Cal-Maine Foods Inc 10-Q for FY2024 Q3
Cal-Maine Foods Inc (CALM)
10-Q
2024-04-02
For: 2024-03-02
View Original
Added on
April 11, 2026
About this 10-Q
Cal-Maine Foods Inc filed this 10-Q on April 2, 2024, covering the quarter ended March 2, 2024 (FY2024 Q3).
Headline figures
Quarter ended March 2, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $703.08M
- down 29.5% from $997.49M a year earlier
- Net income
- $146.71M
- down 54.6% from net income of $323.22M a year earlier
- Diluted EPS
- $3.00
- down 54.7% from $6.62 a year earlier
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 2, 2024.
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 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 2, 2024
June 3, 2023
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
(1,514 )
(2,886 )
Common stock in treasury at cost –
at June 3, 2023
(31,597 )
(30,008 )
Total Cal-Maine Foods, Inc. stockholders’ equity
Noncontrolling interest in consolidated entity
(2,793 )
(1,498 )
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 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Net sales
$
$
$
$
Cost of sales
Gross profit
Selling, general and administrative
Gain on involuntary conversions
(9,929 )
(3,220 )
(9,929 )
(3,220 )
(Gain) loss on disposal of fixed assets
(306 )
(26 )
(44 )
Operating income
Other income (expense):
Interest income, net
Royalty income
Patronage dividends
Equity income of unconsolidated entities
Other, net
(1,473 )
(205 )
Total other income, net
Income before income taxes
Income tax expense
Net income
Less: Loss attributable to noncontrolling
interest
(349 )
(450 )
(1,295 )
(896 )
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 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Net income
$
$
$
$
Other comprehensive income (loss), before
tax:
Unrealized holding gain (loss) on available-
for-sale securities, net of reclassification
adjustments
(1,945 )
Income tax benefit (expense) related to
items of other comprehensive income
(32 )
(6 )
(441 )
Other comprehensive income (loss), net of tax
(1,471 )
Comprehensive income
Less: Comprehensive loss attributable to the
noncontrolling interest
(349 )
(450 )
(1,295 )
(896 )
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 2, 2024
February 25, 2023
Cash flows from operating activities:
Net income
$
$
Depreciation and amortization
Deferred income taxes
Other adjustments, net
Net cash provided by operations
Cash flows from investing activities:
Purchases of investment securities
(243,518 )
(442,583 )
Sales and maturities of investment securities
Investment in unconsolidated entities
(363 )
(1,673 )
Distributions from unconsolidated entities
Acquisition of business
(53,746 )
Purchases of property, plant and equipment
(95,969 )
(86,168 )
Net proceeds from disposal of property, plant and equipment
Net cash used in investing activities
(118,438 )
(397,620 )
Cash flows from financing activities:
Payments of dividends
(42,965 )
(144,559 )
Purchase of common stock by treasury
(1,688 )
(1,633 )
Principal payments on finance lease
(214 )
(167 )
Net cash used in financing activities
(44,867 )
(146,359 )
Net change in cash and cash equivalents
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 3, 2023 (the
“2023 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 2, 2024 and February 25, 2023 included
13 weeks
39 weeks
, respectively.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.
Investment Securities
The Company has determined that its debt securities are available-for-sale investments. We classify these securities as current
because the amounts invested are available for current operations. Available -for-sale securities are carried at fair value, based
on quoted market prices as of the balance sheet date, with unrealized gains and losses recorded in other comprehensive income.
The amortized cost 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.
Investments in mutual funds are recorded at fair value and are classified as “Other long-term assets” in the Company’s
Condensed Consolidated Balance Sheets. Unrealized gains and losses for equity securities are recorded in other income
(expenses) as Other, net in the Company’s Condensed Consolidated Statements of Income.
The cost basis for realized gains and losses on available-for-sale securities is determined by the specific identification method.
Gains and losses are recognized 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 2, 2024 and June 3,
2023, 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.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is
evaluated for impairment annually by first performing a qualitative assessment to determine whether a quantitative goodwill
8
test is necessary. After assessing the totality of events or circumstances, if we determine it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, then we perform additional quantitative tests to determine the
magnitude of any impairment.
Intangible Assets
Intangible assets are initially recorded at fair value in business acquisitions, which include franchise rights, customer
relationships, non-compete agreements, trademark and right of use intangibles. They are amortized over their estimated useful
lives of
amounts are fully amortized and the asset is no longer in use or the contract has expired. When certain events or changes in
operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability
of the carrying amounts.
Indefinite life assets are recorded at fair value in business acquisitions and represents water rights. They are not amortized, but
are reviewed for impairment at least annually or more frequently if impairment indicators arise.
Dividends Payable
We accrue dividends at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors.
The Company pays a dividend to shareholders of its Common Stock and Class A Common Stock on a quarterly basis for each
quarter for which the Company reports net income attributable to Cal-Maine Foods, Inc. computed in accordance with GAAP
in an amount equal to one-third (1/3) of such quarterly income. Dividends are paid to shareholders of record as of the 60th day
following the last day of such quarter, except for the fourth fiscal quarter. For the fourth quarter, the Company pays dividends
to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.
Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend for a subsequent profitable quarter until the Company is profitable on a cumulative basis computed from the
date of the most recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board of
Directors.
Business Combinations
The Company applies the acquisition method of accounting, which requires that once control is obtained, all the assets acquired
and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values at
the date of acquisition. We determine the fair values of identifiable assets and liabilities internally, which requires estimates and
the use 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.
Gain on Involuntary Conversions
The Company maintains insurance for both property damage and business interruption relating to catastrophic events, such as
fires, hurricanes, tornadoes and other acts of God, and is eligible to participate in U.S. Department of Agriculture (“USDA”)
indemnity and compensation programs for certain losses due to disease outbreaks such as highly pathogenic avian influenza
(“HPAI”). Specifically, the Animal Health Protection Act authorizes USDA to provide indemnity payments to producers for
birds and eggs that must be destroyed during a disease response. Payments received under these programs are based on the fair
market value of the poultry and/or eggs at the time that HPAI virus is detected in the flock. Other covered costs include feed,
depopulation and disposal costs, and virus elimination costs. USDA does not provide indemnity for income or production losses
suffered due to downtime or other business disruptions nor for indirect continuing expenses. Recoveries received for property
damage, business interruption and disease outbreaks in excess of the net book value of damaged assets, clean-up and demolition
costs, and other direct post-event costs are recorded within “Gain on involuntary conversions” in the period received or
committed when all contingencies associated with the recoveries are resolved.
Loss Contingencies
Certain conditions may exist as of the date the 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
9
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 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
No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our
Consolidated Financial Statements.
