CALM 10-Q
Cal-Maine Foods Inc (CALM)
10-Q
2025-04-08
For: 2025-03-01
View Original
Added on
April 11, 2026
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
,
,
,
(Address of principal executive offices) (Zip Code)
(
)
(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
The
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☑
☐
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).
☑
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☑
Accelerated filer
☐
Non – Accelerated filer
☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
☑
There were
value, outstanding as of April 8, 2025.
2
INDEX
Page
Number
Part I.
Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Other Information
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
3
PART I. FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
(Unaudited)
March 1, 2025
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
$
Investment securities available-for-sale
Trade and other receivables, net
Income tax receivable
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant & equipment, net
Investments in unconsolidated entities
Goodwill
Intangible assets, net
Other long-term assets
Total Assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
Accrued wages and benefits
Accrued income taxes payable
Dividends payable
Accrued expenses and other liabilities
Total current liabilities
Other noncurrent liabilities
Deferred income taxes, net
Total liabilities
Commitments and contingencies - see Note 10
—
—
Stockholders’ equity:
Common stock ($
Common stock - authorized
Class A convertible common stock - authorized and issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
(757 )
(1,773 )
Common stock in treasury at cost –
at June 1, 2024
(35,496 )
(31,597 )
Total Cal-Maine Foods, Inc. stockholders’ equity
Noncontrolling interest in consolidated entity
(3,104 )
Total stockholders’ equity
Total Liabilities and Stockholders’ Equity
$
$
See Notes to Condensed Consolidated Financial Statements.
4
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 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net sales
$
$
$
$
Cost of sales
Gross profit
Selling, general and administrative
(Gain) loss on involuntary conversions
(9,929 )
(9,929 )
(Gain) loss on disposal of fixed assets
(306 )
(1,001 )
(44 )
Operating income
Other income (expense):
Interest income, net
Patronage dividends
Other, net
Total other income, net
Income before income taxes
Income tax expense
Net income
Less: Loss attributable to noncontrolling
interest
(380 )
(349 )
(1,471 )
(1,295 )
Net income attributable to Cal-Maine Foods,
Inc.
$
$
$
$
Net income per common share:
Basic
$
$
$
$
Diluted
$
$
$
$
Weighted average shares outstanding:
Basic
Diluted
See Notes to Condensed Consolidated Financial Statements.
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income
(In thousands)
(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net income
$
$
$
$
Other comprehensive income, before tax:
Unrealized holding gain on available-for-sale
securities, net of reclassification adjustments
Income tax expense related to items of other
comprehensive income
(49 )
(32 )
(326 )
(441 )
Other comprehensive income, net of tax
Comprehensive income
Less: Comprehensive loss attributable to the
noncontrolling interest
(380 )
(349 )
(1,471 )
(1,295 )
Comprehensive income attributable to Cal-
Maine Foods, Inc.
$
$
$
$
See Notes to Condensed Consolidated Financial Statements.
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
Cash flows from operating activities:
Net income
$
$
Depreciation and amortization
Deferred income taxes
(14,749 )
Other adjustments, net
(119,057 )
Net cash provided by operations
Cash flows from investing activities:
Purchases of investment securities
(813,130 )
(243,518 )
Sales and maturities of investment securities
Investment in unconsolidated entities
(363 )
Distributions from unconsolidated entities
Acquisition of businesses
(116,193 )
(53,746 )
Purchases of property, plant and equipment
(115,395 )
(95,969 )
Net proceeds from disposal of property, plant and equipment
Net cash used in investing activities
(385,126 )
(118,438 )
Cash flows from financing activities:
Payments of dividends
(160,805 )
(42,965 )
Purchase of common stock by treasury
(3,953 )
(1,688 )
Principal payments on long-term debt
(2,481 )
Principal payments on finance lease
(214 )
Net cash used in financing activities
(167,239 )
(44,867 )
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements of Cal-Maine Foods, Inc. and its subsidiaries (the “Company,”
“we,” “us,” “our”) have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and
in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial
reporting and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended June 1, 2024 (the
“2024 Annual Report”). These statements reflect all adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented and, in the opinion of management, consist of adjustments of a normal
recurring nature. Operating results for the interim periods are not necessarily indicative of operating results for the entire fiscal
year.
Fiscal Year
The Company’s fiscal year ends on the Saturday closest to May 31. Each of the three-month periods and year-to-date periods
ended on March 1, 2025 and March 2, 2024 included
13
39 weeks
, respectively.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Investment Securities Available-for-Sale
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 of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity and is
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.
The cost basis for realized gains and losses on available-for-sale securities is determined by the specific identification method.
Gains and losses are recognized in other income (expenses) as Other, net in the Company’s Condensed Consolidated
Statements of 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 1, 2025 and June 1,
2024, reserves for credit losses were $
based on an evaluation of each customer’s financial condition and credit history. Collateral is generally not required. The
Company minimizes exposure to counter party credit risk through credit analysis and approvals, credit limits, and monitoring
procedures. In determining our reserve for credit losses, receivables are assigned an expected loss based on historical loss
information adjusted as needed for economic and other forward-looking factors.
Dividends Payable
We accrue dividends at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors.
The Company pays a dividend to shareholders of its Common Stock and Class A Common Stock on a quarterly basis for each
quarter for which the Company reports net income attributable to Cal-Maine Foods, Inc. computed in accordance with GAAP
in an amount equal to
one-third
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.
8
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.
Revenue Recognition
The Company recognizes revenue through sale of its products to customers through retail, foodservice and other distribution
channels. The majority of the Company’s revenue is derived from agreements or contracts with customers based upon the
customer ordering its products with a single performance obligation of delivering the product. The Company believes the
performance obligation is met upon delivery and acceptance of the product by our customers, which generally occurs upon
shipment or delivery to a customer based on terms of the sale. Costs paid to third party brokers to obtain agreements are
expensed as the Company’s agreements are generally less than one year.
Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for delivery of the
products. The Company periodically offers sales incentives or other programs such as rebates, discounts, coupons, volume-
based incentives, guaranteed sales and other programs. The Company records an estimated allowance for costs associated with
these programs, which is recorded as a reduction in revenue at the time of sale using historical trends and projected redemption
rates of each program. The Company regularly reviews these estimates and any difference between the estimated costs and
actual realization of these programs would be recognized the subsequent period.
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 of various valuation techniques. When a market value is 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.
We 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 of 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.
Loss Contingencies
Certain conditions may exist as of the date the consolidated financial statements are issued that may result in a loss to 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 counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related 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 consolidated 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 be 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
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07,
Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures
. This ASU requires enhanced disclosures about significant segment expenses
regularly provided to the chief operating decision maker that are included within each reported measure of segment profit or
loss, and requires all annual disclosures currently required by Topic 280 to be included in interim periods. ASU 2023-07 is to
be applied retrospectively for all periods presented in the financial statements and is effective for fiscal years beginning after
9
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740) – Improvements to Income Tax Disclosures
.
This ASU requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate
reconciliation and income taxes paid. The ASU is intended to enhance the transparency and decision usefulness of income tax
disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently
evaluating the impact of ASU 2023-09 on its consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03,
Income Statement
—
Reporting Comprehensive Income
—
Expense
Disaggregation Disclosures (Subtopic 220-40)
. The objective of ASU 2024-03 is to improve disclosures about a public entity’s
expenses, primarily through additional disaggregation of income statement expenses. Additionally, in January 2025, the FASB
further clarified the effective date of ASU 2024-03 with the issuance of ASU 2025-01. ASU 2024-03 is effective for annual
periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15,
2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently
evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.
There are no other new accounting pronouncements issued or effective during the fiscal year that had or are expected to have a
material impact on our Consolidated Financial Statements.
Note 2 - Acquisitions
Acquisition of ISE America, Inc. Assets
Effective
, the Company acquired substantially all of the commercial shell egg production, processing and egg
products breaking facilities of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial
shell egg production and processing facilities with a capacity at the time of acquisition of approximately
hens, including
egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast
and Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. The Company
accounted for the acquisition as a business combination.
The following table summarizes the consideration paid for the ISE assets and the amounts of assets acquired and liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
Property, plant and equipment
Intangible assets
Liabilities assumed
(308 )
Total identifiable net assets
$
Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value as 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 June 28, 2024.
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 of customer lists acquired. Customers lists were valued using the income method
approach.
Acquisition of Deal-Rite Feeds, Inc. Assets
Effective
, the Company acquired certain assets of Deal-Rite Feeds, Inc. and certain of its affiliates (“Deal-
Rite”) for approximately $
10
related equipment and a retail feed sales business located in North Carolina. The acquired assets will produce and deliver feed
to our nearby shell egg production facilities. The Company accounted for the acquisition as a business combination.
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.
Goodwill recorded in connection with the Deal-Rite acquisition is primarily attributable to improved efficiencies from
integrating the assets of Deal-Rite with the operations of the Company. The Company recognized goodwill of $
result of the acquisition.
Other Acquisitions
Effective
, the Company acquired the remaining
% interest in our majority-owned subsidiary,
MeadowCreek Foods LLC.
Note 3 - Investment
Securities
The following represents the Company’s investment securities as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
June 1, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
Available-for-sale
Proceeds from sales and maturities of investment securities available-for-sale were $
the thirty-nine weeks ended March 1, 2025 and March 2, 2024, respectively. Gross realized gains for the thirty-nine weeks
ended March 1, 2025 and March 2, 2024 were $
losses for the thirty-nine weeks ended March 1, 2025. Gross realized losses for the thirty-nine weeks ended March 2, 2024 were
$
11
Actual maturities may differ from contractual maturities as some borrowers have the right to call or prepay obligations with or
without penalties. Contractual maturities of current investments at March 1, 2025 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Note 4 - Fair Value Measurements
The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value
hierarchy. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated,
knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would
be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to
settle the liability with the creditor.
•
Level 1
•
Level 2
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
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable
The carrying amount approximates fair value due to the short maturity of these instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following table shows the fair value of financial assets and
liabilities measured at fair value on a recurring basis as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
12
June 1, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
Investment securities – available-for-sale classified as Level 2 consist of securities with maturities of three months or longer
when purchased. We classified these securities as current because amounts invested are readily available for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent consideration classified as Level 3 consists of the potential obligation to pay an earnout to Fassio Egg Farms, Inc.
(“Fassio”) contingent on the acquired business meeting certain return on profitability milestones over a
three-year
commencing on the date of the acquisition in the second quarter of fiscal 2024. 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.
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
Fair value adjustments
Balance, March 1, 2025
$
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
condensed consolidated statements of income.
