1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM

10-Q

☑

 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

September 2, 2023

or

☐

 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________

Commission File Number: 

001-38695

CAL-MAINE FOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware

64-0500378

(State or other jurisdiction of incorporation or organization)

(I.R.S Employer Identification No.)

1052 Highland Colony Pkwy

,

Suite 200

,

Ridgeland

,

Mississippi

39157

(Address of principal executive offices) (Zip Code)

(

601

)

948-6813

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

CALM

The

NASDAQ

 Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to

file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

 No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit such files).

Yes

☑

 No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller

reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

☑

Accelerated filer 

☐

Non – Accelerated filer 

☐

Smaller reporting company 

☐

Emerging growth company 

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards provided pursuant to

Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

 No

☑

There were

44,182,613

 shares of Common Stock, $0.01 par value, and

4,800,000

 shares of Class A Common Stock, $0.01 par

value, outstanding as of October 3, 2023.

2

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Item 2.

Item 3.

Item 4.

Part

II.

Other Information

Item 1.

Item 1A.

Item 2.

, and Issuer Purchases of

Equity Securities

Item 6.

3

PART I. FINANCIAL

INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except for par value amounts)

(Unaudited)

September 2, 2023

June 3, 2023

Assets

Current assets:

Cash and cash equivalents

$

360,343

$

292,824

Investment securities available-for-sale

249,619

355,090

Trade and other receivables, net

125,363

120,247

Income tax receivable

33,787

66,966

Inventories

280,801

284,418

Prepaid expenses and other current assets

14,145

5,380

Total current assets

1,064,058

1,124,925

Property, plant & equipment, net

752,580

744,540

Investments in unconsolidated entities

13,978

14,449

Goodwill

44,006

44,006

Intangible assets, net

15,347

15,897

Other long-term assets

10,398

10,708

Total Assets

$

1,900,367

$

1,954,525

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

$

117,800

$

137,313

Accrued income taxes payable

8,288

8,288

Dividends payable

294

37,130

Total current liabilities

126,382

182,731

Other noncurrent liabilities

9,930

9,999

Deferred income taxes, net

152,725

152,212

Total liabilities

289,037

344,942

Commitments and contingencies - see Note 9

—

—

Stockholders’ equity:

Common stock ($

0.01

 par value):

Common stock - authorized

120,000

 shares, issued

70,261

 shares

703

703

Class A convertible common stock - authorized and issued

4,800

 shares

48

48

Paid-in capital

73,153

72,112

Retained earnings

1,571,744

1,571,112

Accumulated other comprehensive loss, net of tax

(2,291)

(2,886)

Common stock in treasury at cost –

26,078

 shares at September 2, 2023 and

26,077

shares at June 3, 2023

(30,014)

(30,008)

Total Cal-Maine Foods, Inc. stockholders’ equity

1,613,343

1,611,081

Noncontrolling interest in consolidated entity

(2,013)

(1,498)

Total stockholders’ equity

1,611,330

1,609,583

Total Liabilities and Stockholders’ Equity

$

1,900,367

$

1,954,525

See Notes to Condensed Consolidated Financial Statements.

4

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Net sales

$

459,344

$

658,344

Cost of sales

413,911

440,854

Gross profit

45,433

217,490

Selling, general and administrative

52,246

53,607

(Gain) loss on disposal of fixed assets

(56)

33

Operating income (loss)

(6,757)

163,850

Other income (expense):

Interest income, net

7,346

903

Royalty income

349

428

Equity income (loss) of unconsolidated entities

(470)

144

Other, net

265

155

Total other income, net

7,490

1,630

Income before income taxes

733

165,480

Income tax expense

322

40,346

Net income

411

125,134

Less: Loss attributable to noncontrolling interest

(515)

(153)

Net income attributable to Cal-Maine Foods, Inc.

$

926

$

125,287

Net income per common share:

Basic

$

0.02

$

2.58

Diluted

$

0.02

$

2.57

Weighted average shares outstanding:

Basic

48,690

48,623

Diluted

48,840

48,811

See Notes to Condensed Consolidated Financial Statements.

5

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of

Comprehensive Income

(In thousands)

(Unaudited)

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Net income

$

411

 $ 

125,134

Other comprehensive income (loss), before tax:

Unrealized holding gain (loss) on available-for-sale securities, net of reclassification

adjustments

786

(997)

Income tax benefit (expense) related to items of other comprehensive income

(191)

243

Other comprehensive income (loss), net of tax

595

(754)

Comprehensive income

1,006

124,380

Less: Comprehensive loss attributable to the noncontrolling interest

(515)

(153)

Comprehensive income attributable to Cal-Maine Foods, Inc.

$

1,521

$

124,533

See Notes to Condensed Consolidated Financial Statements.

6

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Cash flows from operating activities:

Net income

$

411

$

125,134

Depreciation and amortization

19,340

17,312

Deferred income taxes

322

(1,324)

Other adjustments, net

3,612

31,690

Net cash provided by operations

23,685

172,812

Cash flows from investing activities:

Purchases of investment securities

(28,296)

(51,834)

Sales and maturities of investment securities

135,768

20,296

Purchases of property, plant and equipment

(26,666)

(27,662)

Net proceeds from disposal of property, plant and equipment

74

78

Net cash provided by (used in) investing activities

80,880

(59,122)

Cash flows from financing activities:

Payments of dividends

(36,983)

(36,653)

Purchase of common stock by treasury

(5)

(45)

Principal payments on finance lease

(58)

(55)

Net cash used in financing activities

(37,046)

(36,753)

Net change in cash and cash equivalents

67,519

76,937

Cash and cash equivalents at beginning of period

292,824

59,084

Cash and cash equivalents at end of period

$

360,343

$

136,021

See Notes to Condensed Consolidated Financial Statements.

7

Cal-Maine Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of Cal-Maine Foods, Inc. and its subsidiaries (the “Company,”

“we,” “us,” “our”) have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and

in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial

reporting and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 3, 2023 (the

“2023 Annual Report”). These statements reflect all adjustments that are, in the opinion of management, necessary to a fair

statement of the results for the interim periods presented and, in the opinion of management, consist of adjustments of a normal

recurring nature. Operating results for the interim periods are not necessarily indicative of operating results for the entire fiscal

year.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to May 31. Each of the three-month periods ended on September 2,

2023 and August 27, 2022 included

13 weeks

.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP 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.

