UNITED STATESSECURITIES AND EXCHANGE COMMISSION
For The Fiscal Year Ended
May 29, 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:
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
(State or other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
1052 Highland Colony Pkwy, Suite 200
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class:
Name of each exchange on which registered:
Common Stock, $0.01 par value per share
Securities registered pursuant to Section 12 (g) of the Act:NONE
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes
Indicate by check mark whether the registrant(1) has filed all reports requiredto be filed by Section 13or 15(d) of the Securities Exchange Act
of 1934 during the preceding12 months (or for suchshorter period that the registrantwas required to file suchreports), and (2) has beensubject
to such filing requirements for the past 90 days.
Indicate by check markwhether the registrant hassubmitted electronically every InteractiveData File required tobe submitted pursuant toRule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
company,or an emerginggrowth company.See the definitionsof “large acceleratedfiler,” “acceleratedfiler”, “smaller reportingcompany”,
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
Emerging growth company
If anemerginggrowth company,indicate bycheck markif theregistrant haselectednot touse theextended transitionperiod for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate bycheck markwhether the registranthas fileda report onand attestationto itsmanagement's assessment ofthe effectivenessof its
internal control overfinancial reporting underSection 404(b) ofthe Sarbanes-Oxley Act(15 U.S.C. 7262(b))by the registeredpublic accounting
firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes
The aggregate market value, as reportedby The NASDAQ Global Select Market,of the registrant’sCommon Stock, $0.01 par value,held by
non-affiliatesat November 28,2020, whichwas thedate ofthe lastbusiness dayof theregistrant’smost recentlycompleted secondfiscal
quarter, was $
As ofJuly 19, 2021,
Common Stock, $0.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information calledfor by Part IIIof this Form 10-Kis incorporated hereinby reference from theregistrant’s DefinitiveProxy Statement
for its 2021annual meeting ofstockholders which will befiled pursuant to Regulation14A not later than120 days after theend of thefiscal
year covered by this report.
TABLE OF CONTENTS
This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the
“Securities Act”) andSection 21E ofthe Securities ExchangeAct of 1934(the “Exchange Act”)relating to ourshell eggbusiness,
including estimated future productiondata, expected construction schedules,projected construction costs, potentialfuture supply
of anddemand forour products,potential futurecorn andsoybean pricetrends, potentialfuture impacton ourbusiness ofthe
outcomes of legal proceedings,andprojected operating data, resultsof operations and financialcondition. Such forward-looking
“projected,” “contemplates,” “anticipates,”or similar words.Actual results coulddiffer materiallyfrom those projectedin the
estimates, andprojections regardingthe Companyand itsindustry.These statementsare notguarantees offuture performance
and involve risks, uncertainties,assumptions, and other factorsthat are difficultto predict and maybe beyond ourcontrol. The
factors that could cause actual results to differ materially from those projected in theforward-looking statements include, among
others, (i) the risk factors set forth in Item 1A Risk Factors and elsewhere in this report as wellas those included in other reports
we file from time to time with the Securities and Exchange Commission (the“SEC”) (including our Quarterly Reports on Form
10-Q and CurrentReports on Form8-K), (ii) therisks and hazardsinherent in theshell egg business(including disease, pests,
weather conditions,and potentialfor productrecall), (iii)changes inthe demandfor andmarket pricesof shelleggs andfeed
costs, (iv) ourability to predictand meet demandfor cage-free andother specialty eggs,(v) risks, changes,or obligations that
could result fromour future acquisitionof new flocksor businesses, andrisks or changesthat may causeconditions to completing
a pending acquisition not to be met, (vi) risks relating to the evolving COVID-19 pandemic, and (vii) adverse results in pending
litigation matters.Readers arecautioned notto placeundue relianceon forward-lookingstatements because,while webelieve
the assumptions on which theforward-looking statements are based arereasonable, there can be noassurance that these forward-
lookingstatementswillprovetobeaccurate. Further,forward-looking statementsincludedhereinareonlymadeasofthe
respective dates thereof, or if no date is stated, as of the date hereof.Except as otherwise required by law, we disclaim any intent
We are the largest producer and distributor of shell eggs in the United States. Our mission is to be the most sustainable producer
and reliablesupplier ofconsistent, highquality freshshell eggsand eggproducts inthe country,demonstrating a"Culture of
Sustainability" in everythingwe do, and creatingvalue for our shareholders,customers, team membersand communities. We sell
most of our shell eggs inthe southwestern, southeastern, mid-western and mid-Atlantic regions ofthe U.S. and aim to maintain
efficient, state-of-the-art operations located close to our customers. We were founded in 1957 by the late Fred R. Adams, Jr. and
are headquartered in Ridgeland,Mississippi.
The Company has one operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs.
manufacturing feed,and producing,processing, packaging,and distributingshell eggs.Layers aremature femalechickens, pullets
are female chickens usually under 18 weeks ofage, and breeders are male and female chickensused to produce fertile eggs to be
hatched for egg production flocks.
Many of our customers rely on us to provide most of theirshell egg needs, including specialty and conventional eggs. Specialty
eggs encompass abroad range ofproducts. Weclassify nutritionally enhanced,cage-free, organic andbrown eggs asspecialty
eggs for accounting and reporting purposes. Weclassify all other shell eggs as conventional products. Whilewe report separate
sales information for these egg types, there are many cost factors that are not specifically available for conventional or specialty
eggs dueto thenature ofegg production.We manage ouroperations andallocate resourcesto thesetypes ofeggs ona consolidated
basis based on the demands of our customers.
