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 28, 2021
 
or
☐
TransitionQuarterly report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
February 26, 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
.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
 
Act of 1934 during the
 
during the preceding
12 months (or
 
for such shorter period
 
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
 
mark whether the registrant has
 
registrant has submitted electronically every Interactive Data
 
electronically every
Interactive Data File
required to be
 
submitted
pursuant to
 
Rule 405 of
 
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
 
Indicate bymark whether the
 
check markregistrant is a
 
whether the registrant
is a large
accelerated filer,
 
an accelerated filer,
 
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
44,057,32944,140,283
 
shares of Common
 
Stock, $0.01 par
 
value, and
4,800,000
 
shares of Class A
 
A Common Stock, $0.01
 
$0.01 par
value,
outstanding as of September 28, 2021.March 29, 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)
 
 
August 28, 2021February 26, 2022
May 29, 2021
Assets
Current assets:
Cash and cash equivalents
$
16,68415,589
$
57,352
Investment securities available-for-sale
73,66681,125
112,158
Trade and other receivables, net
134,400138,654
126,63984,123
Income tax receivable
41,383
42,516
Inventories
226,470240,087
218,375
Prepaid expenses and other current assets
9,2495,872
5,407
Total current
assets
460,469522,710
519,931
Property, plant &
equipment, net
667,963671,373
589,417
Finance lease right-of-use asset, net
486409
525
Operating lease right-of-use asset, net
1,5331,168
1,724
Investments in unconsolidated entities
10,72215,794
54,941
Goodwill
44,006
35,525
Intangible assets, net
19,79818,686
20,341
Other long-term assets
6,7537,849
6,770
Total Assets
$
1,211,7301,281,995
$
1,229,174
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
96,709120,665
$
89,191
Current portion of finance lease obligation
217222
215
Current portion of operating lease obligation
617486
691
Total current
liabilities
97,543121,373
90,097
Long-term finance lease obligation
383271
438
Long-term operating lease obligation
916682
1,034
Other noncurrent liabilities
10,32510,673
10,416
Deferred income taxes, net
106,996118,753
114,408
Total liabilities
216,163251,752
216,393
Commitments and contingencies - see
Note 13
0—
0
—
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
65,04466,909
64,044
Retained earnings
957,951992,523
975,977
Accumulated other comprehensive loss, net of tax
(728)(1,413)
(558)
Common stock in treasury at cost –
26,20326,121
 
shares at August 28, 2021February 26, 2022 and
26,202
shares
at May 29, 2021
(27,451)(28,439)
(27,433)
Total Cal-Maine Foods, Inc. stockholders’
equity
995,5671,030,331
1,012,781
Noncontrolling interest in consolidated entity
(88)
0
Total stockholders’ equity
1,030,243
1,012,781
Total Liabilities and Stockholders’
Equity
$
1,211,7301,281,995
$
1,229,174
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of OperationsIncome
(in thousands, except per share amounts)
(unaudited)
 
 
Thirteen Weeks
Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Net sales
$
331,704477,485
$
292,782359,080
$
1,184,195
$
999,189
Cost of sales
325,059385,903
276,017311,563
1,042,221
876,457
Gross profit
6,64591,582
16,76547,517
141,974
122,732
Selling, general and administrative
46,52552,686
43,96547,656
146,991
135,494
(Gain) loss on disposal of fixed assets
(213)(674)
23354
(2,855)
476
Operating lossincome (loss)
(39,667)39,570
(27,223)(493)
(2,162)
(13,238)
Other income (expense):
Interest income, net
23279
925591
440
2,181
Royalty income
273326
305321
877
906
Patronage dividends
10,120
9,004
10,120
9,004
Equity income (loss) of unconsolidated entities
1351,809
(44)1,872
2,208
1,886
Other, net
5,1631,144
512537
8,169
1,485
Total other
income, net
5,80313,478
1,69812,325
Loss21,814
15,462
Income before income taxes
(33,864)53,048
(25,525)11,832
19,652
2,224
Income tax benefitexpense (benefit)
(15,838)13,594
(6,126)(1,716)
(2,921)
(4,080)
Net lossincome
39,454
13,548
22,573
6,304
Less: Loss attributable to noncontrolling interest
(63)
0
(91)
0
Net income attributable to Cal-Maine Foods, Inc.
$
(18,026)39,517
$
(19,399)13,548
$
22,664
$
6,304
Net lossincome per common share:
Basic
$
(0.37)0.81
$
(0.40)0.28
$
0.46
$
0.13
Diluted
$
(0.37)0.81
$
(0.40)0.28
$
0.46
$
0.13
Weighted average
shares outstanding:
Basic
48,85848,886
48,50148,530
48,888
48,511
Diluted
48,85849,036
48,50148,659
49,035
48,649
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive LossIncome
(in thousands)
(unaudited)
Thirteen Weeks
Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Net lossincome
$
(18,026)39,454
 
$
13,548
 
$
(19,399)22,573
$
6,304
Other comprehensive income (loss), before tax:
Unrealized holding gain (loss)loss on available-for-sale
securities, net
of reclassification
adjustments
(224)(551)
468(378)
(1,130)
(283)
Income tax benefit (expense) related to items of other
comprehensive income
54134
(114)92
275
69
Other comprehensive income (loss),loss, net of tax
(170)(417)
354(286)
(855)
(214)
Comprehensive income
39,037
13,262
21,718
6,090
Less: Comprehensive loss attributable to the
noncontrolling interest
(63)
0
(91)
0
Comprehensive income attributable to Cal-Maine
Foods, Inc.
$
(18,196)39,100
$
(19,045)13,262
$
21,809
$
6,090
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
ThirteenThirty-nine Weeks
Ended
August 28,February 26, 2022
February 27, 2021
August 29, 2020
OperatingCash flows from operating activities:
Net lossincome
$
(18,026)22,573
$
(19,399)6,304
Depreciation and amortization
17,38950,996
14,74444,391
Deferred income taxes
(15,838)(3,861)
(6,126)9,970
Other adjustments, net
(7,637)(48,884)
(4,019)(45,936)
Net cash used inprovided by operations
(24,112)20,824
(14,800)14,729
InvestingCash flows from investing activities:
Purchases of investment securities
(1,388)(47,135)
(24,195)(59,415)
Sales and maturities of investment securities
39,38876,377
28,23185,202
Investment in unconsolidated entities
(3,000)
0
Distributions from unconsolidated entities
400
6505,813
Acquisition of business, net of cash acquired
(44,823)
0
Purchases of property,
plant and equipment
(11,233)(49,170)
(25,338)(73,796)
Net proceeds from disposal of property,
plant and equipment
1,1716,041
1813,273
Net cash used in investing activities
(16,485)(61,310)
(20,471)(38,923)
FinancingCash flows from financing activities:
Purchase of common stock by treasury
(18)(1,120)
0(871)
Principal payments on finance lease
(53)(160)
(50)(153)
Contributions
3
5
Net cash used in financing activities
(71)(1,277)
(50)(1,019)
Net change in cash and cash equivalents
(40,668)(41,763)
(35,321)(25,213)
Cash and cash equivalents at beginning of period
57,352
78,130
Cash and cash equivalents at end of period
$
16,68415,589
$
42,80952,917
Supplemental Information:
Cash paid for operating leases
$
217625
$
237703
Interest paid
$
62230
$
65193
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.
Therefore, they do
 
do not include all
 
include all of
the information
 
and footnotes required
 
required by
generally accepted
 
accounting principles in
 
in the
United
 
States
 
of
 
America
 
("GAAP")
 
for
 
complete
 
financial
 
statements
 
and
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
our
 
Annual
Report
 
on
 
Form
 
10-K
 
for
 
the
 
fiscal
 
year
 
ended
 
May
 
29,
 
2021
 
(the
 
"2021
 
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
 
fiscal year
ends on
 
the Saturday closest
 
closest to
May 31.
 
Each of
the three-month
 
periods and
year-to-date periods
ended on
August 28, February 26, 2022 and February 27, 2021
and August 29, 2020 included 13 weeks.weeks and 39 weeks, respectively
.
Use of Estimates
The preparation of the
consolidated financial statements in
conformity with GAAP requires management to make
 
to make estimates and
assumptions that
 
that affect the
 
the amounts reported
 
reported in the
 
the consolidated financial
 
financial statements and
 
and accompanying notes.
 
notes. Actual
results
could differ from those estimates.
The severity,
magnitude and duration, as well as
the economic consequences of the COVID-19
pandemic, are uncertain, rapidly
changing
 
and
 
difficult
 
to
 
predict.
 
Therefore,
 
our
 
accounting
 
estimates
 
and
 
assumptions
 
might
 
change
 
materially
 
in
 
future
periods in response to COVID-19.
Investment Securities
Our investment
 
securities are
 
accounted for
 
for in accordance
 
accordance with ASC
 
ASC 320, “Investments
 
“Investments - Debt
 
Debt and Equity
 
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
 
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
 
the rating of its
 
its debt securities
by credit
 
agencies and economic conditions
 
conditions to assess and
 
and record
any expected cre
ditcredit
losses through allowance
for credit losses,
limited to the
 
allowance for credit
losses, limited to
the amount that
fair value was
 
was less than the
 
amortized cost basis. The
 
costThe
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
inby
 
the
 
Company'sspecific
 
Condensedidentification
 
method.
Gains and losses are recognized in other income (expenses) as Other, net in the Company's Condensed Consolidated Statements
of Income.
 
StatementsInvestments in
 
ofmutual funds
are classified
Operations. Investments
as “Other
long-term assets”
 
in mutualthe
 
funds are
classified as
“Other long-term
assets” in
the Company’s
 
Condensed Consolidated
Balance Sheets.
Trade Receivables
 
Trade receivables
 
receivables are
stated at their
 
their carrying
values, which
 
include a reserve for
credit losses. At August
28, 2021 and May
29,
2021, reserves for credit losses were
$
583
thousand and $
795
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.
At February
26, 2022
and May
29,
2021,
reserves
for
credit
losses
were
$
725
thousand
and
$
795
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 pooled
according
to age,
with
each pool
 
assigned
 
an
expected
loss
based
on
expected loss based on historical loss information adjusted as needed for economic
and other forward-looking factors.
Business Combinations
The
 
Company applies
 
applies fair
value
 
accounting
guidance
 
to
measure
 
non-financial assets
and
liabilities associated
with business
acquisitions. These
 
assets and
 
liabilities
associated
with
business
acquisitions.
These
assets
and
liabilities
are
 
measured
at
 
fair
value
 
for
 
the
initial
 
purchase price
 
allocation.
 
The
fair
 
value
of
8
non-financial
assets
acquired
is
determined
internally. Our
internal
valuation
methodology
for
non-financial
assets
takes
into considers the
account the remaining estimated life of the assets acquired and what management
believes is the market value for those assets.
Change in Accounting Principle
Effective
 
May
 
31,
 
2020,
 
the
 
Company
 
adopted
 
ASU
 
2016-13,
 
Financial
 
Instruments
 
–
 
Credit
 
Losses
 
(Topic
 
326),
 
which
 
is
intended
 
to
 
improve
 
financial
 
reporting
 
by
 
requiring
 
more
 
timely
 
recording
 
of
 
credit
 
losses
 
on
 
loans
 
and
 
other
 
financial
instruments held by financial institutions and other organizations.
The guidance replaces the prior “incurred loss” approach with
an “expected
 
loss” model and
 
and requires
measurement of
 
all expected credit
 
credit losses for
 
for financial
assets held
 
at the
 
reporting date
based
 
on
 
historical
 
experience,
 
current
 
conditions,
 
and
 
reasonable
 
and
 
supportable
 
forecasts.
 
The
 
Company
 
adopted
 
the
guidance on
 
a modified
 
retrospective basis
 
through a
 
cumulative effect
 
adjustment to
 
to retained earnings
 
earnings as of
 
of the beginning
 
beginning of
the period of
 
adoption. The Company evaluated
 
evaluated its current
methodology of
 
estimating allowance for doubtful
 
doubtful accounts and
the
risk
 
profile
 
of
 
its
 
receivables
 
portfolio
 
and
 
developed
 
a
 
model
 
that
 
includes
 
the
 
qualitative
 
and
 
forecasting
 
aspects
 
of
 
the
“expected
 
loss”
 
model
 
under
 
the
 
amended
 
guidance.
 
The
 
Company
 
finalized
 
its
 
assessment
 
of
 
the
 
impact
 
of
 
the
 
amended
guidance and recorded a $
422
 
thousand cumulative increase to retained earnings at May 31, 2020.
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 Income. The errors resulted in
an overstatement of Net Sales and Cost
of Sales of $
6.7
million in the first quarter
of
fiscal
2022
and
$
9.2
million
in
the
second
quarter
of
fiscal
2022.
There
was
0
impact
to
Operating
income
(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
Income
for
the third
quarter
ended February 26, 2022. Accordingly, we have reflected the correction of the immaterial errors as a reduction of Net Sales and
Cost of Sales in the accompanying Condensed Consolidated Statements of Income for the thirty-nine weeks ended February 26,
2022.
Note 2 – Acquisitions
Acquisition
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. As a
result of
the acquisition, the
 
entityacquisition, Red River became a
wholly owned
 
subsidiary of
the Company.
 
Red River owns and operates
 
operates a specialty
shell egg production
 
complex with approximately
1.7
 
million cage-free
laying
 
hens,
 
cage-free
 
pullet
 
capacity,
 
feed
 
mill,
 
processing
 
plant,
 
related
 
offices
 
and
 
outbuildings
 
and
 
related
 
equipment
located on approximately
400
 
acres near Bogata, Texas.
 