Investment Securities

The Company has determined that its debt securities are available-for-sale investments. We classify these securities 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. 

Investments in mutual funds are recorded at fair value and are classified as “Other long-term assets” in the Company’s

Condensed Consolidated Balance Sheets. Unrealized gains and losses for equity securities are recorded in other income

(expenses) as Other, net in the Company’s Condensed Consolidated Statements of Income.

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 (expenses) as Other, net in the Company’s Condensed Consolidated

Statements of Income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.

Trade Receivables 

Trade receivables are stated at their carrying values, which include a reserve for credit losses. As of September 2, 2023 and

June 3, 2023, reserves for credit losses were $

503

 thousand and $

579

 thousand, respectively. The Company extends credit to

customers based 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 as needed for economic and other forward-looking factors.

Dividends Payable 

We accrue dividends at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors.

The Company pays a dividend to shareholders of its Common Stock and Class A Common Stock on a quarterly basis for each

8

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 (

1/3

) of such quarterly income. Dividends are paid to shareholders 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 shareholders 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 of

Directors.

New Accounting Pronouncements and Policies

No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our

Consolidated Financial Statements.

Note 2 - Investment

Securities

The following represents the Company’s investment securities as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

Amortized

Cost

Unrealized 

Gains

Unrealized

Losses

Estimated 

Fair Value

Municipal bonds

$

7,915

$

—

$

150

$

7,765

Commercial paper

8,913

—

15

8,898

Corporate bonds

128,031

—

1,090

126,941

Certificates of deposits

1,125

—

8

1,117

US government and agency obligations

94,584

—

320

94,264

Asset backed securities

10,683

—

49

10,634

Total current investment securities

$

251,251

$

—

$

1,632

$

249,619

Mutual funds

$

2,181

$

—

$

53

$

2,128

Total noncurrent investment securities

$

2,181

$

—

$

53

$

2,128

June 3, 2023

Amortized 

Cost

Unrealized 

Gains

Unrealized

Losses

Estimated 

Fair Value

Municipal bonds

$

16,571

$

—

$

275

$

16,296

Commercial paper

56,486

—

77

56,409

Corporate bonds

139,979

—

1,402

138,577

Certificates of deposits

675

—

—

675

US government and agency obligations

101,240

—

471

100,769

Asset backed securities

13,459

—

151

13,308

Treasury bills

29,069

—

13

29,056

Total current investment securities

$

357,479

$

—

$

2,389

$

355,090

Mutual funds

$

2,172

$

—

$

91

$

2,081

Total noncurrent investment securities

$

2,172

$

—

$

91

$

2,081

Available-for-sale

Proceeds from sales and maturities of investment securities available-for-sale were $

135.8

 million and $

20.3

 million during the

thirteen weeks ended September 2, 2023 and August 27, 2022, respectively. Gross realized gains for the thirteen weeks ended

September 2, 2023 and August 27, 2022 were $

2

 thousand. Gross realized losses for the thirteen weeks ended September 2,

2023 and August 27, 2022 were $

8

 thousand and $

27

 thousand, respectively. There were

no

 allowances for credit losses at

September 2, 2023 and June 3, 2023.

9

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 current investments at September 2, 2023 are as follows (in thousands):

Estimated Fair Value

Within one year

$

175,963

1-5 years

73,656

Total

$

249,619

Noncurrent 

There were

no

 sales of noncurrent investment securities during the thirteen weeks ended September 2, 2023 and August 27,

2022.

Note 3 - Fair Value Measurements

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.

•

Level 1

 - Quoted prices in active markets for identical assets or liabilities

•

Level 2

 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either

directly or indirectly, including:

◦

Quoted prices for similar assets or liabilities in active markets

◦

Quoted prices for identical or similar assets in non-active markets

◦

Inputs other than quoted prices that are observable for the asset or liability

◦

Inputs derived principally from or corroborated by other observable market data

•

Level 3

 - Unobservable inputs for the asset or liability that are supported by little or no market activity and that are

significant to the fair value of the assets or liabilities

The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:

Cash and cash equivalents, accounts receivable, and accounts payable:

 The carrying amount approximates fair value due to the

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 financial assets and

liabilities measured at fair value on a recurring basis as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

$

—

$

7,765

$

—

$

7,765

Commercial paper

—

8,898

—

8,898

Corporate bonds

—

126,941

—

126,941

Certificates of deposits

—

1,117

—

1,117

US government and agency obligations

—

94,264

—

94,264

Asset backed securities

—

10,634

—

10,634

Mutual funds

2,128

—

—

2,128

Total assets measured at fair value

$

2,128

$

249,619

$

—

$

251,747

10

June 3, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

$

—

$

16,296

$

—

$

16,296

Commercial paper

—

56,409

—

56,409

Corporate bonds

—

138,577

—

138,577

Certificates of deposits

—

675

—

675

US government and agency obligations

—

100,769

—

100,769

Asset backed securities

—

13,308

—

13,308

Treasury bills

—

29,056

—

29,056

Mutual funds

2,081

—

—

2,081

Total assets measured at fair value

$

2,081

$

355,090

$

—

$

357,171

Investment securities – available-for-sale classified as Level 2 consist of securities with maturities of three months or longer

when purchased. We classified these securities as current because amounts invested are readily available for current operations.

Observable inputs for these securities are yields, credit risks, default rates, and volatility.

Note 4 - Inventories

Inventories consisted of the following as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

June 3, 2023

Flocks, net of amortization

$

165,138

$

164,540

Eggs and egg products

27,604

28,318

Feed and supplies

88,059

91,560

$

280,801

$

284,418

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

September 2, 2023 and June 3, 2023 consisted of approximately

10.0

 million and

10.8

 million pullets and breeders and

41.9

million and

41.2

 million layers, respectively.