Over time, we have acquired other companies in our industry.Since 1989 through our fiscal year ended May 29, 2021, we have
completed 22acquisitions rangingin sizefrom 160 thousandlayers to7.5 million layers.In addition,subsequent toour fiscal
2021, weacquired theremaining 50%membership interestin RedRiver ValleyEgg Farm,LLC, effectiveJune 1,2021. For
subsidiaries, unless otherwise indicated or thecontext otherwise requires. Our fiscal year2021 ended May 29, 2021, andthe first
three fiscal quarters of fiscal 2021 ended August 29, 2020, November 28, 2020, and February 27, 2021. Allreferences herein to
a fiscal year means our fiscal year and all references to a year mean a calendar year.
According to theU.S. Department ofAgriculture (“USDA”) AgriculturalMarketing Service in2020, approximately 72%of eggs
produced in the U.S.were sold as shelleggs, with 66% soldto retail outlets (e.g.through grocery and conveniencestores), 3%
sold to foodservice customers and 3% exported. The remaining 28% of eggs produced in the U.S. are sold as egg products(shell
eggs broken andsold in liquid,frozen, or driedform) toinstitutions (e.g. companiesproducing baked goods).For information
about egg producers in the U.S., see “Competition” below.
Based on historical consumptiontrends, we believe general demandfor eggs increases basicallyin line with overallpopulation
growth, averaging about 2% per year.Specific events can impact egg consumption in a particular period. Forexample, in 2015,
egg consumption decreased approximately 4% over the prior year primarily due to a shortage of eggsresulting from an outbreak
of avian influenza ("AI") in the spring ofthat year.In 2016, consumption rebounded and increased 7% over2015 and 3% over
the pre-shortage level of 2014.According to the USDA, annual percapita U.S. consumption since 2016 variedbetween 278 and
293 eggs. In calendaryear 2020, per capitaU.S. consumption was estimatedto be 287 eggs,or approximately sixeggs per person
per week. Percapita consumptionis determinedby dividingthe total supplyof eggs bythe entirepopulation inthe U.S. (assuming
all eggs produced domestically by the eggindustry are consumed).Sales prices of eggs are dependent uponmany factors other
than consumption. For information about shell egg prices see “Prices for Shell Eggs” below.
Prices for Shell Eggs
Wholesale shell eggsales prices area critical componentof revenue forthe Company.Wholesale shell eggprices are volatile,
cyclical, andimpacted bya numberof factors,including consumer demand,seasonal fluctuations, disease,and bythe number
and productivity oflaying hensin the U.S.While weuse several differentpricing mechanisms inpricing agreements withour
customers, we believe themajority of conventional shell eggssold in the U.S.in the retail andfoodservice channels are soldat
Publications, Inc.("UB") forshell eggs.Wesell themajority ofour conventionalshell eggsbased onformulas thattake into
account, in varying ways, independently quoted regionalwholesale market prices for shell eggs orformulas related to our costs
of production, whichinclude the costof corn andsoybean meal. Wedo not selleggs directly toconsumers or setthe prices at
which eggs are sold to consumers.
The weekly average pricefor the southeast regionfor large whiteconventional shell eggs asquoted by UB isshown below for
the past threefiscal years alongwith the five-yearaverage price.As further discussedin
, conventional shell egg prices experienced a brief but significantincrease during the fourth
quarter of fiscal 2020 related to the onset of the COVID-19 pandemic. The actual prices that we realize on anygiven transaction
will not necessarily equal quoted market prices becauseof the individualized terms that we negotiatewith individual customers
which are influenced by many factors.
experienced less volatility than prices for conventional shell eggs and have generally been higher due to customerand consumer
willingness to pay more for specialty eggs.
Feed Costs for Shell Egg Production
Feed is a primarycost component in theproduction of shell eggsand represented 58.2% ofour fiscal 2021 farmproduction costs.
We routinely fill our storagebins during harvestseason when pricesfor feed ingredientsare generally lower.To ensure continued
availability of feed ingredients,we may enter into contractsfor future purchases of cornand soybean meal, and aspart of these
contracts, we may lock-in the basis portionof our grain purchases several months inadvance. Ordinarily, wedo not enter long-
term contracts beyonda year topurchase corn andsoybean meal orhedge against increasesin the priceof corn andsoybean meal.
As thequality andcomposition offeed isa criticalfactor inthe nutritionalvalue ofshell eggsand healthof ourchickens, we
formulate and producethe vast majorityof our ownfeed at ourfeed mills locatednear our productionplants. Our annualfeed
requirements forfiscal 2021were 1.8 milliontons offinished feed,of whichwe manufactured1.6 million tons.Wecurrently
have the capacity tostore 152 thousand tons ofcorn and soybean meal,and we replenish thesestores as needed throughoutthe
Our primary feed ingredients, corn and soybean meal, are commodities and are subject to volatile price changes dueto weather,
various supply anddemand factors,transportation and storagecosts, speculators, andagricultural, energyand trade policiesin
the U.S. and internationally. We purchase the vast majority of our corn and soybean meal from U.Ssources but may be forced to
purchase internationallywhen U.S.supplies arenot readilyavailable. Feedgrains arecurrently availablefrom anadequate number
of sources inthe U.S. Asa point ofreference, a multi-yearcomparison of themonthly average ofdaily closing pricesper Chicago
Board of Trade are shown below for corn and soybean meal:
Shell Egg Production
We produced approximately90.5% ofour totalshell eggssold infiscal 2021,with 91%of suchproduction comingfrom company-
furnish allfeed andcritical supplies,own theshell eggsproduced andassume marketrisks. Thecontract producersown and
operate their facilitiesand are paida fee basedon production withincentives for performance.We purchased approximately 9.5%
of the total shell eggs we sold during fiscal 2021 from outside suppliers.
