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 26, 2022February 25, 2023
 
or
☐
 
Transition report pursuant to Section 13 or 15(d)
 
of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File Number:
 
001-38695
 
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
64-0500378
(State or other jurisdiction of incorporation or organization)
 
(I.R.S Employer Identification No.)
1052 Highland Colony Pkwy
,
Suite 200
,
Ridgeland
,
Mississippi
 
39157
 
(Address of principal executive offices)
 
(Zip Code)
(
601
)
948-6813
 
(Registrant’s telephone number,
 
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
CALM
The
NASDAQ
 
Global Select Market
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant:
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
Securities Exchange
 
Act of 1934
 
during the preceding
 
12 months (or
 
for such
 
shorter period that
 
the registrant was
 
required to
file such reports), and (2) has been subject to such filing requirements for the past
 
90 days.
Yes
☑
 
No
☐
Indicate by check
 
mark whether the
 
registrant has submitted
 
electronically every
 
Interactive Data File
 
required to be
 
submitted
pursuant to
 
Rule 405
 
of Regulation
 
S-T (§232.405
 
of this
 
chapter) during
 
the preceding
 
12 months
 
(or for
 
such shorter
 
period
that the registrant was required to submit such files).
Yes
☑
 
No
☐
Indicate by
 
check mark
 
whether the registrant
 
is a large
 
accelerated filer,
 
an accelerated
 
filer, a
 
non-accelerated filer,
 
a smaller
reporting
 
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer”,
“smaller reporting company”, and “emerging growth
 
company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer
☑
Accelerated filer
 
☐
Non – Accelerated filer
 
☐
Smaller reporting company
 
☐
Emerging growth company
 
☐
If
 
an
 
emerging
 
growth
 
company,
 
indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
has
 
elected
 
not
 
to
 
use
 
the
 
extended
transition
 
period
 
for
 
complying
 
with
 
any
 
new
 
or
 
revised
 
financial
 
accounting
 
standards
 
provided
 
pursuant
 
to
Section 13(a) of the Exchange Act
☐
Indicate by check mark whether the registrant is a shell company (as defined
 
in Rule 12b-2 of the Exchange Act).
Yes
☐
 
No
☑
There were
44,130,14944,185,774
 
shares of
 
Common Stock,
 
$0.01 par value,
 
and
4,800,000
 
shares of Class
 
A Common
 
Stock, $0.01
 
par
value, outstanding as of DecemberMarch 28, 2022.2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
PART
 
I.
 
FINANCIAL
INFORMATION
ITEM 1.
 
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
 
(Unaudited)
 
November 26, 2022February 25, 2023
May 28, 2022
Assets
Current assets:
Cash and cash equivalents
$
178,635221,614
$
59,084
Investment securities available-for-sale
200,714423,418
115,429
Trade and other receivables, net
262,964206,920
177,257
Income tax receivable
42,14742,947
42,147
Inventories
280,582290,869
263,316
Prepaid expenses and other current assets
8,9687,599
4,286
Total current
 
assets
974,0101,193,367
661,519
Property, plant &
 
equipment, net
703,882712,512
677,796
Investments in unconsolidated entities
14,68716,146
15,530
Goodwill
44,006
44,006
Intangible assets, net
17,03716,484
18,131
Other long-term assets
9,8189,968
10,507
Total Assets
$
1,763,4401,992,483
$
1,427,489
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
154,624138,617
$
122,331
Accrued income taxes payable
85,72366,723
25,687
Dividends payable
66,202107,720
36,656
Total current
 
liabilities
306,549313,060
184,674
Other noncurrent liabilities
9,4109,715
10,274
Deferred income taxes, net
127,176134,820
128,196
Total liabilities
443,135457,595
323,144
Commitments and contingencies - see Note 9
—
—
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
70,00570,977
67,989
Retained earnings
1,281,7841,497,325
1,065,854
Accumulated other comprehensive loss, net of tax
(3,087)(3,067)
(1,596)
Common stock in treasury at cost –
26,12626,075
 
shares at November 26, 2022February 25, 2023 and
26,121
shares at May 28, 2022
(28,496)(29,996)
(28,447)
Total Cal-Maine Foods,
 
Inc. stockholders’ equity
1,320,9571,535,990
1,104,551
Noncontrolling interest in consolidated entity
(652)(1,102)
(206)
Total stockholders’
 
equity
1,320,3051,534,888
1,104,345
Total Liabilities and Stockholders’
 
Equity
$
1,763,4401,992,483
$
1,427,489
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 25, 2023
February 26, 2022
November 27, 2021February 25, 2023
NovemberFebruary 26, 2022
November 27, 2021
Net sales
$
801,700997,493
$
381,723477,485
$
1,460,0442,457,537
$
706,7091,184,195
Cost of sales
483,851534,467
337,976385,903
924,7051,459,172
656,3171,042,221
Gross profit
317,849463,026
43,74791,582
535,339998,365
50,392141,974
Selling, general and administrative
57,95258,489
47,78052,686
111,559170,048
94,305146,991
Gain on insurance recoveries
(3,220)
(1,095)
(3,220)
(3,225)
(Gain) loss on disposal of fixed assets
29(26)
(1,968)421
6236
(2,181)370
Operating income (loss)
259,868407,783
(2,065)39,570
423,718831,501
(41,732)(2,162)
Other income (expense):
Interest income, net
1,9306,126
12979
2,8338,959
361440
Royalty income
344426
278326
7721,198
551877
Patronage dividends
10,239
10,120
10,239
10,120
Equity income (loss) of unconsolidated
entities
(987)1,786
2641,809
(843)943
3992,208
Other, net
1,113(1,473)
1,8621,144
1,268(205)
7,0258,169
Total other income, net
2,40017,104
2,53313,478
4,03021,134
8,33621,814
Income (loss) before income taxes
262,268424,887
46853,048
427,748852,635
(33,396)19,652
Income tax expense (benefit)
63,974102,118
(677)13,594
104,320206,438
(16,515)(2,921)
Net income (loss)
198,294322,769
1,14539,454
323,428646,197
(16,881)22,573
Less: Loss attributable to noncontrolling
interest
(293)(450)
(28)(63)
(446)(896)
(28)(91)
Net income (loss) attributable to Cal-Maine
Foods, Inc.
$
198,587323,219
$
1,17339,517
$
323,874647,093
$
(16,853)22,664
Net income (loss) per common share:
Basic
$
4.086.64
$
0.020.81
$
6.6613.31
$
(0.34)0.46
Diluted
$
4.076.62
$
0.020.81
$
6.6313.25
$
(0.34)0.46
Weighted average
 
shares outstanding:
Basic
48,62448,653
48,85748,886
48,62448,634
48,85948,888
Diluted
48,84048,842
49,01649,036
48,82748,832
48,85949,035
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 25, 2023
February 26, 2022
November 27, 2021February 25, 2023
NovemberFebruary 26, 2022
November 27, 2021
Net income (loss)
$
198,294322,769
 
$
 
1,14539,454
 
$
 
323,428646,197
 
$
 
(16,881)22,573
Other comprehensive income (loss), before
tax:
Unrealized holding lossgain (loss) on available-for-available-
salefor-sale securities, net of reclassification
adjustments
(974)26
(355)(551)
(1,971)(1,945)
(579)(1,130)
Income tax benefit (expense) related to
items of other
comprehensive income
237(6)
87134
480474
141275
Other comprehensive loss,income (loss), net of tax
(737)20
(268)(417)
(1,491)(1,471)
(438)(855)
Comprehensive income (loss)
197,557322,789
87739,037
321,937644,726
(17,319)21,718
Less: Comprehensive loss attributable to the
noncontrolling interest
(293)(450)
(28)(63)
(446)(896)
(28)(91)
Comprehensive income (loss) attributable to Cal-
Cal-MaineMaine Foods, Inc.
$
197,850323,239
$
90539,100
$
322,383645,622
$
(17,291)21,809
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 25, 2023
February 26, 2022
November 27, 2021
Cash flows from operating activities:
Net income (loss)
$
323,428646,197
$
(16,881)22,573
Depreciation and amortization
34,72953,198
33,96950,996
Deferred income taxes
(540)7,098
(15,995)(3,861)
Gain on insurance recoveries
(3,220)
(3,225)
Net proceeds from insurance settlement - business interruption
3,220
—
Other adjustments, net
(12,830)16
(16,585)(45,659)
Net cash provided by (used in) operations
344,787706,509
(15,492)20,824
Cash flows from investing activities:
Purchases of investment securities
(152,365)(442,583)
(26,387)(47,135)
Sales and maturities of investment securities
65,279132,686
67,86476,377
Investment in unconsolidated entities
(1,673)
(3,000)
Distributions from unconsolidated entities
—
400
Acquisition of business, net of cash acquired
—
(44,823)
Purchases of property,
 
plant and equipment
(59,709)(86,168)
(28,647)(49,170)
Net proceeds from insurance settlement - property,
plant and equipment
—
5,380
Net proceeds from disposal of property,
 
plant and equipment
92118
5,338661
Net cash used in investing activities
(146,703)(397,620)
(26,255)(61,310)
Cash flows from financing activities:
Payments of dividends
(78,394)(144,559)
—
Purchase of common stock by treasury
(45)(1,633)
(18)(1,120)
Principal payments on finance lease
(94)(167)
(106)(160)
Contributions
—
3
Net cash used in financing activities
(78,533)(146,359)
(121)(1,277)
Net change in cash and cash equivalents
119,551162,530
(41,868)(41,763)
Cash and cash equivalents at beginning of period
59,084
57,352
Cash and cash equivalents at end of period
$
178,635221,614
$
15,48415,589
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
 
unaudited
 
condensed
 
consolidated
 
financial
 
statements
 
of
 
Cal-Maine
 
Foods,
 
Inc.
 
and
 
its
 
subsidiaries
 
(the
 
“Company,”
“we,” “us,” “our”)
 
have been prepared
 
in accordance with
 
the instructions to
 
Form 10-Q and
 
Article 10 of
 
Regulation S-X and
in
 
accordance
 
with generally
 
accepted
 
accounting
 
principles in
 
the
 
United
 
States of
 
America
 
(“GAAP”)
 
for
 
interim
 
financial
reporting and should
 
be read in conjunction
 
with our Annual Report
 
on Form 10-K
 
for the fiscal year
 
ended May 28,
 
2022 (the
“2022
 
Annual
 
Report”).
 
These
 
statements
 
reflect
 
all
 
adjustments
 
that
 
are,
 
in
 
the
 
opinion
 
of
 
management,
 
necessary
 
to
 
a
 
fair
statement of the results for
 
the interim periods presented
 
and, in the opinion of
 
management, consist of adjustments
 
of a normal
recurring nature.
 
Operating results for
 
the interim periods
 
are not necessarily
 
indicative of operating
 
results for the
 
entire fiscal
year.
Fiscal Year
The Company’s
 
fiscal year
 
ends on
 
the Saturday
 
closest to
 
May 31.
 
Each of
 
the three-month
 
periods and
 
year-to-date periods
ended on NovemberFebruary 25, 2023 and February 26, 2022 and November 27, 2021 included
13 weeks
 
and
2639 weeks
, respectively.
Use of Estimates
The preparation of the
 
consolidated financial statements in
 
conformity with GAAP requires management
 
to make estimates and
assumptions
 
that affect
 
the amounts
 
reported in
 
the consolidated
 
financial statements
 
and accompanying
 
notes. Actual
 
results
could differ from those estimates.
Investment Securities
Our investment
 
securities are
 
accounted
 
for in
 
accordance with
 
ASC 320,
 
“Investments -
 
Debt and
 
Equity Securities”
 
(“ASC
320”).
 
The
 
Company
 
considers
 
all
 
its
 
debt
 
securities
 
for
 
which
 
there
 
is
 
a
 
determinable
 
fair
 
market
 
value,
 
and
 
there
 
are
 
no
restrictions
 
on
 
the
 
Company’s
 
ability
 
to
 
sell
 
within
 
the
 
next
 
12
 
months,
 
as
 
available-for-sale.
 
We
 
classify
 
these
 
securities
 
as
current, because the
 
amounts invested are available
 
for current operations.
 
Available-for-sale
 
securities are carried at
 
fair value,
with
 
unrealized
 
gains
 
and
 
losses
 
reported
 
in
 
other
 
comprehensive
 
income
 
until
 
realized.
 
The
 
total
 
of
 
other
 
comprehensive
income for the period is presented as a component of stockholders' equity
 
separately from retained earnings and additional paid-
in
capital.
The
Company
regularly
evaluates
changes
tofor
 
the
 
ratingperiod
is
presented
as
a
component
 
of
 
itsstockholders’
 
debtequity
 
securitiesseparately
 
byfrom
 
creditretained
 
agenciesearnings
 
and
 
additional
paid-in
capital. The
Company regularly
evaluates changes
to the
rating of
its debt
securities by
credit agencies
and economic
conditions to assess and record any expected credit losses through
 
losses through the allowance for credit losses, limited to the amount
that fair
value
 
was
 
less
 
than
 
the
 
amortized
 
cost
 
basis.
 
The
 
cost
 
basis
 
for
 
realized
 
gains
 
and
 
losses
 
on
 
available-for-sale
 
securities
 
is
determined by
 
the specific
 
identification method.
 
Gains and
 
losses are
 
recognized in
 
other income
 
(expenses) as
 
Other,
 
net in
the Company’s
 
Condensed Consolidated Statements
 
Statements of
Operations. Income.
 
Investments in mutual
 
mutual funds
are classified
 
as “Other
long- long-term
term assets” in the Company’s Condensed
 
Consolidated Balance Sheets.
Trade Receivables
 
Trade receivables are stated at their carrying
 
receivablesvalues, which include a reserve for credit losses. As of February
 
are stated
at their
carrying values,
which include
a reserve
for credit
losses. As
of November
26, 2022
25, 2023 and May
May 28,
 
2022,
reserves
 
for
credit
 
losses
were
 
$
838709
 
thousand
and
 
$
775
 
thousand,
respectively.
 
The
Company
 
extends
credit
 
to
customers based on
 
an evaluation of
 
each customer's financial
 
condition and credit
 
history.
 
Collateral is generally
 
not required.
The
 
Company
 
minimizes
 
exposure
 
to
 
counter
 
party
 
credit
 
risk
 
through
 
credit
 
analysis
 
and
 
approvals,
 
credit
 
limits,
 
and
monitoring
 
procedures.
 
In
 
determining
 
our
 
reserve
 
for
 
credit
 
losses,
 
receivables
 
are
 
assigned
 
an
 
expected
 
loss
 
based
 
on
historical loss information adjusted as needed for economic and
 
other forward-looking factors.
Dividends Payable
 
We
 
accrue dividends at
 
the end of
 
each quarter according
 
to the Company’s
 
dividend policy adopted
 
by its Board
 
of Directors.
The Company
 
pays a dividend
 
to shareholders
 
of its Common
 
Stock and
 
Class A Common
 
Stock on
 
a quarterly basis
 
for each
quarter for
 
which the
 
Company reports
 
net income
 
attributable to
 
Cal-Maine Foods,
 
Inc. computed
 
in accordance
 
with GAAP
in an amount
 
equal to one-third
 
(
1/3
) of such
 
quarterly income. Dividends
 
are paid to
 
shareholders of record
 
as of the 60th
 
day
following the
 
last day
 
of such quarter,
 
except for
 
the fourth fiscal
 
quarter.
 
