Cal-Maine Foods - 10-Q quarterly report FY2024 Q1

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Index

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC

20549

FORM

10-Q

☑

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended

September 2, 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

44,182,613

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 October 3, 2023.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets -

September 2, 2023 and June 3, 2023

Condensed Consolidated Statements of Income -

Thirteen Weeks Ended September 2, 2023 and August 27, 2022

Condensed Consolidated Statements of Comprehensive Income -

Thirteen Weeks Ended September 2, 2023 and August 27, 2022

Condensed Consolidated Statements of Cash Flows -

Thirteen Weeks Ended September 2, 2023 and August 27, 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, Use of Proceeds

, and Issuer Purchases of

Equity Securities

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)

September 2, 2023

June 3, 2023

Assets

Current assets:

Cash and cash equivalents

360,343

292,824

Investment securities available-for-sale

249,619

355,090

Trade and other receivables, net

125,363

120,247

Income tax receivable

33,787

66,966

Inventories

280,801

284,418

Prepaid expenses and other current assets

14,145

5,380

Total current assets

1,064,058

1,124,925

Property, plant & equipment, net

752,580

744,540

Investments in unconsolidated entities

13,978

14,449

Goodwill

44,006

Intangible assets, net

15,347

15,897

Other long-term assets

10,398

10,708

Total Assets

1,900,367

1,954,525

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

117,800

137,313

Accrued income taxes payable

8,288

Dividends payable

294

37,130

Total current liabilities

126,382

182,731

Other noncurrent liabilities

9,930

9,999

Deferred income taxes, net

152,725

152,212

Total liabilities

289,037

344,942

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

73,153

72,112

Retained earnings

1,571,744

1,571,112

Accumulated other comprehensive loss, net of tax

(2,291)

(2,886)

Common stock in treasury at cost –

26,078

shares at September 2, 2023 and

26,077

shares at June 3, 2023

(30,014)

(30,008)

Total Cal-Maine Foods, Inc. stockholders’ equity

1,613,343

1,611,081

Noncontrolling interest in consolidated entity

(2,013)

(1,498)

Total stockholders’ equity

1,611,330

1,609,583

Total Liabilities and Stockholders’ Equity

1,900,367

1,954,525

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

September 2, 2023

August 27, 2022

Net sales

459,344

658,344

Cost of sales

413,911

440,854

Gross profit

45,433

217,490

Selling, general and administrative

52,246

53,607

(Gain) loss on disposal of fixed assets

(56)

Operating income (loss)

(6,757)

163,850

Other income (expense):

Interest income, net

7,346

903

Royalty income

349

428

Equity income (loss) of unconsolidated entities

(470)

144

Other, net

265

155

Total other income, net

7,490

1,630

Income before income taxes

733

165,480

Income tax expense

322

40,346

Net income

411

125,134

Less: Loss attributable to noncontrolling interest

(515)

(153)

Net income attributable to Cal-Maine Foods, Inc.

926

125,287

Net income per common share:

Basic

0.02

2.58

Diluted

0.02

2.57

Weighted average shares outstanding:

Basic

48,690

48,623

Diluted

48,840

48,811

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

September 2, 2023

August 27, 2022

Net income

411

125,134

Other comprehensive income (loss), before tax:

Unrealized holding gain (loss) on available-for-sale securities, net of reclassification

adjustments

786

(997)

Income tax benefit (expense) related to items of other comprehensive income

(191)

243

Other comprehensive income (loss), net of tax

595

(754)

Comprehensive income

1,006

124,380

Less: Comprehensive loss attributable to the noncontrolling interest

(515)

(153)

Comprehensive income attributable to Cal-Maine Foods, Inc.

1,521

124,533

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Cash flows from operating activities:

Net income

411

125,134

Depreciation and amortization

19,340

17,312

Deferred income taxes

322

(1,324)

Other adjustments, net

3,612

31,690

Net cash provided by operations

23,685

172,812

Cash flows from investing activities:

Purchases of investment securities

(28,296)

(51,834)

Sales and maturities of investment securities

135,768

20,296

Purchases of property, plant and equipment

(26,666)

(27,662)

Net proceeds from disposal of property, plant and equipment

Net cash provided by (used in) investing activities

80,880

(59,122)

Cash flows from financing activities:

Payments of dividends

(36,983)

(36,653)

Purchase of common stock by treasury

(5)

(45)

Principal payments on finance lease

(58)

(55)

Net cash used in financing activities

(37,046)

(36,753)

Net change in cash and cash equivalents

67,519

76,937

Cash and cash equivalents at beginning of period

292,824

59,084

Cash and cash equivalents at end of period

360,343

136,021

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

in accordance

with generally

accepted accounting

principles in

the United

States of

America (“GAAP”)

for interim

financial

reporting and should

be read in

conjunction with our

Annual Report on

Form 10-K for

the fiscal year

ended June 3,

2023 (the

“2023

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 ended

on September

2023 and August 27, 2022 included

13 weeks

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make

estimates and

assumptions that

affect the

amounts reported

in the

consolidated financial

statements and

accompanying notes.

Actual results

could differ from those estimates.

Investment Securities

The Company has

determined that its

debt securities

are available-for-sale

investments. We

classify these securities

as current

because the

amounts invested

are available

for current

operations. Available

-for-sale securities

are carried

at fair

value, based

on quoted market prices as of the balance sheet

date, with unrealized gains and losses recorded in other comprehensive income.

