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
SeptemberDecember 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
 
1934 during the preceding
 
preceding 12 months (or
 
for such
shorter period that
 
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
 
mark whether the
registrant has submitted
 
submitted electronically every
Interactive Data File
 
File required to be
 
submitted
pursuant to
 
Rule 405 of
 
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
 
check mark
whether the registrant
 
registrant is a large
 
large accelerated filer,
 
an accelerated filer,
 
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
 
Common Stock, $0.01 par
 
$0.01 par value,
and
4,800,000
 
shares of Class
 
A Common Stock,
 
$0.01 Stock, $0.01
par
value, outstanding as of OctoberJanuary 3, 2023.2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
December 2, 2023
June 3, 2023
Assets
Current assets:
Cash and cash equivalents
$
360,343361,783
$
292,824
Investment securities available-for-sale
249,619206,045
355,090
Trade and other receivables, net
125,363165,391
120,247
Income tax receivable
33,78733,771
66,966
Inventories
280,801287,270
284,418
Prepaid expenses and other current assets
14,1459,673
5,380
Total current
assets
1,064,0581,063,933
1,124,925
Property, plant &
equipment, net
752,580815,468
744,540
Investments in unconsolidated entities
13,97814,370
14,449
Goodwill
44,00645,776
44,006
Intangible assets, net
15,34717,074
15,897
Other long-term assets
10,39810,184
10,708
Total Assets
$
1,900,3671,966,805
$
1,954,525
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
117,80098,144
$
137,31382,590
Accrued wages and benefits
20,164
38,733
Accrued income taxes payable
8,2888,445
8,288
Dividends payable
2945,682
37,130
Accrued expenses and other liabilities
21,352
15,990
Total current
liabilities
126,382153,787
182,731
Other noncurrent liabilities
9,93030,571
9,999
Deferred income taxes, net
152,725158,483
152,212
Total liabilities
289,037342,841
344,942
Commitments and contingencies - see Note 910
—
—
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
73,15374,214
72,112
Retained earnings
1,571,7441,583,071
1,571,112
Accumulated other comprehensive loss, net of tax
(2,291)(1,614)
(2,886)
Common stock in treasury at cost –
26,078
 
shares at SeptemberDecember 2, 2023 and
26,077
shares at June 3, 2023
(30,014)
(30,008)
Total Cal-Maine Foods,
Inc. stockholders’ equity
1,613,3431,626,408
1,611,081
Noncontrolling interest in consolidated entity
(2,013)(2,444)
(1,498)
Total stockholders’
equity
1,611,3301,623,964
1,609,583
Total Liabilities and Stockholders’
Equity
$
1,900,3671,966,805
$
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
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Net sales
$
459,344523,234
$
658,344801,700
$
982,578
$
1,460,044
Cost of sales
413,911432,104
440,854483,851
846,015
924,705
Gross profit
45,43391,130
217,490317,849
136,563
535,339
Selling, general and administrative
52,24676,578
53,60757,952
(Gain) loss128,824
111,559
Loss on disposal of fixed assets
(56)318
3329
262
62
Operating income (loss)
(6,757)14,234
163,850259,868
7,477
423,718
Other income (expense):
Interest income, net
7,3466,987
9031,930
14,333
2,833
Royalty income
349301
428344
650
772
Equity income (loss) of unconsolidated
entities
(470)29
144(987)
(441)
(843)
Other, net
265567
1551,113
832
1,268
Total other income, net
7,4907,884
1,6302,400
15,374
4,030
Income before income taxes
73322,118
165,480262,268
22,851
427,748
Income tax expense
3225,540
40,34663,974
5,862
104,320
Net income
41116,578
125,134198,294
16,989
323,428
Less: Loss attributable to noncontrolling
interest
(515)(431)
(153)(293)
(946)
(446)
Net income attributable to Cal-Maine Foods,
Inc.
$
92617,009
$
125,287198,587
$
17,935
$
323,874
Net income per common share:
Basic
$
0.020.35
$
2.584.08
$
0.37
$
6.66
Diluted
$
0.020.35
$
2.574.07
$
0.37
$
6.63
Weighted average
shares outstanding:
Basic
48,690
48,62348,624
48,691
48,624
Diluted
48,866
48,840
48,81148,854
48,827
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
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Net income
$
41116,578
$
125,134198,294
$
16,989
$
323,428
Other comprehensive income (loss), before
tax:
Unrealized holding gain (loss) on available-for-saleavailable-
for-sale securities, net of reclassification
adjustments
786895
(997)(974)
1,681
(1,971)
Income tax benefit (expense) related to
items of other comprehensive income
(191)(218)
243237
(409)
480
Other comprehensive income (loss), net of tax
595677
(754)(737)
1,272
(1,491)
Comprehensive income
1,00617,255
124,380197,557
18,261
321,937
Less: Comprehensive loss attributable to the
noncontrolling interest
(515)(431)
(153)(293)
(946)
(446)
Comprehensive income attributable to Cal-MaineCal-
Maine Foods, Inc.
$
1,52117,686
$
124,533197,850
$
19,207
$
322,383
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Thirteen
Twenty-six Weeks
Ended
SeptemberDecember 2, 2023
August 27,November 26, 2022
Cash flows from operating activities:
Net income
$
41116,989
$
125,134323,428
Depreciation and amortization
19,34039,394
17,31234,729
Deferred income taxes
3225,862
(1,324)(540)
Other adjustments, net
3,61211,407
31,690(12,830)
Net cash provided by operations
23,68573,652
172,812344,787
Cash flows from investing activities:
Purchases of investment securities
(28,296)(43,569)
(51,834)(152,365)
Sales and maturities of investment securities
135,768196,104
20,29665,279
Investment in unconsolidated entities
(363)
—
Acquisition of business
(53,746)
—
Purchases of property,
plant and equipment
(26,666)(65,774)
(27,662)(59,709)
Net proceeds from disposal of property,
plant and equipment
74150
7892
Net cash provided by (used in) investing activities
80,88032,802
(59,122)(146,703)
Cash flows from financing activities:
Payments of dividends
(36,983)(37,276)
(36,653)(78,394)
Purchase of common stock by treasury
(5)
(45)
Principal payments on finance lease
(58)(214)
(55)(94)
Net cash used in financing activities
(37,046)(37,495)
(36,753)(78,533)
Net change in cash and cash equivalents
67,51968,959
76,937119,551
Cash and cash equivalents at beginning of period
292,824
59,084
Cash and cash equivalents at end of period
$
360,343361,783
$
136,021178,635
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
 
have been prepared
in accordance with
 
with the instructions to
 
Form 10-Q and Article
 
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
 
should be
read in
 
conjunction with our
 
our Annual
Report on
 
Form 10-K for
 
for the fiscal year
 
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,
 
and, in the opinion of
management, consist of adjustments
of a
normal
recurring nature.
Operating results for
 
for the interim periods
 
are not necessarily indicative
 
indicative of operating
results for the
 
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 endedand
 
year-to-date periods
ended on September
December 2,
2023 and August 27,November 26, 2022 included
13 weeks
and
26 weeks
., respectively.
Use of Estimates
The preparation of the
consolidated financial statements in
conformity with GAAP requires management
to make
estimates and
assumptions that
 
that affect the
 
the amounts reported
 
reported in the
 
the consolidated financial
 
financial statements and
 
and accompanying notes.
 
notes. Actual
results
could differ from those estimates.
Investment Securities
The Company has
 
has determined
that its
 
debt securities
 
are available-for-sale
 
investments. We
 
classify these securities
 
securities as
current
because the
 
amounts invested
 
are available
 
for current
 
operations. Available
 
-for-sale securities
 
securities are carried
 
carried at fair
 
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
 
evaluates changes to the
rating of its debt
 
securities by credit agencies
and
economic conditions to
 
to assess and record
 
record any
expected credit
 
losses through allowance
 
allowance for
credit losses,
 
limited to the
 
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
 
basis for
realized gains
 
and losses on
 
on available-for-sale
securities is
 
determined by the
 
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
 
receivables arevalues, which include a reserve for credit losses. As of December
 
stated at2, 2023 and June
their
carrying values,
which
include a
reserve for
credit losses.
As of
September 2,3,
 
2023,
 
and
June 3,
2023, reserves
 
for
credit
 
losses
were
 
$
503536
 
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.
Goodwill
Goodwill
represents
the
excess
of
the
purchase
price
over
the
fair
value
of
the
identifiable
net
assets
acquired.
Goodwill
is
evaluated
for
impairment
annually
by
first
performing
a
qualitative
assessment
to
determine
whether
a
quantitative
goodwill
8
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, trademark
and right
of use
intangibles. They
are amortized
over their
estimated useful
lives
of
5
to
15
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
represents water rights. They are not amortized, but
are reviewed for impairment at least annually or more frequently if
impairment indicators arise.
Dividends Payable
 
We
 
accrue dividends at the
 
the end of
each quarter according
 
according to the Company’s
 
dividend policy adopted
by its Board
 
Board of Directors.
The Company
pays a dividend
to shareholders
of its Common
Stock and
Class A Common
Stock on
 
a dividendquarterly 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
(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.
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.
Loss Contingencies
Certain
conditions
may
exist
as
of
the
date
the
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
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.
9
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 - Acquisition
Effective
September 30, 2023
, the Company
acquired the assets of
Fassio Egg Farms,
Inc. (“Fassio”), related
to its commercial
shell
egg
production
and
processing
business.
Fassio
owns
and
operates
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.
The Company
accounted for the acquisition as a business combination.
The following table summarizes the consideration paid
for Fassio and the amounts of the assets acquired and
liabilities assumed
recognized at the acquisition date (in thousands):
Cash consideration paid
$
53,746
Fair value of contingent consideration
1,000
Total estimated purchase
consideration
54,746
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventory
$
6,164
Property, plant and equipment
44,540
Intangible assets
2,272
Other long-term assets
143
Liabilities assumed
(143)
Total identifiable
net assets
52,976
Goodwill
1,770
$
54,746
Inventory consisted
primarily of
flock, feed
ingredients,
packaging, and
egg inventory.
Flock inventory
was valued at
carrying
value
as
management
believes
that
its
 
Common Stockcarrying
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 Classsubtracting 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
period,
commencing
on
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 which
the contingent considered
is measured, and the
probability assessments with
respect to the
likelihood of achieving
the forecasted projections.
 
