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
November 27, 2021February 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
 
check mark whether the
 
whether the registrant is a
 
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
44,056,59944,140,283
 
shares of Common
 
Common Stock, $0.01 par
 
$0.01 par value,
and
4,800,000
 
shares of Class
 
A Common Stock,
 
Stock, $0.01
$0.01 par
value, outstanding as of December 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)
 
 
November 27, 2021February 26, 2022
May 29, 2021
Assets
Current assets:
Cash and cash equivalents
$
15,48415,589
$
57,352
Investment securities available-for-sale
69,67281,125
112,158
Trade and other receivables, net
152,958138,654
126,63984,123
Income tax receivable
41,383
42,516
Inventories
236,201240,087
218,375
Prepaid expenses and other current assets
6,8145,872
5,407
Total current
assets
481,129522,710
519,931
Property, plant &
equipment, net
667,250671,373
589,417
Finance lease right-of-use asset, net
448409
525
Operating lease right-of-use asset, net
1,3471,168
1,724
Investments in unconsolidated entities
10,98515,794
54,941
Goodwill
44,006
35,525
Intangible assets, net
19,24118,686
20,341
Other long-term assets
7,5887,849
6,770
Total Assets
$
1,231,9941,281,995
$
1,229,174
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
115,619120,665
$
89,191
Current portion of finance lease obligation
219222
215
Current portion of operating lease obligation
550486
691
Total current
liabilities
116,388121,373
90,097
Long-term finance lease obligation
327271
438
Long-term operating lease obligation
797682
1,034
Other noncurrent liabilities
10,30610,673
10,416
Deferred income taxes, net
106,753118,753
114,408
Total liabilities
234,571251,752
216,393
Commitments and contingencies - see
Note 13
—
—
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
66,01966,909
64,044
Retained earnings
959,124992,523
975,977
Accumulated other comprehensive loss, net of tax
(996)(1,413)
(558)
Common stock in treasury at cost –
26,20426,121
 
shares at November 27, 2021February 26, 2022 and
26,202
shares at May 29, 2021
(27,450)(28,439)
(27,433)
Total Cal-Maine Foods,
Inc. stockholders’ equity
997,4481,030,331
1,012,781
Noncontrolling interest in consolidated entity
(25)(88)
0
Total stockholders’
equity
997,4231,030,243
1,012,781
Total Liabilities and Stockholders’
Equity
$
1,231,9941,281,995
$
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
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27,
2021
November 28,February 26, 2022
2020
NovemberFebruary 27,
2021
November 28,
2020
Net sales
$
390,903477,485
$
347,328359,080
$
722,6071,184,195
$
640,110999,189
Cost of sales
347,156385,903
288,877311,563
672,2151,042,221
564,894876,457
Gross profit
43,74791,582
58,45147,517
50,392141,974
75,216122,732
Selling, general and administrative
47,78052,686
43,87347,656
94,305146,991
87,838135,494
(Gain) loss on disposal of fixed assets
(1,968)(674)
99354
(2,181)(2,855)
122476
Operating income (loss)
(2,065)39,570
14,479(493)
(41,732)(2,162)
(12,744)(13,238)
Other income (expense):
Interest income, net
12979
664591
361440
1,5892,181
Royalty income
278326
280321
551877
585906
Patronage dividends
10,120
9,004
10,120
9,004
Equity income of unconsolidated entities
2641,809
581,872
3992,208
141,886
Other, net
1,8621,144
436537
7,0258,169
9481,485
Total other income, net
2,53313,478
1,43812,325
8,33621,814
3,13615,462
Income (loss) before income taxes
46853,048
15,91711,832
(33,396)19,652
(9,608)2,224
Income tax expense (benefit) expense
(677)13,594
3,762(1,716)
(16,515)(2,921)
(2,364)(4,080)
Net income (loss)
1,14539,454
12,15513,548
(16,881)22,573
(7,244)6,304
Less: Loss attributable to noncontrolling interest
(28)(63)
0
(28)(91)
0
Net income (loss) attributable to Cal-Maine Foods,
Inc.
$
1,17339,517
$
12,15513,548
$
(16,853)22,664
$
(7,244)6,304
Net income (loss) per common share:
Basic
$
0.020.81
$
0.250.28
$
(0.34)0.46
$
(0.15)0.13
Diluted
$
0.020.81
$
0.250.28
$
(0.34)0.46
$
(0.15)0.13
Weighted average
shares outstanding:
Basic
48,85748,886
48,50148,530
48,85948,888
48,50148,511
Diluted
49,01649,036
48,64548,659
48,85949,035
48,50148,649
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income (Loss)
(in thousands)
(unaudited)
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27,
2021
November 28,February 26, 2022
2020
NovemberFebruary 27,
2021
November 28,
2020
Net income (loss)
$
1,14539,454
 
$
12,15513,548
 
$
(16,881)22,573
 
$
(7,244)6,304
Other comprehensive income (loss), before tax:
Unrealized holding gain (loss)loss on available-for-sale
securities, net of reclassification adjustments
(355)(551)
(373)(378)
(579)(1,130)
95(283)
Income tax benefit (expense) related to items of other
comprehensive income
87134
9192
141275
(23)69
Other comprehensive income (loss),loss, net of tax
(268)(417)
(282)(286)
(438)(855)
72(214)
Comprehensive income (loss)
87739,037
11,87313,262
(17,319)21,718
(7,172)6,090
Less: Comprehensive loss attributable to the
noncontrolling interest
(28)(63)
0
(28)(91)
0
Comprehensive income (loss) attributable to Cal-Maine
Foods, Inc.
$
90539,100
$
11,87313,262
$
(17,291)21,809
$
(7,172)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)
 
 
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27, 2021
November 28, 2020
Cash flows from operating activities:
Net lossincome
$
(16,881)22,573
$
(7,244)6,304
Depreciation and amortization
33,96950,996
29,30544,391
Deferred income taxes
(15,995)(3,861)
(2,364)9,970
Other adjustments, net
(16,585)(48,884)
(30,348)(45,936)
Net cash used inprovided by operations
(15,492)20,824
(10,651)14,729
Cash flows from investing activities:
Purchases of investment securities
(26,387)(47,135)
(29,637)(59,415)
Sales and maturities of investment securities
67,86476,377
59,07785,202
Investment in unconsolidated entities
(3,000)
0
Distributions from unconsolidated entities
400
2,6505,813
Acquisition of business, net of cash acquired
(44,823)
0
Purchases of property,
plant and equipment
(28,647)(49,170)
(52,373)(73,796)
Net proceeds from disposal of property,
plant and equipment
5,3386,041
2533,273
Net cash used in investing activities
(26,255)(61,310)
(20,030)(38,923)
Cash flows from financing activities:
Purchase of common stock by treasury
(18)(1,120)
(45)(871)
Principal payments on finance lease
(106)(160)
(101)(153)
Contributions
3
5
Net cash used in financing activities
(121)(1,277)
(141)(1,019)
Net change in cash and cash equivalents
(41,868)(41,763)
(30,822)(25,213)
Cash and cash equivalents at beginning of period
57,352
78,130
Cash and cash equivalents at end of period
$
15,48415,589
$
47,30852,917
Supplemental Information:
Cash paid for operating leases
$
425625
$
237703
Interest paid
$
125230
$
129193
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 year
 
ends on
 
the Saturday
 
closest to
 
May 31.
 
Each of
 
the three-month
 
periods and
 
year-to-date
periods
ended on NovemberFebruary 26, 2022 and February 27, 2021 and November 28, 2020 included
13 weeks and 2639 weeks, respectively.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 credit
losses through the
 
the allowance
for credit
 
losses, limited
to the amount
that fair value
was less than
 
the amortizedamount that
 
fair value was
less than the
amortized cost basis.
The
cost
 
basis
 
for
 
realized
 
gains
 
and
 
losses
 
on
 
available-for-sale
 
securities
 
is
 
determined
 
by
 
the
 
specific
 
identification
 
method.
Gains and losses are recognized in other income
(expenses) as Other, net in the Company's
Condensed Consolidated Statements
of
Operations. Income.
 
Investments
in
 
mutual
funds
 
are
classified
 
as
“Other “Other
 
long-term
assets”
 
in
the
 
Company’s
 
Condensed Consolidated
Consolidated Balance Sheets.
Trade Receivables
 
Trade receivables
 
receivables are
stated at
 
their carrying values,
 
values, which
include a
 
reserve for credit
 
credit losses. At November
 
27, 2021 andAt February
 
26, 2022
and May
29,
 
2021,
 
reserves
 
for
 
credit
 
losses
 
were
 
$
1.1725
 
millionthousand
 
and
 
$
795
 
thousand,
 
respectively.
 
The
 
Company
 
extends
 
credit
 
to
customers based on an
 
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
historical
loss
information
adjusted
as
needed
for
economic
and
other
forward-looking
historical loss information adjusted as needed for economic and other forward-looking factors.
8
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 considers 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
 
retained earnings
 
as of
 
the 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 – 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
 
the acquisition, 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.
9
The
 
following
 
table
 
summarizes
 
the
 
consideration
 
paid
 
for
 
Red
 
River
 
and
 
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 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 receivable
 
acquired along
 
along with liabilities
 
liabilities assumed were
 
were valued at
 
at their carrying
 
carrying value which
 
which approximates
fair value due to the short maturity of these instruments.
Inventory consisted primarily
 
of flock, feed
 
feed ingredients, packaging, and
 
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 egg
inventory were all valued based on market prices as of May 30, 2021.
 
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
The Company
recognized a
gain of
$
4.5
million as
a 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
Income. The
acquisition of
Red River
resulted in
a discrete
tax benefit
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
Property,
plant and
equipment were
valued utilizing
the cost
approach which
is based
on replacement
or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration
and/or functional or economic obsolescence.
The Company
recognized
a gain
of $
4.5
million
as a
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. The
acquisition of
Red River
resulted in
a discrete
tax benefit
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 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 November 27, 2021February 26, 2022 and May 29, 2021
(in (in thousands):
November 27, 2021February 26, 2022
Amortized
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
917
$
4514
$
0
$
9213
$
511
Commercial paper
5,9839,980
0
223
5,9819,957
Corporate bonds
54,457
11061,634
0
54,567344
61,290
Certificates of deposits
1,268
0
12
1,256
Asset backed securities
8,2398,205
0
3694
8,2038,111
Total current
investment securities
$
69,596
$
114
$
38
$
69,672
Mutual funds
$
2,105
$
1,95181,601
$
0
$
4,056
Total noncurrent
investment securities476
$
2,10581,125
Mutual funds
$
1,9512,967
$
0
$
4,05653
$
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 $
67.976.4
 
million and
 
$
59.185.2
 
million during
 
the
twenty-sixthirty-nine weeks ended February
 
weeks
ended November
27,
2021
26, 2022 and
 
November
28,
2020,February 27, 2021,
 
respectively.
 