The

amortized cost

debt

securities is

adjusted

for

amortization of

premiums and

accretion of

discounts

maturity and

recorded in interest income. 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 allowance

for credit losses,

limited to the

amount

that fair value was less than the amortized cost basis.

Investments

mutual

funds

are

recorded

fair

value

and

are

classified

“Other

long-term

assets”

the

Company’s

Condensed

Consolidated

Balance

Sheets.

Unrealized

gains

and

losses

for

equity

securities

are

recorded

other

income

(expenses) as Other, net in the Company’s Condensed Consolidated Statements of Income.

The cost basis

for realized gains

and losses on

available-for-sale securities is

determined by the

specific identification method.

Gains

and

losses

are

recognized

other

income

(expenses)

Other,

net

the

Company’s

Condensed

Consolidated

Statements of Income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.

Trade Receivables

Trade

receivables are

stated at

their

carrying values,

which

include a

reserve for

credit losses.

As of

September 2,

2023

and

June 3,

2023, reserves

for credit

losses were

503

thousand and

579

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

Index

quarter for

which the

Company reports net

income attributable

to Cal-Maine

Foods, Inc.

computed in

accordance with

GAAP

in an amount equal

to one-third (

1/3

) of such quarterly

income. Dividends are paid

to shareholders of record as

of the 60th day

following the last

day of such

quarter, except

for the fourth

fiscal quarter.

For the fourth

quarter, the

Company pays dividends

to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.

Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will

not pay a dividend for a subsequent

profitable quarter until the Company is profitable on

a cumulative basis computed from the

date of the most recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board of

Directors.

New Accounting Pronouncements and Policies

No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our

Consolidated Financial Statements.

Note 2 - Investment

Securities

The following represents the Company’s investment securities as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

7,915

—

150

7,765

Commercial paper

8,913

—

8,898

Corporate bonds

128,031

—

1,090

126,941

Certificates of deposits

1,125

—

1,117

US government and agency obligations

94,584

—

320

94,264

Asset backed securities

10,683

—

10,634

Total current investment securities

251,251

—

1,632

249,619

Mutual funds

2,181

—

2,128

Total noncurrent investment securities

2,181

—

2,128

June 3, 2023

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

16,571

—

275

16,296

Commercial paper

56,486

—

56,409

Corporate bonds

139,979

—

1,402

138,577

Certificates of deposits

675

—

675

US government and agency obligations

101,240

—

471

100,769

Asset backed securities

13,459

—

151

13,308

Treasury bills

29,069

—

29,056

Total current investment securities

357,479

—

2,389

355,090

Mutual funds

2,172

—

2,081

Total noncurrent investment securities

2,172

—

2,081

Available-for-sale

Proceeds from sales and maturities of

investment securities available-for-sale were $

135.8

million and $

20.3

million during the

thirteen weeks

ended September 2,

2023 and

August 27,

2022, respectively.

Gross realized

gains for

the thirteen

weeks ended

September 2,

2023

and August

27,

2022 were

thousand. Gross realized

losses for

the

thirteen weeks

ended September

2023

and

August

27,

2022

were

thousand

and

thousand,

respectively.

There

were

allowances

for

credit

losses

September 2, 2023 and June 3, 2023.

Index

Actual maturities may differ

from contractual maturities as

some borrowers have

the right to call

or prepay obligations

with or

without penalties. Contractual maturities of current investments at September 2, 2023 are as follows (in thousands):

Estimated Fair Value

Within one year

175,963

1-5 years

73,656

Total

249,619

Noncurrent

There

were

sales of

noncurrent

investment securities

during

the

thirteen weeks

ended September

2023

and August

27,

2022.

Note 3 - Fair Value Measurements

The Company

is required

to categorize

both financial

and nonfinancial

assets and

liabilities based

on the

following fair

value

hierarchy. The

fair value

of an

asset is

the price

at which

the asset

could be

sold in

an orderly

transaction between

unrelated,

knowledgeable, and willing parties able to engage in the

transaction. A liability’s fair value

is defined as the amount that would

be paid

to transfer

the liability

to a

new obligor

in a

transaction between

such parties,

not

the amount

that would

be paid

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.

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 of

financial assets

and

liabilities measured at fair value on a recurring basis as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

7,765

—

7,765

Commercial paper

—

8,898

—

8,898

Corporate bonds

—

126,941

—

126,941

Certificates of deposits

—

1,117

—

1,117

US government and agency obligations

—

94,264

—

94,264

Asset backed securities

—

10,634

—

10,634

Mutual funds

2,128

—

2,128

Total assets measured at fair value

2,128

249,619

—

251,747

Index

June 3, 2023

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

16,296

—

16,296

Commercial paper

—

56,409

—

56,409

Corporate bonds

—

138,577

—

138,577

Certificates of deposits

—

675

—

675

US government and agency obligations

—

100,769

—

100,769

Asset backed securities

—

13,308

—

13,308

Treasury bills

—

29,056

—

29,056

Mutual funds

2,081

—

2,081

Total assets measured at fair value

2,081

355,090

—

357,171

Investment securities

–

available-for-sale

classified as

Level 2

consist of

securities with

maturities of

three months

or longer

when purchased. We

classified these securities as current because amounts invested are readily available

for current operations.

Observable inputs for these securities are yields, credit risks, default rates, and volatility.