A Common Stockrange of
potential outcomes cannot
be reasonably estimated
due to market volatility of egg prices.
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 $1.8 million as
a result of the acquisition.
10
Note 3 - Investment
Securities
The following represents the Company’s
investment securities as of December 2, 2023 and June 3, 2023 (in thousands):
December 2, 2023
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
6,141
$
—
$
108
$
6,033
Commercial paper
2,791
—
2
2,789
Corporate bonds
98,202
—
535
97,667
Certificates of deposits
1,125
—
6
1,119
US government and agency obligations
88,470
—
116
88,354
Asset backed securities
10,045
38
—
10,083
Total current
investment securities
$
206,774
$
38
$
767
$
206,045
Mutual funds
$
2,190
$
—
$
24
$
2,166
Total noncurrent
investment securities
$
2,190
$
—
$
24
$
2,166
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 $
196.1
million and $
65.3
million during the
twenty-six weeks ended December 2, 2023
and November 26, 2022, respectively.
Gross realized gains for the twenty-six
weeks
ended December 2, 2023 and November
26, 2022 were $
7
thousand and $
2
thousand, respectively.
Gross realized losses for the
twenty-six
weeks ended
December 2,
2023 and
November 26,
2022 were
$
8
thousand and
$
63
thousand, respectively.
There
were
no
allowances for credit losses at December 2, 2023 and June 3, 2023.
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 December
2, 2023 are as follows (in thousands):
Estimated Fair Value
Within one year
$
145,788
1-5 years
60,257
Total
$
206,045
Noncurrent
There were
no
sales of
noncurrent investment
securities during
the twenty-six
weeks ended
December 2,
2023 and
November
26, 2022.
11
Note 4 - 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 quarterlyRecurring 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 for eachas of December 2, 2023 and June 3,
2023 (in thousands):
December 2, 2023
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
6,033
$
—
$
6,033
Commercial paper
—
2,789
—
2,789
Corporate bonds
—
97,667
—
97,667
Certificates of deposits
—
1,119
—
1,119
US government and agency obligations
—
88,354
—
88,354
Asset backed securities
—
10,083
—
10,083
Mutual funds
2,166
—
—
2,166
Total assets measured at fair
value
$
2,166
$
206,045
$
—
$
208,211
Liabilities
Contingent consideration
$
—
$
—
$
1,000
$
1,000
Total liabilities measured
at fair value
$
—
$
—
$
1,000
$
1,000
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
12
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.
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
period, commencing on
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
which
the
contingent
considered
is
measured,
and
the
probability
assessments
with
respect
to
the
likelihood
of
achieving
the
forecasted
projections.
See
further
discussion
in
Note 5 - Inventories
Inventories consisted of the following as of December 2, 2023 and June
3, 2023 (in thousands):
December 2, 2023
June 3, 2023
Flocks, net of amortization
$
162,323
$
164,540
Eggs and egg products
30,485
28,318
Feed and supplies
94,462
91,560
$
287,270
$
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
December
2,
2023
and
June 3,
2023
consisted
of
approximately
10.6
million
and
10.8
million
pullets
and
breeders
and
43.3
million and
41.2
million layers, respectively.
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended
December 2, 2023 and November 26, 2022 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks
 
Ended December 2, 2023
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 Stockholders
not pay a dividend for a subsequent
profitable quarter until the Company is profitable on
a cumulative basis computed from theCommon Stock
date of the most recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board ofClass A
Directors.
Treasury
New Accounting Pronouncements and PoliciesPaid In
No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on ourAccum. Other
Consolidated Financial Statements.
Retained
Note 2 - InvestmentNoncontrolling
SecuritiesAmount
The following represents the Company’s investment securities as of September 2, 2023 and June 3, 2023 (in thousands):
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at
September 2, 2023
Amortized$
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds703
$
7,91548
$
—(30,014)
$
15073,153
$
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(2,291)
$
251,2511,571,744
$
—(2,013)
$
1,6321,611,330
$Other comprehensive
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
Certificatesincome, net of deposits
675tax
—
—
675
US government and agency obligations
101,240—
—
471
100,769
Asset backed securities
13,459677
—
151—
13,308677
Treasury billsStock compensation
29,069plan transactions
—
13—
29,056—
Total current investment securities1,061
—
—
—
1,061
Dividends ($
0.116
per share)
Common
—
—
—
—
—
(5,125)
—
(5,125)
Class A common
—
—
—
—
—
(557)
—
(557)
Net income (loss)
—
—
—
—
—
17,009
(431)
16,578
Balance at December
2, 2023
$
357,479703
$
—48
$
2,389(30,014)
$
355,090
Mutual funds74,214
$
2,172(1,614)
$
—1,583,071
$
91(2,444)
$
2,081
Total noncurrent investment securities
$
2,172
$
—
$
91
$
2,0811,623,964
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
913
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, 2023November 26, 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 June 3,May 28,
20232022
$
703
$
48
$
(30,008)(28,495)
$
72,11269,017
$
(2,886)(2,350)
$
1,571,1121,149,399
$
(1,498)(359)
$
1,609,5831,187,963
Other comprehensive
income,loss, net of tax
—
—
—
—
595(737)
—
—
595(737)
Stock compensation
plan transactions
—
—
(6)(1)
1,041988
—
—
—
1,035987
Dividends ($
0.0061.353
per share)
Common
—
—
—
—
—
(265)(59,708)
—
(265)(59,708)
Class A common
—
—
—
—
—
(29)(6,494)
—
(29)(6,494)
Net income (loss)
—
—
—
—
—
926198,587
(515)(293)
411198,294
Balance at November
September 2, 202326, 2022
$
703
$
48
$
(30,014)(28,496)
$
73,15370,005
$
(2,291)(3,087)
$
1,571,7441,281,784
$
(2,013)(652)
$
1,611,3301,320,305
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twenty-six Weeks
Ended December 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
—
—
—
—
1,272
—
—
1,272
Stock compensation
plan transactions
—
—
(6)
2,102
—
—
—
2,096
Dividends ($
0.122
per share)
Common
—
—
—
—
—
(5,390)
—
(5,390)
Class A common
—
—
—
—
—
(586)
—
(586)
Net income (loss)
—
—
—
—
—
17,935
(946)
16,989
Balance at December
2, 2023
$
703
$
48
$
(30,014)
$
74,214
$
(1,614)
$
1,583,071
$
(2,444)
$
1,623,964
14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Index
11
Twenty-six Weeks
Thirteen Weeks
Ended August 27,November 26, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
NoncontrollingNoncontrollin
g
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)(1,491)
—
—
(754)(1,491)
Stock compensation
plan transactions
—
—
(48)(49)
1,0282,016
—
—
—
9801,967
Contributions
—
—
—
—
—
—
—
—
Dividends ($
0.8532.206
per share)
Common
—
—
—
—
—
(37,648)(97,355)
—
(37,648)(97,355)
Class A common
—
—
—
—
—
(4,094)(10,589)
—
(4,094)(10,589)
Net income (loss)
—
—
—
—
—
125,287323,874
(153)(446)
125,134323,428
Balance at AugustNovember
27,26, 2022
$
703
$
48
$
(28,495)(28,496)
$
69,01770,005
$
(2,350)(3,087)
$
1,149,3991,281,784
(652)
$
(359)1,320,305
$
1,187,963
Note 67 - Net Income per Common Share
 
Basic net income per
 
per share is
based on the
 
the weighted average Common
Stock and Class
A 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
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Numerator
Net income
$
41116,578
$
125,134198,294
$
16,989
$
323,428
Less: Loss attributable to
noncontrolling interest
(515)(431)
(153)(293)
(946)
(446)
Net income attributable to Cal-Maine
Foods, Inc.
$
92617,009
$
125,287198,587
$
17,935
$
323,874
Denominator
Weighted-average
common shares
outstanding, basic
48,690
48,62348,624
48,691
48,624
Effect of dilutive restricted shares
150176
188216
163
203
Weighted-average
common shares
outstanding, diluted
48,866
48,840
48,81148,854
48,827
Net income per common share
attributable to Cal-Maine Foods, Inc.
Basic
$
0.020.35
$
2.584.08
$
0.37
$
6.66
Diluted
$
0.020.35
$
2.574.07
$
0.37
$
6.63
 
15
Note 78 - 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
 
for the most part is
 
is determined when
the Company and
 
the customer agree
upon the specific
 
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 comparingcompared to current period sales and accounts receivable.
The allowance is recorded as a reduction of sales in the
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.,
 
(e.g., percentage
discounts off
 
current purchases), inducement offers
 
(e.g.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
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
(in thousands):
Thirteen Weeks
Ended
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Conventional shell egg sales
$
225,280280,599
$
425,589541,917
$
505,879
$
967,506
Specialty shell egg sales
208,681217,905
200,820227,778
426,586
428,598
Egg products
22,22320,012
27,64028,052
42,235
55,692
Other
3,1604,718
4,2953,953
7,878
8,248
$
459,344523,234
$
658,344801,700
$
982,578
$
1,460,044
Contract Costs
The Company can incur costs to
obtain or fulfill a contract with a customer.
 