Pending
9
The
following
table
summarizes
the
 
finalization consideration
paid
for
Red
River
and
the
amounts
of
 
the Company’s
 
valuation, theassets
 
following tableacquired
 
summarizes theand
 
consideration paid
for Red
River andliabilities
the amounts of the assets acquired and liabilities assumed recognized at
the acquisition date:
Cash consideration paid
$
48,500
Fair value of the Company's equity interest in Red River held before the business combination
48,500
$
97,000
Recognized amounts of identifiable assets acquired and
liabilities assumed
Cash
$
3,677
Accounts receivables,receivable, net
1,980
Inventory
8,789
Property, plant and equipment
85,002
Liabilities assumed
(2,448)
Deferred income taxes
(8,481)
Total identifiable
net assets
88,519
Goodwill
8,481
$
97,000
Cash and
 
accounts receivablesreceivable
 
acquired along
 
with liabilities
 
assumed were
 
valued at
 
their carrying
 
value which
 
approximates
fair value due to the short maturity of these instruments.
Inventory consisted primarily
 
primarily of
flock, and feed
 
ingredients. Inventoryingredients, packaging, and
 
egg inventory.
Flock inventory was
valued at carrying
value as management believes that their carrying value
best approximates their fair value.
Feed ingredients, packaging and property,egg
inventory were all valued based on market prices as of May 30, 2021.
Property,
 
plant and equipment
 
equipment were valued
 
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the cost approach.
assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
The Company
 
recognized a
 
a gain of
 
of $
4.5
 
million as
 
as a result
 
result of
remeasuring
 
to fair
 
value its
50
% equity
 
interest in
 
Red
River
held before the business combination. The gain
was recorded in other income and expense under the
heading “Other, net” in the
Company’s
 
Condensed Consolidated
 
Statements of
 
Operations.Income. The
 
acquisition of
 
Red River
 
resulted in
 
a discrete
 
tax benefit
of
of $
8.3
 
million, which
 
includes a
$
7.3
 
million decrease
 
in deferred
 
income tax
 
expense related
 
to the
 
outside-basis of
 
our equity
investment
in
Red
River,
with
a
corresponding
non-recurring,
non-cash
$
954,000
reduction
to
income
taxes
expense
on
the
non-taxable
remeasurement
gain
associated
with
the
acquisition.
As
part
of
the
acquisition
accounting,
the
Company
also
recorded
an
$
8.5
million
deferred
tax
liability
for
the
difference
in
the
inside-basis
of
the
acquired
assets
and
liabilities
assumed. The recognition
of deferred tax
liabilities resulted in
the recognition of
goodwill. None of
the goodwill recognized is
expected to be deductible for income tax purposes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
investment
in
Red
River,
with
a
corresponding
non-recurring,
non-cash
$
954,000
reduction
to
income
taxes
expense
on
the
non-taxable
remeasurement
gain
associated
with
the
acquisition.
As
part
of
the
acquisition
accounting,
the
Company
also
recorded a $
8.5
million deferred tax liability
for the difference
in the inside-basis
of the acquired
assets and liabilities assumed.
The recognition
of deferred
tax liabilities resulted
in the
recognition of
goodwill. None
of the goodwill
recognized is
expected
to be deductible for income tax purposes.
10
Note 3 - Investment
Securities
The following represents the Company’s
investment securities as of August 28, 2021February 26, 2022 and May 29, 2021 (in
thousands):
August 28, 2021February 26, 2022
Amortized
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
16,828
$
102514
$
0
$
16,9303
$
511
Commercial paper
1,9999,980
0
023
1,9999,957
Corporate bonds
45,545
33461,634
0
45,879344
61,290
Certificates of deposits
01,268
0
012
01,256
Asset backed securities
8,8658,205
0
794
8,8588,111
Total current
investment securities
$
73,237
$
436
$
7
$
73,666
Mutual funds
$
2,306
$
1,81081,601
$
0
$
4,116
Total noncurrent
investment securities476
$
2,30681,125
Mutual funds
$
1,8102,967
$
0
$
4,11653
$
2,914
Total noncurrent investment securities
$
2,967
$
0
$
53
$
2,914
May 29, 2021
Amortized
 
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
16,424
$
56
$
0
$
16,480
Commercial paper
1,998
0
0
1,998
Corporate bonds
80,092
608
0
80,700
Certificates of deposits
1,077
0
1
1,076
Asset backed securities
11,914
0
10
11,904
Total current
investment securities
$
111,505
$
664
$
11
$
112,158
Mutual funds
$
2,306
$
1,810
$
0
$
4,116
Total noncurrent
investment securities
$
2,306
$
1,810
$
0
$
4,116
Available-for-sale
Proceeds from
 
sales and
 
maturities of
 
investment securities
available-for-sale
 
were $
39.476.4
 
million and
 
$
28.285.2
 
million during
 
the
thirteenthirty-nine weeks ended February
 
weeks
ended August
28,
2021
26, 2022 and
 
August
29,
2020,February 27, 2021,
 
respectively.
 
Gross
realized
gains
 
for
the
thirteen thirty-nine
 
weeks
ended
August 28,ended February 26, 2022 and February 27, 2021 and August 29, 2020 were $
127181
 
thousand and $
28116
 
thousand, respectively.
Gross realized losses for
the thirteen
thirty-nine weeks ended August
28,February 26, 2022 and February 27, 2021 were
$
6067
 
thousand. There werethousand and $
017
 
gross realized losses
for the thirteen
weeks ended August
29,thousand, respectively. There
2020. There were
0
 
allowances for credit losses at August 28, 2021February 26, 2022 and May 29, 2021.
Actual maturities
may differ
 
from contractual maturities as
 
maturities as some
borrowers have
 
the right to
 
call or prepay
 
obligations with
or
without penalties. Contractual maturities of current investments at August
28, 2021February 26, 2022 are as follows (in thousands):
Estimated Fair Value
Within one year
$
30,39552,391
1-5 years
43,27128,734
Total
$
73,66681,125
Noncurrent
 
Proceeds
 
from
 
sales
 
and
 
maturities
 
of
 
noncurrent
 
investment
 
securities
 
were
 
$
3854.9
 
thousandmillion
 
during
 
the
 
thirteenthirty-nine
 
weeks
ended August 28, 2021.February
26,
2022.
 
Gross
realized
gains
for
 
the thirteen weeks ended
 
August 28, 2021 thirty-nine
weeks
ended February
26,
2022
were
 
$
1302.2
 
thousand.million. There
were
no
realized
losses
for
the
thirty-nine
weeks
ended February
26,
2022.
There
were
0
sales
of
noncurrent
investment
securities during the thirty-nine weeks ended February 27, 2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
sales of
noncurrent
investment securities
during
the thirteen
weeks ended
August 29,
2020. There
were
0
realized losses
for
the thirteen weeks ended August 28, 2021 and August 29, 2020.
11
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
 
the transaction. A liability’s fair value
 
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
 
prices included in
 
in Level 1
 
1 that are
 
are observable for
 
for the asset
 
asset or
liability,
 
either
directly or indirectly,
including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market
data
•
Level 3
 
- Unobservable inputs for the asset or liability that are
supported by little or no market activity and that
are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
at cost are as follows:
Cash and cash equivalents, accounts receivable,
and accounts payable:
 
The carrying amount approximates fair value due to the
short maturity of these instruments.
Lease obligations:
 
The carrying value of the Company’s lease obligations
is at its present value which approximates fair value.
Assets and Liabilities Measured at Fair
Value
 
on a Recurring Basis
In
 
accordance
with
 
the
 
fair
value
 
hierarchy
described
 
above,
the
 
following
 
table
shows
 
the
 
fair
value
 
of
 
financial assets
 
assets and
liabilities measured at fair value on a recurring basis as of August 28, 2021February 26, 2022 and May 29,
2021 (in thousands):
August 28, 2021February 26, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
0
$
16,930511
$
0
$
16,930511
Commercial paper
0
1,9999,957
0
1,9999,957
Corporate bonds
0
45,87961,290
0
45,87961,290
Certificates of deposits
0
01,256
0
01,256
Asset backed securities
0
8,8588,111
0
8,8588,111
Mutual funds
4,1162,914
0
0
4,1162,914
Total assets measured at fair
value
$
4,1162,914
$
73,66681,125
$
0
$
77,78284,039
May 29, 2021
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
0
$
16,480
$
0
$
16,480
Commercial paper
0
1,998
0
1,998
Corporate bonds
0
80,700
0
80,700
Certificates of deposits
0
1,076
0
1,076
Asset backed securities
0
11,904
0
11,904
Mutual funds
4,116
0
0
4,116
Total assets measured at fair
value
$
4,116
$
112,158
$
0
$
116,274
Investment
securities
 
–
 
available-for-sale
 
classified as
 
as Level
2
 
consist
of
 
securities with
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
12
Note 5 - Inventories
Inventories consisted of the following as of August 28, 2021February 26, 2022 and May 29,
2021 (in thousands):
 
August 28, 2021February 26, 2022
May 29, 2021
Flocks, net of amortization
$
139,870137,086
$
123,860
Eggs and egg products
20,86924,153
21,084
Feed and supplies
65,73178,848
73,431
$
226,470240,087
$
218,375
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
 
and female
chickens used
to produce
fertile eggs
to hatch
for egg
production flocks).
Our total
flock at
August February
28, 202126, 2022 consisted of approximately
10.39.4
 
million pullets and breeders and
40.842.7
 
million layers.
 
Note 6 - Accrued Dividends Payable and Dividends per Common
Share
We
 
accrue dividends at the
 
the end of each quarter
 
each quarter according
to the Company’s
 
dividend policy adopted by its
 
by its Board
of Directors.
The Company
pays a dividend
to shareholders
of its Common
Stock and
Class A Common
Stock on
 
a quarterly basisdividend to
 
shareholders of its
Common Stock and Class
A Common Stock
on a quarterly
basis for each
quarter for
 
which the
 
Company reports net
 
net income attributable
 
attributable to Cal-Maine
 
Cal-Maine Foods, Inc.
 
Inc. computed in
 
in accordance with
 
with GAAP
in an amount equal
 
equal to one-third (
1/3
) of such quarterly
 
(1/3) of suchincome. Dividends are paid
 
quarterly income. Dividends
are paid to
shareholders of record as
 
as of the 60th
day
following the last
 
last day of
 
of such quarter,
 
except for the
 
fourth fiscal quarter.
For the fourth fiscal
 
quarter. Forquarter, the
 
the fourth quarter,
the Company
pays dividends
to shareholders of record on the 65th day after the
quarter end. Dividends are payable on the 15th day following
the record date.
Following a quarter for which the Company does not report net income
attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend
for a subsequent profitable
 
profitable quarter until the Company
is profitable on
a cumulative
basis computed from the
date of the most
 
the lastrecent quarter for which
 
quarter fora dividend was paid.
 
which a
dividend was
paid. At
For the end
of the
firstthird quarter
 
of fiscal 2022, we
 
2022, thewill pay a
 
cash dividend
of approximately $
0.125
per share to holders
of our Common Stock
and Class A Common
Stock. The amount of
 
cumulativethe accrual is
losses to be recovered before payment of a dividend was $
22.3
million.
recorded in Accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets.
On
 
our
 
condensedCondensed
 
consolidatedConsolidated
 
statementStatements
 
of
 
operations,Income,
 
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 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Net lossincome attributable to Cal-Maine Foods,
Inc.
$
(18,026)39,517
$
(19,399)13,548
$
22,664
$
6,304
Cumulative losses to be recovered prior to
payment of divided at beginning
of period
(21,097)
(8,614)
(4,244)
(1,370)
Net income available for dividend
$
018,420
$
04,934
$
18,420
$
4,934
1/3 of net income attributable to Cal-Maine
Foods, Inc. available for dividend
06,140
1,645
6,140
1,645
Common stock outstanding (shares)
44,05744,140
44,056
Class A common stock outstanding (shares)
4,800
4,800
Total common stock
outstanding (shares)
48,85748,940
48,856
Dividends per common share*
$
0.125
$
0.034
$
0.125
$
0.034
*Dividends
per
common
share
 