Note 5 - Equity

The following reflects equity activity for the thirteen weeks ended September 2, 2023 and August 27, 2022 (in thousands):

Thirteen Weeks Ended September 2, 2023

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Amount

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at June 3,

2023

$

703

$

48

$

(30,008)

$

72,112

$

(2,886)

$

1,571,112

$

(1,498)

$

1,609,583

Other comprehensive

income, net of tax

—

—

—

—

595

—

—

595

Stock compensation

plan transactions

—

—

(6)

1,041

—

—

—

1,035

Dividends ($

0.006

per share)

Common

—

—

—

—

—

(265)

—

(265)

Class A common

—

—

—

—

—

(29)

—

(29)

Net income (loss)

—

—

—

—

—

926

(515)

411

Balance at

September 2, 2023

$

703

$

48

$

(30,014)

$

73,153

$

(2,291)

$

1,571,744

$

(2,013)

$

1,611,330

11

Thirteen Weeks Ended August 27, 2022

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Amount

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at May 28,

2022

$

703

$

48

$

(28,447)

$

67,989

$

(1,596)

$

1,065,854

$

(206)

$

1,104,345

Other comprehensive

loss, net of tax

—

—

—

—

(754)

—

—

(754)

Stock compensation

plan transactions

—

—

(48)

1,028

—

—

—

980

Dividends ($

0.853

per share)

Common

—

—

—

—

—

(37,648)

—

(37,648)

Class A common

—

—

—

—

—

(4,094)

—

(4,094)

Net income (loss)

—

—

—

—

—

125,287

(153)

125,134

Balance at August

27, 2022

$

703

$

48

$

(28,495)

$

69,017

$

(2,350)

$

1,149,399

$

(359)

$

1,187,963

Note 6 - Net Income per Common Share

Basic net income per share is based on the weighted average Common Stock and Class A Common Stock outstanding. Diluted

net income per share is based on weighted-average common shares 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 (amounts in thousands, except per share data):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Numerator

Net income

$

411

$

125,134

Less: Loss attributable to noncontrolling interest

(515)

(153)

Net income attributable to Cal-Maine Foods, Inc.

$

926

$

125,287

Denominator

Weighted-average common shares outstanding, basic

48,690

48,623

Effect of dilutive restricted shares

150

188

Weighted-average common shares outstanding, diluted

48,840

48,811

Net income per common share attributable to Cal-Maine Foods, Inc.

Basic

$

0.02

$

2.58

Diluted

$

0.02

$

2.57

Note 7 - Revenue from Contracts with Customers

Satisfaction of Performance Obligation

The vast majority of the Company’s revenue is derived from agreements with customers based on the customer placing an order

for products. Pricing for the most part is determined when the Company and the customer agree upon the specific order, which

establishes the contract for that order.

Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for the goods. Our

shell eggs are sold at prices related to independently quoted wholesale market prices or formulas related to our costs of

12

production. The Company’s sales predominantly contain a single performance obligation. We recognize revenue upon

satisfaction of the performance obligation with the customer which typically occurs within days of the Company and the

customer agreeing upon the order.

Returns and Refunds

Some of our contracts include a guaranteed sale clause, pursuant to which we credit the customer’s account for product that the

customer is unable to sell before expiration. The Company records an allowance for expected customer returns using historical

return data and comparing to current period sales and accounts receivable. The allowance is recorded as a reduction of sales in

the same period the revenue is recognized.

Sales Incentives Provided to Customers

The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current

discount offers (e.g., percentage discounts off current purchases), inducement offers (e.g., offers for future discounts subject to

a minimum current purchase), and other similar offers. Current discount offers, when accepted by customers, are treated as a

reduction to the sales price of the related transaction, while inducement offers, when accepted by customers, are treated as a

reduction to sales price based on estimated future redemption rates. Redemption rates are estimated using the Company’s

historical experience for similar inducement offers. Current discount and inducement offers are presented as a net amount in

‘‘Net sales.’’

Disaggregation of Revenue

The following table provides revenue disaggregated by product category (in thousands):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Conventional shell egg sales

$

225,280

$

425,589

Specialty shell egg sales

208,681

200,820

Egg products

22,223

27,640

Other

3,160

4,295

$

459,344

$

658,344

Contract Costs

The Company can incur costs to obtain or fulfill a contract with a customer. If the amortization period of these costs is less than

one year, they are expensed as incurred. When the amortization period is greater than one year, a contract asset is recognized

and is amortized over the contract life as a reduction in net sales. As of September 2, 2023 and June 3, 2023, the balance for

contract assets was immaterial.

Contract Balances

The Company receives payment from customers based on specified terms that are generally less than 30 days from delivery.

There are rarely contract assets or liabilities related to performance under the contract.

Note 8 - Stock Based Compensation

Total stock-based compensation expense was $

1.0

 million for the thirteen weeks ended September 2, 2023 and August 27,

2022.

Unrecognized compensation expense as a result of non-vested shares of restricted stock outstanding under the Amended and

Restated 2012 Omnibus Long-Term Incentive Plan at September 2, 2023 of $

6.1

 million will be recorded over a weighted

average period of

1.9

 years. Refer to Part II Item 8, Notes to Consolidated Financial Statements and Supplementary Data, Note

14 - Stock Compensation Plans in our 2023 Annual Report for further information on our stock compensation plans.

13

The Company’s restricted share activity for the thirteen weeks ended September 2, 2023 follows:

Number of

Shares

Weighted

Average Grant

Date Fair Value

Outstanding, June 3, 2023

294,140

$

43.72

Vested

(305)

37.70

Forfeited

(1,329)

44.68

Outstanding, September 2, 2023

292,506

$

43.72

Note 9 - Commitments and Contingencies

LEGAL PROCEEDINGS

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

$

100,000

 in damages. On August 13, 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 denied the Company’s Petition for Review so the case will be remanded to

the trial court for further proceedings. Management believes the risk of material loss related to this matter to be remote. 

Bell et al. v. Cal-Maine Foods et al. 

On April 30, 2020, the Company was named as one of several defendants in Bell et al. v. Cal-Maine Foods et al., Case No.