Gross
realized
gains
 
for the thirty-nine
 
the
twenty-sixweeks
weeks ended
November February 26, 2022 and February 27,
2021 and
November 28,
2020 were
$
165181
 
thousand and
$
57116
 
thousand, respectively.
Gross realized losses for
losses
for
the
twenty-six
thirty-nine weeks
ended
November
February 26, 2022 and February 27,
2021
were
$
67
 
thousand.
There
werethousand and $
017
 
gross
realized
losses
for
thethousand, respectively. There
twenty-six weeks
ended November
28, 2020.
There were
0
 
allowances for
credit losses
at November
27, 2021
February 26, 2022 and May
29,
2021.
10
Actual maturities
may differ
 
from contractual maturities as
 
maturities as some
borrowers have
 
the right to
 
call or prepay
 
prepay obligations
with or
without penalties. Contractual maturities of current investments at November
27, 2021February 26, 2022 are as follows (in thousands):
Estimated Fair Value
Within one year
$
41,32652,391
1-5 years
28,34628,734
Total
$
69,67281,125
Noncurrent
 
Proceeds
 
from
 
sales
 
and
 
maturities
 
of
 
noncurrent
 
investment
 
securities
 
were
 
$
4534.9
 
thousandmillion
 
during
 
the
 
twenty-sixthirty-nine
 
weeks
ended NovemberFebruary
 
27,26,
 
2021.2022.
 
Gross
 
realized
 
gains
 
for
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended NovemberFebruary
 
27,26,
 
20212022
 
were
 
$
165
thousand. There were
0
realized losses for the twenty-six
weeks ended November 27, 2021.
There were
0
sales of noncurrent
investment securities during the twenty-six weeks ended November
28, 2020.
Note 4 - Fair Value
Measurements
The Company
is required
to categorize
both financial
and nonfinancial
assets and
liabilities based
on the
following fair
value
hierarchy. The
fair value
of an
asset is
the price
at which
the asset
could be
sold in
an orderly
transaction between
unrelated,
knowledgeable, and willing
parties able to engage in
the transaction. A liability’s
fair value is defined
as the amount that would
be
paid
to
transfer
the
liability
to
a
new
obligor
in
a
transaction
between
such
parties,
not
the
amount
that
would
be paid
to
settle the liability with the creditor.
•
Level 1
- Quoted prices in active markets for identical assets or liabilities
•
Level 2
- Inputs
other than
quoted
prices included
in Level
1 that
are observable
for the
asset or
liability,
either
directly or indirectly,
including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable
market data
•
Level 3
- Unobservable inputs for the asset or liability that are
supported by little or no market activity and that
are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
at cost are as follows:
Cash and cash equivalents, accounts receivable,
and accounts payable:
The carrying amount approximates fair value due to the
short maturity of these instruments.
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 and
liabilities measured at fair value on a recurring basis as of November 27, 2021 and May
29, 2021 (in thousands):
November 27, 2021
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
0
$
921
$
0
$
921
Commercial paper
0
5,981
0
5,981
Corporate bonds
0
54,567
0
54,567
Asset backed securities
0
8,203
0
8,203
Mutual funds
4,056
0
0
4,056
Total assets measured at fair
value
$
4,056
$
69,672
$
0
$
73,728
11
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 Level
2
consist
of
securities
with maturities
of
three
months
or longer
when purchased. We
classified these securities as
current because amounts
invested are readily available
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Note 5 - Inventories
Inventories consisted of the following as of November 27, 2021
and May 29, 2021 (in thousands):
November 27, 2021
May 29, 2021
Flocks, net of amortization
$
139,645
$
123,860
Eggs and egg products
23,043
21,084
Feed and supplies
73,513
73,431
$
236,201
$
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
hatch
for
egg
production
flocks).
Our
total
flock
at
November 27, 2021 consisted of approximately
9.3
million pullets and breeders and
42.9
million layers.
Note 6 - Accrued Dividends Payable and Dividends per Common
Share
We
accrue dividends at
the end of
each quarter according
to the Company’s
dividend policy adopted
by its Board
of Directors.
The Company
pays a dividend
to shareholders
of its Common
Stock and
Class A Common
Stock on
a quarterly basis
for each
quarter for
which the
Company reports
net income
attributable to
Cal-Maine Foods,
Inc. computed
in accordance
with GAAP
in an amount
equal to one-third
(1/3) of such
quarterly income. Dividends
are paid to
shareholders of record
as of the 60th
day
following the
last day
of such quarter,
except for
the fourth fiscal
quarter. For
the fourth quarter,
the Company
pays dividends
to shareholders of record on the 65th day after the
quarter end. Dividends are payable on the 15th day following
the record date.
Following a quarter for which the Company does not report net income
attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend
for a subsequent profitable
quarter until the Company
is profitable on a cumulative
basis computed from the
date of
the most
recent quarter
for which
a dividend
was paid.
At the
end of
the second
quarter of
fiscal 2022,
the amount
of
cumulative losses to be recovered before payment of a dividend was $
21.12.2
 
million.
There
were
 
no
 
realized
 
12
On
our
condensed
consolidated
statement
of
operations,
we
determine
dividends
per
common
share
in
accordance
with
the
computation in the following table (in thousands, except per share data):
Thirteen Weeks
Ended
Twenty-six Weeks
Ended
November 27,
November 28,
November 27,
November 28,
Net income (loss)
$
1,173
$
12,155
$
(16,853)
$
(7,244)
Cumulative losses to be recovered prior to
payment of divided at beginning of period
(22,270)
(20,769)
(4,244)
(1,370)
Net income available for dividend
$
0
$
0
$
0
$
0
1/3 of net income attributable to Cal-Maine
Foods, Inc. available for dividend
0
Common stock outstanding (shares)
44,057
Class A common stock outstanding (shares)
4,800
Total common stock
outstanding (shares)
48,857
*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
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 November 27, 2021,
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
 
Companythirty-nine
 
atweeks
 
the
quarterly pricingended February
 
date. The26,
 
Company will pay2022.
 
a commitment feeThere
 
on the unusedwere
0
 
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
subsidiariessales
 
of
 
the
Company (thenoncurrent
 
“Guarantors”), andinvestment
is secured
by a
first-priority perfected
security interest
in substantially
all of
securities during 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
thirty-nine weeks ended February 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
transaction. A liability’s fair value
is defined as the amount that would
be paid
to transfer
the liability
to a
new obligor
in a
transaction between
such parties,
not
the amount
that would
be paid
to
settle the liability with the creditor.
•
Level 1
- Quoted prices in active markets for identical assets or liabilities
•
Level 2
- Inputs
other than
quoted prices
included in
Level 1
that are
observable for
the asset
or liability,
either
directly or indirectly, including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market data
•
Level 3
- Unobservable inputs for the asset or liability that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
The carrying amount approximates fair value due to the
short maturity of these instruments.
Lease obligations:
The carrying value of the Company’s lease obligations is at its present value which approximates fair value.
Assets and Liabilities Measured at Fair Value
on a Recurring Basis
In
accordance with
the
fair value
hierarchy described
above, the
following
table shows
the
fair value
of
financial assets
and
liabilities measured at fair value on a recurring basis as of February 26, 2022 and May 29, 2021 (in thousands):
February 26, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
0
$
511
$
0
$
511
Commercial paper
0
9,957
0
9,957
Corporate bonds
0
61,290
0
61,290
Certificates of deposits
0
1,256
0
1,256
Asset backed securities
0
8,111
0
8,111
Mutual funds
2,914
0
0
2,914
Total assets measured at fair value
$
2,914
$
81,125
$
0
$
84,039
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
Level 2
consist of
securities with
maturities of
three months
or longer
when purchased. We
classified these securities as current because amounts invested are readily available
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Note 5 - Inventories
Inventories consisted of the following as of February 26, 2022 and May 29, 2021 (in thousands):
February 26, 2022
May 29, 2021
Flocks, net of amortization
$
137,086
$
123,860
Eggs and egg products
24,153
21,084
Feed and supplies
78,848
73,431
$
240,087
$
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
hatch for egg production flocks). Our total flock at February
26, 2022 consisted of approximately
9.4
million pullets and breeders and
42.7
million layers.
Note 6 - Accrued Dividends Payable and Dividends per Common Share
We
accrue dividends at the
end of each quarter
according to the Company’s
dividend policy adopted by its
Board of Directors.
The Company pays
a dividend to
shareholders of its
Common Stock and Class
A Common Stock
on a quarterly
basis for each
quarter for
which the
Company reports net
income attributable
to Cal-Maine
Foods, Inc.
computed in
accordance with
GAAP
in an amount equal
to one-third (
1/3
) of such quarterly
income. Dividends are paid
to shareholders of record as
of the 60th day
following the last
day of
such quarter,
except for the
fourth fiscal quarter.
For the fourth
quarter, the
Company pays dividends
to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.
Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend for a subsequent
profitable quarter until the Company is profitable on
a cumulative basis computed from the
date of the most
recent quarter for which
a dividend was paid.
For the third quarter
of fiscal 2022, we
will pay a
cash dividend
of approximately $
0.125
per share to holders
of our Common Stock
and Class A Common
Stock. The amount of
the accrual is
recorded in Accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets.
On
our
Condensed
Consolidated
Statements
of
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
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Net income attributable to Cal-Maine Foods,
Inc.
$
39,517
$
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
$
18,420
$
4,934
$
18,420
$
4,934
1/3 of net income attributable to Cal-Maine
Foods, Inc. available for dividend
6,140
1,645
6,140
1,645
Common stock outstanding (shares)
44,140
44,056
Class A common stock outstanding (shares)
4,800
4,800
Total common stock outstanding (shares)
48,940
48,856
Dividends per common share*
$
0.125
$
0.034
$
0.125
$
0.034
*Dividends
per
common
share
=
1/3
of
Net
income
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
defaultissuance
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 termsCredit 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 Agreement. Further,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
 
dividends or repurchases
by the Company of
 
of its capital stock is allowed,
 
is allowed, as long
as after giving
 
effect to such
dividend payments
 
payments or repurchases
 
repurchases no default
 
default has occurred
 
occurred and is
 
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
 
due under the Credit Facility and
 
and foreclosure of
the collateral securing the
 
the Credit
Facility.
At November 27, 2021,February 26, 2022, we were in compliance with the covenant requirements of
the Credit Facility.
Note 8 - Equity
The following reflects
equity activity for
the thirteen and
twenty-six weeks ended
November 27, 2021
and November 28,
2020
(in thousands):
Thirteen Weeks
 
