Cal-Maine Foods 10Q 2021 Q3 Quarterly report

Index

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

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

February 27, 2021

☐

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:

000-38695

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.)

3320 Woodrow Wilson Avenue

Jackson

Mississippi

39209

(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

check

mark

whether

the

registrant:

(1)

has

filed

all

reports

required

filed

Section

15(d)

the

Securities Exchange

Act of 1934

during the preceding

12 months (or

for such

shorter period that

the registrant was

required to

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

90 days.

Yes

☑

☐

Indicate by check

mark whether the

registrant has submitted

electronically every

Interactive Data File

required to be

submitted

pursuant to

Rule 405

of Regulation

S-T (§232.405

of this

chapter) during

the preceding

12 months

(or for

such shorter

period

tha

t the registrant was required to submit such files).

Yes

☑

☐

Indicate by

check mark

whether the registrant

is a large

accelerated filer,

an accelerated

filer, a

non-accelerated filer,

a smaller

reporting

company,

emerging

growth

company.

See

the

definitions

“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

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

use

the

extended

transition

period

for

complying

with

any

new

revised

financial

accounting

standards

provided

pursuant

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

☐

☑

There were

44,056,163

shares of

Common Stock,

$0.01 par value,

and

4,800,000

shares of Class

A Common

Stock, $0.01

par

value, outstanding as of March 29, 2021.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets -

February 27, 2021 and May 30, 2020

Condensed Consolidated Statements of Operations -

Thirteen and Thirty-nine Weeks Ended February 27, 2021 and February 29, 20

Condensed Consolidated Statements of Comprehensive Income (Loss) -

Thirteen and Thirty-nine Weeks Ended February 27, 2021 and February 29, 2020

Condensed Consolidated Statements of Cash Flows -

Thirty-nine Weeks Ended February 27, 2021 and February 29, 2020

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Item 4.

Controls and Procedures

Part II.

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Index

PART

FINANCIAL

INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except for par value amounts)

February 27, 2021

43981

Assets

Current assets:

Cash and cash equivalents

52,917

78,130

Investment securities available-for-sale

127,771

154,163

Trade and other receivables, net

130,314

98,375

Inventories

207,739

187,216

Prepaid expenses and other current assets

4,162

4,367

Total current

assets

522,903

522,251

Property, plant &

equipment, net

585,389

557,375

Finance lease right-of-use asset, net

563

678

Operating lease right-of-use asset, net

1,922

2,531

Investments in unconsolidated entities

57,055

60,982

Goodwill

35,525

Intangible assets, net

22,256

22,816

Other long-term assets

5,671

4,536

Total Assets

1,231,284

1,206,694

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

99,851

92,182

Current portion of finance lease obligation

212

205

Current portion of operating lease obligation

741

796

Total current

liabilities

100,804

93,183

Long-term finance lease obligation

492

652

Long-term operating lease obligation

1,180

1,735

Other noncurrent liabilities

9,690

8,681

Deferred income taxes

102,669

92,768

Total liabilities

214,835

197,019

Commitments and contingencies - see

Note 12

—

Stockholders’ equity:

Common stock ($

0.01

par value):

Common stock - authorized

120,000

shares, issued

70,261

703

Class A convertible common stock - authorized and issued

4,800

Paid-in capital

63,170

60,372

Retained earnings

980,212

975,147

Accumulated other comprehensive income (loss), net of tax

(135)

Common stock in treasury at cost –

26,205

shares at February 27, 2021 and

26,287

shares at May 30, 2020

(27,549)

(26,674)

Total stockholders’

equity

1,016,449

1,009,675

Total Liabilities and

Stockholders’ Equity

1,231,284

1,206,694

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Net sales

359,080

345,588

999,189

898,276

Cost of sales

311,563

295,760

876,457

840,198

Gross profit

47,517

49,828

122,732

58,078

Selling, general and administrative

47,656

44,231

135,494

132,434

Loss on disposal of fixed assets

354

385

476

467

Operating income (loss)

(493)

5,212

(13,238)

(74,823)

Other income (expense):

Interest income, net

591

803

2,181

3,628

Royalty income

321

414

906

1,173

Patronage dividends

9,004

10,096

9,004

10,096

Equity income of unconsolidated entities

1,872

1,445

1,886

537

Other, net

537

1,485

1,897

Total other income,

net

12,325

12,837

15,462

17,331

Income (loss) before income taxes

11,832

18,049

2,224

(57,492)

Income tax (benefit) expense

(1,716)

4,278

(4,080)

(15,356)

Net income (loss)

13,548

13,771

6,304

(42,136)

Less: Income (loss) attributable to noncontrolling

interest

(64)

Net income (loss) attributable to Cal-Maine

Foods, Inc.

13,548

13,749

6,304

(42,072)

Net income (loss) per common share attributable

to Cal-Maine Foods, Inc.:

Basic

0.28

0.13

(0.87)

Diluted

0.28

0.13

(0.87)

Weighted average

shares outstanding:

Basic

48,530

48,473

48,511

48,455

Diluted

48,659

48,588

48,649

48,455

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of

Comprehensive Income (Loss)

(in thousands)

(unaudited)

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Net profit (loss)

13,548

13,771

6,304

(42,136)

Other comprehensive income (loss), before tax:

Unrealized holding loss on available-for-sale

securities, net of reclassification adjustments

(378)

(38)

(283)

(863)

Income tax benefit related to items of other

comprehensive income

210

Other comprehensive loss, net of tax

(286)

(29)

(214)

(653)

Comprehensive income (loss)

13,262

13,742

6,090

(42,789)

Less: Comprehensive income (loss) attributable

to the noncontrolling interest

(64)

Comprehensive income (loss) attributable to Cal-

Maine Foods, Inc.

13,262

13,720

6,090

(42,725)

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

Operating activities:

Net income (loss)

6,304

(42,136)

Depreciation and amortization

44,391

42,911

Deferred income taxes

9,970

(13,406)

Impairment loss on property,

plant & equipment

2,919

Other adjustments, net

(45,936)

(26,742)

Net cash provided by (used in) operations

14,729

(36,454)

Investing activities:

Purchases of investment securities

(59,415)

(12,100)

Sales and maturities of investment securities

85,202

181,533

Distributions from unconsolidated entities

5,813

6,114

Acquisition of business

(44,515)

Purchases of property,

plant and equipment

(73,796)

(94,600)

Net proceeds from disposal of property,

plant and equipment

3,273

1,839

Net cash provided by (used in) investing activities

(38,923)

38,271

Financing activities:

Purchase of common stock by treasury

(871)

(910)

Distributions to noncontrolling interests

(755)

Principal payments on long-term debt

(1,500)

Principal payments on finance lease

(153)

(146)

Contributions

Net cash used in financing activities

(1,019)

(3,311)

Net change in cash and cash equivalents

(25,213)

(1,494)

Cash and cash equivalents at beginning of period

78,130

69,247

Cash and cash equivalents at end of period

52,917

67,753

Supplemental Information:

Cash paid for operating leases

703

635

Interest paid

193

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

February 27, 2021

(unaudited)

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The

unaudited

condensed

consolidated

financial

statements

Cal-Maine

Foods,

Inc.

and

its

subsidiaries

(the

"Company,"

"we,"

"us,"

"our")

have

been

prepared

accordance

with

the

instructions

Form

10-Q

and

Article

Regulation

S-X.

Therefore, they

do not

include all of

the information

and footnotes

required by

generally accepted

accounting principles

in the

United

States

America

("GAAP")

for

complete

financial

statements

and

should

read

conjunction

with

our

Annual

Report

Form

10-K

for

the

fiscal

year

ended

May

30,

2020

(the

"2020

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,

the

opinion

management,

consist

adjustments

normal

recurring

nature.

Operating

results

for

the

interim

periods are not necessarily indicative of operating results for the entire fiscal

year.

Fiscal Year

The Company's

fiscal year

ends on

the Saturday

closest to

May 31.

Each of

the three-month

periods and

year-to-date periods

ended on February 27, 2021 and February 29, 2020 included 13 weeks

and 39 weeks, respectively.

Use of Estimates

The preparation of the

consolidated financial statements in

conformity with GAAP requires management

to make estimates and

assumptions

that affect

the amounts

reported in

the consolidated

financial statements

and accompanying

notes. Actual

results

could differ from those estimates.

The severity,

magnitude and duration, as well as

the economic consequences of the COVID-19

pandemic, are uncertain, rapidly

changing

and

difficult

predict.

Therefore,

our

accounting

estimates

and

assumptions

might

change

materially

future

periods in response to COVID-19.

Investment Securities

Our investment

securities are

accounted

for in

accordance with

ASC 320,

“Investments -

Debt and

Equity Securities”

(“ASC

320”).

The

Company

considers

all

its

debt

securities

for

which

there

determinable

fair

market

value,

and

there

are

restrictions

the

Company's

ability

sell

within

the

months,

available-for-sale.

classify

these

securities

current, because the

amounts invested are available

for current operations.

Available-for-sale

securities are carried at

fair value,

with unrealized

gains and

losses reported

as a

separate

component

of stockholders’

equity.

The Company

regularly

evaluates

changes to

the rating of

its debt securities

by credit

agencies and economic

conditions to assess

and record

any expected

credit

losses through allowance

for credit losses limited

to the amount

that fair value

was less than the

amortized cost basis.

The cost

basis for realized gains and

losses on available-for-sale securities is

determined by the specific identification

method. Gains and

losses

are

recognized

other

income

(expenses)

Other,

net

the

Company's

Condensed

Consolidated

Statements

Operations.

Investments

mutual

funds

are

classified

“Other

long-term

assets”

the

Company’s

Consolidated

Balance

Sheets.

Trade Receivables

Trade

receivables are

stated at

their carrying

values, which

include a

reserve for

credit losses.

At February

27, 2021

and May

30,

2020,

reserves

for

credit

losses

were

728

thousand

and

744

thousand,

respectively.

The

Company

extends

credit

customers based on

an evaluation of

each customer's financial

condition and credit

history.

Collateral is generally

not required.

The

Company

minimizes

exposure

counter

party

credit

risk

through

credit

analysis

and

approvals,

credit

limits,

and

monitoring

procedures.

determining

our

reserve

for

credit losses,

receivables

are

pooled

according

age,

with

each

pool

assigned

expected

loss

based

historical

loss

information

adjusted

needed

for

economic

and

other

forward-looking

factors.

