10-Q 1 calm2023q1.htm FORM 10-Q calm2023q1
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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 27, 2022
 
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
44,135,851
 
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 September 27, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 27, 2022
May 28, 2022
Assets
Current assets:
Cash and cash equivalents
$
136,021
$
59,084
Investment securities available-for-sale
145,784
115,429
Trade and other receivables, net
178,217
177,257
Income tax receivable
42,147
42,147
Inventories
265,754
263,316
Prepaid expenses and other current assets
10,965
4,286
Total current
 
assets
778,888
661,519
Property, plant &
 
equipment, net
688,656
677,796
Investments in unconsolidated entities
15,674
15,530
Goodwill
44,006
44,006
Intangible assets, net
17,592
18,131
Other long-term assets
9,913
10,507
Total Assets
$
1,554,729
$
1,427,489
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
188,689
$
148,018
Dividends payable
41,742
36,656
Total current
 
liabilities
230,431
184,674
Other noncurrent liabilities
9,706
10,274
Deferred income taxes, net
126,629
128,196
Total liabilities
366,766
323,144
Commitments and contingencies - see Note 11
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
69,017
67,989
Retained earnings
1,149,399
1,065,854
Accumulated other comprehensive loss, net of tax
(2,350)
(1,596)
Common stock in treasury at cost –
26,125
 
shares at August 27, 2022 and
26,121
 
shares
at May 28, 2022
(28,495)
(28,447)
Total Cal-Maine Foods,
 
Inc. stockholders’ equity
1,188,322
1,104,551
Noncontrolling interest in consolidated entity
(359)
(206)
Total stockholders’
 
equity
1,187,963
1,104,345
Total Liabilities and Stockholders’
 
Equity
$
1,554,729
$
1,427,489
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Net sales
$
658,344
$
324,986
Cost of sales
440,854
318,341
Gross profit
217,490
6,645
Selling, general and administrative
53,607
46,525
(Gain) loss on disposal of fixed assets
33
(213)
Operating income (loss)
163,850
(39,667)
Other income (expense):
Interest income, net
903
232
Royalty income
428
273
Equity income of unconsolidated entities
144
135
Other, net
155
5,163
Total other income, net
1,630
5,803
Income (loss) before income taxes
165,480
(33,864)
Income tax expense (benefit)
40,346
(15,838)
Net income (loss)
125,134
(18,026)
Less: Loss attributable to noncontrolling interest
(153)
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
125,287
$
(18,026)
Net income (loss) per common share:
Basic
$
2.58
$
(0.37)
Diluted
$
2.57
$
(0.37)
Weighted average
 
shares outstanding:
Basic
48,623
48,858
Diluted
48,811
48,858
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income (Loss)
(In thousands)
(Unaudited)
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Net income (loss)
$
125,134
 
$
 
(18,026)
Other comprehensive income (loss), before tax:
Unrealized holding loss on available-for-sale securities, net of reclassification
adjustments
(997)
(224)
Income tax benefit related to items of other comprehensive income
243
54
Other comprehensive loss, net of tax
(754)
(170)
Comprehensive income (loss)
124,380
(18,196)
Less: Comprehensive loss attributable to the noncontrolling interest
(153)
Comprehensive income (loss) attributable to Cal-Maine Foods, Inc.
$
124,533
$
(18,196)
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 27, 2022
August 28, 2021
Cash flows from operating activities:
Net income (loss)
$
125,134
$
(18,026)
Depreciation and amortization
17,312
17,389
Deferred income taxes
(1,324)
(15,838)
Other adjustments, net
31,690
(7,637)
Net cash provided by (used in) operations
172,812
(24,112)
Cash flows from investing activities:
Purchases of investment securities
(51,834)
(1,388)
Sales and maturities of investment securities
20,296
39,388
Distributions from unconsolidated entities
400
Acquisition of business, net of cash acquired
(44,823)
Purchases of property,
 
plant and equipment
(27,662)
(11,233)
Net proceeds from disposal of property,
 
plant and equipment
78
1,171
Net cash used in investing activities
(59,122)
(16,485)
Cash flows from financing activities:
Payments of dividends
(36,653)
Purchase of common stock by treasury
(45)
(18)
Principal payments on finance lease
(55)
(53)
Net cash used in financing activities
(36,753)
(71)
Net change in cash and cash equivalents
76,937
(40,668)
Cash and cash equivalents at beginning of period
59,084
57,352
Cash and cash equivalents at end of period
$
136,021
$
16,684
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 May 28,
 
2022 (the
“2022
 
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 27, 2022
and August 28, 2021 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
Our investment
 
securities are
 
accounted
 
for in
 
accordance with
 
ASC 320,
 
“Investments -
 
Debt and
 
Equity Securities”
 
(“ASC
320”).
 
The
 
Company
 
considers
 
all
 
its
 
debt
 
securities
 
for
 
which
 
there
 
is
 
a
 
determinable
 
fair
 
market
 
value,
 
and
 
there
 
are
 
no
restrictions
 
on
 
the
 
Company's
 
ability
 
to
 
sell
 
within
 
the
 
next
 
12
 
months,
 
as
 
available-for-sale.
 
We
 
classify
 
these
 
securities
 
as
current, because the
 
amounts invested are available
 
for current operations.
 
Available-for-sale
 
securities are carried at
 
fair value,
with unrealized
 
gains and
 
losses reported
 
as a
 
separate
 
component
 
of stockholders’
 
equity.
 
The Company
 
regularly
 
evaluates
changes to
 
the rating of
 
its debt securities
 
by credit
 
agencies and economic
 
conditions to assess
 
and record
 
any expected credit
losses through
 
the 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
 
Operations.
 
Investments
 
in
 
mutual
 
funds
 
are
 
classified
 
as
 
“Other
 
long-term
 
assets”
 
in
 
the
 
Company’s
 
Condensed
Consolidated Balance Sheets.
Trade Receivables
 
Trade receivables
 
are stated at
 
their carrying
 
values, which
 
include a reserve
 
for credit losses.
 
As of August
 
27, 2022
 
and May
28,
 
2022,
 
reserves
 
for
 
credit
 
losses
 
were
 
$
716
 
thousand
 
and
 
$
775
 
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.
Immaterial Error Correction
Effective
 
on
 
May
 
30,
 
2021,
 
the
 
Company
 
acquired
 
the
 
remaining
50
%
 
membership
 
interest
 
in
 
Red
 
River
 
Valley
 
Egg
 
Farm,
LLC (“Red
 
River”),
 
including
 
certain
 
liabilities. During
 
the Company’s
 
third
 
quarter of
 
fiscal 2022,
 
management
 
determined
that
 
it
 
had
 
not
 
properly
 
eliminated
 
select
 
intercompany
 
sales
 
and
 
cost
 
of
 
sales
 
transactions
 
between
 
Red
 
River
 
and
 
the
corresponding
 
other wholly
 
-owned subsidiaries
 
of the
 
Company
 
in its
 
first and
 
second quarter
 
2022 Condensed
 
Consolidated
Statements
 
of
 
Operations.
 
The
 
errors
 
resulted
 
in
 
an
 
overstatement
 
of
 
Net
 
Sales and
 
Cost of
 
Sales
 
of
 
$
6.7
 
million
 
in the
 
first
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
quarter of fiscal 2022
 
and $
9.2
 
million in the second
 
quarter of fiscal 2022.
 