1:20-cv-461, in the Western District of Texas, Austin Division. The defendants include numerous grocery stores, retailers,

producers, and farms. Plaintiffs assert that defendants violated the DTPA by allegedly demanding exorbitant or excessive prices

for eggs during the COVID-19 state of emergency. Plaintiffs request certification of a class of all consumers who purchased

eggs in Texas sold, distributed, produced, or handled by any of the defendants during the COVID-19 state of emergency.

Plaintiffs seek to enjoin the Company and other defendants from selling eggs at a price more than 10% greater than the price of

eggs prior to the declaration of the state of emergency and damages in the amount of $

10,000

 per violation, or $

250,000

 for

each violation impacting anyone over 65 years old. On December 1, 2020, the Company and certain other defendants filed a

motion to dismiss the plaintiffs’ amended class action complaint. The plaintiffs subsequently filed a motion to strike, and the

motion to dismiss and related proceedings were referred to a United States magistrate judge. On July 14, 2021, the magistrate

judge issued a report and recommendation to the court that the defendants’ motion to dismiss be granted and the case be

dismissed without prejudice for lack of subject matter jurisdiction. On September 20, 2021, the court dismissed the case without

prejudice. On July 13, 2022, the court denied the plaintiffs’ motion to set aside or amend the judgment to amend their

complaint.

On March 15, 2022, plaintiffs filed a second suit against the Company and several defendants in Bell et al. v. Cal-Maine Foods

et al., Case No. 1:22-cv-246, in the Western District of Texas, Austin Division alleging the same assertions as laid out in the

first complaint. On August 12, 2022, the Company and other defendants in the case filed a motion to dismiss the plaintiffs’

class action complaint. On January 9, 2023, the court entered an order and final judgement granting the Company’s motion to

dismiss. 

On February 8, 2023, the plaintiffs appealed the lower court’s judgement to the United States Court of Appeals for the Fifth

Circuit, Case No. 23-50112. The parties filed their respective appellate briefs, but the court has not ruled on these submissions.

Management believes the risk of material loss related to both matters to be remote.

14

Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al. 

As previously reported, on September 25, 2008, the Company was named as one of several defendants in numerous antitrust

cases involving the United States 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 allege 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 are attacking

certain features of the United Egg Producers animal-welfare guidelines and program used by the Company and many other egg

producers. The Egg Products Plaintiffs seek to enjoin the Company and other defendants from engaging in antitrust violations

and seek treble money damages. On May 2, 2022, the court set trial for October 24, 2022, but on September 20, 2022, the court

cancelled the trial date due to COVID-19 protocols and converted the trial date to a status hearing to reschedule the jury trial. A

preliminary pre-trial order was filed by the parties on August 22, 2023, and trial is now set for October 17, 2023. 

In addition, 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 Company intends to continue to defend the remaining case with the Egg Products Plaintiffs as vigorously as possible based

on defenses which the Company believes are meritorious and provable. Adjustments, if any, which might result from the

resolution of this remaining matter with the Egg Products Plaintiffs have not been reflected in the financial statements. While

management believes that there is still a reasonable possibility of a material adverse outcome from the case with the Egg

Products Plaintiffs, 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: two earlier trials based on substantially the same facts and

legal arguments resulted in findings of no conspiracy and/or damages; this trial will be before a different judge and jury in a

different court than prior related cases; there are significant factual issues to be resolved; and there are requests for damages

other than compensatory damages (i.e., injunction and treble money damages).

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

100

% 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.

15

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. The court directed the parties to confer in attempt to

reach agreement on appropriate remedies. On June 12, 2023, the court ordered the parties to mediate before the Tenth Circuit

Chief Judge Deanell Reece Tacha and instructed the parties to file a joint status report 14 days following mediation. 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 13 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 negotiations and mediation 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 10 - Subsequent Events

Effective on September 28, 2023, the Company entered into a definitive agreement to acquire substantially all the assets of

Fassio Egg Farms, Inc. (“Fassio”), related to its commercial shell egg production and processing business. The assets to be

acquired, subject to the completion of this transaction, include commercial shell egg production and processing facilities with a

current capacity 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.

16

ITEM 2. MANAGEMENT’S

DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results

of Operations included in Part II Item 7 of the Company’s Annual Report on Form 10-K for its fiscal year ended June 3, 2023

(the “2023 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2023 Annual

Report and in

 of this Quarterly Report on Form 10-Q (“Quarterly Report”).

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 shell egg

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 inflation and rising interest rates, potential future impact on our business of new legislation, rules or policies,

potential outcomes of legal proceedings, and other projected operating data, including anticipated results of operations and

financial condition. 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 Part I Item 1A of the 2023

Annual Report, the risk factors (if any) set forth in Part II 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 highly pathogenic avian influenza (“HPAI”) affecting poultry in the United States (“U.S.”), Canada and other countries that

was first detected in commercial flocks in the U.S. in February 2022, (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 future acquisition of new flocks or businesses and risks or changes that may cause

conditions to completing a pending acquisition not to be met, (vi) risks relating to increased costs and higher and potentially

further increases in, inflation and interest rates, which began in response to market conditions caused in part by the COVID-19

pandemic and which generally have been exacerbated by the Russia-Ukraine War that began in February 2022, (vii) our ability

to retain existing customers, acquire new customers and grow our product mix and (viii) adverse results in pending litigation

matters. 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 only made 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.

GENERAL

Cal-Maine Foods, Inc. (the “Company,” “we,” “us,” “our”) is primarily engaged in the production, grading, packaging,

marketing and distribution of fresh shell eggs. Our operations are fully integrated and we have one operating and reportable

segment. We are the largest producer and distributor of fresh shell eggs in the U.S. Our total flock of approximately 41.9

million layers and 10.0 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 located primarily in states across the southwestern,

southeastern, mid-western and mid-Atlantic regions of the U.S.

Our operating results are materially impacted by market prices for eggs and feed grains (corn and soybean meal), which are

highly volatile, independent of each other, and out of our control. Generally, higher market prices for eggs have a positive

impact on our financial results while higher market prices for feed grains have a negative impact on our financial results.

