offering under the Securities Act of 1933, as amended.
●
The adoption by the Stockholder Parties of an amended and restated limited liability company operating agreement of
Daughters’ LLC, which provided for certain changes to permit Daughters’ LLC to take the actions provided for in the
Conversion Agreement.
The Conversion Agreement, including the documents contemplated by that agreement, did not require any Stockholder Party to
convert Class A Common Stock into Common Stock or to sell any Common Stock.
Also on February 25, 2025, the Board approved a new $
authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for an aggregate purchase
price up to $
market conditions and other factors. The actual timing, number and value of shares repurchased under the program will be
determined by management in its discretion and will depend on a number of factors, including, but not limited to, the market
price of the Common Stock and general market and economic conditions.
60
The Class A Conversion occurred on April 14, 2025, at which time the Company was no longer a controlled company under the
rules of The Nasdaq Stock Market. On April 15, 2025, the Company filed a Certificate of Retirement with the Delaware Secretary
of State, retiring the Class A Common Stock. Promptly thereafter, the Company filed the Fourth Amended and Restated
Certificate of Incorporation with the Delaware Secretary of State, which became effective upon filing, reflecting the retirement
of the Class A Common Stock.
On April 15, 2025, in connection with the offer and sale (the “Offering”) of
the Company entered into a stock repurchase agreement with the Members, pursuant to which the Company agreed to repurchase
completion of the Offering, at the per share price paid by the underwriter in the Offering, resulting in a total purchase price of
approximately $
agreement were completed on
. The Company incurred expenses of $
Pursuant to the Conversion Agreement, the Selling Stockholders will reimburse the Company $
As of May 31, 2025, no shares other than the Repurchased Shares had been repurchased under the Company’s share repurchase
program, leaving $
Note 12 - Net Income per Common Share
Basic net income per share attributable to Cal-Maine Foods, Inc. is based on the weighted average Common Stock and Class A
Common Stock outstanding. All shares of Class A Common Stock were converted into Common Stock on April 14, 2025. Diluted
net income per share attributable to Cal-Maine Foods, Inc. is based on weighted-average Common Stock outstanding during the
relevant period adjusted for the dilutive effect of share-based awards.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income
per common share attributable to Cal-Maine Foods, Inc. (amounts in thousands, except per share data):
May 31, 2025
June 1, 2024
June 3, 2023
Numerator
Net income
$
$
$
Less: Net loss attributable to noncontrolling interest
(1,816 )
(1,606 )
(1,292 )
Net income attributable to Cal-Maine Foods, Inc.
$
$
$
Denominator
Weighted-average common shares outstanding, basic
Effect of dilutive securities of restricted shares
Weighted-average common shares outstanding, diluted
Net income per common share attributable to Cal-Maine Foods, Inc.
Basic
$
$
$
Diluted
$
$
$
Note 13 – Stock-Based Compensation
The Company’s stock-based compensation plan, the Amended and Restated Cal-Maine Foods, Inc. 2012 Omnibus Long-Term
Incentive Plan (the “LTIP Plan”), provides for the granting of equity-based awards such as restricted stock, performance stock
units and stock options. Awards may be granted under the LTIP Plan to any employee, any non-employee member of the Board,
and any consultant who is a natural person and provides services to us or one of our subsidiaries (except for incentive stock
options, which may be granted only to our employees). The maximum number of shares of Common Stock available for awards
under the LTIP Plan is
authorized but unissued shares or treasury shares. Common Stock issued from treasury shares under the plan was
61
Restricted Stock
Restricted stock outstanding under the LTIP Plan vests three years from the grant date, or upon death or disability, change in
control, or retirement (subject to certain requirements). The restricted stock contains no other service or performance conditions.
Restricted stock is awarded in the name of the recipient and, except for the right of disposal, constitutes issued and outstanding
shares of the Company’s Common Stock for all corporate purposes during the period of restriction including the right to receive
dividends. Compensation expense is a fixed amount based on the grant date closing price and is amortized on a straight-line basis
over the vesting period. Forfeitures are recognized as they occur.
Total stock-based compensation expense was $
respectively.
Our unrecognized compensation expense as a result of non-vested shares was $
June 1, 2024. The unrecognized compensation expense will be amortized to stock compensation expense over a period of 2.1
years.