Index

Change in Accounting Principle

Effective

May

31,

2020,

the

Company

adopted

ASU

2016-13,

Financial

Instruments

–

Credit

Losses

(Topic

326),

which

intended

improve

financial

reporting

requiring

timely

recording

credit

losses

loans

and

other

financial

instruments held by financial institutions and other organizations.

The guidance replaces the prior “incurred loss” approach with

an “expected

loss” model

and requires

measurement of

all expected

credit losses

for financial

assets held

at the

reporting date

based

historical

experience,

current

conditions,

and

reasonable

and

supportable

forecasts.

The

Company

adopted

the

guidance on

a modified

retrospective basis

through a

cumulative effect

adjustment to

retained earnings

as of

the beginning

the period of

adoption. The Company

evaluated its current

methodology of

estimating allowance for

doubtful accounts and

the

risk

profile

its

receivables

portfolio

and

developed

model

that

includes

the

qualitative

and

forecasting

aspects

the

“expected

loss”

model

under

the

amended

guidance.

The

Company

finalized

its

assessment

the

impact

the

amended

guidance and recorded a $

422

thousand cumulative increase to retained earnings at May 31, 2020.

Note 2 - Investment

Securities

The following represents the Company’s

investment securities as of February 27, 2021 and May 30, 2020 (in

thousands):

February 27, 2021

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

16,157

16,209

Commercial paper

6,345

Corporate bonds

92,256

1,062

93,318

Certificates of deposits

2,084

2,077

Asset backed securities

9,823

9,822

Total current

investment securities

126,665

1,114

127,771

Mutual funds

2,293

1,424

3,717

Total noncurrent

investment securities

2,293

1,424

3,717

43981

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

16,093

16,179

Commercial paper

6,965

6,982

Corporate bonds

125,594

1,274

126,868

Certificates of deposits

1,492

Asset backed securities

2,629

2,642

Total current

investment securities

152,773

1,390

154,163

Mutual funds

2,005

744

2,749

Total noncurrent

investment securities

2,005

744

2,749

Available-for-sale

Proceeds from sales

and maturities of investment

securities available-for-sale

were $

85.2

million and $

181.5

million during the

thirty-nine weeks

ended February 27,

2021 and

February 29,

2020,

respectively.

Gross realized

gains for

the thirty-nine

weeks

ended

February

27,

2021

and

February

29,

2020

were

116

thousand

and

246

thousand,

respectively.

There

were

thousand

and

thousand

gross

realized

losses

for

the

thirty-nine

weeks

ended February

27,

2021

and

February

29,

2020,

respectively.

There were

allowance for credit losses at February 27, 2021 and May 30, 2020.

Index

Actual maturities

may differ

from contractual

maturities as some

borrowers have

the right to

call or prepay

obligations with

without penalties.

Contractual maturities of current investments at February 27, 2021 are

as follows (in thousands):

Estimated Fair Value

Within one year

44,862

1-5 years

82,909

Total

127,771

Noncurrent

There were

sales of

noncurrent investment

securities during

the thirty-nine

weeks ended February

27, 2021.

Proceeds from

sales

and

maturities

noncurrent

investment

securities

were

1.2

million

during

the

thirty-nine

weeks

ended February

29,

2020.

Gross

realized

gains

for

the

thirty-nine

weeks

ended February

29,

2020

were

611

thousand.

There

were

realized

losses for the thirty-nine weeks ended February 27, 2021 and February

29, 2020.

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

paid

transfer

the

liability

new

obligor

transaction

between

such

parties,

not

the

amount

that

would

be paid

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.

Lease obligations:

The carrying value of the Company’s lease obligations

is at its present value which approximates fair value.

Assets and Liabilities Measured at Fair

Value

on a Recurring Basis

accordance

with

the

fair

value

hierarchy

described

above,

the

following

table

shows

the

fair

value

financial

assets and

liabilities measured at fair value on a recurring basis as of February 27, 2021 and May 30,

2020 (in thousands):

February 27, 2021

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

16,209

Commercial paper

6,345

Corporate bonds

93,318

Certificates of deposits

2,077

Asset backed securities

9,822

Mutual funds

3,717

Total assets measured at fair

value

3,717

127,771

131,488

Index

43981

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

16,179

Commercial paper

6,982

Corporate bonds

126,868

Certificates of deposits

1,492

Asset backed securities

2,642

Mutual funds

2,749

Total assets measured at fair

value

2,749

154,163

156,912

Investment

securities

–

available-for-sale

classified

as Level

consist

securities

with maturities

three

months

or longer

when purchased. Observable inputs for these securities are yields, credit risks, default

rates, and volatility.

Note 4 - Inventories

Inventories consisted of the following as of February 27, 2021 and

May 30, 2020 (in thousands):

February 27, 2021

43981

Flocks, net of amortization

115,904

110,198

Eggs and egg products

18,069

18,487

Feed and supplies

73,766

58,531

207,739

187,216

grow

and

maintain

flocks

layers

(mature

female

chickens),

pullets

(female

chickens,

under

weeks

age),

and

breeders (male and female chickens used to produce fertile eggs

to hatch for egg production flocks).

Our total flock at February

27, 2021 consisted of approximately

9.6

million pullets and breeders and

41.3

million layers.

Note 5 - Accrued Dividends Payable and Dividends per Common

accrue dividends at

the end of

each quarter according

to the Company’s

dividend policy adopted

by its Board

of Directors.

The Company

pays a dividend

to shareholders

of its Common

Stock and

Class A Common

Stock on

a quarterly basis

for each

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

the

last

quarter

for

which

dividend

was

paid.

For

the

third

quarter

fiscal

2021,

will

pay

cash

dividend

approximately

0.034

per share

to holders

of our

Common Stock

and

Class A

Common

Stock.

The amount

of the

accrual is

recorded in Accounts payable and accrued expenses in the Company’s

Condensed Consolidated Balance Sheets.

Index

our

condensed

consolidated

statement

operations,

determine

dividends

per

common

accordance

with

the

computation in the following table (in thousands, except per share data):

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Net income (loss) attributable to Cal-Maine

Foods, Inc.

13,548

13,749

6,304

(42,072)

Cumulative losses to be recovered prior to

payment of divided at beginning of period

(8,614)

(75,582)

(1,370)

(19,761)

Net income attributable to Cal-Maine Foods,

Inc. available for dividend

4,934

1/3 of net income attributable to Cal-Maine

Foods, Inc. available for dividend

1,645

Common stock outstanding (shares)

44,056

Class A common stock outstanding (shares)

4,800

Total common stock

outstanding (shares)

48,856

Dividends per common share*

0.034

Dividends per common share

= 1/3 of Net

income (loss) attributable to

Cal-Maine Foods, Inc. available

for dividend ÷ Total

common stock

outstanding (shares).

Note 6 - Equity

The following reflects the equity activity,

for the thirteen and thirty-nine weeks ended February 27,

2021 and February 29, 2020

(in thousands):

Thirteen Weeks Ended February

27, 2021

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Amount

Capital

Comp. Income

Earnings

Total

Balance at November 28, 2020

703

(26,723)

62,206

151

968,325

1,004,710

Other comprehensive loss, net of

tax

—

(286)

—

(286)

Purchase of company stock

—

(826)

—

(826)

Restricted stock compensation

—

964

—

964

Dividends

—

(1,661)

Net income

—

13,548

Balance at February 27, 2021

703

(27,549)

63,170

(135)

980,212

1,016,449

Index

Thirteen Weeks Ended February 29, 2020

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Income

Earnings

Interest

Total

Balance at November 30,

2019

703

(25,888)

58,652

(269)

900,485

562

934,293

Other comprehensive

loss, net of tax

—

(29)

—

(29)

Restricted stock

forfeitures

—

103

(103)

—

Purchase of company

stock

—

(889)

—

(889)

Restricted stock

compensation

—

886

—

886

Net income

—

13,749

13,771

Balance at February 29,

2020

703

(26,674)

59,435

(298)

914,234

584

948,032

Thirty-nine Weeks Ended February

27, 2021

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Amount

Capital

Comp. Income

Earnings

Total

Balance at May 30, 2020

703

(26,674)

60,372

975,147

1,009,675

Impact of ASC 326, see

Note 1

—

422

Balance at May 31, 2020

703

(26,674)

60,372

975,569

1,010,097

Other comprehensive loss, net of

tax

—

(214)

—

(214)

Restricted stock forfeitures

—

(4)

—

Purchase of company stock

—

(871)

—

(871)

Restricted stock compensation

—

2,789

—

2,789

Contributions

—

Dividends

—

(1,661)

Net income

—

6,304

Balance at February 27, 2021

703

(27,549)

63,170

(135)

980,212

1,016,449

Index

Thirty-nine Weeks Ended February 29, 2020

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Income

Earnings

Interest

Total

Balance at June 01, 2019

703

(25,866)

56,857

355

954,527

3,182

989,806

Other comprehensive

loss, net of tax

—

(653)

—

(653)

Restricted stock

forfeitures

—

102

(102)

—

Purchase of company

stock

—

(910)

—

(910)

Distributions to

noncontrolling interest

partners

—

(755)

Reclass of equity portion

of Texas Egg Products,

LLC in connection with

acquisition

—

1,779

(1,779)

—

Restricted stock

compensation

—

2,680

—

2,680

Net loss

—

(42,072)

(64)

(42,136)

Balance at February 29,

2020

703

(26,674)

59,435

(298)

914,234

584

948,032

Note 7 - Net Income (Loss) per Common Share

Basic net

income (loss)

per share

attributable to

Cal-Maine Foods,

Inc. is

based on

the weighted

average Common

Stock and

Class A Common

Stock outstanding.

Diluted net income

per share attributable

to Cal-Maine Foods,

Inc. is based

on weighted-

average

common

outstanding

during

the

relevant

period

adjusted

for

the

dilutive

effect

share-based

awards.

Restricted

121

thousand

were

antidilutive

due

the

net

loss

for

the

thirty-nine

weeks

ended

February

29,

2020.

These shares were not included in the diluted net loss per share calculation.

Index

The

following

table

provides

reconciliation

the

numerators

and

denominators

used

determine

basic

and

diluted

net

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

(amounts in thousands, except per share data):

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Numerator

Net income (loss)

13,548

13,771

6,304

(42,136)

Less: Income (loss) attributable to

noncontrolling interest

(64)

Net income (loss) attributable to Cal-

Maine Foods, Inc.

13,548

13,749

6,304

(42,072)

Denominator

Weighted-average

common shares

outstanding, basic

48,530

48,473

48,511

48,455

Effect of dilutive restricted shares

129

115

138

Weighted-average

common shares

outstanding, diluted

48,659

48,588

48,649

48,455

Net income (loss) per common share

attributable to Cal-Maine Foods, Inc.

