Cal-Maine Foods - 10-Q quarterly report FY2023 Q3

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Index

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

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

February 25, 2023

☐

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

check

mark

whether

the

registrant:

(1)

has

filed

all

reports

required

filed

Section

15(d)

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

☑

☐

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

☑

☐

Indicate by

check mark

whether the registrant

is a large

accelerated filer,

an accelerated

filer, a

non-accelerated filer,

a smaller

reporting

company,

emerging

growth

company.

See

the

definitions

“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

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

use

the

extended

transition

period

for

complying

with

any

new

revised

financial

accounting

standards

provided

pursuant

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

☐

☑

There were

44,185,774

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 March 28, 2023.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets -

February 25, 2023 and May 28, 2022

Condensed Consolidated Statements of Income -

Thirteen and Thirty-nine Weeks Ended February 25, 2023 and February 26, 2022

Condensed Consolidated Statements of Comprehensive Income -

Thirteen and Thirty-nine Weeks Ended February 25, 2023 and February 26, 2022

Condensed Consolidated Statements of Cash Flows -

Thirty-nine Weeks Ended February 25, 2023 and February 26, 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part

II.

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Index

PART

FINANCIAL

INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except for par value amounts)

(Unaudited)

February 25, 2023

May 28, 2022

Assets

Current assets:

Cash and cash equivalents

221,614

59,084

Investment securities available-for-sale

423,418

115,429

Trade and other receivables, net

206,920

177,257

Income tax receivable

42,947

42,147

Inventories

290,869

263,316

Prepaid expenses and other current assets

7,599

4,286

Total current

assets

1,193,367

661,519

Property, plant &

equipment, net

712,512

677,796

Investments in unconsolidated entities

16,146

15,530

Goodwill

44,006

Intangible assets, net

16,484

18,131

Other long-term assets

9,968

10,507

Total Assets

1,992,483

1,427,489

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

138,617

122,331

Accrued income taxes payable

66,723

25,687

Dividends payable

107,720

36,656

Total current

liabilities

313,060

184,674

Other noncurrent liabilities

9,715

10,274

Deferred income taxes, net

134,820

128,196

Total liabilities

457,595

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

703

Class A convertible common stock - authorized and issued

4,800

Paid-in capital

70,977

67,989

Retained earnings

1,497,325

1,065,854

Accumulated other comprehensive loss, net of tax

(3,067)

(1,596)

Common stock in treasury at cost –

26,075

shares at February 25, 2023 and

26,121

shares at May 28, 2022

(29,996)

(28,447)

Total Cal-Maine Foods,

Inc. stockholders’ equity

1,535,990

1,104,551

Noncontrolling interest in consolidated entity

(1,102)

(206)

Total stockholders’

equity

1,534,888

1,104,345

Total Liabilities and Stockholders’

Equity

1,992,483

1,427,489

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Net sales

997,493

477,485

2,457,537

1,184,195

Cost of sales

534,467

385,903

1,459,172

1,042,221

Gross profit

463,026

91,582

998,365

141,974

Selling, general and administrative

58,489

52,686

170,048

146,991

Gain on insurance recoveries

(3,220)

(1,095)

(3,220)

(3,225)

(Gain) loss on disposal of fixed assets

(26)

421

370

Operating income (loss)

407,783

39,570

831,501

(2,162)

Other income (expense):

Interest income, net

6,126

8,959

440

Royalty income

426

326

1,198

877

Patronage dividends

10,239

10,120

10,239

10,120

Equity income of unconsolidated

entities

1,786

1,809

943

2,208

Other, net

(1,473)

1,144

(205)

8,169

Total other income, net

17,104

13,478

21,134

21,814

Income before income taxes

424,887

53,048

852,635

19,652

Income tax expense (benefit)

102,118

13,594

206,438

(2,921)

Net income

322,769

39,454

646,197

22,573

Less: Loss attributable to noncontrolling

interest

(450)

(63)

(896)

(91)

Net income attributable to Cal-Maine

Foods, Inc.

323,219

39,517

647,093

22,664

Net income per common share:

Basic

6.64

0.81

13.31

0.46

Diluted

6.62

0.81

13.25

0.46

Weighted average

shares outstanding:

Basic

48,653

48,886

48,634

48,888

Diluted

48,842

49,036

48,832

49,035

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of

Comprehensive Income

(In thousands)

(Unaudited)

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Net income

322,769

39,454

646,197

22,573

Other comprehensive income (loss), before

tax:

Unrealized holding gain (loss) on available-

for-sale securities, net of reclassification

adjustments

(551)

(1,945)

(1,130)

Income tax benefit (expense) related to

items of other comprehensive income

(6)

134

474

275

Other comprehensive income (loss), net of tax

(417)

(1,471)

(855)

Comprehensive income

322,789

39,037

644,726

21,718

Less: Comprehensive loss attributable to the

noncontrolling interest

(450)

(63)

(896)

(91)

Comprehensive income attributable to Cal-

Maine Foods, Inc.

323,239

39,100

645,622

21,809

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

Cash flows from operating activities:

Net income

646,197

22,573

Depreciation and amortization

53,198

50,996

Deferred income taxes

7,098

(3,861)

Gain on insurance recoveries

(3,220)

(3,225)

Net proceeds from insurance settlement - business interruption

3,220

—

Other adjustments, net

(45,659)

Net cash provided by operations

706,509

20,824

Cash flows from investing activities:

Purchases of investment securities

(442,583)

(47,135)

Sales and maturities of investment securities

132,686

76,377

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

(86,168)

(49,170)

Net proceeds from insurance settlement - property,

plant and equipment

—

5,380

Net proceeds from disposal of property,

plant and equipment

118

661

Net cash used in investing activities

(397,620)

(61,310)

Cash flows from financing activities:

Payments of dividends

(144,559)

—

Purchase of common stock by treasury

(1,633)

(1,120)

Principal payments on finance lease

(167)

(160)

Contributions

—

Net cash used in financing activities

(146,359)

(1,277)

Net change in cash and cash equivalents

162,530

(41,763)

Cash and cash equivalents at beginning of period

59,084

57,352

Cash and cash equivalents at end of period

221,614

15,589

See Notes to Condensed Consolidated Financial Statements.

Index

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

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

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,

the

opinion

management,

necessary

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 February 25, 2023 and February 26, 2022 included

13 weeks

and

39 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

determinable

fair

market

value,

and

there

are

restrictions

the

Company’s

ability

sell

within

the

months,

available-for-sale.

classify

these

securities

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

other

comprehensive

income

until

realized.

The

total

other

comprehensive

income

for

the

period

presented

component

stockholders’

equity

separately

from

retained

earnings

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

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

available-for-sale

securities

determined by

the specific

identification method.