For the
 
fourth quarter,
 
the Company
 
pays dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Index
8
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.
Immaterial Error Correction
Effective
on
May
30,
2021,
the
Company
acquired
the
remaining
50
%
membership
interest
in
Red
River
Valley
Egg
Farm,
LLC (“Red
River”),
including
certain
liabilities. During
the Company’s
third
quarter of
fiscal 2022,
management
determined
that
it
had
not
properly
eliminated
select
intercompany
sales
and
cost
of
sales
transactions
between
Red
River
and
the
corresponding
other wholly
-owned subsidiaries
of the
Company
in its
first and
second quarter
2022 Condensed
Consolidated
Statements
of
Operations.
The
errors
resulted
in
an
overstatement
of
Net
Sales and
Cost of
Sales
of
$
6.7
million
in the
first
quarter of fiscal 2022
and $
9.2
million in the second
quarter of fiscal 2022.
There was
no
impact to Operating
loss, Net income
(loss) or Net income (loss) per share.
We
evaluated
the
errors
quantitatively
and
qualitatively
in
accordance
with
Staff
Accounting
Bulletin
("SAB") No. 99 Materiality,
and
SAB No. 108 Considering
the
Effects
of
Prior
Year
Misstatements
when
Quantifying
Misstatements
in
the
Current
Year
Financial
Statements, and
determined
that
the
related
impact
was not material
to
our
condensed
consolidated
financial statements
for
the first
or second
quarters
of fiscal
2022,
but that
correcting
the cumulative
impact
of
the
errors
would
be
relevant
to
our
Condensed
Consolidated
Statements
of
Operations
for
the third
quarter
ended February 26, 2022.
Accordingly,
we have reflected
the correction of
the immaterial error
in fiscal 2022
as a reduction
of
Net Sales and Cost of Sales in the accompanying Condensed Consolidated
Statements of Operations.
New Accounting Pronouncements and Policies
No new accounting pronouncement issued or effective
during the fiscal year had or is expected to have a material impact on
our
Consolidated Financial Statements.
Note 2 - Investment
Securities
The following represents the Company’s
investment securities as of November 26, 2022 and May 28, 2022
(in thousands):
November 26, 2022
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
15,956
$
—
$
276
$
15,680
Commercial paper
33,058
—
53
33,005
Corporate bonds
81,218
—
1,709
79,509
US government and agency obligations
19,111
—
205
18,906
Asset backed securities
13,403
—
340
13,063
Treasury bills
40,644
—
93
40,551
Total current
investment securities
$
203,390
$
—
$
2,676
$
200,714
Mutual funds
$
3,472
$
—
$
114
$
3,358
Total noncurrent
investment securities
$
3,472
$
—
$
114
$
3,358
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98
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.
New Accounting Pronouncements and Policies
No new accounting pronouncement issued or effective
during the fiscal year had or is expected to have a material impact on
our
Consolidated Financial Statements.
Reclassification
Certain
reclassifications
were
made
to
the
fiscal
2022
financial
statements
to
conform
to
the
fiscal
2023
financial
statement
presentation. These reclassifications had no effect on
income.
Note 2 - Investment
Securities
The following represents the Company’s
investment securities as of February 25, 2023 and May 28, 2022 (in
thousands):
February 25, 2023
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
21,158
$
—
$
275
$
20,883
Commercial paper
95,612
—
122
95,490
Corporate bonds
138,004
—
1,664
136,340
US government and agency obligations
94,941
—
299
94,642
Asset backed securities
15,132
—
227
14,905
Treasury bills
61,215
—
57
61,158
Total current
investment securities
$
426,062
$
—
$
2,644
$
423,418
Mutual funds
$
2,162
$
—
$
136
$
2,026
Total noncurrent
investment securities
$
2,162
$
—
$
136
$
2,026
May 28, 2022
Amortized
 
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
10,136
$
—
$
32
$
10,104
Commercial paper
14,940
—
72
14,868
Corporate bonds
74,167
—
483
73,684
Certificates of deposits
1,263
—
18
1,245
US government and agency obligations
2,205
4
—
2,209
Asset backed securities
13,456
—
137
13,319
Total current
 
investment securities
$
116,167
$
4
$
742
$
115,429
Mutual funds
$
3,826
$
—
$
74
$
3,752
Total noncurrent
 
investment securities
$
3,826
$
—
$
74
$
3,752
Available-for-sale
Proceeds from sales
 
sales and maturities of investment
 
maturities of
investment securities
available-for-sale
 
were $
65.3132.7
 
million and
$
67.976.4
 
million during
the
twenty-six
thirty-nine weeks
 
ended NovemberFebruary 25,
 
26,
2022
2023 and
 
November
27,
2021,
respectively.
Gross
realized
gains
for
the
twenty-six
weeks ended
NovemberFebruary 26,
 
2022, andrespectively.
 
November 27,Gross realized
 
2021 gains for
the thirty-nine
weeks
ended February
25, 2023
and February
26, 2022
were $
38
thousand and
 
$
2
thousand
and $
165181
 
thousand, respectively.
 
Gross realized
losses
 
losses for
the
twenty-six
thirty-nine weeks
ended
November
26,
2022
February 25, 2023 and
 
November
27,
2021
February 26, 2022 were
$
6364
 
thousand
and
$
67
 
thousand, respectively.
There
respectively. There were
no
 
allowances for credit losses at November 26, 2022February 25, 2023 and May 28, 2022.
9
Actual maturities
 
may differ
 
from contractual
 
maturities as some
 
borrowers have
 
the right to
 
call or prepay
 
obligations with
 
or
without penalties. Contractual maturities of current investments at NovemberFebruary
 
26, 202225, 2023 are as follows (in thousands):
Estimated Fair Value
Within one year
$
133,867345,765
1-5 years
66,84777,653
Total
$
200,714423,418
Noncurrent
 
There were
no
Proceeds from sales and maturities of noncurrent investment
securities during the twenty-six
weeks ended November
26, 2022. Proceeds from
sales and maturities
of noncurrent
investment securities
 
were $
4531.8
 
thousand duringmillion and $
4.9
 
million during the twenty-sixthirty-nine
weeks
 
weeks ended November
 
27,February
25,
2021.
2023
and
February
26,
2022,
respectively.
 
Gross
 
realized
 
gains
 
for
 
the
 
twenty-sixthirty-nine
weeks
ended February 25,
2023 and February
26, 2022
were $
6
thousand and
$
2.2
million, respectively.
Gross realized
losses for
the
thirty-nine
 
weeks
 
ended NovemberFebruary
 
27,25,
 
20212023
 
were
 
$
16566
 
thousand.
There
 
were
no
 
realized
losses
for
the
thirty-nine
weeks
losses for the twenty-six weeks ended November 27, 2021.February 26, 2022.
Note 3 - Fair Value
 
Measurements
The Company
 
is required
 
to categorize
 
both financial
 
and nonfinancial
 
assets and
 
liabilities based
 
on the
 
following fair
 
value
hierarchy. The
 
fair value
 
of an
 
asset is
 
the price
 
at which
 
the asset
 
could be
 
sold in
 
an orderly
 
transaction between
 
unrelated,
knowledgeable, and willing
 
parties able to engage in
 
the transaction. A liability’s
 
fair value is defined
 
as the amount that would
be
 
paid
 
to
 
transfer
 
the
 
liability
 
to
 
a
 
new
 
obligor
 
in
 
a
 
transaction
 
between
 
such
 
parties,
 
not
 
the
 
amount
 
that
 
would
 
be paid
 
to
settle the liability with the creditor.
•
Level 1
 
- Quoted prices in active markets for identical assets or liabilities
•
Level 2
 
- Inputs
 
other than
 
quoted
 
prices included
 
in Level
 
1 that
 
are observable
 
for the
 
asset or
 
liability,
 
either
directly or indirectly,
 
including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market
 
data
•
Level 3
 
- Unobservable inputs for the asset or liability that are
 
supported by little or no market activity and that
 
are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
at cost are as follows:
Cash and cash equivalents, accounts receivable,
and accounts payable:
The carrying amount approximates fair value due to the
short maturity of these instruments.
Lease obligations:
The carrying value of the Company’s lease obligations
is at its present value which approximates fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
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 26, 2022February 25, 2023 and May 28,
 
28, 2022 (in thousands):
November 26, 2022February 25, 2023
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
15,68020,883
$
—
$
15,68020,883
Commercial paper
—
33,00595,490
—
33,00595,490
Corporate bonds
—
79,509136,340
—
79,509136,340
US government and agency obligations
—
18,90694,642
—
18,90694,642
Asset backed securities
—
13,06314,905
—
13,06314,905
Treasury bills
—
40,55161,158
—
40,55161,158
Mutual funds
3,3582,026
—
—
3,3582,026
Total assets measured at fair
 
value
$
3,3582,026
$
200,714423,418
$
—
$
204,072425,444
May 28, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
10,104
$
—
$
10,104
Commercial paper
—
14,868
—
14,868
Corporate bonds
—
73,684
—
73,684
Certificates of deposits
—
1,245
—
1,245
US government and agency obligations
—
2,209
—
2,209
Asset backed securities
—
13,319
—
13,319
Mutual funds
3,752
—
—
3,752
Total assets measured at fair
 
value
$
3,752
$
115,429
$
—
$
119,181
Investment
 
securities
 
–
 
available-for-sale
 
classified
 
as Level
 
2
 
consist
 
of
 
securities
 
with maturities
 
of
 
three
 
months
 
or longer
when purchased. We
 
classified these securities as
 
current because amounts
 
invested are readily available
 
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Note 4 - Inventories
Inventories consisted of the following as of November 26, 2022February 25, 2023 and
 
and May 28, 2022 (in thousands):
 
November 26, 2022February 25, 2023
May 28, 2022
Flocks, net of amortization
$
156,782158,209
$
144,051
Eggs and egg products
28,34327,925
26,936
Feed and supplies
95,457104,735
92,329
$
280,582290,869
$
263,316
We
 
grow
 
and
 
maintain
 
flocks
 
of
 
layers
 
(mature
 
female
 
chickens),
 
pullets
 
(female
 
chickens,
 
under
 
18
 
weeks
 
of
 
age),
 
and
breeders
(male
(male and
female
 
chickens
used
to
produce
 
fertile
eggs
to
hatch
for
 
egg
production
flocks).
Our
 
total flock at February
25, 2023
 
flockand May
 
at
November 26,28, 2022
 
2022 andconsisted of
 
May 28,
2022 consisted
of approximately
10.49.9
 
million and
11.5
 
million pullets
 
and breeders
 
and
43.743.3
million and
42.2
 
million layers, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
Note 5 - Equity
The following reflects
 
equity activity for the
 
the thirteen and thirty-nine
 
twenty-six weeks ended February 25,
 
November2023 and February 26, 2022
 
and November 27,
20212022 (in
(in thousands):
Thirteen Weeks
 
Ended February 25, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at November
26, 2022
$
703
$
48
$
(28,496)
$
70,005
$
(3,087)
$
1,281,784
$
(652)
$
1,320,305
Other comprehensive
income, net of tax
—
—
—
—
20
—
—
20
Stock compensation
plan transactions
—
—
(1,500)
972
—
—
—
(528)
Dividends ($
2.199
per share)
Common
—
—
—
—
—
(97,123)
—
(97,123)
Class A common
—
—
—
—
—
(10,555)
—
(10,555)
Net income (loss)
—
—
—
—
—
323,219
(450)
322,769
Balance at February
25, 2023
$
703
$
48
$
(29,996)
$
70,977
$
(3,067)
$
1,497,325
$
(1,102)
$
1,534,888
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 August
27, 2022
$
703
$
48
$
(28,495)
$
69,017
$
(2,350)
$
1,149,399
$
(359)
$
1,187,963
Other comprehensive
loss, net of tax
—
—
—
—
(737)
—
—
(737)
Stock compensation
plan transactions
—
—
(1)
988
—
—
—
987
Dividends ($
1.353
per share)
Common
—
—
—
—
—
(59,708)
—
(59,708)
Class A common
—
—
—
—
—
(6,494)
—
(6,494)
Net income (loss)
—
—
—
—
—
198,587
(293)
198,294
Balance at November
26, 2022
$
703
$
48
$
(28,496)
$
70,005
$
(3,087)
$
1,281,784
$
(652)
$
1,320,305
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
$
—
$
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
Other comprehensive
loss, net of tax
—
—
—
—
(417)
—
—
(417)
Stock compensation
plan transactions
—
—
(989)
890
—
—
—
(99)
Dividends ($
0.125
per share)
Common
—
—
—
—
—
(5,518)
—
(5,518)
Class A common
—
—
—
—
—
(600)
—
(600)
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Twenty-sixThirty-nine Weeks Ended
 
Ended November 26, 2022February 25, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 28,
2022
$
703
$
48
$
(28,447)
$
67,989
$
(1,596)
$
1,065,854
$
(206)
$
1,104,345
Other comprehensive
loss, net of tax
—
—
—
—
(1,491)(1,471)
—
—
(1,491)(1,471)
Stock compensation
plan transactions
—
—
(49)(1,549)
2,0162,988
—
—
—
1,9671,439
Dividends ($
2.2065.756
per share)
Common
—
—
—
—
—
(97,355)(194,478)
—
(97,355)(194,478)
Class A common
—
—
—
—
—
(10,589)(21,144)
—
(10,589)(21,144)
Net income (loss)
—
—
—
—
—
323,874647,093
(446)(896)
323,428646,197
Balance at February
November 26, 202225, 2023
$
703
$
48
$
(28,496)(29,996)
$
70,00570,977
$
(3,087)(3,067)
$
1,281,7841,497,325
$
(652)(1,102)
$
1,320,3051,534,888
Twenty-sixThirty-nine Weeks Ended
 
Ended November 27, 2021February 26, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
NoncontrollingNoncontrollin
g
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 29,
2021
$
 
703
$
 
48
$
 
(27,433)
$
 
64,044
$
 
(558)
$
 
975,977
$
 
—
$
 
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 ($
0.125
per share)
Common
—
—
—
—
—
(16,853)(5,518)
(28)—
(16,881)(5,518)
Class A common
—
—
—
—
—
(600)
—
(600)
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
Note 6 - Net Income (Loss) per Common Share
 
Basic net
income (loss)
 
per share is
 
is based
on the
 
weighted average Common
 
Common Stock
and Class
 
A Common Stock
 
Stock outstanding. Diluted
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.
Restrictedcommon
 
shares
 
of
145
outstanding
 
thousand
were
antidilutive
due
toduring
 
the net
 
loss relevant
period
adjusted
for
 
the first
twenty-six weeksdilutive effect of fiscal 2022. These shares were not included in the diluted netshare-based awards.
 
loss per share calculation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13
The
 
following
 
table
 
provides
 
a
 
reconciliation
 
of
 
the
 
numerators
 
and
 
denominators
 
used
 
to
 
determine
 
basic
 
and
 
diluted
 
net
income (loss) per common share (amounts in thousands, except per share data):
Thirteen Weeks
 
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 25, 2023
February 26,
2022
November 27,February 25, 2023
2021
NovemberFebruary 26,
2022
November 27,
2021
Numerator
Net income (loss)
$
198,294322,769
$
1,14539,454
$
323,428646,197
$
(16,881)22,573
Less: Loss attributable to noncontrolling
interest
(293)(450)
(28)(63)
(446)(896)
(28)(91)
Net income (loss) attributable to Cal-Cal-Maine
Maine Foods, Inc.
$
198,587323,219
$
1,17339,517
$
323,874647,093
$
(16,853)22,664
Denominator
Weighted-average
 
common shares
outstanding, basic
48,62448,653
48,85748,886
48,62448,634
48,85948,888
Effect of dilutive restricted shares
216189
159150
203198
—147
Weighted-average
 
common shares
outstanding, diluted
48,84048,842
49,01649,036
48,82748,832
48,85949,035
Net income (loss) per common share
attributable to
Cal-Maine Foods, Inc.
Basic
$
4.086.64
$
0.020.81
$
6.6613.31
$
(0.34)0.46
Diluted
$
4.076.62
$
0.020.81
$
6.6313.25
$
(0.34)0.46
Note 7 – Revenue from Contracts with Customers
Satisfaction of Performance Obligation
The vast majority of the Company’s
 
revenue is derived from agreements with customers based on the customer
 
placing an order
for products. Pricing
 
for the most part
 
is determined when
 
the Company and
 
the customer agree
 
upon the specific
 
order, which
establishes the contract for that order.
Revenues are
 
recognized in
 
an amount
 
that reflects
 
the net
 
consideration we
 
expect to
 
receive in
 
exchange for
 
the goods.
 
Our
shell
eggs
 
are primarily
 
sold
at
prices
 
related
to
 
independently
quoted
 
wholesale
market
 
prices
or
 
formulas
related
 
to our costs
of
 
our
costs
of
production.
 
The
 
Company’s
 
sales
 
predominantly
 
contain
 
a
 
single
 
performance
 
obligation.
 
We
 
recognize
 
revenue
 
upon
satisfaction
 
of
 
the
 
performance
 
obligation
 
with
 
the
 
customer
 
which
 
typically
 
occurs
 
within
 
days
 
of
 
the
 
Company
 
and
 
the
customer agreeing upon the order.
Returns and Refunds
Some of our contracts
 
include a guaranteed sale
 
clause, pursuant to which
 
we credit the customer’s
 
account for product
 
that the
customer
 
is
 
unable
 
to
 
sell
 
before
 
expiration.
 