There was
no
 
impact to Operating
 
loss, Net income
(loss) or Net income (loss) per share.
We
 
evaluated
 
the
 
errors
 
quantitatively
 
and
 
qualitatively
 
in
 
accordance
 
with
 
Staff
 
Accounting
 
Bulletin
("SAB") No. 99 Materiality,
 
and
 
SAB No. 108 Considering
 
the
 
Effects
 
of
 
Prior
 
Year
 
Misstatements
 
when
 
Quantifying
Misstatements
 
in
 
the
 
Current
 
Year
 
Financial
 
Statements, and
 
determined
 
that
 
the
 
related
 
impact
 
was not material
 
to
 
our
condensed
 
consolidated
 
financial statements
 
for
 
the first
 
or second
 
quarters
 
of fiscal
 
2022,
 
but that
 
correcting
 
the cumulative
impact
 
of
 
the
 
errors
 
would
 
be
 
relevant
 
to
 
our
 
Condensed
 
Consolidated
 
Statements
 
of
 
Operations
 
for
 
the third
 
quarter
ended February
 
26,
 
2022. Accordingly,
 
we
 
have
 
reflected
 
the
 
correction
 
of
 
the
 
immaterial
 
error
 
for
 
the
 
first
 
quarter
 
of
 
fiscal
2022 as a reduction of Net Sales and Cost of Sales in the accompanying Condensed
 
Consolidated Statements of Operations.
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 - Investment
Securities
The following represents the Company’s
 
investment securities as of August 27, 2022 and May 28, 2022 (in
 
thousands):
August 27, 2022
Amortized
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
15,032
$
$
155
$
14,877
Commercial paper
15,936
53
15,883
Corporate bonds
81,711
1,237
80,474
Certificates of deposits
3,263
48
3,215
US government and agency obligations
8,190
87
8,103
Asset backed securities
15,620
227
15,393
Treasury bills
7,870
31
7,839
Total current
 
investment securities
$
147,622
$
$
1,838
$
145,784
Mutual funds
$
3,467
$
$
130
$
3,337
Total noncurrent
 
investment securities
$
3,467
$
$
130
$
3,337
May 28, 2022
Amortized
 
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
10,136
$
$
32
$
10,104
Commercial paper
14,940
72
14,868
Corporate bonds
74,167
483
73,684
Certificates of deposits
1,263
18
1,245
US government and agency obligations
2,205
4
2,209
Asset backed securities
13,456
137
13,319
Total current
 
investment securities
$
116,167
$
4
$
742
$
115,429
Mutual funds
$
3,826
$
$
74
$
3,752
Total noncurrent
 
investment securities
$
3,826
$
$
74
$
3,752
Available-for-sale
Proceeds from
 
sales and
 
maturities of
 
investment securities
 
available-for-sale
 
were $
20.3
 
million and
 
$
39.4
 
million during
 
the
thirteen
 
weeks
 
ended August
 
27,
 
2022
 
and
 
August
 
28,
 
2021,
 
respectively.
 
Gross
 
realized
 
gains
 
for
 
the
 
thirteen
 
weeks
 
ended
August 27, 2022
 
and August 28,
 
2021 were $
2
 
thousand and $
127
 
thousand, respectively.
 
Gross realized
 
losses for the thirteen
weeks
 
ended
 
August
 
27,
 
2022
 
and
 
August
 
28,
 
2021
 
were
 
$
27
 
thousand
 
and
 
$
60
 
thousand,
 
respectively.
 
There
 
were
no
allowances
 
for credit losses at August 27, 2022 and May 28, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
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
 
27, 2022 are as follows (in thousands):
Estimated Fair Value
Within one year
$
64,148
1-5 years
81,636
Total
$
145,784
Noncurrent
 
There were
no
 
sales of noncurrent
 
investment securities during
 
the thirteen weeks
 
ended August 27,
 
2022. Proceeds from
 
sales
and maturities of noncurrent
 
investment securities were $
385
 
thousand during the thirteen
 
weeks ended August 28, 2021.
 
Gross
realized gains for
 
the thirteen weeks
 
ended August 28, 2021
 
were $
130
 
thousand. There were
no
 
realized losses for
 
the thirteen
weeks ended August 28, 2021.
Note 3 - Fair Value
 
Measurements
The Company
 
is required
 
to categorize
 
both financial
 
and nonfinancial
 
assets and
 
liabilities based
 
on the
 
following fair
 
value
hierarchy. The
 
fair value
 
of an
 
asset is
 
the price
 
at which
 
the asset
 
could be
 
sold in
 
an orderly
 
transaction between
 
unrelated,
knowledgeable, and willing
 
parties able to engage in
 
the transaction. A liability’s
 
fair value is defined
 
as the amount that would
be
 
paid
 
to
 
transfer
 
the
 
liability
 
to
 
a
 
new
 
obligor
 
in
 
a
 
transaction
 
between
 
such
 
parties,
 
not
 
the
 
amount
 
that
 
would
 
be paid
 
to
settle the liability with the creditor.
Level 1
 
- Quoted prices in active markets for identical assets or liabilities
Level 2
 
- Inputs
 
other than
 
quoted
 
prices included
 
in Level
 
1 that
 
are observable
 
for the
 
asset or
 
liability,
 
either
directly or indirectly,
 
including:
Quoted prices for similar assets or liabilities in active markets
Quoted prices for identical or similar assets in non-active markets
Inputs other than quoted prices that are observable for the asset or liability
Inputs derived principally from or corroborated by other observable market
 
data
Level 3
 
- Unobservable inputs for the asset or liability that are
 
supported by little or no market activity and that
 
are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
 
at cost are as follows:
Cash and cash equivalents, accounts receivable,
 
and accounts payable:
 
The carrying amount approximates fair value due to the
short maturity of these instruments.
Lease obligations:
 
The carrying value of the Company’s lease obligations
 
is at its present value which approximates fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
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 27, 2022 and May 28,
 
2022 (in thousands):
August 27, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
14,877
$
$
14,877
Commercial paper
15,883
15,883
Corporate bonds
80,474
80,474
Certificates of deposits
3,215
3,215
US government and agency obligations
8,103
8,103
Asset backed securities
15,393
15,393
Treasury bills
7,839
7,839
Mutual funds
3,337
3,337
Total assets measured at fair
 
value
$
3,337
$
145,784
$
$
149,121
May 28, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
10,104
$
$
10,104
Commercial paper
14,868
14,868
Corporate bonds
73,684
73,684
Certificates of deposits
1,245
1,245
US government and agency obligations
2,209
2,209
Asset backed securities
13,319
13,319
Mutual funds
3,752
3,752
Total assets measured at fair
 
value
$
3,752
$
115,429
$
$
119,181
Investment
 
securities
 
 
available-for-sale
 
classified
 
as Level
 
2
 
consist
 
of
 
securities
 
with maturities
 
of
 
three
 
months
 
or longer
when purchased. We
 
classified these securities as
 
current because amounts
 
invested are readily available
 
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Note 4 - Inventories
Inventories consisted of the following as of August 27, 2022 and May 28,
 
2022 (in thousands):
 
August 27, 2022
May 28, 2022
Flocks, net of amortization
$
152,264
$
144,051
Eggs and egg products
24,548
26,936
Feed and supplies
88,942
92,329
$
265,754
$
263,316
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
27, 2022 and May
 
28, 2022 consisted of
 
approximately
11.4
 
million and
11.5
 
million pullets and breeders
 
and
41.1
 
million and
42.2
 
million layers, respectively.
Note 5 - Accrued Dividends Payable and Dividends per Common
 
Share
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.
Following a quarter for which the Company does not report net income
 
attributable to Cal-Maine Foods, Inc., the Company will
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
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. For the first
 
quarter of fiscal 2023, we will pay a cash dividend of
approximately $
0.853
 
per share to holders of our Common Stock and Class A Common Stock.
 
On our
 
Condensed Consolidated
 
Statements of
 
Operations, we
 
determine dividends
 
per common
 
share in
 
accordance with
 
the
computation in the following table (in thousands, except per share data):
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
125,287
$
(18,026)
Cumulative loss to be recovered prior to payment of divided at beginning of period
(4,244)
Net income available for dividend
$
125,287
$
1/3 of net income attributable to Cal-Maine Foods, Inc. available for dividend
41,762
Common stock outstanding (shares)
44,136
44,057
Class A common stock outstanding (shares)
4,800
4,800
Total common stock
 
outstanding (shares)
48,936
48,857
Dividends per common share*
$
0.853
$
*Dividends
 
per
 
common
 
share
 
=
1/3
 
of
 
Net
 
income
 
attributable
 
to
 
Cal-Maine
 
Foods,
 
Inc.
 
available
 
for
 
dividend
 
÷
 
Total
 
common
 
stock
outstanding (shares).
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended
 
August 27, 2022 and August 28, 2021 (in thousands):
Thirteen Weeks
 
Ended August 27, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 28,
2022
$
703
$
48
$
(28,447)
$
67,989
$
(1,596)
$
1,065,854
$
(206)
$
1,104,345
Other comprehensive
loss, net of tax
(754)
(754)
Stock compensation
plan transactions
(48)
1,028
980
Dividends
(41,742)
(41,742)
Net income (loss)
125,287
(153)
125,134
Balance at August
27, 2022
$
703
$
48
$
(28,495)
$
69,017
$
(2,350)
$
1,149,399
$
(359)
$
1,187,963
Thirteen Weeks
 
Ended August 28, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Total
Balance at May 29, 2021
$
703
$
48
$
(27,433)
$
64,044
$
(558)
$
975,977
$
1,012,781
Other comprehensive loss, net of tax
(170)
(170)
Stock compensation plan transactions
(18)
1,000
982
Net loss
(18,026)
(18,026)
Balance at August 28, 2021
$
703
$
48
$
(27,451)
$
65,044
$
(728)
$
957,951
$
995,567
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Note 7 - Net Income (Loss) per Common Share
 
Basic net
 
income (loss)
 
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.
 