Although we use a variety of pricing mechanisms in pricing agreements with our customers, we sell most of our conventional

shell eggs based on formulas that consider, in varying ways, independently quoted regional wholesale market prices for shell

eggs or formulas related to our costs of production which include the cost of corn and soybean meal. We do not sell eggs

directly to consumers or set the prices at which eggs are sold to consumers.

17

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. Because of the seasonal and quarterly

fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not

necessarily meaningful comparisons.

We routinely fill our storage bins during harvest season when prices for feed ingredients 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. 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 ensure 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. Corn and soybean meal are commodities and 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 most recently the Russia-Ukraine war.

An important competitive advantage for Cal-Maine Foods is our ability to meet our customers’ evolving needs with a favorable

product mix of conventional and specialty eggs, including cage-free, organic and other specialty offerings, as well as egg

products. We have also enhanced our efforts to provide free-range and pasture-raised eggs that meet consumers’ evolving

choice preferences. While a small part of our current business, the free-range and pasture-raised eggs we produce and sell

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.

CAGE-FREE EGGS

Ten states 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 2026. These states represent approximately 27% of the U.S. total population according to the 2020

U.S. Census. California, Massachusetts, and Colorado, which collectively represent approximately 16% of the total estimated

U.S. population, have cage-free legislation in effect currently. In May 2023, the U.S. Supreme Court upheld as constitutional

California’s law that requires the sale of only cage-free eggs in that state and regardless of the state in which the eggs are

produced. Although we do not sell the majority of our eggs in these ten states, these state laws have impacted egg production

practices nationally.

A significant number of our customers previously announced goals to offer cage-free eggs exclusively on or before 2026,

subject in most cases to availability of supply, affordability and consumer demand, among other contingencies. Some of these

customers have recently changed those goals to offer 70% cage-free eggs by the end of 2030. 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 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 33.0% of our total net shell egg revenue for the first quarter of fiscal year 2024. At the same

time, we understand the importance of our continued ability to provide conventional eggs in order to provide our customers

with a variety of egg choices and to address hunger in our communities. 

For additional information, see the 2023 Annual Report, Part I Item 1, “Business – Specialty Eggs,” “Business – Growth

Strategy” and “Business – Government Regulation,” and the first risk factor in Part I Item 1A, “Risk Factors” under the sub-

heading “Legal and Regulatory Risk Factors.”

ACQUISITION

After the end of the fiscal quarter, we entered into a definitive agreement to acquire substantially all the assets of Fassio Egg

Farms, Inc. (“Fassio”), related to its commercial shell egg production and processing business. The assets to be acquired,

18

subject to the completion of the transaction, include commercial shell egg production and processing facilities with a current

capacity 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. We expect the transaction to close during the

second quarter of fiscal 2024, subject to customary closing conditions. Once completed, the acquisition will expand our market

presence in Utah and the western United States.

HPAI; EGG SUPPLY OUTLOOK

The most recent outbreak of highly pathogenic avian influenza (“HPAI”) impacted our business and financial results primarily

during the fourth quarter of fiscal 2022 and continuing through the first part of our fourth quarter of fiscal 2023. For additional

information, see the 2023 Annual Report, Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and

Results of Operations – HPAI.” While the last occurrence in a commercial egg laying flock was in December 2022, there have

been occurrences in other avian populations in the U.S. since then. HPAI is still present in the wild bird population and the

extent of possible future outbreaks, particularly during the upcoming fall migration season, cannot be predicted. There have

been no positive tests for HPAI at any of Cal-Maine Foods’ owned or contracted production facilities as of October 3, 2023.

Based on USDA data, we believe that the U.S. layer hen flock, which declined as a result of flock depletions due to HPAI, has

largely recovered but remains slightly lower than the five-year average.

Layer hen numbers reported by the USDA as of September 1, 2023, were 318.2 million, which represents an increase of 3.1%

compared with the layer hen inventory a year ago. The USDA also reported that the hatch from April 2023 through August

2023 increased 2.0% as compared with the prior-year period, indicating that layer flocks may continue to increase in the future. 

EXECUTIVE OVERVIEW

For the first quarter of fiscal 2024, we recorded a gross profit of $45.4 million compared to $217.5 million for the same period

of fiscal 2023, with the decrease due primarily to lower conventional shell egg prices and increased labor costs, partially offset

by lower farm production costs due to the decrease in feed ingredient prices.

Our net average selling price per dozen for the first quarter of fiscal 2024 was $1.589 compared to $2.275 in the prior-year

period. Conventional egg prices per dozen were $1.241 compared to $2.368 for the prior-year period, and specialty egg prices

per dozen were $2.278 compared to $2.101 for the prior-year period. Conventional egg prices were lower in the first quarter of

fiscal 2024 compared to the prior-year period as overall egg supply recovers from the most recent HPAI outbreak. The daily

average price for the Urner Barry southeast large index for the first quarter of fiscal 2024 decreased 48.7% from the comparable

period in the prior year. In the first quarter of fiscal 2024, specialty egg prices exceeded conventional egg prices as opposed to

the first quarter of fiscal 2023, returning to a historically normal relative position. Conventional egg prices generally respond

more quickly to market conditions because we sell the majority of our conventional shell eggs based on formulas that adjust

periodically and take into account, in varying ways, independently quoted regional wholesale market prices for shell eggs or

formulas related to our costs of production. The majority of our specialty eggs are typically sold at prices and terms negotiated

directly with customers and therefore do not fluctuate as much as conventional pricing. For information about historical shell

egg prices, see Part I Item I of our 2023 Annual Report.

Our total dozens sold decreased 0.8% to 273.1 million dozen shell eggs for the first quarter of fiscal 2024 compared to 275.3

million dozen for the same period of fiscal 2023. For the first quarter of fiscal 2024, conventional dozens sold increased 1.0%

and specialty dozens sold decreased 4.2% as compared to the same quarter in fiscal 2023. Demand for specialty eggs decreased

in the first quarter of fiscal 2024 compared to the same prior year period due primarily to the large decrease in prices for

conventional eggs compared to the prior four quarters. 

