10-Q 1 calm-20240831.htm FORM 10Q calm-20240831
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1
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
Washington,
 
DC
 
20549
FORM
10-Q
 
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
 
Act of 1934
For the quarterly period ended
August 31, 2024
 
or
 
Transition report pursuant to Section 13 or 15(d)
 
of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number:
 
001-38695
 
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
64-0500378
(State or other jurisdiction of incorporation or organization)
 
(I.R.S Employer Identification No.)
1052 Highland Colony Pkwy
,
Suite 200
,
Ridgeland
,
Mississippi
 
39157
 
(Address of principal executive offices)
 
(Zip Code)
(
601
)
948-6813
 
(Registrant’s telephone number,
 
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
CALM
The
NASDAQ
 
Global Select Market
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant: (1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
Securities Exchange
 
Act of 1934
 
during the preceding
 
12 months (or
 
for such
 
shorter period that
 
the registrant was
 
required to
file such reports), and (2) has been subject to such filing requirements for the past
 
90 days.
Yes
 
No
Indicate by check
 
mark whether the
 
registrant has submitted
 
electronically every
 
Interactive Data File
 
required to be
 
submitted
pursuant to
 
Rule 405
 
of Regulation
 
S-T (§232.405
 
of this
 
chapter) during
 
the preceding
 
12 months
 
(or for
 
such shorter
 
period
that the registrant was required to submit such files).
Yes
 
No
Indicate by
 
check mark
 
whether the registrant
 
is a large
 
accelerated filer,
 
an accelerated
 
filer, a
 
non-accelerated filer,
 
a smaller
reporting
 
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer,”
“smaller reporting company,”
 
and “emerging growth company” in Rule 12b-2 of
 
the Exchange Act.
Large Accelerated filer
Accelerated filer
 
Non – Accelerated filer
 
Smaller reporting company
 
Emerging growth company
 
If
 
an
 
emerging
 
growth
 
company,
 
indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
has
 
elected
 
not
 
to
 
use
 
the
 
extended
transition
 
period
 
for
 
complying
 
with
 
any
 
new
 
or
 
revised
 
financial
 
accounting
 
standards
 
provided
 
pursuant
 
to
Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the Exchange Act).
Yes
 
No
There were
44,236,582
 
shares of
 
Common Stock,
 
$0.01 par value,
 
and
4,800,000
 
shares of Class
 
A Common
 
Stock, $0.01
 
par
value, outstanding as of October 1, 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
INDEX
 
 
 
 
Page
Number
Part I.
 
 
Financial Information
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 3.
Item 4.
 
 
 
 
 
 
Part II.
 
 
Other Information
 
 
 
 
 
Item 1.
 
 
 
 
 
 
Item 1A.
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
PART
 
I.
 
FINANCIAL
INFORMATION
ITEM 1.
 
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
 
(Unaudited)
 
 
August 31, 2024
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
181,667
$
237,878
Investment securities available-for-sale
571,923
574,499
Trade and other receivables, net
272,092
151,983
Income tax receivable
10,459
10,459
Inventories
293,182
261,782
Prepaid expenses and other current assets
14,156
5,238
Total current
 
assets
1,343,479
1,241,839
Property, plant &
 
equipment, net
960,070
857,234
Investments in unconsolidated entities
11,753
11,195
Goodwill
45,776
45,776
Intangible assets, net
16,175
15,996
Other long-term assets
12,755
12,721
Total Assets
$
2,390,008
$
2,184,761
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
128,600
$
75,862
Accrued wages and benefits
18,961
32,971
Accrued income taxes payable
106,288
43,348
Dividends payable
49,971
37,760
Accrued expenses and other liabilities
21,595
37,802
Total current
 
liabilities
325,415
227,743
Other noncurrent liabilities
36,854
17,109
Deferred income taxes, net
128,676
142,866
Total liabilities
490,945
387,718
Commitments and contingencies - see Note 10
Stockholders’ equity:
Common stock ($
0.01
 
par value):
Common stock - authorized
120,000
 
shares, issued
70,261
 
shares
703
703
Class A convertible common stock - authorized and issued
4,800
 
shares
48
48
Paid-in capital
77,503
76,371
Retained earnings
1,856,405
1,756,395
Accumulated other comprehensive loss, net of tax
(474)
(1,773)
Common stock in treasury at cost –
26,024
 
shares at August 31, 2024 and
26,022
shares at June 1, 2024
(31,632)
(31,597)
Total Cal-Maine Foods,
 
Inc. stockholders’ equity
1,902,553
1,800,147
Noncontrolling interest in consolidated entity
(3,490)
(3,104)
Total stockholders’
 
equity
1,899,063
1,797,043
Total Liabilities and Stockholders’
 
Equity
$
2,390,008
$
2,184,761
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
 
 
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Net sales
$
785,871
$
459,344
Cost of sales
538,653
413,911
Gross profit
247,218
45,433
Selling, general and administrative
61,932
52,246
Loss on involuntary conversions
146
Gain on disposal of fixed assets
(1,817)
(56)
Operating income (loss)
186,957
(6,757)
Other income (expense):
Interest income, net
9,785
7,346
Other, net
1,211
144
Total other income, net
10,996
7,490
Income before income taxes
197,953
733
Income tax expense
48,363
322
Net income
149,590
411
Less: Loss attributable to noncontrolling interest
(386)
(515)
Net income attributable to Cal-Maine Foods, Inc.
$
149,976
$
926
Net income per common share:
Basic
$
3.08
$
0.02
Diluted
$
3.06
$
0.02
Weighted average
 
shares outstanding:
Basic
48,761
48,690
Diluted
48,932
48,840
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income
(In thousands)
(Unaudited)
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Net income
$
149,590
$
411
Other comprehensive income (loss), before tax:
Unrealized holding gain on available-for-sale securities, net of reclassification
adjustments
1,715
786
Income tax expense related to items of other comprehensive income
(416)
(191)
Other comprehensive income, net of tax
1,299
595
Comprehensive income
150,889
1,006
Less: Comprehensive loss attributable to the noncontrolling interest
(386)
(515)
Comprehensive income attributable to Cal-Maine Foods, Inc.
$
151,275
$
1,521
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Cash flows from operating activities:
Net income
$
149,590
$
411
Depreciation and amortization
22,048
19,340
Deferred income taxes
(14,605)
322
Other adjustments, net
(39,581)
3,612
Net cash provided by operations
117,452
23,685
Cash flows from investing activities:
Purchases of investment securities
(202,196)
(28,296)
Sales and maturities of investment securities
209,673
135,768
Acquisition of business
(111,521)
Purchases of property,
 
plant and equipment
(35,773)
(26,666)
Net proceeds from disposal of property,
 
plant and equipment
3,946
74
Net cash provided by (used in) investing activities
(135,871)
80,880
Cash flows from financing activities:
Payments of dividends
(37,758)
(36,983)
Purchase of common stock by treasury
(34)
(5)
Principal payments on finance lease
(58)
Net cash used in financing activities
(37,792)
(37,046)
Net change in cash and cash equivalents
(56,211)
67,519
Cash and cash equivalents at beginning of period
237,878
292,824
Cash and cash equivalents at end of period
$
181,667
$
360,343
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
 
unaudited
 
condensed
 
consolidated
 
financial
 
statements
 
of
 
Cal-Maine
 
Foods,
 
Inc.
 
and
 
its
 
subsidiaries
 
(the
 
“Company,”
“we,” “us,” “our”)
 
have been prepared
 
in accordance with
 
the instructions to
 
Form 10-Q and
 
Article 10 of
 
Regulation S-X and
in
 
accordance
 
with generally
 
accepted
 
accounting
 
principles in
 
the
 
United
 
States of
 
America
 
(“GAAP”)
 
for
 
interim
 
financial
reporting and
 
should be
 
read in
 
conjunction with
 
our Annual
 
Report on
 
Form 10-K
 
for the fiscal
 
year ended
 
June 1,
 
2024 (the
“2024
 
Annual
 
Report”).
 
These
 
statements
 
reflect
 
all
 
adjustments
 
that
 
are,
 
in
 
the
 
opinion
 
of
 
management,
 
necessary
 
to
 
a
 
fair
statement of the results for
 
the interim periods presented
 
and, in the opinion of
 
management, consist of adjustments
 
of a normal
recurring nature.
 
Operating results for
 
the interim periods
 
are not necessarily
 
indicative of operating
 
results for the
 
entire fiscal
year.
Fiscal Year
The Company’s
 
fiscal year ends on
 
the Saturday closest to
 
May 31. Each of
 
the three-month periods
 
ended on August 31, 2024
and September 2, 2023 included
13 weeks
.
Use of Estimates
The preparation of the
 
consolidated financial statements in
 
conformity with GAAP requires management
 
to make estimates and
assumptions
 
that affect
 
the amounts
 
reported in
 
the consolidated
 
financial statements
 
and accompanying
 
notes. Actual
 
results
could differ from those estimates.
Investment Securities
 
Available-for-Sale
The Company
 
has determined
 
that its
 
debt securities
 
are available-for-sale
 
investments. We
 
classify these
 
securities as
 
current
because the
 
amounts invested
 
are available
 
for current
 
operations. Available
 
-for-sale
 
securities are
 
carried at
 
fair value,
 
based
on quoted market prices
 
as of the balance sheet
 
date, with unrealized gains
 
and losses recorded in other
 
comprehensive income.
The
 
amortized
 
cost
 
of
 
debt
 
securities
 
is
 
adjusted
 
for
 
amortization
 
of
 
premiums
 
and
 
accretion
 
of
 
discounts
 
to
 
maturity
 
and
 
is
recorded in interest
 
income. The Company regularly
 
evaluates changes to the
 
rating of its debt
 
securities by credit agencies
 
and
economic conditions
 
to assess and
 
record any
 
expected credit
 
losses through
 
allowance for
 
credit losses,
 
limited to
 
the amount
that fair value was less than the amortized cost basis.
 
The cost
 
basis for
 
realized gains
 
and losses
 
on available-for-sale
 
securities is
 
determined by
 
the specific
 
identification method.
Gains
 
and
 
losses
 
are
 
recognized
 
in
 
other
 
income
 
(expenses)
 
as
 
Other,
 
net
 
in
 
the
 
Company’s
 
Condensed
 
Consolidated
Statements of Income. Interest and dividends on securities classified as available-for-sale
 
are recorded in interest income.
Trade Receivables
 
Trade receivables
 
are stated at
 
their carrying
 
values, which
 
include a reserve
 
for credit losses.
 
As of August
 
31, 2024
 
and June
1,
 
2024,
 
reserves
 
for
 
credit
 
losses
 
were
 
$
716
 
thousand
 
and
 
$
490
 
thousand,
 
respectively.
 
The
 
Company
 
extends
 
credit
 
to
customers based on
 
an evaluation of each
 
customer’s financial condition
 
and credit history.
 
Collateral is generally
 
not required.
The
 
Company
 
minimizes
 
exposure
 
to
 
counter
 
party
 
credit
 
risk
 
through
 
credit
 
analysis
 
and
 
approvals,
 
credit
 
limits,
 
and
monitoring
 
procedures.
 