Note 5 - Inventories
Inventories consisted of the following as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
June 1, 2024
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
We grow and maintain flocks of layers (mature female chickens), pullets (female chickens, under 18 weeks of age), and
breeders (male and female chickens used to produce fertile eggs to hatch for egg production flocks). Our total flock at March 1,
2025 and June 1, 2024 consisted of approximately
million layers, respectively.
13
Note 6 - Equity
On February 25, 2025, the Company entered an Agreement Regarding Conversion (the “Conversion Agreement”) by and
among the Company, DLNL, LLC, a Delaware limited liability company (“Daughters’ LLC”), and Fred R. Adams Jr.’s four
daughters and Adolphus B. Baker, Board Chair and Mr. Adams’ son-in-law (the “Members” and together with Daughters’
LLC, the “Stockholder Parties”). The Company’s entry into the Conversion Agreement was a result of the Members informing
the Company that they were potentially interested in diversifying their respective financial portfolios, including through the
potential sale of all or a portion of the shares of the Company’s Common Stock, underlying the Class A Common Stock, held
by Daughters’ LLC, as most of them have become more focused on their individual estate planning efforts and philanthropic
endeavors.
The Conversion Agreement provides for the following:
●
The approval by the Company’s Board of Directors, and approval by Daughters’ LLC by majority written consent, of
the Third Amended and Restated Certificate of Incorporation of the Company (“Third Amended and Restated
Charter”), which has occurred. The Third Amended and Restated Charter became effective upon filing with the
Delaware Secretary of State on March 27, 2025 (the “Restated Charter Effective Date”).
●
The approval by the Company’s Board of Directors of the Amended and Restated Bylaws of the Company (“Restated
Bylaws”), which has occurred. The Restated Bylaws became effective on the Restated Charter Effective Date.
●
The agreement by the Stockholder Parties not to convert any shares of Class A Common Stock (“Class A Shares”) into
shares of Common Stock (“Common Shares”) prior to the later of (i) the Restated Charter Effective Date or (ii) the
date the Company obtained an amendment to its Amended and Restated Credit Agreement such that the Class A
Conversion, defined below, would not result in a “Change of Control” within the meaning of such agreement. Both
conditions were met on March 27, 2025.
●
The agreement by the Stockholder Parties that if Daughters’ LLC converts any Class A Shares into Common Shares, it
will simultaneously convert all (but not less than all) Class A Shares into Common Shares (the “Class A Conversion”).
●
After the effective date of the Class A Conversion (the “Class A Conversion Date”), and ending on the 12-month
anniversary of the Class A Conversion Date (or, if earlier, December 31, 2026), certain registration rights of the
Members to offer or sell Common Shares in a registered offering under the Securities Act of 1933, as amended.
●
The adoption by the Stockholder Parties of an amended and restated limited liability company operating agreement of
Daughters’ LLC, which provides for certain changes to permit Daughters’ LLC to take the actions provided for in the
Conversion Agreement.
The Conversion Agreement, including the documents contemplated by that agreement, are referred to collectively as the
“Transactions.” The Transactions do not require any Stockholder Party to convert Class A Common Shares into Common
Shares or to sell any Common Shares.
On February 25, 2025, the Company’s Board of Directors approved a new $
repurchase program authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for
an aggregate purchase price up to $
repurchases), subject to market conditions and other factors. The actual timing, number and value of shares repurchased under
the program will be determined by management in its discretion and will depend on a number of factors, including, but not
limited to, the market price of the Common Stock and general market and economic conditions.
14
The following reflects equity activity for the thirteen weeks ended March 1, 2025 and March 2, 2024 (in thousands):
Thirteen Weeks Ended March 1, 2025
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at November
30, 2024
$
$
$
(31,661 )
$
$
(908 )
$
$
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(3,835 )
—
—
—
(2,758 )
Dividends ($
per share)
Common
—
—
—
—
—
(152,932 )
—
(152,932 )
Class A common
—
—
—
—
—
(16,589 )
—
(16,589 )
Net income (loss)
—
—
—
—
—
(380 )
Balance at March 1,
2025
$
$
$
(35,496 )
$
$
(757 )
$
$
$
Thirteen Weeks Ended March 2, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at December
2, 2023
$
$
$
(30,014 )
$
$
(1,614 )
$
$
(2,444 )
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(1,583 )
—
—
—
(571 )
Dividends ($
per share)
Common
—
—
—
—
—
(44,111 )
—
(44,111 )
Class A common
—
—
—
—
—
(4,786 )
—
(4,786 )
Net income (loss)
—
—
—
—
—
(349 )
Balance at March 2,
2024
$
$
$
(31,597 )
$
$
(1,514 )
$
$
(2,793 )
$
15
Thirty-nine Weeks Ended March 1, 2025
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 1,
2024
$
$
$
(31,597 )
$
$
(1,773 )
$
$
(3,104 )
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(3,899 )
—
—
—
(593 )
Contributions to
Crepini Foods LLC
—
—
—
—
—
—
Acquisition of
noncontrolling
interest in
MeadowCreek Foods
LLC
—
—
—
—
—
(3,826 )
Dividends ($
per share)
Common
—
—
—
—
—
(263,918 )
—
(263,918 )
Class A common
—
—
—
—
—
(28,627 )
—
(28,627 )
Net income (loss)
—
—
—
—
—
(1,471 )
Balance at March 1,
2025
$
$
$
(35,496 )
$
$
(757 )
$
$
$
Thirty-nine Weeks Ended March 2, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 3,
2023
$
$
$
(30,008 )
$
$
(2,886 )
$
$
(1,498 )
$
Other comprehensive
loss, net of tax
—
—
—
—
1,372
—
—
Stock compensation
plan transactions
(1,589 )
—
—
—
Dividends ($
per share)
Common
—
—
—
—
—
(49,501 )
—
(49,501 )
Class A common
—
—
—
—
—
(5,372 )
—
(5,372 )
Net income (loss)
—
—
—
—
—
(1,295 )
Balance at March 2,
2024
$
$
$
(31,597 )
$
$
(1,514 )
$
$
(2,793 )
$
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 share is based on weighted-average common shares outstanding during the relevant period adjusted for the
dilutive effect of share-based awards.
16
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net
income per common share (amounts in thousands, except per share data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Numerator
Net income
$
$
$
$
Less: Loss attributable to
noncontrolling interest
(380 )
(349 )
(1,471 )
(1,295 )
Net income attributable to Cal-Maine
Foods, Inc.
$
$
$
$
Denominator
Weighted-average common shares
outstanding, basic
Effect of dilutive restricted shares
Weighted-average common shares
outstanding, diluted
Net income per common share
attributable to Cal-Maine Foods, Inc.
Basic
$
$
$
$
Diluted
$
$
$
$
Note 8 - Revenue from Contracts with Customers
Net revenue is primarily generated through the sales of shell eggs and egg products. The Company’s shell egg product offerings
include specialty and conventional shell eggs. Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised
and nutritionally enhanced eggs. Conventional shell egg sales represent all other shell egg sales not sold as specialty shell eggs.
The Company’s egg products offerings include liquid and frozen egg products, as well as ready-to-eat products such as hard-
cooked eggs, egg wraps, protein pancakes, crepes and wrap-ups. Liquid and frozen egg products are primarily sold to the
institutional, foodservice and food manufacturing sectors. Ready-to-eat products are sold primarily within the retail and
foodservice channels.
The following table provides revenue disaggregated by product category (in thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Conventional shell egg sales
$
$
$
$
Specialty shell egg sales
Egg products
Other
$
$
$
$
Note 9 - Stock Based Compensation
Total stock-based compensation expense was $
March 2, 2024, respectively.
Unrecognized compensation expense as a result of non-vested shares of restricted stock outstanding under the Amended and
Restated 2012 Omnibus Long-Term Incentive Plan at March 1, 2025 of $
period of
Stock Compensation Plans in our 2024 Annual Report for further information on our stock compensation plans.
17
The Company’s restricted share activity for the thirty-nine weeks ended March 1, 2025 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, June 1, 2024
$
Granted
Vested
(108,058 )
Forfeited
(4,324 )
Outstanding, March 1, 2025
$
Note 10 - Commitments and Contingencies
LEGAL PROCEEDINGS
Civil Investigative Demand
In March 2025, the Company received a civil investigative demand from the Department of Justice (“DOJ”) in connection with
an antitrust investigation to determine whether there is, has been or may be a violation of the antitrust laws by anticompetitive
conduct by and among egg producers. The Company is cooperating with the investigation. Management cannot predict the
eventual scope, duration or outcome of this investigation and is unable to estimate the amount or range of potential losses, if
any, at this time.
State of Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State
of Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC, Cause No. 2020-25427, in the District
Court of Harris County, Texas. The State of Texas (the “State”) asserted claims based on the Company’s and WCF’s alleged
violation of the Texas Deceptive Trade Practices—Consumer Protection Act, Tex. Bus. & Com. Code §§ 17.41-17.63
(“DTPA”). The State claimed that the Company and WCF offered shell eggs at excessive or exorbitant prices during the
COVID-19 state of emergency and made misleading statements about shell egg prices. The State sought temporary and
permanent injunctions against the Company and WCF to prevent further alleged violations of the DTPA, along with over
$
prejudice. On September 11, 2020, the State filed a notice of appeal, which was assigned to the Texas Court of Appeals for the
First District. On August 16, 2022, the appeals court reversed and remanded the case back to the trial court for further
proceedings. On October 31, 2022, the Company and WCF appealed the First District Court’s decision to the Supreme Court of
Texas. On September 29, 2023, the Supreme Court of Texas denied the Company’s Petition for Review and remanded to the
trial court for further proceedings. The district court entered a pre-trial order scheduling pre-trial proceedings and tentatively
setting a trial date for August 11, 2025. On November 30, 2024, the State filed an amended petition, primarily to address a
procedural deficiency that required the State to generally plead it was seeking monetary relief over $
restitution, civil penalties, attorney’s fees and costs. Pre-trial proceedings are progressing in accordance with the court’s
schedule. Management believes the risk of material loss related to this matter to be remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
As previously reported, on September 25, 2008, the Company was named as one of several defendants in numerous antitrust
cases involving the United States shell egg industry. The Company settled all of these cases, except for the claims of certain
plaintiffs who sought substantial damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These
remaining plaintiffs are Kraft Food Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and,
until a subsequent settlement was reached as described below, The Kellogg Company.