Restricted
 
shares
 
of
131
 
thousand
 
were
 
antidilutive
 
due
 
to
 
the net
 
loss for
 
the first
quarter of fiscal 2022. These shares were not included in the diluted net
 
loss per share calculation.
The
 
following
 
table
 
provides
 
a
 
reconciliation
 
of
 
the
 
numerators
 
and
 
denominators
 
used
 
to
 
determine
 
basic
 
and
 
diluted
 
net
income (loss) per common share (amounts in thousands, except per share data):
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Numerator
Net income (loss)
$
125,134
$
(18,026)
Less: Loss attributable to noncontrolling interest
(153)
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
125,287
$
(18,026)
Denominator
Weighted-average
 
common shares outstanding, basic
48,623
48,858
Effect of dilutive restricted shares
188
Weighted-average
 
common shares outstanding, diluted
48,811
48,858
Net income (loss) per common share attributable to Cal-Maine Foods,
 
Inc.
Basic
$
2.58
$
(0.37)
Diluted
$
2.57
$
(0.37)
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
 
at
 
prices
 
related
 
to
 
independently
 
quoted
 
wholesale
 
market
 
prices
 
or
 
formulas
 
related
 
to
 
our
 
costs
 
of
production.
 
The
 
Company’s
 
sales
 
predominantly
 
contain
 
a
 
single
 
performance
 
obligation.
 
We
 
recognize
 
revenue
 
upon
satisfaction
 
of
 
the
 
performance
 
obligation
 
with
 
the
 
customer
 
which
 
typically
 
occurs
 
within
 
days
 
of
 
the
 
Company
 
and
 
the
customer agreeing upon the order.
Returns and Refunds
Some of our contracts
 
include a guaranteed sale
 
clause, pursuant to which
 
we credit the customer’s
 
account for product
 
that the
customer
 
is
 
unable
 
to
 
sell
 
before
 
expiration.
 
The
 
Company
 
records
 
an
 
allowance
 
for
 
returns
 
and
 
refunds
 
by
 
using
 
historical
return
 
data
 
and
 
comparing
 
to current
 
period
 
sales and
 
accounts receivable.
 
The allowance
 
is recorded
 
as a
 
reduction
 
in sales
with a corresponding reduction in trade accounts receivable.
Sales Incentives Provided to Customers
The
 
Company
 
periodically
 
provides
 
incentive
 
offers
 
to
 
its
 
customers
 
to
 
encourage
 
purchases.
 
Such
 
offers
 
include
 
current
discount offers
 
(e.g., percentage
 
discounts off
 
current purchases), inducement
 
offers (e.g.,
 
offers for
 
future discounts subject
 
to
a minimum
 
current purchase),
 
and other
 
similar offers.
 
Current discount
 
offers,
 
when accepted
 
by customers,
 
are treated
 
as a
reduction
 
to
 
the sales
 
price
 
of the
 
related
 
transaction,
 
while inducement
 
offers,
 
when
 
accepted
 
by customers,
 
are
 
treated
 
as
 
a
reduction
 
to the
 
sales price
 
based on
 
estimated future
 
redemption rates.
 
Redemption
 
rates are
 
estimated using
 
the Company’s
historical
 
experience
 
for
 
similar
 
inducement
 
offers.
 
Current discount
 
and
 
inducement
 
offers
 
are
 
presented
 
as a
 
net amount
 
in
‘‘Net sales.’’
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
 
(in thousands):
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Conventional shell egg sales
$
425,589
$
182,030
Specialty shell egg sales
200,820
132,458
Egg products
27,640
9,366
Other
4,295
1,132
$
658,344
$
324,986
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 August
 
27,
 
2022 and
 
May 28,
 
2022,
 
the balance
 
for
contract assets is 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 $
1.0
 
million for the thirteen weeks ended August 27, 2022 and August 28, 2021.
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 27, 2022 of $
5.9
 
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
 
16:
Stock Compensation Plans in our 2022 Annual Report for further information
 
on our stock compensation plans.
The Company’s restricted share activity
 
for the thirteen weeks ended August 27, 2022 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, May 28, 2022
317,844
$
39.12
Vested
(3,240)
38.31
Forfeited
(2,778)
39.48
Outstanding, August 27, 2022
311,826
$
39.12
Note 10 – Income Taxes
 
For
 
the
 
first
 
quarters
 
of
 
fiscal
 
2023
 
and
 
2022,
 
the
 
Company
 
recorded
 
income
 
tax
 
expense
 
of
 
$
40.3
 
million
 
and
 
income
 
tax
benefit of $
15.8
 
million which reflects
 
an effective
 
tax rate of
24.4
% and
46.8
%, respectively.
 
Excluding the impact
 
of discrete
items
 
related
 
to
 
an
 
$
8.3
 
million
 
net
 
tax
 
benefit
 
recorded
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2022
 
in
 
connection
 
with
 
the
 
Red
 
River
Valley
 
Egg Farm, LLC acquisition, the adjusted effective
 
tax rate for the first quarter of fiscal 2022 is
22.4
%.
 
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
 
in
 
income
 
for
 
financial
 
reporting
 
purposes
 
that
 
are
 
not
 
included
 
in
 
taxable
 
income
 
for
 
income
 
tax
purposes,
 
including
 
tax
 
exempt
 
interest
 
income,
 
certain
 
nondeductible
 
expenses
 
and
 
net
 
income
 
or
 
loss
 
attributable
 
to
noncontrolling interest.
 
 
 
 
14
Note 11 - Commitments and Contingencies
Financial Instruments
The Company maintained
 
standby letters of credit
 
(“LOCs”) totaling $
4.1
 
million at August 27,
 
2022, which were issued
 
under
the Company's Credit Facility.
 
The outstanding LOCs are for the
 
benefit of certain insurance companies
 
and are not recorded as
a liability on the consolidated balance sheets.
 
LEGAL PROCEEDINGS
State of Texas
 
v. Cal-Maine Foods, Inc. d/b/a Wharton;
 
and Wharton County Foods, LLC
 
On April
 
23, 2020,
 
the Company
 
and its subsidiary
 
Wharton County
 
Foods, LLC (“WCF”)
 
were named
 
as defendants in
 
State
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
proceedings.
 
The
 
Company
 
and
 
WCF
 
are
 
considering
 
whether
 
to
 
appeal
 
this
 
decision
 
from
 
the
 
First
 
District.
 
Management
believes the risk of material loss related to this matter to be remote.
Bell et al. v. Cal-Maine Foods et al.
 
On
 
April
 
30, 2020,
 
the Company
 
was named
 
as one
 
of several
 
defendants
 
in
 
Bell et
 
al. v.
 
Cal-Maine
 
Foods et
 
al.,
 
Case No.
1:20-cv-461,
 
in
 
the
 
Western
 
District
 
of
 
Texas,
 
Austin
 
Division.
 
The
 
defendants
 
include
 
numerous
 
grocery
 
stores,
 
retailers,
producers, and farms. Plaintiffs assert that defendants
 
violated the DTPA
 
by allegedly demanding exorbitant or
 
excessive prices
for
 
eggs during
 
the
 
COVID-19
 
state of
 
emergency.
 
Plaintiffs
 
request
 
certification
 
of a
 
class of
 
all consumers
 
who purchased
eggs
 
in
 
Texas
 
sold,
 
distributed,
 
produced,
 
or
 
handled
 
by
 
any
 
of
 
the
 
defendants
 
during
 
the
 
COVID-19
 
state
 
of
 
emergency.
Plaintiffs seek to enjoin
 
the Company and other
 
defendants from selling eggs
 
at a price more than
 
10% greater than the price
 
of
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
 
a
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
 
a
 
report
 
and
 
recommendation
 
to
 
the
 
court
 
that
 
the
 
defendants’
 
motion
 
to
 
dismiss
 
be
 
granted
 
and
 
the
 
case
 
be
dismissed without prejudice for lack of subject matter jurisdiction.
 