The commercial production of shell eggsrequires a source of baby chicksfor laying flock replacement. We produce the majority
After theeggs areproduced, theyare gradedand packaged.Substantially allour farmshave modern“in-line” facilitieswhich
mechanically gather, gradeand packagethe eggsat thesame locationwhere theyare laid.The in-linefacilities generatesignificant
efficiencies and cost savingscompared to thecost of eggsproduced from non-in-linefacilities, which processeggs laid atanother
location and transported to thefacility. The in-line facilities also produce a higherpercentage of USDA Grade Aeggs, which sell
at higher prices. Eggs produced on farms owned by contractors are broughtto our processing plants to be graded and packaged.
Because shell eggs are perishable,we do not maintainlarge egg inventories. Ouregg inventory averagedsix days of salesover
the course of fiscal 2021. Webelieve our constant focus on production efficiencies andautomation throughout the supply chain
enable us to be a low-cost supplier in our markets.
Wedo notuse artificialhormones inthe productionof oureggs. Hormoneuse inthe poultryand eggproduction industryhas
beeneffectivelybanned inthe U.S.since the1950s. Wehave anextensive writtenprotocol thatallows theuse ofmedically
American Association ofAvian Pathologists. When antibiotics aremedically necessary, a licensed veterinarydoctor will approve
and administer approved doses for a restrictedperiod. Our programs are designed to ensureantibiotics are ordered and used only
when necessary and records of their usage – when and where – are maintained to monitor compliance with ourprotocols. We do
not use antibiotics for growth promotion or performance enhancement.
significant andgrowing segmentof themarket. We classifynutritionally enhanced,cage-free, organicand browneggs asspecialty
eggs for accounting and reporting purposes. Specialty eggs are intended to meet the demands of consumers who aresensitive to
environmental, health and/or animal welfare issues.
As defined by the USDA, eggs packed in USDA grade marked consumer packages labeled as cage-free are laid by hens that are
able to roam vertically and horizontallyin indoor houses, and have accessto fresh food and water. Cage-free systems must allow
hens toexhibit naturalbehaviors andinclude enrichmentssuch asscratch areas,perches andnests. Hensmust haveaccess to
litter, protection from predators and be able to move in a barn in a manner that promotes bird welfare.
A significant numberof our customershave announced goalsto offercage-free eggs exclusivelyon or before2026, subject in
most cases to availability of supply, affordability and customer demand, among other contingencies. Additionally,several states
considering such requirements.Our customers typicallydo not committo long-term purchasesof specific quantitiesor type of
eggs withus, andas aresult, itis difficultto accuratelypredict customerrequirements forcage-free eggs.Weare, however,
engaging withour customersin aneffort toachieve asmooth transitionin meetingtheir announcedgoals andneeds. Salesof
capacity exceeds customer requirements, which we believe positions us well, as ourcustomer base is primarily outside of states
that have mandated cage-free production andsales Wehave invested significant capital in recentyears to acquire and construct
cage-free facilities, andwe expect ourfocus for futureexpansion will continue toinclude cage-free facilities, asour customers
importance of our continued abilityto provide affordable conventionaleggs in order to provideour customers with a varietyof
egg choices and to address hunger in our communities.
Land O’ Lakes®
at our facilities under EB guidelines.
Land O’ Lakes®
diet. Our Farmhouse Eggs® brand eggs are produced at our facilities bycage-free hens that are provided with a vegetarian diet.
We marketorganic, vegetarian, and omega-3 eggs under our
We also produce, market, and distribute private label specialty shell eggs to several customers.
Egg products are shell eggs broken and sold in liquid, frozen, or dried form. Wesell liquid and frozen egg products primarily to
the institutional, foodservice, andfood manufacturing sectorsin the U.S.Our egg productsare sold throughour wholly owned
subsidiaries American Egg Products, LLC located in Georgia and Texas Egg Products, LLC located in Texas.
Summary of Conventional and Specialty Shell Egg and Egg Product Sales
specialty shell egg and egg product sales for the following fiscal years:
Other Specialty Eggs
Total Specialty Eggs
Marketing and Distribution
Wesell most of our shell eggs inthe southwestern, southeastern, mid-western and mid-Atlantic regions ofthe U.S. through our
extensive distribution network to a diverse group of customers, including national and regional grocery store chains, clubstores,
companies servicingindependent supermarketsin theU.S., foodservicedistributors andegg productconsumers. Someof our
sales arecompleted throughco-pack agreements–a commonpractice inthe industrywhereby productionand processingof
certain products isoutsourced to anotherproducer. Althoughwe face intensecompetition from numerous othercompanies, we
believe that we have thelargest market share for the saleof shell eggs in thegrocery segment, including large U.S.food retailers.
Weare a memberof the EBcooperative and produce,market and distributeEB and LandO'Lakes branded eggs,both directly
and through our joint ventures Specialty Eggs, LLC and Southwest Specialty Eggs, LLC, underexclusive license agreements in
Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, Nevada, and Texas; portions of states in California, North Carolina
Oklahoma, South Carolina, Utah, as well as the whole New York City area.
The majority of eggs sold are based on the daily or short-term needs of our customers. Most sales to established accounts are on
payment terms rangingfrom seven to30 days. Althoughwe have establishedlong-term relationshipswith manyof our customers,
most of them are free to acquire shell eggs from other sources.
The shell eggswe sell areeither delivered toour customers’ warehouseor retail stores,by our ownfleet or contractedrefrigerated
delivery trucks, or are picked up by our customers at our processing facilities.
Our top threecustomers accounted foran aggregate of48.6%, 51.1% and52.2% of netsales dollars forfiscal 2021, 2020,and
2019, respectively. Our largest customer, Walmart Inc. (including Sam's Club),accounted for 29.8%, 32.1%and 33.7% for fiscal
2021, 2020, and 2019, respectively.