Ended November 27, 2021
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 August 28,
2021
$
703
$
48
$
(27,451)
$
65,044
$
(728)
$
957,951
$
0
$
995,567
Other comprehensive
loss, net of tax
—
—
—
—
(268)
—
—
(268)
Stock compensation
plan transactions
—
—
1
975
—
—
—
976
Contributions
—
—
—
—
—
—
3
3
Net income (loss)
—
—
—
—
—
1,173
(28)
1,145
Balance at November
27, 2021
$
703
$
48
$
(27,450)
$
66,019
$
(996)
$
959,124
$
(25)
$
997,423
Thirteen Weeks
 
Ended November 28, 2020
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Amount
Amount
Amount
Capital
Comp. Income
Earnings
Total
Balance at August 29, 2020
$
703
$
48
$
(26,676)
$
61,267
$
433
$
956,170
$
991,945
Other comprehensive loss, net of tax
—
—
—
—
(282)
—
(282)
Stock compensation plan
transactions
—
—
(47)
934
—
—
887
Contributions
—
—
—
5
—
—
5
Net income
—
—
—
—
—
12,155
12,155
Balance at November 28, 2020
$
703
$
48
$
(26,723)
$
62,206
$
151
$
968,325
$
1,004,710
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
Note 8 - Equity
Twenty-six WeeksThe following reflects equity activity for the
 
Ended Novemberthirteen and thirty-nine weeks ended February 26,
2022 and February 27, 2021 (in
thousands):
Thirteen 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 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
—
—
—
—
(438)(855)
—
—
(438)(855)
Stock compensation
plan transactions
—
—
(17)(1,006)
1,9752,865
—
—
—
1,9581,859
Contributions
—
—
—
—
—
—
3
3
Net lossDividends
—
—
—
—
—
(16,853)(6,118)
(28)—
(16,881)(6,118)
Net income (loss)
—
—
—
—
—
22,664
(91)
22,573
Balance at NovemberFebruary
27, 202126, 2022
$
703
$
48
$
(27,450)(28,439)
$
66,01966,909
$
(996)(1,413)
$
959,124992,523
$
(25)(88)
$
997,4231,030,243
Twenty-six Weeks
Ended November 28, 2020
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Amount
Amount
Amount
Capital
Comp. Income
Earnings
Total
Balance at May 30, 2020
$
703
$
48
$
(26,674)
$
60,372
$
79
$
975,147
$
1,009,675
Impact of ASC 326
—
—
—
—
—
422
422
Balance at May 31 2020
703
48
(26,674)
60,372
79
975,569
1,010,097
Other comprehensive income, net of
tax
—
—
—
—
72
—
72
Stock compensation plan
transactions
—
—
(49)
1,829
—
—
1,780
Contributions
—
—
—
5
—
—
5
Net loss
—
—
—
—
—
(7,244)
(7,244)
Balance at November 28, 2020
$
703
$
48
$
(26,723)
$
62,206
$
151
$
968,325
$
1,004,710
Note 9 - Net Income (Loss) per Common Share
Basic net
income (loss)
per share
is based
on the
weighted average
Common Stock
and Class
A Common
Stock outstanding.
Diluted net income
per share
is based on
weighted-average common
shares outstanding
during the
relevant period
adjusted for
the dilutive
effect of
share-based awards.
Restricted shares
of
145
thousand and
139
thousand were
antidilutive due
to the
net
losses for the first twenty-six weeks of fiscal 2022
and 2021, respectively. These
shares were not included in the diluted net loss
per share calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
��
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
Thirty-nine 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 May 30, 2020
$
703
$
48
$
(26,674)
$
60,372
$
79
$
975,147
$
1,009,675
Impact of ASC 326
—
—
—
—
—
422
422
Balance at May 31 2020
703
48
(26,674)
60,372
79
975,569
1,010,097
Other comprehensive loss, net of tax
—
—
—
—
(214)
—
(214)
Stock compensation plan transactions
—
—
(875)
2,793
—
—
1,918
Contributions
—
—
—
5
—
—
5
Dividends
—
—
—
—
—
(1,661)
(1,661)
Net income
—
—
—
—
—
6,304
6,304
Balance at February 27, 2021
$
703
$
48
$
(27,549)
$
63,170
$
(135)
$
980,212
$
1,016,449
Note 9 - Net Income per Common Share
Basic net income per
share is based on
the weighted average Common Stock
and Class A Common
Stock outstanding. Diluted
net
income
per
share
is
based
on
weighted-average
common
shares
outstanding
during
the
relevant
period
adjusted
for
the
dilutive effect of share-based awards.
The
 
following
 
table
 
provides
 
a
 
reconciliation
 
of
 
the
 
numerators
 
and
 
denominators
 
used
 
to
 
determine
 
basic
 
and
 
diluted
 
net
income per common share (amounts in thousands, except per share data):
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27,
2021
November 28,February 26, 2022
2020
NovemberFebruary 27,
2021
November 28,
2020
Numerator
Net income (loss)
$
1,14539,454
$
12,15513,548
$
(16,881)22,573
$
(7,244)6,304
Less: Loss attributable to noncontrolling
interest
(28)(63)
0
(28)(91)
0
Net income (loss) attributable to Cal-Cal-Maine
Maine Foods, Inc.
$
1,17339,517
$
12,15513,548
$
(16,853)22,664
$
(7,244)6,304
Denominator
Weighted-average
common shares
outstanding, basic
48,85748,886
48,50148,530
48,85948,888
48,50148,511
Effect of dilutive restricted shares
159150
144129
—147
—138
Weighted-average
common shares
outstanding, diluted
49,01649,036
48,64548,659
48,85949,035
48,50148,649
Net income (loss) per common share
attributable to
Cal-Maine Foods, Inc.
Basic
$
0.020.81
$
0.250.28
$
(0.34)0.46
$
(0.15)0.13
Diluted
$
0.020.81
$
0.250.28
$
(0.34)0.46
$
(0.15)0.13
Note 10 - 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
 
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 thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Conventional shell egg sales
$
280,633
$
203,189
$
685,678
$
560,297
Specialty shell egg sales
182,945
145,210
462,319
408,537
Egg products
12,749
9,098
33,516
25,736
Other
1,158
1,583
2,682
4,619
$
477,485
$
359,080
$
1,184,195
$
999,189
Contract Costs
The Company can incur costs to obtain or fulfill a contract with a customer.
If the amortization period of these costs is less than
one year,
they are
expensed as
incurred. When
the amortization
period is
greater than
one year,
a contract
asset is
recognized
and is amortized
over the contract
life as a
reduction in net
sales. As of
February 26, 2022
and February 27,
2021, the balance
for contract assets is immaterial.
Contract Balances
The Company
receives payment
from customers
based on
specified terms
that are
generally less
than 30
days from
delivery.
There are rarely contract assets or liabilities related to performance under the contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
(in thousands):
Thirteen Weeks
Ended
Twenty-six Weeks
Ended
November 27, 2021
November 28, 2020
November 27, 2021
November 28, 2020
Conventional shell egg sales
$
223,258
$
201,725
$
405,807
$
357,109
Specialty shell egg sales
155,853
134,082
294,510
263,327
Egg products
11,401
9,932
20,767
16,637
Other
391
1,589
1,523
3,037
$
390,903
$
347,328
$
722,607
$
640,110
Contract Costs
The Company can incur costs to
obtain or fulfill a contract with a
customer. If the
amortization period of these costs is less
than
one year,
they are
expensed as
incurred. When
the amortization
period is
greater than
one year,
a contract
asset is
recognized
and is
amortized over
the contract
life as
a reduction
in net
sales. As
of November
27, 2021,
the balance
for contract
assets is
immaterial.
Contract Balances
The Company
receives payment
from
customers based
on specified
terms that
are generally
less than
30 days
from
delivery.
There are rarely contract assets or liabilities related to performance under
the contract.
17
Note 11 - Leases
Expenses related to
 
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):
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
November 27, 2021February 26, 2022
November 27, 2021February 26, 2022
Operating lease cost
$
208200
$
425625
Finance lease cost
Amortization of right-of-use asset
$
44
$
88132
Interest on lease obligations
$
76
$
1420
Short term lease cost
$
1,0971,086
$
2,1353,221
17
Future minimum lease payments under non-cancelable leases are as follows
(in (in thousands):
As of November 27, 2021February 26, 2022
Operating Leases
Finance Leases
Remainder fiscal 2022
$
378180
$
12060
2023
539
239240
2024
380
217
2025
130
0
2026
26
0
2027
5
0
Total
1,4581,260
576517
Less imputed interest
(111)(92)
(30)(24)
Total
$
1,3471,168
$
546493
The
 
weighted-average
 
remaining
 
lease
 
term
 
and
 
discount
 
rate
 
for
 
lease
 
liabilities
 
included
 
in
 
our
 
Condensed
 
Consolidated
Balance Sheet are as follows:
As of November 27, 2021February 26, 2022
Operating Leases
Finance Leases
Weighted-average
remaining lease term (years)
2.62.4
2.01.8
Weighted-average
discount rate
5.9
%
4.9
%
Note 12 - Stock Based Compensation
Total stock-based
 
stock-based compensation expense
was $
2.03.0
 
million and $
1.82.8
 
million for the twenty-six weeks
 
thirty-nine weeks ended November 27, 2021
February 26, 2022
and November 28, 2020,February 27, 2021, 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
 
NovemberFebruary
 
27,26,
 
20212022
 
of
 
$
4.68.1
 
million
 
will
 
be
 
recorded
 
over
 
a
 
weighted
average period of
1.72.3
 
years. Refer to Part II
 
II Item 8,
Notes to Consolidated
 
Financial Statements and
Supplementary Data, Note
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 twenty-sixthirty-nine weeks ended November 27, 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
(1,460)(3,932)
37.7037.81
Outstanding, November 27, 2021February 26, 2022
299,328320,579
$
39.3839.12
Note 13 - Commitments and Contingencies
Financial Instruments
The
 
Company
 
maintained
 
standby
 
letters
 
of
 
credit
 
("LOC"(“LOCs”)
 
totaling
 
$
4.1
 
million
 
at
 
NovemberFebruary
 
27,26,
 
20212022,
 
which
 
were
 
issued
under
 
the
 
Company's
 
Credit
 
Facility.
 
