Cal-Maine Foods - 10-Q quarterly report FY2024 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

March 2, 2024

☐

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

44,238,326

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 April 2, 2024.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets -

March 2, 2024 and June 3, 2023

Condensed Consolidated Statements of Income -

Thirteen and Thirty-nine Weeks Ended March 2, 2024 and February 25, 2023

Condensed Consolidated Statements of Comprehensive Income -

Thirteen and Thirty-nine Weeks Ended March 2, 2024 and February 25, 2023

Condensed Consolidated Statements of Cash Flows -

Thirty-nine Weeks Ended March 2, 2024 and February 25, 2023

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)

March 2, 2024

June 3, 2023

Assets

Current assets:

Cash and cash equivalents

367,123

292,824

Investment securities available-for-sale

327,720

355,090

Trade and other receivables, net

212,851

120,247

Income tax receivable

33,771

66,966

Inventories

269,244

284,418

Prepaid expenses and other current assets

6,883

5,380

Total current

assets

1,217,592

1,124,925

Property, plant &

equipment, net

826,573

744,540

Investments in unconsolidated entities

16,388

14,449

Goodwill

45,776

44,006

Intangible assets, net

16,534

15,897

Other long-term assets

10,666

10,708

Total Assets

2,133,529

1,954,525

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

95,610

82,590

Accrued wages and benefits

25,721

38,733

Accrued income taxes payable

30,113

8,288

Dividends payable

48,891

37,130

Accrued expenses and other liabilities

15,354

15,990

Total current

liabilities

215,689

182,731

Other noncurrent liabilities

30,740

9,999

Deferred income taxes, net

166,141

152,212

Total liabilities

412,570

344,942

Commitments and contingencies - see Note 10

—

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

75,226

72,112

Retained earnings

1,680,886

1,571,112

Accumulated other comprehensive loss, net of tax

(1,514)

(2,886)

Common stock in treasury at cost –

26,022

shares at March 2, 2024 and

26,077

at June 3, 2023

(31,597)

(30,008)

Total Cal-Maine Foods,

Inc. stockholders’ equity

1,723,752

1,611,081

Noncontrolling interest in consolidated entity

(2,793)

(1,498)

Total stockholders’

equity

1,720,959

1,609,583

Total Liabilities and Stockholders’

Equity

2,133,529

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

Thirty-nine Weeks Ended

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Net sales

703,076

997,493

1,685,654

2,457,537

Cost of sales

484,504

534,467

1,330,519

1,459,172

Gross profit

218,572

463,026

355,135

998,365

Selling, general and administrative

66,020

58,489

194,844

170,048

Gain on involuntary conversions

(9,929)

(3,220)

(9,929)

(3,220)

(Gain) loss on disposal of fixed assets

(306)

(26)

(44)

Operating income

162,787

407,783

170,264

831,501

Other income (expense):

Interest income, net

7,554

6,126

21,887

8,959

Royalty income

436

426

1,086

1,198

Patronage dividends

11,298

10,239

11,298

10,239

Equity income of unconsolidated entities

2,666

1,786

2,225

943

Other, net

418

(1,473)

1,250

(205)

Total other income, net

22,372

17,104

37,746

21,134

Income before income taxes

185,159

424,887

208,010

852,635

Income tax expense

38,796

102,118

44,658

206,438

Net income

146,363

322,769

163,352

646,197

Less: Loss attributable to noncontrolling

interest

(349)

(450)

(1,295)

(896)

Net income attributable to Cal-Maine Foods,

Inc.

146,712

323,219

164,647

647,093

Net income per common share:

Basic

3.01

6.64

3.38

13.31

Diluted

3.00

6.62

3.37

13.25

Weighted average

shares outstanding:

Basic

48,727

48,653

48,702

48,634

Diluted

48,884

48,842

48,865

48,832

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

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Net income

146,363

322,769

163,352

646,197

Other comprehensive income (loss), before

tax:

Unrealized holding gain (loss) on available-

for-sale securities, net of reclassification

adjustments

132

1,813

(1,945)

Income tax benefit (expense) related to

items of other comprehensive income

(32)

(6)

(441)

474

Other comprehensive income (loss), net of tax

100

1,372

(1,471)

Comprehensive income

146,463

322,789

164,724

644,726

Less: Comprehensive loss attributable to the

noncontrolling interest

(349)

(450)

(1,295)

(896)

Comprehensive income attributable to Cal-

Maine Foods, Inc.

146,812

323,239

166,019

645,622

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

March 2, 2024

February 25, 2023

Cash flows from operating activities:

Net income

163,352

646,197

Depreciation and amortization

59,151

53,198

Deferred income taxes

13,488

7,098

Other adjustments, net

1,613

Net cash provided by operations

237,604

706,509

Cash flows from investing activities:

Purchases of investment securities

(243,518)

(442,583)

Sales and maturities of investment securities

273,915

132,686

Investment in unconsolidated entities

(363)

(1,673)

Distributions from unconsolidated entities

1,000

—

Acquisition of business

(53,746)

—

Purchases of property,

plant and equipment

(95,969)

(86,168)

Net proceeds from disposal of property,

plant and equipment

243

118

Net cash used in investing activities

(118,438)

(397,620)

Cash flows from financing activities:

Payments of dividends

(42,965)

(144,559)

Purchase of common stock by treasury

(1,688)

(1,633)

Principal payments on finance lease

(214)

(167)

Net cash used in financing activities

(44,867)

(146,359)

Net change in cash and cash equivalents

74,299

162,530

Cash and cash equivalents at beginning of period

292,824

59,084

Cash and cash equivalents at end of period

367,123

221,614

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

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 and

year-to-date periods

ended on March 2, 2024 and February 25, 2023 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

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

adjusted

for

amortization

premiums

and

accretion

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 March 2,

2024 and June

2023, reserves for credit losses were

605

thousand and $

579

thousand, respectively.

The Company extends credit to customers

based

evaluation

each

customer’s

financial

condition

and

credit

history.

Collateral

generally

not

required.

The

Company

minimizes exposure

to 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.

Goodwill

represents

the

excess

the

purchase

price

over

the

fair

value

the

identifiable

net

assets

acquired.

Goodwill

evaluated

for

impairment

annually

first

performing

qualitative

assessment

determine

whether

quantitative

goodwill

Index

test is

necessary.

After assessing

the totality

of events

or circumstances,

if we

determine it

is more

likely than

not that

the fair

value

reporting

unit

less

than

its

carrying

amount,

then

perform

additional

quantitative

tests

determine

the

magnitude of any impairment.

Intangible Assets

Intangible

assets

are

initially

recorded

fair

value

business

acquisitions,

which

include

franchise

rights,

customer

relationships, non-compete

agreements, trademark

and right

of use

intangibles. They

are amortized

over their

estimated useful

lives

years. The

gross

cost

and

accumulated

amortization

intangible

assets

are

removed

when

the

recorded

amounts

are fully

amortized

and

the asset

is no

longer

in use

or the

contract has

expired.

When certain

events or

changes in

operating conditions

occur,

asset lives may

be adjusted

and an impairment

assessment may

be performed

on the recoverability

of the carrying amounts.

Indefinite life assets are recorded at fair value in business acquisitions and

represents water rights. They are not amortized, but

are reviewed for impairment at least annually or more frequently if

impairment indicators arise.

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

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.

Business Combinations

The Company applies the acquisition

method of accounting, which

requires that once control is obtained,

all the assets acquired

and liabilities assumed,

including amounts

attributable to noncontrolling

interests, are recorded

at their respective

fair values at

the date of acquisition. We

determine the fair values of identifiable assets and liabilities

internally,

which requires estimates and

the

use

various

valuation

techniques.