Basic

0.28

0.13

(0.87)

Diluted

0.28

0.13

(0.87)

Note 8 - Revenue Recognition

Satisfaction of Performance Obligation

The vast

majority of

the Company’s

revenue is

derived from

contracts with

customers based

on the

customer placing

an order

for products.

Pricing for the most part

is determined when the

Company and the customer

agree upon the specific

order, which

establishes the contract for that order.

Revenues are

recognized in

an amount

that reflects

the net

consideration we

expect to

receive in

exchange for

the goods.

Our

shell eggs

are sold

at prices

related to

independently

quoted wholesale

market prices,

negotiated prices

or formulas

related to

our costs

of production.

The Company’s

sales predominantly

contain a

single performance

obligation.

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

estimate of returns and

refunds by using historical return

data and

comparing to

current period

sales and

accounts receivable.

The allowance

is recorded

as a

reduction in

sales with

corresponding reduction in trade accounts receivable.

Sales Incentives Provided to Customers

The

Company

periodically

provides

incentive

offers

its

customers

encourage

purchases.

Such

offers

include

current

discount offers

(e.g., percentage

discounts off

current purchases), inducement

offers (e.g.,

offers for

future discounts subject

a minimum

current purchase),

and other

similar offers.

Current discount

offers,

when accepted

by customers,

are treated

as a

reduction

the sales

price

of the

transaction,

while inducement

offers,

when

accepted

customers,

are

treated

as a

reduction to sales price based on estimated future redemption rates.

Index

Disaggregation of Revenue

The following table provides revenue disaggregated by product category

(in thousands):

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Conventional shell egg sales

203,189

210,329

560,297

518,898

Specialty shell egg sales

145,210

125,019

408,537

352,118

Egg products

9,098

9,212

25,736

24,210

Other

1,583

1,028

4,619

3,050

359,080

345,588

999,189

898,276

Contract Costs

The Company can

incur costs to obtain

or fulfill a contract

with a customer.

The amortization period

of these costs is

less than

one year; therefore, they are expensed as incurred.

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 and

they are generally

immaterial to

the

financial statements.

Note 9 - Leases

Expenses related

to operating

leases, amortization

of finance

leases, right-of-use

assets, and

finance lease

interest are

included

in Cost of sales, Selling general and administrative expense, and Interest

income, net in the Condensed Consolidated Statements

of Operations. The Company’s lease cost

consists of the following (in thousands):

13 Weeks Ended

February 27, 2021

39 Weeks Ended

February 27, 2021

Operating Lease cost

233

703

Finance Lease cost

Amortization of right-of-use asset

125

Interest on lease obligations

Short term lease cost

857

2,714

Index

Future minimum lease payments under non-cancelable leases are as follows (in

thousands):

As of February 27, 2021

Operating Leases

Finance Leases

Remainder fiscal 2021

224

2022

802

239

2023

539

239

2024

380

218

2025

130

2026

Thereafter

Total

2,106

764

Less imputed interest

(185)

(60)

Total

1,921

704

The

weighted-average

remaining

lease

term

and

discount

rate

for

lease

liabilities

included

our

Condensed

Consolidated

Balance Sheet are as follows:

As of February 27, 2021

Operating Leases

Finance Leases

Weighted-average

remaining lease term (years)

3.0

2.8

Weighted-average

discount rate

5.9

4.9

Note 10 - Stock Based Compensation

October

2020,

shareholders

approved

the

Amended

and

Restated

Cal-Maine

Foods,

Inc.

2012

Omnibus

Long-Term

Incentive

Plan

(the

“Plan”).

The

purpose

the

Plan

assist

and

our

subsidiaries

attracting

and

retaining

selected

individuals

who

are

expected

contribute

our

long-term

success.

The

maximum

number

common

stock

available

for

awards

under

the

Plan

2,000,000

which

1,128,488

remain

available

for

issuance,

and

may

authorized but

unissued shares

or treasury

shares. Awards

may be

granted under

the Plan

to any

employee, any

non-employee

member of the Company’s

Board of Directors, and

any consultant who is

a natural person and

provides services to us

or one of

our subsidiaries (except for incentive stock options, which may be granted

only to our employees).

The only

outstanding awards

under the

Plan are

restricted stock

awards. The

restricted stock

vests one

to three

years from

the

grant

date, or

upon death

or disability,

change

in control,

or retirement

(subject to

certain requirements).

The restricted

stock

contains no other service or performance

conditions. Restricted stock is awarded in

the name of the recipient and, except

for the

right of

disposal, constitutes

issued and

outstanding shares

of the

Company’s

common stock

for all

corporate purposes

during

the period

of restriction

including the

right to

receive dividends.

Compensation

expense is

a fixed

amount based

on the

grant

date closing price and is amortized over the vesting period.

Total

stock-based compensation

expense was

2.8

million and

2.7

million for

the thirty-nine

weeks ended

February 27,

2021

and February 29, 2020, respectively.

Unrecognized

compensation expense

as a

result of

non-vested

shares of

restricted stock

outstanding under

the 2012

Omnibus

Long-Term

Incentive Plan

at February

27, 2021

of $

7.5

million will

be recorded

over a

weighted average

period of

2.3

years.

Refer

Note

our

audited

financial

statements

our

2020

Annual

Report

for

further

information

our

stock

compensation plans.

Index

The Company’s restricted share activity

for the thirty-nine weeks ended February 27, 2021 follows:

Number of

Weighted

Average Grant

Date Fair Value

Outstanding, May 30, 2020

273,046

41.36

Granted

110,560

37.71

Vested

(79,328)

43.96

Forfeited

(4,431)

40.12

Outstanding, February 27, 2021

299,847

39.35

Note 11 – Income Taxes

The differences

between income

tax expense

(benefit)

at the

Company’s

effective

income tax

rate and

income tax

expense at

the statutory federal income tax rate for the thirteen and thirty-nine

weeks ended as of February 27, 2021 were as follows:

Thirteen Weeks

Ended

Thirty-nine Weeks

Ended

February 27, 2021

Statutory federal income tax

2,907

543

Enacted net operating loss carryback provision

(6,422)

Domestic manufacturers deduction

1,408

Other, net

391

(1,716)

(4,080)

On March

27, 2020,

the Coronavirus

Aid, Relief,

and Economic

Security

Act (the

“CARES Act”)

was enacted.

The CARES

Act

contains

several income

tax provisions,

as well

as other

measures,

that are

intended to

assist businesses

impacted

the

economic

effects

the

COVID-19

pandemic.

The

most

significant

provision

the

CARES

Act

that

materially

affects

our

accounting

for

income

taxes

includes

five-year

carryback

allowance

for

taxable

net

operating

losses generated

tax

years

2018 through 2020, our fiscal years 2019 through 2021.

Our financial

statements for

the thirteen

weeks ended

February 27,

2021 were

affected by

the changes

enacted by

the CARES

Act.

As a result of the applicable accounting

guidance and the provisions enacted by the CARES Act, our

income tax provision

for the

third quarter

of fiscal

2021 reflects

the carryback

of taxable

net operating

losses generated

during periods

in which

the

statutory

federal

income

tax

rate

was

periods

which

the

statutory

federal

income

tax

rate

was

Due

the

difference

in statutory

rates, we

recorded a

6.4

million discrete

income tax

benefit related

to the

carryback provisions

during

the thirteen

weeks ended

February 27,

2021. Because

the net

operating losses

were carried

back to

years in

which we

initially

reduced our taxable income using

the Domestic Production Activities Deduction,

we recorded a partially offsetting

1.4

million

discrete income tax expense during the thirteen weeks ended February 27,

2021 to account for the reduced taxable income.

Note 12 - Commitments and Contingencies

Financial Instruments

The Company maintained

standby letters of credit

("LOC") totaling $

4.1

million at February 27,

2021 which were issued

under

the Company's Revolving Credit Facility.

The outstanding LOCs are for the benefit of certain insurance

companies, and are not

recorded as a liability on the consolidated balance sheets.

LEGAL PROCEEDINGS

State of Texas

v. Cal-Maine Foods, Inc. d/b/a Wharton;

and Wharton County Foods, LLC

On April

23, 2020,

the Company

and its subsidiary

Wharton County

Foods, LLC (“WCF”)

were named

as defendants in

State

Texas

Cal-Maine

Foods,

Inc.

d/b/a

Wharton;

and

Wharton

County

Foods,

LLC,

Cause

No.

2020-25427,

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

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

excessive

exorbitant

prices

during

the

COVID-19

state

emergency

and

made

misleading

statements

about

shell

egg

prices.

The

State

sought

temporary

and

Index

permanent

injunctions

against

the

Company

and

WCF

prevent

further

alleged

violations

the

DTPA,

along

with

over

100,000

in damages. On August 13, 2020, the court granted the defendants’ motion

to dismiss the State’s original petition with

prejudice. On September

11, 2020,

the State filed a

notice of appeal,

which was assigned to

the Texas

Court of Appeals

for the

First District. The

State filed its

opening brief

on December 7,

2020. The

Company and

WCF filed their

response on

February

8, 2021.

Management believes the risk of material loss related to this matter to be remote.

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

April

30, 2020,

the Company

was named

as one

of several

defendants

Bell et

al. v.

Cal-Maine

Foods et

al.,

Case No.

1:20-cv-461,

the

Western

District

Texas,

Austin

Division.

The

defendants

include

numerous

grocery

stores,

retailers,

producers, and farms. Plaintiffs assert that defendants

violated the DTPA

by allegedly demanding exorbitant or

excessive prices

for

eggs during

the

COVID-19

state of

emergency.

Plaintiffs

request

certification

of a

class of

all consumers

who purchased

eggs

Texas

sold,

distributed,

produced,

handled

any

the

defendants

during

the

COVID-19

state

emergency.

Plaintiffs seek to enjoin

the Company and other

defendants from selling eggs

at a price more than

10% greater than the price

eggs prior

to the

declaration

of the

state of

emergency

and damages

in the

amount

10,000

per violation,

or $

250,000

for

each violation impacting anyone over

65 years old. On December

1, 2020, the Company and certain

other defendants filed their

motion

dismiss

the

plaintiffs’

first

amended

class

action

complaint.

The

court

has

not

ruled

this

motion

dismiss.

Management believes the risk of material loss related to this matter to be remote.

Kraft Foods Global, Inc. et al. v.

United Egg Producers, Inc. et al.

As previously

reported, on

September 25,

2008, the

Company

was named

as one

of several

defendants

in numerous

antitrust

cases involving

the United

States shell

egg

industry.