Note 4 - Inventories

Inventories consisted of the following as of September 2, 2023 and June 3, 2023 (in thousands):

September 2, 2023

June 3, 2023

Flocks, net of amortization

165,138

164,540

Eggs and egg products

27,604

28,318

Feed and supplies

88,059

91,560

280,801

284,418

grow

and

maintain

flocks

layers

(mature

female

chickens),

pullets

(female

chickens,

under

weeks

age),

and

breeders

(male

and

female

chickens

used

produce

fertile

eggs

hatch

for

egg

production

flocks).

Our

total

flock

September 2,

2023 and

June 3,

2023 consisted

of approximately

10.0

million and

10.8

million pullets

and breeders

and

41.9

million and

41.2

million layers, respectively.

Note 5 - Equity

The following reflects equity activity for the thirteen weeks ended September 2, 2023 and August 27, 2022 (in thousands):

Thirteen Weeks Ended September 2, 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 June 3,

2023

703

(30,008)

72,112

(2,886)

1,571,112

(1,498)

1,609,583

Other comprehensive

income, net of tax

—

595

—

595

Stock compensation

plan transactions

—

(6)

1,041

—

1,035

Dividends ($

0.006

per share)

Common

—

(265)

—

(265)

Class A common

—

(29)

—

(29)

Net income (loss)

—

926

(515)

411

Balance at

September 2, 2023

703

(30,014)

73,153

(2,291)

1,571,744

(2,013)

1,611,330

Index

Thirteen Weeks Ended August 27, 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 May 28,

2022

703

(28,447)

67,989

(1,596)

1,065,854

(206)

1,104,345

Other comprehensive

loss, net of tax

—

(754)

—

(754)

Stock compensation

plan transactions

—

(48)

1,028

—

980

Dividends ($

0.853

per share)

Common

—

(37,648)

—

(37,648)

Class A common

—

(4,094)

—

(4,094)

Net income (loss)

—

125,287

(153)

125,134

Balance at August

27, 2022

703

(28,495)

69,017

(2,350)

1,149,399

(359)

1,187,963

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.

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

September 2, 2023

August 27, 2022

Numerator

Net income

411

125,134

Less: Loss attributable to noncontrolling interest

(515)

(153)

Net income attributable to Cal-Maine Foods, Inc.

926

125,287

Denominator

Weighted-average common shares outstanding, basic

48,690

48,623

Effect of dilutive restricted shares

150

188

Weighted-average common shares outstanding, diluted

48,840

48,811

Net income per common share attributable to Cal-Maine Foods, Inc.

Basic

0.02

2.58

Diluted

0.02

2.57

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

sold

prices

independently

quoted

wholesale

market

prices

formulas

our

costs

Index

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 is unable to sell before expiration. The Company records an allowance for expected customer returns using historical

return data and comparing to current period sales and accounts receivable. The allowance is recorded as a reduction of sales in

the same period the revenue is recognized.

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

reduction to

the sales

price of

the related

transaction, while

inducement offers,

when accepted

by customers,

are treated

as a

reduction

sales

price

based

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.’’

Disaggregation of Revenue

The following table provides revenue disaggregated by product category (in thousands):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Conventional shell egg sales

225,280

425,589

Specialty shell egg sales

208,681

200,820

Egg products

22,223

27,640

Other

3,160

4,295

459,344

658,344

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 September

2, 2023

and June

3, 2023,

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

1.0

million

for

the

thirteen

weeks

ended

September

2023

and

August

27,

2022.

Unrecognized compensation

expense as

a result

of non-vested

shares of

restricted stock

outstanding under

the Amended

and

Restated

2012

Omnibus

Long-Term

Incentive

Plan

September

2023

6.1

million

will

recorded

over

weighted

average period of

1.9

years. Refer to Part II

Item 8, Notes to Consolidated

Financial Statements and Supplementary Data, Note

14 - Stock Compensation Plans in our 2023 Annual Report for further information on our stock compensation plans.

Index

The Company’s restricted share activity for the thirteen weeks ended September 2, 2023 follows:

Number of

Weighted

Average Grant

Date Fair Value

Outstanding, June 3, 2023

294,140

43.72

Vested

(305)

37.70

Forfeited

(1,329)

44.68

Outstanding, September 2, 2023

292,506

43.72

Note 9 - Commitments and Contingencies

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,

in the

District

Court of

Harris County,

Texas.

The State

of Texas

(the “State”)

asserted claims

based on

the Company’s

and WCF’s

alleged

violation

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 appealed the First District Court’s

decision to the Supreme Court of

Texas.

On September 29, 2023,

the Supreme Court denied

the Company’s

Petition for Review so

the case will be

remanded to

the trial court for further proceedings. Management believes the risk of material loss related to this matter to be

remote.

Bell et al. v. Cal-Maine Foods et al.

On April

30, 2020,

the Company

was named

as one

of several

defendants in

Bell et

al. v.

Cal-Maine Foods

et al.,

Case No.

1:20-cv-461,

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. On

August

12,

2022,

the Company

and other

defendants in

the

case

filed

motion

to 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 filed their respective

appellate briefs, but the court

has not ruled on

these submissions.

Management believes the risk of material loss related to both matters to be remote.

Index

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,

until a subsequent settlement was reached as described below, 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

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. A

preliminary pre-trial order was filed by the parties on August 22, 2023, and trial is now set for October 17, 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

a 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 a

different

court than

prior related

cases; there

are significant

factual issues

to be

resolved; and

there are

requests for

damages

other than compensatory damages (i.e., injunction and treble money damages).