Note 2 - Acquisition
Effective
, the Company acquired the assets of Fassio Egg Farms, Inc. (“Fassio”), related to its commercial
shell egg production and processing business. Fassio owns and operates commercial shell egg production and processing
facilities with a capacity at the time of acquisition of approximately
pullets, a fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. The Company
accounted for the acquisition as a business combination.
The following table summarizes the consideration paid for the Fassio assets and the amounts of assets acquired and liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Fair value of contingent consideration
Total estimated purchase consideration
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventory
$
Property, plant and equipment
Intangible assets
Other long-term assets
Liabilities assumed
(143 )
Total identifiable net assets
Goodwill
$
Inventory 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 September 30, 2023.
Property, plant and equipment were valued utilizing the cost approach which is based on replacement or reproduction costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible assets consisted primarily of water rights within the property acquired. Water rights were valued using the sales
comparison approach.
10
Contingent consideration liability was recorded and represents potential future cash payment to the sellers contingent on the
acquired business meeting certain return on profitability milestones over a
three-year
acquisition. The fair value of the contingent consideration is estimated using a discounted cash flow model. Key assumptions
and unobservable inputs that require significant judgement used in the estimate include weighted average cost of capital, egg
prices, projected revenue and expenses over which the contingent considered is measured, and the probability assessments with
respect to the likelihood of achieving the forecasted projections. A range of potential outcomes cannot be reasonably estimated
due to market volatility of egg prices.
Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net
assets acquired. Goodwill recorded in connection with the Fassio acquisition is primarily attributable to improved efficiencies
from integrating the assets of Fassio with the operations of the Company. The Company recognized goodwill of $
a result of the acquisition.
Note 3 - Investment
Securities
The following represents the Company’s investment securities as of March 2, 2024 and June 3, 2023 (in thousands):
March 2, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
Mutual funds
$
$
$
$
Total noncurrent investment securities
$
$
$
$
June 3, 2023
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
$
$
$
$
Mutual funds
$
$
$
$
Total noncurrent investment securities
$
$
$
$
Available-for-sale
Proceeds from sales and maturities of investment securities available-for-sale were $
the thirty-nine weeks ended March 2, 2024 and February 25, 2023, respectively. Gross realized gains for the thirty-nine weeks
ended March 2, 2024 and February 25, 2023 were $
thirty-nine weeks ended March 2, 2024 and February 25, 2023 were $
allowances for credit losses at March 2, 2024 and June 3, 2023.
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 2, 2024 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Noncurrent
Proceeds from sales and maturities of noncurrent investment securities were $
weeks ended March 2, 2024 and February 25, 2023, respectively. Gross realized gains for the thirty-nine weeks ended March 2,
2024 and February 25, 2023 were $
weeks ended March 2, 2024. Gross realized losses for the thirty-nine weeks ended February 25, 2023 were $
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:
short maturity of these instruments.
12
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 2, 2024 and June 3, 2023 (in thousands):
March 2, 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
Mutual funds
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
June 3, 2023
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
Mutual funds
Total assets 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 the sellers of Fassio
contingent on the acquired business meeting certain return on profitability milestones over a
three-year
the date of the acquisition. The fair value of the contingent consideration is estimated using a discounted cash flow model. Key
assumptions and unobservable inputs that require significant judgement used in the estimate include weighted average cost 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. See further discussion in
Note 5 - Inventories
Inventories consisted of the following as of March 2, 2024 and June 3, 2023 (in thousands):
March 2, 2024
June 3, 2023
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
13
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 2,
2024 and June 3, 2023 consisted of approximately
million layers, respectively.
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended March 2, 2024 and February 25, 2023 (in thousands):
Thirteen Weeks Ended March 2, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
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 )
$
Thirteen Weeks Ended February 25, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at November
26, 2022
$
$
$
(28,496 )
$
$
(3,087 )
$
$
(652 )
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
—
—
(1,500 )
—
—
—
(528 )
Dividends ($
per share)
Common
—
—
—
—
—
(97,123 )
—
(97,123 )
Class A common
—
—
—
—
—
(10,555 )
—
(10,555 )
Net income (loss)
—
—
—
—
—
(450 )
Balance at February
25, 2023
$
$
$
(29,996 )
$
$
(3,067 )
$
$
(1,102 )
$
14
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
income, net of tax
—
—
—
—
—
—
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 )
$
Thirty-nine Weeks Ended February 25, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 28,
2022
$
$
$
(28,447 )
$
$
(1,596 )
$
$
(206 )
$
Other comprehensive
loss, net of tax
—
—
—
—
(1,471 )
—
—
(1,471 )
Stock compensation
plan transactions
—
—
(1,549 )
—
—
—
Dividends ($
per share)
Common
—
—
—
—
—
(194,478 )
—
(194,478 )
Class A common
—
—
—
—
—
(21,144 )
—
(21,144 )
Net income (loss)
—
—
—
—
—
(896 )
Balance at February
25, 2023
$
$
$
(29,996 )
$
$
(3,067 )
$
(1,102 )
$
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.
15
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 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Numerator
Net income
$
$
$
$
Less: Loss attributable to
noncontrolling interest
(349 )
(450 )
(1,295 )
(896 )
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
Satisfaction of Performance Obligation
The vast majority of the Company’s revenue is derived from agreements with customers based on the customer placing an order
for products. Pricing for the most part is determined when the Company and the customer agree upon the specific order, which
establishes the contract for that order.
Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for the goods. Our
shell eggs are sold at prices related to independently quoted wholesale market prices or formulas related to our costs of
production. The Company’s sales predominantly contain a single performance obligation. We recognize revenue upon
satisfaction of the performance obligation with the customer, which typically occurs within days of the Company and the
customer agreeing upon the order.
Returns and Refunds
Some of our contracts include a guaranteed sale clause, pursuant to which we credit the customer’s account for product that the
customer is unable to sell before expiration. The Company records an allowance for expected customer returns using historical
return data compared to current period sales and accounts receivable. The allowance is recorded as a reduction of sales in the
same period the revenue is recognized.
Sales Incentives Provided to Customers
The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current
discount offers (e.g., percentage discounts off current purchases), inducement offers (e.g., offers for future discounts subject to
a minimum current purchase), and other similar offers. Current discount offers, when accepted by customers, are treated as a
reduction to the sales price of the related transaction, while inducement offers, when accepted by customers, are treated as a
reduction to sales price based on estimated future redemption rates. Redemption rates are estimated using the Company’s
historical experience for similar inducement offers. Current discount and inducement offers are presented as a net amount in
‘‘Net sales.’’