A summary of our equity award activity and related information for our restricted stock is as follows:
Number of
Shares
Weighted Average Grant
Date Fair Value
Outstanding, June 3, 2023
$
Granted
Vested
(101,660 )
Forfeited
(1,329 )
Outstanding, June 1, 2024
$
Granted
Vested
(108,058 )
Forfeited
(4,879 )
Outstanding, May 31, 2025
$
Note 14 - Income Taxes
Income tax expense consisted of the following:
Fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Current:
Federal
$
$
$
State
Deferred:
Federal
(7,371 )
State
(1,133 )
(2,301 )
(9,672 )
$
$
$
62
Significant components of the Company’s deferred tax liabilities and assets were as follows:
May 31, 2025
June 1, 2024
Deferred tax liabilities:
Property, plant and equipment
$
$
Inventories
Investment in affiliates
Other
Total deferred tax liabilities
Deferred tax assets:
Accrued expenses
State operating loss carryforwards
Other comprehensive income
Other
Total deferred tax assets
Net deferred tax liabilities
$
$
The differences between income tax expense at the Company’s effective income tax rate and income tax expense at the statutory
federal income tax rate were as follows:
Fiscal year end
May 31, 2025
June 1, 2024
June 3, 2023
Statutory federal income tax
$
$
$
State income taxes, net
Other, net
(262 )
$
$
$
As of May 31, 2025, we had
penalties related to uncertain tax positions.
We are subject to income tax in many jurisdictions within the U.S. We are currently not under audit by the Internal Revenue
Service or by any state and local tax authorities. Tax periods for all years beginning with fiscal year 2020 remain open to
examination by federal and state taxing jurisdictions to which we are subject.
Note 15 – Segment Reporting
The Company has
distribution of shell eggs and egg products. The Company is managed on a consolidated basis.
The Company’s operating segment is determined on the basis of our organizational structure and information that is regularly
reviewed by our Chief Operating Decision Maker (“CODM”). The Company’s CODM is Sherman Miller, President and Chief
Executive Officer. The CODM reviews net income, which is reported on the Consolidated Statements of Income, to assess the
performance and make decisions on how to allocate resources to the segment. The CODM utilizes consolidated expense
information regularly provided in the CODM package in order to assist with assessing performance and deciding how to allocate
resources, which align with the consolidated expense categories as disclosed on the face of the Consolidated Statements of
Income. The measure of segment assets is reported on the Consolidated Balance Sheet as Total assets.
Revenue primarily derives from the sales of shell eggs and egg products throughout the Unites States. The Company’s shell egg
product offerings include specialty and conventional shell eggs. Specialty shell eggs include cage-free, organic, brown, free-
range, pasture-raised and nutritionally enhanced eggs. Conventional shell eggs sales represent all other shell egg sales not sold as
specialty shell eggs. The Company’s egg products offerings include liquid and frozen egg products, as well as ready-to-eat
products such as hard-cooked eggs, egg wraps, protein pancakes, crepes and wrap-ups. Other sales represent feed sales,
miscellaneous byproducts and resale products.
63
The following table provides revenue disaggregated by product category (in thousands):
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Conventional shell egg sales
$
$
$
Specialty shell egg sales
Egg products and prepared foods
Other
$
$
$
The following table provides revenue disaggregated by sales channel (in thousands):
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Retail
$
$
$
Foodservice
Other
$
$
$
Retail customers include primarily national and regional grocery store chains, club stores, and companies servicing independent
supermarkets in the U.S. Foodservice customers include primarily companies that sell food products and related items to
restaurants, healthcare and education facilities and hotels.
Our largest customer, Walmart Inc. (including Sam’s Club) accounted for
%,
% and
% of net sales dollars for fiscal
2025, 2024, and 2023, respectively.
Note 16 - Commitments and Contingencies
Civil Investigative Demand
In March 2025, the Company received a Civil Investigative Demand (“CID”) from the Department of Justice (“DOJ”) in
connection with an antitrust investigation to determine whether there is, has been or may be a violation of the antitrust laws by
anticompetitive conduct by and among egg producers. The Company is complying with the CID and cooperating with the
investigation. Management cannot predict the eventual scope, duration or outcome of these investigations and is unable to
estimate the amount or range of potential losses, if any, at this time.