In
 
determining
 
our
 
reserve
 
for
 
credit
 
losses,
 
receivables
 
are
 
assigned
 
an
 
expected
 
loss
 
based
 
on
historical loss information adjusted as needed for economic and
 
other forward-looking factors.
Dividends Payable
 
We
 
accrue dividends at
 
the end of
 
each quarter according
 
to the Company’s
 
dividend policy adopted
 
by its Board
 
of Directors.
The Company
 
pays a dividend
 
to shareholders
 
of its Common
 
Stock and
 
Class A Common
 
Stock on
 
a quarterly
 
basis for each
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.
8
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.
Revenue Recognition
The
 
Company
 
recognizes
 
revenue
 
through
 
sale of
 
its products
 
to
 
customers
 
through
 
retail, foodservice
 
and
 
other
 
distribution
channels.
 
The
 
majority
 
of
 
the
 
Company’s
 
revenue
 
is
 
derived
 
from
 
agreements
 
or
 
contracts
 
with
 
customers
 
based
 
upon
 
the
customer
 
ordering
 
its
 
products
 
with
 
a
 
single
 
performance
 
obligation
 
of
 
delivering
 
the
 
product.
 
The
 
Company
 
believes
 
the
performance
 
obligation
 
is
 
met
 
upon
 
delivery
 
and
 
acceptance
 
of
 
the
 
product
 
by
 
our
 
customers,
 
which
 
generally
 
occurs
 
upon
shipment
 
or
 
delivery
 
to
 
a
 
customer
 
based
 
on
 
terms
 
of
 
the
 
sale.
 
Costs
 
paid
 
to
 
third
 
party
 
brokers
 
to
 
obtain
 
agreements
 
are
expensed as the Company’s
 
agreements are generally less than one year.
Revenues are
 
recognized in
 
an amount
 
that reflects
 
the net
 
consideration we
 
expect to
 
receive in
 
exchange for
 
delivery of
 
the
products.
 
The
 
Company
 
periodically
 
offers
 
sales
 
incentives
 
or
 
other
 
programs
 
such
 
as
 
rebates,
 
discounts,
 
coupons,
 
volume-
based incentives,
 
guaranteed sales and
 
other programs.
 
The Company
 
records an estimated
 
allowance for costs
 
associated with
these programs, which
 
is recorded as a
 
reduction in revenue at
 
the time of sale
 
using historical trends
 
and projected redemption
rates
 
of
 
each
 
program.
 
The
 
Company
 
regularly
 
reviews
 
these
 
estimates
 
and
 
any
 
difference
 
between
 
the
 
estimated
 
costs
 
and
actual realization of these programs would be recognized the subsequent
 
period.
Business Combinations
The Company applies the acquisition
 
method of accounting, which
 
requires that once control is obtained,
 
all the assets acquired
and liabilities assumed,
 
including amounts
 
attributable to noncontrolling
 
interests, are recorded
 
at their respective
 
fair values at
the date of acquisition. We
 
determine the fair values of identifiable assets and liabilities
 
internally,
 
which requires estimates and
the
 
use
 
of
 
various
 
valuation
 
techniques.
 
When
 
a
 
market
 
value
 
is
 
not
 
readily
 
available,
 
our
 
internal
 
valuation
 
methodology
considers the remaining estimated life of the assets acquired and what
 
management believes is the market value for those assets.
 
We
 
typically use the income
 
method approach for
 
intangible assets acquired in
 
a business combination. Significant
 
estimates in
valuing
 
certain
 
intangible
 
assets
 
include,
 
but
 
are
 
not
 
limited
 
to,
 
the
 
amount
 
and
 
timing
 
of
 
future
 
cash
 
flows,
 
growth
 
rates,
discount rates and
 
useful lives. The
 
excess of the purchase
 
price over fair values
 
of identifiable assets and
 
liabilities is recorded
as goodwill.
 
Loss Contingencies
Certain
 
conditions
 
may
 
exist
 
as
 
of
 
the
 
date
 
the
 
consolidated
 
financial
 
statements
 
are
 
issued
 
that
 
may
 
result
 
in
 
a
 
loss
 
to
 
the
Company but
 
which will only
 
be resolved when
 
one or more
 
future events occur
 
or fail to
 
occur.
 
The Company’s
 
management
and
 
its
 
legal
 
counsel
 
assess
 
such
 
contingent
 
liabilities,
 
and
 
such
 
assessment
 
inherently
 
involves
 
an
 
exercise
 
of
 
judgment.
 
In
assessing loss
 
contingencies
 
related to
 
legal proceedings
 
that are
 
pending against
 
the Company
 
or unasserted
 
claims that
 
may
result in
 
such proceedings,
 
the Company’s
 
legal counsel
 
evaluates the
 
perceived merits
 
of any
 
legal proceedings
 
or unasserted
claims as well as the perceived merits of the amount of relief sought or expected
 
to be sought therein.
If the assessment
 
of a contingency
 
indicates it is
 
probable that
 
a material loss
 
has been incurred
 
and the amount
 
of the liability
can
 
be
 
estimated,
 
the
 
estimated
 
liability
 
would
 
be
 
accrued
 
in
 
the
 
Company’s
 
consolidated
 
financial
 
statements.
 
If
 
the
assessment
 
indicates
 
a
 
potentially
 
material
 
loss
 
contingency
 
is
 
not
 
probable,
 
but
 
is
 
reasonably
 
possible,
 
or
 
is
 
probable
 
but
cannot
 
be
 
estimated,
 
then
 
the
 
nature
 
of
 
the
 
contingent
 
liability,
 
together
 
with
 
an
 
estimate
 
of
 
the
 
range
 
of
 
possible
 
loss
 
if
determinable
 
and material,
 
would be
 
disclosed.
 
Loss contingencies
 
considered
 
remote
 
are generally
 
not disclosed
 
unless they
involve guarantees, in which case the nature of the guarantee would be disclosed.
 
The Company expenses the costs of litigation as they are incurred.
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
Note 2 - Acquisition
Effective
June 28, 2024
, the
 
Company
 
acquired
 
substantially
 
all of
 
the commercial
 
shell egg
 
production,
 
processing and
 
egg
products breaking
 
facilities of
 
ISE America,
 
Inc. and
 
certain of
 
its affiliates
 
(“ISE”).
 
The assets
 
acquired included
 
commercial
shell
 
egg
 
production
 
and
 
processing
 
facilities
 
with
 
a
 
capacity
 
at
 
the
 
time
 
of
 
acquisition
 
of
 
approximately
4.7
 
million
 
laying
hens, including
1.0
 
million cage-free,
 
and
1.2
 
million pullets, feed
 
mills, approximately
4,000
 
acres of land,
 
inventories and an
egg products breaking facility.
 
The acquired assets also include an extensive customer
 
distribution network across the Northeast
and
 
Mid-Atlantic
 
states,
 
and
 
production
 
operations
 
in
 
Maryland,
 
New
 
Jersey,
 
Delaware
 
and
 
South
 
Carolina.
 
The
 
Company
accounted for the acquisition as a business combination.
 
Pending the
 
finalization of
 
the Company’s
 
valuation, the
 
following table
 
summarizes the
 
consideration paid
 
for the
 
ISE assets
and the amounts of assets acquired and liabilities assumed recognized
 
at the acquisition date (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash consideration paid
$
111,521
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
20,547
Property, plant and equipment
90,572
Intangible assets
710
Liabilities assumed
(308)
Total identifiable
 
net assets
$
111,521
Inventories consisted primarily of flock, feed ingredients,
 
packaging, and egg inventory.
 
Flock inventory was valued at carrying
value
 
as
 
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 June 28, 2024.
 
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
 
of
 
customer
 
lists
 
acquired.
 
Customers
 
lists
 
were
 
valued
 
using
 
the
 
income
 
method
approach.
Note 3 - Investment
Securities
The following represents the Company’s
 
investment securities as of August 31, 2024 and June 1, 2024 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
August 31, 2024
Amortized
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
4,280
$
$
15
$
4,265
Commercial paper
86,698
5
86,703
Corporate bonds
288,383
547
288,930
Certificates of deposits
5,086
11
5,097
US government and agency obligations
148,399
7
148,392
Asset backed securities
2,877
8
2,869
Treasury bills
35,668
1
35,667
Total current
 
investment securities
$
571,391
$
563
$
31
$
571,923
 
 
 
 
 
 
 
 
 
10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 1, 2024
Amortized
 
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
4,100
$
$
41
$
4,059
Commercial paper
137,856
121
137,735
Corporate bonds
233,289
697
232,592
Certificates of deposits
3,505
14
3,491
US government and agency obligations
154,520
251
154,269
Asset backed securities
3,154
30
3,124
Treasury bills
39,239
10
39,229
Total current
 
investment securities
$
575,663
$
$
1,164
$
574,499
Available-for-sale
Proceeds
 
from
 
sales and
 
maturities of
 
investment
 
securities available-for-sale
 
were $
209.7
 
million
 
and $
135.8
 
million
 
during
the
 
thirteen
 
weeks
 
ended August
 
31,
 
2024
 
and
 
September
 
2,
 
2023,
 
respectively.
 
Gross
 
realized
 
gains
 
for
 
the
 
thirteen
 
weeks
ended August 31,
 
2024 and September
 
2, 2023 were
 
$
11
 
thousand and $
2
 
thousand, respectively.
 
There were
no
 
gross realized
losses for the thirteen weeks ended August 31, 2024. Gross realized losses for the
 
thirteen weeks ended September 2, 2023 were
$
8
 
thousand. There were
no
 
allowances for credit losses at August 31, 2024 and June 1, 2024.
Actual maturities
 
may differ
 
from contractual
 
maturities as some
 
borrowers have
 
the right to
 
call or prepay
 
obligations with
 
or
without penalties. Contractual maturities of current investments at August
 
31, 2024 are as follows (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Fair Value
Within one year
$
365,628
1-5 years
206,295
Total
$
571,923
Note 4 - Fair Value
 
Measurements
The Company
 
is required
 
to categorize
 
both financial
 
and nonfinancial
 
assets and
 
liabilities based
 
on the
 
following fair
 
value
hierarchy. The
 
fair value
 
of an
 
asset is
 
the price
 
at which
 
the asset
 
could be
 
sold in
 
an orderly
 
transaction between
 
unrelated,
knowledgeable, and willing
 
parties able to engage in
 
the transaction. A liability’s
 
fair value is defined
 
as the amount that would
be
 
paid
 
to
 
transfer
 
the
 
liability
 
to
 
a
 
new
 
obligor
 
in
 
a
 
transaction
 
between
 
such
 
parties,
 
not
 
the
 
amount
 
that
 
would
 
be paid
 
to
settle the liability with the creditor.
Level 1
 
- Quoted prices in active markets for identical assets or liabilities
Level 2
 
- Inputs
 
other than
 
quoted
 
prices included
 
in Level
 
1 that
 
are observable
 
for the
 
asset or
 
liability,
 
either
directly or indirectly,
 
including:
Quoted prices for similar assets or liabilities in active markets
Quoted prices for identical or similar assets in non-active markets
Inputs other than quoted prices that are observable for the asset or liability
Inputs derived principally from or corroborated by other observable market
 
data
Level 3
 
- Unobservable inputs for the asset or liability that are
 
supported by little or no market activity and that
 
are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
 
at cost are as follows:
Cash and cash equivalents, accounts receivable,
 
and accounts payable:
 
The carrying amount approximates fair value due to the
short maturity of these instruments.
 