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
 
is amortized over
 
over the contract
 
contract life as
 
as a reduction
 
reduction in net
 
net sales. As
 
As of September
 
December 2, 2023
 
2023 and June
 
June 3, 2023,
 
2023, the balance
 
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 89 - Stock Based Compensation
Total
 
stock-based
 
compensation
 
expense
 
was
 
$
1.02.1
and
$
2.0
 
million
 
for
 
the
 
thirteentwenty-six
 
weeks
 
ended
 
SeptemberDecember
 
2,
 
2023
 
and
November 26, 2022, respectively.
 
August
 
27,
2022.
16
Unrecognized
compensation
 
expense as
 
as a
result
 
of non-vestednon
-vested
 
shares
of
 
restricted stock
 
stock outstanding
under
 
the
Amended
 
and
Restated
 
2012
 
Omnibus
 
Long-Term
 
Incentive
 
Plan
 
at
 
SeptemberDecember
 
2,
 
2023
 
of
 
$
6.15.0
 
million
 
will
 
be
 
recorded
 
over
 
a
 
weighted
average period of
1.91.7
 
years. Refer to Part II
 
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.
The Company’s restricted share activity
for the twenty-six weeks ended December 2, 2023 follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, SeptemberDecember 2, 2023
292,506
$
43.72
 
Note 910 - Commitments and Contingencies
LEGAL PROCEEDINGS
State of Texas v.
 
v. Cal-Maine Foods, Inc. d/b/a Wharton;
and Wharton County Foods, LLC
 
On April 23,
 
23, 2020,
the Company
 
and its subsidiary
 
Wharton County Foods,
 
Foods, LLC (“WCF”) were
 
were named
as defendants in
 
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,
 
11, 2020,
the State filed a
 
notice of appeal,
which was assigned to
 
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
so
 
the case will be
 
remanded tocase
will
be
remanded
to the
trial court
for further
proceedings.
Management believes
the risk
of material
loss related
to this
matter to be
 
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
 
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
 
eggs during
the
 
COVID-19 state
 
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
 
other defendants from selling eggs
at a price more than
 
than 10% greater than the price
of
eggs prior
 
to the
 
declaration
of the
state of
 
the state
of emergency
 
and damages
 
in the
 
amount of
 
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
 
certain other defendants
 
defendants filed
a
motion to
 
dismiss the
 
plaintiffs’
amended
 
class action
 
complaint. The
 
plaintiffs subsequently
 
subsequently filed a
 
a motion to
 
to strike, and
 
and the
motion to
 
dismiss and
 
related proceedings were
 
were referred to
 
to a United
 
United States magistrate
 
magistrate judge. On
 
On July 14,
 
14, 2021, the
 
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.
17
On March 15, 2022, plaintiffs
 
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
 
January 9,
2023, the
 
court entered
 
an order and
 
and final
judgement granting
 
the Company’s
 
motion to
dismiss.
 
On February
 
8, 2023,
 
the plaintiffs
 
appealed
the lower
court’s
judgement
to the
 
lower court’sUnited States
 
judgement toCourt of
Appeals for
 
the United
States Court
of Appeals
for the
Fifth
Circuit, Case No.
23-50112.
 
The parties filed
their respective appellate
 
appellate briefs, but the court
 
court has not
ruled on these
 
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
 
was named as
 
as one of
 
of several
defendants
 
in numerous
 
antitrust
cases involving
 
the United
 
States shell
 
egg
industry.
 
The Company
 
settled all
 
of these
 
cases, except
 
for the
 
the claims of
 
of certain
plaintiffs who sought substantial
damages allegedly arising from
the purchase of egg products (as
 
products (as opposed to shell eggs). These
remaining plaintiffs are
 
are Kraft Food Global,
 
Global, Inc.,
General Mills, Inc.,
 
and Nestle USA, Inc.
 
(the “Egg Products Plaintiffs”)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
 
for the Northern District
of Illinois, Kraft Foods Global,
Inc. et al. v.
 
al. v. United
Egg
 
Producers,
 
Inc.
 
et
 
al.,
Case
 
No.
 
1:11-cv-8808,
 
for
 
trial.
The
 
Egg
 
Products
 
Plaintiffs
 
allegealleged
 
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
attacked
certain features of
the United Egg
 
Egg Producers animal-welfare guidelines
and program used by
 
used by the Company and many
 
many other egg
producers.
On October 24, 2019,
the Company entered into
a confidential settlement agreement
with The EggKellogg Company
 
Products Plaintiffsdismissing all
seek to
enjoinclaims against the
 
Company and otherfor an
 
defendants from engagingamount that did
 
in antitrust violations
and seek treble money damages. On May 2, 2022, the courtnot have a
 
set trial material impact on
the Company’s
financial condition or
results
of operations.
On November
11,
2019, a
stipulation
for October 24, 2022, but dismissal
was filed
with the
court, and
on September 20,March
28, 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 defendtrial of this case began
on October 17, 2023. On December
1, 2023, the remaining case withjury returned a decision
awarding the Egg Products
Plaintiffs
 
as vigorously as possible based$
on17.8
 
defensesmillion
 
whichin damages.
If the
jury’s
decision
is ultimately
upheld,
the defendants
would
be jointly
and
severally
liable
for
treble
damages,
or
$
53.3
million,
subject
to
credit
for
 
the
 
CompanyKellogg
 
believessettlement
 
aredescribed
 
meritoriousabove
 
and
 
provable.certain
 
Adjustments,
if
any,
which
might
result
from
theother
resolution of
this remaining
mattersettlements with
 
the Eggprevious
 
Products Plaintiffssettling defendants,
 
have not
been reflected
inplus the
 
financial statements.Egg Product
 
While
management
believes
that
there
is
still
aPlaintiffs’
 
reasonable
 
possibilityattorneys’
fees. This
decision is
not
final and
remains subject
to the
defendants’ motion
for a
directed verdict
noted below
and appeals
by the
parties. During
our
second fiscal quarter
of 2024, we
recorded an accrued
expense of $
19.6
million 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. 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
and the other
defendants are discussing
apportionment, and our
accrual
may change in
the future based on
the outcome of
those discussions. Our
accrual may also
be revised in
whole or in
part in the
future to the extent we
are successful in further proceedings
in the litigation.
On November 29, 2023, the
defendants, including
the Company,
filed a
 
materialmotion for
 
adversejudgment as
 
outcome
from
the
case
with
the
Egg
Products Plaintiffs,
at the present
time, it is
not possible to
estimate the amounta matter
 
of monetary exposure,law
 
if any,in their
favor,
known as
a directed
verdict, notwithstanding
the
jury’s decision. The Company intends
 
to continue to vigorously defend the Company
due
to
a range
of
factors, including
claims asserted by 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).Egg Products Plaintiffs.
State of Oklahoma Watershed Pollution
Litigation
On June
 
18, 2005, the
 
the State
of Oklahoma
 
filed suit, in
 
in the
United States
 
District Court for
 
for the
Northern District
 
of Oklahoma,
against Cal-Maine
 
Foods, Inc.
 
Inc. and
Tyson
 
Foods, Inc.,
 
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
 
defendants polluted
the Illinois
 
River Watershed.
 
This watershed provides
 
provides water
to eastern
 
Oklahoma. The
complaint
sought
 
injunctive
relief
 
and
 
monetary
damages,
 
but
 
the
 
claim
for
 
monetary
damages
 
was dismissed
 
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.
1518
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
 
fact and
conclusions of
 
law in favor
 
of the State
 
State of
Oklahoma, but
 
no penalties were
 
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
 
retired Tenth
Circuit
Circuit Chief
Judge
Deanell
 
Reece Tacha.
 
TachaOn October 26, 2023, the parties
filed separate status reports informing
the court that
the mediation
was unsuccessful.
Also on
October 26,
2023, the
defendants filed
a post-trial
motion to
dismiss and
supporting
brief arguing
that the
case should
be dismissed
due to
the state record
before the
court, the resulting
mootness of
the case,
 
and
violation
 
instructedof
due
process.
On
November
10,
2023,
 
the
 
partiesState
of
Oklahoma
filed
its
response
in
opposition
 
to
 
filethe
 
amotion
 
jointto
dismiss and on
 
statusNovember 17, 2023,
 
reportthe defendants filed
 
14their reply.
 
daysThe court has not
 
following
mediation.ruled on the motion.
 