In fiscal2021, approximately 90.5%of ourrevenue relatedto sales toretail customers, 6.8%to sales tofoodservice providers
and 2.7% toegg products sales.Retail customers includeprimarily national andregional grocery storechains, club stores,and
companies servicingindependent supermarketsin theU.S. Foodservicecustomers includeprimarily companiesthat sellfood
products and related items to restaurants, healthcare and education facilities, and hotels.
The production, processing, and distribution of shelleggs is an intensely competitive business, whichhas traditionally attracted
large numbers of producers. Shell egg competition is generally based on price, service, and product quality.
producers, each owningat least 500 thousandlayers, owned approximately99% of totalindustry layers. Theten largest producers
owned approximately53% oftotal industrylayers comparedto 54%in theprior year.Webelieve industryconsolidation will
cyclicality ofshell eggprices, butno assurancecan begiven inthat regard.A continuationof thistrend couldcreate greater
competition among fewer producers.
Retail sales of shell eggs historically have been highest during the falland winter months and lowest during the summer months.
Prices for shell eggs fluctuate in response to seasonal demandfactors and a natural increase in egg production during thespring
and early summer.Historically, shellegg prices tend to increasewith the start of theschool year and tend tobe highest prior to
holiday periods,particularly Thanksgiving,Christmas, andEaster.Consequently,and allotherthings beingequal, wewould
expect to experience lower sellingprices, sales volumes and netincome (and may incur netlosses) in our first andfourth fiscal
quarters ending in August/September and May/June, respectively.
Our growth strategy isfocused on remaining alow-cost provider of shelleggs located near our customers.In light of thegrowing
customerdemand andincreased legalrequirements forcage-free eggs,weintend tocontinue tocloselyevaluate theneedto
expand throughselective acquisitions,with apriority onthose thatwill facilitateour abilityto expandour cage-freeshell egg
production capabilitiesin keylocations andmarkets. Wewill continueto closelyevaluate theneed tocontinue toexpand and
convert our own facilities to increase production of cage-free eggs based on a timeline designed to meet the anticipated needs of
our customers and comply withevolving legal requirements. As theongoing production of cage-free eggsis more costly than the
important to the success of our business.
Trademarks and License Agreements
We own the trademarks
. We produce andmarket Egg-Land'sBest®
and Land O’ Lakes® branded eggs underlicense agreements with EB. Webelieve these trademarks and license agreements are
important to our business.
Our facilities and operations aresubject to regulation by variousfederal, state, and local agencies, including,but not limited to,
the FDA,USDA, EnvironmentalProtection Agency("EPA"),Occupational Safetyand HealthAdministration ("OSHA")and
corresponding state agencies or laws. The applicable regulations relate to grading, quality control, labeling, sanitarycontrol and
reuse or disposal ofwaste. Our shell eggfacilities are subject toperiodic USDA, FDA, EPA,and OSHA inspections. Ourfeed
compliance with our own standards and customerspecifications. It is possible that we will berequired to incur significant costs
for compliance withsuch statutes andregulations. In thefuture, additional rulescould be proposedthat, if adopted,could increase
California, Colorado,Massachusetts, Michigan,Nevada, Oregon,Rhode Island,and Washingtonhave passedminimum space
and/or cage-freerequirements, mandatingthe saleof onlycage-free eggsin theirstates, withimplementation ofthese lawsranging
from January 2022 to January2026. These states represent approximately24% of the U.S. totalpopulation according to the 2020
U.S. Census.While ourdirect salesinto thesestates havenot beenmaterial, theselaws willaffect sourcing, productionand pricing
of eggs(conventional aswell asspecialty) asthe nationaldemand forcage-free productioncould begreater thanthe current
supply which wouldincrease the priceof cage-freeeggs, unless morecage-free production capacityis constructed.Likewise,
the nationalsupply foreggs fromconventional production couldexceed consumerdemand whichwould decreasethe priceof
Our operations and facilities are subject to various federal, state, and local environmental, health and safetylaws and regulations
governing, amongotherthings, thegeneration, storage,handling, use,transportation, disposal,and remediationofhazardous
materials. Under these laws andregulations, we must obtainpermits from governmental authorities,including, but not limited to,
wastewater discharge permits. Wehave made, and will continueto make, capital and otherexpenditures relating to compliance
with existing environmental, health and safetylaws and regulations and permits.We are not currently aware of any major capital
regulations are becoming increasingly more stringent, including those relating toanimal wastes and wastewater discharges, it is
possible that we will have to incur significant costs for compliance with such laws and regulations in the future.
Human Capital Resources
As of May29, 2021, wehad 3,286 employees, of whom 2,642 workedin egg production,processing, and marketing,188 worked
in feedmill operationsand 456, including ourexecutive officers, wereadministrative employees. Approximately4.1% ofour
personnelarepart-time, and weutilizetemporaryemploymentagenciesandindependentcontractorstoaugmentour
staffing needs when necessary. For fiscal 2021, the average monthly full-time equivalentfor contingent workers were 840. None
of our employees are covered by a collective bargaining agreement. We consider our relations with employees to be good.
Culture and Values
Weareproudtobe contributing corporatecitizenswherewe liveandwork and tohelp to create healthy,prosperous
communities. Ourcolleagueshelpuscontinuetoenhance our communitycontributions,which are drivenby
our longstanding culture that strives to promote an environment thatupholds integrity and respect and provides opportunities for
each colleague to realize full potential.
Health and Safety
Our top priority is the health and safety of our employees, whocontinue to produce high-quality, affordableegg choices for our
customers andcontribute to astable food supply. Ourenterprise safety committeecomprises two corporatesafety managers,eight
oversees healthandsafety regularlyreviewsourwritten policiesandchangestoOSHAregulationstandards,andshares
working to ensure that ourengagements with our consumers, customers, and regulators evidence our strongcommitment to our
workers’ health and safety.