 
 
 
 
 
 
 
 
 
 
 
11
 
Assets and Liabilities Measured at Fair
 
Value
 
on a Recurring Basis
In
 
accordance
 
with
 
the
 
fair
 
value
 
hierarchy
 
described
 
above,
 
the
 
following
 
table
 
shows
 
the
 
fair
 
value
 
of
 
financial
 
assets and
liabilities measured at fair value on a recurring basis as of August 31, 2024 and June 1,
 
2024 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
August 31, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
4,265
$
$
4,265
Commercial paper
86,703
86,703
Corporate bonds
288,930
288,930
Certificates of deposits
5,097
5,097
US government and agency obligations
148,392
148,392
Asset backed securities
2,869
2,869
Treasury bills
35,667
35,667
Total assets measured at fair
 
value
$
$
571,923
$
$
571,923
Liabilities
Contingent consideration
$
$
$
6,500
$
6,500
Total liabilities measured
 
at fair value
$
$
$
6,500
$
6,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 1, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
4,059
$
$
4,059
Commercial paper
137,735
137,735
Corporate bonds
232,592
232,592
Certificates of deposits
3,491
3,491
US government and agency obligations
154,269
154,269
Asset backed securities
3,124
3,124
Treasury bills
39,229
39,229
Total assets measured at fair
 
value
$
$
574,499
$
$
574,499
Liabilities
Contingent consideration
$
$
$
6,500
$
6,500
Total liabilities measured
 
at fair value
$
$
$
6,500
$
6,500
Investment
 
securities
 
 
available-for-sale
 
classified
 
as Level
 
2
 
consist
 
of
 
securities
 
with maturities
 
of
 
three
 
months
 
or longer
when purchased. We
 
classified these securities as
 
current because amounts
 
invested are readily available
 
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent consideration
 
classified as Level 3
 
consists
 
of the potential
 
obligation to pay
 
an earnout to
 
the sellers of Fassio
 
Egg
Farms,
 
Inc.
 
contingent
 
on
 
the
 
acquired
 
business
 
meeting
 
certain
 
return
 
on
 
profitability
 
milestones
 
over
 
a
three-year
 
period,
commencing on the date
 
of the acquisition in the
 
second quarter of fiscal 2024.
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Note 5 - Inventories
Inventories consisted of the following as of August 31, 2024 and June 1,
 
2024 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
August 31, 2024
June 1, 2024
Flocks, net of amortization
$
169,497
$
149,985
Eggs and egg products
30,800
25,217
Feed and supplies
92,885
86,580
$
293,182
$
261,782
We
 
grow
 
and
 
maintain
 
flocks
 
of
 
layers
 
(mature
 
female
 
chickens),
 
pullets
 
(female
 
chickens,
 
under
 
18
 
weeks
 
of
 
age),
 
and
breeders (male
 
and female
 
chickens used
 
to produce
 
fertile eggs
 
to hatch
 
for egg
 
production flocks).
 
Our total
 
flock at
 
August
31, 2024
 
and June
 
1, 2024
 
consisted of
 
approximately
10.9
 
million and
11.8
 
million pullets
 
and breeders
 
and
46.7
 
million and
39.9
 
million layers, respectively.
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended
 
August 31, 2024 and September 2, 2023 (in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks
 
Ended August 31, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 1,
2024
$
703
$
48
$
(31,597)
$
76,371
$
(1,773)
$
1,756,395
$
(3,104)
$
1,797,043
Other comprehensive
income, net of tax
1,299
1,299
Stock compensation
plan transactions
(35)
1,132
1,097
Dividends ($
1.019
per share)
Common
(45,075)
(45,075)
Class A common
(4,891)
(4,891)
Net income (loss)
149,976
(386)
149,590
Balance at August 31,
2024
$
703
$
48
$
(31,632)
$
77,503
$
(474)
$
1,856,405
$
(3,490)
$
1,899,063
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks
 
Ended September 2, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 3,
2023
$
703
$
48
$
(30,008)
$
72,112
$
(2,886)
$
1,571,112
$
(1,498)
$
1,609,583
Other comprehensive
income, net of tax
595
595
Stock compensation
plan transactions
(6)
1,041
1,035
Dividends ($
0.006
per share)
Common
(265)
(265)
Class A common
(29)
(29)
Net income (loss)
926
(515)
411
Balance at September
2, 2023
$
703
$
48
$
(30,014)
$
73,153
$
(2,291)
$
1,571,744
$
(2,013)
$
1,611,330
 
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
 
share
 
is
 
based
 
on
 
weighted-average
 
common
 
shares
 
outstanding
 
during
 
the
 
relevant
 
period
 
adjusted
 
for
 
the
dilutive effect of share-based awards.
 
The
 
following
 
table
 
provides
 
a
 
reconciliation
 
of
 
the
 
numerators
 
and
 
denominators
 
used
 
to
 
determine
 
basic
 
and
 
diluted
 
net
income per common share (amounts in thousands, except per share data):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Numerator
Net income
$
149,590
$
411
Less: Loss attributable to noncontrolling interest
(386)
(515)
Net income attributable to Cal-Maine Foods, Inc.
$
149,976
$
926
Denominator
Weighted-average
 
common shares outstanding, basic
48,761
48,690
Effect of dilutive restricted shares
171
150
Weighted-average
 
common shares outstanding, diluted
48,932
48,840
Net income per common share attributable to Cal-Maine Foods, Inc.
Basic
$
3.08
$
0.02
Diluted
$
3.06
$
0.02
 
 
 
 
 
14
Note 8 - Revenue from Contracts with Customers
Net revenue is primarily generated through the sales of
 
shell eggs and egg products. The Company’s
 
shell egg product offerings
include specialty and
 
conventional shell eggs.
 
Specialty shell eggs include
 
cage-free, organic,
 
brown, free-range, pasture-raised
and nutritionally enhanced eggs. Conventional shell egg sales represent all other
 
shell egg sales not sold as specialty shell eggs.
 
The Company’s
 
egg products
 
offerings
 
include liquid
 
and frozen
 
egg products
 
and hard-cooked
 
eggs.
 
Liquid and
 
frozen egg
products
 
are
 
primarily
 
sold
 
to
 
the
 
institutional,
 
foodservice
 
and
 
food
 
manufacturing
 
sectors.
 
Hard-cooked
 
eggs
 
are
 
sold
primarily within the foodservice and retail channels.
The following table provides revenue disaggregated by product category
 
(in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Conventional shell egg sales
$
484,736
$
225,280
Specialty shell egg sales
256,777
208,681
Egg products
35,175
22,223
Other
9,183
3,160
$
785,871
$
459,344
Note 9 - Stock Based Compensation
Total
 
stock-based compensation
 
expense was
 
$
1.1
 
million and
 
$
1.0
 
million for
 
the thirteen
 
weeks ended
 
August 31,
 
2024 and
September 2, 2023, respectively.
Unrecognized
 
compensation
 
expense
 
as a
 
result
 
of non
 
-vested
 
shares
 
of
 
restricted
 
stock outstanding
 
under
 
the
 
Amended
 
and
Restated 2012 Omnibus Long-Term
 
Incentive Plan at August 31, 2024 of $
6.3
 
million will be recorded over a weighted average
period
 
of
1.9
 
years.
 
Refer
 
to
 
Part
 
II
 
Item
 
8,
 
Notes
 
to
 
Consolidated
 
Financial
 
Statements
 
and
 
Supplementary
 
Data,
 
Note 14
 
-
Stock Compensation Plans in our 2024 Annual Report for further information
 
on our stock compensation plans.
The Company’s restricted share activity
 
for the thirteen weeks ended August 31, 2024 follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, June 1, 2024
277,954
$
49.38
Vested
(2,057)
44.72
Forfeited
(1,682)
54.64
Outstanding, August 31, 2024
274,215
$
49.38
 
 
 
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
of
 
Texas
 
v.
 
Cal-Maine
 
Foods,
 
Inc.
 
d/b/a
 
Wharton;
 
and
 
Wharton
 
County
 
Foods,
 
LLC,
 
Cause
 
No.
 
2020-25427,
 
in
 
the
 
District
Court of
 
Harris County,
 
Texas.
 
The State
 
of Texas
 
(the “State”)
 
asserted claims
 
based on
 
the Company’s
 
and WCF’s
 
alleged
violation
 
of
 
the
 
Texas
 
Deceptive
 
Trade
 
Practices—Consumer
 
Protection
 
Act,
 
Tex.
 
Bus.
 
&
 
Com.
 
Code
 
§§
 
17.41-17.63
(“DTPA”).
 
The
 
State
 
claimed
 
that
 
the
 
Company
 
and
 
WCF
 
offered
 
shell
 
eggs
 
at
 
excessive
 
or
 
exorbitant
 
prices
 
during
 
the
COVID-19
 
state
 
of
 
emergency
 
and
 
made
 
misleading
 
statements
 
about
 
shell
 
egg
 
prices.
 
The
 
State
 
sought
 
temporary
 
and
permanent
 
injunctions
 
against
 
the
 
Company
 
and
 
WCF
 
to
 
prevent
 
further
 
alleged
 
violations
 
of
 
the
 
DTPA,
 
along
 
with
 
over
$
100,000
 
in damages. On August 13, 2020, the court granted the defendants’ motion to dismiss the State’s
 
original petition with
prejudice. On September
 
11, 2020,
 
the State filed a
 
notice of appeal,
 
which was assigned
 
to the Texas
 
Court of Appeals
 
for the
First
 
District.
 
On
 
August
 
16,
 
2022,
 
the
 
appeals
 
court
 
reversed
 
and
 
remanded
 
the
 
case
 
back
 
to
 
the
 
trial
 
court
 
for
 
further
15
 
 
proceedings. On October 31, 2022,
 
the Company and WCF appealed
 
the First District Court’s
 
decision to the Supreme Court
 
of
Texas.
 
On September
 
29, 2023,
 
the Supreme
 
Court of
 
Texas
 
denied the
 
Company’s
 
Petition for
 
Review and
 
remanded to
 
the
trial
 
court
 
for
 
further
 
proceedings.
 
The district
 
court
 
entered a
 
pre-trial
 
order
 
scheduling
 
pre-trial
 
proceedings
 
and
 
tentatively
setting a trial date for August 11, 2025. Management
 
believes the risk of material loss related to this matter to be remote.
Kraft Foods Global, Inc. et al. v.
 
United Egg Producers, Inc. et al.
 