On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in
the United States District Court for the Eastern District of Pennsylvania, In re Processed Egg Products Antitrust Litigation,
MDL No. 2002, to the United States District Court for the Northern District of Illinois, Kraft Foods Global, Inc. et al. v. United
Egg Producers, Inc. et al., Case No. 1:11 -cv-8808, for trial. The Egg Products Plaintiffs alleged that the Company and other
defendants violated Section 1 of the Sherman Act, 15. U.S.C. § 1, by agreeing to limit the production of eggs and thereby
illegally to raise the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs attacked
18
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 $
defendants, jointly and severally, totaling $
motion for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment. On December 13, 2024,
the court granted defendants’ November 20, 2024 motion to stay enforcement of the judgment and entered an agreed order
requiring the defendants to post security during post-judgment proceedings and appeal, and stayed proceedings to enforce the
judgment until the disposition of the post-judgment motions and ultimate appeals. On December 17, 2024, the Company posted
a bond in the approximate amount of $
appeal the trial court’s decision. Another defendant posted a bond for the remaining amount. The Company intends to continue
to vigorously defend the claims asserted by the Egg Products Plaintiffs.
If the jury’s decision is ultimately upheld, the Company would be jointly and severally liable with other defendants for treble
damages, or $
Plaintiffs’ reasonable attorneys’ fees. During our second fiscal quarter of 2024, we recorded an accrued expense of $
million in selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Income and
classified as other noncurrent liabilities in the Company’s Condensed Consolidated Balance Sheets. Although less than the
bond posted by the Company, 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 be approximately
offset by the credits noted above. We have entered into a judgment allocation and joint defense agreement with the other major
producer defendant remaining in the case and are in discussions with other defendants regarding their contributions. Our
accrual may change in the future based on the outcome of those discussions and may also be revised in whole or in part in the
future to the extent we are successful in further proceedings in the litigation.
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 of their affiliates. The State of Oklahoma claims that through the disposal of chicken
litter the defendants polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint
sought injunctive relief and monetary damages, but the claim for monetary damages was dismissed by the court. Cal-Maine
Foods, Inc. discontinued operations in the watershed in or around 2005. Since the litigation began, Cal-Maine Foods, Inc.
purchased
% of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg
operation within the Illinois River Watershed. Benton County Foods, LLC is not a defendant in the litigation. We also have a
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 of their contract producers. The court directed the parties to confer in attempt to
reach agreement on appropriate remedies. On June 12, 2023, the court ordered the parties to mediate before retired Tenth
Circuit Chief Judge Deanell Reece Tacha, but the mediation was unsuccessful. On June 26, 2024, the district court denied
defendants’ motion to dismiss the case. On September 13, 2024, a status hearing was held and the court scheduled an
evidentiary hearing for December 3, 2024, to determine whether any legal remedy is available based on the now 14 year old
record and changed circumstances of the Illinois River watershed. On November 5, 2024 the court denied defendants’
September 20, 2024 motion to certify an interlocutory appeal. The evidentiary hearing proceeded as scheduled and concluded
on December 17, 2024. The court directed the parties to present their proposed findings of fact and conclusions of law and
supporting briefs by January 30, 2025. The parties submitted their post-trial briefs on January 20, 2025. While management
believes there is a reasonable possibility of a material loss from the case, at the present time, it is not possible to estimate the
amount of monetary exposure, if any, to the Company due to a range of factors, including the following, among others:
uncertainties inherent in any assessment of potential costs associated with injunctive relief or other penalties based on a
decision in a case tried over 14 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
19
uncertainty regarding what our proportionate share of any remedy would be, although we believe that our share compared to the
other defendants is small.
Other Matters
In addition to the above, the Company is involved in various other claims and litigation incidental to its business. Although the
outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that
the final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
Note 11 - Subsequent Events
Second Amendment to Amended and Restated Credit Agreement
On March 25, 2025, the Company entered into the Second Amendment (the “Second Amendment”) to its Amended and
Restated Credit Agreement (as amended, the “Credit Agreement”)). Under the Credit Agreement, a Change of Control is an
event of default. The Second Amendment amended the definition of Change of Control to exclude from that definition the
conversion (the “Class A Conversion”) of all outstanding shares of the Company’s Class A Common Stock into Common Stock
in accordance with the Conversion Agreement.
Under the Second Amendment, prior to the Class A Conversion, the definition of Change of Control is unchanged. On and after
the Class A Conversion, Change of Control will mean any of (i) the acquisition by any “person” or “group” (as such terms are
used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of
% or more of the outstanding capital stock or other equity interests of the Company on a fully-diluted basis, (ii) the failure
of individuals who are members of the board of directors (or similar governing body) of the Company on the effective date of
the Second Amendment (together with any new or replacement directors whose initial nomination for election was approved by
a majority of the directors who were either directors on the effective date of the Second Amendment or previously so approved)
to constitute a majority of the board of directors (or similar governing body) of the Company, or (iii) any “Change of Control”
(or words of like import), as defined in any agreement or indenture relating to any issue of Material Indebtedness of any Loan
Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.
For additional information regarding the Credit Facility, see Note 10 – Credit Facility to the audited consolidated financial
statements included in the 2024 Annual Report.
Third Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
On March 27, 2025, the Company’s Third Amended and Restated Certificate of Incorporation was filed with the Delaware
Secretary of State and became effective. Also on March 27, 2025, the Company’s Amended and Restated Bylaws became
effective.
Agreement to Acquire Echo Lake Foods, Inc.
On April 8, 2025, the Company signed a definitive agreement to acquire Echo Lake Foods, Inc. (“Echo Lake Foods”) for
approximately $
hand. Echo Lake Foods was founded in 1941 and acquired by the Meinerz family in 1981. Based in Burlington, Wisconsin,
Echo Lake Foods produces, packages, markets and distributes ready-to-eat egg products and breakfast foods, including waffles,
pancakes, scrambled eggs, frozen cooked omelets, egg patties, toast and diced eggs. The transaction has been approved by both
companies’ boards of directors and is expected to close by the end of fiscal 2025 following completion of regulatory approvals
and subject to customary closing conditions. The transaction is not subject to shareholder approval.
20
ITEM 2. MANAGEMENT’S
DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results
of Operations included in Part II Item 7 of the Company’s Annual Report on Form 10-K for its fiscal year ended June 1, 2024
(the “2024 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2024 Annual
Report and in
This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act of 1933
(the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our shell egg
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 on our business of the resurgence in United States (“U.S.”) commercial table egg layer flocks of highly pathogenic avian
influenza (“HPAI”), 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 of words such as “believes,”
“intends,” “expects,” “hopes,” “may,” “should,” “plans,” “projected,” “contemplates,” “anticipates,” or similar words. Actual
outcomes or results could differ materially from those projected in the forward-looking statements. The forward-looking
statements are based on management’s current intent, belief, expectations, estimates, and projections regarding the Company
and its industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions, and
other factors that are difficult to predict and may be beyond our control. The factors that could cause actual results to differ
materially from those projected in the forward-looking statements include, among others, (i) the risk factors set forth in Part II
Item 1A Risk Factors of this Quarterly Report on Form 10-Q and Part I Item 1A Risk Factors of our Annual Report on Form
10-K for the year ended June 1, 2024, as well as those included in other reports we file from time to time with the SEC
(including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the effect of the potential conversion of
all of the Company’s Class A Common Stock into Common Stock and resulting loss by the Company of controlled company
status under the rules of The Nasdaq Stock Market on the trading price of the Company’s Common Stock, the ability of the
Company to retain and hire key personnel and maintain relationships with its customers and suppliers, and on the Company’s
operating results and business generally, (iii) the impact on the trading price of the Company’s Common Stock as a result of
the sale or marketing, or potential sale or marketing, of a significant number of shares of the Company’s Common Stock held
by the family of our late founder, Fred R. Adams Jr., as part of their potential portfolio diversification efforts, (iv) the risks and
hazards inherent in the shell egg business (including disease, pests, weather conditions, and potential for product recall),
including but not limited to the current outbreak of 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 flocks in December 2023, (v) changes in
the demand for and market prices of shell eggs and feed costs, (vi) the impacts and potential future impacts of government,
customer and consumer reactions to recent high market prices for eggs, including but not limited to efforts to increase imports
of eggs and egg products, pressure to change long-standing pricing frameworks, lower consumer demand for eggs, and the
pending DOJ antitrust investigation, (vii) our ability to predict and meet demand for cage-free and other specialty eggs, (viii)
risks, changes, or obligations that could result from our recent or future acquisition of new flocks or businesses and risks or
changes that may cause conditions to completing a pending acquisition, such as the pending acquisition of Echo Lake Foods,
not to be met, (ix) risks relating to changes in inflation and interest rates, (x) our ability to retain existing customers, acquire
new customers and grow our product mix, (xi) adverse results in pending litigation and other legal matters, and (xii) global
instability, including as a result of the war in Ukraine, the conflicts in Israel and surrounding areas and attacks on shipping in
the Red Sea. Readers are cautioned not to place undue reliance on forward-looking statements because, while we believe the
assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-
looking statements will prove to be accurate. Further, forward-looking statements included herein are made only 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”) is primarily engaged in the production, grading, packaging,
marketing and distribution of fresh shell eggs. Our operations are fully integrated and we have one operating and reportable
segment. We are the largest producer and distributor of fresh shell eggs in the U.S. Our total flock of approximately 48.9
million layers and 12.3 million pullets and breeders is the largest in the U.S. We sell our shell eggs and egg products to a
diverse group of customers, including national and regional grocery store chains, club stores, companies servicing independent
21
supermarkets in the U.S., foodservice distributors and egg product customers throughout the majority of the U.S. and aim to
maintain efficient, state-of-the-art operations located close to our customers.
Our operating results are materially impacted by market prices for eggs and feed grains (corn and soybean meal), which are
highly volatile, independent of each other, and out of our control. Generally, higher market prices for eggs have a positive
impact on our financial results while higher market prices for feed grains have a negative impact on our financial results.
Although we use a variety of pricing frameworks with our customers for conventional and specialty eggs, we sell most of our
conventional shell eggs based on formulas that consider, in varying ways, independently quoted regional wholesale market
prices for shell eggs or formulas related to our costs of production which include the cost of corn and soybean meal. We sell the
majority of our specialty eggs at prices and terms negotiated directly with our customers. We do not sell eggs directly to
consumers or set the prices at which eggs are sold to consumers.
Retail sales of shell eggs historically have been highest during the fall and winter months and lowest during the summer
months. Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during
the spring and early summer. Historically, shell egg prices tend to increase with the start of the school year and tend to be
highest prior to holiday periods, particularly Thanksgiving, Christmas and Easter. Consequently, and all other things being
equal, we would expect to experience lower selling prices, sales volumes and net income (and may incur net losses) in our first
and fourth fiscal quarters ending in August/September and May/June, respectively. Because of the seasonal and quarterly
fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not
necessarily meaningful comparisons.