When

market

value

not

readily

available,

our

internal

valuation

methodology

considers the remaining estimated life of the assets acquired and what

management believes is the market value for those assets.

typically use the income

method approach for

intangible assets acquired in

a business combination. Significant

estimates in

valuing

certain

intangible

assets

include,

but

are

not

limited

to,

the

amount

and

timing

future

cash

flows,

growth

rates,

discount rates and

useful lives. The

excess of the purchase

price over fair values

of identifiable assets and

liabilities is recorded

as goodwill.

Gain on Involuntary Conversions

The Company

maintains insurance

for both

property damage

and business

interruption relating

to catastrophic

events, such

fires, hurricanes,

tornadoes

and other

acts of

God, and

is eligible

to participate

in U.S.

Department

of Agriculture

(“USDA”)

indemnity

and

compensation

programs

for

certain

losses

due

disease

outbreaks

such as

highly

pathogenic

avian

influenza

(“HPAI”).

Specifically,

the

Animal

Health

Protection

Act

authorizes

USDA to

provide

indemnity

payments

producers

for

birds and eggs

that must be

destroyed during a

disease response. Payments

received under these

programs are based

on the fair

market value

of the

poultry and/or

eggs at

the time

that HPAI

virus is

detected in

the flock.

Other covered

costs include

feed,

depopulation and disposal costs, and virus elimination costs. USDA does not

provide indemnity for income or production losses

suffered

due to

downtime or

other business

disruptions nor

for indirect

continuing expenses.

Recoveries received

for property

damage, business interruption and disease outbreaks in

excess of the net book value of damaged assets, clean-up and

demolition

costs,

and

other

direct

post-event

costs

are

recorded

within

“Gain

involuntary

conversions”

the

period

received

committed when all contingencies associated with the recoveries are resolved.

Loss Contingencies

Certain

conditions

may

exist

the

date

the

financial

statements

are

issued

that

may

result

loss

the

Company

but

which will

only be

resolved when

one or

more future

events occur

or fail

to occur.

The Company’s

management and

its legal

Index

counsel

assess such

contingent

liabilities, and

such assessment

inherently

involves an

exercise

of judgment.

In assessing

loss

contingencies

to legal

proceedings

that are

pending against

the Company

or unasserted

claims that

may result

in such

proceedings, the Company’s

legal counsel evaluates

the perceived merits

of any legal

proceedings or unasserted

claims as well

as the perceived merits of the amount of relief sought or expected to be

sought therein.

If the assessment

of a contingency

indicates it is

probable that

a material loss

has been incurred

and the amount

of the liability

can be

estimated, the

estimated liability

would be accrued

in the Company’s

financial statements.

If the assessment

indicates a

potentially material loss contingency is

not probable, but is reasonably possible,

or is probable but cannot be estimated,

then the

nature of the

contingent liability,

together with an

estimate of the

range of possible

loss if determinable

and material, would

disclosed. Loss

contingencies considered

remote are

generally not

disclosed unless

they involve

guarantees, in

which case

the

nature of the guarantee would be disclosed.

The Company expenses the costs of litigation as they are incurred.

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 - Acquisition

Effective

September 30, 2023

, the Company

acquired the assets of

Fassio Egg Farms,

Inc. (“Fassio”), related

to its commercial

shell

egg

production

and

processing

business.

Fassio

owns

and

operates

commercial

shell

egg

production

and

processing

facilities with

a capacity

at the

time of

acquisition 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.

The Company

accounted for the acquisition as a business combination.

The following

table summarizes

the consideration

paid for

the Fassio

assets and

the amounts

of assets

acquired and

liabilities

assumed recognized at the acquisition date (in thousands):

Cash consideration paid

53,746

Fair value of contingent consideration

1,000

Total estimated purchase

consideration

54,746

Recognized amounts of identifiable assets acquired and

liabilities assumed

Inventory

6,164

Property, plant and equipment

44,540

Intangible assets

2,272

Other long-term assets

143

Liabilities assumed

(143)

Total identifiable

net assets

52,976

Goodwill

1,770

54,746

Inventory consisted

primarily of

flock, feed

ingredients,

packaging, and

egg inventory.

Flock inventory

was valued at

carrying

value

management

believes

that

its

carrying

value

best

approximates

its

fair

value.

Feed

ingredients,

packaging

and

egg

inventory were all valued based on market prices as of September 30, 2023.

Property,

plant and

equipment were

valued utilizing

the cost

approach which

is based

on replacement

or reproduction

costs of

the assets and subtracting any depreciation resulting from physical deterioration

and/or functional or economic obsolescence.

Intangible

assets

consisted

primarily

water

rights

within

the

property

acquired.

Water

rights

were

valued

using

the

sales

comparison approach.

Index

Contingent

consideration

liability

was

recorded

and

represents

potential

future

cash

payment

the

sellers

contingent

the

acquired

business

meeting

certain

return

profitability

milestones over

three-year

period,

commencing

the date

the

acquisition.

The fair

value of

the contingent

consideration is

estimated using

a discounted

cash flow

model. Key

assumptions

and

unobservable

inputs that

require

significant judgement

used in

the estimate

include weighted

average cost

of capital,

egg

prices, projected revenue

and expenses over which

the contingent considered

is measured, and the

probability assessments with

respect to the

likelihood of achieving

the forecasted projections.

A range of

potential outcomes cannot

be reasonably estimated

due to market volatility of egg prices.

Goodwill

represents

the

excess

the

purchase

price

the

acquired

business

over

the

acquisition

date

fair

value

the

net

assets acquired.

Goodwill recorded

in connection

with the

Fassio acquisition

is primarily

attributable to

improved efficiencies

from integrating the assets of

Fassio with the operations

of the Company.

The Company recognized goodwill

of $

1.8

million as

a result of the acquisition.

Note 3 - Investment

Securities

The following represents the Company’s

investment securities as of March 2, 2024 and June 3, 2023 (in thousands):

March 2, 2024

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

6,147

—

6,084

Commercial paper

42,864

—

42,825

Corporate bonds

121,430

—

367

121,063

Certificates of deposits

1,830

—

1,828

US government and agency obligations

115,165

—

199

114,966

Asset backed securities

9,418

—

9,503

Treasury bills

31,455

—

31,451

Total current

investment securities

328,309

674

327,720

Mutual funds

1,108

—

1,124

Total noncurrent

investment securities

1,108

—

1,124

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 $

273.9

million

and $

132.7

million

during

the thirty-nine

weeks ended March

2, 2024

and February

25, 2023,

respectively.

Gross realized

gains for

the thirty-nine

weeks

ended March

2, 2024

and February

25, 2023

were $

thousand and

thousand, respectively.

Gross realized

losses for

the

thirty-nine weeks ended March 2, 2024 and February

25, 2023 were $

thousand and $

thousand, respectively.

There were

allowances

for credit losses at March 2, 2024 and June 3, 2023.

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 March

2, 2024 are as follows (in thousands):

Estimated Fair Value

Within one year

213,556

1-5 years

114,164

Total

327,720

Noncurrent

Proceeds from sales and maturities of noncurrent investment securities

were $

1.5

million and $

1.8

million during the thirty-nine

weeks ended March 2, 2024

and February 25, 2023, respectively.

Gross realized gains for the thirty-nine

weeks ended March 2,

2024 and February 25,

2023 were $

thousand and $

thousand, respectively.