As previously
 
reported, on
 
September 25,
 
2008, the
 
Company
 
was named
 
as one
 
of several
 
defendants
 
in numerous
 
antitrust
cases involving
 
the United
 
States shell
 
egg
 
industry.
 
The Company
 
settled all
 
of these
 
cases, except
 
for
 
the claims
 
of certain
plaintiffs who sought substantial
 
damages allegedly arising from
 
the purchase of egg products (as
 
opposed to shell eggs). These
remaining plaintiffs
 
are Kraft Food
 
Global, Inc.,
 
General Mills, Inc.,
 
and Nestle USA,
 
Inc. (the
 
“Egg Products
 
Plaintiffs”) and,
until a subsequent settlement was reached as described below,
 
The Kellogg Company.
On September
 
13, 2019,
 
the case
 
with the
 
Egg Products
 
Plaintiffs was
 
remanded from
 
a multi-district
 
litigation proceeding
 
in
the
 
United
 
States
 
District
 
Court
 
for
 
the
 
Eastern
 
District
 
of
 
Pennsylvania,
 
In
 
re
 
Processed
 
Egg
 
Products
 
Antitrust
 
Litigation,
MDL No. 2002, to
 
the United States District Court
 
for the Northern District
 
of Illinois, Kraft Foods Global,
 
Inc. et al. v.
 
United
Egg
 
Producers,
 
Inc.
 
et
 
al., Case
 
No.
 
1:11-cv-8808,
 
for
 
trial. The
 
Egg
 
Products
 
Plaintiffs
 
alleged
 
that
 
the
 
Company
 
and
 
other
defendants
 
violated
 
Section
 
1
 
of
 
the
 
Sherman
 
Act,
 
15.
 
U.S.C.
 
§
 
1,
 
by
 
agreeing
 
to
 
limit
 
the
 
production
 
of
 
eggs
 
and
 
thereby
illegally
 
to
 
raise
 
the
 
prices
 
that
 
plaintiffs
 
paid
 
for
 
processed
 
egg
 
products.
 
In
 
particular,
 
the
 
Egg
 
Products
 
Plaintiffs
 
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,
 
or
 
$
53.3
 
million,
 
subject
 
to
 
credit
 
for
 
the
 
Kellogg
 
settlement
 
described
 
above
 
and
 
certain
 
other
settlements with
 
previous
 
settling defendants,
 
plus the
 
Egg Product
 
Plaintiffs’
 
reasonable
 
attorneys’
 
fees. This
 
decision is
 
not
final and remains subject to appeals by the parties. During
 
our second fiscal quarter of 2024, we recorded an accrued expense
 
of
$
19.6
 
million in selling,
 
general and administrative
 
expenses in the
 
Company’s
 
Condensed Consolidated Statements
 
of Income
and classified as
 
other noncurrent liabilities
 
in the Company’s
 
Condensed Consolidated
 
Balance Sheets. The
 
accrual represents
our
 
estimate
 
of
 
the
 
Company’s
 
proportional
 
share
 
of
 
the
 
reasonably
 
possible
 
ultimate
 
damages
 
award,
 
excluding
 
the
 
Egg
Product Plaintiffs’
 
attorneys’ fees
 
that we
 
believe would
 
be approximately
 
offset by
 
the credits
 
noted above.
 
We
 
have entered
into a judgment
 
allocation and joint
 
defense agreement
 
with the other
 
major producer
 
defendant remaining
 
in the case,
 
and are
in discussions
 
with other
 
defendants regarding
 
their contributions.
 
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
 
court denied
 
this motion
 
on
September
 
30, 2024.
 
The Company
 
is evaluating
 
the court’s
 
September
 
30, 2024
 
order and
 
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
 
of
 
their
 
affiliates.
 
The
 
State
 
of
 
Oklahoma
 
claims
 
that
 
through
 
the
 
disposal
 
of
 
chicken
litter the
 
defendants polluted
 
the Illinois
 
River Watershed.
 
This watershed
 
provides water
 
to eastern
 
Oklahoma. The
 
complaint
sought
 
injunctive
 
relief
 
and
 
monetary
 
damages,
 
but
 
the
 
claim
 
for
 
monetary
 
damages
 
was dismissed
 
by
 
the
 
court.
 
Cal-Maine
Foods,
 
Inc.
 
discontinued
 
operations
 
in
 
the
 
watershed
 
in
 
or
 
around
 
2005.
 
Since
 
the
 
litigation
 
began,
 
Cal-Maine
 
Foods,
 
Inc.
purchased
100
%
 
of
 
the
 
membership
 
interests
 
of
 
Benton
 
County
 
Foods,
 
LLC,
 
which
 
is
 
an
 
ongoing
 
commercial
 
shell
 
egg
operation within
 
the Illinois
 
River Watershed.
 
Benton County
 
Foods, LLC
 
is not
 
a defendant
 
in the
 
litigation. We
 
also have
 
a
number of small contract producers that operate in the area.
The non-jury trial in the case began in September 2009
 
and concluded in February 2010. On January 18, 2023, the court entered
findings of
 
fact and
 
conclusions of
 
law in favor
 
of the
 
State of
 
Oklahoma, but
 
no penalties
 
were assessed.
 
The court
 
found the
defendants
 
liable
 
for
 
state
 
law
 
nuisance,
 
federal
 
common
 
law
 
nuisance,
 
and
 
state
 
law
 
trespass.
 
The
 
court
 
also
 
found
 
the
producers
 
vicariously
 
liable
 
for
 
the
 
actions
 
of
 
their
 
contract
 
producers.
 
The
 
court
 
directed
 
the
 
parties
 
to
 
confer
 
in
 
attempt
 
to
reach
 
agreement
 
on
 
appropriate
 
remedies.
 
On
 
June
 
12,
 
2023,
 
the
 
court
 
ordered
 
the
 
parties
 
to
 
mediate
 
before
 
retired
 
Tenth
16
 
Circuit
 
Chief
 
Judge
 
Deanell
 
Reece
 
Tacha,
 
but
 
the
 
mediation
 
was
 
unsuccessful.
 
On
 
June
 
26,
 
2024,
 
the
 
district
 
court
 
denied
defendants’
 
motion
 
to
 
dismiss
 
the
 
case.
 
On
 
September
 
13,
 
2024,
 
a
 
status
 
hearing
 
was
 
held
 
and
 
the
 
court
 
scheduled
 
an
evidentiary
 
hearing
 
for December
 
3, 2024,
 
to determine
 
whether any
 
legal remedy
 
is available
 
based on
 
the now
 
14 year
 
old
record
 
and
 
changed
 
circumstances
 
of
 
the
 
Illinois
 
River
 
watershed.
 
On
 
September
 
20,
 
2024,
 
the
 
defendants
 
filed
 
motions
 
to
certify an interlocutory
 
appeal and stay
 
further proceedings
 
pending appeal to
 
the United States
 
Court of Appeals
 
for the Tenth
Circuit.
 
The
 
court
 
has
 
not ruled
 
on these
 
motions.
 
While
 
management
 
believes
 
there
 
is a
 
reasonable
 
possibility
 
of a
 
material
loss from
 
the case,
 
at the
 
present time,
 
it is
 
not possible
 
to estimate
 
the amount
 
of monetary
 
exposure, if
 
any,
 
to the
 
Company
due
 
to
 
a
 
range
 
of
 
factors,
 
including
 
the
 
following,
 
among
 
others:
 
uncertainties
 
inherent
 
in
 
any
 
assessment
 
of
 
potential
 
costs
associated with injunctive
 
relief or other penalties
 
based on a decision
 
in a case tried over
 
14 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 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
Effective
 
on
 
September
 
9,
 
2024,
 
the
 
Company
 
completed
 
a
 
strategic
 
investment
 
with
 
Crepini
 
LLC,
 
establishing
 
a
 
new
 
egg
products and
 
prepared foods
 
venture. Crepini
 
LLC, founded
 
in 2007,
 
grew its
 
brand throughout
 
the United
 
States and
 
Mexico
featuring
 
egg
 
wraps,
 
protein
 
pancakes,
 
crepes,
 
and
 
wrap-ups,
 
which
 
are
 
sold
 
online
 
and
 
in
 
over
3,500
 
retail
 
stores.
 
The
 
new
entity,
 
located in Hopewell Junction,
 
New York,
 
operates as Crepini
 
Foods LLC (“Crepini”).
 
The Company capitalized Crepini
with
 
approximately
 
$
6.75
 
million
 
in
 
cash
 
to
 
purchase
 
additional
 
equipment
 
and
 
other
 
assets
 
and
 
fund
 
working
 
capital
 
in
exchange for a
51
% interest in the new venture.
 
Crepini LLC contributed its existing
 
assets and business in exchange
 
for a
49
%
interest in the new venture.
17
ITEM
 
2.
 
MANAGEMENT’S
DISCUSSION
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATIONS
The following
 
should be
 
read in
 
conjunction
 
with Management’s
 
Discussion and
 
Analysis of
 
Financial Condition
 
and Results
of Operations
 
included in Part
 
II Item 7
 
of the Company’s
 
Annual Report
 
on Form 10-K
 
for its fiscal
 
year ended
 
June 1, 2024
(the “2024 Annual Report”), and the accompanying financial statements and
 
notes included in Part II Item 8 of the 2024 Annual
Report and in
 
of this Quarterly Report on Form 10-Q (“Quarterly Report”).
This
 
report
 
contains
 
numerous
 
forward-looking
 
statements
 
within
 
the
 
meaning
 
of
 
Section
 
27A
 
of
 
the
 
Securities
 
Act
 
of
 
1933
(the “Securities
 
Act”) and
 
Section 21E
 
of the
 
Securities Exchange
 
Act of
 
1934 (the
 
“Exchange Act”)
 
relating to
 
our shell
 
egg
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 on our business of the resurgence in United States (“U.S.”)
 
commercial table egg layer flocks of highly pathogenic avian
influenza (“HPAI”),
 
potential future
 
impact on
 
our business
 
of inflation
 
and changing
 
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
 
of words
 
such as
 
“believes,”
“intends,”
 
“expects,”
 
“hopes,” “may,”
 
“should,”
 
“plans,”
 
“projected,”
 
“contemplates,”
 
“anticipates,”
 
or
 
similar words.
 
Actual
outcomes
 
or
 
results
 
could
 
differ
 
materially
 
from
 
those
 
projected
 
in
 
the
 
forward-looking
 
statements.
 
The
 
forward-looking
statements
 
are
 
based
 
on management’s
 
current
 
intent,
 
belief,
 
expectations,
 
estimates,
 
and
 
projections
 
regarding
 
the Company
and its
 
industry.
 
These statements
 
are not
 
guarantees of
 
future performance
 
and involve
 
risks, uncertainties,
 
assumptions, and
other
 
factors
 
that
 
are
 
difficult
 
to
 
predict
 
and
 
may
 
be
 
beyond
 
our
 
control.
 