The
 
outstanding
 
LOCs
 
are
 
for
 
the
 
benefit
 
of
 
certain
 
insurance
 
companies
 
and
 
are
 
not
recorded as a liability on the consolidated balance sheets.
 
LEGAL PROCEEDINGS
State of Texas v.
 
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
18
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
 
$
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
 
filed a
 
motion to
 
strike, 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.
 
prejudice. On
October 18,
 
2021, plaintiffs
 
filed a motion
 
motion to
alter or
 
amend the final
 
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,
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
19
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
 
membership interests of
 
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.
 
2021
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
 
Item 7 of the Company’s
 
Annual Report on
Form 10-K for its
 
its fiscal year ended May 29,
 
29, 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
 
increased costs
and growingrising
 
inflationary inflation and interest
rates, and
 
(vii) adverse results
 
results in pending
 
litigation matters. Readers
are cautioned
 
not to place
 
place undue
reliance on forward-looking statements because,
 
while we believe the assumptionsreliance on
 
which the forward-looking statements are
based
are
reasonable,
there
can
be
no
assurance
that
these
forward-looking
statements
will
prove
to
be
accurate. Further,
forward-looking statements
 
includedbecause, while
 
hereinwe believe
 
the assumptions
on which
the forward-looking
statements are
 
onlybased are
 
madereasonable, there
 
ascan 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
 
or
 
obligation
 
to
 
update
publicly
these
forward-
lookingpublicly these forward-looking statements, whether because of new information, future events,
or otherwise.
GENERAL
Cal-Maine
 
Foods,
 
Inc.
 
(the
 
“Company,”
 
“we,”
 
“us,”
 
“our”)
 
is
 
primarily
 
engaged
 
in
 
the
 
production,
 
grading,
 
packaging,
marketing
 
and
 
distribution
 
of
 
fresh
 
shell
 
eggs.
 
Our
 
operations
 
are
 
fully
 
integrated
 
under
 
one
 
operating
 
segment.
 
We
 
are
 
the
largest producer and
 
and distributor
of fresh
 
shell eggs in
 
in the
United States
 
(“U.S.”). Our total
 
Our total flock
of approximately
 
42.942.7 million
layers
 
and
 
9.39.4
 
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
 
national and
regional grocery
 
store chains, club
 
club stores,
companies servicing
 
independent supermarkets
in
the U.S., food
 
service distributors and
 
egg product consumers
 
in states across
 
the southwestern, southeastern, mid-western
 
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,
 
Nevada, North Carolina,
 
Carolina Oklahoma
and South
 
Carolina.
 
We
 
also have an
 
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 White
 
White Large, Southeast
Regional Egg Market Price per
dozen eggs
(“UB southeast large
index”) for the first
half three quarters of fiscal year
2022
ranged from a low
of $1.00 in June
2021 to a high of
$1.66 in
November 2021.$2.06 in February 2022.
2122
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
 
offerings,
 
as
 
well
 
as
 
egg
products.
 
We
 
have
 
also
 
enhanced
 
our
 
efforts
 
to
 
provide
 
free-range
 
and
 
pasture-raised
 
eggs
 
that
 
meet
 
consumers’
 
evolving
choice
 
preferences.
 
While
 
a
 
small
 
part
 
of
 
our
 
current
 
business,
 
the
 
free-range
 
and
 
pasture-raised
 
eggs
 
we
 
produce
 
and
 
sell
represent attractive offerings
to a subset of
 
of consumers,
and therefore our customers, and help
 
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
 
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
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.
 
U.S. Census, cage-free legislation
goeswent into effect January
 
January 1, 2022. For additional
 
For additional information,
see the 2021
 
Annual Report, Part I,
 
I, Item 1, “Business –
 
“Business – Specialty
Eggs,”
 
“Business
 
–
 
Growth
 
Strategy”
 
and
 
“Business
 
–
 
Government
 
Regulation,”
 
and
 
the
 
first
 
risk
 
factor
 
in
 
Part
 
I
 
Item
 
1A,
“Risk Factors” under the sub-heading “Legal and Regulatory Risk Factors.”
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
 
479679
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
each day
 
to produce
 
eggs for
 
our customers.
 
As part
 
of the
 
nation’s
 
food supply,
 
we work
 
in a
 
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
 
to
visitors.
 
There
are
 
no known
indications that COVID-19 affects chickens 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
 
and limited availability of packaging supplies,
 
supplies, and increased labor
costs and medical costs
and, more recently,
inflation.
In the
 
second quartersthe third
 
quarters of fiscal
 
fiscal 2022 and
2021, we
spent approximately
$713 thousand
 
and $6122021,
we spent
approximately $534
 
thousand (excludingand
 
$397 thousand
(excluding medical
insurance claims)
 
claims) related to
 
to the
pandemic
 
and its
 
effects,
 
respectively.
 
The majority
 
of these
 
expenses in
 
in fiscal 2022
 
2022 resulted
from additional labor
 
labor costs
and increased
 
cost of packaging
 
packaging materials,
primarily reflected
 
in cost of
 
of sales. In
 
In fiscal
2021, most
of
 
these
 
expenses
 
related
 
to
 
additional
 
labor
 
costs.costs,
primarily
reflected
in
cost
of
sales.
 
Medical
 
insurance
 
claims
 
related
 
to
COVID-19 paid during the third quarter of
 
COVID-19
paid
during
the
second
quarter of fiscal
2022 were an additional $424 thousand as
 
additional $870
compared to $322 thousand as compared
to $529 thousand
paid in
the
comparable quarter in
fiscal
2021.
2223
In For
the
 
first halfthirty-nine
 
of fiscalweeks
ended
 
2022
and
 
2021,
we
 
spent
approximately
 
$1.3 million
and $1.41.8
 
million
 
(excluding
 
medical insurance
claims)
 
relatedinsurance
 
claims)
related to
 
the
pandemic
 
and
its
 
effects,
respectively.
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
weeks
ended 2022
were
an
 
additional $1.6
 
labormillion
 
costs.
Medical
insurance
claims
relatedas compared
 
to $1.1
 
COVID-19
paid
during
the
first
half
of
fiscal 2022 were an additional $1.1 million as compared to $818 thousand paid
 
in
the comparable
period
in
fiscal
2021.
EXECUTIVE OVERVIEW
For the second third
quarter of fiscal 2022,
 
2022, we recorded
a gross profit
of $43.7$91.6 million
compared to $58.5$47.5
 
million for the
same period
of
 
fiscal
 
2021,
 
with
 
the
 
decreaseincrease
 
due
 
primarily
 
to
 
the
higher
 
costs ofshell
 
feedegg
 
ingredientsprices
 
and
 
higherincreased
 
processingvolume
 
costs.of
specialty
eggs.
 
Our
 
total
dozens sold
 
increased 0.9%2.8%
 
to 276.1287.7
 
million dozen
 
shell eggs
 
for the
 
second quarterthe third
 
quarter of fiscal
 
fiscal 2022 compared
 
compared to 273.7
279.7
 
million
dozen for
 
the same
 
period of
 
fiscal 2021.
 
2021. For the
 
second quarterthe third
 
quarter of fiscal
 
fiscal 2022, conventional
 
conventional dozens sold
 
sold decreased 4.4%
5.2%
 
and
specialty dozens sold
increased 15.7%24.1%
 
as compared to the same
 
the same quarter
in fiscal 2021. Specialty
 
Specialty dozens sold
increased as more
cage-free facilities came into production, which helped increase our
retailers 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
 
southeast
 
large
 
index
 
for
 
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2022
 
increased
 
14.6%46.8%
 
from
 
the
comparable period
 
in
the
 
prior year.
 
Our
net
 
average selling
 
selling price
per
 
dozen
for
 
the second
third
 
quarter
of
 
fiscal
2022
 
was $1.373
$1.612
compared
to $1.227$1.246
 
in the
prior-year
 
period.
Hen numbers
 
reported by the
 
the USDA
as of December
 
March 1, 2021,
2022, were
 
327.8322.7 million,
which is approximately 913
 
thousand more approximately 5.4
million less
hens than
 
the comparable
period of
 
the prior
year.
 
The USDA
also reported
 
that the
hatch
 
from
 
JulyOctober
 
2021
 
through
 
NovemberFebruary
 
20212022
 
decreased
 
2.0%5.5%
 
compared
 
to
 
the
 
prior-year
 
period.
 
As
 
of
 
December March
1,
 
2021,2022,
table-type eggs in incubators were down 9%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 second
third quarter of
 
fiscal 2022
increased 21.6%16.9%,
 
or $0.156,
$0.132, compared to
the second
quarter of
fiscal 2021.
This increase
was primarily
due to
 
increased prices
for feed
ingredients. Feed
costs startedthe
trending
higher
midway
through
the
second
third quarter
 
of
fiscal
 
20212021. This
 
andincrease was
 
have
remained
elevated
comparedprimarily due
 
to increased
 
historical
costs.
Though these feed costs
began trending higher
in fiscal 2021, we initially
benefitted from filling our
storage bins at harvest and
locking in the
basis portion of
our grain purchases
several months in
advance,
which reduced ourprices for
 
feed costs iningredients.
 
fiscal 2021. We
did not
experienceFor the
 
same benefits
in fiscal
2022 given
sustained elevated
feed costs
that increased
our feed
costs compared
to
the
comparable
fiscal
2021
period.
For
the
second
third quarter
 
of
fiscal
2022,
the
average
 
Chicago
Board
of
Trade
 
(“CBOT”)
daily market price
 
price was
$5.43 $6.13 per
 
bushel for
corn and
 
$338412 per ton
ton for
soybean meal,
representing an
increase of
38.4% 23.5% and
a
decrease of
5.9% 2.5%, respectively,
compared to
the average
daily CBOT
prices for
 
the comparable
 
period in
 
the prior
 
year.
 