=
1/3
of
Net
 
income (loss)
attributable
to
 
Cal-Maine
Foods,
Inc.
available
 
for
dividend
÷
Total
 
common
stock
outstanding (shares).
Note 7 – Credit Facility
On November
15, 2021,
we entered
into an
Amended and
Restated Credit
Agreement (the
“Credit Agreement”)
with a
five
-
year
term.
The
Credit
Agreement
amended
and
restated
the
Company’s
previously
existing
credit
agreement
dated
July
10,
2018.
The
Credit
Agreement
provides
for
an
increased
senior
secured
revolving
credit
facility
(the
“Credit
Facility”
or
“Revolver”),
in
an
initial
aggregate
principal
amount
of
up
to
$
250
million,
which
includes
a
$
15
million
sublimit
for
the
13
issuance
of
standby
letters
of
credit
and
a
$
15
million
sublimit
for
swingline
loans.
The
Credit
Facility
also
includes
an
accordion
feature
permitting,
with
the
consent
of
BMO
Harris
Bank
N.A.
(the
“Administrative
Agent”),
an
increase
in
the
Credit Facility in
the aggregate up
to $
200
million by
adding one or
more incremental senior
secured term loans
or increasing
one or more times
the revolving commitments under
the Revolver.
As of February 26,
2022,
0
amounts were borrowed under
the Credit Facility and $
4.1
million in standby letters of credit were issued under the Credit Facility.
The
interest
rate
in
connection
with
loans
made
under
the
Credit
Facility
is
based
on,
at
the
Company’s
election,
either
the
Eurodollar Rate
plus
the Applicable
Margin
or
the
Base Rate
plus
the Applicable
Margin.
The “Eurodollar
Rate” means
the
reserve adjusted rate
at which Eurodollar
deposits in the
London interbank market
for an interest
period of
one
,
two
,
three
,
six
or
twelve
months (as
selected by
the Company)
are quoted.
The “Base
Rate” means
a fluctuating
rate per
annum equal
to the
highest
of
(a)
the
federal
funds
rate
plus
0.50
%
per
annum,
(b)
the
prime
rate
of
interest
established
by
the
Administrative
Agent, and (c) the Eurodollar Rate for an interest period of
one
month plus
1
% per annum, subject to certain interest rate floors.
The
“Applicable
Margin”
means
0.00
%
to
0.75
%
per
annum
for
Base
Rate
Loans
and
1.00
%
to
1.75
%
per
annum
for
Eurodollar
Rate
Loans,
in
each
case
depending
upon
the
Total
Funded
Debt
to
Capitalization Ratio
for
the
Company
at
the
quarterly pricing date.
The Company will
pay a commitment
fee on the
unused portion of
the Credit Facility
payable quarterly
from
0.15
%
to
0.25
%
in
each
case
depending
upon
the
Total
Funded
Debt
to
Capitalization
Ratio
for
the
Company
at
the
quarterly pricing date. The Credit Agreement contains customary provisions regarding replacement of the Eurodollar Rate.
The
Credit Facility
is
guaranteed by
all the
current and
future wholly-owned
direct and
indirect domestic
subsidiaries of
the
Company (the “Guarantors”),
and is secured
by a first-priority
perfected security interest
in substantially all
of the Company’s
and
the
Guarantors’
accounts,
payment
intangibles,
instruments
(including
promissory
notes),
chattel
paper,
inventory
(including farm products) and deposit accounts maintained with the Administrative Agent.
The Credit
Agreement for
the Credit
Facility contains
customary covenants,
including restrictions
on the
incurrence of
liens,
incurrence of additional
debt, sales of
assets and other
fundamental corporate changes
and investments. The
Credit Agreement
requires maintenance of
two financial covenants:
(i) a maximum
Total
Funded Debt to
Capitalization Ratio tested
quarterly of
no greater than
50
%; and (ii) a requirement to maintain Minimum Tangible
Net Worth
at all times of $
700
Million plus
50
% of
net
income
(if
net
income
is
positive)
less
permitted
restricted
payments
for
each
fiscal
quarter
after
November
27,
2021.
Additionally, the
Credit Agreement requires that Fred
R. Adams Jr.’s
spouse, natural children, sons-in-law or grandchildren,
or
any trust, guardianship,
conservatorship or custodianship for
the primary benefit of
any of the
foregoing, or any
family limited
partnership, similar limited liability company or other entity
that
100
% of the voting control of such
entity is held by any of the
foregoing, shall maintain at least
50
% of the Company's voting
stock. Failure to satisfy any
of these covenants will constitute
a
default under the terms of the Credit Agreement. Further, under
the terms of the Credit Agreement, payment of dividends under
the
Company's
current
dividend
policy
of
one-third
of
the
Company's
net
income
computed
in
accordance
with
GAAP
and
payment of other dividends or
repurchases by the Company of
its capital stock is allowed,
as long as after giving
effect to such
dividend payments
or repurchases
no default
has occurred
and is
continuing and
the sum
of cash
and cash
equivalents of
the
Company and its subsidiaries plus availability under the Credit Facility equals at least $
50
million.
The Credit
Agreement also
includes customary
events of
default and
customary remedies
upon the
occurrence of
an event
of
default, including acceleration of the amounts
due under the Credit Facility and
foreclosure of the collateral securing the
Credit
Facility.
At February 26, 2022, we were in compliance with the covenant requirements of the Credit Facility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1214
Note 78 - Equity
The following reflects equity activity for the
thirteen and thirty-nine weeks ended February 26,
 
August 28,2022 and February 27, 2021 and August 29, 2020 (in
thousands):
Thirteen Weeks Ended August
28, 2021February 26, 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 November
27, 2021
$
703
$
48
$
(27,450)
$
66,019
$
(996)
$
959,124
$
(25)
$
997,423
Other comprehensive
loss, net of tax
—
—
—
—
(417)
—
—
(417)
Stock compensation
plan transactions
—
—
(989)
890
—
—
—
(99)
Dividends
—
—
—
—
—
(6,118)
—
(6,118)
Net income (loss)
—
—
—
—
—
39,517
(63)
39,454
Balance at February
26, 2022
$
703
$
48
$
(28,439)
$
66,909
$
(1,413)
$
992,523
$
(88)
$
1,030,243
Thirteen Weeks Ended February 27, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Accum.
Class A
Treasury
Paid In
Other Comp.
Retained
Amount
Amount
Amount
Capital
Income (Loss)
Earnings
Total
Balance at November 28, 2020
$
703
$
48
$
(26,723)
$
62,206
$
151
$
968,325
$
1,004,710
Other comprehensive loss, net of tax
—
—
—
—
(286)
—
(286)
Stock compensation plan transactions
—
—
(826)
964
—
—
138
Dividends
—
—
—
—
—
(1,661)
(1,661)
Net income
—
—
—
—
—
13,548
13,548
Balance at February 27, 2021
$
703
$
48
$
(27,549)
$
63,170
$
(135)
$
980,212
$
1,016,449
Thirty-nine Weeks Ended February 26, 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 29,
2021
$
703
$
48
$
(27,433)
$
64,044
$
(558)
$
975,977
$
0
$
1,012,781
Other comprehensive
loss, net of tax
—
—
—
—
(170)(855)
—
(170)—
(855)
Stock compensation plan
plan transactions
—
—
(18)(1,006)
1,0002,865
—
—
982—
Net loss1,859
Contributions
—
—
—
—
—
(18,026)—
(18,026)3
3
Dividends
—
—
—
—
—
(6,118)
—
(6,118)
Net income (loss)
—
—
—
—
—
22,664
(91)
22,573
Balance at August 28, 2021February
26, 2022
$
703
$
48
$
(27,451)(28,439)
$
65,04466,909
$
(728)(1,413)
$
957,951992,523
$
995,567(88)
$
1,030,243
15
ThirteenThirty-nine Weeks Ended August
29, 2020February 27, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Accum.
Class A
Treasury
Paid In
Accum. Other Comp.
Retained
Amount
Amount
Amount
Capital
Comp. Income (Loss)
Earnings
Total
Balance at May 30, 2020
$
703
$
48
$
(26,674)
$
60,372
$
79
$
975,147
$
1,009,675
Impact of ASC 326 see
Note 1
—
—
—
—
—
422
422
Balance at May 31 2020
703
48
(26,674)
60,372
79
975,569
1,010,097
Other comprehensive income,loss, net of
tax
—
—
—
—
354(214)
—
354(214)
Stock compensation plan
transactions
—
—
(2)(875)
8952,793
—
—
8931,918
Net lossContributions
—
—
—
5
—
—
5
Dividends
—
—
—
—
—
(19,399)(1,661)
(19,399)(1,661)
Net income
—
—
—
—
—
6,304
6,304
Balance at August 29, 2020February 27, 2021
$
703
$
48
$
(26,676)(27,549)
$
61,26763,170
$
433(135)
$
956,170980,212
$
991,9451,016,449
Note 89 - Net LossIncome per Common Share
 
Basic net lossincome per
 
share is based on
 
the weighted average Common Stock
 
Common Stock and
Class A Common
 
Stock outstanding. Diluted
net
 
netincome
per
income per
share
 
is
based
on
 
weighted-average
common
 
shares
outstanding
 
during
the
relevant
 
period
adjusted
 
for
the dilutive
dilutive effect of
share-based awards.
Restricted shares
of
131
thousand and
139
thousand were
antidilutive due
to the
net loss
for the
first quarters of fiscal 2022 and 2021, respectively.
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 per common share (amounts in thousands, except per share data):
Thirteen Weeks
Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Numerator
Net lossincome
$
(18,026)39,454
$
(19,399)13,548
$
22,573
$
6,304
Less: Loss attributable to noncontrolling
interest
(63)
0
(91)
0
Net income attributable to Cal-Maine
Foods, Inc.
$
39,517
$
13,548
$
22,664
$
6,304
Denominator
Weighted-average
common shares
outstanding, basic
48,85848,886
48,50148,530
48,888
48,511
Effect of dilutive restricted shares
0150
0129
147
138
Weighted-average
common shares
outstanding, diluted
48,85849,036
48,50148,659
49,035
48,649
Net lossincome per common share attributable to
Cal-Maine Foods, Inc.
Basic
$
(0.37)0.81
$
(0.40)0.28
$
0.46
$
0.13
Diluted
$
(0.37)0.81
$
(0.40)0.28
$
0.46
$
0.13
13
Note 910 - Revenue Recognition
Satisfaction of Performance Obligation
Most of the Company’s
 
Company’s revenue
is derived from
 
contracts with customers based on
 
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.
16
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
 
quoted wholesale market
 
market prices, negotiated
 
negotiated prices or
 
or formulas related
 
related to
our costs
 
costs of
production.
 
The Company’s
 
sales predominantly
 
contain a
 
a single performance
 
performance obligation.
We
 
recognize
revenue
upon satisfaction of the
 
ofperformance obligation with the performance
 
obligation withcustomer, which typically
 
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
 
sale clause, pursuant to which we
 
we credit the customer’s
account for product that
 
that the
customer is unable to
 
to sell before
expiration. The Company records
 
records an estimate
of returns and
 
refunds by using historical
 
historical return
data
and
 
comparing to
 
to current
period
 
sales and
 
accounts
receivable. The
 
allowance is
 
is recorded as
 
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.,
 
(e.g., percentage
discounts off
 
current purchases), inducement offers
 
offers (e.g.(e.g.,
offers for
 
future discounts subject
 
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
of the
related
transaction,
while inducement
offers,
when
accepted
by customers,
are
treated
 
as a
reduction
 
to
 
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.’’
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
(in (in thousands):
Thirteen Weeks
Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Conventional shell egg sales
$
182,549280,633
$
155,384203,189
$
685,678
$
560,297
Specialty shell egg sales
138,657182,945
129,245145,210
462,319
408,537
Egg products
9,36612,749
6,7059,098
33,516
25,736
Other
1,1321,158
1,4481,583
2,682
4,619
$
331,704477,485
$
292,782359,080
$
1,184,195
$
999,189
Contract Costs
The Company can incur costs to
obtain or fulfill a contract with a customer.
 
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
 
AugustFebruary 26, 2022
 
28,and February 27,
 
2021,
the
balance
for
contract
assets
is
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.
delivery. There are rarely
contract assets or liabilities related to performance under the contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1417
Note 1011 - Leases
Expenses related to
 
Expenses related
to operating
leases, amortization
 
of finance leases,
 
leases, right-of-use
assets, and
 
finance lease interest
 
interest are
included
in Cost of sales, Selling general and administrative expense, and Interest
income, net in the Condensed Consolidated Statements
of Operations.Income. The Company’s lease cost consists
of the following (in thousands):
13Thirteen Weeks Ended
Thirty-nine Weeks Ended
August 28, 2021
February 26, 2022
February 26, 2022
Operating Leaselease cost
$
217200
$
625
Finance Leaselease cost
Amortization of right-of-use asset
$
44
$
132
Interest on lease obligations
$
76
$
20
Short term lease cost
$
1,0971,086
$
3,221
Future minimum lease payments under non-cancelable leases are as follows (in
thousands):
As of August 28, 2021February 26, 2022
Operating Leases
Finance Leases
Remainder fiscal 2022
$
586180
$
18160
2023
539
239240
2024
380
217
2025
130
0
2026
26
0
2027
5
0
Total
1,6661,260
637517
Less imputed interest
(133)(92)
(37)(24)
Total
$
1,5331,168
$
600493
The
 
weighted-average
 
remaining
 
lease
 
term
 
and
 
discount
 
rate
 
for
 
lease
 
liabilities
 
included
 
in
 
our
 
Condensed
 
Consolidated
Balance Sheet are as follows:
As of August 28, 2021February 26, 2022
Operating Leases
Finance Leases
Weighted-average
remaining lease term (years)
2.72.4
2.31.8
Weighted-average
discount rate
5.9
%
4.9
%
Note 1112 - Stock Based Compensation
Total stock-based
 
stock-based compensation expense
was $
1.03.0
 
million and $
8932.8
 
thousandmillion for the thirteen
thirty-nine weeks ended August 28,
February 26, 2022
and February 27, 2021, and
August 29, 2020,
respectively.
Unrecognized
compensation
 
expense as
 
as a
result
 
of non
-vestednon-vested
 
shares
of
 
restricted stock
 
stock outstanding
under
 
the
Amended
 
and
Restated
2012
Omnibus
Long-Term
 
Incentive
Plan
at August 28, 2021
February
26,
2022
of
$
5.68.1
 
million will be recorded over a weighted average
period
 
will
be
recorded
over
a
weighted
average period of
1.92.3
 
years.
Refer
to
Part
II
 
Item
8,
Notes
to
Consolidated
 
Financial
Statements
and
Supplementary
Data,
Note
16:
16: Stock Compensation Plans in our 2021 Annual Report for further information
on our stock compensation plans.
 
18
The Company’s restricted share activity
for the thirteenthirty-nine weeks ended August 28, 2021February 26, 2022 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, May 29, 2021
302,147
$
39.37
Granted
113,142
41.13
Vested
(1,359)(90,778)
40.3442.53
Forfeited
(730)(3,932)
37.7037.81
Outstanding, August 28, 2021February 26, 2022
300,058320,579
$
39.3739.12
15
Note 13 - Commitments and Contingencies
Financial Instruments
The
 
The Company
 
maintained
standby
 
letters
of
 
credit ("LOC"
(“LOCs”)
 
totaling
$
4.1
 
million
at
 
August 28,February
 
2021 26,
2022,
which
 
were issued
 
underissued
under
the
Company's Revolving
Credit
 
Facility.
The
 
outstanding
LOCs
are
for
 
the
benefit
of
certain
 
insurance
companies
and
are
 
not
recorded as a liability on the consolidated balance sheets.
 