While management
management believes there
 
is a
 
reasonable
possibility of
 
a material loss
 
loss from
the case,
at the
 
case, atpresent time,
it is
not possible
to estimate
 
the present
amount
 
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:
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
 
over 13 years ago based
 
on environmental conditions
that existed at the
 
the time, the lack of
 
of guidance from
the
court
as
to
what
 
might
be
considered
appropriate
 
remedies, the ongoing litigation
with the State of Oklahoma
and motion to
dismiss before
 
the
ongoing
negotiations
court, and
 
mediationuncertainty regarding
 
with
the
State
of
Oklahoma, and uncertainty regarding what our proportionate share
 
share of any
remedy would be, although
 
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 1011 - Subsequent Events
EffectiveOn
 
onDecember
 
September
28,12,
 
2023,
 
the
 
Company
 
enteredreported
 
intothat
 
aone
 
definitiveof
 
agreementthe
Company’s
facilities
in
Kansas
experienced
an
outbreak
of
highly pathogenic
avian influenza
(“HPAI”),
affecting
approximately
684,000
laying hens.
Subsequent
to the
initial outbreak,
nearby
facilities
in
Kansas
experienced
an outbreak
of
HPAI,
affecting
approximately
an additional
842,000
laying
hens and
240,000
pullets. The total of the combined outbreaks represented
3.3
% of our total flock as of December 2, 2023.
The
Company
has
and
continues
 
to
 
acquire
substantiallyfollow
 
all
 
guidelines
provided
by
the
 
assetsUnited
States
Department
 
of
Fassio
 
EggAgriculture
 
Farms,(the
“USDA”)
 
Inc.and
 
(“Fassio”),other
 
relatedregulatory
agencies
 
to
 
its
commercial
shell
egg
productiondepopulate
 
and
 
processingsanitize
 
business.the
 
Thefacilities.
 
assetsAs
such,
Cal-Maine
will
be
eligible
to
participate
in
the
USDA
indemnity
program
and
other
programs
designed
 
to
 
becompensate
for
acquired, subject to
the completion
loss 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 productionbirds
 
and
eggs.
The
composting operation Company’s
plans
are
to
repopulate
the
facilities
and land located
resume
normal
operations
at
the
facilities
within
3
-
5 months
.
Due
to
volatility in Erda, Utah, outside Salt Lake City.
the market
prices of
eggs and
uncertain future
supply,
demand and
other market
conditions, an
estimate of
the net
income effect cannot be reasonably made.
1619
ITEM
 
2.
 
MANAGEMENT’S
DISCUSSION
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATIONS
The following
 
should be
 
read in
 
conjunction with
 
with Management’s
 
Discussion and
 
Analysis of
 
Financial Condition
 
and Results
of Operations included
 
included in Part II
 
II Item 7 of
 
of the Company’s
 
Annual Report on
 
on Form 10-K for
 
for its fiscal year
 
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
 
Act of 1934
 
(the “Exchange1934 (the
 
“Exchange Act”) relating
 
relating to our
 
our shell
egg
and egg
products business,
 
including
estimated
 
future
production
 
data,
expected
 
construction
schedules,
 
projected construction
costs, potential
 
construction
costs,
potential
future supply
 
of and
 
and demand for
 
for our
products, potential
future corn
and soybean
price trends,
 
potential future
 
corn and
soybean price
trends, potential
future
impact
on
 
our
business
 
of
 
inflationthe
 
andrecent
 
risingresurgence
 
interestin
 
rates,United
States
(“U.S.”)
commercial
table
egg
layer
flocks
of
the
highly
pathogenic
avian
influenza
(“HPAI”)
outbreak,
 
potential
 
future
 
impact
 
on
 
our
 
business
 
of
 
new
legislation,
rules
or
policies,
potential
outcomes
of
legal
proceedings,inflation
 
and
 
rising
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,
and other
 
projected
 
operating data,
data,
including
anticipated
results
 
of operations and
 
operations
and
financial
condition.
Such
 
forward-looking
statements
are
 
identified
by
the
use
 
of
words
such
 
as
“believes, “believes,”
 
“intends,” “expects,”
“expects,” “hopes,hopes,” “may,” “should,
“should,” “plans,”
 
“projected,” “contemplates,” “anticipates,
“anticipates,” or similar words. Actual outcomes or
or
similar
words.
Actual
outcomes
or
results
 
could
 
differ
 
materially
 
from
 
those
 
projected
 
in
 
the
 
forward-looking
 
statements.
The
 
forward-looking
 
statements
 
are
based
based
on
management’s
 
current
intent,
belief,
expectations,
 
estimates, and projections
 
and
projections
regarding
the
Company
and
 
its
industry.
These
These
statements
are
 
not
guarantees
of
 
future
performance
and
 
involve risks, uncertainties,
 
risks,
uncertainties, assumptions,
and other factors
that are difficult
to predict
and may be
beyond our
control. The
 
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
 
in the
forward-looking
 
statements include,
 
among others,
 
others, (i) the
 
the
risk
factors
 
set forth
 
in
Part
 
I
Item
 
1A
of
 
the
2023
Annual Report,
 
the
risk
 
factors (if
(if
 
any) set
 
set forth
in
 
Part
II
 
Item 1A
 
1A Risk
Factors and
 
and elsewhere
in this
 
report as well
 
well as those included
 
those
included in
other reports
 
we file from
 
from time
to time
 
with the Securities
 
Securities and
Exchange Commission
(the (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
risks
and
hazards
inherent
in
the
shell
egg
business
(including
disease,
pests,
weather
conditions,
 
and potential for product recall),
 
potential
for
product
recall), including
but not limited to
 
to the current outbreak
of highly pathogenic
 
avian influenza (“HPAI”)outbreak of HPAI
 
affecting poultry in
 
in the United StatesU.S.,
 
(“U.S.”), Canada and other
 
other countries that
was first
detected in
commercial flocks
 
in the
U.S. in
February 2022
 
and that
first impacted
our flock
in December
2023, (iii)
changes in the demand
 
demand for and
market prices of
 
shell
eggs and
 
feed costs, (iv)
 
(iv) our
ability to
 
predict and meet
 
meet demand for cage-
free and
 
for cage-free
and other
 
specialty eggs,
 
(v) risks,
 
risks, changes,
or
obligations
 
that
could
 
result
from
 
our
future
 
acquisition
 
of
new
 
flocks or
or
businesses
and
risks
 
or
changes
that
 
may cause conditions
 
cause
conditions to
completing a
 
pending acquisition not
 
not to
be met,
 
(vi) risks relating
to increased
 
relatingcosts and
higher and
potentially further
increases in,
inflation and
interest rates,
(vii) our
ability to
 
increased costs
and higher
and potentiallyretain existing
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.
 
matters,
(ix)
global
instability,
including as
a result of
the wars in
Ukraine and
Israel and
attacks on shipping
in the Red
Sea, and (x)
any potential
resurgence of
COVID-19. Readers
 
are
cautioned
 
not
to
place
 
undue
reliance
 
on
forward-looking
 
statements
because,
 
while
we
believe
the
believe the assumptions on
 
which the forward-looking
 
forward-looking statements
are based
are reasonable,
 
there can
be no
 
assurance that
these forward-
looking
forward-looking statements
 
will
prove
 
to
be
accurate.
 
Further, forward
 
forward-looking
-looking statements
 
included
herein
 
are
only
made
 
as of
the respective
 
ofdates thereof,
 
the
respective dates
thereof, or
if
no
 
date
is
stated,
 
as of the
 
of
the date
hereof.
 
Except
as otherwise
 
required by
 
law,
 
we disclaim
 
disclaim any
intent or obligation
to update publicly
 
publicly these forward-looking statements,
whether because of
 
of new information, future events,
 
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
 
41.943.3
million layers and
 
10.0 and 10.6
million pullets
 
and breeders is
 
is the largest in
 
in the
U.S. We
 
sell most of
 
our shell eggs
 
eggs to a diverse
 
diverse group
of customers, including
 
including national
and regional
 
grocery store chains,
 
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
 
pricing mechanisms
in pricing
 
agreements with our
 
our customers,
we sell
 
most of
 
our conventional
shell eggs
 
based on
 
formulas that
 
consider,
 
in varying
 
ways, independently
 
quoted regional
 
wholesale market
 
market prices for
 
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.
1720
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
 
experience lower selling prices, sales volumes
 
volumes and net
income (and may incur
 
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 feedcorn
 
ingredients, weand soybean
 
may enter
into contracts
for future
purchases of
cornmeal, 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 localapplicable
 
cash pricefutures price.
 
for grainA basis
 
and thecontract is
 
applicable futuresa common
 
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,
 
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 global
instability that
could disrupt
the Russia-Ukraine war.
supply chain.
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
 
of consumers,
and therefore our customers,
and help us continue
 
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
 
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
 
eggslegislation
currently
 
in
 
thateffect.
 