State of Oklahoma Watershed Pollution Litigation

On June

18, 2005, the

State of Oklahoma

filed suit, in

the United States

District Court for

the Northern District

of Oklahoma,

against Cal-Maine

Foods, Inc.

and Tyson

Foods, Inc.,

Cobb-Vantress,

Inc., Cargill,

Inc., George’s,

Inc., Peterson

Farms, Inc.

and

Simmons Foods,

Inc.,

and

certain

their affiliates.

The

State of

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 by

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.

Index

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 of

their

contract producers.

The

court directed

the

parties

confer

in attempt

reach agreement

on appropriate

remedies. On

June 12,

2023, the

court ordered

the parties

to mediate

before the

Tenth

Circuit

Chief

Judge

Deanell

Reece

Tacha

and

instructed

the

parties

file

joint

status

report

days

following

mediation.

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

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

what

might

considered

appropriate

remedies,

the

ongoing

negotiations

and

mediation

with

the

State

Oklahoma, 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.

Note 10 - Subsequent Events

Effective

September

28,

2023,

the

Company

entered

into

definitive

agreement

acquire

substantially

all

the

assets

Fassio

Egg

Farms,

Inc.

(“Fassio”),

its

commercial

shell

egg

production

and

processing

business.

The

assets

acquired, subject to the completion of

this transaction, include commercial shell egg

production and processing facilities with a

current capacity

of approximately

1.2

million laying

hens, primarily

cage-free, a

feed mill,

pullets, a

fertilizer production

and

composting operation and land located in Erda, Utah, outside Salt Lake City.

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 June 3,

2023

(the “2023 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2023 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 of

1933

(the “Securities

Act”) and

Section 21E

of the

Securities Exchange Act

of 1934

(the “Exchange

Act”) relating

to our

shell egg

business,

including

estimated

future

production

data,

expected

construction

schedules,

projected

construction

costs,

potential

future supply

and demand

for our

products, potential

future corn

and soybean

price trends,

potential future

impact on

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 on management’s

current intent, belief, expectations,

estimates, and projections

regarding the Company and

its industry.

These statements are

not guarantees of

future performance and

involve risks, uncertainties,

assumptions, and other

factors that

are difficult to predict and may be beyond our control.

The factors that could cause actual results to differ materially from

those

projected in

the forward-looking

statements include,

among others,

(i) the

risk factors

set forth

in Part

I Item

1A of

the 2023

Annual Report,

the risk

factors (if

any) set

forth in

Part II

Item 1A

Risk Factors

and elsewhere

in this

report as

well as

those

included in

other reports

we file

from time

to time

with the

Securities and

Exchange Commission

(the “SEC”)

(including our

Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell egg business

(including disease, pests, weather conditions,

and potential for product recall),

including but not limited to

the current outbreak

of highly pathogenic

avian influenza (“HPAI”)

affecting poultry in

the United States

(“U.S.”), Canada and

other countries that

was first detected in commercial flocks

in the U.S. in February 2022,

(iii) changes in the demand

for and market prices 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

new

flocks

businesses

and

risks

changes

that

may

cause

conditions to

completing a

pending acquisition

not to

be met,

(vi) risks

relating to

increased costs

and higher

and potentially

further increases in, inflation

and interest rates, which

began in response to

market conditions caused in

part by the COVID-19

pandemic and which generally have been

exacerbated by the Russia-Ukraine War

that began in February 2022, (vii)

our ability

to retain

existing customers,

acquire new

customers and

grow our

product mix

and (viii)

adverse results

in pending

litigation

matters.

Readers

are

cautioned

not

place

undue

reliance

forward-looking

statements

because,

while

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

accurate.

Further,

forward-looking

statements

included

herein

are

only

made

the

respective dates

thereof, or

date

stated,

the date

hereof.

Except

as otherwise

required by

law,

disclaim any

intent or obligation to update

publicly these forward-looking statements, whether because

of new information, future events,

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

and we

have one

operating and

reportable

segment.

are

the

largest

producer

and

distributor

fresh

shell

eggs

the

U.S.

Our

total

flock

approximately

41.9

million layers and

10.0 million pullets

and breeders is

the largest in

the U.S. We

sell most of

our shell eggs

to a diverse

group

of customers, including

national and regional

grocery store chains,

club stores, companies

servicing independent supermarkets

the

U.S.,

food

service

distributors,

and

egg

product

consumers

located

primarily

states

across

the

southwestern,

southeastern, mid-western and mid-Atlantic regions of the U.S.

Our operating

results are

materially impacted

by market

prices for

eggs and

feed grains

(corn

and soybean

meal), which

are

highly

volatile,

independent

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.

Index

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

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 as

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

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.

CAGE-FREE EGGS

Ten

states have

passed

legislation or

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

to January

2026. These

states represent

approximately 27%

the U.S.

total

population according

to the

2020

U.S. Census.

California, Massachusetts,

and Colorado,

which collectively

represent approximately

16% of

the total

estimated

U.S. population,

have cage-free

legislation in

effect currently.