The Company

settled all

of these

cases, except

for

the claims

of certain

plaintiffs who sought substantial

damages allegedly arising from

the purchase of egg products

(as opposed to shell eggs).

These

remaining plaintiffs

are Kraft

Food Global,

Inc., General

Mills, Inc.,

and Nestle

USA, Inc.

(the “Egg

Products Plaintiffs”)

and

The Kellogg Company.

On September

13, 2019,

the case

with the

Egg Products

Plaintiffs was

remanded from

a multi-district

litigation proceeding

the

United

States

District

Court

for

the

Eastern

District

Pennsylvania,

Processed

Egg

Products

Antitrust

Litigation,

MDL No. 2002, to

the United States District Court

for the Northern

District of Illinois, Kraft Foods

Global, Inc. et al. v.

United

Egg

Producers,

Inc.

al.,

Case

No.

1:11-cv-8808,

for

trial.

The

Egg

Products

Plaintiffs

allege

that

the

Company

and

other

defendants

violated

Section

the

Sherman

Act,

15.

U.S.C.

agreeing

limit

the

production

eggs

and

thereby

illegally to raise the prices that plaintiffs

paid for processed egg products. In particular,

the Egg Products Plaintiffs are

attacking

certain features of

the United Egg

Producers animal-welfare guidelines

and program used by

the Company and

many other egg

producers. The

Egg Products

Plaintiffs seek

to enjoin

the Company

and other

defendants from

engaging in

antitrust violations

and seek treble money damages. The parties filed a joint status

report on May 18, 2020, but no schedule has

yet been entered by

the court. It appears that the case will not be tried until later in 2021 or 2022.

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

amount

that

did

not

have

material

impact

the

Company’s

financial

condition or results

of operations. On

November 11,

2019, a stipulation

for dismissal was filed

with the court,

but the court

has

not yet entered a judgment on the filing.

The Company intends to

continue to defend the remaining

case with the Egg Products Plaintiffs

as vigorously as possible based

defenses

which

the

Company

believes

are

meritorious

and

provable.

Adjustments,

any,

which

might

result

from

the

resolution of

this remaining

matter with

the Egg

Products Plaintiffs

have not

been reflected

in the

financial statements.

While

management

believes

that

there

still

reasonable

possibility

material

adverse

outcome

from

the

case

with

the

Egg

Products Plaintiffs,

at the

present time,

it is not

possible to

estimate the

amount of

monetary exposure,

if any,

to the

Company

due to a range of

factors, including the following,

among others: the matter is in

the early stages of

preparing for trial following

remand;

any

trial

will

before

different

judge

and

jury

different

court

than

prior

cases;

there

are

significant

factual issues

to be

resolved; and

there are

requests for

damages other

than compensatory

damages

(i.e., injunction

and treble

money damages).

State of Oklahoma Watershed Pollution

Litigation

On June

18, 2005,

the State

of Oklahoma

filed suit,

in the

United States

District Court

for the

Northern District

of Oklahoma,

against Cal-Maine Foods, Inc. and

Tyson Foods,

Inc. and affiliates, Cobb-Vantress,

Inc., Cargill, Inc. and its

affiliate, George’s,

Inc. and

its affiliate,

Peterson Farms, Inc.

and Simmons Foods,

Inc. The

State of Oklahoma

claims that through

the disposal of

chicken

litter the

defendants have

polluted the

Illinois River

Watershed.

This watershed

provides

water to

eastern Oklahoma.

Index

The complaint

seeks injunctive

relief and

monetary damages,

but the

claim for

monetary damages

has been

dismissed by

the

court.

Cal-Maine

Foods,

Inc.

discontinued

operations

the

watershed.

Accordingly,

not

anticipate

that

Cal-Maine

Foods,

Inc.

will

materially

affected

the

request

for

injunctive

relief

unless

the

court

orders

substantial

affirmative

remediation. 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.

The trial in the case

began in September 2009 and

concluded in February 2010. The

case was tried without a jury,

and the court

has not yet issued its ruling. Management believes the risk of material loss related

to this matter to be remote.

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 13 - Related Party Transaction

August

24,

2020,

Mrs.

Jean

Reed

Adams,

the

wife

the

Company’s

late

founder

Fred

Adams,

Jr.,

and

the

Fred

Adams,

Jr.

Daughters’

Trust,

dated

July

20,

2018

(the

“Daughters’

Trust”),

which

the

daughters

Mr.

Adams

are

beneficiaries

(together,

the

“Selling

Stockholders”),

completed

registered

secondary

public

offering

6,900,000

Common Stock held by them, pursuant to a previously

disclosed Agreement Regarding Common Stock (the “Agreement”)

filed

as an exhibit to our 2020 Annual Report. Mrs. Adams and

the Daughters’ Trust advised the Company that

they were conducting

the

offering

order

pay

estate

taxes

the

settlement

Mr.

Adam’s

estate

and

obtain

liquidity.

The

public

offering

was

made

pursuant

the

Company’s

effective

shelf

registration

statement

Form

S-3

(File

No.

333-227742),

including the Prospectus

contained therein dated

October 9, 2018, and

a related Prospectus Supplement

dated August 19,

2020,

each of

which is on

file with the

Securities and

Exchange Commission.

The public offering

involved only

the sale of

shares of

Common

Stock

that

were

already

outstanding,

and

thus

the

Company

did

not

issue

any

new

raise

any

additional

capital

the

offering.

The

expenses

the

offering

(not

including

the

underwriting

discount

and

legal

fees

and

expenses

legal

counsel

for

the

Selling

Stockholders,

which

were

paid

the

Selling

Stockholders)

paid

the

Company

were

1,102,000

. Pursuant to the Agreement, the Selling Stockholders reimbursed the Company

551,000

Index

ITEM

MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

FINANCIAL

CONDITION

AND

RESULTS

OPERATIONS

The following

should be

read in

conjunction

with Management’s

Discussion and

Analysis of

Financial Condition

and Results

of Operations

included in

Item 7

of the

Company’s

Annual Report

on Form

10-K for

its fiscal

year ended

May 30,

2020 (the

“2020

Annual Report”),

and

the accompanying

financial statements

and

notes included

in Part

II, Item

8 of

the 2020

Annual

Report and in

Part

I, Item I

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

This

report

contains

numerous

forward-looking

statements

within

the

meaning

Section

27A

the

Securities

Act

1933

(the “Securities

Act”) and

Section 21E

of the

Securities Exchange

Act of

1934 (the

“Exchange Act”)

relating to

our shell

egg

business,

including

estimated

future

production

data,

expected

construction

schedules,

projected

construction

costs,

potential

future

supply

of and

demand

for

our

products,

potential

future

corn

and

��

soybean price

trends,

potential

future

impact

our

business

the

COVID-19

pandemic,

potential

future

impact

our

business

new

legislation,

rules

policies,

potential

outcomes

legal

proceedings,

and

other

projected

operating

data,

including

anticipated

results

operations

and

financial

condition.

Such

forward-looking

statements

are

identified

the

use

words

such

“believes,”

“intends,”

“expects,”

“hopes,”

“may,”

“should,”

“plans,”

“projected,”

“contemplates,”

“anticipates,”

similar

words.

Actual

outcomes

results

could differ

materially from

those projected

in the

forward-looking

statements.

The forward-looking

statements are

based on

management’s

current

intent,

belief,

expectations,

estimates,

and

projections

regarding

the

Company

and

its

industry.

These

statements

are

not

guarantees

future

performance

and

involve

risks,

uncertainties,

assumptions,

and

other

factors

that

are

difficult

to predict

and may

be beyond

our control.

The factors

that could

cause actual

results to

differ

materially from

those

projected

in the

forward-looking

statements include,

among others,

(i) the

risk factors

set forth

in Part

I, Item

1A of

the 2020

Annual

Report

(ii)

the

risks

and

hazards

inherent

the

shell egg

business

(including

disease, pests,

weather

conditions,

and

potential for

product recall),

(iii) changes

in the

demand for

and market

prices of

shell eggs

and feed

costs, (iv)

our ability

predict

and

meet

demand

for

cage-free

and

other

specialty

eggs,

(v)

risks,

changes,

obligations

that

could

result

from

our

future

acquisition

new

flocks

businesses

and

risks

changes

that

may

cause

conditions

completing

pending

acquisition not to

be met, (vi) risks

relating to the

evolving COVID-19 pandemic,

and (vii) adverse

results in pending litigation

matters.

Readers

are

cautioned

not

place

undue

reliance

forward-looking

statements

because,

while

believe

the

assumptions on

which the

forward-looking statements

are based

are reasonable,

there can

be no

assurance that

these forward-

looking

statements

will

prove

accurate.

Further,

forward-looking statements

included

herein

are

only

made

the

respective

dates

thereof,

if no

date

is stated,

as of

the date

hereof.

Except

as otherwise

required

law,

disclaim

any

intent or obligation

to update publicly

these forward-looking statements,

whether because of

new information, future

events, or

otherwise.

GENERAL

Cal-Maine

Foods,

Inc.

primarily

engaged

the

production,

grading,

packaging,

marketing

and

distribution

fresh

shell

eggs. Our operations are fully integrated

under one operating segment.

We are

the largest producer and distributor

of fresh shell

eggs in the United States.

Our total flock of approximately 41.3 layers and 9.6

pullets and breeders is the largest in the U.S. We

sell most

of our

shell eggs

to a

diverse

group of

customers, including

national and

regional grocery

store chains,

club stores,

companies

servicing

independent

supermarkets

the

U.S.,

food

service

distributors,

and

egg

product

consumers

states

across the southwestern, southeastern, mid-western and mid

-Atlantic regions of the United States.

Our

operating

results

are

materially

impacted

market

prices for

eggs

and

feed

grains

(corn

and

soybean

meal),

which

are

highly

volatile,

independent

each

other,

and

out

our

control.

Generally

speaking,

higher

market

prices

for

eggs

have

positive

impact

our

financial

results

while

higher

market

prices

for

feed

grains

have

negative

impact

our

financial

results. Although we

use a variety of

pricing mechanisms in pricing

agreements with our customers,

we sell the majority

of our

conventional

shell

eggs

based

formulas

that

take

into

account,

varying

ways,

independently

quoted

regional

wholesale

market prices for

shell eggs or formulas

related to our

costs of production which

include the cost

of corn and soybean

meal. As

an example

of the volatility

in the market

prices of shell

eggs, the Urner

-Barry Southeastern

Regional Large

Egg Market Price

per dozen eggs

(“UB southeastern

large index”) in

fiscal year 2020

ranged from a

low of $0.62

in July 2019

to a high

of $3.18

in March 2020.