stateOregon,
Washington
 
and
 
regardlessNevada
 
ofhave
 
thecage-free
 
statelegislation
going into
 
ineffect starting
 
January 1,
2024, which
 
therepresents an
 
eggs
are
produced. Although
we do
not sell
the majorityadditional 5%
 
of ourthe
 
total estimated
U.S. population.
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
 
significantour customers have announced
 
numbergoals to either exclusively offer
cage-free eggs or significantly
increase
the
volume
 
of
 
ourcage-free
egg
sales
in
the
future,
subject
in
most
cases
to
availability
of
supply,
affordability
and
consumer
demand,
among
other
contingencies.
Our
 
customers
 
previouslytypically
 
announceddo
 
goalsnot
commit
 
to
 
offerlong-term
 
cage-freepurchases
of
specific
quantities or
types
of
 
eggs
 
exclusivelywith
 
onus,
 
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
 
always,strive to offer
 
we
strive toa product
 
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
 
are
engaging
with
our
customers
to
help
them
meet
their
announced
goals
and
needs. We
have invested
significant capital
 
in recent years to acquire
 
years to
acquire
and construct cage-free facilities, and
we expect our focus
for future
 
future expansion will
continue to
include cage-free
facilities. Our
volume
 
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%
30.4% of our total net shell
egg revenue for the first second
quarter of fiscal year 2024.
At the same
time,
we
understand
 
the importance of our continued ability
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
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,”
 
Regulation,” and the
 
the first risk
 
risk factor in
 
in Part I
 
I Item 1A,
 
“Risk Factors”1A, “Risk
 
Factors” under the
 
the sub-
heading “Legal and Regulatory Risk Factors.”
ACQUISITION
After
21
ACQUISITIONS
During the second
 
endquarter of
the fiscal
 
quarter,2024,
 
we entered
into a
definitive agreement
to acquire
substantially allacquired
 
the assets of
 
of Fassio
Egg
Farms,
 
Inc.
(“Fassio”),
related
 
to its commercial
its
commercial
shell
 
egg
 
production
 
and
 
processing
 
business.
 
The
 
assets
 
toacquired
 
beincluded
 
acquired,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.
See further discussion
in
of the Notes to Condensed Consolidated Financial Statements included
Index
in this Quarterly Report.
18
subject toFollowing
 
the completion
end
 
of the
 
transaction, includesecond
 
commercial shellquarter,
 
egg productionwe
announced
a definitive
agreement
to
acquire
from
Tyson
Foods,
Inc.
a recently
closed broiler
processing plant,
hatchery
 
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 Dexter,
 
Erda,
Utah,
outside
Salt
Lake
City.Missouri.
 
We
 
expect
 
theto complete
 
transactionthe acquisition
in
our third fiscal quarter and to repurpose the assets for use in egg and egg products production.
HPAI
Outbreaks
of
HPAI
continue
 
to
 
closeoccur
 
duringin
U.S.
poultry
flocks.
Prior
to
November
2023,
there
were
no
reported
significant
outbreaks
of
HPAI
in
commercial
table
egg
layer
flocks
since
December
2022.
On
January
3,
2024,
 
the
second quarter of fiscal 2024,
 
subject to customary closing conditions. OnceUSDA
 
completed, division
of
Animal and
Plant Health
Inspection Service
(“APHIS”) reported
that approximately
12.9 million
commercial table
egg layers
and
1.5
million
commercial
table
egg
pullets
have
been
depopulated
as
a
result
of
HPAI
outbreaks
since
the acquisition will expand
beginning
of
November 2023.
Cal-Maine
Foods experienced
HPAI
outbreaks
within our
 
market
presencefacilities in Utah and the western United States.
HPAI;
 
EGG SUPPLY OUTLOOK
The most recentKansas, resulting
 
outbreak of highlyin depopulation
 
pathogenic avian influenza (“HPAI”)of approximately
 
impacted 1.5
million
layers
and
240
thousand
pullets,
or
approximately
3.3%
of
our business
total
flock
as
of
December
2,
2023,
subsequent
to
period-end.
Cal-Maine
Foods
believes
that
we
can
mitigate
the
loss
of
production
through
flock
rotations.
Cal-Maine
Foods
remains dedicated
to robust
biosecurity programs
across our
locations;
however,
no farm
is immune
from HPAI.
HPAI
is still
present in the wild bird population
 
and financial results primarilythe extent of possible future
outbreaks, particularly during the fourth quarter of fiscal 2022
migration seasons, cannot
be predicted.
According to
the U.S.
Centers for
Disease Control
 
and continuing through the first part of ourPrevention,
 
fourth quarter of fiscal 2023.these detections
 
For additional
information, seedo not
 
the 2023present an
 
Annual Report,immediate
public health
 
Part IIconcern. For
 
Item 7additional information,
 
“Management’ssee the
2023 Annual
Report, Part
II Item
7 “Management’s
 
Discussion and
Analysis of
Financial Condition
and
Results of Operations –
HPAI.”
 
While
We
believe the last occurrence
HPAI
outbreak will
continue to
impact the overall
supply of
eggs until the
layer hen
flock is
fully replenished.
The layer hen
flock five-year average
for the month
of December from
2018 through 2022
is 330.1 million
hens. According
to
the USDA, the U.S. flock
consisted of 321.6 million
layers producing table or
market type eggs as of
December 1, 2023, which
is 2.6% below the five-year average.
EXECUTIVE OVERVIEW
For
the
second
quarter
and
first two
quarters
of
fiscal
2024,
we
recorded
a
gross profit
of
$91.1
million
and
$136.6 million,
respectively,
compared
to
$317.8
million
and
$535.3
million,
respectively,
for
the
same
periods
of
fiscal
2023,
with
the
decreases
due primarily
to lower
conventional shell
egg prices.
The decrease
 
in a commercial egggross
 
laying flockprofit was in
 
December 2022, there have
beenpartially offset
 
occurrences by lower
feed
ingredient prices
in the
second quarter
and first
two quarters
of fiscal
2024 compared
to the
same periods
of fiscal
2023. Our
operating
income
and
net
income
for
the
second
quarter
of
fiscal
2024
were
impacted
by
a
$19.6
million
litigation
loss
contingency accrual for
pending anti-trust litigation,
reflected in selling,
general and administrative
expenses in the
Company’s
Condensed
Consolidated
Statements
of
Income
and
classified
as
accrued
expenses
and
 
other
 
avian populationsliabilities
 
in
 
the
 
U.S.
since then.
HPAI
is
still present
in
the
wild bird
population and
theCompany’s
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.Condensed Consolidated Balance Sheets.
Our
net
 
average selling
 
price per
 
dozen for
the second
quarter of
fiscal 2024
was $1.730
compared to
$2.709 in
the prior-year
period. Conventional
egg prices
per dozen
were $1.458
compared to
$2.883 for
the prior-year
period, and
specialty egg
prices
per dozen were
$2.277 compared to
$2.370 for the
prior-year period.
Conventional egg prices
were lower in
the second quarter
of fiscal
2024 compared
to the
prior-year period
as the
U.S. egg
supply started
to recover
from outbreaks
of HPAI.
There has
been a
resurgence of
HPAI
starting in
November 2023,
and although
prices rose
in November
2023 they
remained lower
than
comparable 2022
prices. Our net
average selling
price per
 
dozen for
 
the first two
 
quarterquarters of fiscal
 
of
fiscal 2024
was
 
$1.5891.661 compared
to
$2.469
in
the
prior-year
period.
Conventional
egg
prices
per
dozen
were
$1.353
 
compared
 
to $2.275
 
in$2.631
for
 
the
prior-year
period. Conventionalperiod, and
specialty egg
 
prices per dozen
 
dozen were $1.241
 
$2.277 compared
to $2.368$2.236
 
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 wereThe
 
lower in the firstdaily average
 
quarter ofprice
fiscal 2024for the
 
compared toUrner Barry
southeast large
index for
 
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 firstsecond
 
quarter of
 
fiscal 2023,2024
 
returning toand first
 
a historically
normal relative
position. Conventional
egg prices
generally respond
more quickly
to market
conditions because
we sell
the majoritytwo quarters
 
of ourfiscal
 
conventional shell2024 decreased
49.6% and 49.2%, respectively,
 
eggs basedfrom the comparable periods in the
 
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.prior year. For
 
information about historical shell egg
 
historical shellprices,
egg prices, see Part I Item I of our 2023 Annual Report.
 
Our total dozens
 
dozens sold increased 1.4% to
 
decreased 0.8%288.2 million dozen shell
 
to 273.1eggs for the second
 
million dozenquarter of fiscal 2024
 
shell eggscompared to 284.1
million
 
for the
first quarter
of fiscal
2024 compared
to 275.3
million dozen for
 
the same period
 
period of
fiscal 2023.
 