On September 20, 2021, the court dismissed the case without
prejudice.
 
On
 
July
 
13,
 
2022,
 
the
 
court
 
denied
 
the
 
plaintiffs’
 
motion
 
to
 
set
 
aside
 
or
 
amend
 
the
 
judgment
 
to
 
amend
 
their
complaint.
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.
 
On
 
August
 
12,
 
2022,
 
the
 
Company
 
and
 
other
 
defendants
 
in
 
the
 
case
 
filed
 
a
 
motion
 
to
 
dismiss
 
the
 
plaintiffs’
class action
 
complaint. On
 
September 6,
 
2022, the
 
plaintiffs’ filed
 
their opposition
 
to the
 
motion to
 
dismiss and
 
the Company
and other
 
defendants filed
 
their reply on
 
September 13,
 
2022. The
 
court has not
 
issued a ruling.
 
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
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
 
 
15
Egg
 
Producers,
 
Inc.
 
et
 
al.,
 
Case
 
No.
 
1:11-cv-8808,
 
for
 
trial.
 
The
 
Egg
 
Products
 
Plaintiffs
 
allege
 
that
 
the
 
Company
 
and
 
other
defendants
 
violated
 
Section
 
1
 
of
 
the
 
Sherman
 
Act,
 
15.
 
U.S.C.
 
§
 
1,
 
by
 
agreeing
 
to
 
limit
 
the
 
production
 
of
 
eggs
 
and
 
thereby
illegally to raise the prices that plaintiffs
 
paid for processed egg products. In particular,
 
the Egg Products Plaintiffs are
 
attacking
certain features of
 
the United Egg
 
Producers animal-welfare guidelines
 
and program used by
 
the Company and
 
many other egg
producers. The
 
Egg Products
 
Plaintiffs seek
 
to enjoin
 
the Company
 
and other
 
defendants from
 
engaging in
 
antitrust violations
and seek treble money damages.
 
On May 2, 2022,
 
the court set trial for October
 
24, 2022, but on September
 
20, 2022, the court
cancelled the
 
trial date
 
due to
 
COVID-19 protocols
 
and converted
 
the trial
 
date to
 
a status
 
hearing to
 
reschedule the
 
jury trial.
We anticipate the
 
trial being rescheduled for the first or second calendar quarter of 2023.
 
In addition,
 
on October
 
24, 2019,
 
the Company
 
entered into
 
a confidential
 
settlement agreement
 
with The
 
Kellogg Company
dismissing
 
all
 
claims
 
against
 
the
 
Company
 
for
 
an
 
amount
 
that
 
did
 
not
 
have
 
a
 
material
 
impact
 
on
 
the
 
Company’s
 
financial
condition or results of operations. On November 11,
 
2019, a stipulation for dismissal was filed with the court,
 
and on March 28,
2022, the court dismissed the Company with prejudice.
The Company intends to
 
continue to defend the remaining
 
case with the Egg Products Plaintiffs
 
as vigorously as possible based
on
 
defenses
 
which
 
the
 
Company
 
believes
 
are
 
meritorious
 
and
 
provable.
 
Adjustments,
 
if
 
any,
 
which
 
might
 
result
 
from
 
the
resolution of
 
this remaining
 
matter with
 
the Egg
 
Products Plaintiffs
 
have not
 
been reflected
 
in the
 
financial statements.
 
While
management
 
believes
 
that
 
there
 
is
 
still
 
a
 
reasonable
 
possibility
 
of
 
a
 
material
 
adverse
 
outcome
 
from
 
the
 
case
 
with
 
the
 
Egg
Products Plaintiffs,
 
at the
 
present time,
 
it is not
 
possible to
 
estimate the
 
amount of
 
monetary exposure,
 
if any,
 
to the
 
Company
due
 
to
 
a
 
range
 
of
 
factors,
 
including
 
the
 
following,
 
among
 
others:
 
two
 
earlier
 
trials
 
based
 
on
 
substantially
 
the
 
same
 
facts
 
and
legal arguments
 
resulted
 
in findings
 
of no
 
conspiracy
 
and/or damages;
 
this trial
 
will be
 
before
 
a different
 
judge and
 
jury in
 
a
different
 
court
 
than
 
prior related
 
cases; there
 
are significant
 
factual
 
issues to
 
be
 
resolved; and
 
there
 
are requests
 
for damages
other than compensatory damages (i.e., injunction and treble money damages).
State of Oklahoma Watershed Pollution
 
Litigation
On June 18,
 
2005, the
 
State of
 
Oklahoma filed
 
suit, in
 
the United
 
States District
 
Court for
 
the Northern
 
District of
 
Oklahoma,
against Cal-Maine Foods, Inc. and
 
Tyson Foods,
 
Inc. and affiliates, Cobb-Vantress,
 
Inc., Cargill, Inc. and its
 
affiliate, George’s,
Inc. and
 
its affiliate,
 
Peterson Farms, Inc.
 
and Simmons Foods,
 
Inc. The
 
State of Oklahoma
 
claims that through
 
the disposal of
chicken
 
litter the
 
defendants have
 
polluted the
 
Illinois River
 
Watershed.
 
This watershed
 
provides
 
water to
 
eastern Oklahoma.
The complaint
 
seeks injunctive
 
relief and
 
monetary damages,
 
but the
 
claim for
 
monetary damages
 
has been
 
dismissed by
 
the
court.
 
Cal-Maine
 
Foods,
 
Inc.
 
discontinued
 
operations
 
in
 
the
 
watershed.
 
Accordingly,
 
we
 
do
 
not
 
anticipate
 
that
 
Cal-Maine
Foods,
 
Inc.
 
will
 
be
 
materially
 
affected
 
by
 
the
 
request
 
for
 
injunctive
 
relief
 
unless
 
the
 
court
 
orders
 
substantial
 
affirmative
remediation. Since
 
the litigation
 
began, Cal-Maine
 
Foods, Inc.
 
purchased
100
% of the
 
membership interests
 
of Benton
 
County
Foods, LLC,
 
which is
 
an ongoing
 
commercial shell
 
egg operation
 
within the
 
Illinois River
 
Watershed.
 
Benton County
 
Foods,
LLC is not a defendant in the litigation.
The trial in the case
 
began in September 2009 and
 
concluded in February 2010. The
 
case was tried without a jury,
 
and the court
has not yet issued its ruling. Management believes the risk of material loss related
 
to this matter to be remote.
Other Matters
In addition to
 
the above, the Company
 
is involved in
 
various other claims
 
and litigation incidental
 
to its business. Although
 
the
outcome of
 
these matters
 
cannot be
 
determined with
 
certainty,
 
management, upon
 
the advice
 
of counsel,
 
is of
 
the opinion
 
that
the final outcome should not have a material effect on the Company’s
 
consolidated results of operations or financial position.
16
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 May
 
28, 2022
(the “2022 Annual Report”), and the accompanying financial statements and
 
notes included in Part II Item 8 of the 2022 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
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
 
COVID-19
 
pandemic,
 
potential
 
future
 
impact
 
on
 
our
 
business
 
of
 
new
 
legislation,
 
rules
 
or
 
policies,
 
potential
outcomes
 
of
 
legal
 
proceedings,
 
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 of
 
the 2022
Annual
 
Report
 
(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
 
highly
 
pathogenic
 
avian
 
influenza
 
(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, (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
 
the
 
evolving
 
COVID-19
 
pandemic,
 
including
 
without
 
limitation
 
increased
 
costs
 
and
 
rising
 
inflation
 
and
 
interest
rates, which
 
generally have been
 
exacerbated by Russia’s
 
invasion of Ukraine
 
starting February 2022,
 
(vii) our ability
 
to retain
existing
 
customers,
 
acquire
 
new
 
customers
 
and
 
grow
 
our
 
product
 
mix
 
and
 
(viii)
 
adverse
 
results
 
in
 
pending
 
litigation
matters. 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
 
under
 
one
 
operating
 
segment.
 