Generally,

we purchase

primary feed

ingredients,

mainly corn

and soybean

meal, at

current market

prices. Corn

and soybean

meal

are

commodities

and

are

subject

volatile

price

changes

due

weather,

various

supply

and

demand

factors,

transportation and storage costs, speculators, and agricultural, energy

and trade policies in the U.S. and internationally.

Specialty shell

eggs have

been a

significant and

growing portion

of the

market. In

recent years,

a significant

number of

large

restaurant chains, food

service companies and

grocery chains, including

our largest customers,

announced goals to

transition to

an exclusively

cage-free egg

supply chain

by specified

future dates.

Additionally,

several states,

representing 23%

of the

U.S.

Index

total population according to the U.S. Census Bureau,

have passed legislation requiring that all eggs

sold in those states must be

cage-free

eggs by

specified

future dates,

and

other states

are

considering

such legislation.

For additional

information, see

the

2020 Annual

Report, Part I,

Item 1, “Business

– Growth

Strategy” and

“– Government

Regulation,” and

the fifth risk

factor in

Part I, Item 1A, “Risk Factors.”

Retail

sales

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

increase

with

the

start

the

school

year

and

tend

highest

prior

holiday

periods,

particularly

Thanksgiving,

Christmas,

and

Easter.

Consequently,

and

all

other

things

being

equal, we would

expect to experience

lower selling prices, sales

volumes and net

income (and may incur

net losses) in our

first

and

fourth

fiscal

quarters

ending

August/September

and

May/June,

respectively.

Because

the

seasonal

and

quarterly

fluctuations,

comparisons

our

sales

and

operating

results

between

different

quarters

within

single

fiscal

year

are

not

necessarily meaningful comparisons.

COVID-19

Since early

2020,

the coronavirus

(“COVID-19”) outbreak,

characterized as

a pandemic

by the

World

Health Organization

March

11,

2020,

has

caused

significant

disruptions

international

and

U.S.

economies

and

markets.

understand

the

challenges

and

difficult

economic

environment

facing

the

families

the

communities

where

live

and

work,

and

are

committed to

helping where

we can.

One way

we have

done this

is by providing

food assistance

to those

in need.

Cal-Maine

Foods has donated

approximately 1.5 million

dozen eggs in the

first three

quarters of fiscal 2021.

believe we are taking

all

reasonable

precautions

the

management

our

operations

response

the

COVID-19

pandemic.

Our

top priority

the

health and

safety of

our employees,

who work

hard every

day to

produce eggs

for our

customers. As

part of

the nation’s

food

supply,

we work

in a critical

infrastructure industry,

and believe

we have

a special

responsibility to

maintain our

normal work

schedule. As

such, we

are in

regular communication

with our

managers across

our operations

and continue

to closely

monitor

the situation

in our

facilities and

in the

communities

where we

live and

work.

have implemented

procedures designed

protect

our

employees,

taking

into

account

guidelines

published

the

Centers

for

Disease

Control

and

other

government

health

agencies,

and

have

strict

sanitation

protocols

and

biosecurity

measures

place

throughout

our

operations

with

restricted

access

visitors.

All

non-essential

corporate

travel

has

been

suspended.

There

are

known

indications

that

COVID-19 affects hens or can be transferred through the food supply.

continue to

proactively monitor

and manage

operations during

the COVID-19 pandemic,

including additional

related costs

that we incurred or

may incur in the future.

In the thirty-nine weeks ended

February 27, 2021,

we spent $1.8

million (excluding

medical insurance

claims) related

to the

pandemic, of

which $397

thousand was

spent in

the third

quarter of

fiscal 2021.

The

majority

such

expenses

for

both

periods

were

additional

labor,

primarily

reflected

cost

sales.

Medical

insurance

claims

COVID-19

paid

during

the

thirty-nine

weeks

ended

February

27,

2021

were

additional

$1.1

million of which $322 thousand were incurred in the third fiscal quarter of

2021.

EXECUTIVE OVERVIEW

For the

third quarter

of fiscal

2021,

we recorded

a gross

profit of $47.5

million compared

to $49.8

million for

the same period

of fiscal

2020.

Demand for

shell eggs

remained favorable,

primarily at

the retail

level as consumers

continue to

prepare more

meals at

home during

the COVID-19

pandemic.

According to

data provided

by Informational

Resources,

Inc. (“IRI”)

dozens

sold in the Total US -

Multi Outlet channel for conventional eggs for the

calendar year-to-date through March 7, 2021 increased

2.7% and specialty

dozens increased 14.0%

compared to the

same period in

the calendar year.

Our total dozens

sold increased

3.1% to 279.7 million

dozen shell eggs for the

third quarter of fiscal 2021

compared to 271.3 million

dozen for the same period

of fiscal 2020.

This is due to an increase in specialty egg dozens sold of 16.2%.

The

daily

average

price

for

the

southeastern

large

index

for

third

quarter

fiscal

2021

increased

4.3%

from

the

same

period

in the

prior

year.

Our net

average

selling price

per dozen

for

the third

quarter

of fiscal

2021 was

$1.246

compared to

$1.236 in the prior

year period.

Although the hen numbers

reported by the United

States Department of Agriculture

(“USDA”)

as of March 1, 2020 were 327.4

million, which represents 3.1 million fewer

hens than reported a year ago.

The USDA reported

that the

hatch

from October

2020 through

February

2021 increased

2.6%

as compared

to the

prior comparable

period, which

may indicate an

increased supply of hens

in the future. As

we emerge from

the COVID-19 pandemic

with an anticipated return

in food

service demand,

these growing

supply indicators

could affect

the overall

balance of

supply and

demand for

shell eggs

and have an impact on market prices.

Our farm

production costs

per dozen

produced for

the third

quarter of

fiscal 2021

increased 7.0%

or $0.051

compared to

third

quarter of

fiscal 2020.

This increase

was primarily

due to higher

feed costs

in the

third quarter of

fiscal 2021

compared to

the

Index

same period

in the

prior fiscal

year due

to increased

prices for

corn and

soybeans caused

by increased

export demand,

global

weather

conditions

and

geopolitical

issues.

Other

farm

production

costs

for

the

third

quarter

fiscal

2021

decreased

3.1%

compared to the same period in the prior fiscal year due to reductions in

flock amortization and facility expenses.

RESULTS OF

OPERATIONS

The

following

table

sets

forth,

for

the

periods

indicated,

certain

items

from

our

Condensed

Consolidated

Statements

Operations expressed as a percentage of net sales.

13 Weeks Ended

39 Weeks Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Net sales

100.0

Cost of sales

86.8

85.6

87.7

93.5

Gross profit

13.2

14.4

12.3

6.5

Selling, general and administrative

13.3

12.8

13.6

14.7

Loss on disposal of fixed assets

0.1

—

0.1

Operating income (loss)

(0.2)

1.5

(1.3)

(8.3)

Total other income, net

3.4

3.7

1.5

1.9

Income (loss) before income taxes

3.2

5.2

0.2

(6.4)

Income tax (benefit) expense

(0.5)

1.2

(0.4)

(1.7)

Net income (loss)

3.7

4.0

0.6

(4.7)

Less: Income (loss) attributable to

noncontrolling interest

—

(*)

—

(*)

Net income (loss) attributable to Cal-Maine

Foods, Inc.

3.7

4.0

0.6

(4.7)

(*)

Represents less than

0.1% of Net sales

NET SALES

Net sales

for the

third quarter

of fiscal

2021 were

$359.1 million, an

increase of

$13.5 million, or 3.9%,

compared to

net sales

of $345.6 million

for the same

period of fiscal

2020.

The increase was

primarily due

to a 3.1%

increase in the

total volume of

dozen eggs sold

which accounted for a

$10.5 million increase in

net sales. Dozens sold

for the third quarter

ended February 27,

2021 were 279.7 million compared to 271.3 million for the same period

of fiscal 2020.

Net

shell

egg

sales

$350.0 million

and

$336.4 million

made

approximately

97.5% and

97.3%

net

sales for

the

third

quarters

ended February 27, 2021

and February 29, 2020,

respectively. The

net average selling price per

dozen of shell eggs for

the third quarters ended

February 27, 2021 and

February 29, 2020 was $1.246

and $1.236, respectively.

The increase in selling

price per dozen accounted for a $2.8 million increase in net sales.

Egg products

accounted for

2.5% and

2.7% of

net sales

for the

third quarter

ended February

27, 2021

and February

29, 2020,

respectively.

These

revenues

were

$9.1

million

and

$9.2

million

for

the

third

quarters

fiscal

2021

and

2020,

respectively.

The decrease is primarily due to decreased volume partially offset

by higher selling prices.

Net

sales

for

the

thirty-nine

weeks

ended

February

27,

2021

were

$999.2 million,

increase

$100.9 million,

or 11.2%,

compared to

net sales of

$898.3 million for

the same period

of fiscal 2020

The increase was

primarily due

to a 7.0%

increase

in egg selling

prices which

accounted for

a $63.8 million

increase in net

sales. The

net average

selling price per

dozen of shell

eggs for the thirty-nine weeks ended February 27, 2021 and February

29, 2020 was $1.185 and $1.107, respectively.

Net shell

egg sales

of $973.5 million

and $874.1

million made

up approximately

97.4% and 97.3%

of net

sales for

the thirty-

nine

weeks

ended

February

27,

2021

and

February

29,

2020,

respectively.

Dozens

sold

for

the

thirty-nine

weeks

ended

February 27, 2021 were 817.4 million,

a 3.9% increase from 786.7 million for

the same period of fiscal 2020.

The total volume

increase accounted for a $36.3 million increase in net sales.

Egg

products

accounted

for

2.6% and

2.7%

of net

sales for

the thirty

-nine

weeks ended

February

27, 2021

and

February

29,

2020,

respectively.

These

revenues

were

$25.7 million

for

the

thirty-nine

weeks

ended

February

27,

2021,

compared

$24.2 million for the same period in fiscal 2020,

primarily due to higher selling prices slightly offset by decreased volume.