LEGAL PROCEEDINGS
State of Texas v.
 
v. Cal-Maine Foods, Inc. d/b/a Wharton;
and Wharton County Foods, LLC
 
On April 23,
 
23, 2020,
the Company
 
and its subsidiary
 
Wharton County Foods,
 
Foods, LLC (“WCF”) were
 
were named as defendants
 
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,
 
11, 2020,
the State filed a
 
notice of appeal, which was
 
which was assigned to
the Texas
 
Court of Appeals
for the
First District. The
 
State filed its
 
opening brief on
 
on December 7, 2020.
 
2020. The Company and
 
Company and WCF filed their
 
filed their response
on February
8,
2021. The
On
February
11,
2022,
the
 
Texas
 
Court
of
Appeals
 
has not ruledheard
 
on these submissions.oral
argument
but
has
not
issued
a
ruling.
 
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
 
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
 
eggs during
the
 
COVID-19 state
 
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
 
other defendants from selling eggs
at a price more than
 
than 10% greater than the price
of
eggs prior
 
to the
 
declaration of
the state
 
of the
state of
emergency
 
and damages
 
in the
 
amount of
 
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
 
certain other defendants
 
defendants filed
a
motion to
 
dismiss the
 
plaintiffs’
amended
 
class action
 
complaint. The
 
plaintiffs subsequently
 
subsequently filed a
 
a motion to
 
to strike, and
 
and the
motion to
 
dismiss and
 
related proceedings were
 
were referred to
 
to a United
 
United States magistrate
 
magistrate judge. On
 
On July 14,
 
14, 2021, the
 
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
 
prejudice for
lack of
 
subject matter jurisdiction.
 
jurisdiction. On
September 20,
 
2021, the
 
court adopted the
 
the magistrate’s
report
 
and
 
recommendation
 
in
 
its
 
entirety
 
and
 
granted
 
defendants’
 
motion
 
to
 
dismiss
 
plaintiffs’
 
first
 
amended
 
class
 
action
complaint;
thereafter,
 
the court
 
entered a
 
final judgment
 
in favor
 
of the
 
Company and
 
certain other
 
defendants dismissing
 
the
case without prejudice.
On October 18,
2021, plaintiffs
filed a motion
to alter or
amend the final
judgement and allow
a filing
of
a
second
amended
complaint.
The
Company
responded
on
November
1,
2021.
The
court
has
not
ruled
on
the
plaintiffs’
motion.
 
19
Kraft Foods Global, Inc. et al. v.
United Egg Producers, Inc. et al.
 
As previously
 
reported, on
 
September 25,
 
2008, the
 
Company was
 
was named as
 
as one of
 
of several
defendants
 
in numerous
 
antitrust
cases involving
 
the United
 
States shell
 
egg
industry.
 
The Company
 
settled all
 
of these
 
cases, except
 
for the
 
the claims of
 
of certain
plaintiffs who sought
substantial damages allegedly arising
from the purchase of egg products
 
products (as(as opposed to shell
eggs). These
remaining plaintiffs
 
are Kraft Food
 
Food Global,
Inc., General
 
Mills, Inc., and
 
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
 
for the Northern District
of Illinois, Kraft Foods Global, Inc. et
 
Inc. et al. v.
United
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
 
the United Egg
Producers animal-welfare guidelines and program
 
and program used by
the Company and many
 
many other egg
producers. The Egg
 
Egg Products Plaintiffs
 
Plaintiffs seek to
 
to enjoin the
 
the Company
and other
 
defendants from engaging
 
engaging in
antitrust violations
and seek
 
treble money
 
damages. The
 
parties filed
 
a joint
 
status report
 
on May
 
18, 2020.
 
On August
 
4, 2021,
 
by docket
 
entry,
16
the
 
court
 
instructed
 
the
 
parties
 
to
 
jointly
 
submit
 
a
 
second
 
status
 
report
 
to
 
the
 
court
 
that
 
included
 
a
 
proposed
 
schedule
 
for
preparing a final pretrial order. On
 
order. On August
25, 2021, the parties filed a
joint status report, and on
 
on August 26, 2021, the
court, by
docket entry, informed
the parties that the need to discuss issues was no longer
necessary and that a scheduled August 30, 2021,
status hearing was stricken. No trial schedule has yet been entered by the
court.
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
 
2019, a stipulation
for dismissal was filed with
 
with the court,
but the court
 
has
not yet entered a judgment on the filing.
The Company intends to
continue to defend the remaining
case with the Egg Products Plaintiffs
 
as vigorously as possible based
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
 
present time, it is
 
it is not
possible to
 
estimate the amount
 
amount of
monetary exposure,
 
if any,
 
to the
Company
due to a range of
factors, including the following, among
 
among others: the matter is in
the early stages of preparing for
 
for trial following
remand;
 
any
 
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
 
Oklahoma filed suit,
 
suit, in
the United
 
States District
 
Court for
 
the Northern District
 
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
 
its affiliate, Peterson Farms,
 
Peterson Farms, Inc.
and Simmons Foods,
 
Inc. The State of
 
State of Oklahoma
claims that through
 
the disposal of
chicken litter
 
litter the defendants
 
defendants have polluted
 
polluted the Illinois
 
Illinois River
Watershed.
 
This watershed
 
provides water
 
water to eastern
 
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
 
the litigation
began, Cal-Maine
 
Foods, Inc. purchased
100
% of the
 
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
 
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 above, the Company
is involved in
 
various other claims and litigation
 
and litigation incidental
to its business. Although
 
the
outcome of
 
these matters
 
cannot be determined
 
determined with
certainty,
 
management, upon the
 
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.
20
Note 14 - Related Party Transaction
On
 
August
 
24,
 
2020,
 
Mrs.
 
Jean
 
Reed
 
Adams,
 
the
 
wife
 
of
 
the
 
Company’s
 
late
 
founder
 
Fred
 
R.
 
Adams,
 
Jr.,
 
and
 
the
 
Fred
 
R.
Adams,
 
Jr.
 
Daughters’
 
Trust,
 
dated
 
July
 
20,
 
2018
 
(the
 
“Daughters’
 
Trust”),
 
of
 
which
 
the
 
daughters
 
of
 
Mr.
 
Adams
 
are
beneficiaries
 
(together,
 
the
 
“Selling
 
Stockholders”),
 
completed
 
a
 
registered
 
secondary
public
 
offering
 
of
6,900,000
 
shares
 
of
Common Stock held by them, pursuant to a previously
disclosed Agreement Regarding Common Stock (the “Agreement”)
filed
as an exhibit to our 2021 Annual Report. Mrs. Adams and
the Daughters’ Trust advised the Company that
they were conducting
the
 
offering
 
in
 
order
 
to
 
pay
 
estate
 
taxes
 
related
 
to
 
the
 
settlement
 
of
 
Mr.
 
Adam’s
 
estate
 
and
 
to
 
obtain
 
liquidity.
 
The
 
public
offering
 
was
 
made
 
pursuant
 
to
 
the
 
Company’s
 
effective
 
shelf
 
registration
 
statement
 
on
 
Form
 
S-3
 
(File
 
No.
 
333-227742),
including the Prospectus
contained therein dated October
 
October 9, 2018, and a related
 
a related Prospectus Supplement
dated August 19,
2020,
each of which
 
which is on file
 
file with the
Securities and
 
Exchange Commission. The public
 
The public offering
involved only
 
the sale of
 
shares of
Common
 
Stock
 
that
 
were
 
already
 
outstanding,
 
and
 
thus
 
the
 
Company
 
did
 
not
 
issue
 
any
 
new
 
shares
 
or
 
raise
 
any
 
additional
capital
in
 
the
offering.
 
The
expenses
 
of
 
the
offering
 
(not
including
 
the
underwriting
 
discount
and
 
legal
fees
 
and
expenses
 
of
legal
 
counsel
 
for
 
the
 
Selling
 
Stockholders,
 
which
 
were
 
paid
 
by
 
the
 
Selling
 
Stockholders)
 
paid
 
by
 
the
 
Company
 
were
 
$
1.1
million. Pursuant to the Agreement, the Selling Stockholders reimbursed
the Company $
551
 
thousand.
 
1721
ITEM
 
2.
 
MANAGEMENT’S
DISCUSSION
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATIONS
The following
 
should be
 
read in
 
conjunction with
 
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 29,
 
2021 (the
“2021
(the “2021 Annual
Report”),
and
the accompanying
financial
statements
and
notes included
in Part
II
Item 8
of
the 2021
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
 
Act of 1934
 
1934 (the(the “Exchange
 
“Exchange Act”) relating
 
relating to our
 
our shell
egg
business,
 
including
 
estimated
 
future
 
production
 
data,
 
expected
 
construction
 
schedules,
 
projected
 
construction
 
costs,
 
potential
future
supply
 
of and
 
and demand
 
for
our
 
products,
potential
 
future
corn
 
and soybean
 
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
 
may be
beyond
 
our
control. The
 
factors
that
 
could cause
 
actual results
 
to
differ
 
materially from
 
from those
projected in
 
in the
forward-looking
 
statements include,
 
among others,
 
(i) the
 
risk factors
 
set forth
 
in Part
 
I Item
 
1A of
 
the 2021
Annual
Report
 
(ii)
the
 
risks
and
 
hazards
inherent
 
in
the
 
shell egg
 
business
(including (including
 
disease, pests,
 
weather
 
conditions,
and
potential
for
 
product
recall),
 
(iii) changesincluding
but
not
limited
to
the
current
outbreak
of
highly
pathogenic
avian
influenza
(HPAI)
affecting poultry
 
in the
 
demand forU.S., Canada
 
and marketother
 
prices ofcountries (iii)
 
shell eggschanges in
 
and feedthe demand
 
for and
market prices
of shell
eggs and
feed costs, (iv)
 
our ability to
 
to
predict
and
meet
 
demand
for
cage-free
 
and
other
specialty
 
eggs,
(v)
risks,
 
changes, or obligations
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
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, and
(vii) 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 basedbecause, while
 
are reasonable,we believe
 
there canthe assumptions
 
be no
assurance that
these forward-on which
lookingthe forward-looking
 
statements are
 
willbased are
 
provereasonable, there
 
to
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
respective
dates
thereof,
or
if
no
 
date
 
is
 
stated,
 
as
 
of
 
the date
 
hereof. Except
 
as
 
otherwise
 
required
 
by
 
law,
 
we
 
disclaim
 
any
intent
intent
or
obligation
 
to update publicly
 
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.
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 40.8
million layers and
10.3 million pullets
and breeders is
the largest
in the
U.S. We
sell most
of our
 
shell eggs in
the United States
(“U.S.”). Our total
flock of approximately
42.7 million
layers
and
9.4
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
 
grocery
store chains, club
 
club stores, companies servicing
 
servicing independent
supermarkets in
the U.S., food
 
service distributors and
 
and egg product consumers
consumers in states across
the southwestern, southeastern, mid-western
 
and
mid-Atlantic regions of the U.S.
We
are a
member of
the Eggland’s
Best, Inc.
(“EB”) cooperative
and produce,
market, and
distribute EB
and Land
O'Lakes
branded
eggs,
both
directly
and
through
our
joint
ventures
Specialty
Eggs,
LLC
and
Southwest
Specialty
Eggs,
LLC,
under
exclusive
license
agreements
in
Alabama,
Arizona,
Florida,
Georgia,
Louisiana,
Mississippi
and
Texas
and
in
portions
of
Arkansas, California, Nevada,
North Carolina,
Oklahoma and South
Carolina.
We
also have an
exclusive license in
New York
City in addition to exclusivity in select New York metropolitan areas, including areas within New Jersey and Pennsylvania.
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
 
pricing mechanisms
in pricing
 
agreements with our
 
our customers,
we sell
 
most of
 
our conventional
shell eggs
 
based on
 
formulas that
 
consider,
 
in varying
 
ways, independently
 
quoted regional
 
wholesale market
 
market prices for
 
for shell
eggs
 
or
 
formulas
related
 
to
our
 
costs
of
 
production
which
 
include
 
the
 
cost
of
 
corn
 
and
 
soybean
meal.
 
As
 
an
 
example
of
 
the
volatility
in
the
market
prices
of
shell
eggs,
the
Urner-Barry
Southeastern
Regional White
 
Large,
Southeast Regional Egg
Market
Price
per
dozen
eggs
(“UB southeasternsoutheast large index”) infor the first three quarters of fiscal year 20212022 ranged
from a low of $0.87$1.00 in July 2020June 2021 to a high of $1.63
$2.06 in March 2021.February 2022.
22
Generally,
 
we purchase
 
primary feed
 
ingredients, mainly
 
mainly corn and
 
and soybean meal,
 
meal, at current
 
current market prices.
 
prices. Corn and
 
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.
 
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 eggs
 
and eggofferings,
 
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
 
18
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.
Specialty shell
 
eggs have
 
been a
 
significant and
 
growing portion
 
of the
 
market. In
 
recent years,
 
a significant
 
number of
 
large
restaurant chains, food service companies
 
service companies and
grocery chains, including our
 
our largest customers,
announced goals to
 
transition to
an
exclusively
 
cage-free
egg
 
supply
chain
 
by
specified
 
future
dates.
 
Additionally,
 
several
states,
 
representing 2
 
4%approximately
24% of
the U.S.
total population
according to
the 2020
U.S. Census,
have passed
legislation requiring
that all eggs
 
sold in those
those states
 
must
be
cage-free
 
eggs
by
 
specified
 
future
dates,
 
and
 
other
states
 
are
 
considering
 
such
legislation.
 