16
Disaggregation of Revenue
The following table provides revenue disaggregated by product category (in thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Conventional shell egg sales
$
$
$
$
Specialty shell egg sales
Egg products
Other
$
$
$
$
Contract Costs
The Company can incur costs to obtain or fulfill a contract with a customer. If the amortization period of these costs is less than
one year, they are expensed as incurred. When the amortization period is greater than one year, a contract asset is recognized
and is amortized over the contract life as a reduction in net sales. As of March 2, 2024 and June 3, 2023, the balance for
contract assets was immaterial.
Contract Balances
The Company receives payment from customers based on specified terms that are generally less than 30 days from delivery.
There are rarely contract assets or liabilities related to performance under the contract.
Note 9 - Stock Based Compensation
Total stock-based compensation expense was $
February 25, 2023, 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 2, 2024 of $
period of
Stock Compensation Plans in our 2023 Annual Report for further information on our stock compensation plans.
The Company’s restricted share activity for the thirty-nine weeks ended March 2, 2024 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, June 3, 2023
$
Granted
Vested
(99,360 )
Forfeited
(1,329 )
Outstanding, March 2, 2024
$
17
Note 10 - Commitments and Contingencies
LEGAL PROCEEDINGS
State of Texas v. Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State
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 so the case will be
remanded to the trial court for further proceedings. The district court has set a case management conference for April 12, 2024.
Management believes the risk of material loss related to this matter to be remote.
Bell et al. v. Cal-Maine Foods et al.
On April 30, 2020, the Company was named as one of several defendants in Bell et al. v. Cal-Maine Foods et al., Case No.
1:20-cv-461, in the Western District of Texas, Austin Division. The defendants include numerous grocery stores, retailers,
producers, and farms. Plaintiffs assert that defendants violated the DTPA by allegedly demanding exorbitant or excessive prices
for eggs during the COVID-19 state of emergency. Plaintiffs request certification of a class of all consumers who purchased
eggs in Texas sold, distributed, produced, or handled by any of the defendants during the COVID-19 state of emergency.
Plaintiffs seek to enjoin the Company and other defendants from selling eggs at a price more than 10% greater than the price of
eggs prior to the declaration of the state of emergency and damages in the amount of $
each violation impacting anyone over 65 years old. On December 1, 2020, the Company and certain other defendants filed a
motion to dismiss the plaintiffs’ amended class action complaint. The plaintiffs subsequently filed a motion to strike, and the
motion to dismiss and related proceedings were referred to a United States magistrate judge. On July 14, 2021, the magistrate
judge issued a report and recommendation to the court that the defendants’ motion to dismiss be granted and the case be
dismissed without prejudice for lack of subject matter jurisdiction. On September 20, 2021, the court dismissed the case without
prejudice. On July 13, 2022, the court denied the plaintiffs’ motion to set aside or amend the judgment to amend their
complaint.
On March 15, 2022, plaintiffs filed a second suit against the Company and several defendants in Bell et al. v. Cal-Maine Foods
et al., Case No. 1:22-cv-246, in the Western District of Texas, Austin Division alleging the same assertions as laid out in the
first complaint. On August 12, 2022, the Company and other defendants in the case filed a motion to dismiss the plaintiffs’
class action complaint. On January 9, 2023, the court entered an order and final judgement granting the Company’s motion to
dismiss.
On February 8, 2023, the plaintiffs appealed the lower court’s judgement to the United States Court of Appeals for the Fifth
Circuit, Case No. 23-50112. On February 12, 2024, the court affirmed the judgment of the district court.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
As previously reported, on September 25, 2008, the Company was named as one of several defendants in numerous antitrust
cases involving the United States shell egg industry. The Company settled all of these cases, except for the claims of certain
plaintiffs who sought substantial damages allegedly arising from the purchase of egg products (as opposed to shell eggs). These
remaining plaintiffs are Kraft Food Global, Inc., General Mills, Inc., and Nestle USA, Inc. (the “Egg Products Plaintiffs”) and,
until a subsequent settlement was reached as described below, The Kellogg Company.
18
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
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 $
liable for treble damages, or $
settlements with previous settling defendants, plus the Egg Product Plaintiffs’ reasonable attorneys’ fees. This decision is not
final and remains subject to the defendants’ motion for a directed verdict noted below and appeals by the parties. During our
second fiscal quarter of 2024, we recorded an accrued expense of $
in the Company’s Condensed Consolidated Statements of Income and classified as other noncurrent liabilities in the
Company’s Condensed Consolidated Balance Sheets. The accrual represents our estimate of the Company’s proportional share
of the reasonably possible ultimate damages award, excluding the Egg Product Plaintiffs’ attorneys’ fees that we believe would
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. Our accrual may also be revised
in whole or in part in the future to the extent we are successful in further proceedings in the litigation. On November 29, 2023,
the defendants, including the Company, filed a motion for judgment as a matter of law in their favor, known as a directed
verdict, notwithstanding the jury’s decision. The Company intends to continue to vigorously defend the claims asserted by the
Egg Products Plaintiffs.
State of Oklahoma Watershed Pollution Litigation
On June 18, 2005, the State of Oklahoma filed suit, in the United States District Court for the Northern District of Oklahoma,
against Cal-Maine Foods, Inc. and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc., Peterson Farms, Inc.
and Simmons Foods, Inc., and certain 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 the retired Tenth
Circuit Chief Judge Deanell Reece Tacha. On October 26, 2023, the parties filed separate status reports informing the court that
the mediation was unsuccessful. Also on October 26, 2023, the defendants filed a post-trial motion to dismiss and supporting
brief arguing that the case should be dismissed due to the state record before the court, the resulting mootness of the case, and
violation of due process. On November 10, 2023, the State of Oklahoma filed its response in opposition to the motion to
dismiss and on November 17, 2023, the defendants filed their reply. The court has not ruled on the motion. While management
believes there is a reasonable possibility of a material loss from the case, at the present time, it is not possible to estimate the
amount of monetary exposure, if any, to the Company due to a range of factors, including the following, among others:
uncertainties inherent in any assessment of potential costs associated with injunctive relief or other penalties based on a
decision in a case tried over 13 years ago based on environmental conditions that existed at the time, the lack of guidance from
the court as to what might be considered appropriate remedies, the ongoing litigation with the State of Oklahoma and motion to
dismiss before the court, and uncertainty regarding what our proportionate share of any remedy would be, although we believe
that our share compared to the other defendants is small.