There were

realized losses for the

thirty-nine

weeks ended March 2, 2024. Gross realized losses for the thirty-nine

weeks ended February 25, 2023 were $

thousand.

Note 4 - Fair Value

Measurements

The Company

is required

to categorize

both financial

and nonfinancial

assets and

liabilities based

on the

following fair

value

hierarchy. The

fair value

of an

asset is

the price

at which

the asset

could be

sold in

an orderly

transaction between

unrelated,

knowledgeable, and willing

parties able to engage in

the transaction. A liability’s

fair value is defined

as the amount that would

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.

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 March 2, 2024 and June

3, 2023 (in thousands):

March 2, 2024

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

6,084

—

6,084

Commercial paper

—

42,825

—

42,825

Corporate bonds

—

121,063

—

121,063

Certificates of deposits

—

1,828

—

1,828

US government and agency obligations

—

114,966

—

114,966

Asset backed securities

—

9,503

—

9,503

Treasury bills

—

31,451

—

31,451

Mutual funds

1,124

—

1,124

Total assets measured at fair

value

1,124

327,720

—

328,844

Liabilities

Contingent consideration

—

1,000

Total liabilities measured

at fair value

—

1,000

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

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.

Contingent

consideration

classified

Level

consists

the

potential

obligation

pay

earnout

the

sellers

Fassio

contingent on the

acquired business meeting

certain return on

profitability milestones over

three-year

period, commencing on

the date of

the acquisition. The fair

value of the

contingent consideration is

estimated using a

discounted cash flow

model. Key

assumptions and

unobservable inputs

that require

significant judgement

used in

the estimate

include weighted

average cost

capital,

egg

prices,

projected

revenue

and

expenses

over

which

the

contingent

considered

measured,

and

the

probability

assessments

with

respect

the

likelihood

achieving

the

forecasted

projections.

See

further

discussion

Note 2 -

Acquisition

Note 5 - Inventories

Inventories consisted of the following as of March 2, 2024 and June 3,

2023 (in thousands):

March 2, 2024

June 3, 2023

Flocks, net of amortization

150,441

164,540

Eggs and egg products

26,770

28,318

Feed and supplies

92,033

91,560

269,244

284,418

Index

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 March 2,

2024 and June

3, 2023 consisted of

approximately

10.9

million and

10.8

million pullets and breeders

and

42.2

million and

41.2

million layers, respectively.

Note 6 - Equity

The following reflects equity activity for the thirteen weeks ended

March 2, 2024 and February 25, 2023 (in thousands):

Thirteen Weeks

Ended March 2, 2024

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 December

2, 2023

703

(30,014)

74,214

(1,614)

1,583,071

(2,444)

1,623,964

Other comprehensive

income, net of tax

—

100

—

100

Stock compensation

plan transactions

—

(1,583)

1,012

—

(571)

Dividends ($

0.997

per share)

Common

—

(44,111)

—

(44,111)

Class A common

—

(4,786)

—

(4,786)

Net income (loss)

—

146,712

(349)

146,363

Balance at March 2,

2024

703

(31,597)

75,226

(1,514)

1,680,886

(2,793)

1,720,959

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

Index

Thirty-nine Weeks Ended

March 2, 2024

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

—

1,372

—

1,372

Stock compensation

plan transactions

—

(1,589)

3,114

—

1,525

Dividends ($

1.119

per share)

Common

—

(49,501)

—

(49,501)

Class A common

—

(5,372)

—

(5,372)

Net income (loss)

—

164,647

(1,295)

163,352

Balance at March 2,

2024

703

(31,597)

75,226

(1,514)

1,680,886

(2,793)

1,720,959

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 ($

4.403

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

Note 7 - 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

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Numerator

Net income

146,363

322,769

163,352

646,197

Less: Loss attributable to

noncontrolling interest

(349)

(450)

(1,295)

(896)

Net income attributable to Cal-Maine

Foods, Inc.

146,712

323,219

164,647

647,093

Denominator

Weighted-average

common shares

outstanding, basic

48,727

48,653

48,702

48,634

Effect of dilutive restricted shares

157

189

163

198

Weighted-average

common shares

outstanding, diluted

48,884

48,842

48,865

48,832

Net income per common share

attributable to Cal-Maine Foods, Inc.

Basic

3.01

6.64

3.38

13.31

Diluted

3.00

6.62

3.37

13.25

Note 8 - 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

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 compared 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 a

reduction

the sales

price

of the

transaction,

while inducement

offers,

when

accepted

by customers,

are

treated

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.’’

Index

Disaggregation of Revenue

The following table provides revenue disaggregated by product category

(in thousands):

Thirteen Weeks

Ended

Thirty-nine Weeks Ended

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Conventional shell egg sales

413,619

689,022

919,498

1,656,528

Specialty shell egg sales

262,293

272,205

688,879

700,803

Egg products

21,759

32,582

63,994

88,274

Other

5,405

3,684

13,283

11,932

703,076

997,493

1,685,654

2,457,537

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

amortized

over

the

contract

life

reduction

net

sales.

March

2024

and

June

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 9 - Stock Based Compensation

Total

stock-based

compensation

expense

was

3.2

and

3.1

million

for

the

thirty-nine

weeks

ended

March

2024

and

February 25, 2023, respectively.

Unrecognized

compensation

expense

as a

result

of non

-vested

restricted

stock outstanding

under

the

Amended

and

Restated 2012

Omnibus Long-Term

Incentive Plan

at March 2,

2024 of

8.6

million will be

recorded over

a weighted average

period

2.2

years.

Refer

Part

Item

Notes

Consolidated

Financial

Statements

and

Supplementary

Data,

Note 14

Stock Compensation Plans in our 2023 Annual Report for further information

on our stock compensation plans.

The Company’s restricted share activity

for the thirty-nine weeks ended March 2, 2024 follows:

Number of

Weighted

Average Grant

Date Fair Value

Outstanding, June 3, 2023

294,140

43.72

Granted

86,363

54.91

Vested

(99,360)

37.70

Forfeited

(1,329)

44.68

Outstanding, March 2, 2024

279,814

49.31

Index

Note 10 - 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,

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

Texas.

September

29,

2023,

the

Supreme

Court

Texas

denied

the

Company’s

Petition

for

Review

the

case

will

remanded to the

trial court for further

proceedings. The district

court has set

a case management conference

for April 12, 2024.

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

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

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. On February

12, 2024, the court affirmed the judgment of the district court.

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.

Index

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

alleged

that

the

Company

and

other

defendants

violated

Section

the

Sherman

Act,

15.

U.S.C.

agreeing

limit

the

production

eggs

and

thereby

illegally

raise

the

prices

that

plaintiffs

paid

for

processed

egg

products.

particular,

the

Egg

Products

Plaintiffs

attacked

certain features of

the United Egg

Producers animal-welfare guidelines

and program used by

the Company and

many other egg

producers.

On October 24, 2019,

the Company entered into

a confidential settlement agreement

with The Kellogg Company

dismissing all

claims against the

Company for an

amount that did

not have a

material impact on

the Company’s

financial condition or

results

of operations.

On November

11,

2019, a

stipulation

for dismissal

was filed

with the

court, and

on March

28, 2022,

the court

dismissed the Company with prejudice.

The trial of this case began

on October 17, 2023. On December

1, 2023, the jury returned a decision

awarding the Egg Products

Plaintiffs

17.8

million

in damages.