Index

The table below presents an analysis of our conventional and specialty shell egg

sales (in thousands, except percentage data):

13 Weeks Ended

39 Weeks Ended

February 27, 2021

February 29, 2020

February 27, 2021

February 29, 2020

Total net sales

359,080

345,588

999,189

898,276

Conventional

203,189

58.0

210,329

62.5

560,297

57.5

518,898

59.4

Specialty

145,210

41.5

125,019

37.2

408,537

42.0

352,118

40.3

Egg sales, net

348,399

99.5

335,348

99.7

968,834

99.5

871,016

99.7

Other

1,583

0.5

1,028

0.3

4,619

0.5

3,050

0.3

Net shell egg sales

349,982

100.0

336,376

100.0

973,453

100.0

874,066

100.0

Net shell egg sales as a

percent of total net sales

97.5

97.3

97.4

97.3

Dozens sold:

Conventional

203,070

72.6

205,307

75.7

599,625

73.4

599,788

76.2

Specialty

76,645

27.4

65,970

24.3

217,735

26.6

186,939

23.8

Total dozens sold

279,715

100.0

271,277

100.0

817,360

100.0

786,727

100.0

Net average selling price per

dozen:

Conventional

1.001

1.024

0.934

0.865

Specialty

1.895

1.876

1.884

All shell eggs

1.246

1.236

1.185

1.107

Conventional

shell eggs

include all

shell egg

sales not

specifically identified

as specialty

shell egg

sales. Comparing

the third

quarters

ended February 27, 2021 and

February 29, 2020,

conventional egg dozens sold

decreased 1.1% and the

average selling

price

per

dozen

decreased

2.2%

$1.001

from

$1.024.

Comparing

the

thirty-nine

weeks

ended

February

27,

2021

and

February

29,

2020,

conventional

shell

egg

dozens

sold

remained

relatively

flat

while

the

average

selling

price

per

dozen

increased 8.0%

to $0.934 from $0.865.

Specialty

eggs,

which

include nutritionally

enhanced,

cage-free,

organic

and

brown

eggs, continued

make

a significant

portion of

our total

shell egg

revenue and

dozens sold. Specialty

egg retail

prices are

less cyclical

than conventional

shell egg

prices and are

generally higher due

to consumer willingness

to pay more

for specialty eggs.

For the third

quarter of fiscal

2021

and

2020,

specialty

shell

egg

dozens

sold

increased

16.2%,

and

the

average

selling

price

per

dozen

remained

the

same

$1.895.

For the

thirty-nine

weeks ended

February 27,

2021, specialty

shell egg

dozens sold

increased

16.5% and

the average

selling

price

decreased

0.4%

$1.876

from

$1.884

for

the

same

period

fiscal

2020.

the

third

quarter

fiscal

2021,

demand for specialty eggs

increased as consumers

opted for the specialty eggs

which is noted in the

Executive Overview above

along with increased

promotional spending. For

the thirty-nine weeks

ended February 27, 2021,

demand for specialty

eggs was

positively impacted by the higher conventional egg prices as compared

to the same period in the prior year.

The shell

egg sales

classified as

“Other” represent

sales of hard

cooked eggs,

hatching eggs,

and other

miscellaneous products

included with our shell egg operations.

Egg

products

are shell

eggs

that are

broken

and

sold

in liquid,

frozen,

or dried

form.

Our egg

products

are sold

through our

wholly-owned subsidiaries American

Egg Products, LLC

and Texas

Egg Products, LLC. Comparing

the third quarters

of fiscal

2021 and

2020,

pounds

sold decreased

11.3%; however,

the average

selling price

per pound

increased 11.2

to $0.584

from

$0.525. Comparing

the thirty-nine

weeks ended

February 27,

2021 and

February 29,

2020, pounds

sold decreased

8.9% while

the average selling price per pound increased 16.7% to $0.553

from $0.474.

COST OF SALES

Cost of sales consists

of costs directly

related to production, processing

and packing of shell

eggs, purchases of

shell eggs from

outside producers,

processing and

packing of

liquid and

frozen egg

products, and

other non-egg

costs.

Farm production

costs

Index

are

costs incurred

the

egg

production

facility,

including

feed,

facility,

hen

amortization,

and

other

farm

production

costs.

The following table presents the key variables affecting cost of

sales (in thousands, except cost per dozen data):

13 Weeks Ended

39 Weeks Ended

February 27, 2021

February 29, 2020

% Change

February 27, 2021

February 29, 2020

% Change

Cost of Sales:

Farm production

190,883

172,525

10.6

531,877

499,840

6.4

Processing,

packaging, and

warehouse

63,640

60,186

5.7

187,014

170,998

9.4

Egg purchases and

other (including

change in inventory)

50,443

56,179

(10.2)

137,001

146,754

(6.6)

Total shell eggs

304,966

288,890

5.6

855,892

817,592

4.7

Egg products

6,597

6,870

(4.0)

20,565

19,687

4.5

Other

—

2,919

(100.0)

Total

311,563

295,760

5.3

876,457

840,198

4.3

Farm production costs

(per dozen produced)

Feed

0.467

0.406

15.0

0.422

0.411

2.7

Other

0.313

0.323

(3.1)

0.318

0.328

(3.0)

Total

0.780

0.729

7.0

0.740

0.739

0.1

Outside egg purchases

(average cost per

dozen)

1.26

1.17

7.7

1.23

1.12

9.8

Dozens produced

248,130

239,072

3.8

731,205

684,837

6.8

Dozens sold

279,715

271,277

3.1

817,360

786,727

3.9

Cost of sales for

the third quarter of

fiscal 2021 was $311.6

million, an increase of

$15.8 million, or 5.3%,

from $295.8 million

for the

same period

of fiscal

2020. The

increase was

primarily driven

by the

increase in

farm production

costs and

processing

costs.

Farm production

costs were primarily

impacted by higher

feed costs

of $0.467

per dozen

produced compared

to $0.406

per dozen

produced for

the same

period in

the prior

year.

Other farm

production costs

per dozen

produced decreased

3.1% to

$0.313

for

the

quarter

ended

February

27,

2021,

compared

$0.323

for

the

same

period

last

year,

primarily

from

lower

facility costs

and amortization

expense.

The lower

feed costs in

prior periods

which are

capitalized in

our flocks

during pullet

production helped reduce amortization expense in the third

quarter of fiscal 2021 as compared to the same period in fiscal 2020.

Facility

costs

decreased

the

third

quarter

fiscal

2021

compared

the

same

period

fiscal

2020

due

improved

efficiencies

our

utilization

our

facilities

and

increased

volume

production.

Processing

costs

increased

due

3.2%

increase

the

volume

eggs

processed

compared

the

same

period

the

prior

year.

The

cost

packaging

materials

increased 2.0%

compared to

the prior

year period

as the

retail channel

demand increased

due to

the pandemic.

The pandemic

led to

an increase

in labor

costs. Dozens

produced increased

3.8% compared

to the

same period

of fiscal

2020.

Egg purchase

expenses decreased 10.2%,

primarily due to the

decrease in the volume

of outside egg purchases,

partially offset by

an increase

in the cost of these purchases.

Cost of sales for the thirty-nine weeks ended February

27, 2021 was $876.5 million, an increase of $36.3 million,

or 4.3%, from

$840.2 million

for the

same period

of fiscal

2020.

The increase

was primarily

driven by

the increase

in farm

production costs

and processing costs.

Processing costs increased due

to a 5.5% increase in

the volume of eggs processed

compared to the same

period of the prior year.

The cost of packaging materials

increased 2.8%

compared to the prior year

period as the retail channel

demand

increased due

to the

pandemic.

The pandemic

led to

an increase

in labor

costs. Farm

production

costs for

the thirty-

nine weeks

ended February

27, 2021

increased $32.0

million, which

was primarily

due to an

increase in production

volume of

6.8%

compared to the

same period of

fiscal 2020.

Feed cost per

dozen for the

thirty-nine weeks ended

February 27, 2021

was

$0.422,

compared to

$0.411

per dozen

for the

comparable period

of fiscal

2020,

an increase

of 2.7%.

Other farm

production

costs per dozen produced

decreased 3.0% to $0.318

for the thirty-nine weeks

ended February 27, 2021

compared to $0.328 for

Index

the same period

of last year,

primarily from lower

amortization and facility

expense.

In the prior

fiscal year we

incurred higher

amortization expense due

to selling flocks

early in fiscal

2020 in response

to market conditions.

Facility costs decreased

due to

improved

efficiencies

our

utilization

our

facilities

and

increased

volume

our

production.

Egg

purchase

expenses

decreased 6.6%, primarily

due to the decrease in the

volume of outside egg

purchases, partially offset

by an increase in the

cost

of these purchases.

Included

cost

sales

for

the

thirty-nine

weeks

ended

February

29,

2020

$2.9

million

impairment

charge

decommissioning

older,

less

efficient

production

facilities

invest

new

facilities

meet

the

increasing

demand

for

specialty eggs and reduce production costs.

Feed costs started trending higher

midway through the second quarter of

fiscal 2021.

For the third quarter, the

average Chicago

Board of Trade

(“CBOT”) daily market price was $4.97

per bushel for corn and $422.61

per ton for soybean meal,

representing

an increase

of 29.9%

and

42.4%, respectively,

compared

to the

daily average

CBOT prices

for

the same

period

last year.

feed

ingredient

prices

rose

through

the

second

and

third

quarters

fiscal

2021,

benefited

from

our

normal

operating

practices of filling our

storage bins at harvest

and locking in the basis

portion of our grain

purchases several months

in advance

help

ensure

availability

of feed

ingredients.

Most

this benefit

has

been

realized

our

second

and

third

fiscal

quarters,

however,

during our

fourth fiscal

quarter we

will be

exposed more

directly to

price movements

in the

feed ingredient

market.

expect to

see continued

price volatility

for the remainder

of fiscal

2021 as

increased export

demand for

both soybeans

and

corn

placing

pressure

domestic

supplies

and

carryout

inventories

are

projected

lower.

Additionally,

the

ongoing

uncertainties and

supply chain

disruptions related

to the

COVID-19 outbreak,

weather fluctuations

and geopolitical

issues will

continue to affect market prices for our primary feed ingredients.

GROSS PROFIT

Gross profit for the

third quarter of fiscal 2021

was $47.5 million compared to

$49.8 million for the

same period of fiscal 2020.

The decrease

of $2.3

million was

primarily

due to

increased farm

production cost

and processing

costs, partially

offset

by an

increase in dozens sold for specialty eggs.

For

the

thirty-nine

weeks

ended

February

27,

2021

gross

profit

was

$122.7

million

compared

$58.1

million

for

the

same

period of

fiscal 2020.

The increase

of $64.7

million was

primarily due

to the

increase in

conventional

shell egg

selling prices

and an increase in dozens sold for specialty eggs.

SELLING, GENERAL, AND ADMINISTRATIVE

EXPENSES

Selling,

general,

and

administrative

(“SGA”)

expenses

include

costs

marketing,

distribution,

accounting,

and

corporate

overhead.