19
Other Matters
In addition to the above, the Company is involved in various other claims and litigation incidental to its business. Although the
outcome of these matters cannot be determined with certainty, management, upon the advice of counsel, is of the opinion that
the final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
Note 11 - Subsequent Events
On March 14, 2024, the Company completed the previously announced acquisition from Tyson Foods, Inc. of a closed broiler
processing plant, hatchery and feed mill in Dexter, Missouri.
On April 1, 2024,
approximately
% of the Company’s total flock as of March 2,
2024.
The Company has and continues to follow all guidelines provided by the United States Department of Agriculture (the
“USDA”) and other regulatory agencies to depopulate and sanitize the facilities. As such, Cal-Maine will be eligible to
participate in the USDA indemnity program and other programs designed to compensate for the loss of birds and eggs. The
Company’s plans are to repopulate the facilities and resume normal operations at the facilities within 6-8 months. Due to
volatility in the market prices of eggs and uncertain future supply, demand and other market conditions, an estimate of the net
income effect cannot be reasonably made.
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 3, 2023
(the “2023 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2023 Annual
Report and in
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 recent resurgence in United States (“U.S.”) commercial table egg layer flocks of the highly
pathogenic avian influenza (“HPAI”) outbreak, potential future impact on our business of inflation and changing interest rates,
potential future impact on our business of new legislation, rules or policies, potential outcomes of legal proceedings , including
loss contingency accruals and factors that may result in changes in the amounts recorded, and other projected operating data,
including anticipated results of operations and financial condition. Such forward-looking statements are identified by the use 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 I Item 1A of the 2023 Annual Report, the risk factors (if any) set forth in Part II Item 1A Risk
Factors and elsewhere in this report as well as those included in other reports we file from time to time with the Securities and
Exchange Commission (the “SEC”) (including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the
risks and hazards inherent in the shell egg business (including disease, pests, weather conditions, and potential for product
recall), including but not limited to the current outbreak of HPAI affecting poultry in the U.S., Canada and other countries that
was first detected in commercial flocks in the U.S. in February 2022 and that first impacted our flock in December 2023, (iii)
changes in the demand for and market prices of shell eggs and feed costs, (iv) our ability to predict and meet demand for cage-
free and other specialty eggs, (v) risks, changes, or obligations that could result from our future acquisition of new flocks or
businesses and risks or changes that may cause conditions to completing a pending acquisition not to be met, (vi) risks relating
to increased costs and higher and potentially further increases in, inflation and interest rates, (vii) our ability to retain existing
customers, acquire new customers and grow our product mix, (viii) adverse results in pending litigation matters, and (ix) global
instability, including as a result of the war in Ukraine, the Israel-Hamas conflict 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 only made as of the respective dates thereof,
or if no date is stated, as of the date hereof. Except as otherwise required by law, we disclaim any intent or obligation to update
publicly these forward-looking statements, whether because of new information, future events, or otherwise.
GENERAL
Cal-Maine Foods, Inc. (the “Company,” “we,” “us,” “our”) 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 42.2
million layers and 10.9 million pullets and breeders is the largest in the U.S. We sell most of our shell eggs to a diverse group
of customers, including national and regional grocery store chains, club stores, companies servicing independent supermarkets
in the U.S., food service distributors, and egg product consumers located primarily in states across the southwestern,
southeastern, mid-western and mid-Atlantic regions of the U.S.
Our operating results are materially impacted by market prices for eggs and feed grains (corn and soybean meal), which are
highly volatile, independent of each other, and out of our control. Generally, higher market prices for eggs have a positive
impact on our financial results while higher market prices for feed grains have a negative impact on our financial results.
Although we use a variety of pricing mechanisms in pricing agreements with our customers, we sell most of our conventional
shell eggs based on formulas that consider, in varying ways, independently quoted regional wholesale market prices for shell
eggs or formulas related to our costs of production which include the cost of corn and soybean meal. We do not sell eggs
directly to consumers or set the prices at which eggs are sold to consumers.
21
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
product mix of conventional and specialty eggs, including cage-free, organic and other specialty offerings, as well as egg
products. We have also enhanced our efforts to provide free-range and pasture-raised eggs that meet consumers’ evolving
choice preferences. While a small part of our current business, the free-range and pasture-raised eggs we produce and sell
represent attractive offerings to a subset of consumers, and therefore our customers, and help us continue to serve as the trusted
provider of quality food choices.
CAGE-FREE EGGS
Ten states have passed legislation or regulations mandating minimum space or cage-free requirements for egg production or
mandated the sale of only cage-free eggs and egg products in their states, with implementation of these laws ranging from
January 2022 to January 2026. These states represent approximately 27% of the U.S. total population according to the 2020
U.S. Census. California, Massachusetts, Colorado, Oregon, Washington, and Nevada, which collectively represent
approximately 20% of the total estimated U.S. population, have cage-free legislation currently in effect . Although we do not
sell the majority of our eggs in these ten states, these state laws have impacted egg production practices nationally.
A significant number of our customers have announced goals to either exclusively offer cage-free eggs or significantly increase
the volume 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 customer’s 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 27.9% of our total net shell
egg revenue for the third quarter of fiscal year 2024. At the same time, we understand the importance of our continued ability to
provide conventional eggs in order to provide our customers with a variety of egg choices and to address hunger in our
communities.
For additional information, see the 2023 Annual Report, Part 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
During the second quarter of fiscal 2024, we acquired the assets of Fassio Egg Farms, Inc. (“Fassio”) related to its commercial
shell egg production and processing business. The assets acquired included commercial shell egg production and processing
facilities with a capacity at the time of acquisition of approximately 1.2 million laying hens, primarily cage-free, a feed mill,
22
pullets, a fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. See further
discussion in
Report.
Following the end of the third quarter, we announced that we completed the acquisition from Tyson Foods, Inc. of a recently
closed broiler processing plant, hatchery and feed mill located in Dexter, Missouri. We plan to repurpose the assets for use in
egg and egg products production.
HPAI
Since the HPAI outbreaks in 2015, there were no reported significant outbreaks of HPAI in the commercial table egg layer
flocks until the February – December 2022 time period. During this time approximately 43 million commercial layers and 1.0
million pullets were depopulated resulting in significant pressure on the supply of eggs. Thereafter, there were no HPAI cases
affecting commercial layers until November 2023. From November 2023 until the last reported case in commercial layer hens
in January 2024, approximately 15.7 million commercial laying hens and pullets were depopulated.