In May

2023, the

U.S. Supreme

Court upheld

as constitutional

California’s

law

that

requires

the

sale

only

cage-free

eggs

that

state

and

regardless

the

state

which

the

eggs

are

produced. Although

we do

not sell

the majority

of our

eggs in

these ten

states, these

state laws

have impacted

egg production

practices nationally.

significant

number

our

customers

previously

announced

goals

offer

cage-free

eggs

exclusively

before

2026,

subject in

most cases to

availability of supply,

affordability and

consumer 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

focused

adjusting

our

cage-free

production

capacity

with

goal

meeting

the

future

needs

our

customers

light

changing

state

requirements

and

our

customer’s

goals.

always,

strive to

offer a

product mix

that aligns

with current

and anticipated

customer purchase

decisions. We

are engaging

with our

customers to

help them

meet their

announced goals

and needs.

have invested

significant capital

in recent

years to

acquire

and construct cage-free facilities, and we expect our focus for

future expansion will continue to include cage-free facilities. Our

volume

cage-free

egg

sales

has

continued

increase

and

account

for

larger

our

product

mix.

Cage-free

egg

revenue represented approximately 33.0% of our total net shell egg revenue for the first quarter of fiscal year 2024. At the same

time,

understand

the importance

our

continued

ability to

provide conventional

eggs

in order

provide our

customers

with a variety of egg choices and to address hunger in our communities.

For

additional

information,

see

the

2023

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.”

ACQUISITION

After the

end of

the fiscal

quarter,

we entered

into a

definitive agreement

to acquire

substantially all

the assets

of Fassio

Egg

Farms,

Inc.

(“Fassio”),

its

commercial

shell

egg

production

and

processing

business.

The

assets

acquired,

Index

subject to

the completion

of the

transaction, include

commercial shell

egg production

and processing

facilities with

a current

capacity

approximately

1.2

million

laying

hens,

primarily

cage-free,

feed

mill,

pullets,

fertilizer

production

and

composting

operation

and

land

located

Erda,

Utah,

outside

Salt

Lake

City.

expect

the

transaction

during

the

second quarter of fiscal 2024,

subject to customary closing conditions. Once

completed, the acquisition will expand our

market

presence in Utah and the western United States.

HPAI;

EGG SUPPLY OUTLOOK

The most recent

outbreak of highly

pathogenic avian influenza (“HPAI”)

impacted our business

and financial results primarily

during the fourth quarter of fiscal 2022

and continuing through the first part of our

fourth quarter of fiscal 2023.

For additional

information, see

the 2023

Annual Report,

Part II

Item 7

“Management’s

Discussion and

Analysis of

Financial Condition

and

Results of Operations –

HPAI.”

While the last occurrence

in a commercial egg

laying flock was in

December 2022, there have

been

occurrences in

other

avian populations

the

U.S.

since then.

HPAI

still present

the

wild bird

population and

the

extent

possible

future

outbreaks,

particularly

during

the

upcoming

fall

migration

season,

cannot

predicted.

There

have

been no

positive tests

for HPAI

at any

of Cal-Maine

Foods’ owned

or contracted

production facilities

as of

October 3,

2023.

Based on USDA data,

we believe that the

U.S. layer hen flock,

which declined as a

result of flock depletions due

to HPAI,

has

largely recovered but remains slightly lower than the five-year average.

Layer hen numbers

reported by the

USDA as of

September 1, 2023,

were 318.2 million,

which represents an

increase of 3.1%

compared with

the

layer hen

inventory

a year

ago. The

USDA also

reported

that

the hatch

from April

2023

through August

2023 increased 2.0% as compared with the prior-year period, indicating that layer flocks may continue to increase in the future.

EXECUTIVE OVERVIEW

For the first quarter

of fiscal 2024, we

recorded a gross profit

of $45.4 million compared

to $217.5 million for

the same period

of fiscal 2023, with

the decrease due primarily

to lower conventional shell

egg prices and increased

labor costs, partially offset

by lower farm production costs due to the decrease in feed ingredient prices.

Our

net

average selling

price

per

dozen for

the first

quarter

fiscal 2024

was

$1.589

compared

to $2.275

the prior-year

period. Conventional egg

prices per dozen

were $1.241

compared to $2.368

for the prior-year

period, and specialty

egg prices

per dozen were $2.278 compared

to $2.101 for the prior-year

period. Conventional egg prices were

lower in the first

quarter of

fiscal 2024

compared to

the prior-year

period as

overall egg

supply recovers

from the

most recent

HPAI

outbreak. The

daily

average price for the Urner Barry southeast large index for the first quarter of fiscal 2024 decreased 48.7% from the comparable

period in the

prior year.

In the first

quarter of fiscal 2024,

specialty egg prices exceeded

conventional egg prices as

opposed to

the first

quarter of

fiscal 2023,

returning to

a historically

normal relative

position. 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 or

formulas related to our

costs of production. The

majority of our specialty

eggs are typically sold

at prices and terms

negotiated

directly with

customers and

therefore do

not fluctuate

as much

as conventional

pricing. For

information about

historical shell

egg prices, see Part I Item I of our 2023 Annual Report.

Our total

dozens sold

decreased 0.8%

to 273.1

million dozen

shell eggs

for the

first quarter

of fiscal

2024 compared

to 275.3

million dozen for

the same period

of fiscal 2023.

For the first

quarter of fiscal

2024, conventional dozens

sold increased 1.0%

and specialty dozens sold decreased 4.2% as compared

to the same quarter in fiscal 2023. Demand

for specialty eggs decreased

the

first

quarter

fiscal

2024

compared

the

same

prior

year

period

due

primarily

the

large

decrease

prices

for

conventional eggs compared to the prior four quarters.

Our farm

production costs

per dozen

produced for

the first

quarter of

fiscal 2024

decreased 1.0%,

or $0.01,

compared to

the

first quarter of

fiscal 2023. However,

feed costs per

dozen produced decreased 10.5%

or $0.07 compared

to the first

quarter of

fiscal 2023

primarily due

to reduced

corn prices,

our primary

feed ingredient.