64
State of Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State of
Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC, Cause No. 2020-25427, in the District Court
of Harris County, Texas. The State of Texas (the “State”) asserted claims based on the Company’s and WCF’s alleged violation
of the Texas Deceptive Trade Practices—Consumer Protection Act, Tex. Bus. & Com. Code §§ 17.41-17.63 (“DTPA”). The
State claimed that the Company and WCF offered shell eggs at excessive or exorbitant prices during the COVID-19 state of
emergency and made misleading statements about shell egg prices. The State sought temporary and permanent injunctions against
the Company and WCF to prevent further alleged violations of the DTPA, along with over $
2020, the court granted the defendants’ motion to dismiss the State’s original petition with prejudice. On September 11, 2020,
the State filed a notice of appeal, which was assigned to the Texas Court of Appeals for the First District. On August 16, 2022,
the appeals court reversed and remanded the case back to the trial court for further proceedings. On October 31, 2022, the
Company and WCF appealed the First District Court’s decision to the Supreme Court of Texas. On September 29, 2023, the
Supreme Court of Texas denied the Company’s Petition for Review and remanded to the trial court for further proceedings. The
district court entered an order scheduling pre-trial proceedings and a pre-trial conference for August 11, 2025. On November 30,
2024, the State filed an amended petition, primarily to address a procedural deficiency that required the State to generally plead
it was seeking monetary relief over $
proceedings are progressing in accordance with the court’s schedule. Management believes the risk of material loss related to this
matter to be remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
On September 25, 2008, the Company was named as one of several defendants in numerous antitrust cases involving the U.S.
shell egg industry. The Company settled all of these cases, except for the claims of certain plaintiffs who sought substantial
damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These remaining plaintiffs are Kraft Food
Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and, until a subsequent settlement was
reached as described below, The Kellogg Company.
On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in the
United States District Court for the Eastern District of Pennsylvania, In re Processed Egg Products Antitrust Litigation, MDL No.
2002, to the United States District Court for the Northern District of Illinois, Kraft Foods Global, Inc. et al. v. United Egg
Producers, Inc. et al., Case No. 1:11-cv-8808, for trial. The Egg Products Plaintiffs alleged that the Company and other defendants
violated Section 1 of the Sherman Act, 15. U.S.C. § 1, by agreeing to limit the production of eggs and thereby illegally to raise
the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs attacked certain features of the
United Egg Producers animal-welfare guidelines and program used by the Company and many other egg producers.
On October 24, 2019, the Company entered into a confidential settlement agreement with The Kellogg Company dismissing all
claims against the Company for an amount that did not have a material impact on the Company’s financial condition or results
of operations. On November 11, 2019, a stipulation for dismissal was filed with the court, and on March 28, 2022, the court
dismissed the Company with prejudice.
The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the Egg Products
Plaintiffs $
defendants, jointly and severally, totaling $
for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment. On December 13, 2024, the court
granted defendants’ November 20, 2024 motion to stay enforcement of the judgment and entered an agreed order requiring the
defendants to post security during post-judgment proceedings and appeal, and stayed proceedings to enforce the judgment until
the disposition of the post-judgment motions and ultimate appeals. On December 17, 2024, the Company posted a bond in the
approximate amount of $
court’s decision. Another defendant posted a bond for the remaining amount. The Company intends to continue to vigorously
defend the claims asserted by the Egg Products Plaintiffs.
65
If the jury’s decision is ultimately upheld, the Company would be jointly and severally liable with other defendants for treble
damages, or $
Plaintiffs’ reasonable attorneys’ fees. During our second fiscal quarter of 2024, we recorded an accrued expense of $
in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Income and classified
as other noncurrent liabilities in the Company’s Condensed Consolidated Balance Sheets. Although less than the bond posted by
the Company, the accrual represents our estimate of the Company’s proportional share of the reasonably possible ultimate
damages award, excluding the Egg Product Plaintiffs’ attorneys’ fees that we believe would be approximately offset by the credits
noted above. We have entered into a judgment allocation and joint defense agreement with the other defendants remaining in the
case. Our accrual may change in the future to the extent we are successful in further proceedings in the litigation.
State of Oklahoma Watershed Pollution Litigation
On June 18, 2005, the State of Oklahoma filed suit, in the United States District Court for the Northern District of Oklahoma,
against Cal-Maine Foods, Inc. and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc., Peterson Farms, Inc. and
Simmons Foods, Inc., and certain of their affiliates. The State of Oklahoma claims that through the disposal of chicken litter the
defendants polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint sought
injunctive relief and monetary damages, but the claim for monetary damages was dismissed by the court. Cal-Maine Foods, Inc.
discontinued operations in the watershed in or around 2005. Since the litigation began, Cal-Maine Foods, Inc. purchased
%
of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg operation within the Illinois
River Watershed. Benton County Foods, LLC is not a defendant in the litigation. We also have a number of small contract
producers that operate in the area.