We routinely fill our storage bins during harvest season when prices for feed ingredients are generally lower. To ensure
continued availability of feed ingredients, we may enter into contracts for future purchases of corn and soybean meal, and as
part of these contracts, we may lock-in the basis portion of our grain purchases several months in advance. Basis is the
difference between the local cash price for grain and the applicable futures price. A basis contract is a common transaction in
the grain market that allows us to lock-in a basis level for a specific delivery period and wait to set the futures price at a later
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 or hedge against increases in the prices of corn and soybean meal. Corn and soybean meal are commodities and are
subject to volatile price changes due to weather, various supply and demand factors, transportation and storage costs,
speculators, agricultural, energy and trade policies in the U.S. and internationally, and 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
mix of branded and private-label products of conventional and specialty eggs, including cage-free, organic, brown, free-range,
pasture-raised and nutritionally-enhanced eggs as well as egg products.
HPAI
Outbreaks of HPAI have continued to occur in U.S. poultry flocks. In calendar year 2024, 40.2 million commercial layer hens
and pullets were depopulated due to HPAI, and in calendar year 2025, an additional 32.9 million commercial layer hens and
pullets have been depopulated through March. The United States Depart of Agriculture (the “USDA”) reported that the
estimated table-egg layer flock was approximately 285 million as of March 1, 2025, the lowest level since September 2015.
HPAI is currently widespread in the wild bird population worldwide. We remain dedicated to robust biosecurity programs
across our locations and have invested more than $70 million in biosecurity technology, equipment, procedures, and training
across our locations since the last major HPAI outbreak in 2015. However, no farm is immune from HPAI. For example, during
the third and fourth quarters of fiscal 2024, we experienced HPAI outbreaks within our facilities located in Kansas and Texas,
which are now fully operational. According to the U.S. Centers for Disease Control and Prevention (“CDC”), as of April 1,
2025, there were outbreaks in 996 herds of dairy cows in 17 states, and 70 human cases in the U.S., almost entirely among
poultry and dairy workers. However, in 2024, one of the human cases resulted in severe illness after the patient was exposed to
sick and dead birds in backyard flocks. The patient, who was reported to have underlying health conditions, died in January
2025. There have been no reported cases of person-to-person spread. According to the CDC, the human health risk to the U.S.
public from the HPAI virus is considered to be low. The extent of possible future outbreaks among U.S. commercial egg layer
flocks, with heightened risk during migration seasons, cannot be predicted. According to the USDA, HPAI cannot be
transmitted through safely handled and properly cooked eggs. There is no known risk related to HPAI associated with eggs that
are currently in the market and no eggs have been recalled. For additional information, see the 2024 Annual Report, Part II Item
7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – HPAI.”
22
We have taken proactive steps to help mitigate the tight egg supply situation across the country. Our efforts resulted in a 14%
increase in the average number of layer hens (reflecting both organic and inorganic expansion) and a 24% increase in total
chicks hatched during the third quarter of fiscal 2025 compared to the prior-year quarter. Our breeder flocks increased 33% as
of the end of the third fiscal quarter of 2025 compared to the end of the prior-year quarter. We also continue to invest in
expansion projects, including expected completion in calendar 2025 of approximately $60 million in ongoing expansion
projects within our current operations that are expected to add approximately 1.1 million cage-free layer hens and 250,000
pullets, and the successful conversion of a new egg processing facility and hatchery in Dexter, Missouri, projected to add
additional capacity of 1.2 million free range hens by calendar year end.
CAGE-FREE EGGS
Ten states have passed legislation or regulations mandating minimum space or cage-free requirements for egg production or
mandated the sale of only cage-free eggs and egg products in their states, with implementation of these laws ranging from
January 2022 to January 2030. These states represent approximately 27% of the U.S. total population according to the 2020
U.S. Census. California, Massachusetts, Colorado, Michigan, Oregon, Washington, and Nevada, which collectively represent
approximately 23% of the total estimated U.S. population, have cage-free legislation currently in effect. Due to the national egg
shortage caused by HPAI, Nevada temporarily suspended the cage-free egg mandate and other states are considering similar
actions.
A significant number of our customers have announced goals to either exclusively offer cage-free eggs or significantly increase
the volume of cage-free egg sales in the future, subject in most cases to availability of supply, affordability and consumer
demand, among other contingencies. Our customers typically do not commit to long-term purchases of specific quantities or
types of eggs with us, and as a result, it is difficult to accurately predict customer requirements for cage-free eggs. We are
focused on adjusting our cage-free production capacity with a goal of meeting the future needs of our customers in light of
changing state requirements and our customers’ goals. As always, we strive to offer a product mix that aligns with current and
anticipated customer purchase decisions. We are engaging with our customers to help them meet their announced goals and
needs. 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 19.2% of our total shell
egg revenue for the third quarter of fiscal year 2025. At the same time, we understand the importance of our continued ability to
provide conventional eggs in order to provide our customers with a variety of egg choices and to address hunger in our
communities.
For additional information, see the 2024 Annual Report, Part I Item 1, “Business – Specialty Eggs,” “Business – Growth
Strategy” and “Business – Government Regulation,” and the first risk factor in Part I Item 1A, “Risk Factors” under the sub-
heading “Legal and Regulatory Risk Factors.”
ACQUISITIONS
Effective February 3, 2025, we acquired certain assets of Deal-Rite Foods, Inc. and certain of its affiliates (“Deal-Rite”). The
assets acquired included two feed mills, storage facilities, usable grain, vehicles, related equipment and a retail feed sales
business located in North Carolina. The acquired assets will produce and deliver feed to our nearby shell egg production
facilities.
During the first quarter of fiscal 2025, we acquired substantially all the commercial shell egg production, processing and egg
products breaking assets of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial
shell egg production and processing facilities with a capacity at the time of acquisition of approximately 4.7 million laying
hens, including 1.0 million cage-free, and 1.2 million pullets, feed mills, approximately 4,000 acres of land, inventories and an
egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast
and Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. These production
assets are our first in Maryland, New Jersey and Delaware. We believe this acquisition provides us with an opportunity to
significantly enhance our market reach in the Northeast and Mid-Atlantic states. See further discussion in
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.
Effective on September 9, 2024, we completed a strategic investment with Crepini LLC, establishing a new egg products and
prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout the United States and Mexico featuring egg
wraps, protein pancakes, crepes, and wrap-ups, which are sold online and in over 3,500 retail stores. The new entity, located in
Hopewell Junction, New York, operates as Crepini Foods LLC (“Crepini”). We capitalized Crepini with approximately $6.75
million in cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the
new venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
23
In fiscal 2022, we announced a strategic investment in a new entity, MeadowCreek Food, LLC (“MeadowCreek”), which
became a majority-owned subsidiary. During March 2023, MeadowCreek began operations with a focus on being a leading
provider of hard-cooked eggs. During second quarter 2025, we acquired the remaining ownership interests in MeadowCreek
and it became a wholly-owned subsidiary.
In second quarter 2024, we acquired the assets of Fassio Egg Farms, Inc. (“Fassio”) related to its commercial shell egg
production and processing business. Fassio owned and operated 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. This acquisition provided
us with an opportunity to expand our market presence in Utah and the western U.S., particularly for cage-free eggs. In fourth
quarter 2024, we acquired a broiler processing plant, hatchery and feed mill in Dexter, Missouri, which we repurposed for use
in shell egg production.
EXECUTIVE OVERVIEW
For the third quarter and first three quarters of fiscal 2025, we recorded a gross profit of $716.1 million and $1,319.4 million,
respectively, compared to $218.6 million and $355.1 million, respectively, for the same periods of fiscal 2024, primarily driven
by an increase in the net average selling price of shell eggs, primarily conventional egg prices, as well as an increase in total
dozens sold. Our results were also positively impacted by lower feed costs and our recent acquisitions discussed above,
partially offset by an increase in the volume and price of outside egg purchases.
Our net average selling price per dozen for the third quarter of fiscal 2025 was $4.060 compared to $2.247 in the prior-year
period. Conventional egg prices per dozen were $4.766 compared to $2.152 for the prior-year period, and specialty egg prices
per dozen were $2.784 compared to $2.415 for the prior-year period. Egg prices in the third quarter of fiscal 2025 were elevated
compared to the prior-year period primarily due to the resurgence of HPAI outbreaks, which decreased supply during the higher
seasonal demand cycle. According to the USDA, the monthly average size of the layer hen flock from December 2024 through
February (which most closely aligns with our third fiscal quarter) 2025 was approximately 302.7 million hens, which was a
decrease of 11.0 million layers, or 3.5%, compared to the same period in the prior year. The daily average price for the Urner
Barry southeast large index for the third quarter of fiscal 2025 increased 156% from the comparable period in the prior year.
Subsequent to third quarter fiscal 2025, the Urner Barry southeast large index decreased to $3.99 per dozen as of April 4, 2025
from a high of $8.69 per dozen as of February 28, 2025. For more information about historical shell egg prices, see Part I Item I
of our 2024 Annual Report.
Our dozens sold for the third quarter of fiscal 2025 increased 10.2% compared to the third quarter of fiscal 2025. Demand was
strong during the third fiscal quarter, which is typically a period of higher seasonal demand. We believe that other factors
positively impacting demand included severe weather events during the quarter, including the historic snowstorms in the
southern U.S. in January 2025, which prompted families to stock up on staples including eggs, and reported recommendations
of eggs as a good source of lean protein for individuals taking GLP-1 medications. In addition to strong consumer demand
during the quarter, we had an increase in production capacity with the acquisitions of the commercial shell egg production and
processing business of ISE during the first quarter of fiscal 2025.
Our farm production costs per dozen produced for the third quarter of fiscal 2025 decreased 5.7%, or $0.06 compared to the
prior year period, primarily due to lower feed costs. Feed costs per dozen produced decreased 9.6%, or $0.05, compared to the
third quarter of fiscal 2024, primarily due to lower feed ingredient prices. For information about historical corn and soybean
meal prices, see Part I Item I of our 2024 Annual Report. Our egg purchases and other cost of sales increased $163.8 million
quarter-over-quarter and $397.8 million comparing year-to-date periods, primarily due to higher shell egg prices as well as an
increase in dozens purchased to supply eggs for our customers, including those acquired in our ISE acquisition, during the
higher seasonal demand cycle while the nation experienced lower supply due to HPAI.