For the

first quarter

of fiscal

2024, the

average

Chicago

Board

Trade

(“CBOT”)

daily

market

price

was

$5.30

per

bushel

for

corn

and

$422

per

ton

for

soybean

meal,

representing decreases of 20.2% and 7.4%, respectively,

compared to the average daily CBOT prices for the

comparable period

in the prior year. For information about historical corn and soybean meal prices, see Part I Item I of our 2023 Annual Report.

Index

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

September 2, 2023

August 27, 2022

Net sales

100.0

Cost of sales

90.1

67.0

Gross profit

9.9

33.0

Selling, general and administrative

11.3

8.1

Operating income (loss)

(1.4)

24.9

Total other income, net

1.6

0.2

Income before income taxes

0.2

25.1

Income tax expense

0.1

6.1

Net income

0.1

19.0

Less: Loss attributable to noncontrolling interest

(0.1)

—

Net income attributable to Cal-Maine Foods, Inc.

0.2

19.0

NET SALES

Total net

sales for the first

quarter of fiscal 2024

were $459.3 million compared

to $658.3 million for

the same period of

fiscal

2023.

Net shell

egg sales

represented 95.2%

and 95.8%

of total

net sales

for the

first quarters

of fiscal

2024 and

2023, respectively.

Shell egg

sales classified

as “Other”

represent sales

of miscellaneous

byproducts and

resale products

included with

our shell

egg operations.

Index

The table below presents an analysis of our conventional and specialty shell egg sales (in thousands, except percentage data):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Total net sales

459,344

658,344

Conventional

225,280

51.6

425,589

67.5

Specialty

208,681

47.7

200,820

31.8

Egg sales, net

433,961

99.3

626,409

99.3

Other

3,160

0.7

4,295

0.7

Net shell egg sales

437,121

100.0

630,704

100.0

Net shell egg sales as a percent of total net sales

95.2

95.8

Dozens sold:

Conventional

181,530

66.5

179,712

65.3

Specialty

91,596

33.5

95,605

34.7

Total dozens sold

273,126

100.0

275,317

100.0

Net average selling price per dozen:

Conventional

1.241

2.368

Specialty

2.278

2.101

All shell eggs

1.589

2.275

Egg products sales:

Egg products net sales

22,223

27,640

Pounds sold

19,353

16,502

Net average selling price per pound

1.148

1.675

Shell egg net sales

First Quarter – Fiscal 2024 vs. Fiscal 2023

the first

quarter of

fiscal 2024,

conventional egg

sales decreased

$200.3 million,

47.1%, compared

to the

first

quarter

fiscal

2023,

primarily

due

47.6%

decrease

the

prices

for

conventional

eggs,

which

resulted

$204.6 million decrease in net sales, partially offset by a 1.0% increase in the volume of conventional eggs sold, which

resulted in a $4.3 million increase in net sales.

Conventional egg prices decreased

in the first quarter

of fiscal 2024 compared

to the first quarter

of fiscal 2023 as

the

U.S.

egg supply

recovers from

the most

recent HPAI

outbreak that

impacted our

results primarily

during the

fourth

quarter of fiscal 2022 and continuing through the first part of our fourth quarter of fiscal 2023.

Specialty egg

sales increased

$7.9 million, or

3.9%, in

the first

quarter of fiscal

2024 compared

to the first

quarter of

fiscal

2023,

primarily

due

8.4%

increase

the

prices

for

specialty

eggs,

which

resulted

$16.2

million

increase in net sales,

partially offset by

a 4.2% decrease in

the volume of specialty

eggs sold, which resulted

in a $8.4

million decrease in net sales.

Net average selling prices of specialty eggs increased in response to higher input costs and market conditions.

Demand for

specialty eggs

decreased as

conventional egg

prices were

significantly lower

in the

first quarter

of fiscal

2024 compared to the first quarter of fiscal 2023.

Cage-free egg

revenue for

the first

quarter of

fiscal 2024

represented 33.0%

of our

total net

shell egg

revenue versus

19.4% for

the same

prior year

period due

to the

lower conventional

egg prices

causing conventional

egg revenue

represent a smaller proportion of our total sales.

Index

Egg products net sales

First Quarter – Fiscal 2024 vs. Fiscal 2023

Egg

products

net

sales

decreased

$5.4

million,

19.6%,

for

the

first

quarter

fiscal

2024

compared

the

same

period of

fiscal 2023,

primarily due

to a

31.5% selling

price decrease,

which had

a $10.2

million negative

impact on

net sales.

Our egg products net average selling price

decreased in the first quarter of

fiscal 2024, compared to the first

quarter of

fiscal 2023 as the supply of shell eggs used to produce egg products recovers from the most recent HPAI outbreak.

COST OF SALES

Costs of sales

for the first

quarter of fiscal

2024 were $413.9

million compared to

$440.9 million for

the same period

of fiscal

2023.