If the

jury’s

decision

is ultimately

upheld,

the defendants

would

be jointly

and

severally

liable

for

treble

damages,

53.3

million,

subject

credit

for

the

Kellogg

settlement

described

above

and

certain

other

settlements with

settling defendants,

plus the

Egg Product

Plaintiffs’

reasonable

attorneys’

fees. This

decision is

not

final and

remains subject

to the

defendants’ motion

for a

directed verdict

noted below

and appeals

by the

parties. During

our

second fiscal quarter

of 2024, we

recorded an accrued

expense of $

19.6

million in selling,

general and

administrative expenses

the

Company’s

Condensed

Consolidated

Statements

Income

and

classified

other

noncurrent

liabilities

the

Company’s

Condensed Consolidated

Balance Sheets. The

accrual represents

our estimate of

the Company’s

proportional share

of the reasonably

possible ultimate damages

award, excluding the Egg

Product Plaintiffs’ attorneys’

fees that we believe

would

approximately

offset

by the

credits

noted above.

have

entered

into a

judgment

allocation

and joint

defense

agreement

with

the

other

major

producer

defendant

remaining

the

case,

and

are

discussions

with

other

defendants

regarding

their

contributions. Our accrual may change in the future

based on the outcome of those discussions. Our accrual

may also be revised

in whole or in

part in the future

to the extent we

are successful in further

proceedings in the litigation.

On November 29, 2023,

the

defendants,

including

the

Company,

filed

motion

for

judgment

matter

law

their

favor,

known

directed

verdict, notwithstanding

the jury’s

decision. The

Company intends

to continue

to vigorously

defend the

claims asserted

by the

Egg Products Plaintiffs.

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

on appropriate

remedies. On

June 12,

2023, the

court ordered

the parties

to mediate

before the

retired Tenth

Circuit Chief Judge Deanell

Reece Tacha.

On October 26, 2023, the parties

filed separate status reports informing

the court that

the mediation

was unsuccessful.

Also on

October 26,

2023, the

defendants filed

a post-trial

motion to

dismiss and

supporting

brief arguing

that the

case should

be dismissed

due to

the state record

before the

court, the resulting

mootness of

the case,

and

violation

due

process.

November

10,

2023,

the

State

Oklahoma

filed

its

response

opposition

the

motion

dismiss and on

November 17, 2023,

the defendants filed

their reply.

The court has not

ruled on the motion.

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

monetary

exposure,

any,

the

Company

due

range

factors,

including

the

following,

among

others:

uncertainties

inherent

any

assessment

potential

costs

associated

with

injunctive

relief

other

penalties

based

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 ongoing litigation

with the State of Oklahoma

and motion to

dismiss before

the court, 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.

Index

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 11 - Subsequent Events

On March

14, 2024,

the Company

completed the

previously announced

acquisition from

Tyson

Foods, Inc.

of a

closed broiler

processing plant, hatchery and feed mill in Dexter,

Missouri.

April

2024,

one

the

Company’s

facilities

located

Parmer

County,

Texas,

tested

positive

for

HPAI,

affecting

approximately

1.6

million laying hens

and

337,000

pullets, or approximately

3.6

% of the Company’s

total flock as of

March 2,

2024.

The

Company

has

and

continues

all

guidelines

provided

the

United

States

Department

Agriculture

(the

“USDA”)

and

other

regulatory

agencies

depopulate

and

sanitize

the

facilities.

such,

Cal-Maine

will

eligible

participate

the

USDA

indemnity

program

and

other

programs

designed

compensate

for

the

loss of

birds

and

eggs.

The

Company’s

plans

are

repopulate

the

facilities

and

resume

normal

operations

the

facilities

within

6-8

months.

Due

volatility in

the market

prices of

eggs and

uncertain future

supply,

demand and

other market

conditions, an

estimate of

the net

income effect cannot be reasonably made.

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

1933

(the “Securities

Act”) and

Section 21E

of the

Securities Exchange

Act of

1934 (the

“Exchange Act”)

relating to

our shell

egg

and egg

products 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

the

recent

resurgence

United

States

(“U.S.”)

commercial

table

egg

layer

flocks

the

highly

pathogenic avian

influenza (“HPAI”)

outbreak, potential

future impact

on our business

of inflation

and changing

interest rates,

potential future

impact on our

business of new

legislation, rules

or policies,

potential outcomes

of legal proceedings

including

loss contingency

accruals and

factors

that may

result in

changes in

the amounts

recorded,

and other

projected

operating data,

including anticipated results

of operations and

financial condition. Such

forward-looking statements are

identified by the use

words such

as “believes,”

“intends,” “expects,”

“hopes,” “may,”

“should,” “plans,”

“projected,” “contemplates,”

“anticipates,”

similar

words.

Actual

outcomes

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

Part

Item

the

2023

Annual Report,

the

risk

factors

(if

any)

set forth

Part

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

the

shell

egg

business

(including

disease,

pests,

weather

conditions,

and

potential

for

product

recall), including

but not limited

to the current

outbreak of HPAI

affecting poultry

in the U.S.,

Canada and other

countries that

was first

detected in

commercial flocks

in the

U.S. in

February 2022

and that

first impacted

our flock

in December

2023, (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 a

pending acquisition not

to be met,

(vi) risks relating

to increased

costs and

higher and

potentially further

increases in,

inflation and

interest rates,

(vii) our

ability to

retain existing

customers, acquire new customers

and grow our product

mix, (viii) adverse results

in pending litigation matters,

and (ix) global

instability,

including

result

the

war

Ukraine,

the

Israel-Hamas

conflict

and

attacks

shipping

the

Red

Sea.

Readers are cautioned

not to place undue

reliance on forward-looking

statements because, while

we believe the assumptions

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, we

disclaim any intent or

obligation to update

publicly these forward-looking statements, whether because of

new information, future events, or otherwise.

GENERAL

Cal-Maine

Foods,

Inc.

(the

“Company,”

“we,”

“us,”

“our”)

primarily

engaged

the

production,

grading,

packaging,

marketing

and

distribution

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

42.2

million layers

and 10.9

million pullets

and breeders

is the largest

in the

U.S. We

sell most of

our shell

eggs to a

diverse group

of customers,

including national

and regional

grocery store

chains, club

stores, companies

servicing independent

supermarkets

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

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

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 global

instability that

could disrupt

the

supply chain.

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

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.

California,

Massachusetts,

Colorado,

Oregon,

Washington,

and

Nevada,

which

collectively

represent

approximately

20% of

the total

estimated

U.S.

population,

have

cage-free

legislation

currently

in effect

Although

we do

not

sell the majority of our eggs in these ten states, these state laws have impacted egg production

practices nationally.

A significant number of

our customers have announced

goals to either exclusively offer

cage-free eggs or significantly

increase

the

volume

cage-free

egg

sales

the

future,

subject

most

cases

availability

supply,

affordability

and

consumer

demand,

among

other

contingencies.

Our

customers

typically

not

commit

long-term

purchases

specific

quantities or

types

eggs

with

us,

and

result,

difficult

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.

As always, we

strive to offer

a product

mix that aligns

with current

and

anticipated

customer

purchase

decisions.

are

engaging

with

our

customers

help

them

meet

their

announced

goals

and

needs. We

have invested significant capital

in recent years to acquire

and construct cage-free facilities, and

we expect our focus

for future

expansion will

continue to

include cage-free

facilities. Our

volume of

cage-free egg

sales has

continued to

increase

and account for a larger share of our

product mix. Cage-free egg revenue represented approximately

27.9% of our total net shell

egg revenue for the third quarter of fiscal year

2024. At the same time, we understand the importance

of our continued ability to

provide

conventional

eggs

order

provide

our

customers

with

variety

egg

choices

and

address

hunger

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.”

