Cal-Maine Foods 10Q 2024 Q2 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

December 2, 2023

☐

Transition report pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________

Commission File Number:

001-38695

CAL-MAINE FOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware

64-0500378

(State or other jurisdiction of incorporation or organization)

(I.R.S Employer Identification No.)

1052 Highland Colony Pkwy

Suite 200

Ridgeland

Mississippi

39157

(Address of principal executive offices)

(Zip Code)

(

601

)

948-6813

(Registrant’s telephone number,

including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

CALM

The

NASDAQ

Global Select Market

Indicate

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

that 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

44,182,613

shares of

Common Stock,

$0.01 par value,

and

4,800,000

shares of Class

A Common

Stock, $0.01

par

value, outstanding as of January 3, 2024.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets -

December 2, 2023 and June 3, 2023

Condensed Consolidated Statements of Income -

Thirteen and Twenty -six Weeks Ended December 2, 2023 and November 26, 2022

Condensed Consolidated Statements of Comprehensive Income -

Thirteen and Twenty -six Weeks Ended December 2, 2023 and November 26, 2022

Condensed Consolidated Statements of Cash Flows -

Twenty-six Weeks Ended December 2, 2023 and November 26, 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

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)

(Unaudited)

December 2, 2023

June 3, 2023

Assets

Current assets:

Cash and cash equivalents

361,783

292,824

Investment securities available-for-sale

206,045

355,090

Trade and other receivables, net

165,391

120,247

Income tax receivable

33,771

66,966

Inventories

287,270

284,418

Prepaid expenses and other current assets

9,673

5,380

Total current

assets

1,063,933

1,124,925

Property, plant &

equipment, net

815,468

744,540

Investments in unconsolidated entities

14,370

14,449

Goodwill

45,776

44,006

Intangible assets, net

17,074

15,897

Other long-term assets

10,184

10,708

Total Assets

1,966,805

1,954,525

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

98,144

82,590

Accrued wages and benefits

20,164

38,733

Accrued income taxes payable

8,445

8,288

Dividends payable

5,682

37,130

Accrued expenses and other liabilities

21,352

15,990

Total current

liabilities

153,787

182,731

Other noncurrent liabilities

30,571

9,999

Deferred income taxes, net

158,483

152,212

Total liabilities

342,841

344,942

Commitments and contingencies - see Note 10

—

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

74,214

72,112

Retained earnings

1,583,071

1,571,112

Accumulated other comprehensive loss, net of tax

(1,614)

(2,886)

Common stock in treasury at cost –

26,078

shares at December 2, 2023 and

26,077

shares at June 3, 2023

(30,014)

(30,008)

Total Cal-Maine Foods,

Inc. stockholders’ equity

1,626,408

1,611,081

Noncontrolling interest in consolidated entity

(2,444)

(1,498)

Total stockholders’

equity

1,623,964

1,609,583

Total Liabilities and Stockholders’

Equity

1,966,805

1,954,525

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Net sales

523,234

801,700

982,578

1,460,044

Cost of sales

432,104

483,851

846,015

924,705

Gross profit

91,130

317,849

136,563

535,339

Selling, general and administrative

76,578

57,952

128,824

111,559

Loss on disposal of fixed assets

318

262

Operating income

14,234

259,868

7,477

423,718

Other income (expense):

Interest income, net

6,987

1,930

14,333

2,833

Royalty income

301

344

650

772

Equity income (loss) of unconsolidated

entities

(987)

(441)

(843)

Other, net

567

1,113

832

1,268

Total other income, net

7,884

2,400

15,374

4,030

Income before income taxes

22,118

262,268

22,851

427,748

Income tax expense

5,540

63,974

5,862

104,320

Net income

16,578

198,294

16,989

323,428

Less: Loss attributable to noncontrolling

interest

(431)

(293)

(946)

(446)

Net income attributable to Cal-Maine Foods,

Inc.

17,009

198,587

17,935

323,874

Net income per common share:

Basic

0.35

4.08

0.37

6.66

Diluted

0.35

4.07

0.37

6.63

Weighted average

shares outstanding:

Basic

48,690

48,624

48,691

48,624

Diluted

48,866

48,840

48,854

48,827

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of

Comprehensive Income

(In thousands)

(Unaudited)

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Net income

16,578

198,294

16,989

323,428

Other comprehensive income (loss), before

tax:

Unrealized holding gain (loss) on available-

for-sale securities, net of reclassification

adjustments

895

(974)

1,681

(1,971)

Income tax benefit (expense) related to

items of other comprehensive income

(218)

237

(409)

480

Other comprehensive income (loss), net of tax

677

(737)

1,272

(1,491)

Comprehensive income

17,255

197,557

18,261

321,937

Less: Comprehensive loss attributable to the

noncontrolling interest

(431)

(293)

(946)

(446)

Comprehensive income attributable to Cal-

Maine Foods, Inc.

17,686

197,850

19,207

322,383

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

Cash flows from operating activities:

Net income

16,989

323,428

Depreciation and amortization

39,394

34,729

Deferred income taxes

5,862

(540)

Other adjustments, net

11,407

(12,830)

Net cash provided by operations

73,652

344,787

Cash flows from investing activities:

Purchases of investment securities

(43,569)

(152,365)

Sales and maturities of investment securities

196,104

65,279

Investment in unconsolidated entities

(363)

—

Acquisition of business

(53,746)

—

Purchases of property,

plant and equipment

(65,774)

(59,709)

Net proceeds from disposal of property,

plant and equipment

150

Net cash provided by (used in) investing activities

32,802

(146,703)

Cash flows from financing activities:

Payments of dividends

(37,276)

(78,394)

Purchase of common stock by treasury

(5)

(45)

Principal payments on finance lease

(214)

(94)

Net cash used in financing activities

(37,495)

(78,533)

Net change in cash and cash equivalents

68,959

119,551

Cash and cash equivalents at beginning of period

292,824

59,084

Cash and cash equivalents at end of period

361,783

178,635

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The

unaudited

condensed

consolidated

financial

statements

Cal-Maine

Foods,

Inc.

and

its

subsidiaries

(the

“Company,”

“we,” “us,” “our”)

have been prepared

in accordance with

the instructions to

Form 10-Q and

Article 10 of

Regulation S-X and

accordance

with generally

accepted

accounting

principles in

the

United

States of

America

(“GAAP”)

for

interim

financial

reporting and

should be

read in

conjunction with

our Annual

Report on

Form 10-K

for the fiscal

year ended

June 3,

2023 (the

“2023

Annual

Report”).

These

statements

reflect

all

adjustments

that

are,

the

opinion

management,

necessary

fair

statement of the results for

the interim periods presented

and, in the opinion of

management, consist of adjustments

of a normal

recurring nature.

Operating results for

the interim periods

are not necessarily

indicative of operating

results for the

entire fiscal

year.

Fiscal Year

The Company’s

fiscal year

ends on

the Saturday

closest to

May 31.

Each of

the three-month

periods and

year-to-date periods

ended on December 2, 2023 and November 26, 2022 included

13 weeks

and

26 weeks

, respectively.

Use of Estimates

The preparation of the

consolidated financial statements in

conformity with GAAP requires management

to make estimates and

assumptions

that affect

the amounts

reported in

the consolidated

financial statements

and accompanying

notes. Actual

results

could differ from those estimates.

Investment Securities

The Company

has determined

that its

debt securities

are available-for-sale

investments. We

classify these

securities as

current

because the

amounts invested

are available

for current

operations. Available

-for-sale

securities are

carried at

fair value,

based

on quoted market prices

as of the balance sheet

date, with unrealized gains

and losses recorded in other

comprehensive income.

The

amortized

cost

debt

securities

adjusted

for

amortization

premiums

and

accretion

discounts

maturity

and

recorded in interest

income. The Company regularly

evaluates changes to the

rating of its debt

securities by credit agencies

and

economic conditions

to assess and

record any

expected credit

losses through

allowance for

credit losses,

limited to

the amount

that fair value was less than the amortized cost basis.

Investments

mutual

funds

are

recorded

fair

value

and

are

classified

“Other

long-term

assets”

the

Company’s

Condensed

Consolidated

Balance

Sheets.

Unrealized

gains

and

losses

for

equity

securities

are

recorded

other

income

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

Condensed Consolidated Statements of Income.

The cost

basis for

realized gains

and losses

on available-for-sale

securities is

determined by

the specific

identification method.

Gains

and

losses

are

recognized

other

income

(expenses)

Other,

net

the

Company’s

Condensed

Consolidated

Statements of Income. Interest and dividends on securities classified as available-for-sale

are recorded in interest income.

Trade Receivables

Trade receivables are stated at their carrying

values, which include a reserve for credit losses. As of December

2, 2023 and June

2023,

reserves

for

credit

losses

were

536

thousand

and

579

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

assigned

expected

loss

based

historical loss information adjusted as needed for economic and

other forward-looking factors.

Goodwill

represents

the

excess

the

purchase

price

over

the

fair

value

the

identifiable

net

assets

acquired.

Goodwill

evaluated

for

impairment

annually

first

performing

qualitative

assessment

determine

whether

quantitative

goodwill

Index

test is

necessary.

After assessing

the totality

of events

or circumstances,

if we

determine it

is more

likely than

not that

the fair

value

reporting

unit

less

than

its

carrying

amount,

then

perform

additional

quantitative

tests

determine

the

magnitude of any impairment.