We
 
are
 
the
largest producer
 
and distributor
 
of fresh
 
shell eggs
 
in the
 
United States
 
(“U.S.”).
 
Our total flock
 
of approximately
 
41.1 million
layers
 
and
 
11.4
 
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
 
in
the U.S., food
 
service distributors, and
 
egg product consumers
 
in states across
 
the southwestern, southeastern,
 
mid-western and
mid-Atlantic regions of the U.S.
Our
 
operating
 
results
 
are
 
materially
 
impacted
 
by
 
market
 
prices for
 
eggs
 
and
 
feed
 
grains
 
(corn
 
and
 
soybean
 
meal),
 
which
 
are
highly
 
volatile,
 
independent
 
of
 
each
 
other,
 
and
 
out
 
of
 
our
 
control.
 
Generally,
 
higher
 
market
 
prices
 
for
 
eggs
 
have
 
a
 
positive
impact
 
on
 
our
 
financial
 
results
 
while
 
higher
 
market
 
prices
 
for
 
feed
 
grains
 
have
 
a
 
negative
 
impact
 
on
 
our
 
financial
 
results.
Although we
 
use a
 
variety of
 
pricing 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
 
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. 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
17
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
 
and
 
agricultural,
energy and trade policies in the U.S. and internationally
 
and most recently the Russia-Ukraine war.
An important competitive advantage
 
for Cal-Maine Foods is
 
our ability to meet
 
our customers’ evolving needs
 
with a favorable
product
 
mix
 
of
 
conventional
 
and
 
specialty
 
eggs,
 
including
 
cage-free,
 
organic
 
and
 
other
 
specialty
 
offerings,
 
as
 
well
 
as
 
egg
products.
 
We
 
have
 
also
 
enhanced
 
our
 
efforts
 
to
 
provide
 
free-range
 
and
 
pasture-raised
 
eggs
 
that
 
meet
 
consumers’
 
evolving
choice
 
preferences.
 
While
 
a
 
small
 
part
 
of
 
our
 
current
 
business,
 
the
 
free-range
 
and
 
pasture-raised
 
eggs
 
we
 
produce
 
and
 
sell
represent attractive offerings
 
to a subset of
 
consumers,
 
and therefore our customers,
 
and help us continue
 
to serve as the trusted
provider of quality food choices.
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.
HPAI
We
 
are
 
closely
 
monitoring
 
the
 
current
 
outbreak
 
of
 
highly
 
pathogenic
 
avian
 
influenza
 
(“HPAI”),
 
that
 
was
 
first
 
detected
 
in
commercial
 
flocks
 
in
 
the
 
U.S.
 
in
 
February
 
2022
 
and
 
which
 
was
 
most
 
recently
 
detected
 
in
 
commercial
 
flocks
 
in
 
the
 
U.S.
 
in
September
 
2022.
 
According
 
to
 
the
 
U.S.
 
Centers
 
for
 
Disease
 
Control
 
and
 
Prevention,
 
these
 
detections
 
do
 
not
 
present
 
an
immediate
 
public
 
health
 
concern.
 
There
 
have
 
been
 
no
 
positive
 
tests for
 
HPAI
 
at
 
any
 
Cal-Maine
 
Foods’
 
owned
 
or contracted
production
 
facility as
 
of September
 
27, 2022.
 
The USDA
 
division
 
of Animal
 
and Plant
 
Health Inspection
 
Service (“APHIS”)
reported
 
that approximately
 
35.6 million
 
commercial
 
layer hens
 
and 1.0
 
million
 
pullets have
 
been
 
depopulated
 
due
 
to HPAI.
According
 
to
 
APHIS,
 
the
 
most
 
recently
 
reported
 
outbreaks
 
of
 
HPAI
 
affecting
 
commercial
 
layer
 
hens
 
and
 
pullets
 
occurred
September
 
21,
 
2022
 
and
 
June
 
9,
 
2022,
 
respectively.
 
We
 
believe
 
the
 
HPAI
 
outbreak
 
will
 
continue
 
to
 
have
 
an
 
impact
 
on
 
the
overall
 
supply of
 
eggs through
 
the balance
 
of this
 
calendar year
 
and possibly
 
beyond. According
 
to LEAP
 
Market Analytics,
layer hen inventory is not projected to exceed the 320 million mark until October
 
of 2023.
While no
 
farm is
 
immune from
 
HPAI,
 
we believe
 
we have implemented
 
and continue
 
to maintain
 
robust biosecurity
 
programs
across our locations. We
 
are also working closely with federal, state and local government
 
officials and focused industry groups
to mitigate the risk of this and future outbreaks and effectively manage
 
our response, if needed.
CAGE-FREE EGGS
Ten
 
states
 
have
 
passed
 
legislation
 
or
 
regulations
 
mandating
 
minimum
 
space
 
or
 
cage-free
 
requirements
 
for
 
egg
 
production
 
or
mandated
 
the
 
sale
 
of
 
only
 
cage-free
 
eggs
 
and
 
egg
 
products
 
in
 
their
 
states,
 
with
 
implementation
 
of
 
these
 
laws
 
ranging
 
from
January
 
2022
 
to
 
January
 
2026.
 
These
 
states
 
represent
 
approximately
 
27%
 
of
 
the
 
U.S.
 
total
 
population
 
according
 
to
 
the 2020
U.S. Census.
 
In California
 
and Massachusetts,
 
which
 
collectively represent
 
14% of
 
the total
 
U.S. population
 
according to
 
the
2020 U.S. Census,
 
cage-free legislation went
 
into effect January
 
1, 2022. However,
 
these laws are subject
 
to judicial challenge,
and the
 
Supreme Court
 
of the U.S.
 
recently announced
 
that in
 
October 2022
 
it will
 
review a
 
case challenging
 
California’s
 
law
that requires the sale of only
 
cage-free eggs in that state. These laws
 
have already affected and,
 
if upheld, will continue to affect
sourcing,
 
production
 
and
 
pricing
 
of
 
eggs (conventional
 
as well
 
as specialty)
 
as the
 
national
 
demand
 
for
 
cage-free
 
production
could
 
be greater
 
than the
 
current supply,
 
which
 
would increase
 
the price
 
of cage-free
 
eggs, unless
 
more
 
cage-free production
capacity
 
is constructed.
 
Likewise, the
 
national supply
 
for eggs
 
from conventional
 
production
 
could exceed
 
consumer demand
which would decrease the price of conventional eggs.
A significant number
 
of our customers
 
have previously announced
 
goals to offer
 
cage-free eggs exclusively
 
on or before
 
2026,
subject in
 
most cases
 
to availability
 
of supply,
 
affordability and
 
customer demand,
 
among other
 
contingencies. Some
 
of these
customers have
 
recently changed
 
those goals
 
to offer
 
70% cage-free
 
eggs by
 
the end
 
of 2030.
 
Our customers
 
typically do
 
not
commit to long-term
 
purchases of specific quantities
 
or types of eggs
 
with us, and as
 
a result, it is difficult
 
to accurately predict
customer
 
requirements
 
for
 
cage-free
 
eggs.
 
We
 
are,
 
however,
 
engaging
 
with
 
our
 
customers
 
in
 
an
 
effort
 
to
 
achieve
 
a
 
smooth
transition
 
in meeting
 
their announced
 
goals and
 
needs.
 
Sales of
 
cage-free
 
eggs represented
 
approximately
 
19.4% of
 
our shell
egg revenues
 
for the
 
first quarter
 
of fiscal
 
2023.
 
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. At the same
 
time,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
we
 
understand
 
the
 
importance
 
of
 
our
 
continued
 
ability
 
to provide
 
more
 
affordable
 
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
 
2022
 
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.”
EXECUTIVE OVERVIEW
For the first quarter of fiscal
 
2023, we recorded a gross profit of
 
$217.5 million compared to $6.6 million
 
for the same period of
fiscal
 
2022,
 
with
 
the
 
increase
 
due
 
primarily
 
to
 
higher
 
shell
 
egg
 
prices
 
and
 
increased
 
volume
 
of
 
specialty
 
eggs
 
sold,
 
partially
offset by the increased
 
cost of feed ingredients
 
and processing, packaging
 
and warehouse costs. Our
 
total dozens sold increased
8.1% to 275.3
 
million dozen shell
 
eggs for the
 
first quarter of
 
fiscal 2023 compared
 
to 254.6 million
 
dozen for the
 
same period
of fiscal 2022. For the first
 
quarter of fiscal 2023, conventional
 
dozens sold decreased 2.3% and specialty
 
dozens sold increased
35.1% as
 
compared to
 
the same
 
quarter in
 
fiscal 2022.
 