Our commitment to our colleagues’ health includes a strong commitment to on-site worker safety, including a focus on accident
prevention and life safety.Training and safety personnel conduct monthly multi-lingual trainingthat covers topics suchas slip-
protective equipment, hearing conservation,emergency response, lockout tagout ofequipment, and forklift safety, among others.
Tohelp drive ourfocus on colleaguesafety, wedeveloped safety committeesat each ofour sites thatemployee representation
from each department. We regularly provide health and safety information to employees via company bulletin boards. Our local
sitefarmandfeedmillmanagementhasan open-door policywithemployeestodiscussimprovementideas.Wehavealso
installed dry hydrogen peroxide biodefensesystems inour processing facilities. Newcolleagues undergoa two-day orientation
period reviewing oursafety and healthprograms and policies asthey relate totheir job tasksand then areplaced with experienced
team members to learnthe job tasks.At the 30-day anniversary of theemployees’ hire date,their supervisorhas a one-on-one
meeting to discuss any questions the employee may still be unsure about as it relates to their job tasks, health and safety policies
and procedures, or any other matters.
Wereview thesuccess ofour safetyprograms ona monthlybasis tomonitor theireffectiveness andthe developmentof any
trends that needto be addressed.During fiscal year2021 our recordableincident rates decreasedby 21% comparedto fiscal 2020.
Diversity, Equity and Inclusion
Ourculture seekstoembrace thediversityandinclusionofallourteammembers.Thisculture is drivenbyourboardand
executive management team.Our board comprises seven members,four of whom are independent.Women comprise 29% of our
board and 14% of our board members identify as a racial or ethnic minority. As of May 29, 2021, our total workforce comprised
30% women and 52% of colleagues who identifyas racial or ethnic minorities. Our Policyagainst Harassment, Discrimination,
regardless of race, color, religion, sex, national origin or any other basis protected by applicable law.
Cal-Maine Foodsstrives toensure thatour colleaguesare treatedequitably. We are an EqualOpportunity Employerthat prohibits,
by policy and practice, any violation ofapplicable federal, state, or local law regarding employment.Discrimination because of
race, color, religion, sex, pregnancy,age, national origin, citizenship status, veteran status, physical or mental disability, genetic
information, or any otherbasis protected by applicablelaw is prohibited. We value diversityin our workplaces orin work-related
situations. We maintain strong protocols to help our colleagues perform their jobs free from harassment and discrimination. Our
development, training, remuneration, benefits, dischargeand other matters tied toterms and conditions of employment. Weare
Recruitment, Development and Retention
Webelievein compensatingourcolleagueswithfairand competitive wages, inadditionto offering
competitive benefits. Approximately 78%of ouremployees arepaid athourly rates,with themajority paidat ratesabove the
federalminimumwagerequirement.Our annual averageweekly wage acrossall employees for fiscalyear
2021 was $878.30. Weoffer ourfull-time eligibleemployees arange ofbenefits includingcompany-paid lifeinsurance.The
Company providesa comprehensiveself-insured healthplan and paysapproximately 85%of the costsof the planfor participating
employees and theirfamilies as ofDecember 31, 2020. Recentbenchmarking of our healthplan indicates comparable benefits, at
loweremployee contributions, when compared to an applicableAgricultureandFood Manufacturing sectorgrouping,aswell
as peergroupdata.In addition, weofferemployeestheopportunitytopurchaseanextensive rangeof othergroup
plan benefits, such as dental,vision, cancer,disability andvoluntary life.After oneyear ofemployment, full-time employees,
whomeeteligibilityrequirements, mayelectto participateinourKSOP retirement plan,whichoffersarangeofinvestment
alternativesandincludesmany positive features,suchasautomatic enrollment with scheduledautomatic contribution
increases and loanprovisions. And, regardless oftheemployees’ electionto contributetotheKSOP,the
Company contributes sharesof Companystock orcashequivalentto 3%of pre-tax earnings foreachpayperiodthathours
We provideextensivetraininganddevelopment relatedtosafety,regulatorycompliance,andtasktraining. We investin
developing our future leaders through our Management Intern, Management Trainee,and informal mentoring programs.
production of high-qualityeggs andegg products andto the success ofour Company. We have engaged inagricultural production
for more than60 years. Ouragricultural practices continueto evolve withincreased focus onsustainability factors as we continue
to striveto meet theneed for nutritious,affordable foods tofeed agrowing population even as weexercise responsible natural
resource stewardship. We plan to publish ourmost recent Sustainability update in late July 2021, which will be available on our
website. Information contained in our website is not a part of this report.
For informationregarding ourresponse tothe COVID-19pandemic, andits impacton ourbusiness, see
Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Our Corporate Information
matters isavailable. Theinformation containedin ourwebsite isnot apart ofthis report.Our AnnualReports onForm 10-K,
available, free of charge, through our website as soon as reasonably practicable after we file them with the SEC. In addition, the
SEC maintainsa websiteat www.sec.gov thatcontains reports,proxy andinformation statements,and otherinformation regarding
website. Cal-Maine Foods, Inc. is a Delaware corporation, incorporated in 1969.
ITEM 1A.RISK FACTORS
control. The following is a description ofthe known factors thatmay materially affect ourbusiness, financial condition orresults
of operations. They shouldbe consideredcarefully,in addition tothe information setforth elsewherein this AnnualReport on
Form 10-K, including under Item 7.Management’sDiscussion and Analysis of Financial Conditionand Results of Operations,
in making any investment decisions with respect to our securities. Additional risks or uncertainties that are not currentlyknown
to us,or thatwe areaware ofbut currentlydeem tobe immaterialor thatcould applyto anycompany couldalso materially
adversely affect our business, financial condition or results of operations.