Intangible Assets

Intangible

assets

are

initially

recorded

fair

value

business

acquisitions,

which

include

franchise

rights,

customer

relationships, non-compete

agreements, trademark

and right

of use

intangibles. They

are amortized

over their

estimated useful

lives

years. The

gross

cost

and

accumulated

amortization

intangible

assets

are

removed

when

the

recorded

amounts

are fully

amortized

and

the asset

is no

longer

in use

or the

contract has

expired.

When certain

events or

changes in

operating conditions

occur,

asset lives may

be adjusted

and an impairment

assessment may

be performed

on the recoverability

of the carrying amounts.

Indefinite life assets are recorded at fair value in business acquisitions and

represents water rights. They are not amortized, but

are reviewed for impairment at least annually or more frequently if

impairment indicators arise.

Dividends Payable

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 of the most recent quarter

for which a dividend was paid.

The dividend policy is subject to

periodic review by the Board of

Directors.

Business Combinations

The Company applies the acquisition

method of accounting, which

requires that once control is obtained,

all the assets acquired

and liabilities assumed,

including amounts

attributable to noncontrolling

interests, are recorded

at their respective

fair values at

the date of acquisition. We

determine the fair values of identifiable assets and liabilities

internally,

which requires estimates and

the

use

various

valuation

techniques.

When

market

value

not

readily

available,

our

internal

valuation

methodology

considers the remaining estimated life of the assets acquired and what

management believes is the market value for those assets.

typically use the income

method approach for

intangible assets acquired in

a business combination. Significant

estimates in

valuing

certain

intangible

assets

include,

but

are

not

limited

to,

the

amount

and

timing

future

cash

flows,

growth

rates,

discount rates and

useful lives. The

excess of the purchase

price over fair values

of identifiable assets and

liabilities is recorded

as goodwill.

Loss Contingencies

Certain

conditions

may

exist

the

date

the

financial

statements

are

issued

that

may

result

loss

the

Company

but

which will

only be

resolved when

one or

more future

events occur

or fail

to occur.

The Company’s

management and

its legal

counsel

assess such

contingent

liabilities, and

such assessment

inherently

involves an

exercise

of judgment.

In assessing

loss

contingencies

to legal

proceedings

that are

pending against

the Company

or unasserted

claims that

may result

in such

proceedings, the Company’s

legal counsel evaluates

the perceived merits

of any legal

proceedings or unasserted

claims as well

as the perceived merits of the amount of relief sought or expected to be

sought therein.

If the assessment

of a contingency

indicates it is

probable that

a material loss

has been incurred

and the amount

of the liability

can be

estimated, the

estimated liability

would be accrued

in the Company’s

financial statements.

If the assessment

indicates a

potentially material loss contingency is

not probable, but is reasonably possible,

or is probable but cannot be estimated,

then the

nature of the

contingent liability,

together with an

estimate of the

range of possible

loss if determinable

and material, would

disclosed. Loss

contingencies considered

remote are

generally not

disclosed unless

they involve

guarantees, in

which case

the

nature of the guarantee would be disclosed.

The Company expenses the costs of litigation as they are incurred.

Index

New Accounting Pronouncements and Policies

No new accounting pronouncement issued or effective

during the fiscal year had or is expected to have a material impact on

our

Consolidated Financial Statements.

Note 2 - Acquisition

Effective

September 30, 2023

, the Company

acquired the assets of

Fassio Egg Farms,

Inc. (“Fassio”), related

to its commercial

shell

egg

production

and

processing

business.

Fassio

owns

and

operates

commercial

shell

egg

production

and

processing

facilities with

a capacity

at the

time of

acquisition of

approximately

1.2

million

laying hens,

primarily

cage-free,

a feed

mill,

pullets, a

fertilizer production

and composting

operation and

land located

in Erda, Utah,

outside Salt

Lake City.

The Company

accounted for the acquisition as a business combination.

The following table summarizes the consideration paid

for Fassio and the amounts of the assets acquired and

liabilities assumed

recognized at the acquisition date (in thousands):

Cash consideration paid

53,746

Fair value of contingent consideration

1,000

Total estimated purchase

consideration

54,746

Recognized amounts of identifiable assets acquired and liabilities assumed

Inventory

6,164

Property, plant and equipment

44,540

Intangible assets

2,272

Other long-term assets

143

Liabilities assumed

(143)

Total identifiable

net assets

52,976

Goodwill

1,770

54,746

Inventory consisted

primarily of

flock, feed

ingredients,

packaging, and

egg inventory.

Flock inventory

was valued at

carrying

value

management

believes

that

its

carrying

value

best

approximates

its

fair

value.

Feed

ingredients,

packaging

and

egg

inventory were all valued based on market prices as of September 30, 2023.

Property,

plant and

equipment were

valued utilizing

the cost

approach which

is based

on replacement

or reproduction

costs of

the assets and subtracting any depreciation resulting from physical deterioration

and/or functional or economic obsolescence.

Intangible

assets

consisted

primarily

water

rights

within

the

property

acquired.

Water

rights

were

valued

using

the

sales

comparison approach.

Contingent

consideration

liability

was

recorded

and

represents

potential

future

cash

payment

the

sellers

contingent

the

acquired

business

meeting

certain

return

profitability

milestones over

three-year

period,

commencing

the date

the

acquisition.

The fair

value of

the contingent

consideration is

estimated using

a discounted

cash flow

model. Key

assumptions

and

unobservable

inputs that

require

significant judgement

used in

the estimate

include weighted

average cost

of capital,

egg

prices, projected revenue

and expenses over which

the contingent considered

is measured, and the

probability assessments with

respect to the

likelihood of achieving

the forecasted projections.

A range of

potential outcomes cannot

be reasonably estimated

due to market volatility of egg prices.

Goodwill

represents

the

excess

the

purchase

price

the

acquired

business

over

the

acquisition

date

fair

value

the

net

assets acquired.

Goodwill recorded

in connection

with the

Fassio acquisition

is primarily

attributable to

improved efficiencies

from integrating the assets of

Fassio with the operations

of the Company.

The Company recognized goodwill

of $1.8 million as

a result of the acquisition.

Index

Note 3 - Investment

Securities

The following represents the Company’s

investment securities as of December 2, 2023 and June 3, 2023 (in thousands):

December 2, 2023

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

6,141

—

108

6,033

Commercial paper

2,791

—

2,789

Corporate bonds

98,202

—

535

97,667

Certificates of deposits

1,125

—

1,119

US government and agency obligations

88,470

—

116

88,354

Asset backed securities

10,045

—

10,083

Total current

investment securities

206,774

767

206,045

Mutual funds

2,190

—

2,166

Total noncurrent

investment securities

2,190

—

2,166

June 3, 2023

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

16,571

—

275

16,296

Commercial paper

56,486

—

56,409

Corporate bonds

139,979

—

1,402

138,577

Certificates of deposits

675

—

675

US government and agency obligations

101,240

—

471

100,769

Asset backed securities

13,459

—

151

13,308

Treasury bills

29,069

—

29,056

Total current

investment securities

357,479

—

2,389

355,090

Mutual funds

2,172

—

2,081

Total noncurrent

investment securities

2,172

—

2,081

Available-for-sale

Proceeds from sales

and maturities of investment

securities available-for-sale

were $

196.1

million and $

65.3

million during the

twenty-six weeks ended December 2, 2023

and November 26, 2022, respectively.

Gross realized gains for the twenty-six

weeks

ended December 2, 2023 and November

26, 2022 were $

thousand and $

thousand, respectively.

Gross realized losses for the

twenty-six

weeks ended

December 2,

2023 and

November 26,

2022 were

thousand and

thousand, respectively.

There

were

allowances for credit losses at December 2, 2023 and June 3, 2023.

Actual maturities

may differ

from contractual

maturities as some

borrowers have

the right to

call or prepay

obligations with

without penalties. Contractual maturities of current investments at December

2, 2023 are as follows (in thousands):

Estimated Fair Value

Within one year

145,788

1-5 years

60,257

Total

206,045

Noncurrent

There were

sales of

noncurrent investment

securities during

the twenty-six

weeks ended

December 2,

2023 and

November

26, 2022.

Index

Note 4 - Fair Value

Measurements

The Company

is required

to categorize

both financial

and nonfinancial

assets and

liabilities based

on the

following fair

value

hierarchy. The

fair value

of an

asset is

the price

at which

the asset

could be

sold in

an orderly

transaction between

unrelated,

knowledgeable, and willing

parties able to engage in

the transaction. A liability’s

fair value is defined

as the amount that would

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.

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 December 2, 2023 and June 3,

2023 (in thousands):

December 2, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

6,033

—

6,033

Commercial paper

—

2,789

—

2,789

Corporate bonds

—

97,667

—

97,667

Certificates of deposits

—

1,119

—

1,119

US government and agency obligations

—

88,354

—

88,354

Asset backed securities

—

10,083

—

10,083

Mutual funds

2,166

—

2,166

Total assets measured at fair

value

2,166

206,045

—

208,211

Liabilities

Contingent consideration

—

1,000

Total liabilities measured

at fair value

—

1,000

June 3, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

16,296

—

16,296

Commercial paper

—

56,409

—

56,409

Corporate bonds

—

138,577

—

138,577

Certificates of deposits

—

675

—

675

US government and agency obligations

—

100,769

—

100,769

Asset backed securities

—

13,308

—

13,308

Treasury bills

—

29,056

—

29,056

Mutual funds

2,081

—

2,081

Total assets measured at fair

value

2,081

355,090

—

357,171

Index

Investment

securities

–

available-for-sale

classified

as Level

consist

securities

with maturities

three

months

or longer

when purchased. We

classified these securities as

current because amounts

invested are readily available

for current operations.