Gains and

losses are

recognized in

other income

(expenses) as

Other,

net in

the Company’s

Condensed Consolidated Statements

of Income.

Investments in mutual

funds are classified

as “Other long-term

assets” in the Company’s Condensed

Consolidated Balance Sheets.

Trade Receivables

Trade receivables are stated at their carrying

values, which include a reserve for credit losses. As of February

25, 2023 and May

28,

2022,

reserves

for

credit

losses

were

709

thousand

and

775

thousand,

respectively.

The

Company

extends

credit

customers based on

an evaluation of

each customer's financial

condition and credit

history.

Collateral is generally

not required.

The

Company

minimizes

exposure

counter

party

credit

risk

through

credit

analysis

and

approvals,

credit

limits,

and

monitoring

procedures.

determining

our

reserve

for

credit

losses,

receivables

are

assigned

expected

loss

based

historical loss information adjusted as needed for economic and

other forward-looking factors.

Dividends Payable

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

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

the

fiscal

2022

financial

statements

conform

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

—

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

—

10,104

Commercial paper

14,940

—

14,868

Corporate bonds

74,167

—

483

73,684

Certificates of deposits

1,263

—

1,245

US government and agency obligations

2,205

—

2,209

Asset backed securities

13,456

—

137

13,319

Total current

investment securities

116,167

742

115,429

Mutual funds

3,826

—

3,752

Total noncurrent

investment securities

3,826

—

3,752

Available-for-sale

Proceeds from sales

and maturities of investment

securities available-for-sale

were $

132.7

million and $

76.4

million during the

thirty-nine weeks

ended February 25,

2023 and

February 26,

2022, respectively.

Gross realized

gains for

the thirty-nine

weeks

ended February

25, 2023

and February

26, 2022

were $

thousand and

181

thousand, respectively.

Gross realized

losses for

the thirty-nine weeks ended February 25, 2023 and

February 26, 2022 were $

thousand and $

thousand, respectively.

There

were

allowances for credit losses at February 25, 2023 and May 28, 2022.

Index

Actual maturities

may differ

from contractual

maturities as some

borrowers have

the right to

call or prepay

obligations with

without penalties. Contractual maturities of current investments at February

25, 2023 are as follows (in thousands):

Estimated Fair Value

Within one year

345,765

1-5 years

77,653

Total

423,418

Noncurrent

Proceeds from sales and maturities of noncurrent investment securities

were $

1.8

million and $

4.9

million during the thirty-nine

weeks

ended

February

25,

2023

and

February

26,

2022,

respectively.

Gross

realized

gains

for

the

thirty-nine

weeks

ended February 25,

2023 and February

26, 2022

were $

thousand and

2.2

million, respectively.

Gross realized

losses for

the

thirty-nine

weeks

ended February

25,

2023

were

thousand.

There

were

realized

losses

for

the

thirty-nine

weeks

ended 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

paid

transfer

the

liability

new

obligor

transaction

between

such

parties,

not

the

amount

that

would

be paid

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.

Index

Assets and Liabilities Measured at Fair

Value

on a Recurring Basis

accordance

with

the

fair

value

hierarchy

described

above,

the

following

table

shows

the

fair

value

financial

assets and

liabilities measured at fair value on a recurring basis as of February 25, 2023 and May 28,

2022 (in thousands):

February 25, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

20,883

—

20,883

Commercial paper

—

95,490

—

95,490

Corporate bonds

—

136,340

—

136,340

US government and agency obligations

—

94,642

—

94,642

Asset backed securities

—

14,905

—

14,905

Treasury bills

—

61,158

—

61,158

Mutual funds

2,026

—

2,026

Total assets measured at fair

value

2,026

423,418

—

425,444

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

consist

securities

with maturities

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 February 25, 2023 and

May 28, 2022 (in thousands):

February 25, 2023

May 28, 2022

Flocks, net of amortization

158,209

144,051

Eggs and egg products

27,925

26,936

Feed and supplies

104,735

92,329

290,869

263,316

grow

and

maintain

flocks

layers

(mature

female

chickens),

pullets

(female

chickens,

under

weeks

age),

and

breeders (male and female

chickens used to produce

fertile eggs to hatch for

egg production flocks). Our

total flock at February

25, 2023

and May

28, 2022

consisted of

approximately

9.9

million and

11.5

million pullets

and breeders

and

43.3

million and

42.2

million layers, respectively.

Index

Note 5 - Equity

The following reflects

equity activity for the

thirteen and thirty-nine

weeks ended February 25,

2023 and February 26,

2022 (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

Capital

Comp. Loss

Earnings

Interest

Total

Balance at November

26, 2022

703

(28,496)

70,005

(3,087)

1,281,784

(652)

1,320,305

Other comprehensive

income, net of tax

—

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

(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

Capital

Comp. Loss

Earnings

Interest

Total

Balance at November

27, 2021

703

(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

(28,439)

66,909

(1,413)

992,523

(88)

1,030,243

Index

Thirty-nine Weeks Ended

February 25, 2023

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrolling

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at May 28,

2022

703

(28,447)

67,989

(1,596)

1,065,854

(206)

1,104,345

Other comprehensive

loss, net of tax

—

(1,471)

—

(1,471)

Stock compensation

plan transactions

—

(1,549)

2,988

—

1,439

Dividends ($

5.756

per share)

Common

—

(194,478)

—

(194,478)

Class A common

—

(21,144)

—

(21,144)

Net income (loss)

—

647,093

(896)

646,197

Balance at February

25, 2023

703

(29,996)

70,977

(3,067)

1,497,325

(1,102)

1,534,888

Thirty-nine Weeks Ended

February 26, 2022

Cal-Maine Foods, Inc. Stockholders

Common Stock

Class A

Treasury

Paid In

Accum. Other

Retained

Noncontrollin

Amount

Capital

Comp. Loss

Earnings

Interest

Total

Balance at May 29,

2021

703

(27,433)

64,044

(558)

975,977

—

1,012,781

Other comprehensive

loss, net of tax

—

(855)

—

(855)

Stock compensation

plan transactions

—

(1,006)

2,865

—

1,859

Contributions

—

Dividends ($

0.125

per share)

Common

—

(5,518)

—

(5,518)

Class A common

—

(600)

—

(600)

Net income (loss)

—

22,664

(91)

22,573

Balance at February

26, 2022

703

(28,439)

66,909

(1,413)

992,523

(88)

1,030,243

Note 6 - Net Income per Common Share

Basic net income

per share is

based on the

weighted average Common

Stock and Class

A Common Stock

outstanding. Diluted

net

income

per

based

weighted-average

common

outstanding

during

the

relevant

period

adjusted

for

the

dilutive effect of share-based awards.