Other
farm
 
production
 
costs for
 
the secondthird
 
quarter
of
 
fiscal
2022
 
increased
11.9%
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,
 
mill, processing plant,
 
plant, related
offices
 
and outbuildings
 
and
related
 
equipment located
 
on
approximately 400
 
acres near
 
Bogata, Texas.
 
For additional
 
information,
see
Note 2 – Acquisition
 
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 ourwill
 
Board ofspecialize in
 
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
 
with up
to $18.5
 
million in debt
 
debt and
equity to
 
purchase property and
 
and equipment
and to
 
fund working
capital,
and we
 
will retain a
 
a controlling
interest in
 
the venture.
We
 
will serve as
 
as the
preferred provider
 
to supply specialty
 
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
 
approved a $23.0
 
$23.0 million capital
 
capital project to
 
to expand
our
cage-free egg production at our
 
at our Okeechobee,
Florida, production facility.
 
The project is designed
 
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
 
has commenced, with
 
with first pullet
 
pullet placements
planned
 
by mid-May
 
2022 and
 
the first
 
layer
house planned
to be
finished by
October 1,
2022, with
the second
layer house
and project completion
expected by
February 1,
2023. The Company
plans to fund the
project through a combination
of available cash on
hand, investments and
operating cash
flow.
Effective December
5, 2021, we made
an additional investment
in our joint
venture Southwest Specialty
Eggs, LLC, to acquire
warehouse
and
distribution
capability
to
expand
Southwest
Specialty
Eggs,
LLC’s
customer
base
in the
southern
California, Arizona and Nevada markets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2324
RESULTS OFhouse planned to be finished by October 1, 2022, with project completion expected by February 1, 2023. The Company plans to
fund the project through a combination of available cash on hand, investments and operating cash flow.
Effective December 5,
 
OPERATIONS
The2021, we made
 
followingan additional investment
 
tablein our joint
 
setsventure Southwest Specialty Eggs,
 
forth,LLC to acquire
warehouse
and
distribution
capability
to
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
warehouse
in
early
December
as
customers
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.
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27, 2021
November 28, 2020February 26, 2022
NovemberFebruary 27, 2021
November 28, 2020
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
88.880.8
%
83.286.8
%
93.088.0
%
88.287.7
%
Gross profit
11.219.2
%
16.813.2
%
7.012.0
%
11.812.3
%
Selling, general and administrative
12.211.0
%
12.613.3
%
13.112.4
%
13.713.6
%
(Gain) loss on disposal of fixed assets
(0.5)(0.1)
%
—0.1
%
(0.3)(0.2)
%
—
%
Operating income (loss)
(0.5)8.3
%
4.2(0.2)
%
(5.8)(0.2)
%
(1.9)(1.3)
%
Total other income, net
0.62.8
%
0.43.4
%
1.21.8
%
0.51.5
%
Income (loss) before income taxes
0.111.1
%
4.63.2
%
(4.6)1.6
%
(1.4)0.2
%
Income tax expense (benefit) expense
(0.2)2.8
%
1.1(0.5)
%
(2.3)(0.2)
%
(0.4)
%
Net income (loss)
0.38.3
%
3.53.7
%
(2.3)1.8
%
(1.0)0.6
%
NET SALES
Total
net
 
sales for
the
second third quarter
of
 
fiscal
2022
were $390.9
$477.5 million
compared
 
to $347.3
$359.1 million
for
the same
 
period
of fiscal
fiscal 2021.
Net shell egg
 
shellsales represented 97.3%
and 97.5% of
total net sales
for the
third quarters of
fiscal 2022 and
2021, respectively.
Shell
 
egg
 
sales
 
represented
97.1%
of
total
net
sales
for
the
second
quarters
of
fiscal
2022
and
2021.
Shell
egg
sales
classified
 
as “Other”
“Other”
 
represent
 
sales
of
 
hard-cooked
 
eggs,
 
hatching
 
eggs
and
 
other
 
miscellaneous
 
products
included
with
our
included with our shell egg operations.
 
Total
 
net sales
 
sales for the
 
the twenty-six
thirty-nine weeks
 
ended February
 
November 27,
202126, 2022
 
were $1,184.2
 
$722.6 million,
compared
 
to $640.1$999.2
 
million
for
 
the
comparable period of fiscal 2021.
Net
 
shell
 
egg
 
sales
 
represented
 
97.1%97.2%
 
and
 
97.4%
 
of
 
total
 
net
 
sales
 
for
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
27,26,
 
20212022
 
and
November 28, 2020,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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2425
The table below presents an analysis of our conventional and specialty shell egg
sales (in thousands, except percentage data):
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26, 2022
February 27, 2021
November 28, 2020February 26, 2022
NovemberFebruary 27, 2021
November 28, 2020
Total net sales
$
390,903477,485
$
347,328359,080
$
722,6071,184,195
$
640,110999,189
Conventional
$
223,258280,633
58.860.4
%
$
201,725203,189
59.858.0
%
$
405,807685,678
57.859.6
%
$
357,109560,297
57.357.5
%
Specialty
155,853182,945
41.139.4
%
134,082145,210
39.741.5
%
294,510462,319
42.040.2
%
263,327408,537
42.242.0
%
Egg sales, net
379,111463,578
99.999.8
%
335,807348,399
99.5
%
700,3171,147,997
99.8
%
620,436968,834
99.5
%
Other
3911,158
0.10.2
%
1,5891,583
0.5
%
1,5232,682
0.2
%
3,0374,619
0.5
%
Net shell egg sales
$
379,502464,736
100.0
%
$
337,396349,982
100.0
%
$
701,8401,150,679
100.0
%
$
623,473973,453
100.0
%
Net shell egg sales as a
percent of total net sales
97.197.3
%
97.197.5
%
97.197.2
%
97.4
%
Dozens sold:
Conventional
192,403192,511
69.766.9
%
201,317203,070
73.672.6
%
376,890568,511
70.470.0
%
396,555599,625
73.873.4
%
Specialty
83,70595,140
30.333.1
%
72,33476,645
26.427.4
%
158,603243,310
29.630.0
%
141,090217,735
26.226.6
%
Total dozens sold
276,108287,651
100.0
%
273,651279,715
100.0
%
535,493811,821
100.0
%
537,645817,360
100.0
%
Net average selling price per
dozen:
Conventional
$
1.1601.458
$
1.0021.001
$
1.0771.206
$
0.9010.934
Specialty
$
1.8621.923
$
1.8541.895
$
1.8571.900
$
1.8661.876
All shell eggs
$
1.3731.612
$
1.2271.246
$
1.3081.414
$
1.1541.185
Egg products sales:
 
Egg products net sales
11,40112,749
9,9329,098
20,76733,516
16,63725,736
Pounds sold
16,00915,947
15,96715,569
31,27847,225
30,99646,565
Net average selling price per
pound
0.7120.799
0.6220.584
0.6640.710
0.5370.553
Shell egg net sales
SecondThird Quarter – Fiscal 2022 vs. Fiscal 2021
-
In
the second
third
quarter of
fiscal 2022,
conventional
egg
sales
increased
$77.4
million,
or
38.1%,
compared
to
the
third
quarter of fiscal
 
2022,
conventional egg sales increased $21.5
million, or 10.7%, compared to
the second
quarter of
fiscal 2021,
primarily due
 
to the increase
 
increase in
price for
 
conventional shell
eggs,
 
partially offset
 
by a decrease
in volume
 
of conventional
 
eggs sold.
 
Changes in
 
price resulted
 
in a
 
$30.488.0 million
 
increase and
 
the change
 
in volume
resulted in a $10.3$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
 
believe prices
for conventional
eggs were
positively impacted
by a
decrease in
the conventional
production layer
hen
 
flock.flock
and
customer
and
consumer
demand.
 
According
 
to
 
reports
from
 
the
 
USDA,
 
as
of
November
1,
2021,
the
 
estimatedaverage
 
number
 
of
hens producing
 
henswhite and
 
producing
brown conventional
 
eggs decreasedfor
 
11.3February 2022
decreased 31.7
 
million, or
 
4.6%13.1%, versus
 
the
prior-year
 
comparable period.
 