Our farm production costs per dozen produced for the first quarter of fiscal 2024 decreased 1.0%, or $0.01, compared to the

first quarter of fiscal 2023. However, feed costs per dozen produced decreased 10.5% or $0.07 compared to the first quarter of

fiscal 2023 primarily due to reduced corn prices, our primary feed ingredient. For the first quarter of fiscal 2024, the average

Chicago Board of Trade (“CBOT”) daily market price was $5.30 per bushel for corn and $422 per ton for soybean meal,

representing decreases of 20.2% and 7.4%, respectively, compared to the average daily CBOT prices for the comparable period

in the prior year. For information about historical corn and soybean meal prices, see Part I Item I of our 2023 Annual Report.

19

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items from our Condensed Consolidated Statements of Income

expressed as a percentage of net sales.

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Net sales

100.0

%

100.0

%

Cost of sales

90.1

%

67.0

%

Gross profit

9.9

%

33.0

%

Selling, general and administrative

11.3

%

8.1

%

Operating income (loss)

(1.4)

%

24.9

%

Total other income, net

1.6

%

0.2

%

Income before income taxes

0.2

%

25.1

%

Income tax expense

0.1

%

6.1

%

Net income

0.1

%

19.0

%

Less: Loss attributable to noncontrolling interest

(0.1)

%

—

%

Net income attributable to Cal-Maine Foods, Inc.

0.2

%

19.0

%

NET SALES

Total net sales for the first quarter of fiscal 2024 were $459.3 million compared to $658.3 million for the same period of fiscal

2023.

Net shell egg sales represented 95.2% and 95.8% of total net sales for the first quarters of fiscal 2024 and 2023, respectively.

Shell egg sales classified as “Other” represent sales of miscellaneous byproducts and resale products included with our shell

egg operations. 

20

The table below presents an analysis of our conventional and specialty shell egg sales (in thousands, except percentage data):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Total net sales

$

459,344

$

658,344

Conventional

$

225,280

51.6

%

$

425,589

67.5

%

Specialty

208,681

47.7

%

200,820

31.8

%

Egg sales, net

433,961

99.3

%

626,409

99.3

%

Other

3,160

0.7

%

4,295

0.7

%

Net shell egg sales

$

437,121

100.0

%

$

630,704

100.0

%

Net shell egg sales as a percent of total net sales

95.2

%

95.8

%

Dozens sold:

Conventional

181,530

66.5

%

179,712

65.3

%

Specialty

91,596

33.5

%

95,605

34.7

%

Total dozens sold

273,126

100.0

%

275,317

100.0

%

Net average selling price per dozen:

Conventional

$

1.241

$

2.368

Specialty

$

2.278

$

2.101

All shell eggs

$

1.589

$

2.275

Egg products sales: 

Egg products net sales

$

22,223

$

27,640

Pounds sold

19,353

16,502

Net average selling price per pound

$

1.148

$

1.675

Shell egg net sales

First Quarter – Fiscal 2024 vs. Fiscal 2023

-

In the first quarter of fiscal 2024, conventional egg sales decreased $200.3 million, or 47.1%, compared to the first

quarter of fiscal 2023, primarily due to a 47.6% decrease in the prices for conventional eggs, which resulted in a

$204.6 million decrease in net sales, partially offset by a 1.0% increase in the volume of conventional eggs sold, which

resulted in a $4.3 million increase in net sales.

-

Conventional egg prices decreased in the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 as the

U.S. egg supply recovers from the most recent HPAI outbreak that impacted our results primarily during the fourth

quarter of fiscal 2022 and continuing through the first part of our fourth quarter of fiscal 2023. 

-

Specialty egg sales increased $7.9 million, or 3.9%, in the first quarter of fiscal 2024 compared to the first quarter of

fiscal 2023, primarily due to an 8.4% increase in the prices for specialty eggs, which resulted in a $16.2 million

increase in net sales, partially offset by a 4.2% decrease in the volume of specialty eggs sold, which resulted in a $8.4

million decrease in net sales. 

-

Net average selling prices of specialty eggs increased in response to higher input costs and market conditions.

-

Demand for specialty eggs decreased as conventional egg prices were significantly lower in the first quarter of fiscal

2024 compared to the first quarter of fiscal 2023. 

-

Cage-free egg revenue for the first quarter of fiscal 2024 represented 33.0% of our total net shell egg revenue versus

19.4% for the same prior year period due to the lower conventional egg prices causing conventional egg revenue to

represent a smaller proportion of our total sales. 

21

Egg products net sales

First Quarter – Fiscal 2024 vs. Fiscal 2023

-

Egg products net sales decreased $5.4 million, or 19.6%, for the first quarter of fiscal 2024 compared to the same

period of fiscal 2023, primarily due to a 31.5% selling price decrease, which had a $10.2 million negative impact on

net sales.

-

Our egg products net average selling price decreased in the first quarter of fiscal 2024, compared to the first quarter of

fiscal 2023 as the supply of shell eggs used to produce egg products recovers from the most recent HPAI outbreak. 

COST OF SALES

Costs of sales for the first quarter of fiscal 2024 were $413.9 million compared to $440.9 million for the same period of fiscal

2023. 

The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

%

Change

Cost of Sales:

Farm production

$

253,507

$

266,651

(4.9)

%

Processing, packaging, and warehouse

81,906

81,417

0.6

Egg purchases and other (including change in inventory)

60,797

68,298

(11.0)

Total shell eggs

396,210

416,366

(4.8)

Egg products

17,701

24,488

(27.7)

Total

$

413,911

$

440,854

(6.1)

%

Farm production costs (per dozen produced)

Feed

$

0.597

$

0.667

(10.5)

%

Other

$

0.439

$

0.379

15.8

%

Total

$

1.036

$

1.046

(1.0)

%

Outside egg purchases (average cost per dozen)

$

1.65

$

2.57

(35.8)

%

Dozens produced

250,356

257,654

(2.8)

%

Percent produced to sold

91.7%

93.6%

(2.0)

%

Farm Production

First Quarter – Fiscal 2024 vs. Fiscal 2023

-

Feed costs per dozen produced decreased 10.5% in the first quarter of fiscal 2024 compared to the first quarter of fiscal

2023. This decrease was primarily due to lower prices for corn, our primary feed ingredient. Basis levels for corn and

soybean meal were lower in our areas of operations compared to our prior year first fiscal quarter. The decrease in feed

cost per dozen resulted in a decrease in cost of sales of $17.5 million for the first quarter of fiscal 2024 compared to

the prior period quarter.