Demand for
 
specialty eggs
 
increased in
 
the first
 
quarter of
 
fiscal 2023
compared to
 
the same prior
 
year period due
 
primarily to the
 
higher prices for
 
conventional eggs.
 
Further,
 
demand for specialty
eggs continued
 
to increase
 
as retailers
 
continued
 
to shift
 
to selling
 
cage-free
 
products
 
and
 
cage-free
 
legislation
 
went into
 
full
effect
 
in
 
California
 
and
 
Massachusetts
 
on
 
January
 
1,
 
2022.
 
We
 
benefited
 
from
 
the
 
strong
 
demand
 
for
 
specialty
 
eggs
 
as
 
we
placed more of our cage-free facilities into production and better utilized
 
our existing cage-free production capacity.
Conventional
 
egg
 
prices
 
increased
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023
 
primarily
 
due
 
to
 
decreased
 
supply
 
caused
 
by
 
the
 
HPAI
outbreak
 
compounded
 
with
 
good
 
customer
 
demand.
 
See
 
the
 
discussion
 
under
 
the
 
heading
 
“HPAI”
 
above.
 
The
 
daily
 
average
price for
 
the UB
 
southeast large
 
index for
 
the first
 
quarter of
 
fiscal 2023
 
increased 133.8%
 
from the
 
comparable period
 
in the
prior
 
year.
 
Our net
 
average
 
selling price
 
per dozen
 
for
 
the first
 
quarter
 
of fiscal
 
2023
 
was $2.275
 
compared
 
to $1.235
 
in
 
the
prior-year period. Layer
 
hen numbers reported
 
by the USDA
 
as of September
 
21, 2022, were
 
305.3 million, which
 
represents a
decrease of
 
4.6% compared
 
with the
 
layer hen
 
inventory a
 
year ago.
 
The USDA
 
also reported
 
that the
 
hatch from
 
April 2022
through
 
August
 
2022
 
decreased
 
0.5%
 
as
 
compared
 
with
 
the
 
prior-year
 
period.
 
As
 
of
 
September
 
1,
 
2022,
 
however,
 
eggs
 
in
incubators were up 9.0% year-over-year,
 
indicating that layer flocks may increase in the future.
Our farm
 
production costs
 
per dozen
 
produced for
 
the first
 
quarter of
 
fiscal 2023
 
increased 16.5%,
 
or $0.148,
 
compared to
 
the
first quarter of fiscal 2022
 
.
 
This increase was primarily
 
due to increased prices for
 
feed ingredients and a higher
 
basis in corn in
most of
 
our production
 
areas.
 
For the
 
first quarter
 
of fiscal
 
2023, the
 
average Chicago
 
Board of
 
Trade (“CBOT”)
 
daily market
price
 
was
 
$6.65
 
per
 
bushel
 
for
 
corn
 
and
 
$456
 
per
 
ton
 
for
 
soybean
 
meal,
 
representing
 
increases
 
of
 
11.5%
 
and
 
25.4%,
respectively, compared
 
to the average daily CBOT prices for the comparable period in the prior
 
year.
RESULTS OF
 
OPERATIONS
The
 
following
 
table
 
sets
 
forth,
 
for
 
the
 
periods
 
indicated,
 
certain
 
items
 
from
 
our
 
Condensed
 
Consolidated
 
Statements
 
of
Operations expressed as a percentage of net sales.
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Net sales
100.0
%
100.0
%
Cost of sales
67.0
%
98.0
%
Gross profit
33.0
%
2.0
%
Selling, general and administrative
8.1
%
14.3
%
(Gain) loss on disposal of fixed assets
%
(0.1)
%
Operating income (loss)
24.9
%
(12.2)
%
Total other income, net
0.2
%
1.8
%
Income (loss) before income taxes
25.1
%
(10.4)
%
Income tax expense (benefit)
6.1
%
(4.9)
%
Net income (loss)
19.0
%
(5.5)
%
NET SALES
Total
 
net sales for
 
the first quarter
 
of fiscal 2023
 
were a record
 
$658.3 million
 
compared to $325.0
 
million for the
 
same period
of fiscal 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19
Net shell
 
egg sales
 
represented 95.8%
 
and 97.1%
 
of total
 
net sales
 
for the
 
first quarters
 
of fiscal
 
2023 and
 
2022, respectively.
Shell egg sales classified
 
as “Other” represent
 
sales of hard-cooked
 
eggs and other
 
miscellaneous byproducts included
 
with our
shell egg operations.
 
The table below presents an analysis of our conventional and specialty shell egg
 
sales (in thousands, except percentage data):
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
Total net sales
$
658,344
$
324,986
Conventional
$
425,589
67.5
%
$
182,030
57.6
%
Specialty
200,820
31.8
%
132,458
42.0
%
Egg sales, net
626,409
99.3
%
314,488
99.6
%
Other
4,295
0.7
%
1,132
0.4
%
Net shell egg sales
$
630,704
100.0
%
$
315,620
100.0
%
Net shell egg sales as a percent of total net sales
95.8
%
97.1
%
Dozens sold:
Conventional
179,712
65.3
%
183,872
72.2
%
Specialty
95,605
34.7
%
70,750
27.8
%
Total dozens sold
275,317
100.0
%
254,622
100.0
%
Net average selling price per dozen:
Conventional
$
2.368
$
0.990
Specialty
$
2.101
$
1.872
All shell eggs
$
2.275
$
1.235
Egg products sales:
 
Egg products net sales
27,640
9,366
Pounds sold
16,502
15,269
Net average selling price per pound
1.675
0.613
Shell egg net sales
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
In the
 
first quarter
 
of fiscal
 
2023,
 
conventional
 
egg sales
 
increased
 
$243.6 million,
 
or 133.8%,
 
compared to
 
the first
quarter of
 
fiscal 2022,
 
primarily due
 
to the
 
increase in
 
price for
 
conventional shell
 
eggs,
 
partially offset
 
by a decrease
in volume of
 
conventional eggs sold.
 
Changes in price
 
resulted in a
 
$247.6 million
 
increase and the
 
change in volume
resulted in a $4.1 million decrease in net sales, respectively.
-
We believe
 
prices for conventional eggs
 
were positively impacted by
 
a better alignment of the
 
size of the conventional
production layer
 
hen flock
 
and customer
 
and consumer
 
demand. Conventional
 
egg prices further
 
increased in
 
the first
quarter of fiscal 2023 primarily due to decreased supply caused by the HPAI
 
outbreak, discussed above.
-
Conventional
 
egg
 
prices
 
generally
 
respond
 
more
 
quickly
 
to
 
market
 
conditions
 
as
 
we
 
sell
 
the
 
majority
 
of
 
our
conventional
 
shell
 
eggs
 
based
 
on
 
formulas
 
that
 
adjust
 
periodically
 
and
 
take
 
into
 
account,
 
in
 
varying
 
ways,
independently
 
quoted regional
 
wholesale
 
market
 
prices for
 
shell eggs
 
or formulas
 
related to
 
our
 
costs of
 
production.
The
 
majority
 
of
 
our
 
specialty
 
eggs
 
are
 
typically
 
sold
 
at
 
prices
 
and
 
terms
 
negotiated
 
directly
 
with
 
customers
 
and
therefore do
 
not fluctuate
 
as much
 
as conventional
 
pricing. As
 
a result
 
of these
 
independently
 
quoted
 
whole markets
for
 
conventional
 
eggs
 
reaching
 
near
 
historical
 
highs,
 
the
 
average
 
selling
 
price
 
for
 
conventional
 
eggs
 
exceeded
 
the
average selling price for specialty eggs in the first quarter of fiscal 2023.
-
Specialty egg sales increased $68.4 million, or
 
51.6%, in the first quarter of fiscal 2023
 
compared to the first quarter of
fiscal 2022,
 
primarily due
 
to a
 
35.1% increase
 
in the
 
volume of
 
specialty eggs
 
sold, which
 
resulted in
 
a $46.5
 
million
increase in net sales.
 