ACQUISITIONS

During the second

quarter of fiscal

2024,

we acquired

the assets of

Fassio Egg Farms,

Inc. (“Fassio”) related

to its commercial

shell

egg

production

and

processing

business.

The

assets

acquired

included

commercial

shell

egg

production

and

processing

facilities with

a capacity

at the

time of

acquisition of

approximately

1.2 million

laying hens,

primarily

cage-free,

a feed

mill,

Index

pullets,

fertilizer

production

and

composting

operation

and

land

located

Erda,

Utah,

outside

Salt

Lake

City.

See

further

discussion

Note 2 – Acquisition

the

Notes

Condensed

Consolidated

Financial

Statements

included

this

Quarterly

Report.

Following the

end of

the third

quarter,

we announced

that we

completed

the acquisition

from Tyson

Foods, Inc.

of a

recently

closed broiler

processing plant,

hatchery and

feed mill

located in

Dexter,

Missouri. We

plan to

repurpose the

assets for

use in

egg and egg products production.

HPAI

Since the HPAI

outbreaks in 2015, there were no reported significant outbreaks of HPAI

in the commercial table egg layer

flocks until the February – December 2022 time period. During this time approximately

43 million commercial layers and 1.0

million pullets were depopulated resulting in significant pressure on

the supply of eggs. Thereafter, there were no HPAI

cases

affecting commercial layers until November 2023.

From November 2023 until the last reported case in commercial layer hens

in January 2024, approximately 15.7 million commercial laying

hens and pullets were depopulated.

During the third quarter of fiscal 2024, Cal-Maine

Foods experienced an HPAI

outbreak within its facilities in Kansas, resulting

in depopulation

of approximately

1.5 million

laying hens

and 240,000

pullets, or

approximately 3.3%

of our

total flock

at the

time. Following the end of

the third quarter, on

April 1, 2024, one of the Company’s

facilities located in Parmer County,

Texas,

tested

positive

for

HPAI,

resulting

depopulation

approximately

1.6

million

laying

hens

and

337,000

pullets,

approximately 3.6% of

the Company’s

total flock as of

March 2, 2024.

Production at the facility

has temporarily ceased

as the

Company follows the protocols prescribed by the USDA. Cal-Maine

Foods is working to secure production from other facilities

to minimize disruption to its customers.

The Company

remains dedicated

to robust

biosecurity programs

across its

locations; however,

no farm

is immune from

HPAI.

HPAI

still

present

the

wild

bird

population

and

the

extent

possible

future

outbreaks,

with

heightened

risk

during

the

migration

seasons, cannot

be predicted.

According to

the U.S.

Centers for

Disease Control

and Prevention,

the human

health

risk to

the U.S. public

from HPAI

viruses is

considered to

be low.

Also, according

to the USDA,

HPAI

cannot be

transmitted

through

safely

handled

and

properly

cooked

eggs.

There

known

risk

HPAI

associated

with

eggs

that

are

currently in

the market and

no eggs have

been recalled.

For additional information,

see the 2023

Annual Report,

Part II Item

“Management’s Discussion and

Analysis of Financial Condition and Results of Operations – HPAI.”

EXECUTIVE OVERVIEW

For

the

third quarter

and

first three

quarters

of fiscal

2024,

recorded

gross profit

of $218.6

million

and

$355.1 million,

respectively,

compared

$463.0

million

and

$998.4

million,

respectively,

for

the

same

periods

fiscal

2023,

with

the

decreases

due primarily

to lower

conventional shell

egg prices.

The decrease

in gross

profit was

partially offset

by lower

feed

ingredient prices in the third quarter and first three quarters of fiscal

2024 compared to the same periods

of fiscal 2023.

Our

net

average selling

price per

dozen for

the

third quarter

of fiscal

2024

was $2.247

compared

to $3.298

the prior-year

period. Conventional

egg prices

per dozen

were $2.152

compared to

$3.678 for

the prior-year

period, and

specialty egg

prices

per dozen were $2.415 compared to $2.616 for the prior-year

period. Egg prices in the third quarter of fiscal 2023

were elevated

compared to historical averages prior

to fiscal 2023 primarily due to

the resurgence of HPAI

outbreaks and other market factors

in November 2023

through January 2024,

as described above and

herein. Although egg

prices in the third

quarter of 2024 were

lower than

in the

prior-year period,

they were

elevated above

historical averages

due to

the resurgence

of HPAI

in November

2023. According to the USDA,

the five-year average of the monthly

average size of the layer hen flock

from December through

February

(which

most

closely

aligns

with

our

third

fiscal

quarter)

through

2023

330.2

million

hens.

The

monthly

average

layer

hen

flock

from

December

2023

through

February

2024

was

312.2

million,

which

is 18.0

million

5.5%

less than

the

five-year average.

During both

the third

quarters of

2023 and

2024, supply

constraints as

well as

seasonal demand

during the

holidays put upward pressure on the price of shell eggs.

Our net

average selling

price per

dozen for

the first

three quarters

of fiscal

2024 was

$1.866 compared

to $2.771

in the

prior-

year

period.

Conventional

egg

prices per

dozen

were $1.624

compared

to $2.984

for the

prior-year

period,

and

specialty egg

prices

per

dozen

were

$2.328

compared

$2.369

for

the

prior-year

period.

The

daily

average

price

for

the

Urner

Barry

southeast

large

index

for

the third

quarter

fiscal

2024

and

first

three

quarters

fiscal

2024

decreased

35.2%

and

43.7%,

respectively, from

the comparable periods

in the prior year. For information

about historical shell egg prices, see Part I Item I of

our 2023 Annual Report.

In the third quarter of

2024, we achieved record

quarterly sales volume of total

dozens sold and specialty dozens

sold. Our total

dozens

sold

increased

3.2%

300.8

million

dozen

shell

eggs for

the

third

quarter

of fiscal

2024

compared

291.4

million

dozen

for

the

same

period

fiscal

2023.

For

the

year-to-date

period,

total

dozens

sold

increased

1.3%

from

850.8

million

Index

dozen

862.0

million

dozen.

For

the

third

quarter

fiscal

2024,

conventional

dozens

sold

increased

2.6%

and

specialty

dozens sold

increased 4.4%

as compared

to the

same quarter

in fiscal

2023.

Demand for

specialty eggs

increased in

the third

quarter of

fiscal 2024

compared to

the same

prior year

period due

primarily to

cage-free requirements

becoming effective

for

Nevada, Oregon and Washington

on January 1, 2024. For

the year-to-date period,

conventional dozens sold increased

2.0% and

specialty dozens sold remained consistent compared to the prior year period.

Our farm

production costs

per dozen

produced for

the third

quarter and

first three

quarters of

fiscal 2024

decreased 10.5%,

$0.11,

and 6.6%,

or $0.07,

respectively,

compared to

the prior

year periods,

primarily due

to lower

feed costs.

Feed costs

per

dozen produced decreased

19.9%, or $0.14,

compared to the third

quarter of fiscal

2023 and 16.7%,

or $0.11,

for the first three

quarters of

fiscal 2023,

primarily due

to lower

feed ingredient

prices. For

information about

historical corn

and soybean

meal

prices, see Part I Item I of our 2023

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

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Net sales

100.0

Cost of sales

68.9

53.6

78.9

59.4

Gross profit

31.1

46.4

21.1

40.6

Selling, general and administrative

9.3

5.9

11.6

6.9

Gain on involuntary conversions

(1.4)

(0.3)

(0.6)

(0.1)

Operating income

23.2

40.8

10.1

33.8

Total other income, net

3.2

1.7

2.2

0.9

Income before income taxes

26.4

42.5

12.3

34.7

Income tax expense

5.5

10.2

2.6

8.4

Net income

20.9

32.3

9.7

26.3

Less: Loss attributable to noncontrolling

interest

—

(0.1)

—

Net income attributable to Cal-Maine

Foods, Inc.