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

Contingent

consideration

classified

Level

consists

the

potential

obligation

pay

earnout

the

sellers

Fassio

contingent on the

acquired business meeting

certain return on

profitability milestones over

three-year

period, commencing on

the date of

the acquisition. The fair

value of the

contingent consideration is

estimated using a

discounted cash flow

model. Key

assumptions and

unobservable inputs

that require

significant judgement

used in

the estimate

include weighted

average cost

capital,

egg

prices,

projected

revenue

and

expenses

over

which

the

contingent

considered

measured,

and

the

probability

assessments

with

respect

the

likelihood

achieving

the

forecasted

projections.

See

further

discussion

Note 2 -

Acquisition

Note 5 - Inventories

Inventories consisted of the following as of December 2, 2023 and June

3, 2023 (in thousands):

December 2, 2023

June 3, 2023

Flocks, net of amortization

162,323

164,540

Eggs and egg products

30,485

28,318

Feed and supplies

94,462

91,560

287,270

284,418

grow

and

maintain

flocks

layers

(mature

female

chickens),

pullets

(female

chickens,

under

weeks

age),

and

breeders

(male

and

female

chickens

used

produce

fertile

eggs

hatch

for

egg

production

flocks).

Our

total

flock

December

2023

and

June 3,

2023

consisted

approximately

10.6

million

and

10.8

million

pullets

and

breeders

and

43.3

million and

41.2

million layers, respectively.

Note 6 - Equity

The following reflects equity activity for the thirteen weeks ended

December 2, 2023 and November 26, 2022 (in thousands):

Thirteen Weeks

Ended December 2, 2023

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at

September 2, 2023

703

(30,014)

73,153

(2,291)

1,571,744

(2,013)

1,611,330

Other comprehensive

income, net of tax

—

677

—

677

Stock compensation

plan transactions

—

1,061

—

1,061

Dividends ($

0.116

per share)

Common

—

(5,125)

—

(5,125)

Class A common

—

(557)

—

(557)

Net income (loss)

—

17,009

(431)

16,578

Balance at December

2, 2023

703

(30,014)

74,214

(1,614)

1,583,071

(2,444)

1,623,964

Index

Thirteen Weeks

Ended November 26, 2022

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at May 28,

2022

703

(28,495)

69,017

(2,350)

1,149,399

(359)

1,187,963

Other comprehensive

loss, net of tax

—

(737)

—

(737)

Stock compensation

plan transactions

—

(1)

988

—

987

Dividends ($

1.353

per share)

Common

—

(59,708)

—

(59,708)

Class A common

—

(6,494)

—

(6,494)

Net income (loss)

—

198,587

(293)

198,294

Balance at November

26, 2022

703

(28,496)

70,005

(3,087)

1,281,784

(652)

1,320,305

Twenty-six Weeks

Ended December 2, 2023

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at June 3,

2023

703

(30,008)

72,112

(2,886)

1,571,112

(1,498)

1,609,583

Other comprehensive

income, net of tax

—

1,272

—

1,272

Stock compensation

plan transactions

—

(6)

2,102

—

2,096

Dividends ($

0.122

per share)

Common

—

(5,390)

—

(5,390)

Class A common

—

(586)

—

(586)

Net income (loss)

—

17,935

(946)

16,989

Balance at December

2, 2023

703

(30,014)

74,214

(1,614)

1,583,071

(2,444)

1,623,964

Index

Twenty-six Weeks

Ended November 26, 2022

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrollin

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at May 28,

2022

703

(28,447)

67,989

(1,596)

1,065,854

(206)

1,104,345

Other comprehensive

loss, net of tax

—

(1,491)

—

(1,491)

Stock compensation

plan transactions

—

(49)

2,016

—

1,967

Contributions

—

Dividends ($

2.206

per share)

Common

—

(97,355)

—

(97,355)

Class A common

—

(10,589)

—

(10,589)

Net income (loss)

—

323,874

(446)

323,428

Balance at November

26, 2022

703

(28,496)

70,005

(3,087)

1,281,784

(652)

1,320,305

Note 7 - Net Income per Common Share

Basic net income

per share is

based on the

weighted average Common

Stock and Class

A Common Stock

outstanding. Diluted

net

income

per

based

weighted-average

common

outstanding

during

the

relevant

period

adjusted

for

the

dilutive effect of share-based awards.

The

following

table

provides

reconciliation

the

numerators

and

denominators

used

determine

basic

and

diluted

net

income per common share (amounts in thousands, except per share data):

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Numerator

Net income

16,578

198,294

16,989

323,428

Less: Loss attributable to

noncontrolling interest

(431)

(293)

(946)

(446)

Net income attributable to Cal-Maine

Foods, Inc.

17,009

198,587

17,935

323,874

Denominator

Weighted-average

common shares

outstanding, basic

48,690

48,624

48,691

48,624

Effect of dilutive restricted shares

176

216

163

203

Weighted-average

common shares

outstanding, diluted

48,866

48,840

48,854

48,827

Net income per common share

attributable to Cal-Maine Foods, Inc.

Basic

0.35

4.08

0.37

6.66

Diluted

0.35

4.07

0.37

6.63

Index

Note 8 - Revenue from Contracts with Customers

Satisfaction of Performance Obligation

The vast majority of the Company’s

revenue is derived from agreements with customers based on the customer

placing an order

for products. Pricing

for the most part

is determined when

the Company and

the customer agree

upon the specific

order, which

establishes the contract for that order.

Revenues are

recognized in

an amount

that reflects

the net

consideration we

expect to

receive in

exchange for

the goods.

Our

shell

eggs

are

sold

prices

independently

quoted

wholesale

market

prices

formulas

our

costs

production.

The

Company’s

sales

predominantly

contain

single

performance

obligation.

recognize

revenue

upon

satisfaction

the

performance

obligation

with

the

customer,

which

typically

occurs

within

days

the

Company

and

the

customer agreeing upon the order.

Returns and Refunds

Some of our contracts include a guaranteed sale clause, pursuant to which we

credit the customer’s account for product that the

customer is unable to sell before expiration. The Company records an allowance for

expected customer returns using historical

return data compared to current period sales and accounts receivable.

The allowance is recorded as a reduction of sales in the

same period the revenue is recognized.

Sales Incentives Provided to Customers

The

Company

periodically

provides

incentive

offers

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

by customers,

are

treated

reduction

sales

price

based

estimated

future

redemption

rates.

Redemption

rates

are

estimated

using

the

Company’s

historical

experience

for

similar

inducement

offers.

Current discount

and

inducement

offers

are

presented

as a

net amount

‘‘Net sales.’’

Disaggregation of Revenue

The following table provides revenue disaggregated by product category

(in thousands):

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Conventional shell egg sales

280,599

541,917

505,879

967,506

Specialty shell egg sales

217,905

227,778

426,586

428,598

Egg products

20,012

28,052

42,235

55,692

Other

4,718

3,953

7,878

8,248

523,234

801,700

982,578

1,460,044

Contract Costs

The Company can incur costs to

obtain or fulfill a contract with a

customer. If the

amortization period of these costs is less

than

one year,

they are

expensed as

incurred. When

the amortization

period is

greater than

one year,

a contract

asset is

recognized

and

is amortized

over the

contract life

as a

reduction in

net sales.

As of

December 2,

2023 and

June 3,

2023, the

balance for

contract assets was immaterial.

Contract Balances

The Company receives payment from customers based on specified terms that are

generally less than 30 days from delivery.

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

contract.

Note 9 - Stock Based Compensation

Total

stock-based

compensation

expense

was

2.1

and

2.0

million

for

the

twenty-six

weeks

ended

December

2023

and

November 26, 2022, respectively.

Index

Unrecognized

compensation

expense

as a

result

of non

-vested

restricted

stock outstanding

under

the

Amended

and

Restated

2012

Omnibus

Long-Term

Incentive

Plan

December

2023

5.0

million

will

recorded

over

weighted

average period of

1.7

years. Refer to Part

II Item 8,

Notes to Consolidated

Financial Statements and

Supplementary Data, Note

14 - Stock Compensation Plans in our 2023 Annual Report for further information

on our stock compensation plans.

The Company’s restricted share activity

for the twenty-six weeks ended December 2, 2023 follows:

Number of

Weighted

Average Grant

Date Fair Value

Outstanding, June 3, 2023

294,140

43.72

Vested

(305)

37.70

Forfeited

(1,329)

44.68

Outstanding, December 2, 2023

292,506

43.72

Note 10 - Commitments and Contingencies

LEGAL PROCEEDINGS

State of Texas

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

and Wharton County Foods, LLC

On April

23, 2020,

the Company

and its subsidiary

Wharton County

Foods, LLC (“WCF”)

were named

as defendants in

State

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

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.

August

16,

2022,

the

appeals

court

reversed

and

remanded

the

case

back

the

trial

court

for

further

proceedings. On October 31, 2022,

the Company and WCF appealed

the First District Court’s

decision to the Supreme Court

Texas.

September

29,

2023,

the

Supreme

Court

Texas

denied

the

Company’s

Petition

for

Review

the

case

will

remanded

to the

trial court

for further

proceedings.

Management believes

the risk

of material

loss related

to this

matter to

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

of $

10,000

per violation,

or $

250,000

for

each violation

impacting anyone

over 65

years old.