24
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 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
49.5
%
68.9
%
58.2
%
78.9
%
Gross profit
50.5
%
31.1
%
41.8
%
21.1
%
Selling, general and administrative
5.6
%
9.3
%
7.0
%
11.6
%
(Gain) loss on involuntary conversions
—
%
(1.4)
%
—
%
(0.6)
%
Operating income
44.9
%
23.2
%
34.8
%
10.1
%
Total other income, net
1.9
%
3.2
%
1.6
%
2.2
%
Income before income taxes
46.8
%
26.4
%
36.4
%
12.3
%
Income tax expense
10.9
%
5.5
%
8.7
%
2.6
%
Net income
35.9
%
20.9
%
27.7
%
9.7
%
Less: Loss attributable to noncontrolling
interest
—
%
—
%
—
%
(0.1)
%
Net income attributable to Cal-Maine
Foods, Inc.
35.9
%
20.9
%
27.7
%
9.8
%
NET SALES
Total net sales for the third quarter of fiscal 2025 were $1.4 billion compared to $703.1 million for the same period of fiscal
2024.
Shell egg sales represented 94.9% and 96.1% of total net sales for the third quarters of fiscal 2025 and 2024, respectively. The
Company’s shell egg offerings, for both branded and private-label products, include specialty and conventional shell eggs.
Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. Conventional
shell eggs sales represent all other shell egg sales not sold as specialty shell eggs. The Company’s egg products offerings
include liquid and frozen egg products and ready-to-eat products such as hard-cooked eggs, egg wraps, protein pancakes, crepes
and wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.
Total net sales for the thirty-nine weeks ended March 1, 2025 were $3.2 billion, compared to $1.7 billion for the comparable
period of fiscal 2024.
Shell egg sales represented 94.7% and 95.4% of total net sales for the thirty-nine weeks ended March 1, 2025 and March 2,
2024, respectively.
25
The table below presents net sales in key categories (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
% Change
March 1, 2025
March 2, 2024
% Change
Shell Eggs
$
1,345,382
$
675,912
99.0
%
$
2,990,756
$
1,608,377
85.9
%
Egg products
61,024
21,759
180.5
136,850
63,994
113.8
Other
11,279
5,405
108.7
30,621
13,283
130.5
Total net sales
$
1,417,685
$
703,076
101.6
%
$
3,158,227
$
1,685,654
87.4
%
The table below presents an analysis of our shell egg sales (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Shell egg sales
Conventional
$
1,016,438
75.6
%
$
413,619
61.2
%
$
2,118,065
70.8
%
$
919,498
57.2
%
Specialty
328,944
24.4
262,293
38.8
%
872,691
29.2
688,879
42.8
Total shell egg sales
$
1,345,382
100.0
%
$
675,912
100.0
%
$
2,990,756
100.0
%
$
1,608,377
100.0
%
Dozens sold
Conventional
213,247
64.3
%
192,182
63.9
%
622,833
64.1
%
566,174
65.7
%
Specialty
118,148
35.7
108,597
36.1
348,385
35.9
295,904
34.3
Total dozens sold
331,395
100.0
%
300,779
100.0
%
971,218
100.0
%
862,078
100.0
%
Net average selling price per dozen
Conventional
$
4.766
$
2.152
$
3.401
$
1.624
Specialty
$
2.784
$
2.415
$
2.505
$
2.328
All shell eggs
$
4.060
$
2.247
$
3.079
$
1.866
Shell egg sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
In the third quarter of fiscal 2025, conventional egg sales increased $602.8 million, or 145.7%, compared to the third
quarter of fiscal 2024, primarily due to a 121.5% increase in the prices for conventional eggs, which resulted in a
$557.4 million increase in net sales, and a 11.0% increase in the volume of conventional eggs sold, which resulted in a
$45.3 million increase in net sales. Results for the third quarter of 2025 were positively impacted by our acquisition of
ISE during the current fiscal year as well as the resumption of full operations at our facility in Chase, KS, which was
shut down in the prior year quarter due to an HPAI outbreak.
-
Specialty egg sales increased $66.7 million, or 25.4%, in the third quarter of fiscal 2025 compared to the third quarter
of fiscal 2024, primarily due to a 15.3% increase in prices for specialty eggs, which resulted in a $43.6 million
increase in net sales and a 8.8% increase in the volume of specialty eggs sold, which resulted in a $23.1 million
increase in net sales.
-
See “Executive Overview” above for additional discussion.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
- For the thirty-nine weeks ended March 1, 2025, conventional egg sales increased $1.2 billion, or 130.4%, compared to
the same period of fiscal 2024, primarily due to the increase in the prices for conventional shell eggs. Prices for
conventional eggs increased 109.4%, which resulted in a $1.1 billion increase in net sales. A 10.0% increase in the
volume of conventional eggs sold resulted in a $92.0 million increase in net sales.
-
Specialty egg sales increased $183.8 million, or 26.7%, for the thirty-nine weeks ended March 1, 2025 compared to
the same period in fiscal 2024, primarily due to a 17.7% increase in the volume of specialty eggs sold, which resulted
in a $122.2 million increase in net sales and a 7.6% increase in prices for specialty eggs, which resulted in a $61.7
million increase in net sales.
26
Egg products sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Egg products sales increased $39.3 million, or 180.5%, for the third quarter of fiscal 2025 compared to the same
period of fiscal 2024, primarily due to a 200.5% increase in sales of liquid eggs, which had a $22.0 million positive
impact on net sales, and a 46.1% increase in liquid eggs pounds sold, which resulted in a $6.6 million increase in net
sales. Results for the third quarter of 2025 were positively impacted by our recent acquisition of ISE, which included a
breaking facility.
-
Sales from hard-cooked eggs increased $6.6 million or 181.5% in the third quarter of fiscal 2025 compared to fiscal
2024 as more processing capabilities are coming online from our investments in MeadowCreek.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
- Egg products sales increased $72.9 million, or 113.8%, primarily due to a 118.0% increase in sales of liquid eggs,
which had a $31.6 million positive impact on net sales, and a 42.0% increase in liquid eggs pounds sold, which
resulted in a $17.4 million increase in net sales.
-
Sales from hard-cooked eggs increased $18.7 million, or 188.6%, in the first three quarters of fiscal 2025 compared to
the same period in fiscal 2024, primarily for the reasons described above.
Other
-
Other sales increased compared to the prior year periods primarily due to higher feed sales related to our ISE
acquisition.
COST OF SALES
Cost of sales consists of costs directly related to producing, processing and packing shell eggs, purchases of shell eggs from
outside sources, processing and packing of egg products and other non-egg costs. Farm production costs are those costs
incurred at the egg production facility, including feed, facility (including labor), hen amortization and other related farm
production costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
%
Change
March 1, 2025
March 2, 2024
%
Change
Cost of sales
Farm production
$
266,056
$
248,650
7.0
%
$
766,003
$
760,525
0.7
%
Processing, packaging,
and warehouse
101,631
86,423
17.6
292,165
253,096
15.4
Egg purchases and other
cost of sales
291,703
127,925
128.0
658,182
260,375
152.8
Egg products
42,180
21,506
96.1
122,502
56,523
116.7
Total cost of sales
$
701,570
$
484,504
44.8
%
$
1,838,852
$
1,330,519
38.2
%
Farm production costs (per
dozen produced)
Feed
$
0.492
$
0.544
(9.6)
%
$
0.489
$
0.564
(13.3)
%
Other
$
0.418
$
0.421
(0.7)
%
$
0.420
$
0.431
(2.6)
%
Total farm production cost
$
0.910
$
0.965
(5.7)
%
$
0.909
$
0.995
(8.6)
%
Outside egg purchases
(average cost per dozen)
$
5.10
$
2.44
109.0
%
$
3.69
$
2.09
76.6
%
Dozens produced
293,087
259,527
12.9
%
847,962
774,984
9.4
%
Percent produced to sold
88.4%
86.3%
2.4
%
87.3%
89.9%
(2.9)
%
27
Farm Production
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Feed costs per dozen produced decreased 9.6% in the third quarter of fiscal 2025 compared to the third quarter of
fiscal 2024. This decrease was primarily due to lower prices for soybean meal, one of our primary feed ingredients.
The decrease in feed cost per dozen resulted in a decrease in cost of sales of $15.2 million for the third quarter of fiscal
2025 compared to the prior period quarter.
-
For the third quarter of fiscal 2025, the average Chicago Board of Trade (“CBOT”) daily market price was $4.68 per
bushel of corn and $298 per ton of soybean meal, representing an increase of 3.8% and a decrease of 19.3%,
respectively, as compared to the average CBOT daily market prices for the third quarter of fiscal 2024.
-
Other farm production costs decreased primarily due to lower flock amortization. Feed costs reached their peak in the
second quarter of fiscal 2023 and have since trended downward. Lower costs result in lower capitalized values of the
flocks during the grow out phase, which reduced amortization cost over time.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Feed costs per dozen produced decreased 13.3% in the thirty-nine weeks ended March 1, 2025 compared to the same
period of fiscal 2024, primarily due to lower feed ingredient prices. The decrease in feed cost per dozen resulted in a
decrease in cost of sales of $63.6 million compared to the prior year period.
-
For the year-to-date period, the average CBOT daily market price was $4.29 per bushel of corn and $316 per ton of
soybean meal, representing decreases of 11.8% and 21.5%, respectively, compared to the average CBOT daily market
prices for the comparable period in the prior year.
-
Other farm production costs decreased due to lower flock amortization, for the reasons described above.
Current indications for corn and soybean project a favorable stocks-to-use ratio near the levels prevailing today for the
remainder of fiscal 2025; however, as long as outside factors remain uncertain (including weather patterns and global supply
chain disruptions), volatility could remain.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Processing, packaging, and warehouse costs increased 17.6% compared to the third quarter of fiscal 2024 due to a
13.5% increase in the volume of processed dozens as well as an increase in costs of packaging materials.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Processing, packaging, and warehouse costs increased 15.4% compared to the first three quarters of fiscal 2025,
primarily due a 10.3% increase in the volume of processed dozens as well as an increase in costs of packaging
materials.
Egg purchases and other cost of sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Costs in this category increased primarily due to higher shell egg prices as the average cost per dozen of outside egg
purchases increased 109.0% compared to third quarter of fiscal 2024, as well as due to an increase of 8.8% in dozens
purchased. Dozens purchased increased due to purchasing more eggs to supply our customers during the higher
seasonal demand cycle while the nation experienced lower supply due to HPAI.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Costs in this category increased primarily due to higher shell egg prices as the average cost per dozen of outside egg
purchases increased 76.6% compared to fiscal 2024, as well as an increase of 46.2% in dozens purchased, primarily
for the reasons described above.