The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered
findings of fact and conclusions of law in favor of the State of Oklahoma, but no penalties were assessed. The court found the
defendants liable for state law nuisance, federal common law nuisance, and state law trespass. The court also found the producers
vicariously liable for the actions of their contract producers. On June 12, 2023, the court ordered the parties to mediate before
retired Tenth Circuit Chief Judge Deanell Reece Tacha, but the mediation was unsuccessful. On June 26, 2024, the district court
denied defendants’ motion to dismiss the case. On September 13, 2024, a status hearing was held and the court scheduled an
evidentiary hearing for December 3, 2024, to determine whether any legal remedy is available based on the now 14 year old
record and changed circumstances of the Illinois River watershed. On June 17, 2025, the court entered an opinion and order that
found that the State satisfied its burden to show that conditions in the Illinois River watershed have not materially changed since
the original trial and the case in not moot. The court instructed the parties to submit proposed forms of final judgment. While
management believes there is a reasonable possibility of a material loss from the case, at the present time, it is not possible to
estimate the amount of monetary exposure, if any, to the Company due to a range of factors, including the following, among
others: uncertainties inherent in any assessment of potential costs associated with injunctive relief or other penalties based on a
decision in a case tried over 14 years ago based on environmental conditions that existed at the time, the lack of guidance from
the court as to what might be considered appropriate remedies, the ongoing litigation with the State of Oklahoma, and uncertainty
regarding what our proportionate share of any remedy would be, although we believe that our share compared to the other
defendants is small.
Other Matters
In addition to the above, the Company is involved in various other claims and litigation incidental to its business. Although the
outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that the
final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
Note 17 – Subsequent Events
Effective June 2, 2025, the Company completed its previously announced acquisition of Echo Lake Foods, LLC (formerly Echo
Lake Foods, Inc.) and certain related companies (collectively “Echo Lake Foods”). Echo Lake Foods is based in Burlington,
Wisconsin and produces, packages, markets and distributes prepared foods, including waffles, pancakes, scrambled eggs, frozen
cooked omelets, egg patties, toast and diced eggs. The purchase price was approximately $
assets resulting from the transaction, and was funded with available cash on hand.
The Company has not included certain disclosures due to the timing of the transaction relative to the date of the report containing
these Financial Statements and because the initial accounting for the business combination is incomplete.
66
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by
us in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded,
processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and
communicated to management, including our principal executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required disclosure. Based on an evaluation of our disclosure controls
and procedures conducted by our Chief Executive Officer and Chief Financial Officer, together with other financial officers, such
officers concluded that our disclosure controls and procedures were effective as of May 31, 2025 at the reasonable assurance
level.
Internal Control Over Financial Reporting
(a) Management’s Report on Internal Control Over Financial Reporting
The following sets forth, in accordance with Section 404(a) of the Sarbanes-Oxley Act of 2002 and Item 308 of the Securities
and Exchange Commission’s Regulation S-K, the report of management on our internal control over financial reporting.
1.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
“Internal control over financial reporting” is a process designed by, or under the supervision of, our Chief Executive
Officer and Chief Financial Officer, together with other financial officers, and effected by the Board, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:
●
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of our assets;
●
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of our management and directors; and
●
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
2. Our management, in accordance with Rule 13a-15(c) under the Exchange Act and with the participation of our
Chief Executive Officer and Chief Financial Officer, together with other financial officers, evaluated the
effectiveness of our internal control over financial reporting as of May 31, 2025. The framework on which
management’s evaluation of our internal control over financial reporting is based is the “Internal Control –
Integrated Framework”
published in 2013 by the Committee of Sponsoring Organizations (“COSO”) of the
Treadway Commission.
3. Management has determined that our internal control over financial reporting as of May 31, 2025 is effective. It is
noted that internal control over financial reporting cannot provide absolute assurance of achieving financial
reporting objectives, but rather reasonable assurance of achieving such objectives.
4. The attestation report of FROST, PLLC on our internal control over financial reporting, which includes that firm’s
opinion on the effectiveness of our internal control over financial reporting, is set forth below.
(b) Attestation Report of the Registrant’s Public Accounting Firm
67
Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting
Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Ridgeland, Mississippi
Opinion on Internal Control Over Financial Reporting
We have audited Cal-Maine Foods, Inc. and Subsidiaries’ internal control over financial reporting as of May 31, 2025,
based on criteria established in
2013 Internal Control – Integrated Framework
Organizations of the Treadway Commission (“COSO”). In our opinion, Cal-Maine Foods, Inc. and Subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of May 31, 2025, based on criteria established in
2013
Internal Control – Integrated Framework
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated balance sheets and the related consolidated statements of income, comprehensive income,
stockholders’ equity, and cash flows of Cal-Maine Foods, Inc. and Subsidiaries and our report dated July 22, 2025 expressed an
unqualified opinion.