The
 
Company
 
records
 
an
 
allowance
 
for
 
returns
 
and
 
refunds
 
by
 
using
 
historical
return
 
data
 
and
 
comparing
 
to current
 
period
 
sales and
 
accounts receivable.
 
The allowance
 
is recorded
 
as a
 
reduction
 
in sales
with a corresponding reduction in trade accounts receivable.
Sales Incentives Provided to Customers
The
 
Company
 
periodically
 
provides
 
incentive
 
offers
 
to
 
its
 
customers
 
to
 
encourage
 
purchases.
 
Such
 
offers
 
include
 
current
discount offers
 
(e.g., percentage
 
discounts off
 
current purchases), inducement
 
offers (e.g.,
 
offers for
 
future discounts subject
 
to
a minimum
 
current purchase),
 
and other
 
similar offers.
 
Current discount
 
offers,
 
when accepted
 
by customers,
 
are treated
 
as a
reduction
 
to
 
the sales
 
price
 
of the
 
related
 
transaction,
 
while inducement
 
offers,
 
when
 
accepted
 
by customers,
 
are
 
treated
 
as
a
reduction
 
to the
 
sales price
 
based on
 
estimated future
 
redemption rates.
 
Redemption
 
rates are
 
estimated using
 
the Company’s
historical
 
experience
 
for
 
similar
 
inducement
 
offers.
 
Current discount
 
and
 
inducement
 
offers
 
are
 
presented
 
as a
 
net amount
 
in
‘‘Net sales.’’
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
 
(in thousands):
Thirteen Weeks
 
Ended
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 25, 2023
February 26, 2022
November 27, 2021February 25, 2023
NovemberFebruary 26, 2022
November 27, 2021
Conventional shell egg sales
$
541,917689,022
$
221,142280,633
$
967,5061,656,528
$
403,172683,805
Specialty shell egg sales
227,778272,205
146,917182,945
428,598700,803
279,375462,320
Egg products
28,05232,582
11,40112,749
55,69288,274
20,76733,516
Other
3,9533,684
2,2631,158
8,24811,932
3,3954,554
$
801,700997,493
$
381,723477,485
$
1,460,0442,457,537
$
706,7091,184,195
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
 
amortized over
the contract
 
life as a
 
a reduction
in net
 
sales. As of
 
November 26, 2022of February
25, 2023
 
and May 28,
 
28, 2022,
the balance
 
for
contract assets was immaterial.
Contract Balances
The Company receives payment from customers based on specified terms that are
 
are generally less than 30 days from delivery.
There are rarely contract assets or liabilities related to performance under the
 
the contract.
Note 8 - Stock Based Compensation
Total
 
stock-based
compensation
 
expense
was
 
$
2.03.1
and
$
3.0
 
million
for
 
the twenty-six
thirty-nine
 
weeks
ended
 
November 26,February
 
2022 and25,
 
November2023
and
27, 2021.February 26, 2022, respectively.
Unrecognized
 
compensation
 
expense
 
as a
 
result
 
of non
 
-vested
 
shares
 
of
 
restricted
 
stock outstanding
 
under
 
the
 
Amended
 
and
Restated
 
2012
 
Omnibus
 
Long-Term
 
Incentive
 
Plan
 
at
 
NovemberFebruary
 
26,25,
 
20222023
 
of
 
$
4.98.4
 
million
 
will
 
be
 
recorded
 
over
 
a
 
weighted
average period of
1.82.3
 
years. Refer to Part
 
II Item 8,
 
Notes to Consolidated
 
Financial Statements and
 
Supplementary Data, Note
16: Stock Compensation Plans in our 2022 Annual Report for further informationinformat
 
ion on our stock compensation plans.
The Company’s restricted share activity
 
for the twenty-sixthirty-nine weeks ended November 26, 2022February 25, 2023 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, May 28, 2022
317,844
$
39.12
Granted
84,969
54.10
Vested
(3,240)(97,954)
38.3138.25
Forfeited
(4,200)(8,480)
39.4439.22
Outstanding, November 26, 2022February 25, 2023
310,404296,379
$
39.1243.70
Note 9 - Commitments and Contingencies
 
Financial Instruments
The
 
Company
 
maintained
 
standby
 
letters
 
of
credit
 
(“LOCs”)
 
totaling
 
$
4.1
 
million
 
at
 
NovemberFebruary
 
26, 2022,25,
2023,
 
which
 
were
issued
under
 
the
 
Company's
 
senior
 
secured
 
revolving
 
credit
 
facility.
 
The
 
outstanding
 
LOCs
 
are
 
for
 
the
 
benefit
 
of
 
certain
 
insurance
companies and are not recorded as a liability on the consolidated balance
sheets.
 
 
 
 
 
15
LEGAL PROCEEDINGS
State of Texas
 
v. Cal-Maine Foods, Inc. d/b/a Wharton;
 
and Wharton County Foods, LLC
 
On April
 
23, 2020,
 
the Company
 
and its subsidiary
 
Wharton County
 
Foods, LLC (“WCF”)
 
were named
 
as defendants in
 
State
of
 
Texas
 
v.
 
Cal-Maine
 
Foods,
 
Inc.
 
d/b/a
 
Wharton;
 
and
 
Wharton
 
County
 
Foods,
 
LLC,
 
Cause
 
No.
 
2020-25427,
 
in
 
the
 
District
Court of
 
Harris County,
 
Texas.
 
The State
 
of Texas
 
(the “State”)
 
asserted claims
 
based on
 
the Company’s
 
and WCF’s
 
alleged
violation
 
of
 
the
 
Texas
 
Deceptive
 
Trade
 
Practices—Consumer
 
Protection
 
Act,
 
Tex.
 
Bus.
 
&
 
Com.
 
Code
 
§§
 
17.41-17.63
(“DTPA”).
 
The
 
State
 
claimed
 
that
 
the
 
Company
 
and
 
WCF
 
offered
 
shell
 
eggs
 
at
 
excessive
 
or
 
exorbitant
 
prices
 
during
 
the
COVID-19
 
state
 
of
 
emergency
 
and
 
made
 
misleading
 
statements
 
about
 
shell
 
egg
 
prices.
 
The
 
State
 
sought
 
temporary
 
and
permanent
 
injunctions
 
against
 
the
 
Company
 
and
 
WCF
 
to
 
prevent
 
further
 
alleged
 
violations
 
of
 
the
 
DTPA,
 
along
 
with
 
over
$
100,000
 
in damages. On August 13, 2020, the court granted the defendants’ motion to dismiss the State’s
 
State’s original petition with
prejudice. On September
 
11, 2020,
 
the State filed a
 
notice of appeal,
 
which was assigned to
 
the Texas
 
Court of Appeals
 
for the
First
 
District.
 
On
 
August
 
16,
 
2022,
 
the
 
appeals
 
court
 
reversed
 
and
 
remanded
 
the
 
case
 
back
 
to
 
the
 
trial
 
court
 
for
 
further
proceedings. On October
 
31, 2022, the Company
 
and WCF filed a
 
petition for review to
 
the Supreme Court of
 
Texas
 
appealing
the
 
First
District
 
court’s
 
decision.
 
On November
 
30,February
 
2022, 6,
2023,
the
 
State
of
 
Texas
 
waivedfiled
 
its their
response
 
to
defendant’s
 
petition
 
for
review. The court
 
hasOn
February
21,
2023,
the
Company
and
WCF
filed
their
reply
brief
in
support
of
defendant’s
petition
for
review.
Appellate briefs are not issued a ruling.yet due. Management believes the risk of material loss related
to this matter
to be remote.
Bell et al. v. Cal-Maine Foods et al.
 
On
 
April
 
30, 2020,
 
the Company
 
was named
 
as one
 
of several
 
defendants
 
in
 
Bell et
 
al. v.
 
Cal-Maine
 
Foods et
 
al.,
 
Case No.
1:20-cv-461,
 
in
 
the
 
Western
 
District
 
of
 
Texas,
 
Austin
 
Division.
 
The
 
defendants
 
include
 
numerous
 
grocery
 
stores,
 
retailers,
producers, and farms. Plaintiffs assert that defendants
 
violated the DTPA
 
by allegedly demanding exorbitant or
 
excessive prices
for
 
eggs during
 
the
 
COVID-19
 
state of
 
emergency.
 
Plaintiffs
 
request
 
certification
 
of a
 
class of
 
all consumers
 
who purchased
eggs
 
in
 
Texas
 
sold,
 
distributed,
 
produced,
 
or
 
handled
 
by
 
any
 
of
 
the
 
defendants
 
during
 
the
 
COVID-19
 
state
 
of
 
emergency.
Plaintiffs seek to enjoin
 
the Company and other
 
defendants from selling eggs
 
at a price more than
 
10% greater than the price
 
price of
eggs prior
 
to the
 
declaration
 
of the
 
state of
 
emergency
 
and damages
 
in the
 
amount
 
of $
10,000
 
per violation,
 
or $
250,000
 
for
each violation
 
impacting anyone
 
over 65
 
years old.
 
On December
 
1, 2020,
 
the Company
 
and
 
certain other
 
defendants filed
 
filed a
motion to
 
dismiss the
 
plaintiffs’
 
amended
 
class action
 
complaint. The
 
plaintiffs
 
subsequently filed
 
a motion
 
to strike,
 
and the
motion to
 
dismiss and
 
related proceedings
 
were referred
 
to a
 
United States
 
magistrate judge.
 
On July
 
14, 2021,
 
the magistrate
judge
 
issued
 
a
 
report
 
and
 
recommendation
 
to
 
the
 
court
 
that
 
the
 
defendants’
 
motion
 
to
 
dismiss
 
be
 
granted
 
and
 
the
 
case
 
be
dismissed without prejudice for lack of subject matter jurisdiction. On
 
September 20, 2021, the court dismissed the case without
prejudice.
 
On
 
July
 
13,
 
2022,
 
the
 
court
 
denied
 
the
 
plaintiffs’
 
motion
 
to
 
set
 
aside
 
or
 
amend
 
the
 
judgment
 
to
 
amend
 
their
complaint.
On March 15, 2022,
 
plaintiffs filed a
 
second suit against the
 
Company and several
 
defendants in Bell et
 
al. v.
 
Cal-Maine Foods
et al.,
 
Case No.
 
1:22-cv-246, in
 
the Western
 
District of
 
Texas,
 
Austin Division
 
alleging the
 
same assertions
 
as laid
 
out in
 
the
first
 
complaint.
 
On
 
August
 
12,
 
2022,
 
the
 
Company
 
and
 
other
 
defendants
 
in
 
the
 
case
 
filed
 
a
 
motion
 
to
 
dismiss
 
the
 
plaintiffs’
class action
 
complaint. On
 
September 6,January 9,
 
2022,2023, the
 
plaintiffs’ filedcourt entered
 
their oppositionan order
and final
judgement granting
the Company’s
motion to
dismiss.
On February
8, 2023,
the plaintiffs
appealed
the lower
court’s
judgement
 
to the
 
motion toUnited States
 
dismiss andCourt of
Appeals for
 
the CompanyFifth
and otherCircuit,
 
defendants filedCase
 
their replyNo.
 
on September23-50112.
 
13, 2022.The
 
On Decemberparties
 
7, 2022,
the magistrate
judge issued
a report
and
recommendation to
the court that
the defendants’ motion
to dismiss be
granted and the
case be dismissed
without prejudice for
lack
of
subject
matter
jurisdiction.
On
December
21,
2022,
the
plaintiffs
filed
Objectionsare
 
to
 
thefile
 
Magistrate’stheir
 
Reportrespective
 
and
Recommendation, but theappellate
 
court has not issued abriefs,
 
ruling. Management believesbut
 
they
are
not
yet
due.
Management
believes the risk of material loss
related to both matters
to
be remote.
Kraft Foods Global, Inc. et al. v.
 
United Egg Producers, Inc. et al.
 
As previously
 
reported, on
 
September 25,
 
2008, the
 
Company
 
was named
 
as one
 
of several
 
defendants
 
in numerous
 
antitrust
cases involving
 
the United
 
States shell
 
egg
 
industry.
 
The Company
 
settled all
 
of these
 
cases, except
 
for
 
the claims
 
of certain
plaintiffs who sought substantial
 
damages allegedly arising from
 
the purchase of egg products (as
 
opposed to shell eggs). These
remaining plaintiffs
 
are Kraft
 
Food Global,
 
Inc., General
 
Mills, Inc.,
 
and Nestle
 
USA, Inc.
 
(the “Egg
 
Products Plaintiffs”)
 
and
The Kellogg Company.
On September
 
13, 2019,
 
the case
 
with the
 
Egg Products
 
Plaintiffs was
 
remanded from
 
a multi-district
 
litigation proceeding
 
in
the
 
United
 
States
 
District
 
Court
 
for
 
the
 
Eastern
 
District
 
of
 
Pennsylvania,
 
In
 
re
 
Processed
 
Egg
 
Products
 
Antitrust
 
Litigation,
MDL No. 2002, to
 
the United States District Court
 
for the Northern District
 
of Illinois, Kraft Foods Global,
 
Inc. et al. v.
 
United
Egg
 
Producers,
 
Inc.
 
et
 
al.,
 
Case
 
No.
 
1:11-cv-8808,
 
for
 
trial.
 
The
 
Egg
 
Products
 
Plaintiffs
 
allege
 
that
 
the
 
Company
 
and
 
other
defendants
 
violated
 
Section
 
1
 
of
 
the
 
Sherman
 
Act,
 
15.
 
U.S.C.
 
§
 
1,
 
by
 
agreeing
 
to
 
limit
 
the
 
production
 
of
 
eggs
 
and
 
thereby
illegally to raise the prices that plaintiffs
 
paid for processed egg products. In particular,
 
the Egg Products Plaintiffs are
 
attacking
certain features of
 
the United Egg
 
Producers animal-welfare guidelines
 
and program used by
 
the Company and
 
many other egg
16
producers. The
 
Egg Products
 
Plaintiffs seek
 
to enjoin
 
the Company
 
and other
 
defendants from
 
engaging in
 
antitrust violations
16
and seek treble money damages.
 
On May 2, 2022,
 
the court set trial for October
 
24, 2022, but on September
 
20, 2022, the court
cancelled the
 
trial date
 
due to
 
COVID-19 protocols
 
and converted
 
the trial
 
date to
 
a status
 
hearing to
 
reschedule the
 
jury trial.
On
 
December
 
8,
 
2022,
 
the
 
court
 
held
 
a
 
status
 
hearing.
 
The
 
parties
 
subsequently
 
submitted
 
an
 
updated
 
proposed
 
pre-trial
schedule and the Court has set the trial for October 16, 2023.
In addition,
 
on October
 
24, 2019,
 
the Company
 
entered into
 
a confidential
 
settlement agreement
 
with The
 
Kellogg Company
dismissing
 
all
 
claims
 
against
 
the
 
Company
 
for
 
an
 
amount
 
that
 
did
 
not
 
have
 
a
 
material
 
impact
 
on
 
the
 
Company’s
 
financial
condition or results of operations. On November 11,
 
2019, a stipulation for dismissal was filed with the court,
 
and on March 28,
2022, the court dismissed the Company with prejudice.
The Company intends to
 
continue to defend the remaining
 
case with the Egg Products Plaintiffs
 
Plaintiffs as vigorously as possible
 
possible based
on
 
defenses
 
which
 
the
 
Company
 
believes
 
are
 
meritorious
 
and
 
provable.
 
Adjustments,
 
if
 
any,
 
which
 
might
 
result
 
from
 
the
resolution of
 
this remaining
 
matter with
 
the Egg
 
Products Plaintiffs
 
have not
 
been reflected
 
in the
 
financial statements.
 