On December

1, 2020,

the Company

and

certain other

defendants filed

motion to

dismiss the

plaintiffs’

amended

class action

complaint. The

plaintiffs

subsequently filed

a motion

to strike,

and the

motion to

dismiss and

related proceedings

were referred

to a

United States

magistrate judge.

On July

14, 2021,

the magistrate

judge

issued

report

and

recommendation

the

court

that

the

defendants’

motion

dismiss

granted

and

the

case

dismissed without prejudice for lack of subject matter jurisdiction. On

September 20, 2021, the court dismissed the case without

prejudice.

July

13,

2022,

the

court

denied

the

plaintiffs’

motion

set

aside

amend

the

judgment

amend

their

complaint.

Index

On March 15, 2022,

plaintiffs filed a

second suit against the

Company and several

defendants in Bell et

al. v.

Cal-Maine Foods

et al.,

Case No.

1:22-cv-246, in

the Western

District of

Texas,

Austin Division

alleging the

same assertions

as laid

out in

the

first

complaint.

August

12,

2022,

the

Company

and

other

defendants

the

case

filed

motion

dismiss

the

plaintiffs’

class action

complaint. On

January 9,

2023, the

court entered

an order

and final

judgement granting

the Company’s

motion to

dismiss.

On February

8, 2023,

the plaintiffs

appealed

the lower

court’s

judgement

to the

United States

Court of

Appeals for

the Fifth

Circuit, Case No.

23-50112.

The parties filed

their respective appellate

briefs, but the

court has not

ruled on these

submissions.

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

Kraft Foods Global, Inc. et al. v.

United Egg Producers, Inc. et al.

As previously

reported, on

September 25,

2008, the

Company

was named

as one

of several

defendants

in numerous

antitrust

cases involving

the United

States shell

egg

industry.

The Company

settled all

of these

cases, except

for

the claims

of certain

plaintiffs who sought substantial

damages allegedly arising from

the purchase of egg products (as

opposed to shell eggs). These

remaining plaintiffs

are Kraft Food

Global, Inc.,

General Mills, Inc.,

and Nestle USA,

Inc. (the

“Egg Products

Plaintiffs”) and,

until a subsequent settlement was reached as described below,

The Kellogg Company.

On September

13, 2019,

the case

with the

Egg Products

Plaintiffs was

remanded from

a multi-district

litigation proceeding

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

alleged

that

the

Company

and

other

defendants

violated

Section

the

Sherman

Act,

15.

U.S.C.

agreeing

limit

the

production

eggs

and

thereby

illegally

raise

the

prices

that

plaintiffs

paid

for

processed

egg

products.

particular,

the

Egg

Products

Plaintiffs

attacked

certain features of

the United Egg

Producers animal-welfare guidelines

and program used by

the Company and

many other egg

producers.

On October 24, 2019,

the Company entered into

a confidential settlement agreement

with The Kellogg Company

dismissing all

claims against the

Company for an

amount that did

not have a

material impact on

the Company’s

financial condition or

results

of operations.

On November

11,

2019, a

stipulation

for dismissal

was filed

with the

court, and

on March

28, 2022,

the court

dismissed the Company with prejudice.

The trial of this case began

on October 17, 2023. On December

1, 2023, the jury returned a decision

awarding the Egg Products

Plaintiffs

17.8

million

in damages.

If the

jury’s

decision

is ultimately

upheld,

the defendants

would

be jointly

and

severally

liable

for

treble

damages,

53.3

million,

subject

credit

for

the

Kellogg

settlement

described

above

and

certain

other

settlements with

settling defendants,

plus the

Egg Product

Plaintiffs’

reasonable

attorneys’

fees. This

decision is

not

final and

remains subject

to the

defendants’ motion

for a

directed verdict

noted below

and appeals

by the

parties. During

our

second fiscal quarter

of 2024, we

recorded an accrued

expense of $

19.6

million in

selling, general and

administrative expenses

the

Company’s

Condensed

Consolidated

Statements

Income

and

classified

other

noncurrent

liabilities

the

Company’s

Condensed Consolidated

Balance Sheets. The

accrual represents

our estimate of

the Company’s

proportional share

of the reasonably

possible ultimate damages

award, excluding the Egg

Product Plaintiffs’ attorneys’

fees that we believe

would

be approximately offset

by the credits noted

above. We

and the other

defendants are discussing

apportionment, and our

accrual

may change in

the future based on

the outcome of

those discussions. Our

accrual may also

be revised in

whole or in

part in the

future to the extent we

are successful in further proceedings

in the litigation.

On November 29, 2023, the

defendants, including

the Company,

filed a

motion for

judgment as

a matter

of law

in their

favor,

known as

a directed

verdict, notwithstanding

the

jury’s decision. The Company intends

to continue to vigorously defend the claims asserted by the Egg Products Plaintiffs.

State of Oklahoma Watershed Pollution

Litigation

On June

18, 2005,

the State

of Oklahoma

filed suit,

in the

United States

District Court

for the

Northern District

of Oklahoma,

against Cal-Maine

Foods,

Inc. and

Tyson

Foods,

Inc., Cobb-Vantress,

Inc., Cargill,

Inc., George’s,

Inc., Peterson

Farms, Inc.

and

Simmons

Foods,

Inc.,

and

certain

their

affiliates.

The

State

Oklahoma

claims

that

through

the

disposal

chicken

litter the

defendants polluted

the Illinois

River Watershed.

This watershed

provides water

to eastern

Oklahoma. The

complaint

sought

injunctive

relief

and

monetary

damages,

but

the

claim

for

monetary

damages

was dismissed

the

court.

Cal-Maine

Foods,

Inc.

discontinued

operations

the

watershed

around

2005.

Since

the

litigation

began,

Cal-Maine

Foods,

Inc.

purchased

100

the

membership

interests

Benton

County

Foods,

LLC,

which

ongoing

commercial

shell

egg

operation within

the Illinois

River Watershed.

Benton County

Foods, LLC

is not

a defendant

in the

litigation. We

also have

number of small contract producers that operate in the area.

Index

The non-jury trial in the case began in September 2009

and concluded in February 2010. On January 18, 2023, the court entered

findings of

fact and

conclusions of

law in favor

of the

State of

Oklahoma, but

no penalties

were assessed.

The court

found the

defendants

liable

for

state

law

nuisance,

federal

common

law

nuisance,

and

state

law

trespass.

The

court

also

found

the

producers

vicariously

liable

for

the

actions

their

contract

producers.

The

court

directed

the

parties

confer

attempt

reach agreement

on appropriate

remedies. On

June 12,

2023, the

court ordered

the parties

to mediate

before the

retired Tenth

Circuit Chief Judge Deanell

Reece Tacha.

On October 26, 2023, the parties

filed separate status reports informing

the court that

the mediation

was unsuccessful.

Also on

October 26,

2023, the

defendants filed

a post-trial

motion to

dismiss and

supporting

brief arguing

that the

case should

be dismissed

due to

the state record

before the

court, the resulting

mootness of

the case,

and

violation

due

process.

November

10,

2023,

the

State

Oklahoma

filed

its

response

opposition

the

motion

dismiss and on

November 17, 2023,

the defendants filed

their reply.

The court has not

ruled on the motion.

While management

believes there

is a

reasonable

possibility of

a material

loss from

the case,

at the

present time,

it is

not possible

to estimate

the

amount

monetary

exposure,

any,

the

Company

due

range

factors,

including

the

following,

among

others:

uncertainties

inherent

any

assessment

potential

costs

associated

with

injunctive

relief

other

penalties

based

decision in a

case tried over

13 years ago based

on environmental conditions

that existed at the

time, the lack

of guidance from

the court as to what

might be considered appropriate

remedies, the ongoing litigation

with the State of Oklahoma

and motion to

dismiss before

the court, and

uncertainty regarding

what our proportionate

share of any

remedy would be,

although we believe

that our share compared to the other defendants is small.

Other Matters

In addition to the above, the Company is involved in various other claims and litigation incidental

to its business. Although the

outcome of these matters cannot be determined with certainty,

management, upon the advice of counsel, is of the opinion that

the final outcome should not have a material effect on the Company’s

consolidated results of operations or financial position.

Note 11 - Subsequent Events

December

12,

2023,

the

Company

reported

that

one

the

Company’s

facilities

Kansas

experienced

outbreak

highly pathogenic

avian influenza

(“HPAI”),

affecting

approximately

684,000

laying hens.

Subsequent

to the

initial outbreak,

nearby

facilities

Kansas

experienced

an outbreak

HPAI,

affecting

approximately

an additional

842,000

laying

hens and

240,000

pullets. The total of the combined outbreaks represented

3.3

% of our total flock as of December 2, 2023.

The

Company

has

and

continues

all

guidelines

provided

the

United

States

Department

Agriculture

(the

“USDA”)

and

other

regulatory

agencies

depopulate

and

sanitize

the

facilities.

such,

Cal-Maine

will

eligible

participate

the

USDA

indemnity

program

and

other

programs

designed

compensate

for

the

loss of

birds

and

eggs.

The

Company’s

plans

are

repopulate

the

facilities

and

resume

normal

operations

the

facilities

within

5 months

Due

volatility in

the market

prices of

eggs and

uncertain future

supply,

demand and

other market

conditions, an

estimate of

the net

income effect cannot be reasonably made.