For the first
 
quarter of fiscalyear-to-date
 
2024, conventionalperiod,
total dozens
 
sold increased 1.0%
slightly from
559.4
and specialty dozens sold decreased 4.2% as comparedmillion
dozen
 
to the same quarter in fiscal 2023. Demand
 
for specialty eggs decreased561.3
million
in
dozen.
For
 
the
 
firstsecond
 
quarter
 
of
 
fiscal
 
2024,
 
comparedconventional
 
todozens
 
thesold
 
sameincreased
 
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
corn2.4%
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1922
specialty dozens
sold decreased
0.4% as
compared to
the same
quarter in
fiscal 2023.
Demand for
specialty eggs
decreased in
the
second
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
same
prior
year
period.
For
the
year-to-date
period,
conventional
dozens
sold
increased
1.7% and specialty dozens sold decreased 2.3% compared to the prior year period.
Our farm
production costs
per dozen
produced for
the second
quarter and
first two
quarters of
fiscal 2024
decreased 8.0%,
or
$0.86, and
4.6%, or
$0.05, respectively,
compared to
the prior
year periods,
primarily due
to lower
feed costs.
Feed costs
per
dozen produced decreased 19.1%,
or $0.13, compared to
the second quarter of fiscal
2023 primarily due to reduced
corn prices,
our
primary
feed
ingredient.
For
information
about
historical
corn
and
soybean
meal
prices,
see
Part
I
Item
I
of
our
2023
Annual Report.
RESULTS OF
OPERATIONS
The following
table sets forth,
 
forth, for the periods
 
indicated, certain
items from
 
our Condensed Consolidated Statements
 
Statements of Income
expressed as a percentage of net sales.
Thirteen Weeks
Ended
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
90.182.6
%
67.060.4
%
86.1
%
63.3
%
Gross profit
9.917.4
%
33.039.6
%
13.9
%
36.7
%
Selling, general and administrative
11.314.5
%
8.17.2
%
13.1
%
7.6
%
Loss on disposal of fixed assets
0.1
%
—
%
—
%
—
%
Operating income (loss)
(1.4)2.8
%
24.932.4
%
0.8
%
29.1
%
Total other income, net
1.5
%
0.3
%
1.6
%
0.20.3
%
Income before income taxes
0.24.3
%
25.132.7
%
2.4
%
29.4
%
Income tax expense
0.11.1
%
6.18.0
%
0.6
%
7.1
%
Net income
0.13.2
%
19.024.7
%
1.8
%
22.3
%
Less: Loss attributable to noncontrolling
interest
(0.1)
%
—
%
(0.1)
%
—
%
Net income attributable to Cal-Maine
Foods, Inc.
0.23.3
%
19.024.7
%
1.9
%
22.3
%
NET SALES
Total
net
 
sales for the first
 
the
second quarter
of
fiscal
2024
 
were $459.3 $523.2
million
compared
 
to $658.3 $801.7
million
for
 
the same period of
 
fiscalperiod
of
fiscal 2023.
Net shell egg sales represented
 
egg sales
represented 95.2%
96.2% and 95.8%
96.5% of total
net sales
 
for the
first second quarters
of fiscal
 
2024 and
2023, respectively.
Shell
egg
 
sales classified
 
as “Other”
 
represent
sales
 
of
miscellaneous
 
byproducts
and
 
resale products
 
included with
 
with our
shell
egg operations.
Total
net
sales
for
the
twenty-six
weeks
ended
December
2,
2023
were
$982.6
million,
compared
to
$1.46
billion
for
the
comparable period of fiscal 2023.
Net
shell
egg
sales
represented
95.7%
and
96.2%
of
total
net
sales
for
the
twenty-six
weeks
ended
December
2,
2023
and
November 26, 2022, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
The table below presents an analysis of our conventional and specialty shell egg
sales (in thousands, except percentage data):
Thirteen Weeks
Ended
SeptemberTwenty-six Weeks
Ended
December 2, 2023
August 27,November 26, 2022
December 2, 2023
November 26, 2022
Total net sales
$
459,344523,234
$
658,344801,700
$
982,578
$
1,460,044
Conventional
$
225,280280,599
51.655.8
%
$
425,589541,917
67.570.1
%
$
505,879
53.8
%
$
967,506
68.9
%
Specialty
208,681217,905
47.743.3
%
200,820227,778
31.829.4
%
426,586
45.4
%
428,598
30.5
%
Egg sales, net
433,961498,504
99.399.1
%
626,409769,695
99.399.5
%
932,465
99.2
%
1,396,104
99.4
%
Other
3,1604,718
0.70.9
%
4,2953,953
0.70.5
%
7,878
0.8
%
8,248
0.6
%
Net shell egg sales
$
437,121503,222
100.0
%
$
630,704773,648
100.0
%
$
940,343
100.0
%
$
1,404,352
100.0
%
Net shell egg sales as a
percent of total net sales
95.296.2
%
95.896.5
%
95.7
%
96.2
%
Dozens sold:
Conventional
181,530192,462
66.566.8
%
179,712187,976
65.366.2
%
373,992
66.6
%
367,688
65.7
%
Specialty
91,59695,711
33.533.2
%
95,60596,110
34.733.8
%
187,307
33.4
%
191,715
34.3
%
Total dozens sold
273,126288,173
100.0
%
275,317284,086
100.0
%
561,299
100.0
%
559,403
100.0
%
Net average selling price
per dozen:
Conventional
$
1.2411.458
$
2.3682.883
$
1.353
$
2.631
Specialty
$
2.2782.277
$
2.1012.370
$
2.277
$
2.236
All shell eggs
$
1.5891.730
$
2.2752.709
$
1.661
$
2.496
Egg products sales:
 
Egg products net sales
$
22,22320,012
$
27,64028,052
$
42,235
$
55,692
Pounds sold
19,35316,998
16,50215,702
36,351
32,204
Net average selling price
per pound
$
1.1481.177
$
1.6751.787
$
1.162
$
1.729
Shell egg net sales
FirstSecond Quarter – Fiscal 2024
vs. Fiscal 2023
-
In
 
the first
 
second
quarter
of
fiscal
2024,
conventional
egg
sales
decreased
$261.3
million,
or
48.2%,
compared
to
the
second quarter of
 
fiscal 2024,2023, primarily
due to a 49.4%
decrease in the prices
for conventional eggs,
which resulted in
a
$274.3
million
decrease
in
net
sales,
partially
offset
by
a
2.4%
increase
in
the
volume
of
 
conventional
eggs
sold,
which resulted in a $12.9 million increase in net sales.
-
Conventional egg prices
were lower in the
second quarter of fiscal
2024 compared to the
second quarter of fiscal
2023
as the
U.S. egg
supply
started
to recover
from outbreaks
of HPAI.
There
has been
a resurgence
of HPAI
starting in
November 2023, and although prices rose in November 2023,
they remained lower than comparable 2022 prices.
-
Specialty
egg
 
sales
decreased
 
$200.3 9.9
million,
 
or
 
47.1%4.3%,
in
the
second
quarter
of
fiscal
2024
compared
 
to
the
 
firstsecond
quarter
 
of
 
fiscal
 
2023,
 
primarily
 
due
 
to
 
a
 
47.6%3.9%
 
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 $8.49.3
million decrease in net sales.
 
-
Net average selling prices of specialty eggs increased in response to higher input costs and market conditions.Cage-free
egg
-
revenue
Demand
for
 
specialty eggsthe
 
decreased assecond
quarter
of
fiscal
2024
represented
30.4%
of
our
total
net
shell
egg
revenue
versus
18.2%
for
the
same
prior
year
period
due
to
the
lower
 
conventional
egg
 
prices were
 
significantly lowercausing
 
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
revenue to represent a smaller proportion of our total sales.
 
Twenty-six weeks –
Fiscal 2024 vs. Fiscal 2023
-
For
the
twenty-six
weeks
ended
December
2,
2023,
conventional
egg
sales
decreased
$461.6
million,
or
47.7%,
compared
to the
same
period of
fiscal
2023,
primarily
due
to
the
decrease
in
the
prices for
conventional
shell
eggs.
Changes in
prices resulted
in a
$478.0 million
decrease in
net sales,
partially offset
by a
1.7% increase
in the
volume
of conventional eggs sold, which resulted in a $16.6 million increase in net
sales.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2124
Egg products net sales
FirstSecond Quarter – Fiscal 2024
vs. Fiscal 2023
-
Egg products
net sales
decreased $8.0
million, or
28.7%, for
the second
quarter of
fiscal 2024
compared to
the same
period of
fiscal 2023,
primarily due
to a
34.1% selling
price decrease,
which had
a $10.4
million negative
impact on
net sales.
-
Our
egg
 
products
 
net
 
salesaverage
selling
price
 
decreased
 
$5.4
million,
or
19.6%,
forin
 
the
 
firstsecond
 
quarter
 
of
 
fiscal
 
2024,
 
compared
 
to
 
the
 
samesecond
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
increased.
Twenty-six weeks –
Fiscal 2024 vs. Fiscal 2023
-
Egg products net sales decreased
$13.5 million, or 24.2%, primarily
due to a 32.8% selling price
decrease compared to
the most recent HPAI outbreak.first twenty-six weeks of fiscal 2023, which had a $20.6 million negative
impact on net sales.
 