20.9

32.3

9.8

26.3

NET SALES

Total

net sales for the

third quarter of fiscal

2024 were $703.1

million compared to

$997.5 million for the

same period of fiscal

2023.

Net shell

egg sales

represented 96.

9% and

96.7% of

total net

sales for

the third

quarters

of fiscal

2024 and

2023, 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 March

2, 2024

were $1.7

billion, compared

to $2.5

billion for

the comparable

period of fiscal 2023.

Net shell egg sales

represented 96.2% and

96.4% of total net

sales for the thirty-nine

weeks ended March 2,

2024 and February

25, 2023, 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

March 2, 2024

February 25, 2023

March 2, 2024

February 25, 2023

Total net sales

703,076

997,493

1,685,654

2,457,537

Conventional

413,619

60.7

689,022

71.4

919,498

56.7

1,656,528

69.9

Specialty

262,293

38.5

272,205

28.2

688,879

42.5

700,803

29.6

Egg sales, net

675,912

99.2

961,227

99.6

1,608,377

99.2

2,357,331

99.5

Other

5,405

0.8

3,684

0.4

13,283

0.8

11,932

0.5

Net shell egg sales

681,317

100.0

964,911

100.0

1,621,660

100.0

2,369,263

100.0

Net shell egg sales as a

percent of total net sales

96.9

96.7

96.2

96.4

Dozens sold:

Conventional

192,182

63.9

187,357

64.3

566,174

65.7

555,045

65.2

Specialty

108,597

36.1

104,059

35.7

295,904

34.3

295,774

34.8

Total dozens sold

300,779

100.0

291,416

100.0

862,078

100.0

850,819

100.0

Net average selling price

per dozen:

Conventional

2.152

3.678

1.624

2.984

Specialty

2.415

2.616

2.328

2.369

All shell eggs

2.247

3.298

1.866

2.771

Egg products sales:

Egg products net sales

21,759

32,582

63,994

88,274

Pounds sold

18,745

16,796

55,096

49,000

Net average selling price

per pound

1.161

1.940

1.161

1.802

Shell egg net sales

Third Quarter – Fiscal 2024

vs. Fiscal 2023

In the

third quarter

of fiscal

2024, conventional

egg sales

decreased $275.4

million, or

40.0%, compared

to the

third

quarter

fiscal

2023,

primarily

due

41.5%

decrease

the

prices

for

conventional

eggs,

which

resulted

$293.3 million decrease in net sales, partially offset

by a 2.6% increase in the volume of conventional

eggs sold, which

resulted in a $17.7 million increase in net sales.

Conventional

egg

prices

reached

record

highs

third

quarter

fiscal

2023

due

HPAI

outbreaks

experienced

throughout calendar

year 2022 as

well seasonal

demand during

the winter

holidays. Prices

were lower in

the first

half

of fiscal 2024

compared to

the same period

of fiscal 2023

as the U.S.

egg supply

started to

recover from

outbreaks of

HPAI.

There has

been a

resurgence

of HPAI

starting in

November 2023,

and continuing

through the

third quarter

fiscal 2024, which increased prices due

to supply constraints.

However, prices remained

lower than the third quarter of

fiscal 2023.

Specialty egg sales decreased

$9.9 million, or 3.6%,

in the third quarter

of fiscal 2024

compared to the third

quarter of

fiscal

2023,

primarily

due

7.7%

decrease

the

prices

for

specialty

eggs,

which

resulted

$11.9

million

decrease in net sales.

Our total dozens

sold and specialty

dozens sold during

the third quarter

of fiscal 2024

were records for

our Company.

Demand

for

specialty

eggs

increased

the

third

quarter

fiscal

2024

compared

the

same

prior

year

period,

primarily due

to cage-free

requirements becoming

effective for

Nevada, Oregon

and Washington

effective January

2024.

Index

Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023

For the thirty-nine

weeks ended March 2,

2024, conventional egg

sales decreased $737.0 million,

or 44.5%, compared

to the

same period

of fiscal

2023, primarily

due to

the decrease

in the

prices for

conventional shell

eggs. Changes

prices

resulted

$770.0

million

decrease

net

sales,

partially

offset

2.0%

increase

the

volume

conventional eggs sold, which resulted in a $33.2 million increase in net sales.

During

the

first

three

quarters

fiscal

2024,

the

U.S.

egg

supply

was

recovering

from

the

earlier

HPAI

outbreaks,

leading to lower egg prices than the prior year period,

although as noted above there was a resurgence

in HPAI

starting

in November 2023.

Egg products net sales

Third Quarter – Fiscal 2024

vs. Fiscal 2023

Egg

products

net sales

decreased

$10.8

million,

or 33.2%,

for

the third

quarter of

fiscal 2024

compared to

the same

period of

fiscal 2023,

primarily due

to a

40.2%

selling price

decrease, which

had a

$14.6 million

negative impact

net sales.

Our egg

products net

average selling

price decreased

in the

third quarter

of fiscal

2024, compared

to the

third quarter

of fiscal 2023

as the supply of shell eggs used to produce egg products increased.

Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023

Egg products net sales decreased

$24.3 million, or 27.5%, primarily

due to a 35.6% selling price

decrease compared to

the first thirty-nine weeks of fiscal 2023, which had a $35.3 million

negative impact on net sales.

Our egg

products

net average

selling price

decreased

in the

first three

quarters of

fiscal 2024,

compared

to the

prior

year period as the supply of shell eggs used to produce egg products increased.

Index

COST OF SALES

Costs of sales

for the

third quarter of

fiscal 2024

were $484.5 million

compared to $534.5

million for the

same period of

fiscal

2023. Costs of sales for the year-to-date period were $1.3 billion

compared to $1.5 billion for the prior year period.

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

March 2, 2024

February 25,

2023

Change

March 2, 2024

February 25,

2023

Change

Cost of Sales:

Farm production

248,650

280,384

(11.3)

760,525

823,043

(7.6)

Processing, packaging, and

warehouse

86,423

87,037

(0.7)

253,096

252,093

0.4

Egg purchases and other

(including change in

inventory)

127,925

135,003

(5.2)

260,375

301,274

(13.6)

Total shell eggs

462,998

502,424

(7.8)

1,273,996

1,376,410

(7.4)

Egg products

21,506

32,043

(32.9)

56,523

82,762

(31.7)

Total

484,504

534,467

(9.3)

1,330,519

1,459,172

(8.8)

Farm production costs (per

dozen produced)

Feed

0.544

0.679

(19.9)

0.564

0.677

(16.7)

Other

0.421

0.399

5.5

0.431

0.388

11.1

Total

0.965

1.078

(10.5)

0.995

1.065

(6.6)

Outside egg purchases

(average cost per dozen)

2.44

3.72

(34.4)

2.09

3.20

(34.7)

Dozens produced

259,527

263,174

(1.4)

774,984

782,186

(0.9)

Percent produced to sold

86.3%

90.3%

(4.4)

89.9%

91.9%

(2.2)

Farm Production

Third Quarter – Fiscal 2024

vs. Fiscal 2023

Feed

costs per

dozen

produced

decreased

19.9%

the

third

quarter

of fiscal

2024

compared

the

third

quarter

fiscal 2023. This

decrease was primarily

due to lower

prices for corn

and soybean meal,

our primary feed

ingredients.