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

13 Weeks Ended

February 27, 2021

February 29, 2020

$ Change

% Change

Specialty egg expense

16,162

12,581

3,581

28.5

Delivery expense

13,359

13,309

0.4

Payroll, taxes and benefits

10,195

10,639

(444)

(4.2)

Stock compensation expense

964

886

8.8

Other expenses

6,976

6,816

160

2.3

Total

47,656

44,231

3,425

7.7

For the

third quarter

of fiscal

2021,

SGA expenses

increased 7.7%

to $47.7

million from

$44.2 million

for the

same period

fiscal 2020.

Specialty egg expense

increased $3.6 million,

or 28.5%, compared

to the same

period of the

prior year.

Specialty

egg expense,

which includes

franchise fees

and advertising expense,

typically fluctuates

��

with specialty

egg dozens

sold, which

increased 16.2% for the third quarter ended February 27, 2021.

Index

39 Weeks Ended

February 27, 2021

February 29, 2020

$ Change

% Change

Specialty egg expense

42,898

35,995

6,903

19.2

Delivery expense

38,905

39,341

(436)

(1.1)

Payroll, taxes and benefits

31,526

31,391

135

0.4

Stock compensation expense

2,789

2,680

109

4.1

Other expenses

19,376

23,027

(3,651)

(15.9)

Total

135,494

132,434

3,060

2.3

For the thirty-nine weeks

ended February 27, 2021,

SGA expense increased 2.3% to

$135.5 million from $132.4

million for the

same period

in fiscal

2020.

Specialty egg

expense increased

$6.9 million,

or 19.2%,

compared to

the same

period of

the prior

year.

Specialty

egg

expense

typically

fluctuates

with

specialty

egg

dozens

sold,

which

increased

16.5%

for

the

thirty-nine

weeks ended

February 27,

2021. Other

expenses decreased

$3.7

million or

15.9% compared

to the

same period

in fiscal

2020.

This decrease is primarily due to the legal settlement paid in the second

quarter of fiscal 2020 and the first quarter of fiscal 2021

return

brokerage

commissions

property

and

casualty

insurance

placements

refunded

after

final

reconciliation

all

brokerage service agreements.

Included in Other expenses is

approximately $551 thousand relating

to the secondary public offering

completed in August 2020

by the wife of our late founder and a trust of which his

daughters are beneficiaries. For more information, see

Note 13

– Related

Party Transaction of the Notes to Condensed

Consolidated Financial Statements included in this Quarterly Report.

OPERATING

INCOME (LOSS)

For the

third quarter

of fiscal

2021,

we recorded

an operating

loss of

$493 thousand

compared to

an operating

income of

$5.2

million for the same period of fiscal 2020.

For the

thirty-nine weeks

ended February

27, 2021,

we recorded

an operating

loss of

$13.2 million

compared to

an operating

loss of $74.8 million for the same period of fiscal 2020.

OTHER INCOME (EXPENSE)

Total

other

income

(expense)

consists

items

not

directly

charged

operations,

such

interest

income

and

expense, royalty income, equity in income or loss of unconsolidated entities,

and patronage income, among other items.

For

the

third

quarter

fiscal

2021,

earned

$661

thousand

interest

income

compared

$880

thousand

for

the

same

period of fiscal

2020.

For the thirty-nine

weeks ended February

27, 2021,

we earned $2.4 million

of interest income

compared

to $3.9 million for

the same period of fiscal

2020. The decrease for

both periods resulted from

significantly lower interest rates.

The Company

recorded interest expense

of $70

thousand and $77

thousand for the

third quarters

ended February

27, 2021 and

February

29, 2020

respectively.

For the

thirty-nine

weeks ended

February

27, 2021

and February

29,

2020

interest expense

was $205 thousand and $258 thousand, respectively.

Patronage

dividends, which

represent distributions

from our

membership

in Eggland’s

Best, Inc.

were $9.0

million and

$10.1

million

for

the

thirteen

and

thirty-nine

weeks

ended

February

27,

2021

and

February

29,

2020,

respectively.

Patronage

dividends are paid once a year based on the profits of Eggland’s

Best as well as its available cash.

For the

third quarter

of fiscal

2021, equity

income of

unconsolidated entities

was $1.9

million compared

to $1.4

million in

the

prior

year

period.

For

the

thirty-nine

weeks

ended

February

27,

2021,

equity

income

unconsolidated

entities

was

$1.9

million compared

to $537

thousand for

the prior

year period.

The increase

for both

periods is

primarily due

to the

increase in

egg selling prices positively impacting the profitability of our joint

ventures.

Other,

net for

the third

quarter ended

February 27,

2021, was

income of

$537 thousand

compared to

income of

$79 thousand

for the same period of fiscal 2020.

Other, net

for the

thirty-nine weeks

ended February

27, 2021,

was income of

$1.5 million

compared to

income of $1.9

million

for

the

same

period

fiscal

2020.

The

decrease

primarily

driven

lower

realized

and

unrealized

gains

investment

securities available-for-sale.

Index

INCOME TAXES

March

27,

2020,

the

Coronavirus

Aid,

Relief,

and

Economic

Security

Act

(the

“CARES

Act”)

was

enacted.

The

most

significant provision

of the

CARES Act that

materially affected

the Company’s

income taxes

included the

five-year carryback

allowance for taxable net operating losses generated in the tax years

2018 through 2020, our fiscal years 2019 through 2021.

The Company

is electing

to utilize

that provision,

which will

provide additional

liquidity in

the form

of an

income tax

refund

currently

estimated

approximately

$14.6

million.

anticipate

will

receive

the

refund

during

fiscal

year

2022.

Additionally, we recorded

an income tax benefit of approximately $5.0 million related to the carryback

provision.

For the third quarter of fiscal 2021, pre-tax

income was $11.8 million compared to

pre-tax income of $18.0 million for the same

period of fiscal 2020.

We recorded

an income tax benefit of $1.7 million

for the third quarter of fiscal 2021, which

includes the

discrete tax

benefit

of $5.0

million described

above.

Excluding the

tax benefit,

income tax

expense

was $2.9

million for

the

third

quarter

fiscal

2021

with

adjusted

effective

tax

rate

24.6%.

Income

tax

expense

was

$4.3

million

for

the

comparable period of fiscal 2020, which reflects an effective

tax rate of 23.7%.

For the thirty-nine

weeks ended February

27, 2021, pre-tax

income was $2.2

million compared

to pre-tax loss

of $57.5 million

for the same period of fiscal 2020. We

recorded an income tax benefit of $4.1 million,

which includes the discrete tax benefit of

$5.0 million

described above.

Excluding the

tax benefit,

income tax

expense of

$543 thousand

was recorded

with an

adjusted

effective tax

rate of 24.3%.

Income tax benefit

of $15.4

million was

recorded for

the comparable period

of fiscal

2020, which

reflects an effective tax rate of 26.7%.

At February 27,

2021, trade and other

receivables included income

taxes receivables of

$23.6 million compared

to $9.9 million

at May 30, 2020.

Our effective tax

rate differs from

the federal statutory income

tax rate due to

state income taxes, certain

federal tax credits and

certain

items

included

income

for

financial

reporting

purposes

that

are

not

included

taxable

income

for

income

tax

purposes,

including

tax

exempt

interest

income,

certain

nondeductible

expenses

and

net

income

loss

attributable

noncontrolling interest.

Results for the current

quarter were favorably

impacted by a $5.0 million

discrete tax benefit related

the

CARES

Act,

discussed

above

and

Note

–

Income

Taxes

the

Notes

Condensed

Consolidated

Financial

Statements in this Quarterly Report.

NET INCOME (LOSS) ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

Net income for

the third quarter

ended February 27,

2021 was $13.5

million, or $0.28

per basic and

diluted share, compared

net income of $13.7

million or $0.28 per basic and diluted share for the same period of fiscal 2020.

Net income for the thirty-nine

weeks ended February 27, 2021

was $6.3 million, or $0.13 per basic

and diluted share, compared

to a net loss of $42.1 million or $0.87 per basic and diluted share for the same period

of fiscal 2020.

Index

CAPITAL RESOURCES

AND LIQUIDITY

Our working capital

at February 27,

2021 was $422.0 million,

compared to $429.1

million at May 30,

2020. The calculation

working capital

is defined

as current

assets less

current liabilities.

Our current

ratio was

5.19 at

February 27,

2021, compared

with 5.60 at May 30, 2020.

had

long-term

debt

outstanding

February

27,

2021

May

30,

2020.

July

10,

2018,

entered

into

a $100.0

million Senior Secured Revolving

Credit Facility (the “Revolving Credit

Facility”).

As of February 27, 2021,

no amounts were

borrowed under

the Revolving

Credit Facility.

have $4.1

million in outstanding

standby letters

of credit,

issued under our

Revolving Credit

Facility for

the benefit

of certain

insurance companies.

Refer to

Note 10

of our

audited financial

statements

included in our 2020 Annual Report for further information regarding

our long-term debt.

For the thirty-nine weeks

ended February 27, 2021

$14.7 million in net cash

was provided by operating

activities, compared to

$36.4 million

used in

operating activities

for the

comparable period

in fiscal

2020. This

is primarily

due to

an increase

in egg

selling prices compared to the prior year period.

continue

invest

our

facilities

with

$73.8

million

used

purchase

property,

plant

and

equipment

for

the

thirty-nine

weeks

ended

February

27,

2021

compared

$94.6

million

the

same

period

fiscal

2020.

Sales

and

maturities

investment

securities,

net

purchases,

were

$25.8

million

for

the

thirty-nine

weeks

ended

February

27,

2021

compared

$169.4 million

for the comparable

period in fiscal

2020.

received $5.8 million

in distributions from

unconsolidated entities

during the first three quarters

of fiscal 2021 compared to

$6.1 million for the same peri

od fiscal of 2020.

During the thirty-nine

weeks ended February 29, 2020, we used $44.5

million in cash in connection with our purchase of certain

assets of Mahard Egg

Farm.

used $153

thousand for

principal payments

on finance

leases in

the first

three quarters

of fiscal

2021 compared

$1.6 million for principal payments on long-term debt and finance

leases for the same period of fiscal 2020.