While
management
 
believes
 
that
 
there
 
is
 
still
 
a
 
reasonable
 
possibility
 
of
 
a
 
material
 
adverse
 
outcome
 
from
 
the
 
case
 
with
 
the
 
Egg
Products Plaintiffs,
 
at the
 
present time,
 
it is not
 
possible to
 
estimate the
 
amount of
 
monetary exposure,
 
if any,
 
to the
 
Company
due
 
to
 
a
 
range
 
of
 
factors,
 
including
 
the
 
following,
 
among
 
others:
 
two
 
earlier
 
trials
 
based
 
on
 
substantially
 
the
 
same
 
facts
 
and
legal arguments
 
resulted
 
in findings
 
of no
 
conspiracy
 
and/or damages;
 
this trial
 
will be
 
before
 
a different
 
judge and
 
jury in
 
in a
different
 
court
 
than
 
prior related
 
cases; there
 
are significant
 
factual
 
issues to
 
be
 
resolved; and
 
there
 
are requests
 
for damages
other than compensatory damages (i.e., injunction and treble money damages).
State of Oklahoma Watershed Pollution
 
Litigation
On June 18,
 
2005, the
 
State of
 
Oklahoma filed
 
suit, in
 
the United
 
States District
 
Court for
 
the Northern
 
District of
 
Oklahoma,
against Cal-Maine
Foods,
Inc. and
 
Tyson
Foods,
 
Inc. and affiliates,, Cobb-Vantress,
 
Inc., Cargill, Inc. and its
 
affiliate,Inc., George’s,
Inc., Peterson
Farms, Inc.
Inc. and
 
its affiliate,Simmons
 
Peterson Farms, Inc.
and Simmons Foods,
 
Inc.,
and
certain
of
their
affiliates.
The
 
State
of
Oklahoma
 
claims
that
through
 
the disposal of
chicken
 
disposal
of
chicken
litter the
 
defendants havepolluted
 
polluted the Illinois
 
Illinois River
Watershed.
 
This watershed
 
provides water
 
water to eastern
 
eastern Oklahoma.
The complaint
 
seeks complaint
sought
injunctive
 
relief
and
 
monetary
damages,
 
but
the
 
claim
for
 
monetary
damages
 
has beenwas dismissed
 
dismissed by
 
the
court.
 
Cal-Maine
Foods,
 
Inc.
 
discontinued
 
operations
 
in
 
the
 
watershed.watershed
 
Accordingly,in
 
weor
 
doaround
 
not2005.
 
anticipate
that
Cal-Maine
Foods,
Inc.
will
be
materially
affected
bySince
 
the
 
requestlitigation
 
forbegan,
 
injunctiveCal-Maine
 
reliefFoods,
 
unlessInc.
purchased
100
%
of
 
the
 
courtmembership
 
ordersinterests
 
substantialof
 
affirmativeBenton
County
Foods,
LLC,
which
is
an
ongoing
commercial
shell
egg
remediation. Sinceoperation within
 
the litigationIllinois
 
began, Cal-Maine
Foods, Inc.
purchased
100
% of the
membership interests
of Benton
County
Foods, LLC,
which is
an ongoing
commercial shell
egg operation
within the
Illinois River
Watershed.
 
Benton County
 
Foods, LLC
LLC is not
a defendant
in the
litigation. We
also have
a
number of small contract producers that operate in the litigation.area.
The non-jury trial in the case
began in September 2009 and
 
and concluded in February 2010. On January 18, 2023, the court entered
findings of
fact and
conclusions of
law in favor
of the
State of
Oklahoma, but
no penalties
were assessed.
The court
found the
defendants
liable
for
state
law
nuisance,
federal
common
law
nuisance,
and
state
law
trespass.
The
 
court
also
found
the
producers
vicariously
liable
for
the
actions
of
their
contract
producers.
The
court
directed
the
parties
to
confer
in
attempt
to
reach
agreement
on
appropriate
remedies
by
March
17,
2023.
On
March
17,
2023,
a
status
hearing
was
held,
and
the
court
extended the
time period by
which the parties
must reach an
agreement to June
16, 2023. The
defendants have been
conferring
with the
State regarding
appropriate remedies.
While management
believes there
is a
reasonable
possibility of
a material
loss
from the case, wasat the
present time, it is not possible
to estimate the amount of
monetary exposure, if any,
to the Company due to
a range of
factors, including the
following, among others:
uncertainties inherent in
any assessment of
potential costs associated
with injunctive relief or
other penalties based on a
decision in a case tried without a jury,
over 13 years ago
based on environmental conditions
that existed at the time, the lack of guidance from
the court as to what might be considered appropriate remedies,
the early stage
of negotiations
with the
State on
appropriate remedies,
 
and the court
has not yet issued its ruling. Management believes the risk of material loss relateduncertainty
 
regarding what
our proportionate
share of
any remedy
would be, although we believe that our share compared to this matter to be remote.the other defendants is small.
Other Matters
In addition to
 
the above, the Company
 
is involved in
 
various other claims
 
and litigation incidental
 
to its business. Although
 
Although the
outcome of
 
these matters
 
cannot be
 
determined with
 
certainty,
 
management, upon
 
the advice
 
of counsel,
 
is of
 
the opinion
 
that
the final outcome should not have a material effect on the Company’s
 
consolidated results of operations or financial position.
17
ITEM
 
2.
 
MANAGEMENT’S
DISCUSSION
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATIONS
The following
 
should be
 
read in
 
conjunction
 
with Management’s
 
Discussion and
 
Analysis of
 
Financial Condition
 
and Results
of Operations included
 
in Part II Item
 
7 of the Company’s
 
Annual Report on
 
Form 10-K for its
 
fiscal year ended May
 
28, 2022
(the “2022 Annual Report”), and the accompanying financial statements and
 
notes included in Part II Item 8 of the 2022 Annual
Report and in
 
of this Quarterly Report on Form 10-Q (“Quarterly Report”).
This
 
report
 
contains
 
numerous
 
forward-looking
 
statements
 
within
 
the
 
meaning
 
of
 
Section
 
27A
 
of
 
the
 
Securities
 
Act
 
of
 
1933
(the “Securities
 
Act”) and
 
Section 21E
 
of the
 
Securities Exchange
 
Act of
 
1934 (the
 
“Exchange Act”)
 
relating to
 
our shell
 
egg
business,
 
including
 
estimated
 
future
 
production
 
data,
 
expected
 
construction
 
schedules,
 
projected
 
construction
 
costs,
 
potential
future
 
supply
 
of and
 
demand
 
for
 
our
 
products,
 
potential
 
future
 
corn
 
and
 
soybean price
 
trends,
 
potential
 
future
 
impact
 
on
 
our
business
 
of
 
theinflation
 
COVID-19and
 
pandemic,rising
interest
rates,
 
potential
 
future
 
impact
 
on
 
our
 
business
 
of
 
new
 
legislation,
 
rules
 
or
 
policies,
potential
 
potential
outcomes
 
of
 
legal
 
proceedings,
 
and
 
other
 
projected
 
operating
 
data,
 
including
 
anticipated
 
results
 
of
 
operations
 
and
financial
 
financial
condition.
 
Such
 
forward-looking
 
statements
 
are
 
identified
 
by
 
the
 
use
 
of
 
words
 
such
 
as
 
“believes,”
 
“intends,”
“expects,”
“hopes, “hopes,”
“may, “may,”
 
“should,”
“plans, “plans,”
“projected, “projected,”
“contemplates, “contemplates,”
 
“anticipates,”
or
similar
words.
 
Actual outcomes or
results
 
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
 
industry. These
statements
 
are
 
not
 
guarantees
 
of
 
future
 
performance
 
and
 
involve
 
risks,
 
uncertainties,
 
assumptions,
 
and
 
other
factors that are difficult to predict and may
 
factors
that
are
difficult
to predict
and
may be
beyond
our
control. The
factors
that
could cause
actual results
 
to differ materially
from those
 
differ
materially
from those
projected
in the
 
forward-looking statements
 
statements include, among
 
among others, (i)
 
(i) the
risk factors
 
set forth in
 
in Part
I Item
 
1A of
the
 
the 2022
Annual
 
Report
 
(ii)
 
the
 
risks
 
and
 
hazards
 
inherent
 
in
 
the
 
shell
egg
 
business
 
(including
 
disease,
pests,
 
weather
conditions,
 
and
potential
 
for
 
product
recall),
 
including
 
but
not
 
limited
to
 
the
current
 
outbreak
 
of
highly
 
pathogenic
 
avian
influenza
 
(“HPAI”)
affecting
 
poultry
in
 
the
United
 
States
(“U.S.”),
 
Canada
and
 
other
countries
 
that
was
 
first
detected
 
in
commercial
flocks in
 
the
U.S. in February
 
2022, (iii) changes
 
in the demand
 
for and market prices
 
prices of shell eggs
 
eggs and feed costs,
costs, (iv) our
 
ability to
predict
and
 
meet
demand
 
for
cage-free
 
and
other
 
specialty
eggs,
 
(v)
risks,
 
changes,
or
 
obligations
that
 
could
result
from
 
our future
 
future
acquisition of new
 
new flocks
or businesses and
 
and risks
or changes
 
that may cause
 
cause conditions
to completing
 
a
pending acquisition not
 
not
to
be
met,
(vi)
risks
 
relating to increased costs,
rising inflation and rising
interest rates, which generally
have
been
exacerbated
by
Russia’s
invasion
of
Ukraine
starting
February
2022,
(vii)
our
ability
 
to
 
the
evolving
COVID-19
pandemic,
including
without
limitation
increased
costs
and
rising
inflation and interest rates, which generally have been exacerbated
by Russia’s invasion of Ukraine starting
February 2022, (vii)
our ability
to retain
 
existing customers,
 
customers,
acquire new
 
customers and
 
grow our
 
product mix,
 
and (viii) adverse
 
adverse results in
 
in pending litigation
matters and
(ix) risks
relating to
litigation matters.the evolving
COVID-19 pandemic. Readers
 
are cautioned
 
not to
 
place undue
 
reliance on
 
forward-looking statements
 
because,
while we believe
 
we believe
the
assumptions
on
 
which the forward-looking
 
thestatements are based
are reasonable, there
can be no assurance
that
these
 
forward-looking
 
statements will
 
are
based
are
reasonable,
there
can
be
no
assurance
that
these
forward-looking statements
will prove
 
to be
 
accurate. Further,
 
forward-looking statements
included
 
herein are
 
are only
made as
 
as of
the respective
 
respective dates
thereof,
 
or if no
 
no date
is stated,
 
as of
the date hereof.
 
hereof. Except as
 
otherwise required
 
by law,
 
we
disclaim
 
any
intent
intent
or
obligation
 
to
update
publicly
 
these
forward-looking
statements,
 
whether
because
of
 
new information, future
 
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
 
operatingreportable
 
segment.
 
We
 
are
 
the
largest
 
producer
 
and
 
distributor
 
of
fresh
 
shell
 
eggs
 
in
 
the
U.S.
 
Our
 
total
 
flock
 
of
 
approximately
 
43.743.3
 
million
 
layers
and
 
10.49.9
million pullets
 
and breeders
 
is the largest
 
in the U.S.
 
We
 
sell most of
 
our shell eggs
 
to a diverse
 
group of
 
customers, including
national and regional
 
grocery store chains,
 
club stores, companies
 
servicing independent supermarkets
 
in the U.S., food
 
service
distributors, and
 
and egg product
 
consumers inproduct customers
 
in states across
 
across the
southwestern,
 
southeastern, mid-western
 
and mid-Atlantic
 
regions
of the U.S.
Our
 
operating
 
results
 
are
 
materially
 
impacted
 
by
 
market
 
prices for
 
eggs
 
and
 
feed
 
grains
 
(corn
 
and
 
soybean
 
meal),
 
which
 
are
highly
 
volatile,
 
independent
 
of
 
each
 
other,
 
and
 
out
 
of
 
our
 
control.
 
Generally,
 
higher
 
market
 
prices
 
for
 
eggs
 
have
 
a
 
positive
impact
 
on
 
our
 
financial
 
results
 
while
 
higher
 
market
 
prices
 
for
 
feed
 
grains
 
have
 
a
 
negative
 
impact
 
on
 
our
 
financial
 
results.
Although we
 
use a
 
variety of
 
pricing mechanisms
 
in pricing
 
agreements with
 
our customers,
 
we sell
 
most of
 
our conventional
shell eggs
 
based on
 
formulas that
 
consider,
 
in varying
 
ways, independently
 
quoted regional
 
wholesale
 
market prices
 
for shell
eggs
or
formulas
related
to
our
costs
of
production
which
include
the
cost
of
corn
and
soybean
 
meal.
 
We
do
not
sell
eggs
directly to consumers or set the prices at which eggs are sold to consumers.
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
18
equal, we would
expect to experience
lower selling prices, sales
volumes and net
income (and may
incur net losses) in
our first
and
fourth
fiscal
quarters
ending
in
August/September
and
May/June,
respectively.
Because
of
the
seasonal
and
quarterly
fluctuations,
comparisons
of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily meaningful comparisons.
We
 
routinely
 
fill
 
our
 
storage
 
bins
 
during
 
harvest
 
season
 
when
 
prices
 
for
 
feed
 
ingredients
 
are
 
generally
 
lower.
 
To
 
ensure
continued
 
availability of
 
feed ingredients,
 
we may
 
enter into
 
contracts for
 
future purchases
 
of corn
 
and soybean
 
meal, and
 
as
part
 
of
 
these
 
contracts,
 
we
 
may
 
lock-in
 
the
 
basis
 
portion
 
of
 
our
 
grain
 
purchases
 
several
 
months
 
in
 
advance.
 
Basis
 
is
 
the
difference
 
between the
 
local cash
 
price for
 
grain and
 
the applicable
 
futures price.
 
A basis
 
contract is
 
a common
 
transaction in
the grain
 
market that
 
allows us
 
to lock-in
 
a basis
 
level for
 
a specific
 
delivery period
 
and wait
 
to set
 
the futures
 
price at
 
a later
18
date. Furthermore,
 
due to
 
the more
 
limited supply
 
for organic
 
ingredients, we
 
we may commit
 
commit to purchase
 
purchase organic
 
ingredients in
advance to help ensure supply.
 
Ordinarily, we do
 
not enter into long-term contracts beyond a year to purchase
 
corn and soybean
meal
 
or
 
hedge
 
against
 
increases
 
in
 
the
 
prices
 
of
 
corn
 
and
 
soybean
 
meal.
 
Corn
 
and
 
soybean
 
meal
 
are
 
commodities
 
and
 
are
subject
 
to
 
volatile
 
price
 
changes
 
due
 
to
 
weather,
 
various
 
supply
 
and
 
demand
 
factors,
 
transportation
 
and
 
storage
 
costs,
speculators,
 
agricultural, energy and trade policies in the U.S. and internationally
 
and most recently the Russia-Ukraine war.
An important competitive advantage
 
for Cal-Maine Foods is
 
our ability to meet
 
our customers’ evolving needs
 
with a favorable
product
 
mix
 
of
 
conventional
 
and
 
specialty
 
eggs,
 
including
 
cage-free,
 
organic
 
and
 
other
 
specialty
 
offerings,
 
as
 
well
 
as
 
egg
products.
 
We
 
have
 
also
 
enhanced
 
our
 
efforts
 
to
 
provide
 
free-range
 
and
 
pasture-raised
 
eggs
 
that
 
meet
 
consumers’
 
evolving
choice
 
preferences.
 
While
 
a
 
small
 
part
 
of
 
our
 
current
 
business,
 
the
 
free-range
 
and
 
pasture-raised
 
eggs
 
we
 
produce
 
and
 
sell
represent attractive offerings
 
to a subset of
 
consumers,
 
and therefore our customers,
 
and help us continue
 
to serve as the trusted
provider of quality food choices.
We
are
 
also
focused
on
additional
ways
 
to
enhance its
our
product
mix
 
and
support
new
opportunities
in
the
 
restaurant, institutional
institutional
and
industrial
food
 
products
arena.
On
 
October
4,
2021,
Cal-Maine
 
Foods
announced
a
 
strategic
investment
of $18.5
$18.5
 
million
in
debt
 
and
 
equity
 
in
 
Meadow
 
Creek
 
Foods,
 
LLC
 
(“MeadowCreek”),
 
an
 
egg
 
products
 
operation
 
located
 
in
Neosho,
 
Missouri,
focused
focused
on offering
 
hard-cooked
eggs.
Cal-Maine
 
Foods
serves
as
the
preferred
 
provider
of
specialty and
conventional
 
conventional eggs for
used
by
MeadowCreek
 
to
 
manufacture
 
egg
 
products.
 