The decrease in feed cost per dozen resulted

in a decrease in cost of sales of $35.0 million for

the third quarter of fiscal

2024 compared to the prior period quarter.

For the

third quarter

of fiscal

2024, the

average Chicago

Board of

Trade (“CBOT”)

daily market

price was

$4.51 per

bushel

for

corn

and

$370

per

ton

soybean

meal,

representing

decreases

32.4%

and

21.8%,

respectively,

compared

the

average

CBOT

daily

market

prices

for

the

third

quarter

fiscal

2023.

Basis

levels

for

corn

and

soybean meal were lower in our areas of operations compared to our prior year

third fiscal quarter.

Other

farm

production

costs

increased

primarily

due

higher

flock

amortization

and,

lesser

extent,

increased

facility

costs.

Flock

amortization

increased

primarily

due

the

increased

capitalized

value

our

flocks.

This

primarily due to the higher feed costs in earlier periods incurred during

the growing phase of the flocks.

Facility costs increased

due to higher

repairs and maintenance

costs in the third

quarter of fiscal 2024

compared to the

third quarter of fiscal 2023.

Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023

Feed costs

per dozen

produced decreased

16.7% in

the thirty-nine

weeks ended

March 2,

2024 compared

to the

same

period of

fiscal 2023,

primarily due

to lower

feed ingredient

prices. The

decrease in

feed cost

per dozen

resulted in

decrease in cost of sales of $87.6 million compared to the prior year period

Index

For the

year-to-date period,

the average

CBOT daily

market price

was $4.87 per

bushel for

corn and $403

per ton

for

soybean meal, representing

decreases of 27.3%

and 10.5%, respectively,

compared to the

average CBOT daily

market

prices for

the comparable

period in

the prior

year.

In addition,

basis levels

for corn

and soybean

meal were

lower for

the thirty-nine weeks ended March 2, 2024 compared to the same period of

fiscal 2023.

Other farm

production costs

increased due

primarily to

higher flock

amortization,

for the

reasons described

above, as

well as increased facility costs.

Facility

costs

increased

due

primarily

increased

contract

labor

response

labor

shortages,

well

higher

repairs

and

maintenance

costs for

the thirty-nine

weeks ended

March

2, 2024

compared to

the same

period

of fiscal

2023.

Current

indications

for

corn

project

overall

better

stocks-to-use

ratio

implying

potentially

lower

prices

the

near

term;

however, as long

as outside factors remain uncertain

(including weather patterns and

global supply chain disruptions), volatility

could remain. Soybean meal supply has remained tight relative to demand

in the first three quarters

of fiscal 2024.

Processing, packaging, and warehouse

Third Quarter – Fiscal 2024

vs. Fiscal 2023

Processing,

packaging,

and

warehouse

costs

decreased

0.7%

compared

the

third

quarter

fiscal

2023

processed fewer

dozens primarily

due to

the HPAI

outbreak at

our Kansas

facilities. The

decrease was

slightly offset

by inflationary costs in the third quarter of fiscal 2024 compared to the

third quarter of fiscal 2023.

Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023

Processing,

packaging,

and

warehouse

costs

increased

0.4%

compared

the

first

three

quarters

fiscal

2023,

primarily

due

increase

costs

due

inflationary

pressure,

partially

offset

reduction

the

volume

processed dozens.

Egg purchases and other (including change in inventory)

Third 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 34.4% compared

to third quarter of fiscal 2023,

partially offset by an

increase of 36.4% in dozens

purchased due to

the loss of

production caused by

the HPAI

outbreak at our

Kansas facilities as

well as an

increase in

sales volume.

Thirty-nine weeks – 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

34.7% compared

to fiscal

2023, partially

offset by

an increase

of 21.9%

in dozens

purchased for

the reasons discussed above.

GROSS PROFIT

Gross profit

for

the third

quarter of

fiscal 2024

was $218.6

million

compared

to $463.0

million

for

the same

period of

fiscal

2023.

Gross profit for

the thirty-nine weeks

ended March 2,

2024 was $355.1

million compared

to $998.4 million

for the same

period of 2023. The decrease for

both periods was primarily due to lower

conventional egg prices,

partially offset by lower feed

ingredient prices.

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

March 2, 2024

February 25, 2023

$ Change

% Change

Specialty egg expense

20,173

15,689

4,484

28.6

Delivery expense

18,832

19,453

(621)

(3.2)

Payroll, taxes and benefits

13,134

14,325

(1,191)

(8.3)

Stock compensation expense

1,111

1,059

4.9

Other expenses

12,770

7,963

4,807

60.4

Total

66,020

58,489

7,531

12.9

Third Quarter – Fiscal 2024

vs. Fiscal 2023

Specialty egg expense

During the second

part of fiscal year

2023, the higher

prices for conventional

eggs and the

comparatively lower prices

for

specialty

eggs

diminished

the

need

promote

specialty

eggs.

During

the

third

quarter

fiscal

year

2024,

significantly

increased

promotional

programs,

resulting

higher

advertising

fees.

This

was

partially

offset

reduction in franchise fees paid to Eggland’s

Best, Inc.

Delivery expense

The

decreased

delivery

expense

primarily

due

decrease

fuel

and

contract

trucking

expenses

the

third

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

Payroll, taxes and benefits expense

The

decrease

payroll,

taxes

and

benefits

expense

due

decrease

accrued

bonuses

compared

the

third

quarter

of fiscal

2023

as well

as a

reduction

in employee

insurance

expenses

compared to

the

third quarter

of fiscal

2023.

Other expense

The increase

in other

expense is primarily

due to increased

legal costs incurred

compared to the

third quarter

of fiscal

2023.

Thirty-nine Weeks Ended

March 2, 2024

February 25, 2023

$ Change

% Change

Specialty egg expense

48,102

43,429

4,673

10.8

Delivery expense

54,229

57,544

(3,315)

(5.8)

Payroll, taxes and benefits

36,276

39,139

(2,863)

(7.3)

Stock compensation expense

3,212

3,071

141

4.6

Litigation loss contingency accrual

19,648

—

19,648

N.M.

Other expenses

33,377

26,865

6,512

24.2

Total

194,844

170,048

24,796

14.6

N.M. - Not Meaningful

Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023

Specialty egg expense

Specialty egg expense increased

by 10.8%, as advertising

expense increased in fiscal 2024

as discussed above and was

partially offset by the reduction in franchise fees paid to Eggland’s

Best, Inc.

Delivery expense

The decreased delivery expense is primarily due to a decrease in fuel

and contract trucking expenses in fiscal 2024.

Index

Payroll, taxes and benefits expense

The decrease

in payroll, taxes

and benefits expense

is primarily due

to a decrease

in accrued bonuses

in the first

three

quarters of fiscal 2024 compared to the prior year period.

Litigation loss contingency accrual

The

litigation

loss

contingency

accrual

$19.6

million

relates

jury

decision

returned

December

2023

pending

anti-trust

litigation.

See

further

discussion

Note 10 - Commitments and Contingencies

the

Notes

Condensed Consolidated Financial Statements included in this Quarterly

Report.

Other expenses

The increase in other expense is primarily due to increased legal costs incurred

in the year-to-date period.

GAIN ON INVOLUNTARY

CONVERSIONS

For

the

third

quarter

fiscal

2024

and

2023,

recorded

gain

$9.9

million

and

$3.2

million,

respectively,

due

recoveries under indemnity and insurance programs

that exceeded the amortized book value of the covered

assets and our direct

costs.