In
California
and
Massachusetts,
which represent about 14% of the total U.S. population according to the 2020
U.S. Census, cage-free legislation
went into effect January
1, 2022. For additional
 
information, see the 2021
 
the
2021 Annual Report, Part I,
 
Report, PartItem 1, “Business –
 
I, ItemSpecialty
Eggs,”
 
1, “Business“Business
 
–
Growth
 
Strategy”
and
 
“Business
–
Government
 
Regulation,”
and
 
the
first
 
risk
factor
 
in
Part
I
Item
1A,
Part I Item 1A, “Risk“Risk Factors” under the sub-heading “Legal and Regulatory
Risk Factors.”
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
 
expect to experience
lower selling prices, sales volumes
 
volumes and net
income (and may incur
 
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.
COVID-19
Since early
 
2020, the
 
coronavirus (“COVID-19”) outbreak,
 
outbreak, characterized as
 
as a pandemic
 
pandemic by the
 
the World
 
Health Organization
 
on
March
 
11,
 
2020,
 
has
 
caused
 
significant
 
disruptions
 
in
 
international
 
and
 
U.S.
 
economies
 
and
 
markets.
 
We
 
understand
 
the
challenges
 
and
 
difficult
 
economic
 
environment
 
facing
 
families
 
in
 
the
 
communities
 
where
 
we
 
live
 
and
 
work,
 
and
 
we
 
are
committed
 
to
 
helping
 
where
 
we
 
can.
 
We
 
have
 
provided
 
food
 
assistance
 
to
 
those
 
in
 
need
 
by
 
donating
 
approximately
 
239679
thousand
 
dozen
 
eggs
 
to
 
date
 
in
 
fiscal
 
2022.
 
We
 
believe
 
we
 
are
 
taking
 
all
 
reasonable
 
precautions
 
in
 
the
 
management
 
of
 
our
operations in response
 
response to
the COVID-19
 
pandemic. Our top
 
top priority
is the
 
health and safety
 
safety of our
 
our employees,
who work
 
hard
everyeach day
 
to produce
 
eggs for our
 
our customers. As
 
As part
of the
 
nation’s
 
food supply,
 
we work
 
in a critical
 
critical infrastructure industry,
and
 
we
 
believe
 
we
 
have
 
a
 
special
 
responsibility
 
to
 
maintain
 
our
 
normal
 
work
 
schedule.
 
As
 
such,
 
we
 
are
 
in
 
regular
communication with our managers across our operations and
continue to closely monitor the situation in our facilities and
in the
communities where we live and work. We
have implemented procedures designed to protect our employees, taking into account
guidelines
published
 
by the
 
the Centers
for
 
Disease Control
 
and
other
 
government
health
 
agencies,
and
 
we
have
 
strict sanitation
protocols
and
 
biosecurity
measures
 
in
place
 
throughout
our
 
operations
with
 
restricted access
 
access to
visitors.
 
There
are
 
no known
indications that COVID-19 affects henschickens or can be transferred
through the food supply.
 
We
 
continue to
proactively monitor
 
and manage
operations during
 
the COVID-19 pandemic, including
 
including additional
related costs
that
 
we
incurred
 
or
may
 
incur
in
 
the
future.
 
The pandemic
 
had
a
 
negative
impact
 
on our
 
business
through
 
disruptions
in
 
the
supply chain such as increased costs
and limited availability of packaging supplies,
 
supplies, and increased labor costs and medical costs.costs
and, more recently, inflation.
In
 
In the third
 
first quarters of
 
of fiscal 2022
 
2022 and
2021,
 
we spent
 
approximately $534
thousand and
$553397 thousand
 
and $832(excluding medical
insurance claims)
 
thousand (excluding
medical insurance
claims)
related
to
 
the pandemic
 
pandemic,and its
effects,
 
respectively.
 
The
majority
 
of these
expenses in
fiscal 2022
resulted
from additional labor
costs and increased
cost of packaging
materials, primarily reflected
in cost of
sales. In
fiscal 2021, most
of
 
these
 
expenses
 
inrelated
 
fiscal
2022
resulted
fromto
 
additional
 
labor
 
costs,
primarily
reflected
in
cost
of
sales.
Medical
insurance
claims
related
to
COVID-19 paid during the third quarter of
fiscal 2022 were an additional $424 thousand as
compared to $322 thousand paid in
the comparable quarter in fiscal 2021.
23
For
the
thirty-nine
weeks
ended
2022
and
2021,
we
spent
approximately
$1.8
million
(excluding
medical
insurance
claims)
related to
the pandemic
and its
effects. The
majority of
these expenses
in fiscal
2022 resulted
from additional
labor costs
and
increased
 
cost
 
of
 
packaging
 
materials,
 
primarily
 
reflected
 
in
 
cost
 
of
 
sales.
 
In
 
fiscal
 
2021,
 
most
 
of
 
these
 
expenses
 
related
 
to
additional labor costs, primarily reflected in cost of sales. Medical insurance claims related to COVID-19 paid during the thirty-
nine
 
laborweeks
 
costs.
Medical
insurance
claims
related
to
COVID-19
paid
during
the
first
quarter
of
fiscal
ended 2022
 
were
 
an
additional $267 thousand $1.6
million
as compared to $324 thousand paid in the
 
same quarter to $1.1
million paid
in
the comparable
period
in
fiscal 2021.
2021.
EXECUTIVE OVERVIEW
For the firstthird
 
quarter of fiscal
 
2022, we recorded
 
we recorded a gross profit
 
gross profit of $6.6$91.6 million
compared to $47.5
 
million compared tofor the
 
$16.8 million forsame period
of
 
the same periodfiscal
 
of
fiscal 2021,
 
with the decrease due primarily to the higher costs of feed
 
ingredients and higher processing costs. Our totalthe
 
dozens
sold decreasedincrease
 
1.7%due
primarily
to
higher
shell
egg
prices
and
increased
volume
of
specialty
eggs.
Our
total
dozens sold
increased 2.8%
 
to 259.4287.7
 
million dozen
 
shell eggs
 
for the
 
first quarterthe third
 
quarter of fiscal
 
fiscal 2022 compared
 
compared to 264.0
279.7
 
million
dozen for
 
for
the
same
 
period
of
 
fiscal
 
2021.
For
 
the
first third
 
quarter
of
 
fiscal
2022,
 
conventional
dozens
 
sold
decreased
 
5.5%5.2%
 
and
specialty
specialty dozens sold
increased 8.9%24.1%
 
as compared to the same
 
to the
same quarter
in fiscal 2021. Specialty
 
Specialty dozens
sold increased
as more
cage-free
cage-free facilities came into production, which helped increase ourretailers continue shift to selling cage-free
egg sales. products and cage-free legislation went into
full effect in California on January 1, 2022.
The
 
daily
 
average
 
price
 
for
 
the
 
UB
 
southeasternsoutheast
 
large
 
index
 
for
 
firstthe
third
 
quarter
 
of
 
fiscal
 
2022
 
increased
 
41.2%46.8%
 
from
 
the
same
comparable period
 
in
 
the prior
 
prior year.
 
Our
net
 
average
 
selling
price
 
per
dozen
 
for
 
the
 
firstthird
 
quarter
 
of
fiscal
 
20212022
 
was
 
$1.2381.612
compared
 
to
$1.078 $1.246
 
in
the
 
prior
yearprior-year
 
period.
 
Hen
numbers
 
reported
by the
USDA as
of
September
1, 2021,
were 319.5
million,
which
is
approximately
 
the sameUSDA
 
numberas of
 
hens inMarch 1,
 
same period2022, were
 
for the322.7 million,
which is
 
approximately 5.4
million less
hens than
the comparable
period of
the prior
year.
 
The USDA
 
also reported
 
that the
hatch
 
hatch from
 
AprilOctober
2021
through
February
2022
decreased
5.5%
compared
to
the
prior-year
period.
As
of
March
1,
2022,
table-type eggs in incubators totaled 55.4 million, a decrease of 7.6% versus the prior-year period.
We
are
closely
monitoring the
recently reported
outbreaks of
highly pathogenic
avian influenza
(“HPAI”).
According
to
the
U.S.
Centers for
Disease Control
and Prevention,
these detections
.
There
have been no positive tests for HPAI
at any Cal-Maine Foods’ owned or contracted production facility to date. As
of March 28,
2022, the USDA
division of Animal
and Plant Health
Inspection Service (“APHIS”),
reported that approximately
11.5 million
commercial layer
hens or
about 3.6%
of the
table egg
layer flock
based on
February 2022
reported layer
numbers, have
been
depopulated due to
HPAI.
Pullets impacted comprise
approximately 830,000, or
about 0.7 percent
of the February
2022 pullet
inventory. 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.
Our farm production costs
per dozen produced for
the third quarter of
fiscal 2022 increased 16.9%,
or $0.132, compared to
the
third quarter
of fiscal
2021. This
increase was
primarily due
to increased
prices for
feed ingredients.
For the
third quarter
of
fiscal 2022, the average
Chicago Board of Trade
(“CBOT”) daily market price
was $6.13 per
bushel for corn and
$412 per ton
for soybean meal, representing an increase of 23.5% and a decrease of 2.5%, respectively, compared to the average daily CBOT
prices for
the comparable
period in
the prior
year.
Other farm
production
costs for
the third
quarter of
fiscal 2022
increased
11.8% versus the comparable period in the prior fiscal year, driven by higher flock amortization and facility expense.
Effective
May
30,
2021,
we
acquired
the
remaining
50%
membership
interest
in
Red
River
Valley
Egg
Farm,
LLC
(“Red
River”). Red River owns and operates a specialty shell egg production complex with approximately 1.7 million cage-free laying
hens, cage-free
pullet capacity,
feed mill,
processing plant,
related offices
and outbuildings
and related
equipment located
on
approximately 400
acres near
Bogata, Texas.
For additional
information, see
of the
Notes to
Condensed
Consolidated Financial Statements included in this Quarterly Report.
During October
2021, we
announced that
our Board
of Directors
approved a
strategic investment
that will
specialize in
high-
value
commercial
product
solutions
targeting
specific
needs
in
the
food
industry.
The
initial
focus
will
include
hard-cooked
eggs.
The
new
entity,
located
in
Neosho,
Missouri,
will
operate
as
MeadowCreek
Foods,
LLC
(“MeadowCreek”).
We
will
capitalize MeadowCreek with
up to $18.5
million in debt
and equity to
purchase property and
equipment and to
fund working
capital, and we
will retain a
controlling interest in
the venture. We
will serve as
the preferred provider
to supply specialty
and
conventional
eggs
that
MeadowCreek
needs
to
manufacture
egg
products.
MeadowCreek’s
marketing
plan
is
designed
to
extend
our
reach
in
the
foodservice
and
retail
marketplace
and
bring
new
opportunities
in
the
restaurant,
institutional
and
industrial food products arenas.
Also, during
October 2021,
we announced
that our
Board of
Directors approved
a $23.0
million capital
project to
expand our
cage-free egg production at our
Okeechobee, Florida, production facility.
The project is designed
to include the construction of
two cage-free layer houses and one cage-free
pullet house with capacity for approximately 400,000
cage-free hens and 210,000
pullets, respectively.
Construction has
commenced, with
first pullet
placements planned
by mid-May
2022 and
the first
layer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
19house planned to be finished by October 1, 2022, with project completion expected by February 1, 2023. The Company plans to
2021fund the project through August 2021 increased 2.1%a combination of available cash on hand, investments and operating cash flow.
Effective December 5,
 
compared2021, we made
an additional investment
in our joint
venture Southwest Specialty Eggs,
LLC to the prior-year period. As of September 1, 2021, eggs in incubators wereacquire
down 4.9% versus the prior-year period.
warehouse
 
Our farmand
 
production costsdistribution
 
per dozencapability
 
produced forto
expand
Southwest
Specialty
Eggs,
LLC’s
customer
base
in the
southern
California, Arizona and Nevada
markets. This strategic investment
is proving to
be incrementally
accretive as additional
cases
of
specialty
and
cage-free
eggs
began
distribution
through
 
the first
 
quarter ofwarehouse
 
fiscal 2022in
 
increased 25.4%early
 
or $0.182
compared to
the
first quarter
of fiscal 2021
.
This increase was
primarily due
to increased
prices for
feed ingredients
caused by
increased export
demand,December
 
as
 
wellcustomers
 
as
weather-related
shortfalls
in
production
and
yields,
which
have
placed
additional
pressure
on
domestic
supplies. For the
first quarter,
the average Chicago
Board of Trade
(“CBOT”) daily market
price was $5.96
per bushel for
corn
and $364
per ton
for soybean
meal, representing
an increase of
81.8%
and 26.1%,
respectively,
compared to
the average
daily
CBOT prices for
the first quarter
of fiscal 2021.
Other farm production
costs for the
first quarter of
fiscal 2022 increased
7.6%
compared to the same period in the prior fiscal year due to higher flock amortization
and facility expenses.
RESULTS OF
OPERATIONS
The
following
table
sets
forth,prepared
 
for
 
the
California’s January 1, 2022 cage-free mandate.
RESULTS OF OPERATIONS
The following table sets
 