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 Part

II Item 7

of the Company’s

Annual Report

on Form 10-K

for its fiscal

year ended

June 3, 2023

(the “2023 Annual Report”), and the accompanying financial statements and

notes included in Part II Item 8 of the 2023 Annual

Report and in

Part I Item 1

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

and egg

products 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

recent

resurgence

United

States

(“U.S.”)

commercial

table

egg

layer

flocks

the

highly

pathogenic

avian

influenza

(“HPAI”)

outbreak,

potential

future

impact

our

business

inflation

and

rising

interest

rates,

potential future

impact on our

business of new

legislation, rules

or policies,

potential outcomes

of legal proceedings

including

loss contingency

accruals and

factors

that may

result in

changes in

the amounts

recorded,

and other

projected

operating data,

including anticipated results

of operations and

financial condition. Such

forward-looking statements are

identified by the use

words such

as “believes,”

“intends,” “expects,”

“hopes,” “may,”

“should,” “plans,”

“projected,” “contemplates,”

“anticipates,”

similar

words.

Actual

outcomes

results

could

differ

materially

from

those

projected

the

forward-looking

statements.

The

forward-looking

statements

are

based

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

Part

Item

the

2023

Annual Report,

the

risk

factors

(if

any)

set forth

Part

Item

1A Risk

Factors and

elsewhere in this

report as well

as those included

in other reports

we file from

time to time

with the Securities

and

Exchange Commission (the “SEC”)

(including our Quarterly Reports

on Form 10-Q and Current

Reports on Form 8-K), (ii)

the

risks

and

hazards

inherent

the

shell

egg

business

(including

disease,

pests,

weather

conditions,

and

potential

for

product

recall), including

but not limited

to the current

outbreak of HPAI

affecting poultry

in the U.S.,

Canada and other

countries that

was first

detected in

commercial flocks

in the

U.S. in

February 2022

and that

first impacted

our flock

in December

2023, (iii)

changes in the

demand for and

market prices of

shell eggs and

feed costs, (iv)

our ability to

predict and meet

demand for cage-

free and

other

specialty eggs,

(v)

risks, changes,

or obligations

that could

result from

our future

acquisition

of new

flocks or

businesses and risks

or changes that

may cause conditions

to completing a

pending acquisition not

to be met,

(vi) risks relating

to increased

costs and

higher and

potentially further

increases in,

inflation and

interest rates,

(vii) our

ability to

retain existing

customers,

acquire

new

customers

and

grow

our

product

mix,

(viii)

adverse

results

pending

litigation

matters,

(ix)

global

instability,

including as

a result of

the wars in

Ukraine and

Israel and

attacks on shipping

in the Red

Sea, and (x)

any potential

resurgence of

COVID-19. Readers

are cautioned

not to place

undue reliance

on forward-looking

statements because,

while we

believe the assumptions on

which the forward-looking

statements are based are reasonable,

there can be no

assurance that these

forward-looking statements

will prove

to be accurate.

Further, forward

-looking statements

included herein

are only made

as of

the respective

dates thereof,

or if no

date is stated,

as of the

date hereof.

Except as otherwise

required by

law,

we disclaim

any

intent or obligation

to update publicly

these forward-looking statements,

whether because of

new information, future

events, or

otherwise.

GENERAL

Cal-Maine

Foods,

Inc.

(the

“Company,”

“we,”

“us,”

“our”)

primarily

engaged

the

production,

grading,

packaging,

marketing

and

distribution

fresh

shell

eggs.

Our

operations

are

fully

integrated

and we

have

one

operating

and

reportable

segment.

are

the

largest

producer

and

distributor

fresh

shell

eggs

the

U.S.

Our

total

flock

approximately

43.3

million layers

and 10.6

million pullets

and breeders

is the largest

in the

U.S. We

sell most of

our shell

eggs to a

diverse group

of customers,

including national

and regional

grocery store

chains, club

stores, companies

servicing independent

supermarkets

the

U.S.,

food

service

distributors,

and

egg

product

consumers

located

primarily

states

across

the

southwestern,

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

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,

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

most of

our conventional

shell eggs

based on

formulas that

consider,

in varying

ways, independently

quoted regional

wholesale

market prices

for shell

eggs

formulas

our

costs

production

which

include

the

cost

corn

and

soybean

meal.

not

sell

eggs

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

Index

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.

routinely

fill

our

storage

bins

during

harvest

season

when

prices

for

feed

ingredients

are

generally

lower.

ensure

continued

availability of

feed ingredients,

we may

enter into

contracts for

future purchases

of corn

and soybean

meal, and

part

these

contracts,

may

lock-in

the

basis

portion

our

grain

purchases

several

months

advance.

Basis

the

difference

between the

local cash

price for

grain and

the applicable

futures price.

A basis

contract is

a common

transaction in

the grain

market that

allows us

to lock-in

a basis

level for

a specific

delivery period

and wait

to set

the futures

price at

a later

date. Furthermore,

due to

the more

limited supply

for organic

ingredients,

we may

commit to

purchase organic

ingredients in

advance to help ensure supply.

Ordinarily, we do

not enter into long-term contracts beyond a year to purchase

corn and soybean

meal

hedge

against

increases

the

prices

corn

and

soybean

meal.

Corn

and

soybean

meal

are

commodities

and

are

subject

volatile

price

changes

due

weather,

various

supply

and

demand

factors,

transportation

and

storage

costs,

speculators,

agricultural, energy

and trade

policies in

the U.S.

and internationally

and global

instability that

could disrupt

the

supply chain.

An important competitive advantage

for Cal-Maine Foods is

our ability to meet

our customers’ evolving needs

with a favorable

product

mix

conventional

and

specialty

eggs,

including

cage-free,

organic

and

other

specialty

offerings,

well

egg

products.

have

also

enhanced

our

efforts

provide

free-range

and

pasture-raised

eggs

that

meet

consumers’

evolving

choice

preferences.

While

small

part

our

current

business,

the

free-range

and

pasture-raised

eggs

produce

and

sell

represent attractive offerings

to a subset of

consumers,

and therefore our customers,

and help us continue

to serve as the trusted

provider of quality food choices.

CAGE-FREE EGGS

Ten

states

have

passed

legislation

regulations

mandating

minimum

space

cage-free

requirements

for

egg

production

mandated

the

sale

only

cage-free

eggs

and

egg

products

their

states,

with

implementation

these

laws

ranging

from

January

2022

January

2026.

These

states

represent

approximately

27%

the

U.S.

total

population

according

the 2020

U.S. Census.

California, Massachusetts,

and Colorado,

which collectively

represent approximately

16% of

the total

estimated

U.S.

population,

have

cage-free

legislation

currently

effect.

Oregon,

Washington

and

Nevada

have

cage-free

legislation

going into

effect starting

January 1,

2024, which

represents an

additional 5%

of the

total estimated

U.S. population.

Although

we do not sell the majority of our eggs in these ten states, these state laws have impacted

egg production practices nationally.

A significant number of

our customers have announced

goals to either exclusively offer

cage-free eggs or significantly

increase

the

volume

cage-free

egg

sales

the

future,

subject

most

cases

availability

supply,

affordability

and

consumer

demand,

among

other

contingencies.

Our

customers

typically

not

commit

long-term

purchases

specific

quantities or

types

eggs

with

us,

and

result,

difficult

accurately

predict

customer

requirements

for

cage-free

eggs.

are

focused

adjusting

our

cage-free

production

capacity

with

goal

meeting

the

future

needs

our

customers

light

changing state requirements

and our

customer’s goals.

As always, we

strive to offer

a product

mix that aligns

with current

and

anticipated

customer

purchase

decisions.

are

engaging

with

our

customers

help

them

meet

their

announced

goals

and

needs. We

have invested significant capital

in recent years to acquire

and construct cage-free facilities, and

we expect our focus

for future

expansion will

continue to

include cage-free

facilities. Our

volume of

cage-free egg

sales has

continued to

increase

and account for a larger share of our

product mix. Cage-free egg revenue represented approximately

30.4% of our total net shell

egg revenue for the second

quarter of fiscal year 2024.

At the same time, we understand

the importance of our continued ability

provide

conventional

eggs

order

provide

our

customers

with

variety

egg

choices

and

address

hunger

our

communities.

For

additional

information,

see

the

2023

Annual

Report,

Part

Item

“Business

–

Specialty

Eggs,”

“Business

–

Growth

Strategy” and

“Business –

Government

Regulation,” and

the first

risk factor

in Part

I Item

1A, “Risk

Factors” under

the sub-

heading “Legal and Regulatory Risk Factors.”

Index

ACQUISITIONS

During the second

quarter of fiscal

2024,

we acquired

the assets of

Fassio Egg Farms,

Inc. (“Fassio”) related

to its commercial

shell

egg

production

and

processing

business.

The

assets

acquired

included

commercial

shell

egg

production

and

processing

facilities with

a current

capacity of

approximately 1.2

million laying

hens, primarily

cage-free, a

feed mill,

pullets, a

fertilizer

production and composting

operation and land

located in Erda, Utah,

outside Salt Lake

City.

See further discussion

Note 2 –

Acquisition

of the Notes to Condensed Consolidated Financial Statements included

in this Quarterly Report.

Following

the

end

of the

second

quarter,

announced

a definitive

agreement

acquire

from

Tyson

Foods,

Inc.

a recently

closed broiler

processing plant,

hatchery

and feed

mill located

in Dexter,

Missouri.

expect

to complete

the acquisition

our third fiscal quarter and to repurpose the assets for use in egg and egg products production.