In addition,USDA Agriculture
Marketing
Service reported
shell
eggs
broken for
 
foodservice and
demandfurther processing
 
improved
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
 
comparablelatest
 
prior-year13
 
period.weeks
 
Lowerended
 
conventionalFebruary
 
egg27,
 
prices2022
 
inversus
 
the
 
prior-year
period werecomparable period.
-
Specialty egg sales increased
 
primarily tied
to a
surplus of
conventional eggs
entering the
retail channel
from the
foodservice channel
during
the pandemic.
A stronger
export market$37.7 million, or 26.0%,
 
in our
secondthe third quarter
 
of fiscal 2022 compared
 
2022 also
supported
conventional eggto the third quarter
prices.
-
The
decrease
in
volume
of
 
conventionalfiscal
 
eggs
sold
was2021,
 
primarily
 
due
 
to
 
elevateda
 
retail24.1%
 
demand
during
the
second
quarter
of fiscal
2021 given
consumers’
preferences
to purchase
eggs for
in-home
meal preparation
during
the more
restrictive
phases
of
governmental
and
business
shutdowns
due
to
the
pandemic.
We
saw
this
consumer
preference
begin to shift
in the fourth quarter
of fiscal 2021
as consumers began
to resume out-of-home
dining and prepare
fewer
meals at home.
-
Specialty
egg
sales
increased
$21.8
million,
or
16.2%,increase
 
in
 
the
 
second
quartervolume
 
of
 
fiscalspecialty
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
 
compareddozens sold
 
to(including free-range,
 
thepasture-raised and
 
second
quarter oforganic) increased
 
fiscal 2021,21.3%. We
 
primarilybelieve this
increase in
26
demand is due
 
to aCalifornia’s
 
15.7% increasecage-free mandate going
 
in theinto-effect January
 
volume of1, 2022,
 
specialty eggsas well
 
sold, ofas more retailers’
 
which resulted
in ashifting
$21.2to selling more cage-free products.
-
million increase
in net
sales. Our
specialty egg
 
sales in
 
the secondthird quarter
 
quarter of fiscal
 
fiscal 2022 versus
 
versus the prior-year
 
prior-year
period benefitted from
our acquisition
of
the remaining
50% membership
 
interest in
Red River,
which helped drive
 
drive our
cage-free
 
cage-free egg
 
retail
sales.
Our
 
cage-free
sales
 
also
 
benefitted
 
from
 
our
 
continued
 
investment
 
in
 
expanded
 
cage-free
 
capabilities
Index
as
25
capabilities as additional
 
cage-free
production
capacity came online
during the quarter.
Cage-free egg sales
comprised for the first, second and third quarters of fiscal
24.0%2022 were 22.3%, 22.4% and 24.1% of our total net shell egg sales, in second quarter fiscal 2022 and 23.8% of total sales fiscal year-to-date.respectively.
-
We
believe that
the demand
for specialty
eggs has increased
as consumers
have evolved
their preferences
to purchase
higher-priced
specialty
eggs for
at-home
meal preparation
and
as retailers
have
committed
to selling
more cage-free
products.
Twenty-sixThirty-nine weeks – Fiscal 2022
vs. Fiscal 2021
-
For
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
27,26,
 
2021,2022,
 
conventional
 
egg
 
sales
 
increased
 
$48.7125.4
 
million
 
or
 
13.6%22.4%
compared
 
to
 
the
 
same
period
 
of
 
fiscal
2021,
 
primarily
 
due
 
to
 
the
 
increase
in
 
price,
 
partially
 
offset
 
by
 
a
 
decrease
in
volume
of
conventional
eggs
 
sold.
Changes
in
price
resulted
in
 
a $66.3
$154.6
million
increase
and
 
change
in
volume resulted
resulted in a $21.2$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
layer hen flock and customer and consumer demand.
 
believe prices
for conventional
USDA Agriculture Marketing Service reported shell eggs were
positively impacted
by a
decrease in
the conventional
production layerbroken
hen
flock.
In
addition,for
 
foodservice
 
demandand
 
improvedfurther
processing
increased
10.2%
 
compared
 
to
 
the
 
samecomparable
 
periodprior-year
 
inperiod.
 
theWe
 
prior
year.
Lowerbelieve
lower conventional
 
egg
prices
 
in the
 
the prior
-year
prior-year period
 
were
primarily
 
due
tied to
 
a surplus
of conventional
 
eggs entering
the
retail
channel
the retail channel from the foodservice channel due toexceeding demand during this phase of the pandemic.
-
The decrease in
 
in volume of conventional
 
conventional eggs sold was
 
sold was primarily due to
 
due to elevated
retail demand
 
during the first
 
first half
of
fiscal
2021
 
due
to
 
consumers’
preferences
 
to
purchase
 
eggs for
 
in-home
meal
 
preparation
due
 
to
the
 
pandemic.
We
saw this consumer
 
consumer preference
begin to
 
shift in the
 
the fourth quarter of
 
of fiscal
2021 as
 
consumers began to
 
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
 
sales increased
$31.2 million,
or 11.8%13.2%,
for the
 
twenty-sixthirty-nine weeks
ended November
27, 2021February 26, 2022
 
compared to
to the same period of
 
same periodfiscal 2021, primarily due
 
of fiscal
2021, primarily
due to
a 12.4% an 11.7%
 
increase in
the volume
 
of specialty
dozens sold
 
partiallyand a slight
offset by a
decreaseincrease in specialty egg
prices. Changes in price
resulted in a $1.4
$5.8 million decreaseincrease and
change in volume resulted in a
resulted
$48.0 million increase in
a
$32.5
million
increase
in
net
sales,
 
respectively.
We
 
also benefitted from our additional cage-free
 
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
SecondThird Quarter – Fiscal 2022 vs. Fiscal 2021
-
Egg
 
products
 
net
 
sales
increased
 
$1.53.7
 
million
 
or
 
14.8%40.1%
 
for
 
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2022
 
compared
 
to
 
the
 
same
period of fiscal 2021,
 
2021, primarily due to a
 
to a 14.5%
36.8% selling price increase,
 
which had a $3.4
 
$1.4 million positive impact on
 
impact on net
sales.
-
Selling
prices
for
egg
products
in
 
the
second
third quarter
of
fiscal
2021
 
were negatively impacted by a decline in
 
negatively
impacted
by
a
decline
infoodservice
foodservice demand due to the pandemic.
Our egg products net average selling
price increased in the second quarter
of
fiscal 2022 compared
 
to the same period
 
pandemic. Our
egg products
net average
selling price
increased in
the third
quarter of
fiscal 2022
compared to
the same
period in
fiscal 2021
 
as foodservice channel
 
channel demand
has begun
 
to shift more
 
more to pre-
pre-pandemic
pandemic levels.
Twenty-sixThirty-nine weeks – Fiscal 2022
vs. Fiscal 2021
-
Egg products
 
net sales
 
increased $4.1$7.8
 
million or
 
24.8%30.2%, primarily
 
due to
 
a 23.6%28.4%
 
selling price
 
increase compared
 
to
the first twenty-sixthirty-nine weeks of fiscal 2021, which had a $4.0$7.4 million positive
impact on net sales.
-
Our egg products
net average selling
 
price increased in the twenty-six
 
the thirty-nine weeks end November 27, 2021, compared
 
end February 26,
2022, compared to
the
same
 
period
 
in
 
fiscal
 
2021
 
as
 
foodservice
 
channel
 
demand
 
has
 
begun
 
to
 
shift
 
more
 
towards
 
pre-pandemic
 
levels.
Selling
 
prices
 
for
 
egg
 
products
 
in
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
28,27,
 
20202021
 
were
 
negatively
 
impacted
 
by
 
a
decline in foodservice
 
foodservice demand
during the
 
more restrictive phases
 
phases of
governmental and
 
business shutdowns
due to
the
pandemic.
COST OF SALES
Costs
of
sales
for
the
second
quarter
of
fiscal
2022
were
$347.2
million
compared
to
$288.9
million
for
the
same
period
of
fiscal
2021.
For
the
twenty-six
weeks
ended
November
27,
2021
and
November
28,
2020,
total
cost
of
sales
were
$672.2
million and $564.9 million, respectively.
Cost of
sales consists
of
costs directly
related
 
to producing,
processing
and
packing
shell eggs,
purchases
of
shell
eggs fromthe
outside producers, processing and packing of liquid
and frozen egg products and other non-egg costs. Farm
production costs are
those costs
incurred at
the egg production
facility,
including feed,
facility,
hen amortization,
and other
related farm
production
costs.pandemic.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
COST OF SALES
Costs of sales for
the third quarter of
fiscal 2022 were $385.9
million compared to $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
directly related
to producing,
processing and
packing shell
eggs, purchases
of shell
eggs from
outside producers, processing and packing of liquid and frozen egg products and other non-egg costs. Farm production costs are
those costs incurred
at the egg
production facility,
including feed, facility,
hen amortization, and
other related farm
production
costs.
The following table presents the key variables affecting our cost of
sales (in thousands, except cost per dozen data):
Thirteen Weeks
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 26,
2022
February 27,
2021
November 28,%
2020
% Change
NovemberFebruary 26,
2022
February 27,
2021
November 28,%
2020
% Change
Cost of Sales:
Farm production
$
221,971239,389
$
179,131190,883
23.925.4
%
$
429,466668,855
$
340,994531,877
25.925.8
%
Processing, packaging, and
warehouse
69,47477,116
63,50563,640
9.421.2
134,533211,649
123,374187,014
9.013.2
Egg purchases and other (including
change in inventory)
46,03959,135
37,62550,443
22.417.2
90,730133,968
86,558137,001
4.8(2.2)
Total shell eggs
337,484375,640
280,261304,966
20.423.2
654,7291,014,472
550,926855,892
18.818.5
Egg products
9,67210,263
8,6166,597
12.355.6
17,48627,749
13,96820,565
25.234.9
Total
$
347,156385,903
$
288,877311,563
20.223.9
%
$
672,2151,042,221
$
564,894876,457
19.018.9
%
Farm production costs (per dozen
produced)
Feed
$
0.5290.562
$
0.4100.467
29.020.3
%
$
0.5370.546
$
0.3990.422
34.629.4
%
Other
$
0.3490.350
$
0.3120.313
11.911.8
%
$
0.3510.350
$
0.3200.318
9.710.1
%
Total
$
0.8780.912
$
0.7220.780
21.616.9
%
$
0.8880.896
$
0.7190.740
23.521.1
%
Outside egg purchases (average
cost per
dozen)
$
1.561.75
$
1.241.26
25.838.9
%
$
1.451.57
$
1.131.23
28.327.6
%
Dozens produced
256,786264,433
251,914248,130
1.96.6
%
493,244757,677
483,075731,205
2.13.6
%
Percent produced to sold
93.0%91.9%
92.1%88.7%
1.03.6
%
92.1%93.3%
89.9%89.5%
2.44.2
%
Farm Production
SecondThird Quarter – Fiscal 2022 vs. Fiscal 2021
-
Feed
costs per
dozen
 
produced
increased 29.0% 20.3%
in
 
the second
third
quarter
of
fiscal
 
2022 compared to the
 
second compared
to
the third
quarter of
fiscal 2021.
 