During the third quarter of fiscal 2024, Cal-Maine Foods experienced an HPAI outbreak within its facilities in Kansas, resulting
in depopulation of approximately 1.5 million laying hens and 240,000 pullets, or approximately 3.3% of our total flock at the
time. Following the end of the third quarter, on April 1, 2024, one of the Company’s facilities located in Parmer County, Texas,
tested positive for HPAI, resulting in depopulation of approximately 1.6 million laying hens and 337,000 pullets, or
approximately 3.6% of the Company’s total flock as of March 2, 2024. Production at the facility has temporarily ceased as the
Company follows the protocols prescribed by the USDA. Cal-Maine Foods is working to secure production from other facilities
to minimize disruption to its customers.
The Company remains dedicated to robust biosecurity programs across its locations; however, no farm is immune from HPAI.
HPAI is still present in the wild bird population and the extent of possible future outbreaks, with heightened risk during the
migration seasons, cannot be predicted. According to the U.S. Centers for Disease Control and Prevention, the human health
risk to the U.S. public from HPAI viruses is considered to be low. Also, according to the USDA, HPAI cannot be transmitted
through safely handled and properly cooked eggs. There 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 2023 Annual Report, Part II Item 7
“Management’s Discussion and Analysis of Financial Condition and Results of Operations – HPAI.”
EXECUTIVE OVERVIEW
For the third quarter and first three quarters of fiscal 2024, we recorded a gross profit of $218.6 million and $355.1 million,
respectively, compared to $463.0 million and $998.4 million, respectively, for the same periods of fiscal 2023, with the
decreases due primarily to lower conventional shell egg prices. The decrease in gross profit was partially offset by lower feed
ingredient prices in the third quarter and first three quarters of fiscal 2024 compared to the same periods of fiscal 2023.
Our net average selling price per dozen for the third quarter of fiscal 2024 was $2.247 compared to $3.298 in the prior-year
period. Conventional egg prices per dozen were $2.152 compared to $3.678 for the prior-year period, and specialty egg prices
per dozen were $2.415 compared to $2.616 for the prior-year period. Egg prices in the third quarter of fiscal 2023 were elevated
compared to historical averages prior to fiscal 2023 primarily due to the resurgence of HPAI outbreaks and other market factors
in November 2023 through January 2024, as described above and herein. Although egg prices in the third quarter of 2024 were
lower than in the prior-year period, they were elevated above historical averages due to the resurgence of HPAI in November
2023. According to the USDA, the five-year average of the monthly average size of the layer hen flock from December through
February (which most closely aligns with our third fiscal quarter) through 2023 is 330.2 million hens. The monthly average
layer hen flock from December 2023 through February 2024 was 312.2 million, which is 18.0 million or 5.5% less than the
five-year average. During both the third quarters of 2023 and 2024, supply constraints as well as seasonal demand during the
holidays put upward pressure on the price of shell eggs.
Our net average selling price per dozen for the first three quarters of fiscal 2024 was $1.866 compared to $2.771 in the prior-
year period. Conventional egg prices per dozen were $1.624 compared to $2.984 for the prior-year period, and specialty egg
prices per dozen were $2.328 compared to $2.369 for the prior-year period. The daily average price for the Urner Barry
southeast large index for the third quarter of fiscal 2024 and first three quarters of fiscal 2024 decreased 35.2% and 43.7%,
respectively, from the comparable periods in the prior year. For information about historical shell egg prices, see Part I Item I of
our 2023 Annual Report.
In the third quarter of 2024, we achieved record quarterly sales volume of total dozens sold and specialty dozens sold. Our total
dozens sold increased 3.2% to 300.8 million dozen shell eggs for the third quarter of fiscal 2024 compared to 291.4 million
dozen for the same period of fiscal 2023. For the year-to-date period, total dozens sold increased 1.3% from 850.8 million
23
dozen to 862.0 million dozen. For the third quarter of fiscal 2024, conventional dozens sold increased 2.6% and specialty
dozens sold increased 4.4% as compared to the same quarter in fiscal 2023. Demand for specialty eggs increased in the third
quarter of fiscal 2024 compared to the same prior year period due primarily to cage-free requirements becoming effective for
Nevada, Oregon and Washington on January 1, 2024. For the year-to-date period, conventional dozens sold increased 2.0% and
specialty dozens sold remained consistent compared to the prior year period.
Our farm production costs per dozen produced for the third quarter and first three quarters of fiscal 2024 decreased 10.5%, or
$0.11, and 6.6%, or $0.07, respectively, compared to the prior year periods, primarily due to lower feed costs. Feed costs per
dozen produced decreased 19.9%, or $0.14, compared to the third quarter of fiscal 2023 and 16.7%, or $0.11, for the first three
quarters of fiscal 2023, primarily due to lower feed ingredient prices. For information about historical corn and soybean meal
prices, see Part I Item I of our 2023 Annual Report.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items from our Condensed Consolidated Statements of Income
expressed as a percentage of net sales.
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
68.9
%
53.6
%
78.9
%
59.4
%
Gross profit
31.1
%
46.4
%
21.1
%
40.6
%
Selling, general and administrative
9.3
%
5.9
%
11.6
%
6.9
%
Gain on involuntary conversions
(1.4)
%
(0.3)
%
(0.6)
%
(0.1)
%
Operating income
23.2
%
40.8
%
10.1
%
33.8
%
Total other income, net
3.2
%
1.7
%
2.2
%
0.9
%
Income before income taxes
26.4
%
42.5
%
12.3
%
34.7
%
Income tax expense
5.5
%
10.2
%
2.6
%
8.4
%
Net income
20.9
%
32.3
%
9.7
%
26.3
%
Less: Loss attributable to noncontrolling
interest
—
%
—
%
(0.1)
%
—
%
Net income attributable to Cal-Maine
Foods, Inc.
20.9
%
32.3
%
9.8
%
26.3
%
NET SALES
Total net sales for the third quarter of fiscal 2024 were $703.1 million compared to $997.5 million for the same period of fiscal
2023.
Net shell egg sales represented 96. 9% and 96.7% of total net sales for the third quarters of fiscal 2024 and 2023, respectively.
Shell egg sales classified as “Other” represent sales of miscellaneous byproducts and resale products included with our shell
egg operations.
Total net sales for the thirty-nine weeks ended March 2, 2024 were $1.7 billion, compared to $2.5 billion for the comparable
period of fiscal 2023.
Net shell egg sales represented 96.2% and 96.4% of total net sales for the thirty-nine weeks ended March 2, 2024 and February
25, 2023, respectively.