COST OF SALES
Costs
of
sales
 
for
the first
second
 
quarter
of
fiscal
 
2024
were
$432.1
million
compared
to
$483.9
million
for
the
same
period
of
fiscal 2023. Costs of sales for the year-to-date period were $413.9$846.0
 
million compared to
$440.9 $924.7 million for
the same period
of fiscal
2023.
prior year period.
The following table presents the key variables affecting our cost of
sales (in thousands, except cost per dozen data):
Thirteen Weeks
Ended
SeptemberTwenty-six Weeks
Ended
December 2,
2023
August 27, November 26,
2022
%
Change
December 2,
2023
November 26,
2022
%
Change
Cost of Sales:
Farm production
$
253,507258,367
$
266,651276,008
(4.9)(6.4)
%
$
511,874
$
542,659
(5.7)
%
Processing, packaging, and
warehouse
81,90684,767
81,41783,639
0.61.3
166,673
165,056
1.0
Egg purchases and other (including
(including change in
inventory)
60,79771,654
68,29897,973
(11.0)(26.9)
132,451
166,271
(20.3)
Total shell eggs
396,210414,788
416,366457,620
(4.8)(9.4)
810,998
873,986
(7.2)
Egg products
17,70117,316
24,48826,231
(27.7)(34.0)
35,017
50,719
(31.0)
Total
$
413,911432,104
$
440,854483,851
(6.1)(10.7)
%
$
846,015
$
924,705
(8.5)
%
Farm production costs (per
dozen produced)
Feed
$
0.5970.554
$
0.6670.685
(10.5)(19.1)
%
$
0.575
$
0.676
(14.9)
%
Other
$
0.4390.431
$
0.3790.386
15.811.7
%
$
0.435
$
0.383
13.6
%
Total
$
1.0360.985
$
1.0461.071
(1.0)(8.0)
%
$
1.010
$
1.059
(4.6)
%
Outside egg purchases (average
(average cost per dozen)
$
1.652.03
$
2.573.14
(35.8)(35.4)
%
$
1.84
$
2.88
(36.1)
%
Dozens produced
250,356265,101
257,654261,358
(2.8)1.4
%
515,457
519,012
(0.7)
%
Percent produced to sold
91.7%92.0%
93.6%92.0%
(2.0)—
%
91.8%
92.8%
(1.1)
%
Farm Production
FirstSecond Quarter – Fiscal 2024
vs. Fiscal 2023
-
Feed costs per dozen produced decreased 10.5% 19.1
%
in the firstsecond quarter of fiscal 2024
compared to the firstsecond quarter of fiscal
fiscal
2023.
This
decrease
 
was
primarily
due
to
 
lower
prices
for
corn,
 
our
primary
feed
 
ingredient. Basis levels for
 
corn andBasis
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
 
our
areas
of operations
compared
to our
prior
year
second
fiscal
quarter.
The
decrease in
 
feed cost
per dozen
resulted in
a decrease
in cost of
 
sales of
 
$17.534.7 million
 
for the
 
firstsecond quarter
 
of fiscal
2024 compared
to
the prior period quarter.
25
-
For the firstsecond
 
quarter of fiscal
 
2024, the average
 
daily CBOT marketChiago Board of
 
price was $5.30Trade (“CBOT”)
 
daily market price
was $4.79 per
bushel
for
 
corn
and $422
$417
 
per
ton
ton
of
soybean
meal,
representing
decreases
of 20.2%
29.3%
and
 
7.4%1.6%, respectively, as compared
 
respectively,
as
compared to the average CBOT daily CBOT
market prices for the firstsecond quarter of
fiscal 2023.
 
-
Other farm production costs
increased primarily due to
higher flock amortization and facility
 
facility costs. Flock amortization
increased primarily
due to
the increased
capitalized value
of our
flocks. This
is primarily
due to
the higher
feed costs
incurred during the growing phase of the flocks.
-
Facility costs
increased
due
 
primarily
 
fromto increased
 
higherlabor costs.
 
capitalized
feedLabor
 
costs increased
 
as12.5% compared
 
wellto the
 
assecond
quarter of fiscal 2023 primarily due to an increase in contract labor in response
 
higherto labor shortages.
Twenty-six weeks –
 
amortizationFiscal 2024 vs. Fiscal 2023
-
Feed
 
costs per
 
fromdozen
 
anproduced
 
increasedecreased
14.9%
 
in
 
our
cage-free production.the
 
Cage-free dozenstwenty-six
 
sold increasedweeks
 
12.6% inended
December
2,
2023
compared
to
 
the first
quartersame period of
 
fiscal 20242023, primarily
due to lower
feed ingredient prices.
The decrease in
feed cost per
dozen resulted
in a decrease in cost of sales of $52.1 million compared to the prior year period.
-
For the
year-to-date period
,
the average
CBOT daily
market price
was $5.05 per
bushel for
corn and $420
per ton
for
soybean meal,
representing decreases
of 24.8%
and 4.6%,
respectively,
 
compared to
 
the firstaverage
CBOT daily
market
prices for the comparable period in the prior year.
-
Other
farm
production
costs increased
due
to
higher
facility
costs
and
flock
amortization,
for
the
reasons
described
above.
Current
indications
for
corn
project
an
overall
better
stocks-to-use
ratio
implying
potentially
lower
prices
in
the
near
term;
however, as long
as outside factors remain uncertain
(including weather patterns and
global supply chain disruptions), volatility
could remain. Soybean meal supply has remained tight relative to demand
in the first two quarters of fiscal 2024.
Processing, packaging, and warehouse
Second Quarter – Fiscal 2024
vs. Fiscal 2023
-
Processing, packaging,
and warehouse
costs increased
1.3% compared
to the
second quarter
of fiscal
2023, primarily
due
to an
increase
in dozens
processed
in the
second quarter
of fiscal
2024 compared
to the
second quarter
of fiscal
2023.
Twenty-six weeks –
Fiscal 2024 vs. Fiscal 2023
-
Processing,
packaging,
and
warehouse
costs
increased
1.0%
compared
to
the
first
two
quarters
of
fiscal
2023,
primarily due
an increase
in labor
costs of
4.2% due
to wage
increases in
response to
labor shortages,
partially offset
by decrease in dozens processed.
Egg purchases and other (including change in inventory)
Second 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 35.4% compared to second quarter of fiscal 2023
.
Twenty-six weeks –
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 36.1% compared to fiscal 2023, partially offset
by an increase of 13.0% in dozens purchased.
GROSS PROFIT
Gross profit
for the
second quarter
of fiscal
2024 was
$91.1 million
compared to
$317.8 million
for the
same period
of fiscal
2023.
Gross profit
for the
twenty-six weeks
ended December
2, 2023
was $136.6
million compared
to $535.3
million for
the
same
period
of
2023.
The
decrease
for
both
periods
was
primarily
due
to
lower
conventional
egg
prices,
partially
offset
by
lower feed ingredient prices.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.26
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
SeptemberDecember 2, 2023
August 27,November 26, 2022
$ Change
% Change
Specialty egg expense
$
12,00515,924
$
13,06714,673
$
(1,062)1,251
(8.1)8.5
%
Delivery expense
17,69117,706
19,91618,175
(2,225)(469)
(11.2)(2.6)
%
Payroll, taxes and benefits
12,06611,076
10,98713,827
1,079(2,751)
9.8(19.9)
%
Stock compensation expense
1,0401,061
1,025987
1574
1.57.5
%
Litigation loss contingency accrual
19,648
—
19,648
N.M
Other expenses
9,44411,163
8,61210,290
832873
9.78.5
%
Total
$
52,24676,578
$
53,60757,952
$
(1,361)18,626
(2.5)32.1
%
FirstN.M. – Not Meaningful
Second Quarter – Fiscal 2024
vs. Fiscal 2023
Specialty egg expense
-
SpecialtyDuring the second
 
eggpart of fiscal year
2023, the higher
prices for conventional
eggs and the
comparatively lower prices
for
specialty eggs
diminished
the need
to promote
specialty eggs
.
During the
second quarter
of fiscal
year
2024, we
significantly
increased
promotional
programs,
resulting
in
higher
advertising
fees.
This
was
partially
offset
by
a
decrease
in a reduction in franchise fees to Eggland’s
Best, Inc.
Delivery expense
-
The
decreased
delivery
 
expense
 
decreasedis
 
primarily
 
due
 
to
 
a
 
reductiondecrease
 
in
 
franchisefuel
 
feesand
 
tocontract
 
Eggland’strucking
 
Best,expenses
 
Inc.in
 
asthe
 
well
assecond
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 firstsecond quarter of fiscal 2023.
Payroll, taxes and benefits expense
-
The increasedecrease
 
in payroll,
 
taxes and
 
benefits expense
 
is due
 
to ana
 
increase indecrease
 
salaries andin accrued
 
wagesbonuses compared
 
to the
 
firstsecond
quarter of fiscal year 2023.
Litigation loss contingency accrual
-
The
litigation
loss
contingency
accrual
of
$19.6
million
relates
to
a
jury
decision
returned
on
December
1,
2023
in
pending
anti-trust
litigation.
See
further
discussion
in
of
the
Notes
to
Condensed Consolidated Financial Statements included in this Quarterly
Report.
Other expense
-
The
increase
in
 
other
expense
is
 
primarily due an
 
increase in due
to
increased
legal
 
fees in thecosts
 
first quarter ofincurred
 
fiscal 2024 compared
 
to
the
second
quarter
of
the first quarter of fiscal 2023.
Twenty-six Weeks
Ended
December 2, 2023
November 26, 2022
$ Change
% Change
Specialty egg expense
$
27,929
$
27,740
$
189
0.7
%
Delivery expense
35,397
38,091
(2,694)
(7.1)
%
Payroll, taxes and benefits
23,142
24,814
(1,672)
(6.7)
%
Stock compensation expense
2,101
2,012
89
4.4
%
Litigation loss contingency accrual
19,648
—
19,648
N.M.
Other expenses
20,607
18,902
1,705
9.0
%
Total
$
128,824
$
111,559
$
17,265
15.5
%
N.M. - Not Meaningful
Twenty-six weeks –
Fiscal 2024 vs. Fiscal 2023
 