forth, for the periods
 
indicated,
certain
items
from
 
our
Condensed
Consolidated
Statements
 
of Income
Operations expressed as a percentage of net sales.
13Thirteen Weeks Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
98.080.8
%
94.386.8
%
88.0
%
87.7
%
Gross profit
2.019.2
%
5.713.2
%
12.0
%
12.3
%
Selling, general and administrative
14.011.0
%
15.013.3
%
12.4
%
13.6
%
(Gain) loss on disposal of fixed assets
(0.1)
%
0.1
%
(0.2)
%
—
%
Operating lossincome (loss)
(11.9)8.3
%
(9.3)(0.2)
%
(0.2)
%
(1.3)
%
Total other income, net
1.72.8
%
3.4
%
1.8
%
1.5
%
Income before income taxes
11.1
%
3.2
%
1.6
%
0.2
%
Income tax expense (benefit)
2.8
%
(0.5)
%
(0.2)
%
(0.4)
%
Net income
8.3
%
3.7
%
1.8
%
0.6
%
Loss before income taxesNET SALES
(10.2)Total net
sales for the third quarter of
fiscal 2022 were $477.5 million compared
to $359.1 million for the same
period of fiscal
%
(8.7)
%
Income tax benefit
(4.8)
%
(2.1)
%2021.
Net lossshell egg
sales represented 97.3%
and 97.5% of
total net sales
for the
third quarters of
fiscal 2022 and
2021, respectively.
(5.4)Shell
egg
sales
classified
as
“Other”
represent
sales
of
hard-cooked
eggs,
hatching
eggs
and
other
miscellaneous
products
%included with our shell egg operations.
(6.6)Total
net sales
for the
thirty-nine weeks
ended February
26, 2022
were $1,184.2
million, compared
to $999.2
million for
the
%comparable period of fiscal 2021.
Net
shell
egg
sales
represented
97.2%
and
97.4%
of
total
net
sales
for
the
thirty-nine
weeks
ended
February
26,
2022
and
February 27, 2021, respectively.
Total
conventional
dozens
sold
for
the
first,
second
and
third
quarters
were
183.9
million,
192.1
million
and
192.5
million,
respectively.
Total
specialty
dozens
sold
for
the
first,
second
and
third
quarters
were
70.8
million,
77.4
million
and
95.1
million, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
20
NET SALES
Total
net sales for the
first quarter of fiscal
2022 were $331.7
million, compared to
$292.8 million for
the same period of
fiscal
2021.
Net shell
egg
sales represented
97.2% and
97.7% of
total net
sales for
the first
quarter of
fiscal 2022
and 2021,
respectively.
Shell
egg
sales
classified
as
“Other”
represent
sales
of
hard
cooked
eggs,
hatching
eggs,
and
other
miscellaneous
products
included with
our shell
egg operations.
The table
below presents
an analysis
of our
conventional and
specialty shell
egg sales
(in (in thousands, except percentage data):
13Thirteen Weeks Ended
August 28,Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
August 29, 2020February 26, 2022
February 27, 2021
Total net sales
$
331,704477,485
$
292,782359,080
$
1,184,195
$
999,189
Conventional
$
182,549280,633
56.660.4
%
$
155,384203,189
54.358.0
%
$
685,678
59.6
%
$
560,297
57.5
%
Specialty
138,657182,945
43.039.4
%
129,245145,210
45.241.5
%
462,319
40.2
%
408,537
42.0
%
Egg sales, net
321,206463,578
99.699.8
%
284,629348,399
99.5
%
1,147,997
99.8
%
968,834
99.5
%
Other
1,1321,158
0.40.2
%
1,4481,583
0.5
%
2,682
0.2
%
4,619
0.5
%
Net shell egg sales
$
322,338464,736
100.0
%
$
286,077349,982
100.0
%
$
1,150,679
100.0
%
$
973,453
100.0
%
Net shell egg sales as a
percent of total net sales
97.3
%
97.5
%
97.2
%
97.797.4
%
Dozens sold:
Conventional
184,487192,511
71.166.9
%
195,238203,070
74.072.6
%
568,511
70.0
%
599,625
73.4
%
Specialty
74,89895,140
28.933.1
%
68,75676,645
26.027.4
%
243,310
30.0
%
217,735
26.6
%
Total dozens sold
259,385287,651
100.0
%
263,994279,715
100.0
%
811,821
100.0
%
817,360
100.0
%
Net average selling price per
dozen:
Conventional
$
0.9891.458
$
0.7961.001
$
1.206
$
0.934
Specialty
$
1.8511.923
$
1.8801.895
$
1.900
$
1.876
All shell eggs
$
1.2381.612
$
1.0781.246
$
1.414
$
1.185
Egg products sales:
 
Egg products net sales
9,36612,749
6,7059,098
33,516
25,736
Pounds sold
15,26915,947
15,03015,569
47,225
46,565
Net average selling price per
pound
0.6130.799
0.4460.584
0.710
0.553
Shell egg net sales
-Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
In
 
the
 
firstthird
 
quarter of
fiscal 2022,
conventional
egg
sales
increased
$77.4
million,
or
38.1%,
compared
to
the
third
quarter of fiscal
2021, 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
$88.0 million
increase and
the change
in volume
resulted in a $10.6 million decrease in net sales, respectively.
-
We believe prices for conventional eggs were positively impacted by a better alignment of the conventional production
layer
hen
flock
and
customer
and
consumer
demand.
According
to
reports
from
the
USDA,
the
average
number
of
hens producing
white and
brown conventional
eggs for
February 2022
decreased 31.7
million, or
13.1%, versus
the
prior-year
comparable period.
USDA Agriculture
Marketing
Service reported
shell
eggs
broken for
foodservice and
further processing
increased 7.9% compared
to the
comparable prior-year
period. We
believe lower
conventional egg
prices in the prior-year period were primarily tied to a surplus of conventional eggs entering the retail channel from the
foodservice channel exceeding demand during this phase of the pandemic.
-
Conventional
egg
volume
sales
decreased
5.2%.
We
believe
many
consumers
have
evolved
their
preferences
to
purchase higher-priced specialty eggs for at-home meal preparation due to the perceived health and
welfare benefits of
specialty eggs, various state laws
mandating the sale of cage-free
and the public commitments by
most retailers to sell
more cage-free
products. Per
Information Resources,
Inc. (“IRI”),
Total
US –
Multi Outlet,
conventional white
shell
egg
dozens
sales
decreased
13.7%
during
the
latest
13
weeks
ended
February
27,
2022
versus
the
prior-year
comparable period.
-
Specialty egg sales increased
$37.7 million, or 26.0%,
in the third quarter
of fiscal 2022 compared
to the third quarter
of
fiscal
2021,
primarily
due
to
a
24.1%
increase
in
the
volume
 
of
 
specialty
eggs
sold,
which
resulted
in
a
$35.0
million increase in
net sales. Per
IRI, Total
US – Multi
Outlet for the
latest 13 weeks
ended February 27,
2022, cage-
free eggs
dozens sold
(including free-range,
pasture-raised and
organic) increased
21.3%. We
believe this
increase in
26
demand is due
to California’s
cage-free mandate going
into-effect January
1, 2022,
as well
as more retailers’
shifting
to selling more cage-free products.
-
Our specialty egg
sales in
the third quarter
of fiscal
2022 versus
the prior-year
period benefitted from
our acquisition
of
the remaining
50% membership
interest in
Red River,
which helped
drive our
cage-free egg
sales. Our
cage-free
sales
also
benefitted
from
our
continued
investment
in
expanded
cage-free
capabilities
as
additional
cage-free
production capacity came online during the quarter. Cage-free egg sales for the first, second and third quarters of fiscal
2022 were 22.3%, 22.4% and 24.1% of our total net shell egg sales, respectively.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
For
the
thirty-nine
weeks
ended
February
26,
 
2022,
 
conventional
 
egg
 
sales
 
increased
 
$27.2125.4
 
million
 
or
 
17.5%,22.4%
compared
 
to
 
the
 
firstsame period
quarter of
 
fiscal 2021,
 
primarily
due
 
to
the
 
increase in
 
price,
partially
 
offset
by
 
a decrease
 
decrease in
volume
 
of
conventional
eggs
 
sold.
 
Changes
 
in
 
price
 
resulted
 
in
 
a
 
$35.6154.6
 
million
 
increase
 
and
 
change
 
in
 
volume
resulted
in
a
$10.6
million
resulted in a $29.1 million decrease in net sales, respectively.
-
We believe prices for conventional eggs were positively impacted by a better alignment of the conventional production
Higher quarter-over-quarterlayer hen flock and customer and consumer demand.
USDA Agriculture Marketing Service reported shell eggs broken
for
foodservice
and
further
processing
increased
10.2%
compared
to
the
comparable
prior-year
period.
We
believe
lower conventional
 
egg prices were primarily due
to depressed prices in the first
quarter of fiscal
2021,
which
resulted
from
conventional
eggs
entering
the
retail
channel
from
the
foodservice
channel
due
to
the
pandemic.
-
The decrease
 
in volumethe
prior-year period
were primarily
tied to
a surplus
 
of conventional
 
eggs soldentering
the retail channel from the foodservice channel exceeding demand during this phase of the pandemic.
-
The decrease in
 
volume of conventional
eggs sold was
primarily due to
elevated retail demand
during the first
half of
fiscal 2021
 
due to
 
the firstconsumers’ preferences
 
quarter ofto purchase
 
fiscal 2021eggs for
 
elevated retailin-home meal
demandpreparation due
 
to consumers’the
 
preferencespandemic. We
saw this consumer
preference begin to
 
purchase eggsshift in the
 
for in-home
meal preparation
due to
the pandemic.
We
saw
this consumer preference
begin to shift in
the fourth quarter of
 
fiscal 2021 as consumers
 
consumers began to
resume out-of-
home
dining
and
prepare
fewer
meals
at
home.
Per
Information
Resources,
Inc.
(“IRI”),
Total
US
–
Multi
Outlet,
conventional white shell egg dozens sales decreased 12.6% during the latest 39
weeks ended February 27, 2022 versus
the prior-year comparable period.
-
Specialty egg sales increased $53.8
million, or 13.2%, for the
thirty-nine weeks ended February 26, 2022
compared to
the same period of
fiscal 2021, primarily due
 
to resume out-of-home
dining and preparean 11.7%
 
fewer meals at home.increase in the volume
of specialty dozens sold
and a slight
increase in specialty egg prices. Changes in price resulted in a $5.8 million increase and change in volume resulted in a
$48.0 million increase in net sales,
respectively. We
also benefitted from our additional cage-free
production capacity.
Cage-free egg sales for the thirty-nine weeks ended February 26, 2022 were 23.0% of our total net shell egg sales.
Egg products net sales
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
SpecialtyEgg
 
eggproducts
net
 
sales
increased
 
$9.43.7
 
million
 
or 7.3
 
%,40.1%
 
primarilyfor
 
duethe
third
quarter
of
fiscal
2022
compared
 
to
 
increasedthe
 
volumesame
period of fiscal 2021,
primarily due to a
36.8% selling price increase,
which had a $3.4
million positive impact on
net
sales.
-
Selling prices for egg products in
the third quarter of fiscal 2021
were negatively impacted by a decline in
foodservice
demand due
to the
pandemic. Our
egg products
net average
selling price
increased in
the third
quarter of
 
8.9%fiscal 2022
compared to
 
whichthe same
 
resultedperiod in
fiscal 2021
as foodservice
channel demand
has begun
to shift
more to
pre-pandemic
levels.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Egg products
net sales
increased $7.8
million or
30.2%, primarily
due to
a 28.4%
selling price
increase compared
to
the first thirty-nine weeks of fiscal 2021, which had a $7.4 million positive impact on net sales.
-
Our egg products
net average selling
price increased in
the thirty-nine weeks
end February 26,
2022, compared to
the
same
period
 
in
 
a
$11.4 millionfiscal
 
increase in net sales.
More cage-free facilities
came into production
which helped increase our
cage-free
egg sales.
-
We believe that
higher demand for specialty eggs has been driven by the pandemic
,2021
 
as consumers prepared more meals
for in-home
 
consumption ratherfoodservice
 
than diningchannel
 
out.demand
 
We
believe higher
at-home meal
preparation has
 
driven abegun
 
consumerto
shift
more
towards
pre-pandemic
levels.
preference Selling
prices
for
egg
products
in
the
thirty-nine
weeks
ended
February
27,
2021
were
negatively
impacted
by
a
decline in foodservice
demand during the
more restrictive phases
of governmental and
business shutdowns due
to purchase higher-priced specialty eggs.the
pandemic.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
21COST OF SALES
Egg products netCosts of sales
-
Egg products
net sales
increased $2.7
million or
39.7%, primarily
due to
a 37.4%
selling price
increase compared
to
the first quarter of fiscal 2021, which had a $1.6 million positive impact
on net sales.
-
Selling prices for
 
egg products in
the first quarter
of fiscal 2021
were negatively impacted
by a decline
in foodservice
demand
due to
the pandemic.
Our egg
products net
average selling
price
increased in
the first
third quarter of
 
fiscal 2022
compared to
the same
period in
fiscal 2021
as foodservice
channel demand
has begun
to shift
more to
pre-pandemic
levels.
COST OF SALES
Costs of
sales for
the first
quarter of
fiscal 2022
were $325.1$385.9
 
million compared
to $276.0$311.6
 
million for
the same
 
period of
fiscal
2021. For the
thirty-nine weeks ended
February 26, 2022
and February 27,
2021, total cost
of sales were
$1,042.2 million and
$876.5 million, respectively.
Cost of
 
sales consists
 
of costs
 
costs directly
related
 
to producing,
 
processing
and
 
packing shell
 
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
 
incurred at the egg
 
the egg production
facility,
 
including feed,
facility,
 
hen amortization, and
 
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):
13Thirteen Weeks Ended
August 28, Thirty-nine Weeks Ended
February 26,
2022
February 27,
2021
August 29, 2020%
Change
February 26,
2022
February 27,
2021
%
Change
Cost of Sales:
Farm production
$
207,495239,389
$
161,863190,883
28.225.4
%
$
668,855
$
531,877
25.8
%
Processing, packaging, and warehouse
65,05977,116
59,86963,640
8.721.2
211,649
187,014
13.2
Egg purchases and other (including
change in inventory)
44,69159,135
48,93350,443
(8.7)17.2
133,968
137,001
(2.2)
Total shell eggs
317,245375,640
270,665304,966
17.223.2
1,014,472
855,892
18.5
Egg products
7,81410,263
5,3526,597
46.055.6
27,749
20,565
34.9
Total
$
325,059385,903
$
276,017311,563
17.823.9
%
$
1,042,221
$
876,457
18.9
%
Farm production costs (per dozen
produced)
Feed
$
0.5450.562
$
0.3880.467
40.520.3
%
$
0.546
$
0.422
29.4
%
Other
$
0.3530.350
$
0.3280.313
7.611.8
%
$
0.350
$
0.318
10.1
%
Total
$
0.8980.912
$
0.7160.780
25.416.9
%
$
0.896
$
0.740
21.1
%
Outside egg purchases (average cost per
dozen)
$
1.351.75
$
1.041.26
29.838.9
%
$
1.57
$
1.23
27.6
%
Dozens produced
236,458264,433
231,161248,130
2.36.6
%
Dozens sold757,677
259,385731,205
263,994
(1.7)3.6
%
Percent produced to sold
91.9%
88.7%
3.6
%
93.3%
89.5%
4.2
%
Farm Production
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Feed
 
Feed costs per
dozen
produced
 
increased 40.5% 20.3%
in
the first
third
quarter
of
 
fiscal
2022
compared
to
the firstthird
 
quarter of fiscal
2021,fiscal 2021.
 