On
 
December
 
13,
 
2022,
 
our
 
Board
 
of
 
Directors
approved
 
an
additional
 
$13.8
million investment
 
investment to expand
 
expand the
Company’s
 
controlling interest
 
and fund
 
additional equipment
and
 
and working
 
capital
needs
 
to support
growth
support growth
opportunities
for
 
MeadowCreek.
As demand
for
 
hard-cooked
eggs
continues to
grow,
 
the
funds
will
be
used
for
additional
 
refrigerated
 
storage
 
space
 
and
 
expanded
 
capacity
 
for
 
cooking
 
and
 
packaging
 
to
better serve MeadowCreek’s
 
better
serve
MeadowCreek’s
customers.
Due
to
delays
caused
by
supply
chain
issues and
plans
for
expansion,
MeadowCreek
is
now
expected
to be
fully
operational by or before March began operations during the third quarter of fiscal 2023.
The
 
Company
 
has
 
joined
 
in
 
the
 
formation
 
of
 
a
 
new
 
egg
 
farmer
 
cooperative
 
in
 
the
 
western
 
United
 
States.
 
ProEgg,
 
Inc.
(“ProEgg”)
 
is
 
comprised
 
of
 
leading
 
egg
 
production
 
companies,
 
including
 
Cal-Maine
 
Foods,
 
servicing
 
retail
 
and
 
foodservice
shell egg customers in 13 western states. ProEgg is a producer-owned
 
cooperative organized under the Capper-Volstead
 
Act.
Our
 
membership
 
in
 
ProEgg
 
is
 
expected
 
to
 
provide
 
benefits
 
for
 
its
 
customers,
 
including
 
supply
 
chain
 
stability
 
and
 
enhanced
reliability.
 
Initially,
 
Cal-Maine Foods’
 
customer relationships
 
and customer
 
support are
 
expected to
 
remain the
 
same. At some
point in the future, it is anticipated
 
that each producer member will sell
 
through ProEgg the shell eggs
 
it produces for sale in the
western
 
states
 
covered
 
by
 
the
 
cooperative.
 
Customers
 
would
 
have
 
a
 
single
 
point
 
of
 
contact
 
for
 
their
 
shell
 
egg
 
purchases,
 
as
ProEgg would have a dedicated team to market and sell the members’ combined
 
egg production in the region.
The Company’s
 
top priority in joining
 
as a member of
 
ProEgg is serving
 
our valued customers in
 
this important market
 
region.
During
 
this
 
initial
 
phase,
 
we
 
will
 
continue
 
our
 
work
 
to
 
confirm
 
that
 
our
 
participation
 
in
 
this
 
new
 
cooperative
 
is
 
in
 
the
 
best
interest of
 
our customers
 
and aligns
 
with our
 
long-term interests.
 
This consideration
 
will take
 
place before
 
moving to
 
the next
phase of membership, and we expect this process to be completed on
 
or before the end of our fiscalcalendar year 2023.
Retail
sales
of
shell
eggs
historically
have
been
highest
during
the
fall
and
winter
months
and
lowest
during
the
summer
months. Prices
for shell
eggs fluctuate
in response
to seasonal
demand factors
and a
natural increase
in egg
production during
the
spring
and
early
summer.
Historically,
shell
egg
prices
tend
to
increase
with
the
start
of
the
school
year
and
tend
to
be
highest
prior
to
holiday
periods,
particularly
Thanksgiving,
Christmas
and
Easter.
Consequently,
and
all
other
things
being
equal, we would
expect to experience
lower selling prices, sales
volumes and net
income (and may
incur net losses) in
our first
and
fourth
fiscal
quarters
ending
in
August/September
and
May/June,
respectively.
Because
of
the
seasonal
and
quarterly
fluctuations,
comparisons
of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily meaningful comparisons.
HPAI
We
 
are closely
 
monitoring
 
the current
 
outbreak of
 
HPAI
 
that was
 
first detected
 
in commercial
 
flocks in
 
the U.S.
 
in February
2022.
Outbreaks in
commercial flocks
in the
U.S. have
most recently
 
occurred
during
each month
from September
to DecemberMarch
2022. 2023.
The
 
current
HPAI
 
epidemic
has
 
surpassed
the
 
prior
2014-2015
 
outbreak
in
 
terms
of
 
its
duration
and
the
number
 
of
affected
 
hens
in
 
the
U.S.,
 
and
 
HPAI
 
continues
 
to
 
circulate
 
throughout
 
the
 
wild
 
bird
 
population
 
in
 
the
 
U.S.
 
and
 
abroad.
According
to
 
the U.S.
 
U.S.
Centers
for
 
Disease Control
 
and
Prevention,
 
these
detections
 
do not
 
not present an
 
an immediate
public
 
health
concern.
 
There
have
been
been
no positive
tests for
HPAI
 
at
any
Cal-Maine
Foods’
owned
or contracted
production
 
facility as
of December 28, 2022. The
March 28,
2023. The
USDA division
 
of Animal
 
and Plant
 
Health Inspection
 
Service (“APHIS”)
 
reported on
 
December 27,on March
 
2022 27, 2023
that
 
approximately
43.3
43.3
million
commercial
 
layer
hens
and
1.0
 
million
pullets
have
been
 
depopulated
due
to
HPAI
 
this year.since
February 2022. We
 
We believe the HPAI
 
the HPAI
outbreak will continue
 
continue to exert downward
 
downward pressure on the
 
on the overall supply of
 
supply of eggs,
and the duration
of those effects
will depend
19
duration of those
effects will depend
in part on the
timing of replenishment
of the U.S.
layer hen flock.
Prior to the outbreak
of
HPAI
in February
2022,
the layer
 
hen flock. Prior to the outbreak of HPAI
in February 2022, the layer hen
flock
 
five-year
 
average
from
 
2017
through
 
2021
was
 
comprised
 
of
approximately
 
328
million
hens.
 
According
to
 
a LEAP Market
 
LEAP
Market Analytics report dated December
 
8, 2022, dated March
21, 2023,
the layer
hen inventory
 
is not
projected to
exceed this 328 million
 
million mark again
until
 
December
January of
2023. 2024.
 
Layer
hen
numbers
reported
 
by
the
USDA
as
 
of
December
March 1,
2022 2023
 
were
308.3312.9
 
million,
 
which
represents
represents
a
 
decrease
of
 
5.8% 3.8%
compared
 
with
the
 
layer
hen
 
inventory
a
 
year
ago.
 
However,
 
the USDA
 
USDA
reported
that
 
the
hatch
from
from July
October
2022
through November 2022
February
2023
increased 5.8%
4.5%
as
compared
 
with
the
prior-year
period,
indicating that layer flocks may increase in the prior-year period.future.
While no
 
farm is
 
immune from
 
HPAI,
 
we believe
 
we have implemented
 
and continue
 
to maintain
 
robust biosecurity
 
programs
across our locations. We
 
are also working closely with federal, state and local government
 
officials and focused industry groups
to mitigate the risk of this and future outbreaks and effectively manage
 
our response, if needed.
CAGE-FREE EGGS
Ten
 
states
 
have
 
passed
 
legislation
 
or
 
regulations
 
mandating
 
minimum
 
space
 
or
 
cage-free
 
requirements
 
for
 
egg
 
production
 
or
mandated
 
the
 
sale
 
of
 
only
 
cage-free
 
eggs
 
and
 
egg
 
products
 
in
 
their
 
states,
 
with
 
implementation
 
of
 
these
 
laws
 
ranging
 
from
January
 
2022
 
to
 
January
 
2026.
 
These
 
states
 
represent
 
approximately
 
27%
 
of
 
the
 
U.S.
 
total
 
population
 
according
 
to
 
the 2020
U.S. Census.
 
In California
 
and Massachusetts,
 
which
 
collectively represent
 
14% of
 
the total
 
U.S. population
 
according to
 
the
2020 U.S. Census,
 
cage-free legislation went
 
into effect January
 
1, 2022. However,
 
these laws are subject
 
to judicial challenge,
and in October
2022 the U.S.
Supreme Court of the U.S.
heard oral arguments
 
in a case
challenging California’s
 
law that requires
the sale
sale of only
cage-free eggs in
 
that state. A
decision in that case
 
case is expected
next year. in the summer of 2023.
 
These laws have already affected
and,
 
already affectedif
 
and, if
upheld,
 
will
 
continue
 
to
 
affect
 
sourcing,
 
production
 
and
 
pricing
 
of
 
eggs
 
(conventional
 
as
 
well
 
as
 
specialty)
 
as
 
the
national demand for cage-free production
 
national
demand
for cage-free
production could
be greater
than the
 
current supply,
 
which would
increase the
prices
 
of cage-free
eggs,
 
eggs,unless
unless more
 
cage-free
production
 
capacity
is
constructed.
 
Likewise,
the
national
 
supply
for
 
eggs
from
 
conventional production
production could exceed consumer demand, which would decrease the
prices
 
of conventional eggs.
A significant number
 
of our customers
 
have previously announce
dannounced
 
goals to offer
 
cage-free eggs exclusively
 
on or before
 
2026,
subject in
 
most cases
 
to availability
 
of supply,
 
affordability and
 
customer demand,
 
among other
 
contingencies. Some
 
of these
customers have
 
recently changed
 
those goals
 
to offer
 
70% cage-free
 
eggs by
 
the end
 
of 2030.
 
Our customers
 
typically do
 
not
commit to long-term
 
purchases of specific quantities
 
or types of eggs
 
with us, and as
 
a result, it is difficult
 
to accurately predict
customer
 
requirements
 
for
 
cage-free
 
eggs.
 
We
 
are,
 
however,
 
engaging
 
with
 
our
 
customers
 
in
 
an
 
effort
 
to
 
achieve
 
a
 
smooth
transition
 
in
 
meeting
 
their
 
announced
 
goals
 
and
 
needs.
 
We
 
have
 
invested
 
significant
 
capital
 
in
 
recent
 
years
 
to
 
acquire
 
and
construct cage-free
 
facilities, and
 
we expect
 
our focus
 
for future
 
expansion will
 
continue to
 
include cage-free
 
facilities. At
 
the
same
 
time,
 
we
 
understand
 
the
 
importance
 
of
 
our
 
continued
 
ability
 
to
 
provide
 
conventional
 
eggs
 
in
 
order
 
to
 
provide
 
our
customers with a variety of egg choices and to address hunger in our communities.
 
For
 
additional
 
information,
 
see
 
the
 
2022
 
Annual
 
Report,
 
Part
 
I
 
Item
 
1,
 
“Business
 
–
 
Specialty
 
Eggs,”
 
“Business
 
–
 
Growth
Strategy” and
 
“Business –
 
Government
 
Regulation,” and
 
the first
 
risk factor
 
in Part
 
I Item
 
1A, “Risk
 
Factors” under
 
the sub-
heading “Legal and Regulatory Risk Factors.”
EXECUTIVE OVERVIEW
For
the
second
third quarter
 
of fiscal 2023,
we recorded a gross
profit of $463.0 million
compared to $91.6 million
for the same period
of
 
fiscal
 
2023,
we
recorded
a
gross
profit
of
$317.8
million
compared
to
$43.7
million
for
the
same
period of
fiscal 2022,
 
with
the
 
increase
 
due
primarily
 
to
higher
 
shell
egg
 
prices,
partially
 
offset
 
by
the
 
increased
 
cost
of
 
feed
ingredients and other farm production costs as well as increased processing
,
packaging and warehouse costs.
Our
net
 
average selling
 
price per
 
dozen for
 
the second
 
third quarter of
 
of fiscal
2023
 
was $2.709$3.298
 
compared to
 
$1.365 to $1.
612
in
 
the prior-year
period. Conventional
 
egg prices
 
per dozen
 
were $2.883$3.678
 
compared to
 
$1.1511.458 for
 
the prior-year
 
period, and
 
specialty egg
 
prices
per dozen
were $2.370 $2.616
compared to $1.898
$1.923 for
 
the prior-year
period. Conventional
egg prices
increased in
 
the second third
quarter of
fiscal 2023 primarily due to decreased supply caused by the HPAI
 
2023outbreak combined with robust customer demand,
 
primarilywhich was
due
to decreased
supply
caused
bolstered by
 
the peak
 
HPAIwinter holiday
 
outbreak
combined
with
good
customer
demand.
season. See
 
the discussion
discussion under the
 
heading “HPAI”
 
above. The daily
 
daily average
price for
the Urner
Barry southeast
large index
for the
 
UB southeast largethird quarter
 
index for the secondof fiscal
 
quarter of
fiscal 2023 increased 154.8%
129.8% from
the comparable period
 
period in the prior year, reaching near-record
 
highs. Conventional egg pricesthe
prior
year.
Conventional
egg
prices
exceeding
 
specialty
 
egg
 
prices
 
has
 
occurred
 
for
 
the
 
past
 
threefour
 
quarters
 
but
 
is
 
atypical
historically.
 
Conventional
egg
 
prices
generally
 
respond
more
 
quickly
to
 
market
conditions
 
because
we
 
sell
the
 
majority
of
 
our
conventional shell eggs based on
 
conventional
shell
eggs
based
on
formulas that adjust periodically and take into account,
 
account, in varying ways, independently quoted
regional
wholesale
 
market
prices for
shell
for shell
eggs
 
or
formulas
related
 
to our costs
 
our
costs of
production.
 
The
majority
 
of our specialty
 
specialty
eggs
are
typically
 
sold
at
prices
 
and
terms
terms
negotiated
directly
 
with
customers
and
 
therefore
do
not
 
fluctuate
as
much
 
as
conventional pricing.
For information about
historical shell egg prices,
see Part I Item I of our 2022 Annual Report.
 
Our total dozens
sold increased 5.4% to
284.1 million dozen shell
eggs for the second
quarter of fiscal 2023
compared to 269.6
million
dozen
for
the
same
period
of
fiscal
2022.
For
the second
quarter
of
fiscal
2023,
conventional
dozens
sold
decreased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
2.2%Our total
 
anddozens sold
 
increased 1.3%
to 291.4
million dozen
shell eggs
for the
third quarter
of fiscal
2023 compared
to 287.7
million dozen for
the same period
of fiscal 2022.
For the third quarter
of fiscal 2023,
conventional dozens sold
decreased 2.7%
and specialty
 
dozens
sold
increased
 
24.1%
9.4% as compared
 
to
the
same
 
quarter
in
fiscal
 
2022.
Demand
 
for
specialty
eggs
increased
in
the
second
quarter
of
fiscal
2023
compared
to
the
same
prior
year
period
due
primarily
to
the
higher
prices
for
conventional
eggs. Further,
demand for
specialty eggs
 
continued toincreased
in the
 
increase asthird quarter
 
retailersof fiscal
2023 compared
to the
same prior
year period
due primarily
to the
higher prices
for conventional
eggs. Further, demand for specialty eggs continued
 
to increase as retailers continued to shift
to selling
cage-free
products and cage-free legislation went into full effect in California
and Massachusetts on January 1, 2022.products.
Our farm production
 
production costs
per dozen
 
produced for the
 
the second
third quarter of
 
fiscal 2023 increased
 
increased 22.0%18.2%,
or $0.193,$0.166,
 
compared to the
the secondthird quarter
of fiscal 2022.
 
This increase was
primarily due to
increased prices for
feed ingredients and
a higher basis
in
corn in
most of
our production
areas,
which added
 
to ourincreased feed ingredient
 
expense. Forcosts as well as increased facility
 
the secondcosts
and higher amortization
 
of our flocks.
For the third quarter of
 
fiscal 2023, the average
Chicago Board of Trade
(“CBOT”) daily
market
price
was
$6.67
per
bushel
for
corn
and
$473
per
ton
for
soybean
meal,
representing
increases
of
8.8%
and
14.8%,
respectively,
compared
to
 
the average
 
Chicago
Board of
Trade
(“CBOT”) daily
 
market price
was $6.78
per bushel
for corn
and $423
per ton
for soybean
meal, representing
increases
of 24.8% and
25.5%, respectively,
compared to the average
daily CBOT prices
 
for
the
comparable
 
period
in
the prior
year. For information about
 
year.
For
information
about
historical corn and soybean meal prices, see Part I Item I of our 2022 Annual
Report.
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 25, 2023
February 26,
2022
November 27,February 25, 2023
2021
NovemberFebruary 26,
2022
November 27,
2021
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
60.453.6
%
88.580.8
%
63.359.4
%
92.988.0
%
Gross profit
39.646.4
%
11.519.2
%
36.740.6
%
7.112.0
%
Selling, general and administrative
7.25.9
%
12.511.0
%
7.66.9
%
13.312.4
%
Gain on insurance recoveries
(0.3)
%
(0.2)
%
(0.1)
%
(0.3)
%
(Gain) loss on disposal of fixed assets
—
%
(0.5)0.1
%
—
%
(0.3)—
%
Operating income (loss)
32.440.8
%
(0.5)8.3
%
29.133.8
%
(5.9)(0.1)
%
Total other income, net
0.31.7
%
0.72.8
%
0.30.9
%
1.21.8
%
Income (loss) before income taxes
32.742.5
%
0.211.1
%
29.434.7
%
(4.7)1.7
%
Income tax expense (benefit)
8.010.2
%
2.8
%
8.4
%
(0.2)
%
7.1Net income
32.3
%
(2.3)8.3
%
Net income (loss)
24.726.3
%
0.4
%
22.3
%
(2.4)1.9
%
NET SALES
Total
 
net
sales
for
the
 
second
third quarter
of
fiscal
2023
were
a
record
$801.7
million
compared
to
$381.7
million
for
the
same
period of fiscal 2022.
Net shell egg sales represented
96.5% and 97.0% of total net sales
for the second quarters of fiscal
 
2023 were $997.5 million
compared to $477.5 million
for the same period
of fiscal
2022.
Net shell
egg sales
represented 96.
7% and
97.3% of
total net
sales for
the third
quarters
of fiscal
2023 and
2022, respectively.
Shell
egg
sales classified
 
as “Other”
represent
 
sales of hard-cooked
 
eggs and otherof
 
miscellaneous
byproducts
and
resale products
included
 
with our
shell
shell egg operations.
 