GROSS PROFIT
Gross profit for the thirteen weeks ended March 1, 2025 was $716.1 million compared to $218.6 million for the same period of
2024. Gross profit for the thirty-nine weeks ended March 1, 2025 was $1.3 billion compared to $355.1 million for the same
period of 2024. The increases were primarily due to higher net average selling prices, particularly for conventional eggs, and
28
higher volumes, as well as lower feed ingredient prices, partially offset by the increase in volume and price of outside egg
purchases.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative (“SGA”) expenses include costs of delivery, marketing, and other general and
administrative expenses. Delivery expense includes contract trucking expense and all costs to maintain and operate our fleet of
trucks to deliver products to customers including the related payroll expenses. Marketing expense includes franchise fees that
are submitted to Eggland’s Best, Inc. (“EB”) to support the EB brand, brokerage and commission fees, and other general
marketing expenses such as payroll expenses for our in-house sales team. Other general and administrative expenses include
corporate payroll related expenses and other general corporate overhead costs. The following table presents an analysis of our
SGA expenses (in thousands):
Thirteen Weeks Ended
March 1, 2025
March 2, 2024
$ Change
% Change
Delivery expense
$
23,476
$
18,832
$
4,644
24.7
%
Marketing expense
11,240
14,149
(2,909)
(20.6)
%
Other general and administrative
expenses
45,251
33,039
12,212
37.0
%
Total
$
79,967
$
66,020
$
13,947
21.1
%
Third Quarter – Fiscal 2025 vs. Fiscal 2024
Delivery expense
-
The increased delivery expense is primarily due to an increase in our sales volumes of egg and egg products compared
to the prior year period. Contract trucking expenses increased in connection with our acquisition of ISE and our
facility in Chase, KS being fully operational in the current fiscal quarter. We also obtained some new business and
additional shipping routes in order to meet our customers’ needs at their locations.
Marketing expense
-
The decrease in marketing expense is primarily due to a decrease in franchise fees. The higher prices for conventional
eggs compared to specialty eggs diminished the need to promote specialty eggs; as a result EB temporarily reduced the
related franchise fees for certain specialty egg brands to encourage continued production of these branded eggs.
Other general and administrative expense
-
The increase in other general and administrative expense is primarily due both to an increase in the accrual for
anticipated employee bonuses and to the increased adjustment to the fair value of contingent consideration associated
with the Fassio acquisition. See further discussion in
of the Notes to Condensed
Consolidated Financial Statements included in this Quarterly Report.
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
$ Change
% Change
Delivery expense
$
68,206
$
54,229
$
13,977
25.8
%
Marketing expense
40,666
38,809
1,857
4.8
%
Litigation loss contingency accrual
—
19,648
(19,648)
(100.0)
%
Other general and administrative
expenses
110,660
82,158
28,502
34.7
%
Total
$
219,532
$
194,844
$
24,688
12.7
%
Thirty-six weeks – Fiscal 2025 vs. Fiscal 2024
Delivery expense
-
The increased delivery expense is primarily due to the reasons described above
29
Marketing expense
-
The increase in marketing expense is primarily due to an increase in franchise fees in the first half of fiscal 2025 as
specialty egg sales increased, partially offset by the reduction in fees in the third quarter of fiscal 2025 described
above.
Litigation loss contingency accrual
-
In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in
pending anti-trust litigation. See further discussion in
Condensed Consolidated Financial Statements included in this Quarterly Report.
Other general and administrative expense
-
The increase in other general and administrative expense is primarily for the reasons described above, as well as costs
associated with the acquisition of ISE assets that occurred during the first quarter of fiscal 2025.
GAIN ON INVOLUNTARY CONVERSION
In the third quarter of fiscal 2024, we recorded a gain of $9.9 million due to recoveries under indemnity and insurance programs
that exceeded the amortized book value of the covered assets and our direct costs, primarily related to the HPAI outbreak at our
Kansas facility.
OPERATING INCOME
For the third quarter of fiscal 2025, we recorded operating income of $635.7 million compared to operating income of $162.8
million for the same period of fiscal 2024.
For the thirty-nine weeks ended March 1, 2025, we recorded operating income of $1.1 billion compared to operating income of
$170.3 million for the same period of fiscal 2024.
OTHER INCOME (EXPENSE)
Total other income (expense) consists of items not directly charged or related to operations, such as interest income and
expense, equity in income or loss of unconsolidated entities, and patronage dividends, among other items. Patronage dividends
are paid to us from our membership in the EB cooperative.
For the third quarter of fiscal 2025, we earned $12.8 million of interest income compared to $7.8 million for the same period of
fiscal 2024, primarily due to higher average cash and cash equivalents and investment securities available-for-sale balances and
yields. The Company recorded interest expense of $146 thousand and $247 thousand for the third quarters ended March 1, 2025
and March 2, 2024, respectively.
For the thirty-nine weeks ended March 1, 2025, we earned $32.6 million of interest income compared to $22.4 million for the
same period of fiscal 2024, primarily due to higher average cash and cash equivalents and investment securities available-for-
sale balances and yields. The Company recorded interest expense of $457 thousand and $523 thousand for the thirty-nine weeks
ended March 1, 2025 and March 2, 2024, respectively.
INCOME TAXES
For the third quarter of fiscal 2025, our pre-tax income was $663.0 million, compared to $185.2 million for the third quarter of
fiscal 2024. Income tax expense of $154.9 million was recorded for third quarter 2025 with an effective tax rate of 23.4%. This
includes the discrete tax benefit of $5.7 million associated with the fiscal 2024 provision-to-return adjustments. Excluding the
discrete tax benefit, income tax expense was $160.8 million for the third quarter of fiscal 2025 with an adjusted effective tax
rate of 24.2%. For the third quarter 2024, income tax expense was $38.8 million with 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 with an adjusted effective tax rate of 24.4%.
For the thirty-nine weeks ended March 1, 2025, pre-tax income was $1.1 billion, compared to $208.0 million for the same
period of fiscal 2024. Income tax expense of $273.8 million was recorded for the thirty-nine weeks ended March 1, 2025 with
an effective tax rate of 23.8%. This includes the discrete tax benefit of $5.7 million associated with the fiscal 2024 provision-to-
return adjustments. Excluding the discrete tax benefit, income tax expense was $279.5 million with an adjusted effective tax
rate of 24.3%. For the same period of fiscal 2024, income tax expense was $44.7 million with an effective tax rate of 21.5%.
30
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%.
Items causing our effective tax rate to differ from the federal statutory income tax rate of 21% are state income taxes, certain
federal tax credits and certain items included in income or loss for financial reporting purposes that are not included in taxable
income or loss for income tax purposes, including tax exempt interest income, certain nondeductible expenses, and net income
or loss attributable to noncontrolling interest.
NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.
Net income attributable to Cal-Maine Foods, Inc. for the third quarter ended March 1, 2025 was $508.5 million, or $10.42 per
basic and $10.38 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $146.7 million, or
$3.01 per basic and $3.00 per diluted common share, for the same period of fiscal 2024.
Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended March 1, 2025, was $877.6 million, or $17.99
per basic and $17.92 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $164.6
million or $3.38 per basic and $3.37 per diluted common share, for the same period of fiscal 2024.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Current Ratio
Our working capital was $1.5 billion at March 1, 2025 compared to $1.0 billion at June 1, 2024. The calculation of working
capital is defined as current assets less current liabilities. Our current ratio was 3.9 at March 1, 2025 compared to 5.5 at June 1,
2024. The decrease in our current ratio is primarily due to the increase in both income taxes and trade payables. The current
ratio is calculated by dividing current assets by current liabilities.
Cash Flows from Operating Activities
For the thirty-nine weeks ended March 1, 2025, $811.7 million in net cash was provided by operating activities, compared to
$237.6 million provided by operating activities for the comparable period in fiscal 2024. The increase in cash flow from
operating activities resulted primarily from higher net average selling prices per dozen, particularly for conventional eggs,
increased volume of sales and a decrease in feed ingredient costs compared to the prior-year period, partially offset by the
increase in volume and price of outside egg purchases.
Cash Flows from Investing Activities
For the thirty-nine weeks ended March 1, 2025, $385.1 million was used in investing activities, primarily due to the acquisition
of assets of ISE, and purchases of property, plant and equipment compared to $118.4 million used in investing activities in the
same period of fiscal 2024, primarily due to purchases of investment securities. Purchases of investment securities were $813.1
million during the thirty-nine weeks ended March 1, 2025 and sales and maturities of investment securities were $654.4 million
during the period. Sales and maturities of investment securities were $273.9 million in the prior year period while purchases of
investment securities were $243.5 million during the period. The increase in sales and maturities of investment securities is
primarily due to the maturities of short-term investments during the first three quarters of fiscal 2025. Cash paid for business
acquisitions was $116.2 million in the thirty-nine weeks ended March 1, 2025, primarily related to the ISE acquisition, and
$53.7 million in the prior year period, related to the Fassio acquisition. Purchases of property, plant and equipment were $115.4
million and $96.0 million in the first three quarters of fiscal 2025 and 2024, respectively, primarily reflecting progress on our
construction projects.
Cash Flows from Financing Activities
We paid dividends of $160.8 million for the thirty-nine weeks ended March 1, 2025 compared to $43.0 million in the same
prior-year period.
As of March 1, 2025, cash increased $259.4 million since June 1, 2024, compared to $74.3 million during the same period of
fiscal 2024. The increase is primarily due to the increase in net sales during fiscal 2025.
31
Credit Facility
On November 15, 2021, we entered into a credit agreement that provides for a senior secured revolving credit facility (the
“Credit Facility”), in an initial aggregate principal amount of up to $250 million with a five-year term. As of March 1, 2025, no
amounts were borrowed under the Credit Facility and we had $4.7 million in outstanding standby letters of credit issued under
our Credit Facility for the benefit of certain insurance companies. On March 25, 2025, we entered into the Second Amendment
to the Credit Facility. Refer to Part I. Item I, Notes to Consolidated Financial Statements,
included in this report, Exhibit 10.2 to this report and Part II Item 8, Notes to Consolidated Financial Statements and
Supplementary Data, Note 10 - Credit Facility included in our 2024 Annual Report for further information regarding our long-
term debt.
Share Repurchase Program
On February 25, 2025, the Board of Directors approved a new $500 million share repurchase program. The share repurchase
program authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for an aggregate
purchase price up to $500 million (exclusive of any fees, taxes, commissions or other expenses related to such repurchases),
subject to market conditions and other factors. The actual timing, number and value of shares repurchased under the program
will be determined by management in its discretion and will depend on a number of factors, including, but not limited to, the
market price of the Common Stock and general market and economic conditions.