The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):

Thirteen Weeks Ended

September 2, 2023

August 27, 2022

Change

Cost of Sales:

Farm production

253,507

266,651

(4.9)

Processing, packaging, and warehouse

81,906

81,417

0.6

Egg purchases and other (including change in inventory)

60,797

68,298

(11.0)

Total shell eggs

396,210

416,366

(4.8)

Egg products

17,701

24,488

(27.7)

Total

413,911

440,854

(6.1)

Farm production costs (per dozen produced)

Feed

0.597

0.667

(10.5)

Other

0.439

0.379

15.8

Total

1.036

1.046

(1.0)

Outside egg purchases (average cost per dozen)

1.65

2.57

(35.8)

Dozens produced

250,356

257,654

(2.8)

Percent produced to sold

91.7%

93.6%

(2.0)

Farm Production

First Quarter – Fiscal 2024 vs. Fiscal 2023

Feed costs per dozen produced decreased 10.5% in the first quarter of fiscal 2024 compared to the first quarter of fiscal

2023. This decrease

was primarily due to

lower prices for corn,

our primary feed

ingredient. Basis levels for

corn and

soybean meal were lower in our areas of operations compared to our prior year first fiscal quarter. The decrease in feed

cost per

dozen resulted

in a

decrease in

cost of

sales of

$17.5 million

for the

first quarter

of fiscal

2024 compared

the prior period quarter.

For the first

quarter of fiscal

2024, the average

daily CBOT market

price was $5.30

per bushel for

corn and $422

per

ton of soybean meal, representing decreases of 20.2% and

7.4%, respectively, as compared

to the average daily CBOT

prices for the first quarter of fiscal 2023.

Other farm production costs increased primarily due to higher flock amortization and

facility costs. Flock amortization

increased

primarily

from

higher

capitalized

feed

costs

well

higher

amortization

costs

from

increase

our

cage-free production.

Cage-free dozens

sold increased

12.6% in

the first

quarter of

fiscal 2024

compared to

the first

quarter of fiscal 2023.

Index

Facility

costs

increased

due

primarily

increased

labor

costs.

Labor

costs

increased

16.5%

compared

the

first

quarter of fiscal 2023 primarily due to increase in contract labor in response to labor shortages.

Current indications

for corn

project an

overall better

stocks-to-use ratio;

however,

until this

year’s harvest

is complete

and as

long

outside

factors

remain

uncertain

(including

weather

patterns

and

the

Russia-Ukraine

war

and

its

effect

export

markets), volatility could remain. Soybean meal supply has remained tight relative to demand in the first quarter of fiscal

2024.

Processing, packaging, and warehouse

First Quarter – Fiscal 2024 vs. Fiscal 2023

Processing, packaging, and warehouse costs remained relatively consistent compared to the first quarter of fiscal 2023.

On a per dozen basis, costs in this category increased due to the decrease in processing volume.

Egg purchases and other (including change in inventory)

First Quarter – Fiscal 2024 vs. Fiscal 2023

Costs in

this category

decreased primarily

due to

lower shell

egg prices

as the

average cost

per dozen

of outside

egg

purchases decreased 35.8% compared to first quarter of fiscal 2023. The decrease was partially offset by an increase in

the volume of outside egg purchases, causing the percentage of produced to sold to decrease to 91.7% from 93.6%.

GROSS PROFIT

Gross profit for the first quarter of fiscal 2024 was $45.4 million compared to $217.5 million for the same period of fiscal 2023.

The decrease of $172.1 million was primarily due to lower conventional egg prices and increased labor costs, partially offset by

lower farm production costs due to the decrease in feed ingredient prices.

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

September 2, 2023

August 27, 2022

$ Change

% Change

Specialty egg expense

12,005

13,067

(1,062)

(8.1)

Delivery expense

17,691

19,916

(2,225)

(11.2)

Payroll, taxes and benefits

12,066

10,987

1,079

9.8

Stock compensation expense

1,040

1,025

1.5

Other expenses

9,444

8,612

832

9.7

Total

52,246

53,607

(1,361)

(2.5)

First Quarter – Fiscal 2024 vs. Fiscal 2023

Specialty egg expense

Specialty

egg

expense

decreased

primarily

due

reduction

franchise

fees

Eggland’s

Best,

Inc.

well

reduced sales volume of specialty eggs.

Delivery expense

The decreased delivery expense is primarily due to a decrease in fuel and contract trucking expenses in the first quarter

of fiscal 2024 compared to the first quarter of fiscal 2023.

Payroll, taxes and benefits expense

The increase

in payroll,

taxes and

benefits expense

is due

to an

increase in

salaries and

wages compared

to the

first

quarter of fiscal year 2023.

Other expense

The increase in

other expense is

primarily due an

increase in legal

fees in the

first quarter of

fiscal 2024 compared

the first quarter of fiscal 2023.

Index

OPERATING

INCOME (LOSS)

For the first quarter

of fiscal 2024, we

recorded operating loss of

$6.8 million compared to

operating income of $163.9

million

for the same period of fiscal 2023.

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 first

quarter of

fiscal 2024, we

earned $7.5 million

of interest income

compared to $1.1

million for the

same period of

fiscal

2023.

The

increase

resulted

from

significantly

higher

investment

balances

and

higher

interest

rates.

The

Company

recorded interest

expense of

$142 thousand

and $148

thousand for

the first

quarters ended

September 2,

2023 and

August 27,

2022, respectively.

INCOME TAXES

For the first quarter of fiscal

2024, pre-tax income was $733 thousand

compared to $165.5 million for the

same period of fiscal

2023. We

recorded income tax expense of $322

thousand for the first quarter of

fiscal 2024, which reflects an effective

tax rate

of 43.9%.

Income tax expense

was $40.3 million

for the comparable

period of fiscal

2023, which reflects

an effective tax

rate

of 24.4%.