 
 
 
 
 
 
 
 
2327
Specialty egg expense
-
Specialty egg
expense increased
by 0.7%,
as advertising
expense increased
in fiscal 2024
as discussed above
and was
offset by the reduction in franchise fees to Eggland’s
Best, Inc.
Delivery expense
-
The decreased delivery expense is primarily due to a decrease in fuel
and contract trucking expenses in fiscal 2024.
Payroll, taxes and benefits expense
-
The decrease
in payroll,
taxes and
benefits expense
is primarily
due to
a decrease
in accrued
bonuses in
the first
two
quarters of fiscal 2024 compared to the prior year period.
Litigation loss contingency accrual
-
The increase relates to the litigation loss contingency accrual discussed above.
Other expenses
-
The increase in other expense is primarily due to increased legal costs incurred
in the year-to-date period.
OPERATING
 
INCOME (LOSS)
For the first second
quarter of fiscal
2024,
we recorded operating
income of $14.2
million compared
to operating income
 
of $259.9
million for the same period of fiscal 2024, we2023.
For the twenty-six
 
weeks ended December
2, 2023, we recorded
an operating loss ofincome
 
$6.8of $7.5 million
compared to an operating
operating income of $163.9
$423.7 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
 
second quarter of
 
of fiscal 2024, we
 
2024,
we earned $7.5
$7.1 million
 
of interest income
 
income compared
to $1.1$2.1
 
million for the
 
the same
period of
of
fiscal
 
2023.
 
The
 
increase
 
resulted
 
from
 
significantly
 
higher
 
investment
 
balances
 
and
 
higher
 
interest
 
rates.
 
The
 
Company
recorded interest expense
of $134 thousand and
$143 thousand for the
second quarters ended December
2, 2023 and November
26, 2022, respectively.
For the twenty-six weeks ended December 2, 2023, we earned
$14.6 million of interest income compared to $3.1 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 of $276
thousand
 
and $148$291
 
thousand
for
 
the first
 
quarters twenty-six
weeks
ended
 
SeptemberDecember 2,
 
2023 and
August 27,
and November 26, 2022, respectively.
INCOME TAXES
For
the first
second
quarter
of
fiscal
 
2024,
pre-tax
income
was $733 thousand$22.1
million
 
compared
to $165.5
$262.2
million
for
the
 
same
period
of fiscal
fiscal 2023.
We
 
recorded income
tax expense of $322
 
thousandof $5.5
million for
the first second
quarter of
 
fiscal 2024,
which reflects
an effective
tax rate
 
tax rate
of 43.9%25.0%.
 
Income tax expense
 
expense was $40.3 million$64.0
 
million for
the comparable
 
period of fiscal
 
2023, which reflects
 
reflects an effective
tax rate of 24.4%.
Our effective tax
 
rate
of 24.4%. differs from
 
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
 
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
 
the firstsecond quarter
 
quarter ended
September December 2,
 
2023, was
 
$926 thousand,17.0 million,
 
or $0.02$0.35
per basic and
 
diluted common share,
 
compared to net
 
income attributable to
 
Cal-Maine Foods, Inc.
 
of $125.3$198.6 million,
 
or $2.58$4.08
per basic and $2.57$4.07 per diluted common share for the same period of fiscal
2023.
28
Net income attributable to
Cal-Maine Foods, Inc. for the
twenty-six weeks ended December 2,
2023, was $17.9 million, or
$.37
per basic
and diluted
common share,
compared to
net income
attributable to
Cal-Maine Foods,
Inc. of
$323.9 million
or $6.66
per basic and $6.63 per diluted common share, for the same period of fiscal 2023.
LIQUIDITY AND CAPITAL
RESOURCES
 
Working
Capital and Current Ratio
Our working capital
 
capital at September
December 2,
 
2023 was $937.7 million,$910.1
 
million, compared
to $942.2
 
million at June
 
June 3,
2023. The
 
calculation of
working
capital
 
is defined
 
as current
 
assets less
 
current liabilities.
 
liabilities. Our
current
 
ratio was
 
8.4 atwas 6.9
 
September 2,at December
 
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 twenty-six weeks
 
ended September
December 2, 2023,
 
$23.774.0 million in net cash
 
in netwas provided by operating
 
cash was
provided by
operating activities,
compared to
$172.8344.8
 
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
WeFor
 
continue the
twenty-six
weeks
ended
December
2,
2023,
$32.4
million
was
provided
by
investing
activities,
primarily
due
to
 
invest the
sales
and
maturities
of
investment
securities,
partially
offset
by
the
acquisition
of
assets
of
Fassio
Egg
Farms,
Inc.
This
compares
to
$146.7
million
used
in
 
our facilities,investing
 
with $26.7activities
in
the
same
period
of
fiscal
2023,
primarily
due
to
purchases
of
investment
securities.
Sales
and
maturities
of
investment
securities
were
$196.1
 
million used
in
first
two
quarters
of
fiscal
2024,
compared to
$65.3 million
in the
first two
quarters fiscal
2023. The
increase in
sales and
maturities of
investment securities
is
primarily
due
 
to purchasethe
 
or constructmaturities of
short-term
investments
during
the period.
Purchases of
 
property,
 
plant and
 
equipment were
$66.2 million
and $59.7 million
in the first
two quarters
of fiscal 2024
and 2023,
respectively,
primarily reflecting
progress on
our construction projects.
Cash Flows from Financing Activities
We
paid dividends
of $37.3
million for
the twenty-six
weeks ended
December 2,
2023 compared
to $78.4
million in
the same
prior-year period.
As of December 2, 2023, cash
increased $69.0 million since June
3, 2023, compared to an increase
of $119.6 million during
 
the
thirteen weeks ended
September 2, 2023,
compared to $27.7
million in the
same period of fiscal 2023.
Credit Facility
We
 
fiscal 2023. Saleshad no
 
and maturities of
investmentlong-term debt
 
securitiesoutstanding at
 
wereDecember 2,
 
$135.82023 or
 
millionJune 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
 
thean
 
firstinitial
 
quarteraggregate
principal
amount
 
of
 
fiscal
2024,
comparedup
 
to
 
$20.3250
 
million
 
with
a
five-year
term.
As
of
December
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.
Dividends
In
accordance
with
our
variable
dividend
policy,
we
will
pay
a
cash
dividend
totaling
approximately
$5.7
million,
or
approximately $0.116
per share to holders
of our common
and Class A common
stock with respect
to our second
fiscal quarter
of 2024.
The amount
paid per
share will
vary based
on the
number of
outstanding
shares on
the record
date. The
dividend is
payable on February 15, 2024 to holders of record on January 31, 2024.
Material Cash Requirements
We
continue
to
monitor
the
increasing
demand
for
cage-free
eggs
and
to
engage
with
our
customers
in
 
fiscalefforts
 
2023.to
achieve
a
smooth transition
toward their
announced timelines
for cage-free
egg sales.
 
The following
table presents
material construction
projects approved as of December 2, 2023 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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):29
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of
SeptemberDecember 2, 2023
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 20242025
54,702
23,22136,370
31,481
Cage-Free Layer & Pullet Houses
Fiscal 2025
40,099
29,471
10,62818,332
Feed Mill
Fiscal 2025
10,80010,486
362,486
10,7648,000
Cage-Free Layer & Pullet Houses
Fiscal 2026
38,88378,982
24,62359,000
14,26019,982
Cage-Free Layer & Pullet Houses
Fiscal 2027
56,92356,732
24,31129,334
32,61227,398
$
201,407200,902
$
101,662127,190
$
99,74573,712
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
 
are those
estimates
 
made in
 
in accordance with
 
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
 
have been no
 
no changes to
 
to our critical
 
critical accounting estimates
 
estimates identified in
 
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 SeptemberDecember 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
 
controls and
procedures are
 
designed to
 
provide reasonable assurance
 
assurance that
information required
 
to be
disclosed
by us in the reports
we file or submit
 
or submit under the Exchange Act
is recorded, processed, summarized
 
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
 
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 SeptemberDecember 2, 2023 at the reasonable
assurance level.
Changes in Internal Control Over Financial Reporting
There was no
 
no change
in our
 
internal control over
 
over financial
reporting that
 
occurred during the
 
the quarter
ended SeptemberDecember
 
2, 2023
that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2630
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 SALESReport, except
 
OF EQUITY
SECURITIES, USE
OF PROCEEDS,
AND ISSUER
PURCHASESas
OF EQUITY SECURITIESreported herein in Part I Item 2 under the heading “HPAI.”
 
The following table is a summaryITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
There were no purchases of Common Stock made by or
on behalf 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 YetCompany or any affiliated purchaser
 
Beduring the second
quarter of Sharesfiscal 2024.
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
3.2
31.1*
31.2*
32**
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.
 
 
2731
SIGNATURES
Pursuant to the
 
the requirements
of the Securities
 
Securities Exchange Act
 
of 1934, the
 
the registrant has duly
 
duly caused
this report
 
to be signed
 
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
 
OctoberJanuary 3, 20232024
/s/ Max P.
 
Bowman
Max P.
 
Bowman
Vice President, Chief Financial
Officer
(Principal Financial Officer)
໿
Date:
 
OctoberJanuary 3, 20232024
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
໿