HPAI

Outbreaks

HPAI

continue

occur

U.S.

poultry

flocks.

Prior

November

2023,

there

were

reported

significant

outbreaks

HPAI

commercial

table

egg

layer

flocks

since

December

2022.

January

2024,

the

USDA

division

Animal and

Plant Health

Inspection Service

(“APHIS”) reported

that approximately

12.9 million

commercial table

egg layers

and

1.5

million

commercial

table

egg

pullets

have

been

depopulated

result

HPAI

outbreaks

since

the

beginning

November 2023.

Cal-Maine

Foods experienced

HPAI

outbreaks

within our

facilities in

Kansas, resulting

in depopulation

of approximately

1.5

million

layers

and

240

thousand

pullets,

approximately

3.3%

our

total

flock

December

2023,

subsequent

period-end.

Cal-Maine

Foods

believes

that

can

mitigate

the

loss

production

through

flock

rotations.

Cal-Maine

Foods

remains dedicated

to robust

biosecurity programs

across our

locations;

however,

no farm

is immune

from HPAI.

HPAI

is still

present in the wild bird population

and the extent of possible future

outbreaks, particularly during the

migration seasons, cannot

be predicted.

According to

the U.S.

Centers for

Disease Control

and Prevention,

these detections

do not

present an

immediate

public health

concern. For

additional information,

see the

2023 Annual

Report, Part

II Item

7 “Management’s

Discussion and

Analysis of Financial Condition and Results of Operations – HPAI.”

believe the

HPAI

outbreak will

continue to

impact the overall

supply of

eggs until the

layer hen

flock is

fully replenished.

The layer hen

flock five-year average

for the month

of December from

2018 through 2022

is 330.1 million

hens. According

the USDA, the U.S. flock

consisted of 321.6 million

layers producing table or

market type eggs as of

December 1, 2023, which

is 2.6% below the five-year average.

EXECUTIVE OVERVIEW

For

the

second

quarter

and

first two

quarters

fiscal

2024,

recorded

gross profit

$91.1

million

and

$136.6 million,

respectively,

compared

$317.8

million

and

$535.3

million,

respectively,

for

the

same

periods

fiscal

2023,

with

the

decreases

due primarily

to lower

conventional shell

egg prices.

The decrease

in gross

profit was

partially offset

by lower

feed

ingredient prices

in the

second quarter

and first

two quarters

of fiscal

2024 compared

to the

same periods

of fiscal

2023. Our

operating

income

and

net

income

for

the

second

quarter

fiscal

2024

were

impacted

$19.6

million

litigation

loss

contingency accrual for

pending anti-trust litigation,

reflected in selling,

general and administrative

expenses in the

Company’s

Condensed

Consolidated

Statements

Income

and

classified

accrued

expenses

and

other

liabilities

the

Company’s

Condensed Consolidated Balance Sheets.

Our net

average selling

price per

dozen for

the second

quarter of

fiscal 2024

was $1.730

compared to

$2.709 in

the prior-year

period. Conventional

egg prices

per dozen

were $1.458

compared to

$2.883 for

the prior-year

period, and

specialty egg

prices

per dozen were

$2.277 compared to

$2.370 for the

prior-year period.

Conventional egg prices

were lower in

the second quarter

of fiscal

2024 compared

to the

prior-year period

as the

U.S. egg

supply started

to recover

from outbreaks

of HPAI.

There has

been a

resurgence of

HPAI

starting in

November 2023,

and although

prices rose

in November

2023 they

remained lower

than

comparable 2022

prices. Our net

average selling

price per

dozen for

the first two

quarters of fiscal

2024 was

$1.661 compared

$2.469

the

prior-year

period.

Conventional

egg

prices

per

dozen

were

$1.353

compared

$2.631

for

the

prior-year

period, and

specialty egg

prices per

dozen were

$2.277 compared

to $2.236

for the

prior-year

period. The

daily average

price

for the

Urner Barry

southeast large

index for

the second

quarter of

fiscal 2024

and first

two quarters

of fiscal

2024 decreased

49.6% and 49.2%, respectively,

from the comparable periods in the

prior year. For

information about historical shell egg

prices,

see Part I Item I of our 2023 Annual Report.

Our total dozens

sold increased 1.4% to

288.2 million dozen shell

eggs for the second

quarter of fiscal 2024

compared to 284.1

million

dozen for

the same

period of

fiscal 2023.

For the

year-to-date

period,

total dozens

sold increased

slightly from

559.4

million

dozen

561.3

million

dozen.

For

the

second

quarter

fiscal

2024,

conventional

dozens

sold

increased

2.4%

and

Index

specialty dozens

sold decreased

0.4% as

compared to

the same

quarter in

fiscal 2023.

Demand for

specialty eggs

decreased in

the

second

quarter

fiscal

2024

compared

the

same

prior

year

period

due

primarily

the

large

decrease

prices

for

conventional

eggs

compared

the

same

prior

year

period.

For

the

year-to-date

period,

conventional

dozens

sold

increased

1.7% and specialty dozens sold decreased 2.3% compared to the prior year period.

Our farm

production costs

per dozen

produced for

the second

quarter and

first two

quarters of

fiscal 2024

decreased 8.0%,

$0.86, and

4.6%, or

$0.05, respectively,

compared to

the prior

year periods,

primarily due

to lower

feed costs.

Feed costs

per

dozen produced decreased 19.1%,

or $0.13, compared to

the second quarter of fiscal

2023 primarily due to reduced

corn prices,

our

primary

feed

ingredient.

For

information

about

historical

corn

and

soybean

meal

prices,

see

Part

Item

our

2023

Annual Report.

RESULTS OF

OPERATIONS

The following

table sets forth,

for the periods

indicated, certain

items from

our Condensed Consolidated

Statements of Income

expressed as a percentage of net sales.

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Net sales

100.0

Cost of sales

82.6

60.4

86.1

63.3

Gross profit

17.4

39.6

13.9

36.7

Selling, general and administrative

14.5

7.2

13.1

7.6

Loss on disposal of fixed assets

0.1

—

Operating income

2.8

32.4

0.8

29.1

Total other income, net

1.5

0.3

1.6

0.3

Income before income taxes

4.3

32.7

2.4

29.4

Income tax expense

1.1

8.0

0.6

7.1

Net income

3.2

24.7

1.8

22.3

Less: Loss attributable to noncontrolling

interest

(0.1)

—

(0.1)

—

Net income attributable to Cal-Maine

Foods, Inc.

3.3

24.7

1.9

22.3

NET SALES

Total

net

sales for

the

second quarter

fiscal

2024

were $523.2

million

compared

to $801.7

million

for

the same

period

fiscal 2023.

Net shell egg sales represented

96.2% and 96.5% of total net sales

for the second quarters of fiscal

2024 and 2023, respectively.

Shell

egg

sales classified

as “Other”

represent

sales

miscellaneous

byproducts

and

resale products

included

with our

shell

egg operations.

Total

net

sales

for

the

twenty-six

weeks

ended

December

2023

were

$982.6

million,

compared

$1.46

billion

for

the

comparable period of fiscal 2023.

Net

shell

egg

sales

represented

95.7%

and

96.2%

total

net

sales

for

the

twenty-six

weeks

ended

December

2023

and

November 26, 2022, respectively.

Index

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

sales (in thousands, except percentage data):

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

December 2, 2023

November 26, 2022

Total net sales

523,234

801,700

982,578

1,460,044

Conventional

280,599

55.8

541,917

70.1

505,879

53.8

967,506

68.9

Specialty

217,905

43.3

227,778

29.4

426,586

45.4

428,598

30.5

Egg sales, net

498,504

99.1

769,695

99.5

932,465

99.2

1,396,104

99.4

Other

4,718

0.9

3,953

0.5

7,878

0.8

8,248

0.6

Net shell egg sales

503,222

100.0

773,648

100.0

940,343

100.0

1,404,352

100.0

Net shell egg sales as a

percent of total net sales

96.2

96.5

95.7

96.2

Dozens sold:

Conventional

192,462

66.8

187,976

66.2

373,992

66.6

367,688

65.7

Specialty

95,711

33.2

96,110

33.8

187,307

33.4

191,715

34.3

Total dozens sold

288,173

100.0

284,086

100.0

561,299

100.0

559,403

100.0

Net average selling price

per dozen:

Conventional

1.458

2.883

1.353

2.631

Specialty

2.277

2.370

2.277

2.236

All shell eggs

1.730

2.709

1.661

2.496

Egg products sales:

Egg products net sales

20,012

28,052

42,235

55,692

Pounds sold

16,998

15,702

36,351

32,204

Net average selling price

per pound

1.177

1.787

1.162

1.729

Shell egg net sales

Second Quarter – Fiscal 2024

vs. Fiscal 2023

the

second

quarter

fiscal

2024,

conventional

egg

sales

decreased

$261.3

million,

48.2%,

compared

the

second quarter of

fiscal 2023, primarily

due to a 49.4%

decrease in the prices

for conventional eggs,

which resulted in

$274.3

million

decrease

net

sales,

partially

offset

2.4%

increase

the

volume

conventional

eggs

sold,

which resulted in a $12.9 million increase in net sales.

Conventional egg prices

were lower in the

second quarter of fiscal

2024 compared to the

second quarter of fiscal

2023

as the

U.S. egg

supply

started

to recover

from outbreaks

of HPAI.

There

has been

a resurgence

of HPAI

starting in

November 2023, and although prices rose in November 2023,

they remained lower than comparable 2022 prices.