The
 
factors
 
that
 
could
 
cause
 
actual
 
results
 
to
 
differ
materially from
 
those projected
 
in the
 
forward-looking statements
 
include, among
 
others, (i)
 
the risk
 
factors set
 
forth in
 
Part I
Item
 
1A
 
Risk
 
Factors
 
of
 
the
 
2024
 
Annual
 
Report,
 
the
 
risk
 
factors
 
(if
 
any)
 
set
 
forth
 
in
 
Part
 
II
 
Item
 
1A
 
Risk
 
Factors
 
and
elsewhere in
 
this report
 
as well
 
as those
 
included in
 
other reports
 
we file
 
from time
 
to time
 
with the
 
Securities and
 
Exchange
Commission (the
 
“SEC”) (including our
 
Quarterly Reports on
 
Form 10-Q and
 
Current Reports on
 
Form 8-K), (ii)
 
the risks and
hazards
 
inherent
 
in
 
the
 
shell
 
egg
 
business
 
(including
 
disease,
 
pests,
 
weather
 
conditions,
 
and
 
potential
 
for
 
product
 
recall),
including but not limited to the current outbreak
 
of 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 flocks
 
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 recent
 
or 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
 
changes
 
in
 
inflation
 
and
 
interest
 
rates,
 
(vii)
 
our
 
ability
 
to
 
retain
 
existing
 
customers,
 
acquire
 
new
 
customers
 
and
 
grow
 
our
product
 
mix,
 
(viii) adverse
 
results in
 
pending
 
litigation
 
matters, and
 
(ix)
 
global instability,
 
including
 
as a
 
result of
 
the war
 
in
Ukraine, the conflicts
 
in Israel and surrounding areas and attacks on
 
shipping in the Red Sea. Readers are cautioned
 
not to place
undue
 
reliance
 
on
 
forward-looking
 
statements
 
because,
 
while
 
we
 
believe
 
the
 
assumptions
 
on
 
which
 
the
 
forward-looking
statements are based
 
are reasonable,
 
there can be
 
no assurance that
 
these forward-looking
 
statements will prove
 
to be accurate.
Further,
 
forward-looking statements
 
included herein
 
are only
 
made as
 
of the
 
respective dates
 
thereof, or
 
if no
 
date is
 
stated, as
of the date
 
hereof. Except
 
as otherwise required
 
by law,
 
we disclaim any
 
intent or
 
obligation to
 
update publicly
 
these forward-
looking statements, whether because of new information, future events,
 
or otherwise.
GENERAL
Cal-Maine
 
Foods,
 
Inc.
 
(the
 
“Company,”
 
“we,”
 
“us,”
 
“our”)
 
is
 
primarily
 
engaged
 
in
 
the
 
production,
 
grading,
 
packaging,
marketing
 
and
 
distribution
 
of
 
fresh
 
shell
 
eggs.
 
Our
 
operations
 
are
 
fully
 
integrated
 
and we
 
have
 
one
 
operating
 
and
 
reportable
segment.
 
We
 
are
 
the
 
largest
 
producer
 
and
 
distributor
 
of
 
fresh
 
shell
 
eggs
 
in
 
the
 
U.S.
 
Our
 
total
 
flock
 
of
 
approximately
 
46.7
million
 
layers
 
and
 
10.9
 
million
 
pullets
 
and
 
breeders
 
is
 
the
 
largest
 
in
 
the
 
U.S.
 
We
 
sell
 
our
 
shell
 
eggs
 
and
 
egg
 
products
 
to
 
a
diverse group of
 
customers, including national
 
and regional grocery
 
store chains,
 
club stores, companies
 
servicing independent
supermarkets
 
in the
 
U.S., foodservice
 
distributors
 
and
 
egg product
 
customers
 
throughout the
 
majority
 
of the
 
U.S.
 
and aim
 
to
maintain efficient, state-of-the-art operations located
 
close to our customers.
 
Our
 
operating
 
results
 
are
 
materially
 
impacted
 
by
 
market
 
prices for
 
eggs
 
and
 
feed
 
grains
 
(corn
 
and
 
soybean
 
meal),
 
which
 
are
highly
 
volatile,
 
independent
 
of
 
each
 
other,
 
and
 
out
 
of
 
our
 
control.
 
Generally,
 
higher
 
market
 
prices
 
for
 
eggs
 
have
 
a
 
positive
impact
 
on
 
our
 
financial
 
results
 
while
 
higher
 
market
 
prices
 
for
 
feed
 
grains
 
have
 
a
 
negative
 
impact
 
on
 
our
 
financial
 
results.
Although we
 
use a
 
variety of
 
pricing mechanisms
 
in pricing
 
agreements with
 
our customers,
 
we sell
 
most of
 
our conventional
shell eggs
 
based on
 
formulas that
 
consider,
 
in varying
 
ways, independently
 
quoted regional
 
wholesale
 
market prices
 
for shell
eggs
 
or
 
formulas
 
related
 
to
 
our
 
costs
 
of
 
production
 
which
 
include
 
the
 
cost
 
of
 
corn
 
and
 
soybean
 
meal.
 
We
 
do
 
not
 
sell
 
eggs
directly to consumers or set the prices at which eggs are sold to consumers.
18
Retail
 
sales
 
of
 
shell
 
eggs
 
historically
 
have
 
been
 
highest
 
during
 
the
 
fall
 
and
 
winter
 
months
 
and
 
lowest
 
during
 
the
 
summer
months. Prices
 
for shell
 
eggs fluctuate
 
in response
 
to seasonal
 
demand factors
 
and a
 
natural increase
 
in egg
 
production during
the
 
spring
 
and
 
early
 
summer.
 
Historically,
 
shell
 
egg
 
prices
 
tend
 
to
 
increase
 
with
 
the
 
start
 
of
 
the
 
school
 
year
 
and
 
tend
 
to
 
be
highest
 
prior
 
to
 
holiday
 
periods,
 
particularly
 
Thanksgiving,
 
Christmas
 
and
 
Easter.
 
Consequently,
 
and
 
all
 
other
 
things
 
being
equal, we would
 
expect to experience
 
lower selling prices, sales
 
volumes and net
 
income (and may incur
 
net losses) in our
 
first
and
 
fourth
 
fiscal
 
quarters
 
ending
 
in
 
August/September
 
and
 
May/June,
 
respectively.
 
Because
 
of
 
the
 
seasonal
 
and
 
quarterly
fluctuations,
 
comparisons
 
of
 
our
 
sales
 
and
 
operating
 
results
 
between
 
different
 
quarters
 
within
 
a
 
single
 
fiscal
 
year
 
are
 
not
necessarily meaningful comparisons.
We
 
routinely
 
fill
 
our
 
storage
 
bins
 
during
 
harvest
 
season
 
when
 
prices
 
for
 
feed
 
ingredients
 
are
 
generally
 
lower.
 
To
 
ensure
continued
 
availability of
 
feed ingredients,
 
we may
 
enter into
 
contracts for
 
future purchases
 
of corn
 
and soybean
 
meal, and
 
as
part
 
of
 
these
 
contracts,
 
we
 
may
 
lock-in
 
the
 
basis
 
portion
 
of
 
our
 
grain
 
purchases
 
several
 
months
 
in
 
advance.
 
Basis
 
is
 
the
difference
 
between the
 
local cash
 
price for
 
grain and
 
the applicable
 
futures price.
 
A basis
 
contract is
 
a common
 
transaction in
the grain
 
market that
 
allows us
 
to lock-in
 
a basis
 
level for
 
a specific
 
delivery period
 
and wait
 
to set
 
the futures
 
price at
 
a later
date. Furthermore,
 
due to
 
the more
 
limited supply
 
for organic
 
ingredients,
 
we may
 
commit to
 
purchase organic
 
ingredients in
advance to help ensure supply.
 
Ordinarily, we do
 
not enter into long-term contracts beyond a year to purchase
 
corn and soybean
meal
 
or
 
hedge
 
against
 
increases
 
in
 
the
 
prices
 
of
 
corn
 
and
 
soybean
 
meal.
 
Corn
 
and
 
soybean
 
meal
 
are
 
commodities
 
and
 
are
subject
 
to
 
volatile
 
price
 
changes
 
due
 
to
 
weather,
 
various
 
supply
 
and
 
demand
 
factors,
 
transportation
 
and
 
storage
 
costs,
speculators,
 
agricultural, energy
 
and trade
 
policies in
 
the U.S.
 
and internationally
 
,
 
and 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
mix of
 
branded and
 
private-label products
 
of conventional
 
and specialty
 
eggs, including
 
cage-free, organic,
 
brown, free-range,
pasture-raised and nutritionally-enhanced eggs as well as egg products.
CAGE-FREE EGGS
Ten
 
states
 
have
 
passed
 
legislation
 
or
 
regulations
 
mandating
 
minimum
 
space
 
or
 
cage-free
 
requirements
 
for
 
egg
 
production
 
or
mandated
 
the
 
sale
 
of
 
only
 
cage-free
 
eggs
 
and
 
egg
 
products
 
in
 
their
 
states,
 
with
 
implementation
 
of
 
these
 
laws
 
ranging
 
from
January
 
2022
 
to
 
January
 
2030.
 
These
 
states
 
represent
 
approximately
 
27%
 
of
 
the
 
U.S.
 
total
 
population
 
according
 
to
 
the 2020
U.S.
 
Census.
 
California,
 
Massachusetts,
 
Colorado,
 
Oregon,
 
Washington,
 
and
 
Nevada,
 
which
 
collectively
 
represent
approximately 20% of the total estimated U.S. population,
 
have cage-free legislation currently in effect.
 
A significant number of
 
our customers have announced
 
goals to either exclusively offer
 
cage-free eggs or significantly
 
increase
the
 
volume
 
of
 
cage-free
 
egg
 
sales
 
in
 
the
 
future,
 
subject
 
in
 
most
 
cases
 
to
 
availability
 
of
 
supply,
 
affordability
 
and
 
consumer
demand,
 
among
 
other
 
contingencies.
 
Our
 
customers
 
typically
 
do
 
not
 
commit
 
to
 
long-term
 
purchases
 
of
 
specific
 
quantities or
types
 
of
 
eggs
 
with
 
us,
 
and
 
as
 
a
 
result,
 
it
 
is
 
difficult
 
to
 
accurately
 
predict
 
customer
 
requirements
 
for
 
cage-free
 
eggs.
 
We
 
are
focused
 
on
 
adjusting
 
our
 
cage-free
 
production
 
capacity
 
with
 
a
 
goal
 
of
 
meeting
 
the
 
future
 
needs
 
of
 
our
 
customers
 
in
 
light
 
of
changing state requirements
 
and our
 
customer’s goals.
 
As always, we
 
strive to offer
 
a product
 
mix that aligns
 
with current
 
and
anticipated
 
customer
 
purchase
 
decisions.
 