24
The table below presents an analysis of our conventional and specialty shell egg sales (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 2, 2024
February 25, 2023
March 2, 2024
February 25, 2023
Total net sales
$
703,076
$
997,493
$
1,685,654
$
2,457,537
Conventional
$
413,619
60.7
%
$
689,022
71.4
%
$
919,498
56.7
%
$
1,656,528
69.9
%
Specialty
262,293
38.5
%
272,205
28.2
%
688,879
42.5
%
700,803
29.6
%
Egg sales, net
675,912
99.2
%
961,227
99.6
%
1,608,377
99.2
%
2,357,331
99.5
%
Other
5,405
0.8
%
3,684
0.4
%
13,283
0.8
%
11,932
0.5
%
Net shell egg sales
$
681,317
100.0
%
$
964,911
100.0
%
$
1,621,660
100.0
%
$
2,369,263
100.0
%
Net shell egg sales as a
percent of total net sales
96.9
%
96.7
%
96.2
%
96.4
%
Dozens sold:
Conventional
192,182
63.9
%
187,357
64.3
%
566,174
65.7
%
555,045
65.2
%
Specialty
108,597
36.1
%
104,059
35.7
%
295,904
34.3
%
295,774
34.8
%
Total dozens sold
300,779
100.0
%
291,416
100.0
%
862,078
100.0
%
850,819
100.0
%
Net average selling price
per dozen:
Conventional
$
2.152
$
3.678
$
1.624
$
2.984
Specialty
$
2.415
$
2.616
$
2.328
$
2.369
All shell eggs
$
2.247
$
3.298
$
1.866
$
2.771
Egg products sales:
Egg products net sales
$
21,759
$
32,582
$
63,994
$
88,274
Pounds sold
18,745
16,796
55,096
49,000
Net average selling price
per pound
$
1.161
$
1.940
$
1.161
$
1.802
Shell egg net sales
Third Quarter – Fiscal 2024 vs. Fiscal 2023
-
In the third quarter of fiscal 2024, conventional egg sales decreased $275.4 million, or 40.0%, compared to the third
quarter of fiscal 2023, primarily due to a 41.5% decrease in the prices for conventional eggs, which resulted in a
$293.3 million decrease in net sales, partially offset by a 2.6% increase in the volume of conventional eggs sold, which
resulted in a $17.7 million increase in net sales.
-
Conventional egg prices reached record highs in third quarter fiscal 2023 due to HPAI outbreaks experienced
throughout calendar year 2022 as well seasonal demand during the winter holidays. Prices were lower in the first half
of fiscal 2024 compared to the same period of fiscal 2023 as the U.S. egg supply started to recover from outbreaks of
HPAI. There has been a resurgence of HPAI starting in November 2023, and continuing through the third quarter of
fiscal 2024, which increased prices due to supply constraints. However, prices remained lower than the third quarter of
fiscal 2023.
-
Specialty egg sales decreased $9.9 million, or 3.6%, in the third quarter of fiscal 2024 compared to the third quarter of
fiscal 2023, primarily due to a 7.7% decrease in the prices for specialty eggs, which resulted in a $11.9 million
decrease in net sales.
-
Our total dozens sold and specialty dozens sold during the third quarter of fiscal 2024 were records for our Company.
Demand for specialty eggs increased in the third quarter of fiscal 2024 compared to the same prior year period,
primarily due to cage-free requirements becoming effective for Nevada, Oregon and Washington effective January 1,
2024.
25
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
-
For the thirty-nine weeks ended March 2, 2024, conventional egg sales decreased $737.0 million, or 44.5%, compared
to the same period of fiscal 2023, primarily due to the decrease in the prices for conventional shell eggs. Changes in
prices resulted in a $770.0 million decrease in net sales, partially offset by a 2.0% increase in the volume of
conventional eggs sold, which resulted in a $33.2 million increase in net sales.
-
During the first three quarters of fiscal 2024, the U.S. egg supply was recovering from the earlier HPAI outbreaks,
leading to lower egg prices than the prior year period, although as noted above there was a resurgence in HPAI starting
in November 2023.
Egg products net sales
Third Quarter – Fiscal 2024 vs. Fiscal 2023
-
Egg products net sales decreased $10.8 million, or 33.2%, for the third quarter of fiscal 2024 compared to the same
period of fiscal 2023, primarily due to a 40.2% selling price decrease, which had a $14.6 million negative impact on
net sales.
-
Our egg products net average selling price decreased in the third quarter of fiscal 2024, compared to the third quarter
of fiscal 2023 as the supply of shell eggs used to produce egg products increased.
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
-
Egg products net sales decreased $24.3 million, or 27.5%, primarily due to a 35.6% selling price decrease compared to
the first thirty-nine weeks of fiscal 2023, which had a $35.3 million negative impact on net sales.
-
Our egg products net average selling price decreased in the first three quarters of fiscal 2024, compared to the prior
year period as the supply of shell eggs used to produce egg products increased.
26
COST OF SALES
Costs of sales for the third quarter of fiscal 2024 were $484.5 million compared to $534.5 million for the same period of fiscal
2023. Costs of sales for the year-to-date period were $1.3 billion compared to $1.5 billion for the prior year period.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 2, 2024
February 25,
2023
%
Change
March 2, 2024
February 25,
2023
%
Change
Cost of Sales:
Farm production
$
248,650
$
280,384
(11.3)
%
$
760,525
$
823,043
(7.6)
%
Processing, packaging, and
warehouse
86,423
87,037
(0.7)
253,096
252,093
0.4
Egg purchases and other
(including change in
inventory)
127,925
135,003
(5.2)
260,375
301,274
(13.6)
Total shell eggs
462,998
502,424
(7.8)
1,273,996
1,376,410
(7.4)
Egg products
21,506
32,043
(32.9)
56,523
82,762
(31.7)
Total
$
484,504
$
534,467
(9.3)
%
$
1,330,519
$
1,459,172
(8.8)
%
Farm production costs (per
dozen produced)
Feed
$
0.544
$
0.679
(19.9)
%
$
0.564
$
0.677
(16.7)
%
Other
$
0.421
$
0.399
5.5
%
$
0.431
$
0.388
11.1
%
Total
$
0.965
$
1.078
(10.5)
%
$
0.995
$
1.065
(6.6)
%
Outside egg purchases
(average cost per dozen)
$
2.44
$
3.72
(34.4)
%
$
2.09
$
3.20
(34.7)
%
Dozens produced
259,527
263,174
(1.4)
%
774,984
782,186
(0.9)
%
Percent produced to sold
86.3%
90.3%
(4.4)
%
89.9%
91.9%
(2.2)
%
Farm Production
Third Quarter – Fiscal 2024 vs. Fiscal 2023
-
Feed costs per dozen produced decreased 19.9% in the third quarter of fiscal 2024 compared to the third quarter of
fiscal 2023. This decrease was primarily due to lower prices for corn and soybean meal, our primary feed ingredients.