Specialty

egg

sales

decreased

$9.9

million,

4.3%,

the

second

quarter

fiscal

2024

compared

the

second

quarter

fiscal

2023,

primarily

due

3.9%

decrease

the

prices

for

specialty

eggs,

which

resulted

$9.3

million decrease in net sales.

Cage-free

egg

revenue

for

the

second

quarter

fiscal

2024

represented

30.4%

our

total

net

shell

egg

revenue

versus

18.2%

for

the

same

prior

year

period

due

the

lower

conventional

egg

prices

causing

conventional

egg

revenue to represent a smaller proportion of our total sales.

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

For

the

twenty-six

weeks

ended

December

2023,

conventional

egg

sales

decreased

$461.6

million,

47.7%,

compared

to the

same

period of

fiscal

2023,

primarily

due

the

decrease

the

prices for

conventional

shell

eggs.

Changes in

prices resulted

in a

$478.0 million

decrease in

net sales,

partially offset

by a

1.7% increase

in the

volume

of conventional eggs sold, which resulted in a $16.6 million increase in net

sales.

Index

Egg products net sales

Second Quarter – Fiscal 2024

vs. Fiscal 2023

Egg products

net sales

decreased $8.0

million, or

28.7%, for

the second

quarter of

fiscal 2024

compared to

the same

period of

fiscal 2023,

primarily due

to a

34.1% selling

price decrease,

which had

a $10.4

million negative

impact on

net sales.

Our

egg

products

net

average

selling

price

decreased

the

second

quarter

fiscal

2024,

compared

the

second

quarter of fiscal 2023 as the supply of shell eggs used to produce egg products

increased.

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

Egg products net sales decreased

$13.5 million, or 24.2%, primarily

due to a 32.8% selling price

decrease compared to

the first twenty-six weeks of fiscal 2023, which had a $20.6 million negative

impact on net sales.

COST OF SALES

Costs

sales

for

the

second

quarter

fiscal

2024

were

$432.1

million

compared

$483.9

million

for

the

same

period

fiscal 2023. Costs of sales for the year-to-date period were $846.0

million compared to $924.7 million for the prior year period.

The following table presents the key variables affecting our cost of

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

Thirteen Weeks

Ended

Twenty-six Weeks

Ended

December 2,

2023

November 26,

2022

Change

December 2,

2023

November 26,

2022

Change

Cost of Sales:

Farm production

258,367

276,008

(6.4)

511,874

542,659

(5.7)

Processing, packaging, and

warehouse

84,767

83,639

1.3

166,673

165,056

1.0

Egg purchases and other

(including change in

inventory)

71,654

97,973

(26.9)

132,451

166,271

(20.3)

Total shell eggs

414,788

457,620

(9.4)

810,998

873,986

(7.2)

Egg products

17,316

26,231

(34.0)

35,017

50,719

(31.0)

Total

432,104

483,851

(10.7)

846,015

924,705

(8.5)

Farm production costs (per

dozen produced)

Feed

0.554

0.685

(19.1)

0.575

0.676

(14.9)

Other

0.431

0.386

11.7

0.435

0.383

13.6

Total

0.985

1.071

(8.0)

1.010

1.059

(4.6)

Outside egg purchases

(average cost per dozen)

2.03

3.14

(35.4)

1.84

2.88

(36.1)

Dozens produced

265,101

261,358

1.4

515,457

519,012

(0.7)

Percent produced to sold

92.0%

—

91.8%

92.8%

(1.1)

Farm Production

Second Quarter – Fiscal 2024

vs. Fiscal 2023

Feed costs per dozen produced decreased 19.1

in the second quarter of fiscal 2024

compared to the second quarter of

fiscal

2023.

This

decrease

was

primarily

due

lower

prices

for

corn,

our

primary

feed

ingredient.

Basis

levels

for

corn

and

soybean

meal

were lower

our

areas

of operations

compared

to our

prior

year

second

fiscal

quarter.

The

decrease in

feed cost

per dozen

resulted in

a decrease

in cost of

sales of

$34.7 million

for the

second quarter

of fiscal

2024 compared to the prior period quarter.

Index

For the second

quarter of fiscal

2024, the average

Chiago Board of

Trade (“CBOT”)

daily market price

was $4.79 per

bushel

for

corn

and

$417

per

ton

soybean

meal,

representing

decreases

29.3%

and

1.6%,

respectively,

compared to the average CBOT daily market prices for the second quarter of

fiscal 2023.

Other farm production costs

increased primarily due to

higher flock amortization and facility

costs. Flock amortization

increased primarily

due to

the increased

capitalized value

of our

flocks. This

is primarily

due to

the higher

feed costs

incurred during the growing phase of the flocks.

Facility costs

increased

due

primarily

to increased

labor costs.

Labor

costs increased

12.5% compared

to the

second

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

to labor shortages.

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

Feed

costs per

dozen

produced

decreased

14.9%

the

twenty-six

weeks

ended

December

2023

compared

the

same period of

fiscal 2023, primarily

due to lower

feed ingredient prices.

The decrease in

feed cost per

dozen resulted

in a decrease in cost of sales of $52.1 million compared to the prior year period.

For the

year-to-date period

the average

CBOT daily

market price

was $5.05 per

bushel for

corn and $420

per ton

for

soybean meal,

representing decreases

of 24.8%

and 4.6%,

respectively,

compared to

the average

CBOT daily

market

prices for the comparable period in the prior year.

Other

farm

production

costs increased

due

higher

facility

costs

and

flock

amortization,

for

the

reasons

described

above.

Current

indications

for

corn

project

overall

better

stocks-to-use

ratio

implying

potentially

lower

prices

the

near

term;

however, as long

as outside factors remain uncertain

(including weather patterns and

global supply chain disruptions), volatility

could remain. Soybean meal supply has remained tight relative to demand

in the first two quarters of fiscal 2024.

Processing, packaging, and warehouse

Second Quarter – Fiscal 2024

vs. Fiscal 2023

Processing, packaging,

and warehouse

costs increased

1.3% compared

to the

second quarter

of fiscal

2023, primarily

due

to an

increase

in dozens

processed

in the

second quarter

of fiscal

2024 compared

to the

second quarter

of fiscal

2023.

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

Processing,

packaging,

and

warehouse

costs

increased

1.0%

compared

the

first

two

quarters

fiscal

2023,

primarily due

an increase

in labor

costs of

4.2% due

to wage

increases in

response to

labor shortages,

partially offset

by decrease in dozens processed.

Egg purchases and other (including change in inventory)

Second Quarter – Fiscal 2024

vs. Fiscal 2023

Costs in

this category

decreased primarily

due to

lower shell

egg prices

as the

average cost

per dozen

of outside

egg

purchases decreased 35.4% compared to second quarter of fiscal 2023

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

Costs in

this category

decreased primarily

due to

lower shell

egg prices

as the

average cost

per dozen

of outside

egg

purchases decreased 36.1% compared to fiscal 2023, partially offset

by an increase of 13.0% in dozens purchased.

GROSS PROFIT

Gross profit

for the

second quarter

of fiscal

2024 was

$91.1 million

compared to

$317.8 million

for the

same period

of fiscal

2023.

Gross profit

for the

twenty-six weeks

ended December

2, 2023

was $136.6

million compared

to $535.3

million for

the

same

period

2023.

The

decrease

for

both

periods

was

primarily

due

lower

conventional

egg

prices,

partially

offset

lower feed ingredient prices.

Index

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):

Thirteen Weeks

Ended

December 2, 2023

November 26, 2022

$ Change

% Change

Specialty egg expense

15,924

14,673

1,251

8.5

Delivery expense

17,706

18,175

(469)

(2.6)

Payroll, taxes and benefits

11,076

13,827

(2,751)

(19.9)

Stock compensation expense

1,061

987

7.5

Litigation loss contingency accrual

19,648

—

19,648

N.M

Other expenses

11,163

10,290

873

8.5

Total

76,578

57,952

18,626

32.1

N.M. – Not Meaningful

Second Quarter – Fiscal 2024

vs. Fiscal 2023

Specialty egg expense

During the second

part of fiscal year

2023, the higher

prices for conventional

eggs and the

comparatively lower prices

for

specialty eggs

diminished

the need

to promote

specialty eggs

During the

second quarter

of fiscal

year

2024, we

significantly

increased

promotional

programs,

resulting

higher

advertising

fees.

This

was

partially

offset

decrease

in a reduction in franchise fees to Eggland’s

Best, Inc.

Delivery expense

The

decreased

delivery

expense

primarily

due

decrease

fuel

and

contract

trucking

expenses

the

second

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

Payroll, taxes and benefits expense

The decrease

in payroll,

taxes and

benefits expense

is due

to a

decrease

in accrued

bonuses compared

to the

second

quarter of fiscal year 2023.

Litigation loss contingency accrual

The

litigation

loss

contingency

accrual

$19.6

million

relates

jury

decision

returned

December

2023

pending

anti-trust

litigation.

See

further

discussion

Note 10 – Commitments and Contingencies

the

Notes

Condensed Consolidated Financial Statements included in this Quarterly

Report.

Other expense

The

increase

other

expense

primarily

due

increased

legal

costs

incurred

compared

the

second

quarter

fiscal 2023.

Twenty-six Weeks

Ended

December 2, 2023

November 26, 2022

$ Change

% Change

Specialty egg expense

27,929

27,740

189

0.7

Delivery expense

35,397

38,091

(2,694)

(7.1)

Payroll, taxes and benefits

23,142

24,814

(1,672)

(6.7)

Stock compensation expense

2,101

2,012

4.4

Litigation loss contingency accrual

19,648

—

19,648

N.M.