Index

The

following

table

provides

reconciliation

the

numerators

and

denominators

used

determine

basic

and

diluted

net

income per common share (amounts in thousands, except per share data):

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Numerator

Net income

322,769

39,454

646,197

22,573

Less: Loss attributable to noncontrolling

interest

(450)

(63)

(896)

(91)

Net income attributable to Cal-Maine

Foods, Inc.

323,219

39,517

647,093

22,664

Denominator

Weighted-average

common shares

outstanding, basic

48,653

48,886

48,634

48,888

Effect of dilutive restricted shares

189

150

198

147

Weighted-average

common shares

outstanding, diluted

48,842

49,036

48,832

49,035

Net income per common share attributable to

Cal-Maine Foods, Inc.

Basic

6.64

0.81

13.31

0.46

Diluted

6.62

0.81

13.25

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

production.

The

Company’s

sales

predominantly

contain

single

performance

obligation.

recognize

revenue

upon

satisfaction

the

performance

obligation

with

the

customer

which

typically

occurs

within

days

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

unable

sell

before

expiration.

The

Company

records

allowance

for

returns

and

refunds

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

its

customers

encourage

purchases.

Such

offers

include

current

discount offers

(e.g., percentage

discounts off

current purchases), inducement

offers (e.g.,

offers for

future discounts subject

a minimum

current purchase),

and other

similar offers.

Current discount

offers,

when accepted

by customers,

are treated

as a

reduction

the sales

price

of the

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

‘‘Net sales.’’

Index

Disaggregation of Revenue

The following table provides revenue disaggregated by product category

(in thousands):

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Conventional shell egg sales

689,022

280,633

1,656,528

683,805

Specialty shell egg sales

272,205

182,945

700,803

462,320

Egg products

32,582

12,749

88,274

33,516

Other

3,684

1,158

11,932

4,554

997,493

477,485

2,457,537

1,184,195

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 over

the contract

life as

a reduction

in net

sales. As

of February

25, 2023

and May

28, 2022,

the balance

for

contract assets was immaterial.

Contract Balances

The Company receives payment from customers based on specified terms that

are generally less than 30 days from delivery.

There are rarely contract assets or liabilities related to performance under the

contract.

Note 8 - Stock Based Compensation

Total

stock-based

compensation

expense

was

3.1

and

3.0

million

for

the

thirty-nine

weeks

ended

February

25,

2023

and

February 26, 2022, respectively.

Unrecognized

compensation

expense

as a

result

of non

-vested

restricted

stock outstanding

under

the

Amended

and

Restated

2012

Omnibus

Long-Term

Incentive

Plan

February

25,

2023

8.4

million

will

recorded

over

weighted

average period of

2.3

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 informat

ion on our stock compensation plans.

The Company’s restricted share activity

for the thirty-nine weeks ended February 25, 2023 follows:

Number of

Weighted

Average Grant

Date Fair Value

Outstanding, May 28, 2022

317,844

39.12

Granted

84,969

54.10

Vested

(97,954)

38.25

Forfeited

(8,480)

39.22

Outstanding, February 25, 2023

296,379

43.70

Note 9 - Commitments and Contingencies

Financial Instruments

The

Company

maintained

standby

letters

credit

(“LOCs”)

totaling

4.1

million

February

25,

2023,

which

were

issued

under

the

Company's

senior

secured

revolving

credit

facility.

The

outstanding

LOCs

are

for

the

benefit

certain

insurance

companies and are not recorded as a liability on the consolidated balance

sheets.

Index

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

Texas

Cal-Maine

Foods,

Inc.

d/b/a

Wharton;

and

Wharton

County

Foods,

LLC,

Cause

No.

2020-25427,

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

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

excessive

exorbitant

prices

during

the

COVID-19

state

emergency

and

made

misleading

statements

about

shell

egg

prices.

The

State

sought

temporary

and

permanent

injunctions

against

the

Company

and

WCF

prevent

further

alleged

violations

the

DTPA,

along

with

over

100,000

in damages. On August 13, 2020, the court granted the defendants’ motion to dismiss the

State’s original petition with

prejudice. On September

11, 2020,

the State filed a

notice of appeal,

which was assigned to

the Texas

Court of Appeals

for the

First

District.

August

16,

2022,

the

appeals

court

reversed

and

remanded

the

case

back

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.

February

2023,

the

State

Texas

filed

their

response

defendant’s

petition

for

review.

February

21,

2023,

the

Company

and

WCF

filed

their

brief

support

defendant’s

petition

for

review.

Appellate briefs are not 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.

April

30, 2020,

the Company

was named

as one

of several

defendants

Bell et

al. v.

Cal-Maine

Foods et

al.,

Case No.

1:20-cv-461,

the

Western

District

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

Texas

sold,

distributed,

produced,

handled

any

the

defendants

during

the

COVID-19

state

emergency.

Plaintiffs seek to enjoin

the Company and other

defendants from selling eggs

at a price more than

10% greater than the

price of

eggs prior

to the

declaration

of the

state of

emergency

and damages

in the

amount

of $

10,000

per violation,

or $

250,000

for

each violation

impacting anyone

over 65

years old.

On December

1, 2020,

the Company

and

certain other

defendants

filed a

motion to

dismiss the

plaintiffs’

amended

class action

complaint. The

plaintiffs

subsequently filed

a motion

to strike,

and the

motion to

dismiss and

related proceedings

were referred

to a

United States

magistrate judge.

On July

14, 2021,

the magistrate

judge

issued

report

and

recommendation

the

court

that

the

defendants’

motion

dismiss

granted

and

the

case

dismissed without prejudice for lack of subject matter jurisdiction. On

September 20, 2021, the court dismissed the case without

prejudice.

July

13,

2022,

the

court

denied

the

plaintiffs’

motion

set

aside

amend

the

judgment

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.

August

12,

2022,

the

Company

and

other

defendants

the

case

filed

motion

dismiss

the

plaintiffs’

class action

complaint. On

January 9,

2023, the

court entered

an 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

United States

Court of

Appeals for

the Fifth

Circuit,

Case

No.

23-50112.

The

parties

are

file

their

respective

appellate

briefs,

but

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

the

United

States

District

Court

for

the

Eastern

District

Pennsylvania,

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.

al.,

Case

No.

1:11-cv-8808,

for

trial.

The

Egg

Products

Plaintiffs

allege

that

the

Company

and

other

defendants

violated

Section

the

Sherman

Act,

15.

U.S.C.

agreeing

limit

the

production

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

Index

producers. The

Egg Products

Plaintiffs seek

to enjoin

the Company

and other

defendants from

engaging in

antitrust violations

and seek treble money damages.

On May 2, 2022,

the court set trial for October

24, 2022, but on September

20, 2022, the court

cancelled the

trial date

due to

COVID-19 protocols

and converted

the trial

date to

a status

hearing to

reschedule the

jury trial.