INDUSTRY RISK FACTORS
Market prices ofwholesale shell eggsare volatile,and decreasesin these pricescan adversely impactour revenuesand
Our operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside our
control. As aresult, ourprior performanceshould notbe presumedto bean accurateindication offuture performance.Under
certain circumstances,small increasesin production,or smalldecreases in demand,within the industrymight have alarge adverse
effect on shell egg prices. Low shell egg prices adversely affect our revenues and profits.
Market prices for wholesale shelleggs have been volatile andcyclical. Shell egg prices haverisen in the pastduring periods of
high demand such as the initial outbreak of the COVID-19 pandemic and periods when high protein diets are popular. Shell egg
prices have alsorisen in the pastduring periods ofconstrained supply,such as theavian influenza outbreak in2015, which we
believe, based on published industryestimates, impacted approximately 12% ofthe national flock of layinghens. During times
when prices arehigh, the eggindustry has typicallygeared up to producemore eggs primarilyby increasing thenumber of layers,
ultimately resulting in an oversupply of eggs, which was subsequently followed by a period of lower prices.
As discussedabove underthe heading“Seasonality” inPart I.Item 1.Business, seasonalfluctuations impactshell eggprices.
Therefore, comparisons ofour sales andoperating results betweendifferent quarters within asingle fiscal yearare not necessarily
A decline in consumer demand for shell eggs can negatively impact our business.
Webelieve theincrease inmeals preparedat homedue toCOVID-19 pandemic,high proteindiet trends,industry advertising
campaigns, and the improved nutritional reputation of eggs (related tobetter scientific understanding of the role of cholesterol in
diets) have all contributed to shell egg demand. However,it is possible that the demand for shell eggs willdecline in the future.
Adverse publicityrelating tohealth concernsand changesin theperception ofthe nutritionalvalue ofshell eggs,changes in
consumer viewsregarding consumptionof animal-basedproducts, aswell asmovement awayfrom highprotein diets,could
Feed costs are volatile and increases in these costs can adversely impact our results of operations.
Feed costs are thelargest element of ourshell egg (farm) productioncost, ranging from 55%to 58% of totalfarm production cost
in the last five fiscal years. Although feed ingredients, primarily corn and soybeanmeal, are available from a number of sources,
we do not havecontrol over the pricesof the ingredients wepurchase, which are affected byweather, various supply and demand
internationally. Increases in feed costs unaccompanied by increasesin the selling price ofeggs can have a materialadverse effect
on theresults ofour operationsand cashflow. Alternatively,low feedcosts canencourage industryoverproduction, possibly
resulting in lower egg prices and lower revenue.
Shelleggsandshelleggproductsaresusceptible tomicrobialcontamination, andwemayberequiredto,orwemay
voluntarily, recall contaminated products.
Shell eggsand shellegg productsare vulnerableto contaminationby pathogenssuch asSalmonella. The Companymaintains
policies and procedures designed to comply with the complex rules and regulationsgoverning egg production, such as The Final
Egg Ruleissued bythe FDA"Prevention ofSalmonella Enteritidisin ShellEggs DuringProduction, Storage,and Transportation,”
and theFDA’s Food Safety Modernization Act.Shipment ofcontaminated products,even ifinadvertent, couldresult ina violation
of lawand leadto increasedrisk ofexposure toproduct liabilityclaims, productrecalls andscrutiny byfederal andstate regulatory
redistributed byus. As such,we mightdecide or berequired to recalla productif weor regulatorsbelieve it posesa potential
health risk. Any product recall couldresult in a loss of consumerconfidence in our products, adverselyaffect our reputation with
existing and potential customers andhave a material adverse effect onour business, results of operationsand financial condition.
Agricultural risks, including outbreaks of avian disease, could harm our business.
Our shell egg production activitiesare subject to a varietyof agricultural risks. Unusual orextreme weather conditions, disease
and pestscan materiallyand adverselyaffect thequality andquantity ofshell eggswe produceand distribute. TheCompany
maintains controls and proceduresto reduce the risk ofexposing our flocks to harmfuldiseases; however, despitethese efforts,
outbreaks of avian disease canand do still occur andmay adversely impact the healthof our flocks. An outbreak of aviandisease
could have a materialadverse impact on ourfinancial results by increasinggovernment restrictions on thesale and distribution
of our productsand requiring usto euthanize theaffected layers.Negative publicity froman outbreak withinour industry can
negatively impact customer perception,even if theoutbreak does notdirectly impact our flocks.If a substantialportion of our
layers or production facilities are affected by any of these factorsin any given quarter or year, our business, financial condition,
and results of operations could be materially and adversely affected.
BUSINESS AND OPERATIONAL RISK FACTORS
The COVID-19 pandemic has had an adverse impact on our business and operations
Since early2020, thecoronavirus ("COVID-19") outbreak,characterized asa pandemicby theWorldHealth Organizationon
March 11, 2020, hascaused significant disruptions in internationaland U.S. economies and markets.The effects of COVID-19
have had, and may continue tohave if a resurgence occurs,a negative impact on our businessthrough disruptions in the supply
chain such as increased costsand decreased availability of packagingsupplies; the pandemic has alsoincreased labor costs and
During the initial outbreakof COVID-19, we sawan increase indemand for eggsas consumers prepared moremeals at home.
Egg prices initially rose during the fourth quarter of fiscal 2020, but prices quickly decreased as the demand shock subsided and
eggs that normallywould go to foodservicebusinesses (e.g. restaurants)entered the retailmarket (e.g. grocery stores).As a result
of the pandemic,the foodservice marketfor shell eggswas depressed formost of fiscal2021. As vaccinationrates continue to
rise and governmentalrestrictions are lifted,foodservice demand mayincrease and demandin retail channels,where we sellmost
of our eggs, could decrease.