Other expenses

20,607

18,902

1,705

9.0

Total

128,824

111,559

17,265

15.5

N.M. - Not Meaningful

Twenty-six weeks –

Fiscal 2024 vs. Fiscal 2023

Index

Specialty egg expense

Specialty egg

expense increased

by 0.7%,

as advertising

expense increased

in fiscal 2024

as discussed above

and was

offset by the reduction in franchise fees to Eggland’s

Best, Inc.

Delivery expense

The decreased delivery expense is primarily due to a decrease in fuel

and contract trucking expenses in fiscal 2024.

Payroll, taxes and benefits expense

The decrease

in payroll,

taxes and

benefits expense

is primarily

due to

a decrease

in accrued

bonuses in

the first

two

quarters of fiscal 2024 compared to the prior year period.

Litigation loss contingency accrual

The increase relates to the litigation loss contingency accrual discussed above.

Other expenses

The increase in other expense is primarily due to increased legal costs incurred

in the year-to-date period.

OPERATING

INCOME (LOSS)

For the second

quarter of fiscal

2024,

we recorded operating

income of $14.2

million compared

to operating income

of $259.9

million for the same period of fiscal 2023.

For the twenty-six

weeks ended December

2, 2023, we recorded

an operating income

of $7.5 million

compared to an operating

income of $423.7 million for the same period of fiscal 2023.

OTHER INCOME (EXPENSE)

Total

other

income

(expense)

consists

items

not

directly

charged

operations,

such

interest

income

and

expense, royalty income, equity income or loss of unconsolidated

entities, and patronage income, among other items.

For the

second quarter

of fiscal

2024,

we earned

$7.1 million

of interest

income compared

to $2.1

million for

the same

period

fiscal

2023.

The

increase

resulted

from

significantly

higher

investment

balances

and

higher

interest

rates.

The

Company

recorded interest expense

of $134 thousand and

$143 thousand for the

second quarters ended December

2, 2023 and November

26, 2022, respectively.

For the twenty-six weeks ended December 2, 2023, we earned

$14.6 million of interest income compared to $3.1 million for the

same period

of fiscal

2023. The

increase resulted

from significantly

higher investment

balances and

higher interest

rates. The

Company

recorded

interest

expense

of $276

thousand

and $291

thousand

for

the

twenty-six

weeks

ended

December 2,

2023

and November 26, 2022, respectively.

INCOME TAXES

For

the

second

quarter

fiscal

2024,

pre-tax

income

was $22.1

million

compared

$262.2

million

for

the

same

period

fiscal 2023.

recorded income

tax expense

of $5.5

million for

the second

quarter of

fiscal 2024,

which reflects

an effective

tax rate

of 25.0%.

Income tax

expense was $64.0

million for

the comparable

period of fiscal

2023, which

reflects an effective

tax rate of 24.4%.

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

our

noncontrolling interest.

NET INCOME ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

Net income

attributable to

Cal-Maine Foods,

Inc. for the

second quarter

ended December 2,

2023, was

$17.0 million,

or $0.35

per basic and

diluted common share,

compared to net

income attributable to

Cal-Maine Foods, Inc.

of $198.6 million,

or $4.08

per basic and $4.07 per diluted common share for the same period of fiscal

2023.

Index

Net income attributable to

Cal-Maine Foods, Inc. for the

twenty-six weeks ended December 2,

2023, was $17.9 million, or

$.37

per basic

and diluted

common share,

compared to

net income

attributable to

Cal-Maine Foods,

Inc. of

$323.9 million

or $6.66

per basic and $6.63 per diluted common share, for the same period of fiscal 2023.

LIQUIDITY AND CAPITAL

RESOURCES

Working

Capital and Current Ratio

Our working

capital at

December 2,

2023 was $910.1

million, compared

to $942.2

million at

June 3,

2023. The

calculation of

working

capital

is defined

as current

assets less

current

liabilities. Our

current

ratio

was 6.9

at December

2, 2023,

compared

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

assets by current liabilities.

Cash Flows from Operating Activities

For the twenty-six weeks

ended December 2, 2023,

$74.0 million in net cash

was provided by operating

activities, compared to

$344.8

million

provided

operating

activities

for

the

comparable

period

fiscal

2023.

The

decrease

cash

flow

from

operating activities resulted primarily from lower selling prices for

conventional eggs compared to the prior-year period.

Cash Flows from Investing Activities

For

the

twenty-six

weeks

ended

December

2023,

$32.4

million

was

provided

investing

activities,

primarily

due

the

sales

and

maturities

investment

securities,

partially

offset

the

acquisition

assets

Fassio

Egg

Farms,

Inc.

This

compares

$146.7

million

used

investing

activities

the

same

period

fiscal

2023,

primarily

due

purchases

investment

securities.

Sales

and

maturities

investment

securities

were

$196.1

million

first

two

quarters

fiscal

2024,

compared to

$65.3 million

in the

first two

quarters fiscal

2023. The

increase in

sales and

maturities of

investment securities

primarily

due

to the

maturities of

short-term

investments

during

the period.

Purchases of

property,

plant and

equipment were

$66.2 million

and $59.7 million

in the first

two quarters

of fiscal 2024

and 2023,

respectively,

primarily reflecting

progress on

our construction projects.

Cash Flows from Financing Activities

paid dividends

of $37.3

million for

the twenty-six

weeks ended

December 2,

2023 compared

to $78.4

million in

the same

prior-year period.

As of December 2, 2023, cash

increased $69.0 million since June

3, 2023, compared to an increase

of $119.6 million during

the

same period of fiscal 2023.

Credit Facility

had no

long-term debt

outstanding at

December 2,

2023 or

June 3,

2023. On

November 15,

2021, we

entered into

a credit

agreement

that

provides

for

senior

secured

revolving

credit facility

(the

“Credit

Facility”),

initial

aggregate

principal

amount

$250

million

with

five-year

term.

December

2023,

amounts

were

borrowed

under

the

Credit

Facility. We

have $4.3 million

in outstanding standby

letters of credit issued

under our Credit

Facility for the

benefit of certain

insurance companies.

Refer to

Part II

Item 8,

Notes to

Consolidated

Financial Statements

and Supplementary

Data, Note

10 -

Credit Facility included in our 2023

Annual Report for further information regarding our long-term debt.

Dividends

accordance

with

our

variable

dividend

policy,

will

pay

cash

dividend

totaling

approximately

$5.7

million,

approximately $0.116

per share to holders

of our common

and Class A common

stock with respect

to our second

fiscal quarter

of 2024.

The amount

paid per

share will

vary based

on the

number of

outstanding

shares on

the record

date. The

dividend is

payable on February 15, 2024 to holders of record on January 31, 2024.

Material Cash Requirements

continue

monitor

the

increasing

demand

for

cage-free

eggs

and

engage

with

our

customers

efforts

achieve

smooth transition

toward their

announced timelines

for cage-free

egg sales.

The following

table presents

material construction

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

Index

Project(s) Type

Projected

Completion

Projected Cost

Spent as of

December 2, 2023

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2025

54,702

36,370

18,332

Feed Mill

Fiscal 2025

10,486

2,486

8,000

Cage-Free Layer & Pullet Houses

Fiscal 2026

78,982

59,000

19,982

Cage-Free Layer & Pullet Houses

Fiscal 2027

56,732

29,334

27,398

200,902

127,190

73,712

We believe our

current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient

to fund our

current cash needs for at least the next 12 months.

IMPACT OF

RECENTLY

ISSUED/ADOPTED ACCOUNTING STANDARDS

For

information

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

2023 Annual Report.

ITEM 3. QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk during the

thirteen weeks ended December 2, 2023 from

the information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About

Market Risk in our 2023 Annual

Report.

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

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 December 2, 2023 at the reasonable

assurance level.

Changes in Internal Control Over Financial Reporting

There was

no change

in our

internal control

over financial

reporting that

occurred during

the quarter

ended December

2, 2023

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

our internal control over financial reporting.

Index

PART

II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Refer

the

discussion

certain

legal

proceedings

involving

the

Company

and/or

its

subsidiaries

(i)

our

2023

Annual

Report,

Part

Item

Legal

Proceedings,

and

Part

Item 8,

Notes

Consolidated

Financial

Statements

and

Supplementary

Data,

Note

Commitments

and

Contingencies,

and

(ii)

this

Quarterly

Report

Note 10

- Commitments and

Contingencies

the

Notes

Condensed

Consolidated

Financial

Statements,

which

discussions

are

incorporated

herein

reference.

ITEM 1A.

RISK

FACTORS

There have

been no

material changes

in the risk

factors previously

disclosed in

the Company’s

2023 Annual

Report, except

reported herein in Part I Item 2 under the heading “HPAI.”

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

There were no purchases of Common Stock made by or

on behalf of our Company or any affiliated purchaser

during the second

quarter of fiscal 2024.

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.

Index

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:

January 3, 2024

/s/ Max P.

Bowman

Max P.

Bowman

Vice President, Chief Financial

Officer

(Principal Financial Officer)

໿

Date:

January 3, 2024

/s/ Matthew S. Glover

Matthew S. Glover

Vice President – Accounting

(Principal Accounting Officer)

໿

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Cal-Maine Foods (CALM) 10-Q2024 Q2 Quarterly report

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