We
 
are
 
engaging
 
with
 
our
 
customers
 
to
 
help
 
them
 
meet
 
their
 
announced
 
goals
 
and
needs. We
 
have invested significant capital
 
in recent years to acquire
 
and construct cage-free facilities, and
 
we expect our focus
for future
 
expansion will
 
continue to
 
include cage-free
 
facilities. Our
 
volume of
 
cage-free egg
 
sales has
 
continued to
 
increase
and account for a larger share of our
 
product mix. Cage-free egg revenue represented approximately
 
25.6% of our total net shell
egg revenue for the
 
first quarter of fiscal year
 
2025. At the same time,
 
we understand the importance
 
of our continued ability to
provide
 
conventional
 
eggs
 
in
 
order
 
to
 
provide
 
our
 
customers
 
with
 
a
 
variety
 
of
 
egg
 
choices
 
and
 
to
 
address
 
hunger
 
in
 
our
communities.
 
For
 
additional
 
information,
 
see
 
the
 
2024
 
Annual
 
Report,
 
Part
 
I
 
Item
 
1,
 
“Business
 
 
Specialty
 
Eggs,”
 
“Business
 
 
Growth
Strategy” and
 
“Business –
 
Government
 
Regulation,” and
 
the first
 
risk factor
 
in Part
 
I Item
 
1A, “Risk
 
Factors” under
 
the sub-
heading “Legal and Regulatory Risk Factors.”
ACQUISITIONS
During the
 
first quarter
 
of fiscal
 
2025,
 
we acquired
 
substantially all
 
the commercial
 
shell egg
 
production,
 
processing and
 
egg
products
 
breaking
 
assets
 
of
 
ISE
 
America,
 
Inc.
 
and
 
certain
 
of
 
its
 
affiliates
 
(“ISE”).
 
The
 
assets
 
acquired
 
included
 
commercial
shell
 
egg
 
production
 
and
 
processing
 
facilities
 
with
 
a
 
capacity
 
at
 
the
 
time
 
of
 
acquisition
 
of
 
approximately
 
4.7
 
million
 
laying
hens, including
 
1.0 million cage-free,
 
and 1.2 million
 
pullets, feed mills,
 
approximately 4,000
 
acres of land,
 
inventories and an
egg products breaking facility.
 
The acquired assets also include an extensive customer
 
distribution network across the Northeast
and Mid-Atlantic
 
states, and
 
production operations
 
in Maryland,
 
New Jersey,
 
Delaware and
 
South Carolina.
 
These production
assets
 
are
 
our
 
first
 
in
 
Maryland,
 
New
 
Jersey
 
and
 
Delaware.
 
We
 
believe
 
this
 
acquisition
 
provides
 
us
 
with
 
an
 
opportunity
 
to
19
significantly enhance
 
our market reach
 
in the Northeast
 
and Mid-Atlantic states.
 
See further discussion
 
in
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly
 
Report.
In
 
second
 
quarter
 
2024,
 
we
 
acquired
 
the
 
assets
 
of
 
Fassio
 
Egg
 
Farms,
 
Inc.(“Fassio”),
 
related
 
to
 
its
 
commercial
 
shell
 
egg
production and processing
 
business. Fassio owned
 
and operated 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.
 
This acquisition provided
us with
 
an opportunity
 
to expand
 
our market
 
presence in
 
Utah and
 
the western
 
U.S., particularly
 
for cage-free
 
eggs. In
 
fourth
quarter
 
2024,
 
we
 
acquired
 
a
 
broiler
 
processing
 
plant,
 
hatchery
 
and
 
feed
 
mill
 
in
 
Dexter,
 
Missouri
 
that
 
were
 
closed
 
by
 
Tyson
Foods, Inc. in 2023 and that we are repurposing for use in shell egg and egg products production.
Following the end of first quarter 2025, we announced that we completed
 
a strategic investment with Crepini,
 
LLC, establishing
a
 
new
 
egg
 
products
 
and
 
prepared
 
foods
 
venture.
 
See
 
further
 
discussion
 
in
 
Note
 
11
 
 
Subsequent
 
Events
 
of
 
the
 
Notes
 
to
Condensed Consolidated Financial Statements included in this Quarterly
 
Report
HPAI
Outbreaks of HPAI
 
have continued to
 
occur in U.S. poultry
 
flocks. From the
 
resurgence beginning
 
in November 2023
 
until the
last reported
 
case in
 
commercial layer
 
hens in
 
July 2024,
 
approximately 33.1
 
million commercial
 
laying hens
 
and pullets
 
have
been depopulated.
During the
 
third and fourth
 
quarters of fiscal
 
2024, we experienced
 
HPAI
 
outbreaks within
 
our facilities located
 
in Kansas and
Texas,
 
resulting in
 
total depopulation
 
of approximately
 
3.1 million
 
laying hens
 
and 577,000
 
pullets. Both
 
locations have
 
been
cleared
 
by
 
the
 
USDA to
 
resume
 
operations.
 
Repopulation
 
began
 
during
 
the first
 
quarter
 
of
 
fiscal
 
2025
 
and
 
is expected
 
to
 
be
completed before calendar year end.
We
 
remain
 
dedicated
 
to robust
 
biosecurity
 
programs
 
across our
 
locations;
 
however,
 
no farm
 
is immune
 
from HPAI.
 
HPAI
 
is
currently
 
widespread
 
in
 
the
 
wild
 
bird
 
population
 
worldwide.
 
The
 
extent
 
of
 
possible
 
future
 
outbreaks,
 
with
 
heightened
 
risk
during the
 
migration seasons,
 
and more
 
recent HPAI
 
events, which
 
have been
 
directly linked
 
to dairy
 
cattle operations,
 
cannot
be predicted.
 
According to
 
the U.S.
 
Centers for
 
Disease Control
 
and Prevention,
 
the human health
 
risk to
 
the U.S. public
 
from
the HPAI
 
virus is considered
 
to be low.
 
Also, according to
 
the USDA, HPAI
 
cannot be transmitted
 
through safely handled
 
and
properly cooked eggs. There
 
is no known risk related
 
to HPAI
 
associated with eggs that are
 
currently in the market and no
 
eggs
have
 
been
 
recalled.
 
For
 
additional
 
information,
 
see
 
the
 
2024
 
Annual
 
Report,
 
Part
 
II
 
Item
 
7
 
“Management’s
 
Discussion
 
and
Analysis of Financial Condition and Results of Operations – HPAI.”
 
EXECUTIVE OVERVIEW
For the first quarter of
 
fiscal 2025, we recorded a gross
 
profit of $247.2 million, compared
 
to $45.4 million, for the
 
same period
of fiscal 2024,
 
primarily driven by an increase in the net average selling price
 
of shell eggs as well as an increase in total dozens
sold. In the first
 
quarter of fiscal 2025,
 
we sold a record
 
amount of total shell eggs
 
and specialty shell eggs,
 
reflecting favorable
demand for
 
shell eggs during
 
most of the
 
quarter.
 
Our results were
 
also positively
 
impacted by
 
lower feed costs
 
and our recent
acquisitions discussed above.
Our
 
net
 
average
 
selling
 
price
 
per
 
dozen
 
for
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
was
 
$2.392
 
compared
 
to
 
$1.589
 
in
 
the
 
prior-year
period. Conventional
 
egg prices
 
per dozen
 
were $2.424
 
compared to
 
$1.241 for
 
the prior-year
 
period, and
 
specialty egg
 
prices
per dozen were $2.335
 
compared to $2.278 for the
 
prior-year period. Egg
 
prices in the first quarter
 
of fiscal 2025 were elevated
compared
 
to the
 
prior-year
 
period
 
primarily
 
due
 
to
 
the resurgence
 
of
 
HPAI
 
outbreaks,
 
which
 
decreased
 
supply,
 
among
 
other
factors.
 
According
 
to
 
the
 
USDA,
 
the
 
monthly
 
average
 
size
 
of
 
the
 
layer
 
hen
 
flock
 
from
 
June
 
through
 
August
 
(which
 
most
closely aligns with
 
our first fiscal quarter)
 
2024 was approximately
 
305 million hens,
 
which was a decrease
 
of 9 million layers
 
,
or 2.9%,
 
compared to
 
the same
 
period in
 
the prior
 
year.
 
The daily
 
average price
 
for the
 
Urner Barry
 
southeast large
 
index for
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
increased
 
125.6%
 
from
 
the
 
comparable
 
period
 
in
 
the
 
prior
 
year
 
and
 
was
 
volatile
 
during
 
the
quarter
 
with
 
a
 
low
 
of
 
$2.54
 
and
 
a
 
high
 
of
 
$4.63
 
at
 
the
 
end
 
of
 
the
 
quarter.
 
Subsequent
 
to
 
quarter-end,
 
prices
 
have
 
dropped
significantly. For
 
more information about historical shell egg prices, see Part I Item I of our 2024 Annual
 
Report.
 
Our dozens sold
 
for the first quarter
 
of fiscal 2025
 
increased 13.5% compared
 
to fiscal 2024.
 
We
 
had an increase
 
in production
capacity with the
 
acquisitions of the
 
commercial shell egg
 
production and processing
 
business of ISE
 
during the first quarter
 
of
fiscal
 
2025
 
and
 
Fassio
 
during
 
the
 
second
 
quarter
 
of
 
fiscal
 
2024,
 
which
 
was
 
partially
 
offset
 
by
 
the
 
temporary
 
decrease
 
in
production due to the HPAI
 
outbreaks at our facilities in Kansas and Texas
 
during the third and fourth quarters of fiscal 2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
Our farm
 
production costs
 
per dozen
 
produced for
 
the first
 
quarter
 
of fiscal
 
2025 decreased
 
11.7%,
 
or $0.12
 
compared to
 
the
prior year period, primarily
 
due to lower feed costs. Feed
 
costs per dozen produced
 
decreased 17.3%, or $0.10,
 
compared to the
first
 
quarter
 
of
 
fiscal
 
2024,
 
primarily
 
due
 
to
 
lower
 
feed
 
ingredient
 
prices.
 
For
 
information
 
about
 
historical
 
corn
 
and
 
soybean
meal prices,
 
see Part
 
I Item
 
I of
 
our 2024
 
Annual Report.
 
Our egg
 
purchases and
 
other (including
 
changes in
 
inventory) costs
increased
 
$107.7
 
million
 
quarter-over-quarter,
 
primarily
 
due
 
to
 
higher
 
shell
 
egg
 
prices
 
as
 
well
 
as
 
an
 
increase
 
in
 
dozens
purchased due to the loss of production caused by the HPAI
 
outbreaks at our facilities as described above .
 