Our acquisition growth strategy subjects us to various risks.
As discussed in
, we planto pursue agrowth strategy thatincludes selective acquisitions
of othercompanies engagedin theproduction andsale ofshell eggs,with apriority onthose thatwill facilitateour abilityto
expand ourcage-free shellegg productioncapabilities inkey locationsand markets.The numberof existingcompanies with
cage-free capacity thatwe may be ableto purchase is limited,as most productionof shell eggs byother companies in ourmarkets
currently does not meet customer or legal requirements to be designated as cage-free.
Acquisitions require capital resources andcan divert management’s attention from our existingbusiness. Acquisitions also entail
an inherent risk thatwe could becomesubject to contingentor other liabilities,including liabilities arisingfrom events orconduct
prior toour acquisitionof abusiness thatwere unknownto usat thetime ofacquisition. Wecould incursignificantly greater
expenditures in integrating an acquired business than we anticipated at the time of its purchase. We may over-estimate or under-
estimate the demand for cage-free eggs, which could cause our acquisition strategy to be less-than-optimalfor our future growth
We cannot assure you that we:
will identify suitable acquisition candidates;
can consummate acquisitions on acceptable terms;
can successfully integrate an acquired business into our operations; or
can successfully manage the operations of an acquired business.
Noassurance canbegiventhatcompaniesweacquireinthefuturewillcontributepositivelytoourresultsofoperations or
financial condition.In addition,federal antitrustlaws requireregulatory approvalof acquisitionsthat exceedcertain threshold
levels of significance, and we cannot guarantee that such approvals would be obtained.
The consideration we payin connection with anyacquisition affects our financialresults. If we paycash, we could berequired
to use aportion of ouravailable cash toconsummate the acquisition.To the extent weissue sharesof our CommonStock, existing
stockholders may be diluted. In addition, acquisitions may result in additional debt.
Our largest customers have accountedfor a significant portion ofour net sales volume. Accordingly, our businessmay be
adversely affected by the loss of, or reduced purchases by, one or more of our large customers.
Our top threecustomers accounted foran aggregate of48.6%, 51.1% and52.2% of netsales dollars forfiscal 2021, 2020,and
2019, respectively.Our largestcustomer, WalmartInc. (including Sam'sClub), accounted for29.8%, 32.1% and33.7% of net
sales dollarsfor fiscal2021, 2020,and 2019, respectively.Although wehave establishedlong-term relationships withmost of
our customers whocontinue to purchasefrom us basedon our abilityto service theirneeds, they arefree to acquireshell eggs
from other sources. If, for any reason, one or more of our large customers were to purchase significantly less of our shell eggs in
the future or terminatetheir purchases fromus, and we werenot able tosell our shelleggs to new customersat comparable levels,
it would have a material adverse effect on our business, financial condition, and results of operations.
Our business is highly competitive.
competitive. We compete with a large number of competitors that mayprove to be more successful thanwe are in marketing and
selling shell eggs. We cannot provide assurance that we will be able to compete successfully with any or all of these companies.
Increased competition couldresult in pricereductions, greater cyclicality, reducedmargins and lossof market share,which would
negatively affect our business, results of operations, and financial condition.
implementation of our business plan in a timely manner.
Our success dependslargely uponthe continued serviceof our seniormanagement team. Theloss or interruptionof service of
one or more ofour key executive officerscould adversely affect ourability to manage ouroperations effectively and/or pursue
our growth strategy.Wehave not enteredinto any employmentor non-compete agreementswith any ofour executive officers
nor do wecarry any significantkey-man life insurancecoverage on anysuch persons.Competition couldcause us tolose talented
competition for employees.
effectively respond to cyber-attacks, securitybreaches, or other incidents involving those systems, could adverselyaffect
day-to-day operations and decision making processes and have an adverse effect on our performance and reputation.
The efficient operation of our business depends on our information technology systems, which we rely on to effectively manage
effectively manage the resources necessaryto build and sustain anappropriate technology environment, ourbusiness, reputation,
or financial results could be negatively impacted. In addition, our information technology systems may be vulnerable to damage
viruses, ransomware, security breaches or cyber incidents. Cyber-attacks are becoming more sophisticated andare increasing in
the number of attempts and frequency by groups and individuals with a wide range of motives.
A security breachofsensitiveinformationcouldresultindamagetoourreputationandourrelationswithourcustomersor
employees. Any such damage or interruption could have a material adverse effect on our business.
Labor shortages or increases in labor costs could adversely impact our business and results of operations.
Labor is a primary component of our farm production costs. Our success is dependent upon recruiting, motivating,and retaining
staff to operate our farms.Approximately 78% of ouremployees are paid athourly rates, often inentry-level positions. While the
minimum wagerequirements couldincrease ourlabor costs.In addition,any regulatorychanges requiringus toprovide additional
compensation, would increaseour costs. Ashortage in thelabor pool,which may becaused by competitionfrom other employers,
the remote locations of manyof our farms, or changesin government provided supportor immigration laws, particularly intimes
of lower unemployment, could adversely affect our business and results of operations.A shortage of labor available to us could
cause our farms to operate with reduced staff, which could negatively impact our production capacity and efficiencies and could
require usto increase wagesto attractlabor.Accordingly,any significant laborshortages orincreases in ourlabor costs could
have a material adverse effect on our results of operations.
Weare controlledby thefamily ofour latefounder,Fred R.Adams, Jr.,and AdolphusB. Baker,our ChiefExecutive
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 onMarch 29, 2020. Mr.Adams’ son-in-law, AdolphusB. Baker,
ourChiefExecutive OfficerandChairman ofourboardofdirectors, Mr.Baker’sspouse andherthree sisters(whoareMr.