The decrease in feed cost per dozen resulted in a decrease in cost of sales of $35.0 million for the third quarter of fiscal
2024 compared to the prior period quarter.
-
For the third quarter of fiscal 2024, the average Chicago Board of Trade (“CBOT”) daily market price was $4.51 per
bushel for corn and $370 per ton of soybean meal, representing decreases of 32.4% and 21.8%, respectively, as
compared to the average CBOT daily market prices for the third quarter of fiscal 2023. Basis levels for corn and
soybean meal were lower in our areas of operations compared to our prior year third fiscal quarter.
-
Other farm production costs increased primarily due to higher flock amortization and, to a lesser extent, increased
facility costs. Flock amortization increased primarily due to the increased capitalized value of our flocks. This is
primarily due to the higher feed costs in earlier periods incurred during the growing phase of the flocks.
-
Facility costs increased due to higher repairs and maintenance costs in the third quarter of fiscal 2024 compared to the
third quarter of fiscal 2023.
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
-
Feed costs per dozen produced decreased 16.7% in the thirty-nine weeks ended March 2, 2024 compared to the same
period of fiscal 2023, primarily due to lower feed ingredient prices. The decrease in feed cost per dozen resulted in a
decrease in cost of sales of $87.6 million compared to the prior year period .
27
-
For the year-to-date period, the average CBOT daily market price was $4.87 per bushel for corn and $403 per ton for
soybean meal, representing decreases of 27.3% and 10.5%, respectively, compared to the average CBOT daily market
prices for the comparable period in the prior year. In addition, basis levels for corn and soybean meal were lower for
the thirty-nine weeks ended March 2, 2024 compared to the same period of fiscal 2023.
-
Other farm production costs increased due primarily to higher flock amortization, for the reasons described above, as
well as increased facility costs.
-
Facility costs increased due primarily to increased contract labor in response to labor shortages, as well as higher
repairs and maintenance costs for the thirty-nine weeks ended March 2, 2024 compared to the same period of fiscal
2023.
Current indications for corn project an overall better stocks-to-use ratio implying potentially lower prices in the near term;
however, as long as outside factors remain uncertain (including weather patterns and global supply chain disruptions), volatility
could remain. Soybean meal supply has remained tight relative to demand in the first three quarters of fiscal 2024.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2024 vs. Fiscal 2023
-
Processing, packaging, and warehouse costs decreased 0.7% compared to the third quarter of fiscal 2023 as we
processed fewer dozens primarily due to the HPAI outbreak at our Kansas facilities. The decrease was slightly offset
by inflationary costs in the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023.
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
-
Processing, packaging, and warehouse costs increased 0.4% compared to the first three quarters of fiscal 2023,
primarily due to an increase in costs due to inflationary pressure, partially offset by a reduction in the volume of
processed dozens.
Egg purchases and other (including change in inventory)
Third Quarter – Fiscal 2024 vs. Fiscal 2023
-
Costs in this category decreased primarily due to lower shell egg prices as the average cost per dozen of outside egg
purchases decreased 34.4% compared to third quarter of fiscal 2023, partially offset by an increase of 36.4% in dozens
purchased due to the loss of production caused by the HPAI outbreak at our Kansas facilities as well as an increase in
sales volume.
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
-
Costs in this category decreased primarily due to lower shell egg prices as the average cost per dozen of outside egg
purchases decreased 34.7% compared to fiscal 2023, partially offset by an increase of 21.9% in dozens purchased for
the reasons discussed above.
GROSS PROFIT
Gross profit for the third quarter of fiscal 2024 was $218.6 million compared to $463.0 million for the same period of fiscal
2023. Gross profit for the thirty-nine weeks ended March 2, 2024 was $355.1 million compared to $998.4 million for the same
period of 2023. The decrease for both periods was primarily due to lower conventional egg prices, partially offset by lower feed
ingredient prices.
28
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative (“SGA”) expenses include costs of marketing, distribution, accounting and corporate
overhead. The following table presents an analysis of our SGA expenses (in thousands):
Thirteen Weeks Ended
March 2, 2024
February 25, 2023
$ Change
% Change
Specialty egg expense
$
20,173
$
15,689
$
4,484
28.6
%
Delivery expense
18,832
19,453
(621)
(3.2)
%
Payroll, taxes and benefits
13,134
14,325
(1,191)
(8.3)
%
Stock compensation expense
1,111
1,059
52
4.9
%
Other expenses
12,770
7,963
4,807
60.4
%
Total
$
66,020
$
58,489
$
7,531
12.9
%
Third Quarter – Fiscal 2024 vs. Fiscal 2023
Specialty egg expense
-
During the second part of fiscal year 2023, the higher prices for conventional eggs and the comparatively lower prices
for specialty eggs diminished the need to promote specialty eggs. During the third quarter of fiscal year 2024, we
significantly increased promotional programs, resulting in higher advertising fees. This was partially offset by a
reduction in franchise fees paid to Eggland’s Best, Inc.
Delivery expense
-
The decreased delivery expense is primarily due to a decrease in fuel and contract trucking expenses in the third
quarter of fiscal 2024 compared to the third quarter of fiscal 2023.
Payroll, taxes and benefits expense
-
The decrease in payroll, taxes and benefits expense is due to a decrease in accrued bonuses compared to the third
quarter of fiscal 2023 as well as a reduction in employee insurance expenses compared to the third quarter of fiscal
2023.
Other expense
-
The increase in other expense is primarily due to increased legal costs incurred compared to the third quarter of fiscal
2023.
Thirty-nine Weeks Ended
March 2, 2024
February 25, 2023
$ Change
% Change
Specialty egg expense
$
48,102
$
43,429
$
4,673
10.8
%
Delivery expense
54,229
57,544
(3,315)
(5.8)
%
Payroll, taxes and benefits
36,276
39,139
(2,863)
(7.3)
%
Stock compensation expense
3,212
3,071
141
4.6
%
Litigation loss contingency accrual
19,648
—
19,648
Other expenses
33,377
26,865
6,512
24.2
%
Total
$
194,844
$
170,048
$
24,796
14.6
%
N.M. - Not Meaningful
Thirty-nine weeks – Fiscal 2024 vs. Fiscal 2023
Specialty egg expense
-
Specialty egg expense increased by 10.8%, as advertising expense increased in fiscal 2024 as discussed above and was
partially offset by the reduction in franchise fees paid to Eggland’s Best, Inc.
Delivery expense
-
The decreased delivery expense is primarily due to a decrease in fuel and contract trucking expenses in fiscal 2024.
29
Payroll, taxes and benefits expense
-
The decrease in payroll, taxes and benefits expense is primarily due to a decrease in accrued bonuses in the first three
quarters of fiscal 2024 compared to the prior year period.