-

For the first quarter of fiscal 2024, the average daily CBOT market price was $5.30 per bushel for corn and $422 per

ton of soybean meal, representing decreases of 20.2% and 7.4%, respectively, as compared to the average daily CBOT

prices for the first quarter of fiscal 2023. 

-

Other farm production costs increased primarily due to higher flock amortization and facility costs. Flock amortization

increased primarily from higher capitalized feed costs as well as higher amortization costs from an increase in our

cage-free production. Cage-free dozens sold increased 12.6% in the first quarter of fiscal 2024 compared to the first

quarter of fiscal 2023.

22

-

Facility costs increased due primarily to increased labor costs. Labor costs increased 16.5% compared to the first

quarter of fiscal 2023 primarily due to increase in contract labor in response to labor shortages.

Current indications for corn project an overall better stocks-to-use ratio; however, until this year’s harvest is complete and as

long as outside factors remain uncertain (including weather patterns and the Russia-Ukraine war and its effect on export

markets), volatility could remain. Soybean meal supply has remained tight relative to demand in the first quarter of fiscal 2024.

Processing, packaging, and warehouse

First Quarter – Fiscal 2024 vs. Fiscal 2023

-

Processing, packaging, and warehouse costs remained relatively consistent compared to the first quarter of fiscal 2023.

On a per dozen basis, costs in this category increased due to the decrease in processing volume. 

Egg purchases and other (including change in inventory)

First Quarter – Fiscal 2024 vs. Fiscal 2023

-

Costs in this category decreased primarily due to lower shell egg prices as the average cost per dozen of outside egg

purchases decreased 35.8% compared to first quarter of fiscal 2023. The decrease was partially offset by an increase in

the volume of outside egg purchases, causing the percentage of produced to sold to decrease to 91.7% from 93.6%.

GROSS PROFIT 

Gross profit for the first quarter of fiscal 2024 was $45.4 million compared to $217.5 million for the same period of fiscal 2023.

The decrease of $172.1 million was primarily due to lower conventional egg prices and increased labor costs, partially offset by

lower farm production costs due to the decrease in feed ingredient prices.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative (“SGA”) expenses include costs of marketing, distribution, accounting and corporate

overhead. The following table presents an analysis of our SGA expenses (in thousands):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

$ Change

% Change

Specialty egg expense

$

12,005

$

13,067

$

(1,062)

(8.1)

%

Delivery expense

17,691

19,916

(2,225)

(11.2)

%

Payroll, taxes and benefits

12,066

10,987

1,079

9.8

%

Stock compensation expense

1,040

1,025

15

1.5

%

Other expenses

9,444

8,612

832

9.7

%

Total

$

52,246

$

53,607

$

(1,361)

(2.5)

%

First Quarter – Fiscal 2024 vs. Fiscal 2023

Specialty egg expense

-

Specialty egg expense decreased primarily due to a reduction in franchise fees to Eggland’s Best, Inc. as well as

reduced sales volume of specialty eggs.

Delivery expense

-

The decreased delivery expense is primarily due to a decrease in fuel and contract trucking expenses in the first quarter

of fiscal 2024 compared to the first quarter of fiscal 2023.

Payroll, taxes and benefits expense

-

The increase in payroll, taxes and benefits expense is due to an increase in salaries and wages compared to the first

quarter of fiscal year 2023.

Other expense

-

The increase in other expense is primarily due an increase in legal fees in the first quarter of fiscal 2024 compared to

the first quarter of fiscal 2023.

23

OPERATING INCOME (LOSS)

For the first quarter of fiscal 2024, we recorded operating loss of $6.8 million compared to operating income of $163.9 million

for the same period of fiscal 2023.

OTHER INCOME (EXPENSE) 

Total other income (expense) consists of items not directly charged or related to operations, such as interest income and

expense, royalty income, equity income or loss of unconsolidated entities, and patronage income, among other items.

For the first quarter of fiscal 2024, we earned $7.5 million of interest income compared to $1.1 million for the same period of

fiscal 2023. The increase resulted from significantly higher investment balances and higher interest rates. The Company

recorded interest expense of $142 thousand and $148 thousand for the first quarters ended September 2, 2023 and August 27,

2022, respectively.

INCOME TAXES

For the first quarter of fiscal 2024, pre-tax income was $733 thousand compared to $165.5 million for the same period of fiscal

2023. We recorded income tax expense of $322 thousand for the first quarter of fiscal 2024, which reflects an effective tax rate

of 43.9%. Income tax expense was $40.3 million for the comparable period of fiscal 2023, which reflects an effective tax rate

of 24.4%. The increase in the effective tax rate for first quarter of fiscal 2024 is primarily due to the loss attributable to our

noncontrolling interest. Taxable income for the first quarter of fiscal 2024 was $1.2 million and excludes the loss attributable to

noncontrolling interest of $515 thousand, which represents an effective tax rate of 25.7%.

At September 2, 2023, the Company had an income tax receivable of $33.8 million compared to an income tax receivable of

$67.0 million at June 3, 2023. The change is primarily due to receipt during the first quarter of fiscal 2024 of a $33.2 million

federal tax refund plus associated federal interest income related to the carryback of fiscal 2021 taxable net operating losses.

Our effective tax rate differs from the federal statutory income tax rate due to state income taxes, certain federal tax credits and

certain items included in income for financial reporting purposes that are not included in taxable income for income tax

purposes, including tax exempt interest income, certain nondeductible expenses and net income or loss attributable to our

noncontrolling interest.

NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.

Net income attributable to Cal-Maine Foods, Inc. for the first quarter ended September 2, 2023, was $926 thousand, or $0.02

per basic and diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $125.3 million or $2.58

per basic and $2.57 per diluted common share for the same period of fiscal 2023.