December

2022,

the

court

held

status

hearing.

The

parties

subsequently

submitted

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

amount

that

did

not

have

material

impact

the

Company’s

financial

condition or results of operations. On November 11,

2019, a stipulation for dismissal was filed with the court,

and on March 28,

2022, the court dismissed the Company with prejudice.

The Company intends to

continue to defend the remaining

case with the Egg Products

Plaintiffs as vigorously as

possible based

defenses

which

the

Company

believes

are

meritorious

and

provable.

Adjustments,

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

still

reasonable

possibility

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

range

factors,

including

the

following,

among

others:

two

earlier

trials

based

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

different

court

than

prior related

cases; there

are significant

factual

issues to

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., Cobb-Vantress,

Inc., Cargill,

Inc., George’s,

Inc., Peterson

Farms, Inc.

and

Simmons

Foods,

Inc.,

and

certain

their

affiliates.

The

State

Oklahoma

claims

that

through

the

disposal

chicken

litter the

defendants polluted

the Illinois

River Watershed.

This watershed

provides water

to eastern

Oklahoma. The

complaint

sought

injunctive

relief

and

monetary

damages,

but

the

claim

for

monetary

damages

was dismissed

the

court.

Cal-Maine

Foods,

Inc.

discontinued

operations

the

watershed

around

2005.

Since

the

litigation

began,

Cal-Maine

Foods,

Inc.

purchased

100

the

membership

interests

Benton

County

Foods,

LLC,

which

ongoing

commercial

shell

egg

operation within

the Illinois

River Watershed.

Benton County

Foods, LLC

is not

a defendant

in the

litigation. We

also have

number of small contract producers that operate in the area.

The non-jury trial in the case began in September 2009

and concluded in February 2010. On January 18, 2023, the court entered

findings of

fact and

conclusions of

law in favor

of the

State of

Oklahoma, but

no penalties

were assessed.

The court

found the

defendants

liable

for

state

law

nuisance,

federal

common

law

nuisance,

and

state

law

trespass.

The

court

also

found

the

producers

vicariously

liable

for

the

actions

their

contract

producers.

The

court

directed

the

parties

confer

attempt

reach

agreement

appropriate

remedies

March

17,

2023.

March

17,

2023,

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, at the

present time, it is not possible

to estimate the amount of

monetary exposure, if any,

to the Company due to

a range of

factors, including the

following, among others:

uncertainties inherent in

any assessment of

potential costs associated

with injunctive relief or

other penalties based on a

decision in a case tried

over 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 uncertainty

regarding what

our proportionate

share of

any remedy

would be, although we believe that our share compared to the other defendants is small.

Other Matters

In addition to

the above, the Company

is involved in

various other claims

and litigation incidental

to its business. Although

the

outcome of

these matters

cannot be

determined with

certainty,

management, upon

the advice

of counsel,

is of

the opinion

that

the final outcome should not have a material effect on the Company’s

consolidated results of operations or financial position.

Index

ITEM

MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

FINANCIAL

CONDITION

AND

RESULTS

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

Part I Item 1

of this Quarterly Report on Form 10-Q (“Quarterly Report”).

This

report

contains

numerous

forward-looking

statements

within

the

meaning

Section

27A

the

Securities

Act

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

our

business

inflation

and

rising

interest

rates,

potential

future

impact

our

business

new

legislation,

rules

policies,

potential

outcomes

legal

proceedings,

and

other

projected

operating

data,

including

anticipated

results

operations

and

financial

condition.

Such

forward-looking

statements

are

identified

the

use

words

such

“believes,”

“intends,”

“expects,” “hopes,” “may,”

“should,” “plans,” “projected,” “contemplates,”

“anticipates,” or similar words.

Actual outcomes or

results

could

differ

materially

from

those

projected

the

forward-looking

statements. The

forward-looking

statements

are

based

management’s

current

intent,

belief,

expectations,

estimates,

and

projections

regarding

the

Company

and

its

industry. These

statements

are

not

guarantees

future

performance

and

involve

risks,

uncertainties,

assumptions,

and

other

factors that are difficult to predict and may

be beyond our control. The factors that could cause actual results

to differ materially

from those

projected in the

forward-looking statements

include, among

others, (i)

the risk factors

set forth in

Part I Item

1A of

the

2022

Annual

Report

(ii)

the

risks

and

hazards

inherent

the

shell

egg

business

(including

disease,

pests,

weather

conditions,

and

potential

for

product

recall),

including

but

not

limited

the

current

outbreak

highly

pathogenic

avian

influenza

(“HPAI”)

affecting

poultry

the

United

States

(“U.S.”),

Canada

and

other

countries

that

was

first

detected

commercial flocks in

the U.S. in February

2022, (iii) changes

in the demand

for and market prices

of shell eggs

and feed costs,

(iv) our

ability to

predict and

meet demand

for cage-free

and other

specialty eggs,

(v) risks,

changes, or

obligations that

could

result from

our future

acquisition of

new flocks

or businesses

and risks

or changes

that may

cause conditions

to completing

pending acquisition not

to be met, (vi) risks

relating to increased costs,

rising inflation and rising

interest rates, which generally

have

been

exacerbated

Russia’s

invasion

Ukraine

starting

February

2022,

(vii)

our

ability

retain

existing

customers,

acquire new

customers and

grow our

product mix,

(viii) adverse

results in

pending litigation

matters and

(ix) risks

relating to

the evolving

COVID-19 pandemic. Readers

are cautioned

not to

place undue

reliance on

forward-looking statements

because,

while we believe

the assumptions on

which the forward-looking

statements are based

are reasonable, there

can be no assurance

that

these

forward-looking

statements will

prove

to be

accurate. Further,

forward-looking statements

included

herein

are only

made as

of the

respective dates

thereof,

or if

no date

is stated,

as of

the date hereof.

Except as

otherwise required

by law,

disclaim

any

intent

obligation

update

publicly

these

forward-looking

statements,

whether

because

new

information,

future events, or otherwise.

GENERAL

Cal-Maine

Foods,

Inc.

(the

“Company,”

“we,”

“us,”

“our”)

primarily

engaged

the

production,

grading,

packaging,

marketing

and

distribution

of fresh

shell

eggs.

Our

operations

are

fully

integrated

under

one

reportable

segment.

are

the

largest

producer

and

distributor

fresh

shell

eggs

the

U.S.

Our

total

flock

approximately

43.3

million

layers

and

9.9

million pullets

and breeders

is the largest

in the U.S.

sell most of

our shell eggs

to a diverse

group of

customers, including

national and regional

grocery store chains,

club stores, companies

servicing independent supermarkets

in the U.S., food

service

distributors,

and egg

product customers

in states

across the

southwestern,

southeastern, mid-western

and mid-Atlantic

regions

of the U.S.