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
August 31, 2024
September 2, 2023
Net sales
100.0
%
100.0
%
Cost of sales
68.5
%
90.1
%
Gross profit
31.5
%
9.9
%
Selling, general and administrative
7.9
%
11.3
%
Gain on disposal of fixed assets
(0.2)
%
%
Operating income (loss)
23.8
%
(1.4)
%
Total other income, net
1.4
%
1.6
%
Income before income taxes
25.2
%
0.2
%
Income tax expense
6.2
%
0.1
%
Net income
19.0
%
0.1
%
Less: Loss attributable to noncontrolling interest
%
(0.1)
%
Net income attributable to Cal-Maine Foods, Inc.
19.0
%
0.2
%
NET SALES
Total
 
net sales for
 
the first quarter
 
of fiscal 2025
 
were $785.9 million
 
compared to $459.3
 
million for the
 
same period of
 
fiscal
2024.
Net shell
 
egg sales
 
represented 95.5%
 
and 95.2%
 
of total
 
net sales
 
for the
 
first quarters
 
of fiscal
 
2025 and
 
2024, respectively.
The Company’s
 
shell egg offerings
 
,
 
for both branded
 
and private-label products,
 
include specialty and
 
conventional shell eggs.
Specialty shell eggs include cage-free, organic,
 
brown, free-range, pasture-raised and nutritionally enhanced
 
eggs. Conventional
shell eggs sales represent all
 
other shell egg sales not sold
 
as specialty shell eggs. Shell egg sales
 
classified as “Other” represent
sales of miscellaneous byproducts and resale products included with our shell
 
egg operations.
The Company’s egg products
 
offerings
 
include liquid and frozen egg products and hard-cooked eggs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
The table below presents an analysis of our conventional and specialty shell egg
 
sales (in thousands, except percentage data):
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
Total net sales
$
785,871
$
459,344
Conventional
$
484,736
64.6
%
$
225,280
51.6
%
Specialty
256,777
34.2
%
208,681
47.7
%
Egg sales, net
741,513
98.8
%
433,961
99.3
%
Other
9,183
1.2
%
3,160
0.7
%
Net shell egg sales
$
750,696
100.0
%
$
437,121
100.0
%
Net shell egg sales as a percent of total net sales
95.5
%
95.2
%
Dozens sold:
Conventional
199,989
64.5
%
181,530
66.5
%
Specialty
109,990
35.5
%
91,596
33.5
%
Total dozens sold
309,979
100.0
%
273,126
100.0
%
Net average selling price per dozen:
Conventional
$
2.424
$
1.241
Specialty
$
2.335
$
2.278
All shell eggs
$
2.392
$
1.589
Egg products sales:
 
Egg products net sales
$
35,175
$
22,223
Pounds sold
21,051
19,353
Net average selling price per pound
$
1.671
$
1.148
Shell egg net sales
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
-
In the
 
first quarter
 
of fiscal
 
2025,
 
conventional
 
egg sales
 
increased
 
$259.5 million,
 
or 115.2%,
 
compared to
 
the first
quarter
 
of
 
fiscal
 
2024,
 
primarily
 
due
 
to
 
a
 
95.3%
 
increase
 
in
 
the
 
prices
 
for
 
conventional
 
eggs,
 
which
 
resulted
 
in
 
a
$236.6 million increase in
 
net sales, and a 10.2%
 
increase in the volume of
 
conventional eggs sold, which resulted
 
in a
$22.9
 
million
 
increase
 
in
 
net
 
sales.
 
Results
 
for
 
the
 
first
 
quarter
 
of
 
2025
 
were
 
positively
 
impacted
 
by
 
our
 
recent
acquisitions discussed above.
-
Specialty egg sales increased $48.1 million, or
 
23.0%, in the first quarter of fiscal 2025 compared
 
to the first quarter of
fiscal 2024, primarily
 
due to an 20.1%
 
increase in the volume
 
of specialty eggs
 
sold, which resulted in
 
a $41.9 million
increase in
 
net sales
 
and a
 
2.5% increase
 
in prices
 
for specialty
 
eggs, which
 
resulted in
 
a $6.3
 
million increase
 
in net
sales.
 
-
Demand
 
for
 
specialty
 
eggs
 
increased
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
as
 
conventional
 
egg
 
prices
 
rose.
 
Our
 
sales
volume benefited
 
as we sold
 
20.1% more
 
specialty eggs by
 
volume in
 
the first quarter
 
of fiscal 2025
 
versus the prior-
year period. Additionally,
 
demand continues to be impacted by
 
cage-free requirements becoming effective
 
for Nevada,
Oregon and Washington
 
on January 1, 2024.
 
-
See “Executive Overview” above for additional discussion.
Egg products net sales
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
-
Egg
 
products
 
net
 
sales
 
increased
 
$13.0
 
million,
 
or
 
58.3%,
 
for
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
 
compared
 
to
 
the
 
same
period of fiscal 2024, primarily
 
due to a 45.6%
 
selling price increase, which had a $11.0
 
million positive impact on net
sales.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
-
Our egg products
 
net average selling
 
price increased in
 
the first quarter
 
of fiscal 2025,
 
compared to the
 
first quarter of
fiscal 2024, as the supply of shell eggs used to produce egg products was lower due
 
to the impact of HPAI
 
.
COST OF SALES
Cost of
 
sales consists
 
of
 
costs directly
 
related
 
to producing,
 
processing
 
and
 
packing
 
shell eggs,
 
purchases
 
of
 
shell
 
eggs from
outside sources,
 
processing and
 
packing of
 
liquid and
 
frozen egg
 
products and
 
other non-egg
 
costs. Farm production
 
costs are
those costs
 
incurred at
 
the egg production
 
facility,
 
including feed,
 
facility (including
 
labor), hen
 
amortization and
 
other related
farm production costs.
The following table presents the key variables affecting our cost of
 
sales (in thousands, except cost per dozen data):
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
%
Change
Cost of Sales:
Farm production
$
241,701
$
253,507
(4.7)
%
Processing, packaging, and warehouse
91,711
81,906
12.0
Egg purchases and other (including change in inventory)
168,449
60,797
177.1
Total shell eggs
501,861
396,210
26.7
Egg products
36,792
17,701
107.9
Total
$
538,653
$
413,911
30.1
%
Farm production costs (per dozen produced)
Feed
$
0.494
$
0.597
(17.3)
%
Other
$
0.421
$
0.439
(4.1)
%
Total
$
0.915
$
1.036
(11.7)
%
Outside egg purchases (average cost per dozen)
$
2.83
$
1.65
71.5
%
Dozens produced
266,839
250,365
6.6
%
Percent produced to sold
86.1%
91.7%
(6.1)
%
Farm Production
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
-
Feed costs per dozen produced decreased 17.3% in the first quarter
 
of fiscal 2025
 
compared to the first quarter of fiscal
2024. This
 
decrease was
 
primarily due
 
to lower
 
prices for
 
corn and
 
soybean meal,
 
our primary
 
feed ingredients.
 
The
decrease
 
in
 
feed
 
cost
 
per
 
dozen
 
resulted
 
in
 
a
 
decrease
 
in
 
cost
 
of
 
sales of
 
$27.5
 
million
 
for
 
the
 
first
 
quarter
 
of
 
fiscal
2025
 
compared to the prior period quarter.
-
For the
 
first quarter
 
of fiscal
 
2025, the
 
average Chicago
 
Board of
 
Trade
 
(“CBOT”) daily
 
market price
 
was $4.03
 
per
bushel
 
for
 
corn
 
and
 
$340
 
per
 
ton
 
of
 
soybean
 
meal,
 
representing
 
decreases
 
of
 
24.0%
 
and
 
19.5%,
 
respectively,
 
as
compared to the average CBOT daily market prices for the first quarter
 
of fiscal 2024.
 
-
Other farm
 
production costs decreased
 
primarily due
 
to lower flock
 
amortization. Feed
 
costs reached their
 
peak in the
second quarter
 
of fiscal
 
2023 and
 
have since
 
trended downward.
 
Lower costs
 
result in
 
lower capitalized
 
values of
 
the
flocks during the grow out phase, which reduced amortization cost over time.
 
Current
 
indications
 
for
 
corn
 
project
 
an
 
overall
 
better
 
stocks-to-use
 
ratio
 
implying
 
potentially
 
lower
 
prices
 
in
 
the
 
near
 
term;
however, as long
 
as outside factors remain uncertain
 
(including weather patterns and
 
global supply chain disruptions), volatility
could remain.
 
Processing, packaging, and warehouse
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
-
Processing, packaging, and warehouse costs increased 12.0
 
%
 
compared to the first quarter of fiscal 2024
 
due to a 7.5%
increase in the volume of processed dozens as well as an increase in costs of packaging
 
materials.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
Egg purchases and other (including change in inventory)
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
-
Costs in
 
this category
 
increased primarily
 
due to
 
higher shell
 
egg prices
 
as the
 
average cost
 
per dozen
 
of outside
 
egg
purchases
 
increased
 
71.5%
 
compared
 
to
 
first
 
quarter
 
of
 
fiscal
 
2024,
 
as
 
well
 
as
 
an
 
increase
 
of
 
67.5%
 
in
 
dozens
purchased due to the loss of
 
production caused by the HPAI
 
outbreaks
 
at our facilities in Kansas and Texas
 
in the third
and fourth quarters of fiscal 2024.
GROSS PROFIT
 
Gross profit, as a percentage of net sales, was 31.5% for the first quarter
 
of fiscal 2025 compared to 9.9% for the same period of
fiscal 2024.
 
The increase was
 
primarily due to
 
higher net average
 
selling price as
 
well as lower
 
feed ingredient prices,
 
partially
offset by the increase in volume and price of outside egg purchases
 
.
SELLING, GENERAL, AND ADMINISTRATIVE
 
EXPENSES
Selling,
 
general,
 
and
 
administrative
 
(“SGA”)
 
expenses
 
include
 
costs
 
of
 
delivery,
 
marketing,
 
and
 
other
 
general
 
and
administrative expenses.
 
Delivery expense includes
 
contract trucking
 
expense and
 
all costs to
 
maintain and operate
 
our fleet of
trucks to
 
deliver products
 
to customers
 
including the
 
related payroll
 
expenses. Marketing
 
expense includes
 
franchise fees
 
that
are
 
submitted
 
to
 
Eggland’s
 
Best,
 
Inc.
 
to
 
support
 
the
 
EB brand,
 
brokerage
 
and
 
commission
 
fees,
 
and
 
other
 
general
 
marketing
expenses
 
such
 
as
 
payroll
 
expenses
 
for
 
our
 
in-house
 
sales
 
team.
 
Other
 
general
 
and
 
administrative
 
expenses
 
include
 
corporate
payroll
 
related
 
expenses
 
and
 
other
 
general
 
corporate
 
overhead
 
costs.
 