-
According
 
to
 
Information
 
Resources,
 
Inc.,
 
Total
 
US
 
 
Multi
 
Outlet
 
for
 
the
 
latest
 
13
 
weeks
 
ended
 
August
 
27,
 
2022,
cage-free
 
eggs
 
dozens
 
sold
 
(including
 
free-range,
 
pasture-raised
 
and
 
organic)
 
increased
 
34.9%.
 
We
 
believe
 
this
increase in
 
demand was
 
positively impacted
 
by the
 
higher conventional
 
egg prices
 
as compared
 
to the
 
same period
 
in
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
the
 
prior
 
year.
 
Demand
 
for
 
specialty
 
eggs
 
was
 
further
 
positively
 
affected
 
by
 
California’s
 
and
 
Massachusetts’s
 
cage-
free mandates going into effect January 1, 2022, as well as more
 
retailers shifting to selling more cage-free products.
-
Our
 
specialty
 
egg
 
sales
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023
 
versus
 
the
 
prior-year
 
period
 
benefitted
 
from
 
the
 
strong
demand
 
for
 
specialty
 
eggs
 
as
 
we
 
placed
 
more
 
of
 
our
 
cage-free
 
facilities
 
into
 
production,
 
and
 
we
 
better
 
utilized
 
our
existing cage-free production capacity.
 
Cage-free egg sales for the first
 
quarter of fiscal 2023 represented 19.4%
 
of our
total net shell egg
 
sales versus 22.1%
 
for the same prior
 
year period due
 
the higher conventional
 
egg prices. Cage-free
dozens sold increased 58% in the first of quarter of fiscal 2023 as compared
 
to the first quarter of fiscal 2022.
Egg products net sales
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
Egg
 
products
 
net
 
sales
 
increased
 
$18.3
 
million
 
or
 
195.1%
 
for
 
the
 
first
 
quarter
 
of
 
fiscal
 
2023
 
compared
 
to
 
the
 
same
period of
 
fiscal 2022,
 
primarily due
 
to a
 
173.2% selling
 
price increase,
 
which had
 
a $17.5
 
million positive
 
impact on
net sales.
-
Our egg products
 
net average selling
 
price increased in
 
the first quarter
 
of fiscal 2023,
 
compared to the
 
first quarter of
fiscal 2022 as the supply decreased due to the HPAI
 
outbreak that started in February 2022. We
 
believe 13.4 million of
the
 
33.7
 
million
 
layers
 
culled
 
as
 
a
 
result
 
of
 
the
 
HPAI
 
outbreak
 
were
 
located
 
at
 
facilities
 
dedicated
 
to
 
support
 
inline
breaking facilities in Iowa and Ohio.
COST OF SALES
Costs of
 
sales for
 
the first
 
quarter of
 
fiscal 2023
 
were $440.9
 
million compared
 
to $318.3
 
million for
 
the same
 
period of
 
fiscal
2022.
 
Cost of
 
sales consists
 
of
 
costs directly
 
related
 
to producing,
 
processing
 
and
 
packing
 
shell eggs,
 
purchases
 
of
 
shell
 
eggs from
outside producers, processing and packing of liquid
 
and frozen egg products and other non-egg costs. Farm
 
production costs are
those costs
 
incurred at
 
the egg
 
production facility,
 
including feed,
 
facility,
 
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 27, 2022
August 28, 2021
%
Change
Cost of Sales:
Farm production
$
266,651
$
207,495
28.5
%
Processing, packaging, and warehouse
81,417
65,059
25.1
Egg purchases and other (including change in inventory)
68,298
37,973
79.9
Total shell eggs
416,366
310,527
34.1
Egg products
24,488
7,814
213.4
Total
$
440,854
$
318,341
38.5
%
Farm production costs (per dozen produced)
Feed
$
0.667
$
0.545
22.4
%
Other
$
0.379
$
0.353
7.4
%
Total
$
1.046
$
0.898
16.5
%
Outside egg purchases (average cost per dozen)
$
2.57
$
1.35
90.4
%
Dozens produced
257,654
236,458
9.0
%
Percent produced to sold
93.6%
92.9%
0.8
%
Farm Production
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
Feed costs per dozen produced
 
increased 22.4% in the first quarter
 
of fiscal 2023
 
compared to the first quarter of fiscal
2022. This increase was primarily due to increased prices for corn, our primary
 
feed ingredient.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
-
For the
 
first quarter
 
of fiscal
 
2023, the
 
average daily
 
Chicago Board
 
of Trade
 
(“CBOT”) market
 
price was
 
$6.65 per
bushel
 
for
 
corn
 
and
 
$456
 
per
 
ton
 
of
 
soybean
 
meal
 
representing
 
increases
 
of
 
11.5%
 
and
 
25.4%,
 
respectively,
 
as
compared to the average daily CBOT prices for the first quarter of fiscal 202
 
2.
 
Supplies of
 
corn and soybean
 
remained tight
 
relative to demand
 
in the first
 
quarter of
 
fiscal 2023 as
 
evidenced by a
 
low stock-
to-use
 
ratio
 
for
 
corn,
 
as
 
a
 
result
 
of
 
weather-related
 
shortfalls
 
in
 
production
 
and
 
yields,
 
ongoing
 
disruptions
 
related
 
to
 
the
COVID-19
 
global
 
pandemic
 
and
 
the
 
Russia-Ukraine
 
war
 
and
 
its
 
impact
 
on
 
the
 
export
 
markets.
 
Basis
 
levels
 
for
 
corn
 
ran
significantly
 
higher
 
in
 
our
 
area
 
of
 
operations
 
compared
 
to
 
our
 
prior
 
year
 
first
 
fiscal
 
quarter.
 
For
 
fiscal
 
2023,
 
we
 
expect
continued corn and soybean upward pricing pressures and further market
 
volatility to affect feed costs.
 
Processing, packaging, and warehouse
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
Cost of packaging materials increased 16.1% compared to the first quarter of
 
fiscal 2022 due to rising inflation.
-
Labor costs increased 24.4%
 
due to wage increases and increased use of contract labor in response to labor shortages
 
.
-
Dozens processed increased 8.6% compared to the first quarter of fiscal 2022,
 
which resulted in a $2.2 million increase
in costs.
Egg purchases and other (including change in inventory)
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
Costs in
 
this category
 
increased
 
primarily
 
due
 
to higher
 
egg prices,
 
partially offset
 
by the
 
decrease
 
in the
 
volume of
outside egg purchases, as our percentage of produced to sold increased
 
to 93.6% from 92.9%.
GROSS PROFIT
 
Gross profit for
 
the first quarter
 
of fiscal 2023
 
was $217.5 million
 
compared to $6.6
 
million for the
 
same period of
 
fiscal 2022.
The increase
 
of $210.9
 
million was
 
primarily due
 
to higher
 
egg prices
 
as well
 
as the
 
increased volume
 
of specialty
 
eggs sold,
partially offset by the increased cost of feed ingredients
 
and processing,
 
packaging and warehouse costs.
SELLING, GENERAL, AND ADMINISTRATIVE
 
EXPENSES
Selling,
 
general,
 
and
 
administrative
 
expenses
 
("SGA")
 
include
 
costs
 
of
 
marketing,
 
distribution,
 
accounting
 
and
 
corporate
overhead. The following table presents an analysis of our SGA expenses (in thousands):
Thirteen Weeks
 
Ended
August 27, 2022
August 28, 2021
$ Change
% Change
Specialty egg expense
$
13,067
$
13,715
$
(648)
(4.7)
%
Delivery expense
19,916
13,936
5,980
42.9
%
Payroll, taxes and benefits
10,987
9,939
1,048
10.5
%
Stock compensation expense
1,025
1,001
24
2.4
%
Other expenses
8,612
7,934
678
8.5
%
Total
$
53,607
$
46,525
$
7,082
15.2
%
First Quarter – Fiscal 2023
 
vs. Fiscal 2022
Specialty egg expense
-
Specialty egg
 
expense, which includes
 
franchise fees, advertising
 
and promotion
 
costs, generally
 
aligns with specialty
egg
 
volumes,
 
which
 
were
 
up
 
35.1%
 
for
 
the
 
first
 
quarter
 
of fiscal
 
2023
 
compared
 
to
 
the
 
same
 
period
 
of
 
fiscal
 
2022.
However,
 
our specialty egg
 
expense decreased by
 
4.7%, primarily due
 
to increased sales
 
to other
 
Eggland’s Best,
 
Inc.
(“EB”)
 
franchisees,
 
including
 
unconsolidated
 
affiliates,
 
Specialty
 
Eggs,
 
LLC
 
and
 
Southwest
 
Specialty
 
Eggs,
 
LLC.
These franchisees
 
that were
 
responsible for
 
the franchise
 
fees, advertising
 
and promotion
 
costs associated
 
with those
sales, which resulted in reduced costs for us. Also, the higher prices for
 
conventional eggs and the comparatively lower
prices for specialty eggs diminished
 
the need to promote specialty eggs;
 
as a result, EB temporarily reduced
 
the related
franchise fees for certain specialty egg products to encourage continued production
 
of these products.
 