OPERATING

INCOME (LOSS)

For the

third quarter

of fiscal

2024,

we recorded

operating income

of $162.8

million compared

to operating

income of

$407.8

million for the same period of fiscal 2023.

For the

thirty-nine weeks

ended March

2, 2024,

we recorded

an operating

income of

$170.3 million

compared to

an operating

income of $831.5 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 third

quarter of fiscal

2024,

we earned $7.8

million of interest

income compared

to $6.3 million

for the same

period of

fiscal 2023.

The increase

resulted from

higher investment

balances and

interest rates.

The Company

recorded interest

expense

of $247 thousand and $143 thousand for the third quarters ended March

2, 2024 and February 25, 2023, respectively.

For the

thirty-nine

weeks ended

March 2,

2024, we

earned $22.4

million of

interest income

compared

to $9.4

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 $523

thousand and

$433 thousand

for the

thirty-nine weeks

ended March

2, 2024

and

February 25, 2023, respectively.

INCOME TAXES

For the third quarter of fiscal 2024,

pre-tax income was $185.2 million compared

to $424.9 million for the same period of

fiscal

2023. We

recorded income tax

expense of $38.8

million for the

third quarter of

fiscal 2024, which

reflects an effective

tax rate

of 21.0%. This

includes the discrete

tax benefit of

$6.4 million associated

with the fiscal

2023 provision-to-return

adjustments.

Excluding the

discrete tax

benefit, income

tax expense

was $45.2

million for

the third

quarter of

fiscal 2024

with an

adjusted

effective tax rate of

24.4%.

Income tax expense was $102.1

million for the comparable

period of fiscal 2023, which

reflects an

effective tax rate of 24.0%.

For the

thirty-nine

weeks ended

March 2,

2024, pre-tax

income was

$208.0

million compared

to $852.6

million for

the same

period

fiscal

2023.

recorded

income

tax

expense

of $44.

million,

which

reflects

effective

tax

rate

21.5%. This

includes the

discrete tax benefit

of $6.4

million associated

with the fiscal

2023 provision-to-return

adjustments.

Excluding the

discrete tax

benefit, income

tax expense

was $51.0

million with

an adjusted

effective

tax rate

of 24.5%.

recorded income

tax expense of $206.4 million in the prior year period, which reflects an effective

tax rate of 24.2%.

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.

Index

NET INCOME ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

Net income

attributable to

Cal-Maine Foods,

Inc. for

the third

quarter ended

March 2,

2024, was

$146.7 million,

or $3.01

per

basic and $3.00

per diluted common

share, compared to

net income attributable

to Cal-Maine Foods,

Inc. of $323.2

million, or

$6.64 per basic and $6.62 per diluted common share for the same period of

fiscal 2023.

Net income

attributable to

Cal-Maine Foods, Inc.

for the thirty-nine

weeks ended March

2, 2024,

was $164.6 million,

or $3.38

per basic and

$3.37 per diluted common

share, compared to net

income attributable to

Cal-Maine Foods, Inc.

of $647.1 million

or $13.31 per basic and $13.25 per diluted common share, for the same

period of fiscal 2023.

LIQUIDITY AND CAPITAL

RESOURCES

Working

Capital and Current Ratio

Our working capital at

March 2, 2024 was $1.0 billion, 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 5.7

at March 2, 2024, 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

thirty-nine weeks

ended March

2, 2024,

$237.6 million

in net

cash was

provided by

operating activities,

compared to

$706.5

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

For the thirty-nine

weeks ended March

2, 2024,

$118.4 million

was used in

investing activities,

primarily due

to the purchases

of investment

securities, the

acquisition of

assets of

Fassio Egg

Farms, Inc.,

and purchases

of property,

plant and

equipment.

This

compares

to $397.6

million

used in

investing

activities

the same

period

of fiscal

2023,

primarily

due

to purchases

investment securities and purchases of

property, plant

and equipment.

Sales and maturities of investment securities

were $273.9

million in

first three

quarters of

fiscal 2024,

compared to

$132.7 million

in the

first three

quarters fiscal

2023. The

increase in

sales

and

maturities

investment

securities

primarily

due

the

maturities

short-term

investments

during

the

period.

Purchases of

property,

plant and

equipment were

$96.0 million

and $86.2

million in

the first

three quarters

of fiscal

2024 and

2023, respectively, primarily

reflecting progress on our construction projects.

Cash Flows from Financing Activities

paid

dividends

$43.0

million

for

the

thirty-nine

weeks

ended

March

2, 2024

compared

$144.6

million

the

same

prior-year period.

As of

March 2,

2024, cash

increased $74.3

million

since June

3, 2023,

compared to

an increase

of $162.5

million during

the

same period of fiscal 2023.

Credit Facility

had

long-term

debt

outstanding

March

2024

June

2023.

November

15,

2021,

entered

into

credit

agreement

that

provides

for

senior

secured

revolving

credit facility

(the

“Credit

Facility”),

initial

aggregate

principal

amount of up to

$250 million with a five-year

term. As of March 2,

2024, no 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

Part

Item

Notes

Consolidated

Financial

Statements

and

Supplementary

Data,

Note

Credit

Facility included in our 2023 Annual Report for further information

regarding our long-term debt.

Dividends

accordance

with

our

variable

dividend

policy,

will

pay

cash

dividend

totaling

approximately

$48.9

million,

approximately $0.997 per

share to holders of our

common and Class A common

stock with respect to

our third fiscal quarter

2024.

The

amount

paid

per

will

vary

based

the

number

outstanding

the

record

date.

The

dividend

payable on May 16, 2024 to holders of record on May 1, 2024.

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 March 2, 2024 (in thousands):

Project(s) Type

Projected

Completion

Projected Cost

Spent as of March 2,

2024

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2025

72,915

49,379

23,536

Feed Mill

Fiscal 2025

10,479

3,165

7,314

Dexter, MO Renovations

Fiscal 2025

11,000

Cage-Free Layer & Pullet Houses

Fiscal 2026

82,298

66,823

15,475

Cage-Free Layer & Pullet Houses

Fiscal 2027

56,923

32,991

23,932

233,615

152,358

81,257

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

thirty-nine weeks ended March 2, 2024 from the

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

Market Risk in our 2023 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 March 2, 2024 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

March 2, 2024

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

Item

Legal

Proceedings,

and

Part

Item 8,

Notes

Consolidated

Financial

Statements

and

Supplementary

Data,

Note

Commitments

and

Contingencies,

and

(ii)

this

Quarterly

Report

Note 10

- Commitments and

Contingencies

the

Notes

Condensed

Consolidated

Financial

Statements,

which

discussions

are

incorporated

herein

reference.

ITEM 1A.

RISK

FACTORS

There have

been no

material changes

in the risk

factors previously

disclosed in

the Company’s

2023 Annual

Report, except

reported herein in Part I Item 2 under the heading “HPAI.”

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF

PROCEEDS

The following table is a summary of our third 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

12/03/23 to 12/30/23

—

12/31/23 to 01/27/24

30,650

54.91

—

01/28/24 to 03/02/24

—

30,650

54.91

—

(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:

April 2, 2024

/s/ Max P.

Bowman

Max P.

Bowman

Vice President, Chief Financial

Officer

(Principal Financial Officer)

໿

Date:

April 2, 2024

/s/ Matthew S. Glover

Matthew S. Glover

Vice President – Accounting

(Principal Accounting Officer)

໿

Cal-Maine Foods - 10-Q quarterly report FY2024 Q3

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