The
 
following
 
table
 
presents
 
an
 
analysis
 
of
 
our
 
SGA
expenses (in thousands):
Thirteen Weeks
 
Ended
August 31, 2024
September 2, 2023
$ Change
% Change
Delivery expense
$
21,064
$
17,691
$
3,373
19.1
%
Marketing expense
14,352
12,463
1,889
15.2
%
Other general and administrative expenses
26,516
22,092
4,424
20.0
%
Total
$
61,932
$
52,246
$
9,686
18.5
%
First Quarter – Fiscal 2025
 
vs. Fiscal 2024
Delivery expense
-
The
 
increased
 
delivery
 
expense
 
is
 
primarily
 
due
 
to
 
an
 
increase
 
in
 
dozens
 
sold
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025
compared to the first quarter of fiscal 2024.
Marketing expense
-
The
 
increase
 
in
 
marketing
 
expense
 
is
 
primarily
 
due
 
to
 
an
 
increase
 
in
 
franchise
 
fees
 
as
 
specialty
 
egg
 
sales
 
increased
compared to the first quarter of fiscal 2024.
Other general and administrative expense
-
The increase
 
in other
 
general and
 
administrative
 
expense
 
is primarily
 
due
 
to costs
 
associated
 
with the
 
acquisition
 
of
ISE assets that occurred during the first quarter of fiscal 2025 as well as an increase
 
in insurance costs.
OPERATING
 
INCOME (LOSS)
For
 
the
 
first
 
quarter
 
of
 
fiscal
 
2025,
 
we
 
recorded
 
operating
 
income
 
of
 
$187.0
 
million
 
compared
 
to
 
an
 
operating
 
loss
 
of
 
$6.8
million for the same period of fiscal 2024.
OTHER INCOME (EXPENSE)
 
Total
 
other
 
income
 
(expense)
 
consists
 
of
 
items
 
not
 
directly
 
charged
 
or
 
related
 
to
 
operations,
 
such
 
as
 
interest
 
income
 
and
expense, equity in income or loss of unconsolidated
 
entities, and patronage income, among other items. Patronage
 
dividends are
paid to us from our membership in the EB cooperative.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
For the
 
first quarter
 
of fiscal
 
2025,
 
we earned
 
$9.9 million
 
of interest
 
income compared
 
to $7.5
 
million for
 
the same
 
period of
fiscal 2024,
 
primarily due to higher average
 
cash and cash equivalents and
 
investment securities available-for-sale balances
 
and
yields.
 
The
 
Company
 
recorded
 
interest
 
expense
 
of
 
$160
 
thousand
 
and
 
$142
 
thousand
 
for the
 
first
 
quarters
 
ended
 
August
 
31,
2024 and September 2, 2023, respectively.
INCOME TAXES
For the
 
first quarter
 
of fiscal
 
2025, our
 
pre-tax income
 
was $198.0
 
million, compared
 
to $733
 
thousand for
 
the first
 
quarter of
fiscal 2024.
 
Income tax
 
expense of
 
$48.4 million
 
was recorded
 
for first
 
quarter 2025
 
with an
 
effective
 
tax rate
 
of 24.4%.
 
For
first quarter 2024,
 
income tax expense
 
was $322 thousand
 
with an effective
 
tax rate of
 
43.9%. The higher
 
effective tax
 
rate for
first quarter
 
of fiscal
 
2024 is
 
primarily
 
due to
 
the loss
 
attributable
 
to our
 
noncontrolling interest.
 
Taxable
 
income for
 
the
 
first
quarter
 
of fiscal
 
2024
 
was $1.2
 
million
 
and
 
excludes
 
the
 
loss attributable
 
to
 
noncontrolling
 
interest
 
of
 
$515
 
thousand,
 
which
represents an effective tax rate of 25.7%.
Items causing
 
our effective
 
tax rate
 
to differ
 
from the
 
federal statutory
 
income tax
 
rate of
 
21% are
 
state income
 
taxes, certain
federal tax
 
credits and
 
certain items included
 
in income or
 
loss for financial
 
reporting purposes that
 
are not included
 
in taxable
income or
 
loss for income
 
tax purposes, including
 
tax exempt interest
 
income, certain
 
nondeductible expenses,
 
and net income
or loss attributable to noncontrolling interest.
NET INCOME ATTRIBUTABLE
 
TO CAL-MAINE FOODS, INC.
Net income
 
attributable to
 
Cal-Maine Foods,
 
Inc. for
 
the first quarter
 
ended August
 
31, 2024
 
was $150.0
 
million, or
 
$3.08 per
basic and $3.06
 
per diluted common
 
share, compared to
 
net income attributable
 
to Cal-Maine Foods,
 
Inc. of $926
 
thousand, or
$0.02 per basic and diluted common share, for the same period of fiscal
 
2024.
LIQUIDITY AND CAPITAL
 
RESOURCES
 
Working
 
Capital and Current Ratio
Our working capital was $1.0 billion
 
at both August 31, 2024 and June 1, 2024.
 
The calculation of working capital is defined
 
as
current
 
assets
 
less
 
current
 
liabilities.
 
Our
 
current
 
ratio
 
was
 
4.1
 
at
 
August
 
31,
 
2024,
 
compared
 
with
 
5.5
 
at
 
June
 
1,
 
2024.
 
The
current ratio is calculated by dividing current assets by current liabilities.
Cash Flows from Operating Activities
For
 
the thirteen
 
weeks
 
ended August
 
31, 2024,
 
$117.5
 
million
 
in net
 
cash
 
was
 
provided by
 
operating
 
activities,
 
compared
 
to
$23.7
 
million
 
provided
 
by
 
operating
 
activities
 
for
 
the
 
comparable
 
period
 
in
 
fiscal
 
2024.
 
The
 
increase
 
in
 
cash
 
flow
 
from
operating activities
 
resulted primarily
 
from higher
 
net average
 
selling prices
 
per dozen
 
as well
 
as a
 
decrease in
 
feed ingredient
costs compared to the prior-year period.
Cash Flows from Investing Activities
For the thirteen
 
weeks ended August
 
31, 2024,
 
$135.9 million
 
was used in
 
investing activities, primarily
 
due to the
 
acquisition
of
 
assets
 
of
 
ISE,
 
and
 
purchases
 
of
 
property,
 
plant
 
and
 
equipment.
 
This
 
compares
 
to
 
$80.9
 
million
 
provided
 
by
 
investing
activities in
 
the same
 
period of
 
fiscal 2024,
 
primarily due
 
to sales and
 
maturities of
 
investment securities.
 
Sales and
 
maturities
of investment
 
securities were
 
$209.7 million
 
in first
 
quarter of
 
fiscal 2025
 
and purchases
 
of investment
 
securities were
 
$202.2
million during the period. Sales and maturities of investment
 
securities were $135.8 million in the first quarter fiscal
 
2024
 
while
purchases
 
of
 
investment
 
securities
 
were
 
$28.3
 
million
 
during
 
the
 
period.
 
The
 
increase
 
in
 
sales
 
and
 
maturities
 
of
 
investment
securities is primarily due
 
to the maturities of short-term
 
investments during first quarter 2025.
 
Purchases of property,
 
plant and
equipment were
 
$35.8 million
 
and $26.7
 
million in the
 
first quarters
 
of fiscal
 
2025 and
 
2024, respectively,
 
primarily reflecting
progress on our construction projects.
Cash Flows from Financing Activities
We
 
paid dividends of $37.8
 
million for the thirteen
 
weeks ended August 31,
 
2024 compared to $37.0
 
million in the same
 
prior-
year period.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
As of
 
August 31,
 
2024,
 
cash decreased
 
$56.2 million
 
since June
 
1, 2024,
 
compared to
 
an increase
 
of $67.5
 
million during
 
the
same period
 
of fiscal
 
2024.
 
The decrease
 
is primarily
 
due
 
to the
 
acquisition
 
of assets
 
of
 
ISE during
 
the first
 
quarter of
 
fiscal
2025.
Credit Facility
We
 
had
 
no long-term
 
debt outstanding
 
at August
 
31, 2024
 
or June
 
1, 2024.
 
On November
 
15, 2021,
 
we entered
 
into a
 
credit
agreement
 
that
 
provides
 
for
 
a
 
senior
 
secured
 
revolving
 
credit facility
 
(the
 
“Credit
 
Facility”),
 
in
 
an
 
initial
 
aggregate
 
principal
amount
 
of
 
up
 
to
 
$250
 
million
 
with
 
a
 
five-year
 
term.
 
As
 
of
 
August
 
31,
 
2024,
 
no
 
amounts
 
were
 
borrowed
 
under
 
the
 
Credit
Facility. We
 
have $4.7 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 2024
 
Annual Report for further information regarding our long-term debt.
Dividends
In
 
accordance
 
with
 
our
 
variable
 
dividend
 
policy,
 
we
 
will
 
pay
 
a
 
cash
 
dividend
 
totaling
 
approximately
 
$50.0
 
million,
 
or
approximately
 
$1.019 per
 
share, to
 
holders of
 
our Common
 
Stock and
 
Class A
 
Common Stock
 
with respect
 
to our
 
first fiscal
quarter
 
of
 
2025.
 
The
 
amount
 
paid
 
per
 
share
 
will
 
vary
 
based
 
on
 
the
 
number
 
of
 
outstanding
 
shares
 
on
 
the
 
record
 
date.
 
The
dividend is payable on November 14, 2024 to holders of record on October 30,
 
2024.
 
Material Cash Requirements
Material cash
 
requirements for
 
operating activities
 
primarily consist
 
of feed
 
ingredients, processing,
 
packaging and
 
warehouse
costs, employee related
 
costs, and other
 
general operating expenses,
 
which we expect
 
to be paid
 
from our cash
 
from operations
and cash and
 
investment securities on
 
hand for at
 
least the next
 
12 months. While
 
volatile egg prices
 
and feed ingredient
 
costs,
among
 
other
 
things,
 
make
 
long-term
 
predictions
 
difficult,
 
we
 
have
 
substantial
 
liquid
 
assets
 
and
 
availability
 
under
 
our
 
Credit
Facility to fund future operating requirements.
Our material
 
cash requirements
 
for capital
 
expenditures consist
 
primarily of
 
our construction
 
projects to increase
 
our cage-free
production
 
capacity.
 
We
 
continue
 
to
 
monitor
 
the
 
increasing
 
demand
 
for
 
cage-free
 
eggs and
 
to
 
engage
 
with
 
our
 
customers
 
in
efforts
 
to
 
achieve
 
a smooth
 
transition
 
toward
 
their
 
announced
 
timelines
 
for
 
cage-free
 
egg
 
sales. The
 
following
 
table presents
material construction projects approved as of August 31, 2024 (in
 
thousands):
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of August
31, 2024
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2025
$
81,429
$
73,945
$
7,484
Dexter, MO Processing and Hatchery
 
Renovations
Fiscal 2025
6,204
4,704
1,500
Feed Mills
Fiscal 2026
16,593
4,565
12,028
Cage-Free Layer & Pullet Houses
Fiscal 2026
135,905
115,420
20,485
$
240,131
$
198,634
$
41,497
We believe our
 
current cash balances, investments, projected cash flows from operations, and available
 
borrowings under our
Credit Facility will be sufficient to fund our capital expenditure
 
cash needs for at least the next 12 months and to fund our
capital commitments currently in place thereafter.
 
IMPACT OF
 
RECENTLY
 
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
 
information
 
on
 
changes
 
in
 
accounting
 
principles
 
and
 
new
 
accounting
 
policies,
 
see
 
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly
 
Report.
CRITICAL ACCOUNTING ESTIMATES
 
Critical accounting
 
estimates
 
are those
 
estimates
 
made
 
in accordance
 
with U.S.
 
generally
 
accepted
 
accounting
 
principles that
involve
 
a
 
significant
 
level
 
of
 
estimation
 
uncertainty
 
and
 
have
 
had
 
or
 
ar