Our

operating

results

are

materially

impacted

market

prices for

eggs

and

feed

grains

(corn

and

soybean

meal),

which

are

highly

volatile,

independent

each

other,

and

out

our

control.

Generally,

higher

market

prices

for

eggs

have

positive

impact

our

financial

results

while

higher

market

prices

for

feed

grains

have

negative

impact

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

formulas

our

costs

production

which

include

the

cost

corn

and

soybean

meal.

not

sell

eggs

directly to consumers or set the prices at which eggs are sold to consumers.

Retail

sales

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

increase

with

the

start

the

school

year

and

tend

highest

prior

holiday

periods,

particularly

Thanksgiving,

Christmas

and

Easter.

Consequently,

and

all

other

things

being

Index

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

August/September

and

May/June,

respectively.

Because

the

seasonal

and

quarterly

fluctuations,

comparisons

our

sales

and

operating

results

between

different

quarters

within

single

fiscal

year

are

not

necessarily meaningful comparisons.

routinely

fill

our

storage

bins

during

harvest

season

when

prices

for

feed

ingredients

are

generally

lower.

ensure

continued

availability of

feed ingredients,

we may

enter into

contracts for

future purchases

of corn

and soybean

meal, and

part

these

contracts,

may

lock-in

the

basis

portion

our

grain

purchases

several

months

advance.

Basis

the

difference

between the

local cash

price for

grain and

the applicable

futures price.

A basis

contract is

a common

transaction in

the grain

market that

allows us

to lock-in

a basis

level for

a specific

delivery period

and wait

to set

the futures

price at

a later

date. Furthermore,

due to

the more

limited supply

for organic

ingredients, we

may commit

to purchase

organic

ingredients in

advance to help ensure supply.

Ordinarily, we do

not enter into long-term contracts beyond a year to purchase

corn and soybean

meal

hedge

against

increases

the

prices

corn

and

soybean

meal.

Corn

and

soybean

meal

are

commodities

and

are

subject

volatile

price

changes

due

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

conventional

and

specialty

eggs,

including

cage-free,

organic

and

other

specialty

offerings,

well

egg

products.

have

also

enhanced

our

efforts

provide

free-range

and

pasture-raised

eggs

that

meet

consumers’

evolving

choice

preferences.

While

small

part

our

current

business,

the

free-range

and

pasture-raised

eggs

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.

are

also

focused

additional

ways

enhance

our

product

mix

and

support

new

opportunities

the

restaurant,

institutional

and

industrial

food

products

arena.

October

2021,

Cal-Maine

Foods

announced

strategic

investment

$18.5

million

debt

and

equity

Meadow

Creek

Foods,

LLC

(“MeadowCreek”),

egg

products

operation

located

Neosho,

Missouri,

focused

on offering

hard-cooked

eggs.

Cal-Maine

Foods

serves

the

preferred

provider

specialty and

conventional

eggs

used

MeadowCreek

manufacture

egg

products.

December

13,

2022,

our

Board

Directors

approved

an additional

$13.8 million

investment to

expand the

Company’s

controlling interest

and fund

additional equipment

and

working

capital

needs

to support

growth

opportunities

for

MeadowCreek.

As demand

for

hard-cooked

eggs

continues to

grow,

the

funds

will

used

for

additional

refrigerated

storage

space

and

expanded

capacity

for

cooking

and

packaging

better serve MeadowCreek’s

customers. MeadowCreek began operations during the third quarter of fiscal 2023.

The

Company

has

joined

the

formation

new

egg

farmer

cooperative

the

western

United

States.

ProEgg,

Inc.

(“ProEgg”)

comprised

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

ProEgg

expected

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

the

cooperative.

Customers

would

have

single

point

contact

for

their

shell

egg

purchases,

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,

will

continue

our

work

confirm

that

our

participation

this

new

cooperative

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 calendar year 2023.

HPAI

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 March

2023.

The

current

HPAI

epidemic

has

surpassed

the

prior

2014-2015

outbreak

terms

its

duration

and

the

number

affected

hens

the

U.S.,

and

HPAI

continues

circulate

throughout

the

wild

bird

population

the

U.S.

and

abroad.

According to

the U.S.

Centers for

Disease Control

and Prevention,

these detections

do not

present an

immediate public

health

concern.

There

have

been

no positive

tests for

HPAI

any

Cal-Maine

Foods’

owned

or contracted

production

facility as

March 28,

2023. The

USDA division

of Animal

and Plant

Health Inspection

Service (“APHIS”)

reported

on March

27, 2023

that

approximately

43.3

million

commercial

layer

hens

and

1.0

million

pullets

have

been

depopulated

due

HPAI

since

February 2022. We

believe the HPAI

outbreak will continue

to exert downward

pressure on the

overall supply of

eggs, and the

Index

duration of those

effects will depend

in part on the

timing of replenishment

of the U.S.

layer hen flock.

Prior to the outbreak

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

Analytics report

dated March

21, 2023,

the layer

hen inventory

is not

projected to

exceed this 328

million mark again until

January of 2024.

Layer hen numbers reported

by the USDA as

of March 1, 2023

were

312.9

million,

which

represents

decrease

3.8%

compared

with

the

layer

hen

inventory

year

ago.

However,

the

USDA

reported

that

the

hatch

from

October

2022

through

February

2023

increased

4.5%

compared

with

the

prior-year

period,

indicating that layer flocks may increase in the 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

regulations

mandating

minimum

space

cage-free

requirements

for

egg

production

mandated

the

sale

only

cage-free

eggs

and

egg

products

their

states,

with

implementation

these

laws

ranging

from

January

2022

January

2026.

These

states

represent

approximately

27%

the

U.S.

total

population

according

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

heard oral arguments

in a case

challenging California’s

law that requires

the sale

of only cage-free eggs in

that state. A decision in that case

is expected in the summer of 2023.

These laws have already affected

and,

upheld,

will

continue

affect

sourcing,

production

and

pricing

eggs

(conventional

well

specialty)

the

national demand for cage-free production

could be greater than the

current supply,

which would increase the prices

of cage-free

eggs,

unless

cage-free

production

capacity

constructed.

Likewise,

the

national

supply

for

eggs

from

conventional

production could exceed consumer demand, which would decrease the

prices

of conventional eggs.

A significant number

of our customers

have previously announced

goals to offer

cage-free eggs exclusively

on or before

2026,

subject in

most cases

to availability

of supply,

affordability and

customer demand,

among other

contingencies. Some

of these

customers have

recently changed

those goals

to offer

70% cage-free

eggs by

the end

of 2030.