Common Stock (whichhas 10 votesper share), controllingapproximately 52.1% ofour total votingpower. Additionally,such
persons andJean ReedAdams (“Mrs.Adams”), thewife ofour latefounder,Fred R.Adams, Jr.,also haveadditional voting
power due tobeneficial ownership of ourCommon Stock (which hasone vote pershare), directly orindirectly through related
entities, resulting infamily voting controlof approximately 57.7%of our totalvoting power. Mr. Baker controls thevote of 100%
of our outstanding Class A Common Stock.
Weunderstand that the Adams andBaker families intend to retain ownershipof a sufficient amountof our Common Stock and
our Class A CommonStock to assure continuedownership of more than50% of the votingpower of our outstandingshares of
capital stock.As aresult ofthis ownership,the Adamsand Bakerfamilies havethe abilityto exertsubstantial influenceover
matters requiring action by our stockholders, including amendments to our certificate of incorporation andby-laws, the election
transactions. Delaware lawprovides thatthe holdersof amajority ofthe votingpower ofshares entitled tovote mustapprove
certain fundamental corporate transactionssuch as a merger,consolidation and sale ofall or substantially allof a corporation’s
assets; accordingly,such a transaction involving usand requiring stockholder approval cannotbe effected without theapproval
discourage certaintypes oftransactions involvinga changeof controlof ourCompany, including transactionsin whichthe holders
of our Common Stockmight otherwise receive apremium for their sharesover then current marketprices. The Adams andBaker
families’ controlling ownership of our capital stock may adversely affect the market price of our Common Stock.
experience significant dilutionas a result offuture issuances of oursecurities, which couldmaterially and adverselyaffect
the market price of our Common Stock.
The sale oravailability for sale ofsubstantial amounts of ourCommon Stock could adverselyimpact its price. Asdescribed in
Adams and theDaughters’ Trust (of whichthe daughters ofour late founderare beneficiaries) sold6.9 million sharesof Common
Stock in a secondarypublic offering pursuant toa previously disclosedAgreement Regarding Common Stock(the “Agreement”)
filed as an exhibit to this report. Afterthe sale, approximately 5.0 million shares (the “Subject Shares”)remain registered under
a shelfregistration statementand prospectusdated October9, 2018for potentialresale, whichshares aresubject tothe Agreement.
The Agreement generallyprovides that ifa holder ofSubject Shares intendsto sell anyof the SubjectShares, such partymust
give the Companya right offirst refusal topurchase all orany of suchshares. The pricepayable by theCompany to purchase
shares pursuant to the exercise of the rightof first refusal will reflect a 6% discountto the then-current market price based on the
20 business-day volumeweighted average price.If the Companydoes not exerciseits right offirst refusal andpurchase the shares
offered, suchparty will,subject tothe approvalof aspecial committeeof independentdirectors ofthe Boardof Directors,be
permitted tosell theshares notpurchased bythe Companypursuant toa Companyregistration statement,Rule 144under the
Securities Act of 1933, or another manner of sale agreed to by the Company. Although pursuant to the Agreement the Company
will have aright of firstrefusal to purchaseall or anyof those shares,the Company mayelect not toexercise its rightsof first
refusal, and if sosuch shares would beeligible for sale pursuantto the registration rightsin the Agreement orpursuant 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.
In addition, ourarticles of incorporationauthorize us toissue 120,000,000 sharesof our CommonStock. As ofMay 29, 2021,
there were 44,058,463shares of ourCommon Stock outstanding.Accordingly,a substantial numberof shares ofour Common
additional shares of our Common Stock in connection with employee benefit plans (including equity incentive plans).
In thefuture, wemay decideto raisecapital throughofferings ofour CommonStock, additionalsecurities convertibleinto or
exchangeable for Common Stock,or rights to acquirethese securities or ourCommon Stock. The issuanceof additional shares
of our Common Stock or additional securitiesconvertible into or exchangeable for our CommonStock 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 affectprevailing market pricesfor ourCommon Stock, andwe cannot predictthe effect
this dilution may have on the price of our Common Stock.
LEGAL AND REGULATORYRISK FACTORS
Pressure from animal rights groups regarding the treatmentof animals may subjectus to additional costs toconform our
practices and protect ourimage with our customers. Inparticular,changes in customer preferencesand new legislation
have accelerated an increase in demand for cage-free eggs, which increases uncertainty in our businessand increases our
We and many of our customers facepressure from animal rightsgroups, such as Peoplefor the Ethical Treatment ofAnimals and
the Humane Societyof the UnitedStates, to requirecompanies that supplyfood products to operatetheir business ina manner
additional costs to conformour practices to addressthese standards or todefend our existing practicesand protect our imagewith
our customers. Thestandards promoted bythese groups changeover time, buttypically require minimumcage space forhens,
among other requirements, and some of these groups have led successful legislative efforts toban any form of caged housing in
various states.As discussedin PartI. Item1. Business- GovernmentRegulation, severalstates havepassed minimumspace
and/or cage-freerequirements forhens, andother statesare consideringsuch requirements.In addition,in recentyears, many
large restaurant chains,foodservice companies andgrocery chains, includingour largest customers,announced goals totransition
to anexclusively cage-freeegg supplychain byspecified futuredates, insome casessubject toavailable supply,affordability
and consumer demand.
Changing our infrastructure and operating procedures to conform to consumer preferences, customerdemands and new laws has
resulted and willcontinue to resultin additional costs,including capital andoperating cost increases. TheUSDA reported that
theestimatedcage-freeflockis 86.0 million hensasof June 1, 2021, whichisapproximately