The Company expects to strategically and opportunistically repurchase shares from time to time through solicited or unsolicited
transactions in the open market, in privately negotiated transactions or by other means in accordance with securities laws. It is
also possible that the Company could use a portion of its share repurchase program to repurchase some of the shares of the
Company’s Common Stock held by the family of our late founder, Fred R. Adams Jr., as part of their potential portfolio
diversification. Any repurchases from the family would require special approval from a Special Committee of the Board of
Directors. The Company expects that share repurchases under the program will be funded from one or a combination of
existing cash balances and future free cash flow. The share repurchase program does not obligate the Company to repurchase
any specific amount of shares, does not have an expiration date, and may be suspended, modified or discontinued at any time
without prior notice.
Dividends
In accordance with our variable dividend policy, we will pay a cash dividend totaling approximately $169.5 million, or
approximately $3.456 per share, to holders of our Common Stock and Class A Common Stock with respect to our third quarter
of fiscal 2025. The amount paid per share will vary based on the number of outstanding shares on the record date. The dividend
is payable on May 15, 2025 to holders of record on April 30, 2025.
Material Cash Requirements
Material cash requirements for operating activities primarily consist of feed ingredients, processing, packaging and warehouse
costs, employee related costs, and other general operating expenses, which we expect to be paid from our cash from operations
and cash and investment securities on hand for at least the next 12 months. While volatile egg prices and feed ingredient costs,
among other things, make long-term predictions difficult, we have substantial liquid assets and availability under our Credit
Facility to fund future operating requirements.
Our material cash requirements for capital expenditures consist primarily of our construction projects to increase our cage-free
production capacity. We continue to monitor the increasing demand for cage-free eggs and to engage with our customers in
efforts to achieve a smooth transition toward their announced timelines for cage-free egg sales. The following table presents
material construction projects approved as of March 1, 2025 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of March 1,
2025
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2025
$
4,396
$
3,796
$
600
Feed Mills
Fiscal 2026
16,593
8,055
8,538
Egg Products Expansion
Fiscal 2026
20,213
7,093
13,120
Cage-Free Layer & Pullet Houses
Fiscal 2026
199,667
155,444
44,223
$
240,869
$
174,388
$
66,481
32
These projects include the addition of five new cage-free layer houses and two pullet houses across our locations in Florida,
Georgia, Utah and Texas. We expect the projects to be completed in calendar 2025 with expected additional production
capacity for approximately 1.1 million cage-free layer hens and 250 thousand pullets. We are also investing $15 million to
expand our egg products processing facility in Blackshear, Georgia to add extended shelf-life liquid eggs products.
We believe our current cash balances, investments, projected cash flows from operations, and available borrowings under our
Credit Facility will be sufficient to fund our capital expenditure cash needs for at least the next 12 months and to fund our
capital commitments currently in place thereafter.
IMPACT OF RECENTLY ISSUED/ADOPTED ACCOUNTING STANDARDS
For information on changes in accounting principles and new accounting policies, see
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that
involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our
financial condition or results of operations. There have been no changes to our critical accounting estimates identified in our
2024 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 1, 2025 from the
information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2024 Annual
Report.
ITEM 4. CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive
and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure. Based on an evaluation of our disclosure controls and procedures conducted by our Chief Executive Officer
and Chief Financial Officer, together with other financial officers, such officers concluded that our disclosure controls and
procedures were effective as of March 1, 2025 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 1, 2025 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
33
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to the discussion of certain legal proceedings involving the Company and/or its subsidiaries in (i) our 2024 Annual
Report, Part I Item 3 Legal Proceedings, and Part II Item 8, Notes to Consolidated Financial Statements and Supplementary
Data, Note 16 - Commitments and Contingencies, and (ii) in this Quarterly Report in
reference.
ITEM 1A. RISK
FACTORS
Except as set forth below, there have been no material changes in the risk factors previously disclosed in the Company’s 2024
Annual Report.
Provisions of our certificate of incorporation, bylaws, and Delaware law may make an acquisition of us or a change in
our management more difficult.
Certain provisions of our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition or
other change in control that stockholders may consider favorable, including transactions in which an investor might otherwise
receive a premium for its shares. These provisions also could limit the price that investors might be willing to pay in the future
for shares of our Common Stock, thereby depressing the market price of our Common Stock. Stockholders who wish to
participate in these transactions may not have the opportunity to do so. Furthermore, these provisions could prevent or frustrate
attempts by our stockholders to replace or remove our management. These provisions:
●
provide for the division of the Board into three classes as nearly equal in size as practicable with staggered three-year
terms and limit the removal of directors and the filling of vacancies;
●
authorize our Board to set the terms of and issue preferred stock, without stockholder approval, that could be issued to
persons friendly to management or could operate as a “poison pill” to dilute the stock ownership of a potential hostile
acquirer to prevent an acquisition that is not approved by our Board;
●
prohibit stockholder action by written consent;
●
prohibit stockholders from calling special meetings of stockholders;
●
establish advance notice requirements for stockholder nominations to our Board or for stockholder proposals that can
be acted on at stockholder meetings; and
●
require the approval of the holders of at least 66-2/3% of the voting power of all then outstanding shares of capital
stock of the Company entitled to vote generally in the election of directors, voting together as a single class, in order to
amend our certificate of incorporation and bylaws.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless
certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock,
from merging or combining with us for a prescribed period of time.
The potential loss, or loss, of controlled company status could disrupt our business.
Our Company has been controlled by members of the family of our founder, Fred R. Adams, Jr. since its founding and since it
became a public company. As previously disclosed, family members have informed the Company that they are potentially
interested in diversifying their respective financial portfolios, including through the potential sale of all or a portion of their
equity interests in the Company (the “Potential Portfolio Diversification”), which could involve the conversion of all of the
outstanding Class A Common Stock. Such a conversion would result in the family no longer controlling a majority of the
voting power of our outstanding equity securities and in our Company ceasing to be a “controlled company” under Nasdaq
rules. Adolphus B. Baker, Board Chair and a family member, has indicated that he is willing to serve as executive Board Chair
at least through our 2027 annual meeting of stockholders. The effect of the loss of controlled company status on the trading
price of our Common Stock and on our business is uncertain, including our ability to retain and hire key personnel and maintain
relationships with customers and suppliers, and on our operating results. In addition, our business may be more likely to be
disrupted by persons seeking to influence or effect a change of control, change of management or change in governance of our
Company. Any such disruptions to our business could have a material adverse effect on our operations and financial results.
34
Sales of substantial amounts of our Common Stock in the public markets, or the perception that such sales might occur,
could cause the trading price of our Common Stock to decline.
Sales of a substantial number of shares of our Common Stock into the public markets in connection with the Potential Portfolio
Diversification, or the perception that such sales might occur, could cause the trading price of our Common Stock to decline.
The recent high market prices for eggs, primarily caused by the HPAI-related reduction in supply, has led to pressure
from customers to change long-standing market-based pricing frameworks and/or otherwise reduce the price of our
eggs. A material change in our sales arrangements with key customers could have a material adverse effect on our
revenues, gross profits and net income. Other reactions to high egg prices, including by state or federal government
agencies, may also adversely impact our business.
Market prices for wholesale shell eggs have been volatile and cyclical over time. Market prices for eggs tend to increase during
and following outbreaks of agricultural diseases in the egg industry that reduce the supply of eggs, which has occurred during
the current HPAI outbreak, until the supply and demand balance is restored. Many of our sales arrangements with customers,
particularly for conventional eggs, are based on formulas that take into account, in varying ways, independently quoted regional
wholesale market prices for eggs. The recent high market prices for eggs have led to pressure from customers to change long-
standing market-based pricing frameworks and/or otherwise reduce the price of our eggs. To remain competitive and retain our
customers and gain new ones, we must consider our customer relationships and the reactions and potential reactions of
competitors. A material change in our sales arrangements with key customers could have a material adverse effect on our
revenues and gross profits.
Other reactions to high egg prices may also adversely impact our business. On February 26, 2025, the U.S. Secretary of
Agriculture announced a $1 billion-dollar comprehensive strategy to curb HPAI, protect the U.S. poultry industry, and lower
egg prices. The Secretary’s five-pronged strategy includes an additional $500 million for biosecurity measures, $400 million in
financial relief for affected farmers, and $100 million for vaccine research, actions to reduce regulatory burdens, and exploring
temporary egg import options. As disclosed elsewhere herein, in March 2025, we received a civil investigative demand in
connection with a widely publicized investigation by the Antitrust Division of the Department of Justice into the causes behind
nationwide increases in egg prices. In addition, persistent high egg prices during the peak of the current HPAI outbreak may
have caused and may in the future cause some consumers to purchase fewer eggs. Such persistent high-price cycles may also
increase attention on the egg industry by state and federal government agencies, which may lead to additional government
investigations or related activities. The potential impacts of these reactions on our business are unclear, unpredictable and may
divert our resources and attention from our core business activities, and they may have an adverse effect that could be material.
For additional information, see, in this report, Part I. Item 1. Notes to the Consolidated Financial Statements,
of Operations – HPAI. See also the following risk factors in Part I. Item IA. in our 2024 Annual Report:
“Market prices of
wholesale shell eggs are volatile, and decreases in these prices can adversely impact our revenues and profits.”; “Agricultural
risks, including outbreaks of avian diseases such as HPAI, have harmed and in the future could harm our business.”
Current and future litigation and other legal matters could expose us to significant liabilities and adversely affect our
business reputation.
We and certain of our subsidiaries are involved in various legal proceedings and other legal matters. Litigation, government
investigations and other legal matters are inherently unpredictable, and although we believe we have meaningful defenses in
these matters, we may incur liabilities due to adverse judgments or enter into settlements of claims that could have a material
adverse effect on our results of operations, cash flow and financial condition. For further discussion, see, in this report, Part I.
Item 1. Notes to the Consolidated Financial Statements, Note 10 – Commitments and Contingencies and, in our 2024 Annual
Report, Part I. Item 3. Legal Proceedings and Part II. Item 8. Notes to the Consolidated Financial Statements, Note 16 –
Commitments and Contingencies. Such lawsuits, investigations and other legal matters are expensive to respond to and defend,
divert management’s attention, and may result in significant adverse judgments or settlements. Legal proceedings may expose
us to negative publicity, which could adversely affect our business reputation and customer preference for our products and
brands.
The Company’s pending Echo Lake Acquisition may not be completed and, if completed, may not achieve the results we
anticipate.