This increase was
 
was primarily
due
 
to
increased prices
 
for corn,
 
corn, our
primary feed
 
ingredient. Feed
ingredient
costs started trending
higher midway
through the
second quarter
of fiscal 2021
and have remained
elevated compared
to historical costs. Though these feed costs began trending
higher in fiscal 2021, we initially benefitted from
filling our
storage
bins
at
harvest
and
locking
inFor
 
the
 
basisthird
portionquarter
 
of
 
ourfiscal 2022,
 
grainthe
 
purchasesaverage
 
severaldaily
 
monthsChicago
 
in
advance,
which
reduced our
feed costs
in fiscal
2021. As
feed costs
have remained
elevated entering
into our
second quarterBoard
 
of fiscal
2022, we
 
did notTrade
 
experience the(“CBOT”) market
 
same benefits,price
 
which increasedwas
 
our feed$6.13 per
 
costs comparedbushel
 
for
corn representing an increase of 23.5 percent compared to the average
 
same period
daily CBOT prices for the third quarter of fiscal
2021.
-
Other
farm
 
production costs
 
costs increased
due
 
to higher
 
flock amortization,
 
,primarily from
 
primarily
from an
increase
 
in
our
 
cage-free
production, which has
 
has higher capitalized costs. Also,
 
costs. Also, our
higher feed
 
costs, which began to
 
to rise in our
 
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.
Twenty-sixThirty-nine weeks – Fiscal 2022
vs. Fiscal 2021
-
Feed costs
 
costs per
dozen
 
produced
increased
 
34.6% 29.4%
in
 
the twenty-six
 
thirty-nine weeks
ended
 
November 27,February 26,
 
2021 2022
compared
 
to
the
same period
 
of fiscal
 
2021, primarily
 
due to
 
higher feed
 
ingredient prices
 
resulting from
 
increased export
demand, as
well
as
weather-related
shortfalls
 
in
production
and
yields,
which
have
placed
additional
pressure
on
domestic
production and yields, which have placed additional pressure on domestic supplies.
-
Other
farm
 
production costs
 
costs increased
due
 
to higher
 
flock amortization,
 
primarily from
 
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.
27
Processing, packaging, and warehouse
SecondThird Quarter – Fiscal 2022 vs. Fiscal 2021
-
Cost of packaging
 
packaging materials increased
 
5.3% comparedincreased 17.7%
 
compared to
the secondthird
 
quarter of fiscal
 
fiscal 2021
as supply
 
chain constraints
caused by the pandemic increased costs for packaging products and manufacturer
s
implemented pandemic surcharges.
-
Labor costs
increased 18.4%
due to
wage increases
in response
to labor
shortages, primarily
due to
the pandemic
and
its effects.
Twenty-six weeks – Fiscal 2022
vs. Fiscal 2021
-
Cost of
packaging
materials increased
7.0%
compared
to the
twenty-six
weeks ended
November 27,
2021 as
supply
chain
constraintsinitially
 
caused
 
by
 
the
 
pandemic
 
increased
 
costs
 
for
 
packaging
 
products
 
and
 
manufacturers
 
implemented
pandemic
pandemic surcharges.
Costs also increased due to rising inflation.
-
Labor costs increased
 
increased 14.8%
16.3% due to
 
wage increases in
 
in response
to labor
 
shortages, primarily due
 
due to
the pandemic
 
and
its effects.
-
Dozens
processed
increased
6.6%
compared
to
the
third
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
supply
chain
constraints
initially
caused
by
the
pandemic
increased
costs
for
packaging
products
and
manufacturers
implemented pandemic surcharges.
Costs also increased due to rising inflation.
-
Labor costs increased
15.3% due to
wage increases in
response to labor
shortages, primarily due
to the 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)
SecondThird Quarter – Fiscal 2022 vs. Fiscal 2021
-
Costs
in
 
this category
 
increased
primarily
 
due
to
 
higher
egg
 
prices, partially
 
offset
 
slightly
by
the
 
decrease
in
 
the
volume
 
of
outside egg purchases, as our percentage of produced to sold increased
to 93.0%91.9% from 88.7%.
Twenty-sixThirty-nine weeks – Fiscal 2022
vs. Fiscal 2021
-
Costs
 
in
 
this
category
 
increaseddecreased
 
primarily
 
due
 
to
higher
egg
prices,
offset
slightly
by
 
the
 
decrease
 
in
 
the
 
volume
 
of
outside
egg
purchases,
as
our
outside egg purchases, as our percentage of produced to sold increased
to 92.1%.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
 
supplies
remained
tight
relative
to
demand,
primarily
related
to
lower
carry-out
stock.
We
expect
market
prices
 
toand
 
remain
volatile
given
the
ongoing
disruptions
related
to
thehigher
COVID-19 global pandemic, weather fluctuationsvolatility tied to the Russia-Ukraine war and geopolitical
issues.higher export demand.
GROSS PROFIT
 
Gross profit for the third quarter of fiscal 2022
 
profitwas $91.6 million compared to $47.5 million for the
 
for
the second
quarter
same period of fiscal
2022 was
$43.7
million
compared
to $58.5
million
for
the same
period of
fiscal 2021.
2021.
The decreaseincrease of $14.7$44.1 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.
Gross
profit
 
for
the
 
twenty-six
thirty-nine weeks
 
ended February
 
November
27,
202126, 2022
 
was
$50.4 $142.0
 
million
compared
 
to
$75.2 $122.7
 
million
for
 
the
same
period of fiscal
 
2021. The decreaseincrease
 
of $24.8$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.
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES
Selling,
general,
and
administrative
expenses
("SGA")
include
costs
of
marketing,
distribution,
accounting,
and
corporate
overhead. The following table presents an analysis of our SGA expenses (in
thousands):
Thirteen Weeks
Ended
November 27, 2021
November 28, 2020
$ Change
% Change
Specialty egg expense
$
14,262
$
14,039
$
223
1.6
%
Delivery expense
14,395
13,052
1,343
10.3
%
Payroll, taxes and benefits
11,303
10,030
1,273
12.7
%
Stock compensation expense
975
931
44
4.7
%
Other expenses
6,845
5,821
1,024
17.6
%
Total
$
47,780
$
43,873
$
3,907
8.9
%
Second Quarter – Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Advertising and
franchise fees
increased in
the second
quarter of
fiscal 2022
compared to
the second
quarter of
fiscal
2021,
due to increased
advertising expense.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Index
28
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 an increase
in employee health insurance costs.
Other expenses
-
The
increase
in
other
expenses
is
primarily
due
to
increased
premiums
for
property
and
casualty
insurance
due
to
insurance market conditions.
Twenty-six Weeks
Ended
November 27, 2021
November 28, 2020
$ Change
% Change
Specialty egg expense
$
27,977
$
26,736
$
1,241
4.6
%
Delivery expense
28,331
25,546
2,785
10.9
%
Payroll, taxes and benefits
21,242
21,331
(89)
(0.4)
%
Stock compensation expense
1,976
1,824
152
8.3
%
Other expenses
14,779
12,401
2,378
19.2
%
Total
$
94,305
$
87,838
$
6,467
7.4
%
Twenty-six weeks –
Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Advertising
and
franchise
fees
increased
in
the
twenty-six
weeks
ended
November
27,
2021
compared
to
the
same
period of fiscal 2021 due to increased
advertising expense.
Delivery expense
-
The increased
delivery expense
is primarily
due to
the increase
in fuel
and labor
costs for
both our
fleet and
contract
trucking.
Other expenses
-
The increase
in other expenses
is primarily due
to property losses
incurred that
were not covered
by insurance
as well
as increased premiums for property and casualty insurance market
conditions.
OPERATING
INCOME (LOSS)
For
the
second
quarter
of fiscal
2022,
we
recorded
an operating
loss of
$2.1 million
compared
to operating
income of
$14.5
million for the same period of fiscal 2021.
For the twenty-six
weeks ended
November 27,
2021, we recorded
an operating loss
of $41.7
million compared
to an operating
loss of $12.7 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 income or loss of unconsolidated
entities, and patronage income, among other items.
For
the
second
quarter
of fiscal
2022,
we
earned
$207 thousand
of interest
income
compared
to $727
thousand
for
the same
period
of
fiscal
2021.
The
decrease
resulted
from
significantly
lower
investment
balances.
The
Company
recorded
interest
expense
of
$78
thousand
and
$64
thousand
for
the
second
quarters
ended
November
27,
2021
and
November
28,
2020,
respectively.
For the twenty-six
weeks ended November 27,
2021, we earned $497
thousand of interest income
compared to $1.7 million
for
the
same
period
of
fiscal
2021.
The
decrease
resulted
from
significantly
lower
investment
balances.
The
Company
recorded
interest expense
of $136
thousand and
$135 thousand
for the
twenty-six weeks
ended November
27, 2021
and November
28,
2020, respectively.
29
For the second quarter of fiscal 2022, equity
income of unconsolidated entities was $264 thousand
compared to $58 thousand in
the prior-year period.
For the twenty-six
weeks ended November
27, 2021, equity
income of unconsolidated
entities was $399
thousand compared
to
$14 thousand in the prior-year period.
Other, net
for the second quarter
ended November 27, 2021,
was income of $1.9
million compared to income
of $436 thousand
for
the same
period of
fiscal 2021,
which is
primarily
due to
a $1.4
million payment
related to
review
and adjustment
of our
various marketing agreements.
Other,
net
for
the
twenty-six
weeks
ended
November
27,
2021,
was
income
of
$7.0
million
compared
to
income
of
$948
thousand
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
remeasurement
of
our
equity
investment,
along with the $1.4 million payment related to review and adjustment of our
various marketing agreements.
INCOME TAXES
As of November 27, 2021, we remain under
audit by the Internal Revenue Service (IRS) for the fiscal years
2013 through 2015.
The IRS
has proposed
adjustments related
to the
Company’s
research and
development credits
claimed during
the years
under
audit. Management is continuing to evaluate those proposed adjustments
and does not anticipate the adjustments would result in
a
material
change
to
its
consolidated
financial
statements.
Using
the
facts,
circumstances
and
information
known
at
the
reporting date, the Company believes
it is reasonably possible an
adjustment to the previously recognized
tax benefits related to
the research
and development
credits is
necessary.
As such,
we recorded
a tax
benefit of
approximately $520
thousand during
the second quarter of fiscal 2022.
For
the
second
quarter
of
fiscal
2022,
pre-tax
income
was
$468
thousand
compared
to
$15.9
million
for
the
same
period
of
fiscal
2021.
We
recorded
an
income
tax
benefit
of
$677
thousand
for
the
second
quarter
of
fiscal
2022,
which
includes
the
discrete tax
benefit described
above. Excluding
the discrete
tax benefit,
income tax
benefit was
$157 thousand
for the
second
quarter
of fiscal
2022
with an
adjusted
effective
tax rate
of
33.5%.
Income
tax expense
was $3.8
million
for
the comparable
period of fiscal 2021, which reflects an effective tax rate of 23.6%.
For
the
twenty-six
weeks
ended
November
27,
2021,
pre-tax
loss
was
$33.4
million
compared
to
$9.6
million
for
the
same
period
of
fiscal
2021.
We
recorded
an
income
tax
benefit
of
$16.5
million,
which
includes
the
discrete
tax
benefit
of
$8.3
million
as discussed
in Note
2 –
Acquisitions
of the
Notes to
Condensed Consolidated
Financial
Statements in
this Quarterly
Report.
Excluding
the discrete
tax
benefit,
income
tax benefit
was $8.2
million
with
an adjusted
effective
tax rate
of 24.6%,
compared to $2.4 million for the comparable period of fiscal 2021,
which reflects an effective tax rate of 24.6%.
At November
27, 2021
and May
29, 2021,
trade and
other receivables
included income
taxes receivables
of $42.8
million and
$42.5 million, respectively.
Our effective tax
rate differs from
the federal statutory income
tax rate due to
state income taxes, certain
federal tax credits and
certain
items
included
in
income
for
financial
reporting
purposes
that
are
not
included
in
taxable
income
for
income
tax
purposes,
including
tax
exempt
interest
income,
certain
nondeductible
expenses
and
net
income
or
loss
attributable
to
our
noncontrolling interest.
NET LOSS
Net income for
the second quarter ended
November 27, 2021, was
$1.2 million, or $0.02
per basic and diluted
share, compared
to net income of $12.2 million or $0.25 per basic and diluted share for the same
period of fiscal 2021.
Net loss for the twenty-six
weeks ended November 27, 2021, was
$16.9 million, or $0.34 per
basic and diluted share, compared
to net loss of $7.2 million or $0.15 per basic and diluted share for the same period of fiscal 2021.
CAPITAL RESOURCES
AND LIQUIDITY
Our working
capital at
November 27,
2021 was $364.7
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
4.13
at
November
27,
2021,
compared with 5.77 at May 29, 2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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):
Thirteen Weeks Ended
February 26, 2022
February 27, 2021
$ Change
% Change
Specialty egg expense
$
17,318
$
16,162
$
1,156
7.2
%
Delivery expense
16,440
13,359
3,081
23.1
%
Payroll, taxes and benefits
11,398
10,195
1,203
11.8
%
Stock compensation expense
1,007
964
43
4.5
%
Other expenses
6,523
6,976
(453)
(6.5)
%
Total
$
52,686
$
47,656
$
5,030
10.6
%
Third Quarter – 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 24.1%
for the
third quarter
of fiscal
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
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 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
delivery expense
is primarily
due to
the increase
in fuel
and labor
costs for
both our
fleet and
contract
trucking.
Other expenses
-
The increase in other
expenses is primarily due
to property losses
incurred that were not
covered by insurance as
well
as increased premiums for property and casualty insurance programs.
30
OPERATING
INCOME (LOSS)
For
the
third
quarter
of
fiscal
2022,
we
recorded
operating
income
of
$39.6
million
compared
to
operating
loss
of
$493
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 income or loss of unconsolidated entities, and patronage income, among other items.
For
the
third
quarter
of
fiscal
2022,
we
earned
$205
thousand
of
interest
income
compared
to
$661
thousand
for
the
same
period
of
fiscal
2021.
The
decrease
resulted
from
significantly
lower
investment
balances.
The
Company
recorded
interest
expense
of
$126
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 period.
For the thirty-nine weeks ended February 26, 2022, equity income of unconsolidated entities was $2.2 million compared to $1.9
million in the prior-year period.
Other, net for
the third quarter ended February 26, 2022,
was income of $1.1 million compared
to income of $537 thousand for
the same period of fiscal 2021.
Other, net
for the thirty-nine
weeks ended February
26, 2022, was
income of $8.2
million compared to
income of $1.5
million
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
remeasurement of our
equity investment,
along with
the
$1.4 million payment related to review and adjustment of our various marketing agreements.
INCOME TAXES
For the
third quarter of
fiscal 2022,
pre-tax income was
$53.0 million compared
to $11.8
million for the
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 an income tax benefit of $2.9 million, which includes the discrete tax benefit of $8.3 million
as discussed
in
of the
Notes to
Condensed Consolidated
Financial Statements
in this
Quarterly Report.
Excluding the discrete tax benefit, income tax
expense was $5.3 million with an
adjusted effective tax rate of 27.3%,
compared
to income tax expense
of $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 differs
from the federal statutory income tax rate
due to state income taxes, certain
federal tax credits and
certain
items
included
in
income
for
financial
reporting
purposes
that
are
not
included
in
taxable
income
for
income
tax
31
purposes,
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
 