This increase
was primarily
 
due
 
to
 
higherincreased prices
 
for
corn, our
primary feed
 
ingredientingredient. For
 
pricesthe
 
resultingthird
quarter
 
fromof
 
increasedfiscal 2022,
 
exportthe
 
demand,average
 
asdaily
 
wellChicago
 
asBoard
 
weather-
related shortfalls in production and yields, which have placed additionalof
 
pressure on domestic supplies.Trade
(“CBOT”) market
price
was
$6.13 per
bushel
for
corn representing an increase of 23.5 percent compared to the average
daily CBOT prices for the third quarter of fiscal
2021.
-
Other
farm
 
production costs
 
costs increased
due
 
to higher
 
flock amortization,
 
,primarily from
 
primarilyan increase
 
from anin our
 
increasecage-free
production, which has
higher capitalized costs. Also,
our higher feed
costs, which began to
rise in our
third quarter of
fiscal 2021, are capitalized in our flocks during pullet production and increased our amortization expense.
-
We had higher facility expense as more cage-free facilities came into production.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Feed
costs per
dozen
produced
increased
29.4%
 
in
 
the
thirty-nine weeks
ended
February 26,
2022
compared
to
the
same period
of fiscal
2021, primarily
due to
higher feed
ingredient prices
resulting from
weather-related shortfalls
in
production and yields, which have placed additional pressure on domestic supplies.
-
Other farm
production costs
increased due
to higher
flock amortization,
primarily from
an increase
in our
 
cage-free
production,
 
which
 
has
 
higher
 
capitalized
 
costs.
 
Also,
 
higher
 
feed
 
costs,
 
which
 
began
 
to
 
rise
 
in
 
our
 
third
 
quarter
 
of
fiscal 2021, are capitalized in our flocks during pullet production and
increased our amortization expense.
-
 
28
-
We had higher
facility expense as more cage-free facilities came into production.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Cost of
 
packaging materials
increased 17.7%
compared to
the third
quarter of
fiscal 2021
as supply
chain constraints
initially
caused
by
the
pandemic
increased
costs
for
 
packaging
 
materialsproducts
and
manufacturers
implemented
pandemic
surcharges.
Costs also increased due to rising inflation.
-
Labor costs increased
16.3% due to
wage increases in
response to labor
shortages, primarily due
to the pandemic
and
its effects.
-
Dozens
processed
 
increased
 
8.9%6.6%
 
compared
 
to
 
the
 
firstthird
 
quarter
 
of
 
fiscal
 
2021,
 
which
resulted
in
a
$4.5
million
increase in costs.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Cost of
packaging materials
increased 10.8%
compared to
the thirty-nine
weeks ended
February 27,
2021 as
 
demandsupply
chain
constraints
initially
caused
by
the
pandemic
increased
costs
 
for
 
packaging
products
 
increased
due
to
pandemic
supply
chain
constraintsproducts
 
and
 
manufacturers
implemented pandemic surcharges.
 
Costs also increased
prices
and
implemented
pandemic surcharges. due to rising inflation.
-
Labor costs increased 11.1%
15.3% due to wage
 
wage increases in
response to labor
shortages, primarily due
to the pandemic.pandemic
and
its effects.
-
Dozens processed increased 3.2%
compared to the thirty-nine
weeks ended February 27,
2021, which resulted in
$6.1
million increase in costs.
Egg purchases and other (including change in inventory)
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
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 91.9% from 88.7%.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Costs
 
in
 
this
 
category
 
decreased
 
primarily
 
due
 
to
 
the
 
decrease
 
in
 
the
 
volume
 
of
 
outside
 
egg
 
purchases,
 
as
 
our
percentage of produced to sold increased to 91.2%93.3% from 89.5%, partially offset by higher egg prices.
Looking
 
forward
throughout
the
rest
of
fiscal
2022,
market
indications
point
to
higher
corn
and
soybean
prices
and
higher
volatility tied to the Russia-Ukraine war and higher export demand.
GROSS PROFIT
Gross profit for the third quarter of fiscal 2022
was $91.6 million compared to $47.5 million for the
same period of fiscal 2021.
The increase of $44.1 million was primarily due to higher egg prices as well as the increased volume of specialty eggs, partially
offset by an increase in the increased cost of these purchases.feed ingredients and processing costs.
Gross profit
for the
thirty-nine weeks
ended February
26, 2022
was $142.0
million compared
to $122.7
million for
the same
period of fiscal
2021. The increase
of $19.3 million
was primarily due
to higher egg
prices as well
as the increased
volume of
specialty eggs, partially offset by the increased cost of feed ingredients and processing costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22
Looking
forward
throughout
the
rest
of
fiscal
2022,
corn
and
soybean
supplies
remained
tight
relative
to
demand,
primarily
related
to
higher
export
demand,
as
well
as
weather-related
shortfalls
in
production
and
yields.
We
expect
market
prices
to
remain elevated
and volatile
relative to
historical prices
at least
for the
short term
given the
ongoing disruptions
related to
the
COVID-19 global pandemic, weather fluctuations and geopolitical issues.
GROSS PROFIT
Gross profit
for the
first quarter
of fiscal
2022 was
$6.6 million
compared to
$16.8 million
for the
same period
of fiscal
2021.
The decrease of $10.1 million was primarily due to the increased cost of feed ingredients
and processing costs.
29
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):
13Thirteen Weeks Ended
August 28,February 26, 2022
February 27, 2021
August 29, 2020
$ Change
% Change
Specialty egg expense
$
13,71517,318
$
12,69716,162
$
1,0181,156
8.07.2
%
Delivery expense
13,93616,440
12,49413,359
1,4423,081
11.523.1
%
Payroll, taxes and benefits
9,93911,398
11,30110,195
(1,362)1,203
(12.1)11.8
%
Stock compensation expense
1,0011,007
893964
10843
12.14.5
%
Other expenses
7,9346,523
6,5806,976
1,354(453)
20.6(6.5)
%
Total
$
46,52552,686
$
43,96547,656
$
2,5605,030
5.810.6
%
Third Quarter – Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Advertising andSpecialty egg
 
franchise fees increasedexpense which
 
in the firstincludes franchise
 
quarter offees, advertising
 
and promotion
costs generally
tracks with
specialty
egg volumes
which were
up 24.1%
for the
third quarter
of fiscal
2022 compared
 
to the first
 
quarter same period
of fiscal
 
2021,2021.
dueSpecialty dozens
sold to the 8.9%
outside distributors
including unconsolidated
affiliates, Specialty
Eggs, LLC
and Southwest
Specialty Eggs, LLC, increased volume ofwhich reduced related costs that we generally incur for specialty eggs sales.
egg sales to retailers.
 
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
is primarily due to the increase in fuel costs.
increased wages for standard annual
 
raises as well as the
addition of Red River. The accrual for anticipated performance-based bonuses also increased.
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
$ Change
% Change
Specialty egg expense
$
45,295
$
42,898
$
2,397
5.6
%
Delivery expense
44,771
38,905
5,866
15.1
%
Payroll, taxes and benefits
32,640
31,526
1,114
3.5
%
Stock compensation expense
2,983
2,789
194
7.0
%
Other expenses
21,302
19,376
1,926
9.9
%
Total
$
146,991
$
135,494
$
11,497
8.5
%
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Specialty egg
expense which
includes franchise
fees, advertising
and promotion
costs generally
tracks with
specialty
egg volumes
which were
up 11.7%
for the
thirty-nine weeks end
February 26,
2022, compared
to the
same period
of
fiscal 2021.
Specialty dozens sold to outside distributors including unconsolidated affiliates,
Specialty Eggs, LLC and
Southwest Specialty Eggs,
LLC, increased which
reduced related costs
that we generally
incur for specialty
egg sales
to retailers.
Delivery expense
-
The increased
 
decrease
in payroll,
taxes and
benefitsdelivery expense
 
is primarily
 
due
to
 
a decreasethe increase
 
in bonusfuel
 
accruals asand labor
 
wellcosts for
 
as aboth our
 
decreasefleet and
 
incontract
expense associated with the deferred compensation plan.
trucking.
Other expenses
-
The increase in other
 
other expenses is primarily due
 
due to property losses
incurred that were not
covered by insurance as
well
as increased premiums
for property and casualty
insurance due to
programs.
hard
market conditions driven by industry high loss ratios and low investment income
returns to offset losses.
30
OPERATING
 
INCOME (LOSS)
For
 
the
 
firstthird
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
recorded
 
anoperating
income
of
$39.6
million
compared
to
 
operating
 
loss
 
of
 
$39.7
million
compared
to
an
operating
loss
of
$27.2493
thousand for the same period of fiscal 2021.
For the thirty-nine weeks ended February 26, 2022, we recorded an operating loss of $2.2 million compared to an operating loss
of $13.2 million for the same period of fiscal 2021.
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 in income or loss of unconsolidated entities, and
patronage income, among other items.
For the first quarter of
fiscal 2022,
we earned $290 thousand of
interest income compared to $996
thousand for the same period
of fiscal 2021
.
The decrease resulted
from significantly
lower investment
balances.
The Company
recorded interest
expense of
$58 thousand and $71 thousand for the first quarters
ended August 28, 2021 and August 29, 2020,
respectively.
For
 
the
 
firstthird
 
quarter
 
of
 
fiscal
 
2022,
 
equitywe
 
incomeearned
$205
thousand
 
of
 
unconsolidatedinterest
 
entities
was
$135
thousandincome
 
compared
 
to
 
a$661
 
lossthousand
for
the
same
period
of
fiscal
2021.
The
decrease
resulted
from
significantly
lower
investment
balances.
The
Company
recorded
interest
expense
 
of
 
$44126
thousand
and
$70
thousand
for
the
third
quarters
ended
February
26,
2022
and
February
27,
2021,
respectively.
For the
thirty-nine weeks ended
February 26, 2022,
we earned
$702 thousand
of interest
income compared to
$2.4 million
for
the
same
period
of
fiscal
2021.
The
decrease
resulted
from
significantly lower
investment balances.
The
Company
recorded
interest
expense
of
$262
thousand
and
$205
thousand
for
the
thirty-nine
weeks
ended
February
26,
2022
and
February
27,
2021, respectively.
Patronage dividends, which represent distributions from our membership in Eggland’s Best, Inc. were $10.1 million and $9.0
million for the thirteen and thirty-nine weeks ended February 26, 2022 and February 27, 2021, respectively. Patronage
dividends are paid once a year based on the profits of Eggland’s Best as well as its available cash.
For the third
quarter of fiscal
2022, equity income
of unconsolidated entities
was $1.8 million
compared to $1.9
million in the prior year
prior-year period.
For the thirty-nine weeks ended February 26, 2022, equity income of unconsolidated entities was $2.2 million compared to $1.9
23million in the prior-year period.
Other,
net for
 
the firstthird quarter ended February 26, 2022,
 
quarter endedwas income of $1.1 million compared
 
August 28,to income of $537 thousand for
the same period of fiscal 2021.
Other, net
 
2021,for the thirty-nine
weeks ended February
26, 2022, was
 
income of $8.2
 
$5.2 million
compared to
 
income of $1.5
 
$512 thousandmillion
for the
 
for
the same period
 
of fiscal
2021.
The majority
of the
 
increase is
due
to our
acquisition of
the remaining
50% membership
interest in
Red River
as we
recognized a
$4.5 million
gain due
 
to the acquisition of
 
Red River Valley
Egg Farm, LLC
(“Red River”) as we
recognized a $4.5 million gain due to the remeasurement of our equity investmen
 
t.equity investment,
along with
the
$1.4 million payment related to review and adjustment of our various marketing agreements.
INCOME TAXES
For the first quarter
 
third quarter of
fiscal 2022, pre-tax loss
 
pre-tax income was $33.9
$53.0 million compared
 
to $25.5 $11.8
million for the same
 
same period of
fiscal
2021. We
recorded income tax expense
of $13.6 million for
the third quarter of
fiscal 2022, which reflects
an effective tax
rate
of 25.6%.
Excluding the impact of discrete
items related to a
$5.0 million net tax
benefit recorded in the
third quarter of fiscal
2021 in connection
with the Coronavirus
Aid, Relief, and
Economic Security Act
(the “CARES Act”),
income tax expense
for
the comparable period of fiscal 2021 was $3.3 million, which reflects an adjusted effective tax rate of 27.9%.
For the
thirty-nine weeks
ended February
26, 2022,
pre-tax income
was $19.7
million compared
to $2.2
million for
the same
period of fiscal 2021.
We recorded
 
recorded an income tax benefit of $15.8$2.9 million, for the first quarter of fiscal 2022,
which includes the discrete tax benefit of $8.3 million
$8.3
million
as
discussed
 
in
Note
2
–
Acquisitions
 
of
the
 
Notes
to
 
Condensed
Consolidated
 
Financial
Statements
 
in this
 
this
Quarterly Report.
Excluding the discrete tax benefit, income tax
 
tax benefitexpense was $7.6$5.3 million for the first quarter of fiscal 2022with an
 
with
an adjusted effective tax rate of 27.3%,
 
effectivecompared
to income tax rateexpense
 
of 22.4%.
Income
tax benefit
was $6.1
million
$934 thousand for the
 
comparable period
of fiscal
2021,
 
which
reflects an effective
tax rate of 41.8%
excluding the impact of the $5.0 million discrete net tax benefit recorded in connection with the CARES Act.
Our effective tax rate of 24.0%.
differs
 
At August 28, 2021 and May 29, 2021, trade and other receivables, net included
income taxes receivables of $42.5 million.
Our effective tax
rate differs from
the federal statutory income tax rate
 
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.
Results
for
the
current
quarter
were
favorably
impacted
by
a
$8.3
million
discrete
tax
benefit
as
discussed in Note 2 – Acquisitions of the Notes to Condensed Consolidated Finan
cial Statements in this Quarterly Report.
 