LIQUIDITY AND CAPITAL RESOURCES 

Working Capital and Current Ratio

Our working capital at September 2, 2023 was $937.7 million, compared to $942.2 million at June 3, 2023. The calculation of

working capital is defined as current assets less current liabilities. Our current ratio was 8.4 at September 2, 2023, compared

with 6.2 at June 3, 2023. The current ratio is calculated by dividing current assets by current liabilities.

Cash Flows from Operating Activities

For the thirteen weeks ended September 2, 2023, $23.7 million in net cash was provided by operating activities, compared to

$172.8 million provided by operating activities for the comparable period in fiscal 2023. The decrease in cash flow from

operating activities resulted primarily from lower selling prices for conventional eggs compared to the prior-year period.

Cash Flows from Investing Activities

We continue to invest in our facilities, with $26.7 million used to purchase or construct property, plant and equipment for the

thirteen weeks ended September 2, 2023, compared to $27.7 million in the same period of fiscal 2023. Sales and maturities of

investment securities were $135.8 million in the first quarter of fiscal 2024, compared to $20.3 million in fiscal 2023. The

24

increase in sales and maturities of investment securities is primarily due to the maturities of short-term investments during the

period. 

Cash Flows from Financing Activities

We paid dividends of $37.0 million for the thirteen weeks ended September 2, 2023 compared to $36.7 million in the same

prior-year period.

As of September 2, 2023, cash increased $67.5 million since June 3, 2023, compared to an increase of $76.9 million during the

same period of fiscal 2023.

Credit Facility

We had no long-term debt outstanding at September 2, 2023 or June 3, 2023. On November 15, 2021, we entered into a credit

agreement that provides for a senior secured revolving credit facility (the “Credit Facility”), in an initial aggregate principal

amount of up to $250 million with a five-year term. As of September 2, 2023, no amounts were borrowed under the Credit

Facility. We have $4.3 million in outstanding standby letters of credit issued under our Credit Facility for the benefit of certain

insurance companies. Refer to Part II Item 8, Notes to Consolidated Financial Statements and Supplementary Data, Note 10 -

Credit Facility included in our 2023 Annual Report for further information regarding our long-term debt.

Material Cash Requirements

We continue to monitor the increasing demand for cage-free eggs and to engage with our customers in efforts to achieve a

smooth transition toward their announced timelines for cage-free egg sales. The following table presents material construction

projects approved as of September 2, 2023 (in thousands):

Project(s) Type

Projected 

Completion

Projected Cost

Spent as of

September 2, 2023

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2024

54,702

23,221

31,481

Cage-Free Layer & Pullet Houses

Fiscal 2025

40,099

29,471

10,628

Feed Mill

Fiscal 2025

10,800

36

10,764

Cage-Free Layer & Pullet Houses

Fiscal 2026

38,883

24,623

14,260

Cage-Free Layer & Pullet Houses

Fiscal 2027

56,923

24,311

32,612

$

201,407

$

101,662

$

99,745

We believe our current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient to fund our

current cash needs for at least the next 12 months. 

IMPACT OF RECENTLY ISSUED/ADOPTED ACCOUNTING STANDARDS

For information on changes in accounting principles and new accounting policies, see

 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

CRITICAL ACCOUNTING ESTIMATES 

Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that

involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our

financial condition or results of operations. There have been no changes to our critical accounting estimates identified in our

2023 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk during the thirteen weeks ended September 2, 2023 from

the information provided in Part II Item 7A Quantitative and Qualitative Disclosures About Market Risk in our 2023 Annual

Report.

25

ITEM 4. 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 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 September 2, 2023 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended September 2, 2023

that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

26

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the discussion of certain legal proceedings involving the Company and/or its subsidiaries in (i) our 2023 Annual

Report, Part I Item 3 Legal Proceedings, and Part II Item 8, Notes to Consolidated Financial Statements and Supplementary

Data, Note 16 - Commitments and Contingencies, and (ii) in this Quarterly Report in

of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated herein by reference.

ITEM 1A. RISK

FACTORS

There have been no material changes in the risk factors previously disclosed in the Company’s 2023 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES

OF EQUITY SECURITIES

The following table is a summary of our first quarter 2024 share repurchases:

Issuer Purchases of Equity Securities

Total Number of

Maximum Number

Shares Purchased

of Shares that

Total Number

Average

as Part of Publicly

May Yet Be

of Shares

Price Paid

Announced Plans

Purchased Under the

Period

Purchased (1)

per Share

Or Programs

Plans or Programs

06/04/23 to 07/01/23

—

$

—

—

—

07/02/23 to 07/29/23

106

44.75

—

—

07/30/23 to 09/02/23

—

—

—

—

106

$

44.75

—

—

(1) As permitted under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan, these shares were withheld by us to satisfy tax withholding 

 obligations for employees in connection with the vesting of restricted common stock.

ITEM 6. EXHIBITS

Exhibits

No.

Description

3.1

Second Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to

Exhibit 3.1 in the Registrant’s Form 8-K, filed July 20, 2018)

3.2

Composite Bylaws of the Company (incorporated by reference to Exhibit 3.2 in the Registrant’s Form 10-Q

for the quarter ended March 2, 2013, filed April 5, 2013)

31.1*

Rule 13a-14(a) Certification of the Chief Executive Officer

31.2*

Rule 13a-14(a) Certification of the Chief Financial Officer

32**

Section 1350 Certification of the Chief Executive Officer and the Chief Financial Officer

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)

*

Filed herewith as an Exhibit. 

**

Furnished herewith as an Exhibit.

+

Submitted electronically with this Quarterly Report.

27

SIGNATURES

Pursuant to the requirements 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.

CAL-MAINE FOODS, INC.

(Registrant)

Date: 

October 3, 2023

/s/ Max P. Bowman

Max P. Bowman

Vice President, Chief Financial Officer

(Principal Financial Officer)

໿

Date: 

October 3, 2023

/s/ Matthew S. Glover

Matthew S. Glover

Vice President – Accounting

(Principal Accounting Officer)

໿