As of

February 27,

2021,

cash decreased

$25.2 million

since May

30, 2020

compared to

a decrease

of $1.5

million during

the

same period of fiscal 2020.

continue to

take aggressive

steps to

position Cal-Maine

Foods to

meet the

expected future

demand for

cage-free eggs.

have

invested

approximately

$418

million

facilities,

equipment

and

operations

expand

our

cage-free

production

starting with

our first

facility in

2008. The

following table

presents material

construction projects

approved as

of February

27,

2021 (in thousands):

Project(s) Type

Projected

Completion

Projected Cost

Spent as of

February 27, 2021

Remaining

Projected Cost

Convertible/Cage-Free Layer Houses & Pullet

Houses

Fiscal 2021

46,950

10,337

36,613

Cage-Free Layer & Pullet Houses/Processing

Facility

Fiscal 2022

94,632

79,558

15,074

141,582

89,895

51,687

believe our current

cash balances, investments,

cash flows from operations,

and Revolving Credit Facility

will be sufficient

to fund our current and projected capital needs for at least the next twelve months.

RECENTLY

ISSUED/ADOPTED ACCOUNTING STANDARDS

For

information

changes

accounting

principles

and

new

accounting

policies,

see

Note 1 - Summary of Significant

Accounting Policies

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

Report.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting

estimates

are those

estimates

made

in accordance

with U.S.

generally

accepted

accounting

principles that

involve

significant

level

estimation

uncertainty

and

have

had

are

reasonably

likely

have

material

impact

our

financial condition

or results

of operations.

There have

been no

changes to

our critical

accounting estimates

identified in

our

2020 Annual Report.

Index

ITEM 4.

CONTROLS

AND

PROCEDURES

Disclosure Controls and Procedures

Our disclosure

controls and

procedures are

designed to

provide reasonable

assurance that

information required

to be

disclosed

by us in the reports

we file or submit

under the Exchange Act

is recorded, processed, summarized

and reported, within the

time

periods

specified in

the Securities

and

Exchange

Commission’s

rules and

forms.

Disclosure controls

and procedures

include,

without limitation, controls and

procedures designed to ensure that

information required to be disclosed

by us in the reports that

we file or

submit under the

Exchange Act is accumulated

and communicated to

management, including our

principal executive

and

principal

financial

officers,

persons

performing

similar

functions,

appropriate

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 February 27, 2021 at the reasonable

assurance level.

Changes in Internal Control Over Financial Reporting

There was

no change

in our

internal control

over financial

reporting that

occurred during

the quarter

ended February

27, 2021

that has materially affected, or is reasonably likely to materially affect,

our internal control over financial reporting.

ITEM 1A.

RISK

FACTORS

Except

set

forth

below,

there

have

been

material

changes

the

risk

factors

previously

disclosed

the

2020

Annual

Report.

are controlled

by the

family of

our late

founder,

Fred R.

Adams, Jr.,

and Adolphus

B. Baker,

our Chief

Executive

Officer and Chairman of our Board of Directors controls

the vote of 100% of our outstanding Class A Common Stock.

Fred R. Adams,

Jr., our

Founder and Chairman Emeritus

died on March 29,

2020. Mr.

Adams’ son-in-law,

Adolphus B. Baker,

our

Chief

Executive

Officer

and

Chairman

our

board

directors,

Mr.

Baker’s

spouse

and

her

three

sisters

(who

are

Mr.

Adams’

four

daughters)

beneficially

own,

directly

indirectly

through

entities,

100%

our

outstanding

Class

Common Stock,

controlling approximately

52.2% of

our total

voting power.

Additionally,

such persons

and Jean

Reed Adams

(“Mrs.

Adams”),

the

wife

our

late

founder,

Fred

Adams,

Jr.,

also

have

additional

voting

power

due

beneficial

ownership

our

Common

Stock,

directly

indirectly

through

entities,

resulting

family

voting

control

approximately

57.7%

our

total

voting

power.

Mr.

Baker

controls

the

vote

100%

our

outstanding

Class

Common

Stock.

understand that the

Adams and Baker

families intend to

retain ownership of

a sufficient amount

of our Common

Stock and

our Class A

Common Stock

to assure continued

ownership of

more than 50%

of the voting

power of our

outstanding shares of

capital stock.

As a

result of

this ownership,

the Adams

and Baker

families have

the ability

to exert

substantial influence

over

matters requiring action by

our stockholders, including amendments

to our certificate of incorporation

and by-laws, the election

and

removal

directors,

and

any

merger,

consolidation,

sale

all

substantially

all

our

assets,

other

corporate

transactions. Delaware

law provides

that the

holders of

a majority

of the

voting power

of shares

entitled to

vote must

approve

certain fundamental

corporate transactions such

as a merger,

consolidation and

sale of all

or substantially

all of a

corporation’s

assets; accordingly,

such a transaction

involving us and

requiring stockholder approval

cannot be effected

without the approval

the

Adams

and

Baker

families.

Such

ownership

will

make

unsolicited

acquisition

our

Company

difficult

and

discourage

certain

types

transactions

involving

change

control

our

Company,

including

transactions

which

the

holders of our

Common Stock might

otherwise receive a

premium for their

shares over then

current market prices.

The Adams

and Baker families’ controlling ownership of our capital stock may

adversely affect the market price of our Common Stock.

The

price

our

Common

Stock

may

affected

the

availability

for

sale

the

market,

and

you

may

experience

significant

dilution

result

future

issuances

our

securities,

which

could

materially

and

adversely

affect the market price of our Common Stock.

The sale

or availability

for sale

of substantial

amounts of

our Common

Stock could

adversely impact

its price.

Our articles

incorporation

authorize

us to

issue 120,000,000

shares of

our Common

Stock.

As of

March

29,

2021,

there

were 44,056,163

shares of

our Common

Stock outstanding.

Accordingly,

a substantial

number of

shares of

our Common

Stock are

outstanding

and

are, or

could become,

available for

sale in

the market.

In addition,

we may

be obligated

to issue

additional shares

of our

Common Stock in connection with employee benefit plans (including

equity incentive plans).

Index

In the

future, we

may decide

to raise

capital through

offerings of

our Common

Stock, additional

securities convertible

into or

exchangeable for

Common Stock, or

rights to acquire

these securities or

our Common Stock.

The issuance of

additional shares

of our

Common Stock

or additional

securities convertible

into or

exchangeable for

our Common

Stock could

result in

dilution

of existing

stockholders’ equity

interests in

us. Issuances

of substantial

amounts of

our Common

Stock, or

the perception

that

such issuances

could occur,

may

adversely affect

prevailing

market prices

for our

Common Stock,

and we

cannot predict

the

effect this dilution may have on the price of our Common

Stock.

As described in

Note 13

– Related Party

Transaction of

the Notes to Condensed

Consolidated Financial

Statements included

this Quarterly

Report,

in August

2020

Mrs. Adams

and the

Daughters’

Trust

(of

which

the daughters

of our

late founder

are

beneficiaries)

sold

6.9

million

Common

Stock

secondary

public

offering

pursuant

previously

disclosed

Agreement

Regarding

Common

Stock

(the

“Agreement”)

filed

exhibit

our

2020

Annual

Report.

After

the

sale,

approximately

5.0 million

shares (the

“Subject Shares”)

remain registered

under a

shelf registration

statement and

prospectus

dated October 9, 2018 for

potential resale, which shares are subject

to the Agreement. The Agreement

generally provides that if

a holder of Subject

Shares intends to sell any

of the Subject Shares,

such party must give

the Company a right

of first refusal to

purchase all or any of such

shares. The price payable by the Company

to purchase shares pursuant to the exercise

of the right of

first refusal

will reflect

a 6% discount

to the

then-current market

price based

on the 20

business-day volume

weighted average

price. If

the Company

does not

exercise its

right of

first refusal

and purchase

the shares offered,

such party

will, subject

to the

approval of a special committee of independent directors of the Board

of Directors, be permitted to sell the shares not purchased

by the

Company pursuant

to a

Company registration

statement, Rule

144 under

the Securities

Act of

1933, or

another manner

sale

agreed

the

Company.

Although

pursuant

the

Agreement

the

Company

will

have

right

first

refusal

purchase all or any of

those shares, the Company may

elect not to exercise its rights

of first refusal, and if so

such shares would

be eligible for sale pursuant to the registration rights in the Agreement or pursuant

to Rule 144 under the Securities Act of 1933.

Sales, or the availability for

sale, of a large number

of shares of our Common

Stock could result in a decline

in the market price

of our Common Stock.

PART

II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Refer

the

discussion

certain

legal

proceedings

involving

the

Company

and/or

its

subsidiaries

(i)

our

2020

Annual

Report,

Part I

Item 3:

Legal Proceedings,

and

Part II

Item 8,

Notes to

Consolidated

Financial

Statements and

Supplementary

Data, Note 18: Commitments

and Contingencies, and

(ii) in this Quarterly

Report in

Note 12

: Commitments and Contingencies

of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated

herein by reference.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

The following table is a summary of our third quarter 2021 share repurchases:

Total

Number of

Maximum Number

Shares Purchased

of Shares that

Total

Number

Average

as Part of Publicly

May Yet

of Shares

Price Paid

Announced Plans

Purchased Under the

Period

Purchased (1)

per Share

Or Programs

Plans or Programs

11/29/20 to 12/26/20

—

12/27/20 to 01/23/21

—

01/24/21 to 02/27/21

22,628

36.47

—

22,628

36.47

—

(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.

Index

ITEM 6. EXHIBITS

Exhibits

No.

Description

3.1

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

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

3.2

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

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

31.1*

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

31.2*

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

32**

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

101.SCH*+

Inline XBRL Taxonomy

Extension Schema Document

101.CAL*+

Inline XBRL Taxonomy

Extension Calculation Linkbase Document

101.DEF*+

Inline XBRL Taxonomy

Extension Definition Linkbase Document

101.LAB*+

Inline XBRL Taxonomy

Extension Label Linkbase Document

101.PRE*+

Inline XBRL Taxonomy

Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained

in Exhibit 101)

Filed herewith as an Exhibit.

Furnished herewith as an Exhibit.

Submitted electronically with this Quarterly Report.

SIGNATURES

Pursuant to

the requirements

of the Securities

Exchange Act

of 1934,

the registrant has

duly caused

this report

to be signed

its behalf by the undersigned, thereunto duly authorized.

CAL-MAINE FOODS, INC.

(Registrant)

Date:

March 29, 2021

/s/ Max P.

Bowman

Max P.

Bowman

Vice President, Chief Financial

Officer

(Principal Financial Officer)

໿

Date:

March 29, 2021

/s/ Michael D. Castleberry

Michael D. Castleberry

Vice President, Controller

(Principal Accounting Officer)

໿

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Cal-Maine Foods (CALM) 10-Q2021 Q3 Quarterly report

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