 
 
 
22
Delivery expense
-
The increased
 
delivery expense
 
is primarily
 
due to
 
the increase
 
in fuel
 
and labor
 
costs for
 
both our
 
fleet and
 
contract
trucking.
Payroll, taxes and benefits expense
-
The increase
 
in payroll,
 
taxes and
 
benefits expense
 
is primarily
 
due
 
to increased
 
wages for
 
all employees
 
due
 
to the
inflationary market.
OPERATING
 
INCOME (LOSS)
For the first quarter of fiscal 2023,
 
we recorded operating income of $163.9 million
 
compared to operating loss of $39.7 million
for the same period of fiscal 2022.
OTHER INCOME (EXPENSE)
 
Total
 
other
 
income
 
(expense)
 
consists
 
of
 
items
 
not
 
directly
 
charged
 
or
 
related
 
to
 
operations,
 
such
 
as
 
interest
 
income
 
and
expense, royalty income, equity income or loss of unconsolidated
 
entities, and patronage income, among other items.
For the first quarter of fiscal
 
2023, we earned $1.1 million of interest
 
income compared to $290 thousand for
 
the same period of
fiscal
 
2022.
 
The
 
increase
 
resulted
 
from
 
significantly
 
higher
 
investment
 
balances.
 
The
 
Company
 
recorded
 
interest
 
expense
 
of
$148 thousand and $58 thousand for the first quarters
 
ended August 27, 2022 and August 28, 2021, respectively.
Other,
 
net for
 
the first
 
quarter ended
 
August 27,
 
2022, was
 
income of
 
$155 thousand
 
compared to
 
income of
 
$5.2 million
 
for
the same
 
period of
 
fiscal 2022.
 
The decrease
 
is primarily
 
due to
 
our acquisition
 
of the
 
remaining 50%
 
membership interest
 
in
Red
 
River
 
in
 
the
 
first
 
quarter
 
of
 
fiscal
 
2022
 
as
 
we
 
recognized
 
a
 
$4.5
 
million
 
gain
 
due
 
to
 
the
 
remeasurement
 
of
 
our
 
equity
investment.
INCOME TAXES
For the
 
first quarter
 
of fiscal
 
2023, pre-tax
 
income was
 
$165.5 million
 
compared to
 
pre-tax loss
 
of $33.9
 
million for
 
the same
period of
 
fiscal 2022.
 
We
 
recorded income
 
tax expense
 
of $40.3
 
million for
 
the first
 
quarter of
 
fiscal 2023,
 
which reflects
 
an
effective
 
tax
 
rate
 
of
 
24.4%,
 
compared
 
to
 
an
 
income
 
tax
 
benefit
 
of
 
$15.8
 
million
 
in
 
the
 
prior
 
year
 
period,
 
which
 
reflects
 
an
effective tax
 
rate of 46.8%.
 
Excluding the
 
impact of discrete
 
items related to
 
a $8.3
 
million net
 
tax benefit
 
recorded in the
 
first
quarter of
 
fiscal 2022
 
in connection
 
with the
 
Red River
 
Valley
 
Egg Farm,
 
LLC (“Red
 
River”) acquisition,
 
income tax
 
benefit
for the comparable period of fiscal 2022 was $7.6 million, which reflects an
 
adjusted effective tax rate of 22.4%.
 
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
 
in
 
income
 
for
 
financial
 
reporting
 
purposes
 
that
 
are
 
not
 
included
 
in
 
taxable
 
income
 
for
 
income
 
tax
purposes,
 
including
 
tax
 
exempt
 
interest
 
income,
 
certain
 
nondeductible
 
expenses
 
and
 
net
 
income
 
or
 
loss
 
attributable
 
to
noncontrolling interest.
NET INCOME ATTRIBUTABLE
 
TO CAL-MAINE FOODS, INC.
Net income
 
attributable to Cal-Maine
 
Foods, Inc. for
 
the first quarter
 
ended August 27,
 
2022, was $125.3
 
million, or $2.58
 
per
basic and $2.57 per diluted
 
common share, compared to net
 
loss attributable to Cal-Maine
 
Foods, Inc. of $18.0 million
 
or $0.37
per basic and diluted common share for the same period of fiscal 2022.
LIQUIDITY AND CAPITAL
 
RESOURCES
 
Working
 
Capital and Current Ratio
Our working
 
capital at
 
August 27,
 
2022 was $548.5
 
million, compared
 
to $476.8
 
million at
 
May 28,
 
2022. The
 
calculation of
working capital is
 
defined as current
 
assets less current liabilities.
 
Our current ratio
 
was 3.4 at August
 
27, 2022, compared with
3.6 at May 28, 2022. The current ratio is calculated by dividing current
 
assets by current liabilities.
Cash Flows from Operating Activities
For
 
the thirteen
 
weeks
 
ended August
 
27, 2022,
 
$172.8
 
million
 
in net
 
cash
 
was
 
provided by
 
operating
 
activities,
 
compared
 
to
$24.1
 
million used
 
by operating
 
activities for
 
the comparable
 
period in
 
fiscal 2022.
 
The increase
 
in cash
 
flow from
 
operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
activities
 
resulted
 
primarily
 
from
 
higher
 
selling
 
prices
 
for
 
conventional
 
and
 
specialty
 
eggs
 
as
 
well
 
as
 
increased
 
volume
 
of
specialty
 
egg
 
sales,
 
partially
 
offset
 
by
 
increased
 
costs
 
of
 
feed
 
ingredients
 
compared
 
to
 
the
 
prior-year
 
period.
 
The
 
increase
 
in
Other adjustments, net is primarily due to a $67.4 million balance for
 
income taxes payable as of August 27, 2022.
Cash Flows from Investing Activities
We continue
 
to invest in our facilities, with $27.7
 
million used to purchase property,
 
plant and equipment for the thirteen
 
weeks
ended
 
August
 
27,
 
2022,
 
compared
 
to
 
$11.2
 
million
 
in
 
the
 
same
 
period
 
of
 
fiscal
 
2022. In
 
the
 
first
 
quarter
 
of
 
fiscal
 
2022,
 
we
acquired the
 
remaining 50%
 
membership interest
 
in Red
 
River Valley
 
Egg Farm,
 
LLC for
 
$44.8 million,
 
net of
 
cash acquired.
Purchases
 
of investments
 
were $51.8
 
million
 
in
 
the first
 
quarter
 
of fiscal
 
2023,
 
compared to
 
$1.4
 
million
 
in fiscal
 
2022.
 
The
increase in
 
purchases of
 
investments is
 
primarily due
 
to the
 
increased cash
 
provided by
 
operating activities
 
noted above.
 
Sales
and
 
maturities of
 
investment
 
securities were
 
$20.3
 
million
 
for
 
the thirteen
 
weeks ended
 
August
 
27,
 
2022,
 
compared
 
to $39.4
million for the comparable period in fiscal 2022.
 
Cash Flows from Financing Activities
We paid dividends
 
of $36.7 million in the first quarter of fiscal 2023.
As of
 
August 27,
 
2022,
 
cash increased
 
$76.9 million
 
since May
 
28, 2022,
 
compared to
 
a decrease
 
of $40.7
 
million during
 
the
same period of fiscal 2022.
Credit Facility
We
 
had no
 
long-term debt
 
outstanding at
 
August 27,
 
2022 or
 
May 28,
 
2022. On
 
November 15,
 
2021, we
 
entered into
 
a credit
agreement
 
that
 
provides
 
for
 
a
 
senior
 <