Total
 
net
 
sales
 
for
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
26,25,
 
20222023
 
were
 
$1.462.46
 
billion,
 
compared
 
to
 
$706.71.18
 
millionbillion
 
for
 
the
comparable period of fiscal 2022.
Net
 
shell
 
egg
 
sales
 
represented
 
96.2%96.4%
 
and
 
97.1%97.2%
 
of
 
total
 
net
 
sales
 
for
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
26,25,
 
20222023
 
and
November 27, 2021,February 26, 2022, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21
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 25, 2023
February 26, 2022
November 27, 2021February 25, 2023
NovemberFebruary 26, 2022
November 27, 2021
Total net sales
$
801,700997,493
$
381,723477,485
$
1,460,0442,457,537
$
706,7091,184,195
Conventional
$
541,917689,022
70.171.4
%
$
221,142280,633
59.760.4
%
$
967,5061,656,528
69.069.9
%
$
403,172683,805
58.859.4
%
Specialty
227,778272,205
29.428.2
%
146,917182,945
39.739.4
%
428,598700,803
30.529.6
%
279,375462,320
40.740.2
%
Egg sales, net
769,695961,227
99.6
%
463,578
99.8
%
2,357,331
99.5
%
368,0591,146,125
99.4
%
1,396,104
99.5
%
682,547
99.599.6
%
Other
3,9533,684
0.4
%
1,158
0.2
%
11,932
0.5
%
2,2634,554
0.6
%
8,248
0.6
%
3,395
0.50.4
%
Net shell egg sales
$
773,648964,911
100.0
%
$
370,322464,736
100.0
%
$
1,404,3522,369,263
100.1100.0
%
$
685,9421,150,679
100.0
%
Net shell egg sales as a
percent of total net sales
96.596.7
%
97.097.3
%
96.296.4
%
97.197.2
%
Dozens sold:
Conventional
187,976187,357
66.264.3
%
192,135192,511
71.366.9
%
367,688555,045
65.765.2
%
376,003568,511
71.770.0
%
Specialty
96,110104,059
33.835.7
%
77,42095,140
28.733.1
%
191,715295,774
34.334.8
%
148,171243,310
28.330.0
%
Total dozens sold
284,086291,416
100.0
%
269,555287,651
100.0
%
559,403850,819
100.0
%
524,174811,821
100.0
%
Net average selling price
per dozen:
Conventional
$
2.8833.678
$
1.1511.458
$
2.6312.984
$
1.0721.203
Specialty
$
2.3702.616
$
1.8981.923
$
2.2362.369
$
1.8851.900
All shell eggs
$
2.7093.298
$
1.3651.612
$
2.4962.771
$
1.3021.412
Egg products sales:
 
Egg products net sales
28,05232,582
11,40112,749
55,69288,274
20,76733,516
Pounds sold
15,70216,796
16,00915,947
32,20449,000
31,27847,225
Net average selling price
per pound
1.7871.940
0.7120.799
1.7291.802
0.6640.710
Shell egg net sales
SecondThird Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
In
the
 
second
third quarter
 
of
fiscal
 
2023,
 
conventional
egg
 
sales
increased
 
$320.8
408.4 million,
 
or
145.0% 145.5%,
 
compared
to
 
the
second quarter
of fiscal 2022,
primarily due
to the increase
in the price
s
for conventional shell
eggs, slightly
offset by
a decrease
in volume
of conventional
shell eggs
sold. Changes
in prices
resulted in
a $325.6
million increase
and the
change in volume resulted in a $4.8 million decrease in net sales, respectively.
-
Conventional egg prices increased in the second
quarter of fiscal 2023
primarily due to decreased supply caused by
the
HPAI
outbreak,
discussed
above,
while
we
experienced
continued
good
customer
demand
(and
typical
seasonal
consumer demand).
-
As a result of
the independently quoted
wholesale market prices
for conventional
eggs reaching near-record
highs, the
average selling
price for conventional
eggs exceeded
the average selling
price for specialty
eggs in the
second quarter
of
fiscal
2023,
which
has
occurred
for
the
past
three
quarters
but
is
atypical
historically.
Conventional
egg
prices
generally respond
more quickly
to market
conditions as
we sell
the majority
of our
conventional shell
eggs based
on
formulas
that
adjust
periodically
and
take
into
account,
in
varying
ways,
independently
quoted
regional
wholesale
market
prices
for
shell
eggs
or
formulas
related
to
our
costs
of
production.
The
majority
of
our
specialty
eggs
are
typically
sold
at
prices
and
terms
negotiated
directly
with
customers
and
therefore
do
not
fluctuate
as
much
as
conventional pricing.
-
Specialty
egg
sales
increased
$80.9
million,
or
55.0%,
in
the
second
quarter
of
fiscal
2023
compared
to
the
second third
quarter
 
of
 
fiscal
 
2022,
 
primarily
 
due
 
to
 
the
increase
in
the
prices
for
conventional
shell
eggs,
slightly
offset
by
a
decrease
in
volume
of
conventional
shell
eggs
sold.
Changes
in
prices
resulted
in
a
 
24.9%$415.9
million
increase
and
the
change in volume resulted in a $7.5 million decrease in net sales, respectively.
-
Conventional egg
prices increased
in the
third quarter
of fiscal
2023
primarily due
to decreased
supply caused
by the
HPAI
outbreak,
discussed
above,
while
customer
demand,
bolstered
by
the
peak
winter
holiday
season,
remained
robust.
-
Specialty egg
sales increased $89.3
million, or 48.8%,
in the third
quarter of fiscal
2023 compared to
the third quarter
of
fiscal
2022,
primarily
due
to
a
36.0%
 
increase
 
in
 
the
 
prices
 
for
 
specialty
 
eggs,
 
which
 
resulted
 
in
 
a
 
$45.4
million72.1
 
million
increase
 
in
 
net
 
sales,
 
and
 
a
 
24.1%9.4%
 
increase
 
in
 
the
 
volume
 
of
 
specialty
 
eggs
 
sold,
 
which
 
resulted
 
in
 
a
 
$35.517.2
million
million increase in net sales.
 
22
-
Net average selling prices
 
selling price of
specialty eggs increased
 
in response to rising feed
 
rising feed and
other input costs as well
 
as well as
current
market conditions due to HPAI.
-
Demand
for
specialty
eggs
 
increased as conventional egg prices
 
rose. Our sales volumeas
 
benefited as we produced 11%
more specialty
eggs in
the second
quarter of
fiscal 2023
versus the
prior-year period,
through use
of our
higher cage-
free production capacity
and better utilization of that capacity.
-
Cage-freeconventional
 
egg
 
prices
rose.
Our
sales
 
forvolume
benefited
as
we
sold
9.4%
more
specialty
eggs
by
volume
in
 
the
 
secondthird
 
quarter
 
of
 
fiscal
 
2023
 
versus
the
prior-year
period,
through
use
of
our
higher cage-free production capacity.
-
Cage-free egg sales
for the third quarter
of fiscal 2023 represented
 
18.2%17.8%
of our total net
shell egg sales versus
24.0%
for the
same prior year
period due
to the higher
conventional egg
prices causing
conventional egg
sales to represent
a
22
higher
proportion
 
of
 
our
 
total
 
net
shell
egg
sales
versus
22.4%
for
the
same
prior
year
period
due
to
the
higher
conventional
egg
prices.sales.
 
Cage-free
 
dozens
 
sold
 
increased
14.9%
in
the
third
quarter
of
fiscal
2023
as
47.4% in the second quarter of fiscal 2023 as compared to the secondthird quarter
 
quarter of fiscal 2022.2022 as the
higher conventional egg prices drove
demand for specialty eggs
and
Twenty-sixwe utilized our expanded cage-free production capacity.
Thirty-nine weeks –
Fiscal 2023 vs. Fiscal 2022
-
For
 
the
 
twenty-sixthirty-nine
 
weeks
 
ended
 
NovemberFebruary
 
26,25,
 
2022,2023,
 
conventional
 
egg
 
sales
 
increased
 
$564.3972.7
 
million,
 
or
 
140.0%142.3%,
compared
 
to
 
the
 
same
 
period
 
of
 
fiscal
 
2022,
 
primarily
 
due
 
to
 
the
 
increase
 
in
 
the
 
prices
 
for
 
conventional
 
shell
 
eggs,
slightly offset
 
by the decrease
 
in the volume
 
of conventional eggs
 
sold. Changes in
 
in prices
 
resulted in a
 
$573.2988.5 million
increase and the change in volume resulted in a $9.0$16.2 million decrease in net
 
sales, respectively.
-
Specialty egg sales
 
sales increased $149.2
$238.5 million,
 
or 53.4%51.6%,
for the
 
twenty-sixthirty-nine weeks ended
 
November 26, 2022 ended February
25, 2023
compared
to
the
 
same
period
of
 
fiscal
2022,
 
primarily
due
 
to
a
29.4% 24.7%
 
increase
in
 
the prices
 
volume
of
for specialty
 
dozenseggs.
 
sold.Additionally,
 
Thethe
volume
 
of
specialty
 
dozens
 
sold
 
increased
 
21.6%
compared
to
the
same
prior
year
period,
mainly
 
due
 
to
 
the higher
conventional egg prices.
 
higher
conventionalChanges in specialty
 
egg
prices.
Change
in
volume
resulted in a
$82.1 million increase
and changes in
specialty egg price prices resulted
 
in a $67.3$138.7 million
 
increase in net sales
and changes
in volume resulted in a $99.7 million increase,
respectively.
 
Egg products net sales
SecondThird Quarter – Fiscal 2023
 
vs. Fiscal 2022
-
Egg products
 
net sales
 
increased $16.7$19.8
 
million, or
 
146.0%155.6%, for
 
the secondthird
 
quarter of
 
fiscal 2023
 
compared to
 
the same
period of
 
fiscal 2022,
 
primarily due
 
to a
 
151.0%142.8% selling
 
price increase,
 
which had
 
a $16.9$19.2
 
million positive
 
impact on
net sales.
-
Our
egg
products
net
average
selling
price
increased
in
the
second
third quarter
 
of
fiscal
2023,
compared
to
the
second
third quarter of
fiscal 2022
as the
supply of
shell eggs
 
used to
produce
egg products
decreased
 
due
to the
HPAI
 
outbreak
that started in
February 2022.
 
Twenty-sixThirty-nine weeks –
Fiscal 2023 vs. Fiscal 2022
-
Egg products
 
net sales
 
increased $34.9$54.8
 
million or
 
168.2%163.4%, primarily
 
due to
 
a 160.4%153.8%
 
selling price
 
increase compared
to the first twenty-sixthirty-nine weeks of fiscal 2022, which had a $34.3$53.5 million
 
positive impact on net sales.
-
Our egg
products net average
selling price increased
 
in the twenty-sixthirty-nine weeks ended February 25, 2023
 
weeks ended
November 26,
2022, compared
to the
the
same
 
period
 
in
fiscal
 
2022
as
 
the
 
supply
of
 
shell
 
eggs
used
 
to
produce
 
egg
products
 
decreased
 
due
 
to
the
 
HPAI
outbreak that started in February 2022.
COST OF SALES
Costs of sales
 
for the
third quarter of
fiscal 2023
were $534.5 million
compared to $385.9
million for the
same period of
fiscal
2022. Cost of
 
sales
for
the
 
secondthirty-nine weeks
 
quarter
of
fiscalended February 25,
 
2023
were
$483.9 $1,459.2
 
million
compared
 
to
$338.0
$1,042.2 million
 
for
the
same
period
of
the same period of fiscal 2022.
Cost of
 
sales consists
 
of
 
costs directly
 
related
 
to producing,
 
processing
 
and
 
packing
 
shell eggs,
 
purchases
 
of
 
shell
 
eggs from
outside producers, processing and packing
of liquid
and frozen egg products and other non-egg
costs. Farm
production costs are
those costs
 