Our customers

typically do

not

commit to long-term

purchases of specific quantities

or types of eggs

with us, and as

a result, it is difficult

to accurately predict

customer

requirements

for

cage-free

eggs.

are,

however,

engaging

with

our

customers

effort

achieve

smooth

transition

meeting

their

announced

goals

and

needs.

have

invested

significant

capital

recent

years

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,

understand

the

importance

our

continued

ability

provide

conventional

eggs

order

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

Item

“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 third quarter

of fiscal 2023,

we recorded a gross

profit of $463.0 million

compared to $91.6 million

for the same period

fiscal

2022,

with

the

increase

due

primarily

higher

shell

egg

prices,

partially

offset

the

increased

cost

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

third quarter

of fiscal

2023

was $3.298

compared

to $1.

612

the prior-year

period. Conventional

egg prices

per dozen

were $3.678

compared to

$1.458 for

the prior-year

period, and

specialty egg

prices

per dozen

were $2.616

compared to

$1.923 for

the prior-year

period. Conventional

egg prices

increased in

the third

quarter of

fiscal 2023 primarily due to decreased supply caused by the HPAI

outbreak combined with robust customer demand,

which was

bolstered by

the peak

winter holiday

season. See

the discussion

under the

heading “HPAI”

above. The

daily average

price for

the Urner

Barry southeast

large index

for the

third quarter

of fiscal

2023 increased

129.8% from

the comparable

period in

the

prior

year.

Conventional

egg

prices

exceeding

specialty

egg

prices

has

occurred

for

the

past

four

quarters

but

atypical

historically.

Conventional egg

prices generally

respond more

quickly to

market conditions

because 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

formulas

our

costs of

production.

The

majority

of our

specialty

eggs

are

typically

sold

prices

and

terms

negotiated

directly

with

customers

and

therefore

not

fluctuate

much

conventional pricing. For information about historical shell egg prices,

see Part I Item I of our 2022 Annual Report.

Index

Our total

dozens 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

9.4% as compared

to the same

quarter in fiscal

2022. Demand

for specialty eggs

increased

in the

third quarter

of fiscal

2023 compared

to the

same prior

year period

due primarily

to the

higher prices

for conventional

eggs. Further, demand for specialty eggs continued

to increase as retailers continued to shift to selling cage-free products.

Our farm production

costs per dozen

produced for the

third quarter of

fiscal 2023 increased

18.2%, or $0.166,

compared to the

third quarter of fiscal 2022.

This increase was primarily due

to increased feed ingredient

costs as well as increased facility

costs

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

8.8%

and

14.8%,

respectively,

compared

the average

daily

CBOT prices

for

the

comparable

period

the prior

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

expressed as a percentage of net sales.

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Net sales

100.0

Cost of sales

53.6

80.8

59.4

88.0

Gross profit

46.4

19.2

40.6

12.0

Selling, general and administrative

5.9

11.0

6.9

12.4

Gain on insurance recoveries

(0.3)

(0.2)

(0.1)

(0.3)

(Gain) loss on disposal of fixed assets

—

0.1

—

Operating income (loss)

40.8

8.3

33.8

(0.1)

Total other income, net

1.7

2.8

0.9

1.8

Income before income taxes

42.5

11.1

34.7

1.7

Income tax expense (benefit)

10.2

2.8

8.4

(0.2)

Net income

32.3

8.3

26.3

1.9

NET SALES

Total

net sales for the

third quarter 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

miscellaneous

byproducts

and

resale products

included

with our

shell

egg operations.

Total

net

sales

for

the

thirty-nine

weeks

ended

February

25,

2023

were

$2.46

billion,

compared

$1.18

billion

for

the

comparable period of fiscal 2022.

Net

shell

egg

sales

represented

96.4%

and

97.2%

total

net

sales

for

the

thirty-nine

weeks

ended

February

25,

2023

and

February 26, 2022, respectively.

Index

The table below presents an analysis of our conventional and specialty shell egg

sales (in thousands, except percentage data):

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

February 25, 2023

February 26, 2022

Total net sales

997,493

477,485

2,457,537

1,184,195

Conventional

689,022

71.4

280,633

60.4

1,656,528

69.9

683,805

59.4

Specialty

272,205

28.2

182,945

39.4

700,803

29.6

462,320

40.2

Egg sales, net

961,227

99.6

463,578

99.8

2,357,331

99.5

1,146,125

99.6

Other

3,684

0.4

1,158

0.2

11,932

0.5

4,554

0.4

Net shell egg sales

964,911

100.0

464,736

100.0

2,369,263

100.0

1,150,679

100.0

Net shell egg sales as a

percent of total net sales

96.7

97.3

96.4

97.2

Dozens sold:

Conventional

187,357

64.3

192,511

66.9

555,045

65.2

568,511

70.0

Specialty

104,059

35.7

95,140

33.1

295,774

34.8

243,310

30.0

Total dozens sold

291,416

100.0

287,651

100.0

850,819

100.0

811,821

100.0

Net average selling price

per dozen:

Conventional

3.678

1.458

2.984

1.203

Specialty

2.616

1.923

2.369

1.900

All shell eggs

3.298

1.612

2.771

1.412

Egg products sales:

Egg products net sales

32,582

12,749

88,274

33,516

Pounds sold

16,796

15,947

49,000

47,225

Net average selling price

per pound

1.940

0.799

1.802

0.710

Shell egg net sales

Third Quarter – Fiscal 2023

vs. Fiscal 2022

In the

third quarter

of fiscal

2023,

conventional egg

sales increased

$408.4 million,

or 145.5%,

compared to

the third

quarter

fiscal

2022,

primarily

due

the

increase

the

prices

for

conventional

shell

eggs,

slightly

offset

decrease

volume

conventional

shell

eggs

sold.

Changes

prices

resulted

$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

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

fiscal

2022,

primarily

due

36.0%

increase

the

prices

for

specialty

eggs,

which

resulted

$72.1

million

increase

net

sales,

and

9.4%

increase

the

volume

specialty

eggs

sold,

which

resulted

$17.2

million

increase in net sales.

Net average selling prices

of specialty eggs increased

in response to rising feed

and other input costs as well

as current

market conditions due to HPAI.

Demand

for

specialty

eggs

increased

conventional

egg

prices

rose.

Our

sales

volume

benefited

sold

9.4%

specialty

eggs

volume

the

third

quarter

fiscal

2023

versus

the

prior-year

period,

through

use

our

higher cage-free production capacity.

Cage-free egg sales

for the third quarter

of fiscal 2023 represented

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

Index

higher

proportion

our

total

sales.

Cage-free

dozens

sold

increased

14.9%

the

third

quarter

fiscal

2023

compared to the third quarter

of fiscal 2022 as the

higher conventional egg prices drove

demand for specialty eggs

and

we utilized our expanded cage-free production capacity.

Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022

For

the

thirty-nine

weeks

ended

February

25,

2023,

conventional

egg

sales

increased

$972.7

million,

142.3%,

compared

the

same

period

fiscal

2022,

primarily

due

the

increase

the

prices

for

conventional

shell

eggs,

slightly offset

by the decrease

in the volume

of conventional eggs

sold. Changes in

prices

resulted in a

$988.5 million

increase and the change in volume resulted in a $16.2 million decrease in net

sales, respectively.

Specialty egg

sales increased

$238.5 million,

or 51.6%,

for the

thirty-nine weeks

ended February

25, 2023

compared

to the

same period of

fiscal 2022,

primarily due

to a 24.7%

increase in

the prices

for specialty

eggs.

Additionally,

the

volume

of specialty

dozens

sold

increased

21.6%

compared

the

same

prior

year

period,

mainly

due

the higher

conventional egg prices.

Changes in specialty

egg prices resulted

in a $138.7 million

increase in net sales

and changes

in volume resulted in a $99.7 million increase,

respectively.

Egg products net sales

Third Quarter – Fiscal 2023

vs. Fiscal 2022

Egg products

net sales

increased $19.8

million, or

155.6%, for

the third

quarter of

fiscal 2023

compared to

the same

period of

fiscal 2022,

primarily due

to a

142.8% selling

price increase,

which had

a $19.2

million positive

impact on

net sales.

Our egg products net average selling price increased in the third quarter

of fiscal 2023, compared to the 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.

Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022

Egg products

net sales

increased $54.8

million or

163.4%, primarily

due to

a 153.8%

selling price

increase compared

to the first thirty-nine weeks of fiscal 2022, which had a $53.5 million

positive impact on net sales.

Our egg products net average selling price increased

in the thirty-nine weeks ended February 25, 2023

compared to the

same

period

fiscal

2022

the

supply

shell

eggs

used

produce

egg

products

decreased

due

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

thirty-nine weeks

ended February 25,

2023 were $1,459.2

million compared

to $1,042.2 million

for

the same period of fiscal 2022.

Cost of

sales consists

costs directly

to producing,

processing

and

packing

shell eggs,

purchases

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.

Index

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%

the

third

quarter

fiscal

2023

compared

the

third

quarter

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

higher

facility

and

flock

amortization.

Facility

costs

increased

due

primarily

increased

labor

costs.

Labor

costs

increased

36%

due

increased

use

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

our

flocks

during

pullet

production

and

increased

our

amortization

expense.

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%

the

thirty-nine

weeks

ended

February

25,

2023

compared

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

higher

facility

and

flock

amortization.

Facility

costs

increased

due

primarily

increased

labor

costs.

Labor

costs

increased

28%

due

increased

use

contract

labor

and

increased

wages raised in response to labor shortages.

Index

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

the

export

markets.

For

fiscal

2023,

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

the

thirty-nine

weeks

ended

February

26,

2022,

which

resulted

$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

fiscal

2023

was

$463.0

million

compared

$91.6

million

for

the

same

period

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

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.

Index

SELLING, GENERAL, AND ADMINISTRATIVE

EXPENSES

Selling,

general,

and

administrative

("SGA")

expenses

include

costs

marketing,

distribution,

accounting

and

corporate

overhead. The following table presents an analysis of our SGA expenses (in thousands):

Thirteen Weeks

Ended

February 25, 2023

February 26, 2022

$ Change

% Change

Specialty egg expense

15,689

17,318

(1,629)

(9.4)

Delivery expense

19,453

16,440

3,013

18.3

Payroll, taxes and benefits

14,325

11,398

2,927

25.7

Stock compensation expense

1,059

1,007

5.2

Other expenses

7,963

6,523

1,440

22.1

Total

58,489

52,686

5,803

11.0

Third Quarter – Fiscal 2023

vs. Fiscal 2022

Specialty egg expense

Specialty

egg

expense

decreased

primarily

due

significant

reduction

advertising

costs.

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

primarily

due

increase

contract

trucking

expenses

approximately

$2.0

million in the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022.

Payroll, taxes and benefits expense

The

increase

in payroll,

taxes and

benefits

expense

is due

increase

the accrual

for

anticipated

performance-

based bonuses.

Other expense

The increase in other expense is primarily due to inflationary pressure increasing

costs.

Thirty-nine Weeks Ended

February 25, 2023

February 26, 2022

$ Change

% Change

Specialty egg expense

43,429

45,295

(1,866)

(4.1)

Delivery expense

57,544

44,771

12,773

28.5

Payroll, taxes and benefits

39,139

32,640

6,499

19.9

Stock compensation expense

3,071

2,983

3.0

Other expenses

26,865

21,302

5,563

26.1

Total

170,048

146,991

23,057

15.7

Thirty-nine weeks – Fiscal 2023 vs. Fiscal 2022

Specialty egg expense

Specialty egg

expense, which includes

franchise fees, advertising

and promotion

costs, generally

aligns with specialty

egg

volumes,

which

were

21.6%

for

fiscal

2023

compared

fiscal

2022.

However,

our

specialty

egg

expense

decreased by

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

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

eggs; as a result, EB temporarily

reduced the related franchise

fees for certain specialty egg products to encourage continued production of

these products.

Index

Delivery expense

The increased

delivery expense

is primarily

due to

an increase

in fuel

and labor

costs for

both our

fleet and

contract

trucking.

Compared

fiscal

2022,

contract

trucking

and

labor

expenses

increased

approximately

$9.2

million

for

fiscal 2023.

Payroll, taxes and benefits expense

The

increase

payroll,

taxes

and

benefits

expense

primarily

due

increase

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 $3.6 million.

OPERATING

INCOME (LOSS)

For the

third quarter

of fiscal

2023, we

recorded operating

income of

$407.8 million

compared to

$39.6 million

for the

same

period of fiscal 2022.

For the thirty-nine

weeks ended February

25, 2023, we

recorded operating

income of $831.5

million compared

to an operating

loss of $2.2 million for the same period of fiscal 2022.

OTHER INCOME (EXPENSE)

Total

other

income

(expense)

consists

items

not

directly

charged

operations,

such

interest

income

and

expense, royalty income, equity income or loss of unconsolidated

entities, and patronage income, among other items.

For the

third quarter

of fiscal

2023,

we earned

$6.3 million

of interest

income compared

to $205

thousand for

the same

period

fiscal

2022.

The

increase

resulted

from

significantly

higher

investment

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

expense

$433

thousand

and

$262

thousand

for

the

thirty-nine

weeks

ended

February

25,

2023 and February 26, 2022, respectively.

Other, net for the

third quarter ended February 25, 2023

was an expense of $1.5 million

compared to income of $1.1 million

for

the

same

period

fiscal

2022.

The

majority

the

decrease

due

million

impairment

investment

unconsolidated entity in the third quarter of fiscal 2023.