Basis for Opinion
Cal-Maine Foods, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over
financial reporting, and for their assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control Over Financial Reporting in Item 9A. Our responsibility is to express
an opinion on the entities’ internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to Cal-Maine Foods, Inc. and Subsidiaries in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCOAB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures
as we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America. An entities’ internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the entities; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and expenditures of the entities are being made only in
accordance with authorizations of management and directors of the entities; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the entities’ assets that could have a material
effect on the consolidated financial statements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
July 22, 2025
68
(c) Changes in Internal Control Over Financial Reporting
In connection with its evaluation of the effectiveness, as of May 31, 2025, of our internal control over financial reporting,
management determined that there was no change in our internal control over financial reporting that occurred during the fourth
quarter ended May 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
ITEM 9B. OTHER INFORMATION
During our fourth quarter of fiscal 2025, no director or officer of the Company
arrangement or
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth below, the information concerning directors, executive officers and corporate governance required by Item 10
is incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.
We have adopted a Code of Ethics and Business Conduct that applies to our directors, officers and employees, including the chief
executive officer and principal financial and accounting officers of the Company. We will provide a copy of the code free of
charge to any person that requests a copy by writing to:
Cal-Maine Foods, Inc.
1052 Highland Colony Pkwy, Suite 200
Ridgeland, MS 39157
Attn.: Investor Relations
Requests can be made by phone at (601) 948-6813.
A copy is also available at our website www.calmainefoods.com under the heading “Investor Relations – Corporate
Governance.” We intend to disclose any amendments to, or waivers from, the Code of Ethics and Business Conduct on our
website promptly following the date of any such amendment or waiver. Information contained on our website is not a part of this
report.
ITEM 11. EXECUTIVE COMPENSATION
The information concerning executive compensation required by Item 11 is incorporated by reference from our definitive proxy
statement which is to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with our 2025
Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information concerning security ownership of certain beneficial owners and management and related stockholder matters
required by Item 12 is incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation
14A under the Securities Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information concerning certain relationships and related transactions, and director independence required by Item 13 is
incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.
69
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information concerning principal accountant fees and services required by Item 14 is incorporated by reference from our
definitive proxy statement which is to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in
connection with our 2025 Annual Meeting of Stockholders.
PART IV.
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The following consolidated financial statements and notes thereto of Cal-Maine Foods, Inc. and its subsidiaries are included in
Item 8 and are filed herewith:
)
(a)(2) Financial Statement Schedule
All schedules are omitted either because they are not applicable or required, or because the required information is included in
the financial statements or notes thereto.
(a)(3) Exhibits Required by Item 601 of Regulation S-K
See Part (b) of this Item 15.
70
(b) Exhibits Required by Item 601 of Regulation S-K
The following exhibits are filed herewith or incorporated by reference:
Exhibit
Number
Exhibit
2.1
3.1
3.2
4.1**
10.1
10.2
10.3
10.4
Agreement Regarding Conversion dated February 25, 2025 by and among Cal-Maine Foods, Inc. DLNL, LLC,
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
Form of Restricted Stock Agreement for Amended and Restated Cal-Maine Foods, Inc. 2012 Omnibus Long-
10.11*
10.12*
10.13*
10.14*
10.15*
19.1
21**
23.1**
31.1**
31.2**
32***
97
71
101.SCH***+
Inline XBRL Taxonomy Extension Schema Document
101.CAL***+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE***+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Management contract or compensatory plan or arrangement
** Filed herewith as an Exhibit
*** Furnished herewith as an Exhibit
+ Submitted electronically with this Annual Report on Form 10-K
(c) Financial Statement Schedules Required by Regulation S-X
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are inapplicable and therefore have been omitted.
ITEM 16. FORM 10-K SUMMARY
None.
72
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized, in Ridgeland, Mississippi.
CAL-MAINE FOODS, INC.
/s/ Sherman L. Miller
Sherman L. Miller
President and Chief Executive Officer
Date:
July 22, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Sherman L. Miller
President, Chief Executive Officer
Sherman L. Miller
and Director
July 22, 2025
(Principal Executive Officer)
/s/ Max P. Bowman
Vice President, Treasurer, Secretary,
Max P. Bowman
Chief Financial Officer and Director
July 22, 2025
(Principal Financial Officer)
/s/ Matthew S. Glover
Vice President, Accounting
Matthew S. Glover
(Principal Accounting Officer)
July 22, 2025
/s/ Adolphus B. Baker
Chairman of the Board and Director
July 22, 2025
Adolphus B. Baker
/s/ Letitia C. Hughes
Director
July 22, 2025
Letitia C. Hughes
/s/ James E. Poole
Director
July 22, 2025
James E. Poole
/s/ Steve W. Sanders
Director
July 22, 2025
Steve W. Sanders
/s/ Camille S. Young
Director
July 22, 2025
Camille S. Young