incurred at
 
the egg
 
production facility,
 
including feed,
 
facility,
 
hen amortization
 
and other
 
related farm
 
production
costs.
��
23
The following table presents the
key variables affecting our cost of sales (in thousands, except cost per
dozen data):
Thirteen Weeks
Ended
Thirty-nine Weeks Ended
February 25, 2023
February 26, 2022
%
Change
February 25, 2023
February 26, 2022
%
Change
Cost of Sales:
Farm production
$
280,384
$
239,389
17.1
%
$
823,043
$
668,855
23.1
%
Processing, packaging,
and warehouse
87,037
77,116
12.9
252,093
211,649
19.1
Egg purchases and other
(including change in
inventory)
135,003
59,135
128.3
301,274
133,968
124.9
Total shell eggs
502,424
375,640
33.8
1,376,410
1,014,472
35.7
Egg products
32,043
10,263
212.2
82,762
27,749
198.3
Total
$
534,467
$
385,903
38.5
%
$
1,459,172
$
1,042,221
40.0
%
Farm production costs
(per dozen produced)
Feed
$
0.679
$
0.562
20.8
%
$
0.677
$
0.546
24.0
%
Other
$
0.399
$
0.350
14.0
%
$
0.388
$
0.350
10.9
%
Total
$
1.078
$
0.912
18.2
%
$
1.065
$
0.896
18.9
%
Outside egg purchases
(average cost per dozen)
$
3.72
$
1.75
112.6
%
$
3.20
$
1.57
103.8
%
Dozens produced
263,174
264,433
(0.5)
%
782,186
757,677
3.2
%
Percent produced to sold
90.3%
91.9%
(1.7)
%
91.9%
93.3%
(1.5)
%
Farm Production
Third Quarter – Fiscal 2023
vs. Fiscal 2022
-
Feed
costs
per
dozen
produced
increased
20.8%
in
the
third
quarter
of
fiscal
2023
compared
to
the
third
quarter
of
fiscal 2022.
This increase was
primarily due
to increased
prices for corn,
our primary feed
ingredient.
Basis levels for
corn and soybean meal ran significantly higher in our area of operations
compared to our prior year third fiscal quarter,
adding to our expense.
-
For the third
quarter of fiscal
2023, the average
daily CBOT
market price was
$6.67 per bushel
for corn and
$473 per
ton of soybean
meal, representing increases
of 8.8% and
14.8%, respectively,
as compared to the
average daily CBOT
prices for the third quarter of fiscal 2022.
-
Other
farm
production
costs
increased
due
to
higher
facility
and
flock
amortization.
Facility
costs
increased
due
primarily
to
increased
labor
costs.
Labor
costs
increased
36%
due
to
increased
use
of
contract
labor
and
increased
wages raised in response to labor shortages.
-
Flock amortization
increased primarily
from higher
feed costs,
which began
to rise
in our
third quarter
of fiscal
2021
due to
increased feed
ingredient prices
discussed above,
and which
remained high
in the
third quarter
of fiscal
2023.
Feed
costs
are
capitalized
in
our
flocks
during
pullet
production
and
increased
our
amortization
expense.
We
also
experienced higher amortization costs from an increase in our cage-free
production, which has higher capitalized costs.
Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022
-
Feed
costs
per
dozen
produced
increased
24.0%
in
the
thirty-nine
weeks
ended
February
25,
2023
compared
to
the
same period
of fiscal
2022, primarily
due to higher
feed ingredient prices
.
Basis levels for
corn and soybean
meal ran
significantly higher in our area of operations compared to our prior year third
fiscal quarter, adding to our expense.
-
Other
farm
production
costs
increased
due
to
higher
facility
and
flock
amortization.
Facility
costs
increased
due
primarily
to
increased
labor
costs.
Labor
costs
increased
28%
due
to
increased
use
of
contract
labor
and
increased
wages raised in response to labor shortages.
24
-
Flock amortization increa
sed primarily from
higher capitalized feed
costs as well as
higher amortization
costs from an
increase in our cage-free production.
Supplies of corn and
soybean remained tight relative to
demand in the third quarter
of fiscal 2023,
as evidenced by a low stock-
to-use ratio for corn,
as a result of
weather-related shortfalls in
production and yields, ongoing
supply chain disruptions and
the
Russia-Ukraine
war
and
its
impact
on
the
export
markets.
For
fiscal
2023,
we
expect
continued
corn
and
soybean
upward
pricing pressures and further market volatility to affect
feed costs.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2023
vs. Fiscal 2022
-
Cost of
packaging materials
increased 10.9%
compared to
the third
quarter of
fiscal 2022
due to
rising inflation
and
labor costs.
-
Labor costs increased 14.2%
due to wage increases and increased use of contract labor in response to labor shortages
.
Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022
-
Cost of packaging materials
increased 15.5%
compared to the thirty-nine
weeks ended February 26, 2022
due to rising
inflation and labor costs.
-
Labor costs
increased 13.7%
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
26,
2022,
which
resulted
in
a
$7.3 million increase in costs.
Egg purchases and other (including change in inventory)
Third Quarter – Fiscal 2023
vs. Fiscal 2022
-
Costs in this
category increased
primarily due to
higher egg prices
as well as
an increase in
the volume of
outside egg
purchases, causing the percentage of produced to sold to decrease to 90.3%
from 91.9%.
Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022
-
Costs in this
category increased
primarily due to
higher egg prices
as well as
an increase in
the volume of
outside egg
purchases, as our percentage of produced to sold decreased to 91.9% from 93.3%.
GROSS PROFIT
Gross
profit
for
the
third
quarter
of
fiscal
2023
was
$463.0
million
compared
to
$91.6
million
for
the
same
period
of
fiscal
2022.
The increase
of $371.4
million was
primarily due
to higher
egg prices
as well
as the
increased volume
of specialty
eggs
sold, partially offset
by the increased cost of
feed ingredients and processing,
packaging and warehouse costs
and the decreased
volume of conventional egg sales.
Gross profit
for
the thirty-nine
weeks ended
February
25, 2023
was $998.4
million
compared
to $142.0
million
for the
same
period of fiscal
2022. The increase
of $856.4 million
was primarily due
to higher egg
prices as well as
the increased volume
of
specialty eggs sold, partially offset by the increased
cost of feed ingredients and processing, packaging and warehouse costs and
the decreased volume of conventional egg sales.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23
The following table presents the key variables affecting our cost of
sales (in thousands, except cost per dozen data):
Thirteen Weeks
Ended
Twenty-six Weeks
Ended
November 26,
2022
November 27,
2021
%
Change
November 26,
2022
November 27,
2021
%
Change
Cost of Sales:
Farm production
$
276,008
$
221,971
24.3
%
$
542,659
$
429,466
26.4
%
Processing, packaging,
and warehouse
83,639
69,474
20.4
165,056
134,533
22.7
Egg purchases and other
(including change in
inventory)
97,973
36,859
165.8
166,271
74,832
122.2
Total shell eggs
457,620
328,304
39.4
873,986
638,831
36.8
Egg products
26,231
9,672
171.2
50,719
17,486
190.1
Total
$
483,851
$
337,976
43.2
%
$
924,705
$
656,317
40.9
%
Farm production costs
(per dozen produced)
Feed
$
0.685
$
0.529
29.5
%
$
0.676
$
0.537
25.9
%
Other
$
0.386
$
0.349
10.6
%
$
0.383
$
0.351
9.1
%
Total
$
1.071
$
0.878
22.0
%
$
1.059
$
0.888
19.3
%
Outside egg purchases
(average cost per dozen)
$
3.14
$
1.56
101.3
%
$
2.88
$
1.45
98.6
%
Dozens produced
261,358
256,786
1.8
%
519,012
493,244
5.2
%
Percent produced to sold
92.0%
95.3%
(3.5)
%
92.8%
94.1%
(1.4)
%
Farm Production
Second Quarter – Fiscal 2023
vs. Fiscal 2022
-
Feed costs per dozen
produced increased 29.5% in
the second quarter of fiscal
2023 compared to the
second quarter of
fiscal 2022. This increase was primarily due to increased prices for corn, our primary
feed ingredient.
-
For the
second quarter
of fiscal
2023, the
average daily
CBOT market
price was
$6.78 per
bushel for
corn and
$423
per
ton of
soybean
meal representing
increases
of 24.8%
and
25.5%, respectively,
as compared
to
the average
daily
CBOT prices for the second quarter of fiscal 2022.
-
Other farm
production costs
increased due
to higher
facility and
flock amortization,
primarily from
higher feed
costs,
which
began to
rise in
our third
quarter of
fiscal 2021
due to
increased
prices discussed
above,
and which
remained
high
in
the
second
quarter
of
fiscal
2023.
Feed
costs
are
capitalized
in
our
flocks
during
pullet
production
and
increased our amortization expense.
Twenty-six weeks –
Fiscal 2023 vs. Fiscal 2022
-
Feed costs
per dozen
produced increased
25.9% in
the twenty-six
weeks ended
November 26,
2022 compared
to the
same period of fiscal 2021, primarily due to higher feed ingredient prices.
-
Other farm
production costs
increased due
to higher
facility and
flock amortization,
primarily from
higher feed
costs,
which
began to
rise in
our third
quarter of
fiscal 2021
due to
increased
prices discussed
above,
and which
remained
high
in
the
second
quarter
of
fiscal
2023.
Feed
costs
are
capitalized
in
our
flocks
during
pullet
production
and
increased our amortization expense.
Supplies
of
corn
and
soybean
remained
tight
relative
to
demand
in
the
second
quarter
of fiscal
2023,
as evidenced
by a
low
stock-to-use ratio
for corn,
as a
result of
weather-related shortfalls
in production
and yields,
ongoing disruptions
related to
the
COVID-19
global
pandemic
and
the
Russia-Ukraine
war
and
its impact
on
the
export markets
.
Additionally,
basis
levels
for
corn ran
significantly higher
in our area
of operations
compared to
our prior
year second
fiscal quarter,
adding to
our expense.
24
For
fiscal
2023,
we
expect
continued
corn
and
soybean
upward
pricing
pressures
and
further
market
volatility
to
affect
feed
costs.
Processing, packaging, and warehouse
Second Quarter – Fiscal 2023
vs. Fiscal 2022
-
Cost of packaging
materials increased 38.3
%
compared to the
second quarter of
fiscal 2022
due to rising
inflation and
labor costs.
-
Labor costs increased 49.2%
due to wage increases and increased use of contract labor in response to labor shortages
.
-
Dozens
processed
increased
5.4%
compared
to
the
second
quarter
of
fiscal
2022,
which
resulted
in
a
$4.0
million
increase in costs.
Twenty-six weeks –
Fiscal 2023 vs. Fiscal 2022
-
Cost
of
packaging
materials
increased
26.7%
compared
to
the
twenty-six
weeks
ended
November
27,
2021
due
to
rising inflation and labor costs.
-
Labor costs
increased 30.3%
due to
wage increases
in response
to labor
shortages, primarily
due to
the pandemic
and
its effects.
-
Dozens processed
increased 7.0%
compared
to the
twenty-six weeks
ended November
27, 2021,
which resulted
in a
$9.9 million increase in costs.
Egg purchases and other (including change in inventory)
Second Quarter – Fiscal 2023
vs. Fiscal 2022
-
Costs in this
category increased
primarily due to
higher egg prices
as well as
an increase in
the volume of
outside egg
purchases, causing the percentage of produced to sold to decrease to 92.0% from
95.3%.
Twenty-six weeks –
Fiscal 2023 vs. Fiscal 2022
-
Costs in this
category increased
primarily due to
higher egg prices
as well as
an increase in
the volume of
outside egg
purchases, as our percentage of produced to sold decreased to 92.8% from 94.1%.
GROSS PROFIT
Gross profit
for the
second quarter
of fiscal
2023 was
$317.8 million
compared to
$43.7 million
for the
same period
of fiscal
2022.
The increase
of $274.1
million was
primarily due
to higher
egg prices
as well
as the
increased volume
of specialty
eggs
sold, partially offset by the increased cost of feed ingredients and
processing, packaging and warehouse costs.
Gross profit
for the
twenty-six weeks
ended November
26, 2022
was $535.3
million compared
to $50.4
million for
the same
period of fiscal
2022. The increase
of $484.9 million
was primarily due
to higher egg
prices as well as
the increased volume
of
specialty eggs sold, partially offset by the increased cost of feed ingredients
and processing, packaging and warehouse costs.25
SELLING, GENERAL, AND ADMINISTRATIVE
 
EXPENSES
Selling,
 
general,
 
and
 
administrative
 
expenses("SGA")
 
("SGA")expenses
 
include
 
costs
 
of
 
marketing,
 
distribution,
 
accounting
 
and
 
corporate
overhead. The following table presents an analysis of our SGA expenses (in thousands):
Thirteen Weeks
 
Ended
NovemberFebruary 25, 2023
February 26, 2022
November 27, 2021
$ Change
% Change
Specialty egg expense
$
14,67315,689
$
14,26217,318
$
411(1,629)
2.9(9.4)
%
Delivery expense
18,17519,453
14,39516,440
3,7803,013
26.318.3
%
Payroll, taxes and benefits
13,82714,325
11,30311,398
2,5242,927
22.325.7
%
Stock compensation expense
9871,059
9751,007
1252
1.25.2
%
Other expenses
10,2907,963
6,8456,523
3,4451,440
50.322.1
%
Total
$
57,95258,489
$
47,78052,686
$
10,1725,803
21.311.0
%
25
SecondThird Quarter – Fiscal 2023
 
vs. Fiscal 2022
Specialty egg expense
-
Specialty
egg
 
expense which includes
 
franchise fees, advertisingdecreased
 
and promotionprimarily
 
costs, generally
aligns with specialty
egg volumes,
which were
up 24.1% for
the second
quarter of
fiscal 2023
compared to
the same
period of fiscal
2022.
However, our
specialty egg expense
only increased by
2.9%, primarily due
 
to increased sales
 
to other Eggland’sa
 
Best,
Inc. (“EB”) franchisees, includingsignificant
 
unconsolidated affiliates, Specialtyreduction
 
Eggs, LLC and Southwest Specialtyin
 
Eggs, LLC.
These franchisees were
responsible for the
franchise fees, advertising
 
and promotion costs associatedcosts.
 
with those sales,
which resulted in reduced costs for us.The
 
higher
prices
for
conventional eggs and the comparatively lower prices for specialty
eggs diminished the need to promote specialty eggs
in the third quarter of fiscal 2023.
Delivery expense
-
The
increased
delivery
expense
is
primarily
due
to
an
increase
in
contract
trucking
expenses
of
approximately
$2.0
million in the third quarter of fiscal 2023 compared to the increase in contract trucking.third quarter of fiscal 2022.
Payroll, taxes and benefits expense
-
The
 
increase
 
in payroll,
 
taxes and
 
benefits
 
expense
 
is due
 
to
 
an
 
increase
 
in
 
the accrual
 
for
 
anticipated
 
performance-
based bonuses.
Other expense
-
The increase in other
expense is primarily due to inflationary pressure increasing
 
to increased legal expenses
of approximately $2.6 million
in the secondcosts.
quarter of fiscal 2023 compared to the second quarter of fiscal 2022.
Twenty-sixThirty-nine Weeks
Ended
NovemberFebruary 25, 2023
February 26, 2022
November 27, 2021
$ Change
% Change
Specialty egg expense
$
27,74043,429
$
27,97745,295
$
(237)(1,866)
(0.8)(4.1)
%
Delivery expense
38,09157,544
28,33144,771
9,76012,773
34.428.5
%
Payroll, taxes and benefits
24,81439,139
21,24232,640
3,5726,499
16.819.9
%
Stock compensation expense
2,0123,071
1,9762,983
3688
1.83.0
%
Other expenses
18,90226,865
14,77921,302
4,1235,563
27.926.1
%
Total
$
111,559170,048
$
94,305146,991
$
17,25423,057
18.315.7
%
Twenty-sixThirty-nine weeks –
Fiscal 20222023 vs. Fiscal 20212022
Specialty egg expense
-
Specialty egg
 
expense, which includes
 
franchise fees, advertising
 
and promotion
 
costs, generally
 
aligns with specialty
egg
 
volumes,
 
which
 
were
 
up
 
29.4%21.6%
 
for
 
fiscal
 
2023
 
compared
 
to
 
fiscal
 
2022.
 
However,
 
our
 
specialty
 
egg
 
expense
decreased
by
 
0.8%4.1%,
primarily
 
due
to
 
a significant
reduction in
advertising expense
as well
as increased
 
sales
to
 
other
Eggland’s
 
Best,
 
Inc.
 
(“EB”)
 
franchisees,
 
including
unconsolidated
unconsolidated
affiliates,
Specialty
 
Eggs,
LLC
and
Southwest
Specialty
 
Eggs,
LLC.
Additionally,
 
the
higher
prices
for
conventional
 
eggs
 
and
 
the
 
comparatively
 
lower
 
prices
 
for
specialty
eggs
diminished
the
 
need to promote specialty
 
to
promote
specialty
eggs;
as
a
result,
EB
temporarily
 
reduced
the
related
franchise
fees
for
certain
specialty
egg
products
to
encourage
fees for certain specialty egg products to encourage continued production of
these products.
 
26
Delivery expense
-
The increased
 
delivery expense
 
is primarily
 
due to
 
thean increase
 
in fuel
 
and labor
 
costs for
 
both our
 
fleet and
 
contract
trucking.
Compared
to
fiscal
2022,
contract
trucking
and
labor
expenses
increased
approximately
$9.2
million
for
fiscal 2023.
Payroll, taxes and benefits expense
-
The
 
increase
 
in
 
payroll,
 
taxes
 
and
 
benefits
 
expense
 
is
 
primarily
 
due
 
to
 
an
 
increase
 
in
 
the
 
accrual
 
for
 
anticipated
performance-based bonuses and increased wages for all employees
 
due to the inflationary market.
Other expenses
-
The increase in other expense is primarily due to increased
 
legal expenses of approximately $3.5$3.6 million.
OPERATING
 
INCOME (LOSS)
For
the
 
second
third quarter
 
of
fiscal
 
2023,
we
 
recorded
operating
 
income
of
 
$259.9
407.8 million
 
compared
to
 
operating$39.6 million
 
lossfor the
 
of
$2.1same
million for the same period of fiscal 2022.
26
For
the
twenty-six thirty-nine
 
weeks ended February
 
ended
November
26,
2022,
25, 2023, we
 
recorded
an
operating
 
income
of
$423.7 $831.5
 
million
compared
 
to
an operating
operating loss of $41.7$2.2 million for the same period of fiscal 2022.
OTHER INCOME (EXPENSE)
 
Total
 
other
 
income
 
(expense)
 
consists
 
of
 
items
 
not
 
directly
 
charged
 
or
 
related
 
to
 
operations,
 
such
 
as
 
interest
 
income
 
and
expense, royalty income, equity income or loss of unconsolidated
 
entities, and patronage income, among other items.
For the second
third quarter
of fiscal 2023,
 
we earned $2.1 million of interest income compared to $207 thousand
for the same period
of fiscal 2022.
The increase resulted
from significantly
higher investment balances.
The Company recorded
interest expense of
$143 thousand and $78 thousand for the second quarters ended November
26, 2022 and November 27, 2021, respectively.
For the
twenty-six weeks
ended November
26, 2022,2023,
 
we earned
 
$3.16.3 million
 
of interest
 
income compared
 
to $497$205
 
millionthousand for
the
 
the same
 
period
of
 
fiscal
 
2022.
 