had
 
no long
 
-termlong-term
 
debt
 
outstanding
 
at
 
NovemberFebruary
 
27,26,
 
20212022
 
or
May
 
29,
 
2021.
 
On
November
 
15,
2021,
 
we
 
entered
 
into
an
Amended and Restated
Credit Agreement (the
 
“Credit Agreement”) with a five-year
 
a five-year term.
The Credit Agreement amended
 
amended and
restated
 
the
 
Company’s
 
previously
 
existing
 
credit
 
agreement
 
dated
 
July
 
10,
 
2018.
 
The
 
Credit
 
Agreement
 
provides
 
for
 
an
increased senior secured
 
secured revolving
credit facility
 
(the “Credit Facility”),
 
in an
 
initial aggregate principal
 
principal amount
of up
 
to $250
million. As
 
of NovemberFebruary
 
27, 2021,26, 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,
 
twenty-six$20.8 million in net cash was provided by
 
weeks ended
November
27,
2021, $15.5
million
in net
cash was
used
in operating
activities, compared
to
$10.714.7 million provided
 
used in
by operating activities
 
for the comparable
 
comparable period
in fiscal
 
2021.
This is
 
primarily due to
 
to the higher egg
prices partially offset by increased costs
of feed ingredients compared to the prior-year period.
We
 
continue to
 
to invest in
 
in our
facilities,
 
with
$28.6 $49.2
 
million used
 
to purchase
 
property,
 
plant and
 
equipment
for
 
the
twenty-six thirty-nine
weeks ended November 27,February
 
2021,26, 2022, compared
to $52.4$73.8 million
 
in the same
period of fiscal
 
2021. We
 
We also acquired the
 
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 $41.5
$29.2
 
million
for
 
the twenty-six
thirty-nine
 
weeks
ended
 
November 27,February
 
2021, 26,
2022,
compared
 
to
$29.425.8
 
million
 
for
 
the
 
comparable
period
 
in
 
fiscal
 
2021.
 
We
 
received
 
$400
 
thousand
 
in
 
distributions
 
from
 
an
 
unconsolidated
entity in the first twothree quarters of fiscal 2022 compared to $2.70$5.8 million for
the same period fiscal of 2021.
 
As of February 26, 2022, cash decreased $41.8 million
 
November 27,
2021, cash
decreased $41.9
million since
May 29,
2021, compared
to a
decrease of
 
$30.825.2 million
during the
the same period of fiscal 2021.
We
 
continue to
monitor the
increasing demand
for cage-free
eggs and
 
to monitorengage
 
the increasingwith our
 
demand forcustomers in
 
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
$488 $502
million in facilities, equipment
and related operations to
expand our cage-free production
 
starting with our first facility
in 2008.
During
October
2021,
we
announced
a
new
$23.0
million
capital
project
to
expand
our
cage-free
egg
production
at
our
Okeechobee,
Florida,
production
facility,
and
a
new
planned
$18.5
million
strategic
investment
that
will
specialize
in
high
value
commercial
product
solutions
targeting
specific
needs
in
the
food
industry.
See
“
ExecutiveOverview
”
for
additional
information. The following table presents material construction
projects approved as of November 27, 2021February 26, 2022 (in thousands):
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of
February
November 27, 202126, 2022
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses/Processing
Facility
Fiscal 2022
132,443$
104,477130,918
27,966108,579
22,339
Cage-Free Layer & Pullet Houses
Fiscal 2023
23,77124,752
116,262
23,76018,490
$
156,214155,670
$
104,488114,841
$
51,72640,829
We believe our
current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient
to fund our
current capital needs.
 
32
RECENTLY
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
 
information
 
on
 
changes
 
in
 
accounting
 
principles
 
and
 
new
 
accounting
 
policies,
 
see
 
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly
Report.
CRITICAL ACCOUNTING ESTIMATES
 
Critical accounting
 
estimates are
 
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
 
critical accounting estimates
 
estimates identified in
 
in our
2021 Annual Report.
3133
ITEM 3. QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the
twenty-six thirty-six weeks ended November 27, 2021February 26, 2022 from
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
 
submit under the
Exchange Act is accumulated and
 
and communicated to
management, including our principal
 
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 November 27, 2021February 26, 2022 at the reasonable
assurance level.
Changes in Internal Control Over Financial Reporting
There was no change
 
change in our
internal control over
 
over financial reporting that
 
that occurred during the
 
quarter ended NovemberFebruary
 
27, 202126, 2022
that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
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
 
There wereThe following table is a summary of our third 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
 
no purchasesBe
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
11/28/21 to 12/25/21
206
$
36.32
—
—
12/26/21 to 01/22/22
26,780
41.00
—
—
01/23/22 to 02/26/22
—
—
—
—
26,986
$
40.96
—
—
(1)
 
ofAs permitted under our Amended and Restated 2012 Omnibus Long-Term
 
Common StockIncentive Plan, these shares were withheld by us to satisfy tax withholding
 
made by
 
or on
behalfobligations for employees in connection with the vesting of
our Company
or any
affiliated
purchaser during
the
second quarter of fiscal 2022. restricted common stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3234
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
10.1
10.2
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:
 
December 28, 2021March 29, 2022
/s/ Max P.
 
Bowman
Max P.
 
Bowman
Vice President, Chief Financial
Officer
(Principal Financial Officer)
໿
Date:
 
December 28, 2021March 29, 2022
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
໿