The completion of the Company’s pending acquisition of Echo Lake Foods is subject to a number of risks and uncertainties,
many of which are outside of the Company’s control, including:
●
conditions to the closing of the proposed transaction may not be satisfied;
35
●
antitrust clearance required for the proposed transaction may not be obtained, or required antitrust clearance may delay
the proposed transaction or result in the imposition of conditions that could have a material adverse effect on the
Company or Echo Lake Foods or cause certain conditions to closing not to be satisfied, which could result in the
termination of the acquisition agreement;
●
the timing of completion of the proposed transaction is uncertain;
●
the business of the Company or Echo Lake Foods may suffer as a result of uncertainty surrounding the proposed
transaction;
●
events, changes or other circumstances could occur that could give rise to the termination of the acquisition agreement;
●
there are risks related to disruption of management’s attention from the ongoing business operations of the Company
or Echo Lake Foods due to the proposed transaction;
●
the announcement or pendency of the proposed transaction could affect the relationships of the Company or Echo
Lake Foods with its customers, supplier, operating results and business generally, including on the ability of the
Company or Echo Lake Foods to retain employees; and
●
the Company or Echo Lake Foods may be adversely affected by other economic, business, and/or competitive factors
as well as management’s response to any of the aforementioned factors.
Although we have already diversified our business with ready-to-eat product offerings, the Echo Lake Acquisition represents a
significant expansion of this strategy. Accordingly, we may experience unexpected challenges in integrating and managing the
business of Echo Lake Foods. Integrating Echo Lake Foods’ business may be more costly or time consuming than we expect.
Even if the acquisition is completed and the business of Echo Lake Foods is successfully integrated, we may not realize the
benefits we expect from the acquisition, including the synergies, cost savings, reduction in earnings volatility, margin
expansion, financial returns, expanded customer relationships, or sales or growth opportunities.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table is a summary of our third quarter 2025 share repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Approximate
Shares Purchased
Dollar Value of
Total Number
Average
as Part of Publicly
Shares that May Yet
of Shares
Price Paid
Announced Plans
Be Purchased Under
Period
Purchased (1)
per Share
Or Programs
the Plans or Programs (2)
12/01/24 to 12/28/24
—
$
—
—
$
—
12/29/24 to 01/25/25
35,202
109.97
—
—
01/26/25 to 03/01/25
198
107.78
—
500,000,000
35,400
$
109.96
—
$
500,000,000
(1) As permitted under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan, 32,023 shares were withheld by us to satisfy tax withholding
obligations for employees in connection with the vesting of restricted common stock. To assist outside directors with the payment of taxes due upon
vesting of restricted stock, 3,377 shares were purchased.
(2) On February 25, 2025, the Company announced a new $500 million share repurchase program. The share repurchase program authorizes the Company, in
management’s discretion, to repurchase shares of Common Stock from time to time for an aggregate purchase price up to $500 million (exclusive of any
fees, taxes, commissions or other expenses related to such repurchases), subject to market conditions and other factors.
ITEM 5. OTHER INFORMATION
Echo Lake Purchase Agreement
On April 8, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), with Echo Lake
Foods, Inc. (“Echo Lake Foods”), Scott Meinerz, as Sellers’ Representative, and certain selling entities owned by the
Wisconsin-based Meinerz family (collectively, the “Sellers”). Under the Purchase Agreement, the Company has agreed to
acquire Echo Lake Foods and certain related companies (collectively, the “Echo Lake Company Group”) for a cash purchase
price of approximately $258 million, excluding expected tax assets resulting from the transaction, to be funded from available
cash on hand (the “Echo Lake Acquisition”). The purchase price is subject to customary working capital and related
adjustments.
Echo Lake Foods was founded in 1941 and acquired by the Meinerz family in 1981. Based in Burlington, Wisconsin, Echo
Lake Foods produces, packages, markets and distributes ready-to-eat egg products and breakfast foods, including waffles,
pancakes, scrambled eggs, frozen cooked omelets, egg patties, toast and diced eggs. Echo Lake Foods had annual revenues of
36
approximately $240 million in 2024. Echo Lake Foods will operate as a stand-alone component of the Company’s integrated
operations with its four production facilities strategically located in Wisconsin, Indiana and Kentucky.
The transaction is expected to close in the Company’s fourth fiscal quarter. The transaction is not subject to approval by the
Company’s stockholders or by the equityholders of any member of the Echo Lake Company Group. The consummation of the
Echo Lake Acquisition is subject to customary closing conditions, including, among others, (i) the expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”),
(ii) the accuracy of the representations and warranties of each party (subject to certain materiality qualifiers), and (iii) the
performance in all material respects by each party of its obligations under the Purchase Agreement. The Company’s obligations
are also conditioned upon the absence of a material adverse effect on the Echo Lake Company Group.
The Purchase Agreement also contains customary representations, warranties and covenants, including covenants by the Echo
Lake Company Group to conduct its business in the ordinary course consistent with past practice and to refrain from taking
certain actions prior to the closing of the transaction without the Company’s consent. In addition, the Sellers and the Echo Lake
Group have agreed not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning,
or provide confidential information in connection with, any unsolicited competing acquisition proposals.
If the Echo Lake Acquisition has not closed by July 7, 2025 (“Outside Date”), then either the Sellers’ Representative or the
Company may terminate the Purchase Agreement. However, if the closing has not occurred solely because the applicable
waiting period under the HSR Act has not expired or been terminated, and all other conditions to closing have been satisfied or
waived (other than those pre-closing restructuring steps and conditions that by their terms are to be satisfied at the closing),
either the Company or the Sellers’ Representative may extend the Outside Date for up to an additional 30 days.
The foregoing summary of the Purchase Agreement and the transactions contemplated by the Purchase Agreement does not
purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of
which is attached to this Form 10-Q as Exhibit 10.5 and is incorporated herein by reference. The Purchase Agreement has been
included to provide investors and stockholders with information regarding its terms. It is not intended to provide any other
factual information about the Company, or the Echo Lake Company Group. The representations, warranties and covenants
contained in the Purchase Agreement were made only for purposes of the Purchase Agreement as of the specific dates therein,
were solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of
materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party
beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of facts or condition of the Company or the Echo Lake Company
Group. Moreover, information concerning the subject matter of the representations and warranties may change after the date of
the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Severance and Change in Control Agreements
Effective as of April 8, 2025, the Company entered into a Severance and Change in Control Agreement (each, an “Agreement”)
with each of Sherman Miller, Max Bowman, Todd Walters, Rob Holladay and Scott Hull (each, an “Executive” and
collectively, the “Executives”). The Agreements continue in effect through May 31, 2030, after which they will automatically
renew for additional one-year periods unless prior written notice of non-renewal is provided by the Company in accordance
with the terms of the Agreement.
Under each Agreement, if the Company terminates the Executive without Cause or the Executive terminates employment for
Good Reason during the term of the Agreement and prior to a Change in Control (as such terms are defined in the Agreement),
the Executive will receive a lump-sum cash payment equal to the sum of (a) an amount in lieu of his annual bonus for the year
of termination equal to the average of the annual bonuses awarded to the Executive for the three fiscal years immediately
preceding the termination date (the “Termination Bonus”), plus (b) two times for Mr. Miller and one and one-half times for
each other Executive the sum of (i) the Executive’s base salary in effect at the time of termination plus (ii) the average of the
annual bonuses awarded to the Executive for the three fiscal years immediately preceding the termination date. In addition, the
Company shall continue to provide insurance and welfare benefits to the Executive until the earlier of the third anniversary of
the termination date or the date the Executive accepts new employment (the “Benefit Continuation”).
Additionally, if the Company or its successor terminates the Executive during the two-year period following a Change in
Control, other than by reason of death, disability or Cause, or the Executive terminates employment for Good Reason (as such
terms are defined in the Agreement), the Executive will receive a lump-sum cash payment equal to the sum of (a) his
Termination Bonus plus (b) three times for Mr. Miller and two times for each other Executive the sum of (i) the Executive’s
base salary in effect at the termination date, or if higher, immediately preceding the Change in Control (with such base salary
37
being determined without regard to any reduction that would provide the Executive a basis to terminate employment for Good
Reason), plus (ii) the average of the annual cash bonuses paid to the Executive for the three full fiscal years immediately
preceding the date of the Change in Control, or, if a higher amount results, the termination date. In addition, the Company shall
provide the Benefit Continuation. If any part of the payments or benefits received by the Executive in connection with a
termination following a Change in Control constitutes an excess parachute payment under Section 4999 of the Internal Revenue
Code, the Executive will receive the greater of (a) the amount of such payments and benefits reduced so that none of the
amount constitutes an excess parachute payment, net of income taxes, or (b) the amount of such payments and benefits, net of
income taxes and net of excise taxes under Section 4999 of the Internal Revenue Code.
The Agreements also require the Executives to deliver a release in favor of the Company in order to receive the severance
benefits.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the form
of the Severance and Change in Control Agreement, which is filed as Exhibit 10.6 hereto and incorporated herein by reference.
Performance Share Unit Awards
The Compensation Committee (the “Committee”) of the Company’s Board of Directors has implemented a new performance-
based component under the Company’s long-term executive compensation program, which provides for awards of performance
share units (“PSUs”) to certain key executives. On April 8, 2025, the Committee approved awards of PSUs to each of Sherman
Miller, Max Bowman, Todd Walters, Rob Holladay, Adolphus Baker and Scott Hull, which awards will be effective on June 1,
2025 (the “Grant Date”). The number of PSUs granted, which amount represents the target award, will be determined by
dividing 40% of each executive’s current base salary by the per share closing price of the Company’s Common Shares on the
Grant Date, and rounding down to the nearest unit. Each PSU represents the right to receive one Common Share, provided the
applicable service and performance conditions are met. Specifically, the terms of the PSUs provide that they will pay out after a
three-year performance period contingent on (a) the executive’s continued service through the performance period, except as
otherwise provided in the Performance Share Unit Agreement, and (b) the Company’s achievement of specific performance
goals tied to the following two equally weighted measures: the Company’s cumulative adjusted EBITDA and relative total
shareholder return compared to a peer group. Depending on the level of achievement of these two measures over the
performance period, the PSUs will pay out between 0% and 150% of the target award.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the form
of the Performance Share Unit Agreement, which is filed as Exhibit 10.7 hereto and incorporated herein by reference.
38
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
10.1
10.2
10.3
10.4
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
April 8, 2025
/s/ Max P. Bowman
Max P. Bowman
Vice President, Chief Financial Officer
(Principal Financial Officer)
Date:
April 8, 2025
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)