The increase

in the

effective

tax rate

for first

quarter of

fiscal 2024

is primarily

due to

the loss

attributable to

our

noncontrolling interest. Taxable income for the

first quarter of fiscal 2024 was $1.2 million and excludes the loss

attributable to

noncontrolling interest of $515 thousand, which represents an effective tax rate of 25.7%.

At September 2, 2023, the Company had an income tax receivable of $33.8 million compared to an income tax receivable of

$67.0 million at June 3, 2023. The change is primarily due to receipt during the first quarter of fiscal 2024 of a $33.2 million

federal tax refund plus associated federal interest income related to the carryback of fiscal 2021 taxable net operating losses.

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 first

quarter ended

September 2,

2023, was

$926 thousand,

or $0.02

per basic and

diluted common share,

compared to net

income attributable to

Cal-Maine Foods, Inc.

of $125.3 million

or $2.58

per basic and $2.57 per diluted common share for the same period of fiscal 2023.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital and Current Ratio

Our working capital

at September 2,

2023 was $937.7 million,

compared to $942.2

million at June

3, 2023. The

calculation of

working capital

is defined

as current

assets less

current liabilities.

Our current

ratio was

8.4 at

September 2,

2023, compared

with 6.2 at June 3, 2023. The current ratio is calculated by dividing current assets by current liabilities.

Cash Flows from Operating Activities

For the

thirteen weeks

ended September

2, 2023,

$23.7 million

in net

cash was

provided by

operating activities,

compared to

$172.8

million

provided

operating

activities

for

the

comparable

period

fiscal

2023.

The

decrease

cash

flow

from

operating activities resulted primarily from lower selling prices for conventional eggs compared to the prior-year period.

Cash Flows from Investing Activities

continue to

invest in

our facilities,

with $26.7

million used

to purchase

or construct

property,

plant and

equipment for

the

thirteen weeks ended

September 2, 2023,

compared to $27.7

million in the

same period of

fiscal 2023. Sales

and maturities of

investment

securities

were

$135.8

million

the

first

quarter

fiscal

2024,

compared

$20.3

million

fiscal

2023.

The

Index

increase in sales

and maturities of

investment securities is

primarily due to

the maturities of

short-term investments during

the

period.

Cash Flows from Financing Activities

paid

dividends of

$37.0 million

for

the thirteen

weeks ended

September 2,

2023 compared

to $36.7

million

in the

same

prior-year period.

As of September 2, 2023,

cash increased $67.5 million since June

3, 2023, compared to an

increase of $76.9 million during the

same period of fiscal 2023.

Credit Facility

had no long-term

debt outstanding at

September 2, 2023

or June 3,

2023. On November

15, 2021, we

entered into a

credit

agreement

that

provides for

senior

secured revolving

credit

facility (the

“Credit

Facility”), in

initial aggregate

principal

amount

$250

million with

five-year

term. As

September 2,

2023,

amounts were

borrowed under

the

Credit

Facility. We

have $4.3 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

Consolidated Financial

Statements and

Supplementary Data,

Note 10

Credit Facility included in our 2023 Annual Report for further information regarding our long-term debt.

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 September 2, 2023 (in thousands):

Project(s) Type

Projected

Completion

Projected Cost

Spent as of

September 2, 2023

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2024

54,702

23,221

31,481

Cage-Free Layer & Pullet Houses

Fiscal 2025

40,099

29,471

10,628

Feed Mill

Fiscal 2025

10,800

10,764

Cage-Free Layer & Pullet Houses

Fiscal 2026

38,883

24,623

14,260

Cage-Free Layer & Pullet Houses

Fiscal 2027

56,923

24,311

32,612

201,407

101,662

99,745

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

2023 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 thirteen weeks ended September 2, 2023 from

the information provided in Part II Item 7A Quantitative and Qualitative Disclosures About Market Risk in our 2023 Annual

Report.

Index

ITEM 4.

CONTROLS

AND

PROCEDURES

Disclosure Controls and Procedures

Our disclosure controls

and procedures are

designed to

provide reasonable assurance

that information required

to be disclosed

by us in the reports we file

or submit under the Exchange Act is recorded,

processed, summarized and reported, within the time

periods specified

in the

Securities and

Exchange Commission’s

rules and

forms. Disclosure controls

and procedures

include,

without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports

that

we file or submit under

the Exchange Act is accumulated and

communicated to management, including our principal

executive

and

principal

financial

officers,

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 September 2, 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 September

2, 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

2023

Annual

Report,

Part I

Item 3

Legal Proceedings,

and Part

Item 8,

Notes

to Consolidated

Financial

Statements and

Supplementary

Data, Note 16 - Commitments and Contingencies, and (ii) in this Quarterly Report

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 2023 Annual Report.

ITEM 2.

UNREGISTERED SALES

OF EQUITY

SECURITIES, USE

OF PROCEEDS,

AND ISSUER

PURCHASES

OF EQUITY SECURITIES

The following table is a summary of our first quarter 2024 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

06/04/23 to 07/01/23

—

07/02/23 to 07/29/23

106

44.75

—

07/30/23 to 09/02/23

—

106

44.75

—

(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:

October 3, 2023

/s/ Max P.

Bowman

Max P.

Bowman

Vice President, Chief Financial Officer

(Principal Financial Officer)

໿

Date:

October 3, 2023

/s/ Matthew S. Glover

Matthew S. Glover

Vice President – Accounting

(Principal Accounting Officer)

໿

Cal-Maine Foods - 10-Q quarterly report FY2024 Q1

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