The
 
increase
 
resulted
 
from
 
significantly
 
higher
 
investment
 
balances.balances
 
and
higher
interest
rates.
The
Company
recorded interest expense of
$143 thousand and
$126 thousand for the
third quarters ended February
25, 2023 and February
26,
2022,
respectively.
For the
thirty-nine weeks
ended February
25, 2023,
we earned
$9.4 million
of interest
income compared
to $702
thousand for
the
same
period of
fiscal
2022.
The
increase
resulted
from significantly
higher
investment
balances
and higher
interest rates.
The
 
Company
 
recorded
interest
interest
expense
 
of $291
$433
 
thousand
and
 
$136 262
thousand
 
for
the
thirty-nine
weeks
ended
February
25,
2023 and February 26, 2022, respectively.
Other, net for the
 
twenty-six weeksthird quarter ended February 25, 2023
 
ended Novemberwas an expense of $1.5 million
 
26, 2022compared to income of $1.1 million
 
and Novemberfor
the
 
27,same
period
of
fiscal
2022.
The
majority
of
the
decrease
is
due
to
a
$2
million
impairment
of
an
investment
in
an
2021, respectively.unconsolidated entity in the third quarter of fiscal 2023.
Other,
 
net for
 
the secondthirty-nine
 
quarterweeks ended
 
November 26,February
 
2022, was25, 2023
 
incomewas an
expense
 
of $1.1$205
 
million thousand
compared
 
to income
 
of $1.9
million$8.2
million for the same
period of fiscal 2022.
Other, net for
the twenty-six weeks ended November
26, 2022, was income of $1.3
million compared to income of $7.0
million
for the
same period The majority
 
of fiscal
2022. The
majority of
the decrease
is due
 
to our
acquisition in
fiscal 2022
 
of the
remaining 50%
50% membership
 
interest
in
 
Red
River
 
Valley
 
Egg
Farm,
 
LLC
(“ (“Red
 
River”)
as
 
we
recognized
 
a
$4.5 $4.5
 
million
gain
 
due
to
 
the
remeasurement
 
of
 
our
 
equity
 
investment,
 
along
 
with
 
the
 
$1.4
 
million
 
payment
 
received
 
in
 
fiscal
 
2022
 
related
 
to
 
review
 
and
adjustment
of
our
various
marketing
agreements.
Additionally,
the
Company
recorded
a
$2
million
impairment
of
an
investment in an unconsolidated entity in the third quarter of our various marketing agreements.fiscal 2023.
INCOME TAXES
For the third
 
second quarter
of fiscal
 
2023,
pre-tax income
 
was $262.2
$424.9 million
 
compared to $53.0
 
$468 thousand
million for the
 
same period of
 
offiscal
fiscal 2022.
We
 
recorded income tax expense of $102.1
million for the third quarter of fiscal
2023, which reflects an effective
 
tax expenserate
of 24.0%.
 
of $64Income tax
expense was $13.6
 
million for
 
the secondcomparable
 
quarterperiod of fiscal
 
fiscal 2023,2022, which
 
which reflects
an effective
tax
rate
of
24.4%.
We
recorded
an
income
 
tax
benefit
of
$677
thousand
in
the
prior
year
period
which
includes
a
$520 rate
thousand
discrete
tax
benefit
related
to
the
Internal
Revenue
Service
(IRS)
adjustments
associated
with
the
Company’s
previously recognized research and development tax benefits.of 25.6%.
 
For the
twenty-six thirty-nine
 
weeks ended February
 
November 26,25, 2023, pre-tax income
 
2022, pre-tax
income was
$427.7 $852.6 million
 
compared to $19.7 million
 
a pre-tax
loss of
$33.4
million for
the same
period of
 
fiscal 2022.
 
We
 
recorded income
 
tax expense
 
of $104.3$206.4
 
million, which
 
reflects an
 
effective
tax
rate
 
of
24.4% 24.2%.
 
We
recorded an
income
tax benefit
of $16.5
$2.9 million
 
in
the prior
year
period,
which
includes
the discrete
tax
benefit of $8.3
million in connection
with the Red
River acquisition.
Excluding the discrete
 
tax benefit of $8.3 million in
connection with the Red River
acquisition.
Excluding the discrete tax benefit, income
 
tax benefitexpense for
the comparable period
of
fiscal 2022 was $8.2$5.3 million with an adjusted effective tax
 
effective tax rate of 24.6%27.3%.
27
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 INCOME ATTRIBUTABLE
 
TO CAL-MAINE FOODS, INC.
Net income
attributable to
Cal-Maine Foods,
Inc. for
the third
quarter ended
February 25,
2023,
was $323.2
million, or
$6.64
per basic
and $6.62
per diluted
common share,
compared to
net income
attributable to
Cal-Maine Foods,
Inc. of
$39.5 million
or $0.81 per basic and diluted common share for the same period of fiscal
2022.
Net
 
income
 
attributable
 
to
 
Cal-Maine
 
Foods,
 
Inc.
 
for
 
the thirty-nine
 
second
quarterweeks
 
ended February
 
November25,
 
26,
2022,2023,
 
was
$198.6 $647.1
 
million,
 
or
$4.0813.31 per basic and $13.25 per diluted share, compared
 
perto net income attributable to Cal-Maine Foods, Inc.
 
of $22.6 million or
$0.46 per basic and diluted share for the same period of fiscal 2022.
LIQUIDITY AND CAPITAL
RESOURCES
Working
Capital and Current Ratio
Our working capital
at February 25,
2023 was $880.3 million,
compared to $476.8
million at May 28,
2022. The calculation
of
working
capital
is defined
as current
assets less
current
liabilities. Our
current
ratio
was 3.8
at February
25, 2023,
compared
with 3.6 at May 28, 2022. The current ratio is calculated by dividing
current assets by current liabilities.
Cash Flows from Operating Activities
For the
thirty-nine weeks
ended February
25, 2023,
$706.5 million
in net
cash was
provided by
operating activities,
compared
to
$20.8
million
provided
by
operating
activities
for
the
comparable
period
in
fiscal
2022.
The
increase
in
cash
flow
from
operating
activities
resulted
primarily
from
higher
selling
prices
for
conventional
 
and
 
$4.07specialty
 
pereggs
 
dilutedas
 
commonwell
 
share,as
increased
volume of
specialty egg
sales, partially
offset by
increased costs of
feed ingredients
and processing,
packaging and
warehouse
costs compared to the prior-year period.
Cash Flows from Investing Activities
We
continue
to invest
in our
facilities,
with
$86.2
million used
to purchase
property,
plant and
equipment
for
the
thirty-nine
weeks
ended
February
25,
2023,
 
compared
 
to
 
net$49.2
 
incomemillion
 
attributablein
the
same
period
of
fiscal
2022.
Purchases
of
investment
securities
were
$442.6
million
in
the
third
quarter
of
fiscal
2023,
compared
 
to
 
Cal-Maine$47.1
 
Foods,million
 
Inc.in
 
fiscal
2022.
The
increase
in
purchases of
 
$1.2
million or $0.02 per basic and diluted common share for the same period ofinvestment securities
 
fiscal 2022.
Net incomeis primarily
 
attributabledue to
Cal-Maine Foods,
Inc. for
 
the twenty-sixutilization
 
of increased
liquidity resulting
from increased
cash flows
provided by operating activities noted above.
During the thirty-nine weeks ended
November February 26,
 
2022, was
$323.9 million,
orwe acquired the remaining
$6.66 per50% membership interest in Red River for $48.5 million.
Cash Flows from Financing Activities
basic and
$6.63 per
diluted share,
compared to
net lossWe paid dividends
 
of $16.9$144.6 million for the thirty-nine weeks ended February 25, 2023.
As of February 25, 2023, cash increased $162.5 million since May 28,
 
2022, compared to a decrease of $41.8 million or
$0.34 per
basic and
diluted share
forduring the
same period of fiscal 2022.
Credit Facility
We
had no long-term
debt outstanding at
February 25, 2023
or May 28,
2022. On November
15, 2021, we
entered into a credit
agreement
that
provides
for
a
senior
secured
revolving
credit facility
(the
“Credit
Facility”),
in
an
initial
aggregate
principal
amount
of
up
to
$250
million
with
a
five-year
term.
As
of
February
25,
2023,
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. Refer
to Part II Item
8, Notes to
the Financial Statements,
Note 10 –
Credit Facility included
in our 2022
Annual Report for further information regarding our long-term debt.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
LIQUIDITY AND CAPITAL
RESOURCES
Working
Capital and Current Ratio
Our working
capital at
November 26,
2022 was $667.5
million, compared
to $476.8
million at
May 28
2022. The
calculation
of working capital is defined as current assets less current
liabilities. Our current ratio was 3.2 at November
26, 2022, compared
with 3.6 at May 28, 2022. The current ratio is calculated by dividing
current assets by current liabilities.
Cash Flows from Operating Activities
For the twenty-six weeks
ended November 26, 2022,
$344.8 million in net cash
was provided by operating
activities, compared
to $15.5 million
used by operating activities
for the comparable
period in fiscal 2022.
The increase in cash
flow from operating
activities
resulted
primarily
from
higher
selling
prices
for
conventional
and
specialty
eggs
as
well
as
increased
volume
of
specialty
egg
sales,
partially
offset
by
increased
costs
of
feed
ingredients
and
processing,
packaging
and
warehouse
costs
compared to the prior-year period..
Cash Flows from Investing Activities
We
continue
to invest
in our
facilities,
with
$59.7
million used
to purchase
property,
plant
and
equipment
for
the
twenty-six
weeks ended November
26, 2022, compared
to $28.6 million in
the same period of
fiscal 2022.
Purchases of investments were
$152.4
million
in
the
second
quarter
of
fiscal
2023,
compared
to
$26.4
million
in
fiscal
2022.
The
increase
in
purchases
of
investments is primarily due to the increased cash provided by operating
activities noted above.
Cash Flows from Financing Activities
We
paid dividends of
$78.4 million for the
twenty-six weeks ended
November 26, 2022 compared
to no dividends for
the prior
year period.
As of
November 26,
2022, cash
increased $119.6
million since
May 28,
2022, compared
to a decrease
of $41.9
million during
the same period of fiscal 2022.
Credit Facility
We
had
no
long-term
debt
outstanding
at
November
26,
2022
or
May
28,
2022.
On
November
15,
2021,
we
entered
into
a
credit
agreement
that
provides
for
a
senior
secured
revolving
credit
facility
(the
“Credit
Facility”),
in
an
initial
aggregate
principal amount
of up to
$250 million with
a five-year
term. As of
November 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. Refer
to Part
II Item
8, Notes
to the
Financial Statements,
Note 10
– Credit
Facility included
in
our 2022 Annual Report for further information regarding our long-term
debt.
Material Cash Requirements
We
 
continue
 
to
 
monitor
 
the
 
increasing
 
demand
 
for
 
cage-free
 
eggs
 
and
 
to
 
engage
 
with
 
our
 
customers
 
in
 
efforts
 
to
 
achieve
 
a
smooth transition
 
toward their
 
announced timelines
 
for cage-free
 
egg sales.
 
The following
 
table presents
 
material construction
projects approved as of November 26, 2022February 25, 2023 (in thousands):
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of NovemberFebruary
26, 202225, 2023
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses/Processing
Facility
Fiscal 2023
$
131,932
117,056
14,876
Cage-Free Layer & Pullet Houses
Fiscal 2023
24,640
23,325
1,315
Cage-Free Layer & Pullet Houses
Fiscal 2024
42,591
2,0574,830
40,53437,761
Cage-Free Layer & Pullet Houses
Fiscal 2025
95,80640,099
22,52626,350
73,28013,749
Cage-Free Layer & Pullet Houses
Fiscal 2026
38,883
15,894
22,989
Cage-Free Layer & Pullet Houses
Fiscal 2027
56,923
13,617
43,306
$
294,969178,496
$
164,96460,691
$
130,005117,805
We believe our
 
current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient
 
to fund our
current cash needs for at least the next 12 months.
 
28
IMPACT OF
 
RECENTLY
 
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
 
information
 
on
 
changes
 
in
 
accounting
 
principles
 
and
 
new
 
accounting
 
policies,
 
see
 
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly
 
Report.
CRITICAL ACCOUNTING ESTIMATES
 
Critical accounting
 
estimates
 
are those
 
estimates
 
made
 
in accordance
 
with U.S.
 
generally
 
accepted
 
accounting
 
principles that
involve
 
a
 
significant
 
level
 
of
 
estimation
 
uncertainty
 
and
 
have
 
had
 
or
 
are
 
reasonably
 
likely
 
to
 
have
 
a
 
material
 
impact
 
on
 
our
financial
 
condition
 
or results
 
of operations.
 
There
 
have been
 
no changes
 
to our
 
critical accounting
 
estimates identified
 
in our
2022 Annual Report.
ITEM 3. QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the
 
twenty-sixthirty-nine weeks ended November 26, 2022February 25, 2023 from
from the information provided in Part II Item 7A Quantitative and Qualitative Disclosures About
 
Disclosures About Market Risk in our 2022 Annual
Annual Report.
ITEM 4.
 
CONTROLS
AND
PROCEDURES
 
Disclosure Controls and Procedures
Our disclosure
 
controls and
 
procedures are
 
designed to
 
provide reasonable
 
assurance that
 
information required
 
to be
 
disclosed
by us in the reports
 
we file or submit
 
under the Exchange Act
 
is recorded, processed, summarized
 
and reported, within the
 
time
periods
 
specified
 
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 the
 
Exchange Act is accumulated
 
and communicated to
 
management, including our
 
principal executive
and
 
principal
 
financial
 
officers,
 
or
 
persons
 
performing
 
similar
 
functions,
 
as
 
appropriate
 
to
 
allow
 
timely
 
decisions
 
regarding
required disclosure. Based on an evaluation of our disclosure
 
controls and procedures conducted by our Chief Executive Officer
and
 
Chief
 
Financial
 
Officer,
 
together
 
with
 
other
 
financial
 
officers,
 
such
 
officers
 
concluded
 
that
 
our
 
disclosure
 
controls
 
and
procedures were effective as of November 26, 2022February 25, 2023 at the reasonable
 
assurance level.
Changes in Internal Control Over Financial Reporting
There was
no change
 
in our
internal control
 
over financial reporting
 
reporting that
occurred during the
 
the quarter ended November
 
26, 2022ended February
25, 2023
that has materially affected, or is reasonably likely to materially affect,
 
our internal control over financial reporting.
 
 
 
 
 
 
 
 
 
 
 
 
 
29
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
 
2022
 
Annual
Report,
 
Part
 
I
 
Item
 
3
 
Legal
 
Proceedings,
 
and
 
Part
 
II
 
Item 8,
 
Notes
 
to
 
Consolidated
 
Financial
 
Statements
 
and
 
Supplementary
Data, Note
 
18: Commitments
 
and Contingencies,
 
and (ii)
 
in this Quarterly
 
Report in
of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated
 
incorporated herein by reference.
ITEM 1A.
 
RISK
FACTORS
 
There have been no material changes in the risk factors previously disclosed in the
 
Company’s 2022 Annual
 
Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
 
PROCEEDS
 
There wereThe following table is a summary of our third quarter 2023 share repurchases:
Issuer Purchases of Equity Securities
Total
 
no purchasesNumber of
Maximum Number
Shares Purchased
of Shares that
Total
 
Number
Average
as Part of ourPublicly
May Yet
 
Common StockBe
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
11/27/22 to 12/24/22
—
$
—
—
—
12/25/22 to 01/21/23
(29,344)
54.10
—
—
01/22/23 to 02/25/23
—
—
—
—
(29,344)
$
54.10
—
—
(1)
 
made byAs permitted under our Amended and Restated 2012
 
or onOmnibus Long-Term Incentive Plan, these shares were withheld by us to satisfy
 
behalf oftax withholding
 
our Company
 
or anyobligations for employees in connection with the vesting of restricted
 
affiliated
common stock.
purchaser during
the
second quarter of fiscal 2023.
ITEM 6. EXHIBITS
 
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy
 
Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy
 
Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy
 
Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy
 
Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy
 
Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained
 
in Exhibit 101)
 
*
Filed herewith as an Exhibit.
 
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
 
 
30
SIGNATURES
 
Pursuant to
 
the requirements
 
of the Securities
 
Securities Exchange Act
 
Act of 1934,
 
the registrant has
 
duly caused
 
this report
 
to be signed
 
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
 
DecemberMarch 28, 20222023
/s/ Max P.
 
Bowman
Max P.
 
Bowman
Vice President, Chief Financial
 
Officer
(Principal Financial Officer)
໿
Date:
 
DecemberMarch 28, 20222023
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
໿