NET LOSS
 
Net loss
for the
first quarter
ended August
28, 2021,
was $18.0
million, or
$0.37 per
basic and
diluted share,
compared to
net
loss of $19.4 million or $0.40 per basic and diluted share for the same period of fiscal
2021.
 
CAPITAL RESOURCES
AND LIQUIDITY
 
Our working
capital at
August 28,
2021,
was $362.9
million, compared
to $429.8
million at
May 29,
2021. The
calculation of
working
capital
is
defined
as curr
ent
assets
less
current
liabilities.
Our
current
ratio
was
4.72
at
August
28,
2021,
compared
with 5.77 at May 29, 2021.
 
We had
 
no long-term debt outstanding at
August 28, 2021 or May 29, 2021.
On July 10, 2018, we entered into
a $100.0 million
Senior Secured Revolving Credit
Facility (the “Revolving Credit
Facility”). As of August
28, 2021, no amounts were
borrowed
under the
Revolving Credit
Facility.
We
have $4.1
million in outstanding
standby letters of
credit, issued under
our Revolving
Credit
Facility
for
the
benefit
of
certain
insurance
companies.
Refer
to
Part
II
Item
8,
Notes
to
Consolidated
Financial
Statements
and
Supplementary
Data,
Note
10:
Credit
Facility
included
in
our
2021
Annual
Report
for
further
information
regarding our long-term debt.
For the
thirteen
weeks ended
August
28, 2021
,
$24.1 million
in net
cash was
used in
operating activities,
compared
to $14.8
million used in operating
activities for the comparable
period in fiscal 2021
.
This is primarily due
to the increased costs
of feed
ingredients compared to the prior year period.
We
continue to invest
in our facilities with
$11.2 million
used to purchase property,
plant and equipment for
the thirteen weeks
ended
August
28,
2021,
compared
to
$25.3
million
in
the
same
period
of
fiscal
2021.
We
also
acquired
the
remaining
50%
membership
interest in
Red River
during our
first quarter
of fiscal
2022 for
$48.5 million.
Sales and
maturities of
investment
securities, net of
purchases, were $38.0
million for the thirteen
weeks ended August
28, 2021,
compared to $4.0 million
for the
comparable period
in fiscal 2021.
We
received $400 thousand
in distributions from
an unconsolidated entity
in the first
quarter
of fiscal 2022
compared to $650
thousand for the
same period fiscal
of 2021.
We
used $53 thousand
for principal payments
on
finance leases in the first quarter of fiscal 2022 compared to $50
thousand for the same period of fiscal 2021.
As of
August 28,
2021,
cash decreased
$40.7 million
since May
29, 2021,
compared to
a decrease
of $35.3
million during
the
same period of fiscal 2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31
24purposes,
including
tax
exempt
interest
income,
certain
nondeductible
expenses
and
net
income
or
loss
attributable
to
our
noncontrolling interest.
NET INCOME ATTRIBUTABLE
TO CAL-MAINE FOODS, INC.
Net income attributable to Cal-Maine Foods, Inc. for the third quarter ended February 26, 2022, was $39.5 million, or $0.81 per
basic and
diluted common
share, compared
to net
income attributable
to Cal-Maine
Foods, Inc.
of $13.5
million or
$0.28 per
basic and diluted common share for the same period of fiscal 2021.
Net
income
attributable
to
Cal-Maine
Foods,
Inc.
for
the
thirty-nine
weeks
ended
February
26,
2022,
was
$22.7
million,
or
$0.46 per
basic and
diluted common
share, compared
to net
income attributable
to Cal-Maine
Foods, Inc.
of $6.3
million or
$0.13 per basic and diluted common share for the same period of fiscal 2021.
CAPITAL RESOURCES AND LIQUIDITY
Our working capital at February
26, 2022 was $401.3 million,
compared to $429.8 million at
May 29, 2021. The
calculation of
working capital
is defined
as current
assets less
current liabilities.
Our current
ratio was
4.31 at
February 26,
2022, compared
with 5.77 at May 29, 2021.
We
 
continuehad
 
to monitorno
long-term
debt
outstanding
at
February
26,
2022
or
May
29,
2021.
On
November
15,
2021,
we
entered
into
an
Amended and Restated Credit Agreement (the
“Credit Agreement”) with a five-year
term. The Credit Agreement amended
and
restated
 
the increasin
 
gCompany’s
 
demand previously
existing
credit
agreement
dated
July
10,
2018.
The
Credit
Agreement
provides
for
 
cage-free eggsan
increased senior secured
 
and torevolving credit facility
 
engage with
our customers(the “Credit Facility”),
 
in an
 
initial aggregate principal
amount of up
to $250
million. As
of February
26, 2022,
no amounts
were borrowed
under the
Credit Facility.
We
have $4.1
million in
outstanding
standby
letters
of
credit,
issued
under
our
Credit
Facility
for
the
benefit
of
certain
insurance
companies.
For
additional
information,
see
of
the
Notes
to
Condensed
Consolidated
Financial
Statements
included
in
this
Quarterly Report.
For the thirty-nine weeks ended February 26, 2022,
$20.8 million in net cash was provided by
operating activities, compared to
$14.7 million provided
by operating activities
for the comparable
period in fiscal
2021. This is
primarily due to
the higher egg
prices partially offset by increased costs of feed ingredients compared to the prior-year period.
We
continue to
invest in
our facilities,
with $49.2
million used
to purchase
property,
plant and
equipment for
the thirty-nine
weeks ended February
26, 2022, compared
to $73.8 million
in the same
period of fiscal
2021. We
also acquired the
remaining
50%
membership
interest
in
Red
River
during
our
first
quarter
of
fiscal
2022
for
$48.5
million.
Sales
and
maturities
of
investment
securities,
net
of
purchases,
were
$29.2
million
for
the
thirty-nine
weeks
ended
February
26,
2022,
compared
to
$25.8
million
for
the
comparable period
in
fiscal
2021.
We
received
$400
thousand
in
distributions
from
an
unconsolidated
entity in the first three quarters of fiscal 2022 compared to $5.8 million for the same period fiscal of 2021.
As of February 26, 2022, cash decreased $41.8 million
since May 29, 2021, compared to a decrease of
$25.2 million during the
same period of fiscal 2021.
We
continue to
monitor the
increasing demand
for cage-free
eggs and
to engage
with our
customers in
an effort
 
to achieve
 
a
smooth transition to meet their
 
meet their announced
commitment timeline for cage-free
 
cage-free egg sales.
We
 
have invested approximately
$482 $502
million in facilities, equipment
and related operations to
expand our cage-free production
 
starting with our first facility
in 2008.
The following table presents material construction projects approved
as of August 28, 2021February 26, 2022 (in thousands):
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of
February
August 28, 202126, 2022
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses/Processing
Facility
Fiscal 2022
138,724$
99,380130,918
39,344108,579
22,339
Cage-Free Layer & Pullet Houses
Fiscal 2023
24,752
6,262
18,490
$
138,724155,670
$
99,380114,841
$
39,344
40,829
We believe our
current cash balances, investments, cash flows from operations, and Revolving Credit Facility
will be sufficient
to fund our
current capital needs. As we monitor the demand for cage-free
 
eggs and our growth strategy described in Part I Item
I “Business – Growth Strategy” in our 2021 Annual Report,
there may be a need for long-term debt financing. We
believe withIndex
our strong balance sheet that we will have adequate access to capital markets if that need
arises.
32
RECENTLY
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
 
information
 
on
 
changes
 
in
 
accounting
 
principles
 
and
 
new
 
accounting
 
policies,
 
see
Note 1 - Summary of Significant
Accounting Policies
 
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly
Report.
CRITICAL ACCOUNTING ESTIMATES
 
Critical accounting
 
estimates are
 
are those
estimates
 
made in
 
in accordance with
 
with U.S.
generally
 
accepted
accounting
 
principles that
involve
 
a
 
significant
 
level
 
of
 
estimation
 
uncertainty
 
and
 
have
 
had
 
or
 
are
 
reasonably
 
likely
 
to
 
have
 
a
 
material
 
impact
 
on
 
our
financial
condition
 
or results
 
of operations.
 
There have
 
have been no
 
no changes to
 
to our
critical
 
accounting estimates
 
estimates identified in
 
in our
2021 Annual Report.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
25ITEM 3. QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the thirty-six weeks ended February 26, 2022 from
the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2021 Annual Report.
ITEM 4.
 
CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls
 
controls and
procedures are
 
designed to
 
provide reasonable assurance
 
assurance that
information required
 
to be
disclosed
by us in the reports we file
 
we file or submit
under the Exchange Act is recorded,
 
is recorded, processed, summarized
and reported, within the
time
periods
specified
 
in
the
 
Securities and
 
Exchange
Commission’s
 
rules
and
 
forms. Disclosure
controls
 
and
procedures
 
include,
without limitation, controls and
procedures designed to ensure that
information required to be disclosed
by us in the reports
that
we file or submit under
 
under the Exchange
Act is accumulated and
 
communicated to management,
including our principal
 
executive
and
 
principal
 
financial
 
officers,
 
or
 
persons
 
performing
 
similar
 
functions,
 
as
 
appropriate
 
to
 
allow
 
timely
 
decisions
 
regarding
required disclosure. Based on an evaluation of our disclosure controls
and procedures conducted by our Chief Executive Officer
and
 
Chief
 
Financial
 
Officer,
 
together
 
with
 
other
 
financial
 
officers,
 
such
 
officers
 
concluded
 
that
 
our
 
disclosure
 
controls
 
and
procedures were effective as of August 28, 2021February 26, 2022 at the reasonable
assurance level.
Changes in Internal Control Over Financial Reporting
There
was no
 
change
in our
 
internal control over
 
over financial reporting that
 
reporting
that occurred
during the
 
quarter ended February
 
ended
August
28, 202126, 2022
that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
ITEM 3. QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the
thirteen weeks ended August 28, 2021 from the
information provided in Item 7A. Quantitative and Qualitative Disclosure
s
About Market Risk in our 2021 Annual Report.
PART
 
II. OTHER INFORMATION
ITEM 1.
 
LEGAL PROCEEDINGS
Refer
 
to
 
the
 
discussion
 
of
 
certain
 
legal
 
proceedings
 
involving
 
the
 
Company
 
and/or
 
its
 
subsidiaries
 
in
 
(i)
 
our
 
2021
 
Annual
Report,
 
Part I
 
Item 3:3
 
Legal Proceedings,
 
and Part
 
Part II
 
Item 8,
 
Notes to
 
to Consolidated
 
Financial
 
Statements and
 
Supplementary
Data, Note 18: Commitments
and Contingencies, and (ii)
 
(ii) in this Quarterly
Report in
of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated
herein by reference.
 
ITEM 1A.
 
RISK
FACTORS
There have been no material changes in the risk factors previously disclosed in the
Company’s 2021 Annual
Report.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
 
The following table is a summary of our firstthird quarter 2022 share repurchases:
Issuer Purchases of Equity Securities
Total
Number of
Maximum Number
Shares Purchased
of Shares that
Total
Number
Average
as Part of Publicly
May Yet
 
Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
05/30/11/28/21 to 06/26/12/25/21
—206
$
36.32
—
—
—
06/27/12/26/21 to 07/24/2101/22/22
40426,780
36.3441.00
—
—
07/25/2101/23/22 to 08/28/2102/26/22
—
—
—
—
40426,986
$
36.3440.96
—
—
(1)
 
As permitted under our Amended and Restated 2012 Omnibus LongLong-Term
-
term Incentive Plan, these sha
resshares were withheld
by us to satisfy tax withholding
obligations for employees in connection with
the vesting of restricted common stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34
26
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy
Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy
Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy
Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained
in Exhibit 101)
 
*
Filed herewith as an Exhibit.
 
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
 
SIGNATURES
Pursuant to the
 
requirements of the requirements
 
of the Securities
Exchange Act
 
of 1934, the
 
the registrant has duly
 
duly caused
this report
 
to be signed
 
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
 
September 28, 2021March 29, 2022
/s/ Max P.
 
Bowman
Max P.
 
Bowman
Vice President, Chief Financial
Officer
(Principal Financial Officer)
໿
Date:
 
September 28, 2021March 29, 2022
/s/ Michael D. CastleberryMatthew S. Glover
Michael D. CastleberryMatthew S. Glover
Vice President Controller– Accounting
(Principal Accounting Officer)
໿