Other,

net for

the thirty-nine

weeks ended

February

25, 2023

was an

expense

of $205

thousand

compared

to income

of $8.2

million for the same

period of fiscal 2022. The majority

of the decrease is due

to our acquisition in fiscal 2022

of the remaining

50% membership

interest in

Red River

Valley

Egg Farm,

LLC (“Red

River”) as

we recognized

a $4.5

million gain

due to

the

remeasurement

our

equity

investment,

along

with

the

$1.4

million

payment

received

fiscal

2022

review

and

adjustment

our

various

marketing

agreements.

Additionally,

the

Company

recorded

million

impairment

investment in an unconsolidated entity in the third quarter of fiscal 2023.

INCOME TAXES

For the third

quarter of fiscal

2023, pre-tax income

was $424.9 million

compared to $53.0

million for the

same period of

fiscal

2022. We

recorded income tax expense of $102.1

million for the third quarter of fiscal

2023, which reflects an effective

tax rate

of 24.0%.

Income tax

expense was $13.6

million for

the comparable

period of fiscal

2022, which

reflects an effective

tax rate

of 25.6%.

For the thirty-nine

weeks ended February

25, 2023, pre-tax income

was $852.6 million

compared to $19.7 million

for the same

period of

fiscal 2022.

recorded income

tax expense

of $206.4

million, which

reflects an

effective

tax rate

of 24.2%.

recorded an income tax benefit of $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, income

tax expense for the comparable period

fiscal 2022 was $5.3 million with an adjusted effective tax

rate of 27.3%.

Index

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

income

for

financial

reporting

purposes

that

are

not

included

taxable

income

for

income

tax

purposes,

including

tax

exempt

interest

income,

certain

nondeductible

expenses

and

net

income

loss

attributable

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

Cal-Maine

Foods,

Inc.

for

the thirty-nine

weeks

ended February

25,

2023,

was $647.1

million,

$13.31 per basic and $13.25 per diluted share, compared

to 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

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

$20.8

million

provided

operating

activities

for

the

comparable

period

fiscal

2022.

The

increase

cash

flow

from

operating

activities

resulted

primarily

from

higher

selling

prices

for

conventional

and

specialty

eggs

well

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

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

$49.2

million

the

same

period

fiscal

2022.

Purchases

investment

securities

were

$442.6

million

the

third

quarter

fiscal

2023,

compared

$47.1

million

fiscal

2022.

The

increase

purchases of

investment securities

is primarily

due to

the utilization

of increased

liquidity resulting

from increased

cash flows

provided by operating activities noted above.

During the thirty-nine weeks ended February 26,

2022, we acquired the remaining

50% membership interest in Red River for $48.5 million.

Cash Flows from Financing Activities

We paid dividends

of $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 during the

same period of fiscal 2022.

Credit Facility

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

senior

secured

revolving

credit facility

(the

“Credit

Facility”),

initial

aggregate

principal

amount

$250

million

with

five-year

term.

February

25,

2023,

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.

Index

Material Cash Requirements

continue

monitor

the

increasing

demand

for

cage-free

eggs

and

engage

with

our

customers

efforts

achieve

smooth transition

toward their

announced timelines

for cage-free

egg sales.

The following

table presents

material construction

projects approved as of February 25, 2023 (in thousands):

Project(s) Type

Projected

Completion

Projected Cost

Spent as of February

25, 2023

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2024

42,591

4,830

37,761

Cage-Free Layer & Pullet Houses

Fiscal 2025

40,099

26,350

13,749

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

178,496

60,691

117,805

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.

IMPACT OF

RECENTLY

ISSUED/ADOPTED ACCOUNTING STANDARDS

For

information

changes

accounting

principles

and

new

accounting

policies,

see

Note 1 - Summary of Significant

Accounting Policies

of the Notes to Condensed Consolidated Financial Statements included in this Quarterly

Report.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting

estimates

are those

estimates

made

in accordance

with U.S.

generally

accepted

accounting

principles that

involve

significant

level

estimation

uncertainty

and

have

had

are

reasonably

likely

have

material

impact

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

thirty-nine weeks ended February 25, 2023 from

the information provided in Part II Item 7A Quantitative and Qualitative Disclosures About

Market Risk in our 2022 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

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,

persons

performing

similar

functions,

appropriate

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 February 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 that

occurred during

the quarter

ended February

25, 2023

that has materially affected, or is reasonably likely to materially affect,

our internal control over financial reporting.

Index

PART

II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Refer

the

discussion

certain

legal

proceedings

involving

the

Company

and/or

its

subsidiaries

(i)

our

2022

Annual

Report,

Part

Item

Legal

Proceedings,

and

Part

Item 8,

Notes

Consolidated

Financial

Statements

and

Supplementary

Data, Note

18: Commitments

and Contingencies,

and (ii)

in this Quarterly

Report in

Note 9

: Commitments and Contingencies

of the Notes to Condensed Consolidated Financial Statements, which discussions are

incorporated herein by reference.

ITEM 1A.

RISK

FACTORS

There have been no material changes in the risk factors previously disclosed in the

Company’s 2022 Annual

Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

The following table is a summary of our third quarter 2023 share repurchases:

Issuer Purchases of Equity Securities

Total

Number of

Maximum Number

Shares Purchased

of Shares that

Total

Number

Average

as Part of Publicly

May Yet

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)

As permitted under our Amended and Restated 2012

Omnibus Long-Term Incentive Plan, these shares were withheld by us to satisfy

tax withholding

obligations for employees in connection with the vesting of restricted

common stock.

ITEM 6. EXHIBITS

Exhibits

No.

Description

3.1

Second Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to

Exhibit 3.1 in the Registrant’s Form 8-K, filed July 20, 2018)

3.2

Composite Bylaws of the Company (incorporated by reference to Exhibit 3.2 in the Registrant’s Form 10-Q

for the quarter ended March 2, 2013, filed April 5, 2013)

31.1*

Rule 13a-14(a) Certification of the Chief Executive Officer

31.2*

Rule 13a-14(a) Certification of the Chief Financial Officer

32**

Section 1350 Certification of the Chief Executive Officer and the Chief Financial Officer

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.

Index

SIGNATURES

Pursuant to

the requirements

of the Securities

Exchange Act

of 1934,

the registrant has

duly caused

this report

to be signed

its behalf by the undersigned, thereunto duly authorized.

CAL-MAINE FOODS, INC.

(Registrant)

Date:

March 28, 2023

/s/ Max P.

Bowman

Max P.

Bowman

Vice President, Chief Financial

Officer

(Principal Financial Officer)

໿

Date:

March 28, 2023

/s/ Matthew S. Glover

Matthew S. Glover

Vice President – Accounting

(Principal Accounting Officer)

໿

Cal-Maine Foods - 10-Q quarterly report FY2023 Q3

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