Litigation loss contingency accrual
-
The litigation loss contingency accrual of $19.6 million relates to a jury decision returned on December 1, 2023 in
pending anti-trust litigation. See further discussion in
Condensed Consolidated Financial Statements included in this Quarterly Report.
Other expenses
-
The increase in other expense is primarily due to increased legal costs incurred in the year-to-date period.
GAIN ON INVOLUNTARY CONVERSIONS
For the third quarter of fiscal 2024 and 2023, we recorded a gain of $9.9 million and $3.2 million, respectively, due to
recoveries under indemnity and insurance programs that exceeded the amortized book value of the covered assets and our direct
costs.
OPERATING INCOME (LOSS)
For the third quarter of fiscal 2024, we recorded operating income of $162.8 million compared to operating income of $407.8
million for the same period of fiscal 2023.
For the thirty-nine weeks ended March 2, 2024, we recorded an operating income of $170.3 million compared to an operating
income of $831.5 million for the same period of fiscal 2023.
OTHER INCOME (EXPENSE)
Total other income (expense) consists of items not directly charged or related to operations, such as interest income and
expense, royalty income, equity income or loss of unconsolidated entities, and patronage income, among other items.
For the third quarter of fiscal 2024, we earned $7.8 million of interest income compared to $6.3 million for the same period of
fiscal 2023. The increase resulted from higher investment balances and interest rates. The Company recorded interest expense
of $247 thousand and $143 thousand for the third quarters ended March 2, 2024 and February 25, 2023, respectively.
For the thirty-nine weeks ended March 2, 2024, we earned $22.4 million of interest income compared to $9.4 million for the
same period of fiscal 2023. The increase resulted from significantly higher investment balances and higher interest rates. The
Company recorded interest expense of $523 thousand and $433 thousand for the thirty-nine weeks ended March 2, 2024 and
February 25, 2023, respectively.
INCOME TAXES
For the third quarter of fiscal 2024, pre-tax income was $185.2 million compared to $424.9 million for the same period of fiscal
2023. We recorded income tax expense of $38.8 million for the third quarter of fiscal 2024, which reflects an effective tax rate
of 21.0%. This includes the discrete tax benefit of $6.4 million associated with the fiscal 2023 provision-to-return adjustments.
Excluding the discrete tax benefit, income tax expense was $45.2 million for the third quarter of fiscal 2024 with an adjusted
effective tax rate of 24.4%. Income tax expense was $102.1 million for the comparable period of fiscal 2023, which reflects an
effective tax rate of 24.0%.
For the thirty-nine weeks ended March 2, 2024, pre-tax income was $208.0 million compared to $852.6 million for the same
period of fiscal 2023. We recorded income tax expense of $44. 7 million, which reflects an effective tax rate of 21.5%. This
includes the discrete tax benefit of $6.4 million associated with the fiscal 2023 provision-to-return adjustments. Excluding the
discrete tax benefit, income tax expense was $51.0 million with an adjusted effective tax rate of 24.5%. We recorded income
tax expense of $206.4 million in the prior year period, which reflects an effective tax rate of 24.2%.
Our effective tax rate differs from the federal statutory income tax rate due to state income taxes, certain federal tax credits and
certain items included in income for financial reporting purposes that are not included in taxable income for income tax
purposes, including tax exempt interest income, certain nondeductible expenses and net income or loss attributable to our
noncontrolling interest.
30
NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.
Net income attributable to Cal-Maine Foods, Inc. for the third quarter ended March 2, 2024, was $146.7 million, or $3.01 per
basic and $3.00 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $323.2 million, or
$6.64 per basic and $6.62 per diluted common share for the same period of fiscal 2023.
Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended March 2, 2024, was $164.6 million, or $3.38
per basic and $3.37 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $647.1 million
or $13.31 per basic and $13.25 per diluted common share, for the same period of fiscal 2023.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Current Ratio
Our working capital at March 2, 2024 was $1.0 billion, compared to $942.2 million at June 3, 2023. The calculation of working
capital is defined as current assets less current liabilities. Our current ratio was 5.7 at March 2, 2024, compared with 6.2 at June
3, 2023. The current ratio is calculated by dividing current assets by current liabilities.
Cash Flows from Operating Activities
For the thirty-nine weeks ended March 2, 2024, $237.6 million in net cash was provided by operating activities, compared to
$706.5 million provided by operating activities for the comparable period in fiscal 2023. The decrease in cash flow from
operating activities resulted primarily from lower selling prices for conventional eggs compared to the prior-year period.
Cash Flows from Investing Activities
For the thirty-nine weeks ended March 2, 2024, $118.4 million was used in investing activities, primarily due to the purchases
of investment securities, the acquisition of assets of Fassio Egg Farms, Inc., and purchases of property, plant and equipment.
This compares to $397.6 million used in investing activities in the same period of fiscal 2023, primarily due to purchases of
investment securities and purchases of property, plant and equipment. Sales and maturities of investment securities were $273.9
million in first three quarters of fiscal 2024, compared to $132.7 million in the first three quarters fiscal 2023. The increase in
sales and maturities of investment securities is primarily due to the maturities of short-term investments during the period.
Purchases of property, plant and equipment were $96.0 million and $86.2 million in the first three quarters of fiscal 2024 and
2023, respectively, primarily reflecting progress on our construction projects.
Cash Flows from Financing Activities
We paid dividends of $43.0 million for the thirty-nine weeks ended March 2, 2024 compared to $144.6 million in the same
prior-year period.
As of March 2, 2024, cash increased $74.3 million since June 3, 2023, compared to an increase of $162.5 million during the
same period of fiscal 2023.
Credit Facility
We had no long-term debt outstanding at March 2, 2024 or June 3, 2023. 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 2, 2024, no amounts were borrowed under the Credit Facility.
We have $4.3 million in outstanding standby letters of credit issued under our Credit Facility for the benefit of certain insurance
companies. Refer to Part II Item 8, Notes to Consolidated Financial Statements and Supplementary Data, Note 10 - Credit
Facility included in our 2023 Annual Report for further information regarding our long-term debt.
Dividends
In accordance with our variable dividend policy, we will pay a cash dividend totaling approximately $48.9 million, or
approximately $0.997 per share to holders of our common and Class A common stock with respect to our third fiscal quarter of
2024. The amount paid per share will vary based on the number of outstanding shares on the record date. The dividend is
payable on May 16, 2024 to holders of record on May 1, 2024.
31
Material Cash Requirements
We continue to monitor the increasing demand for cage-free eggs and to engage with our customers in efforts to achieve a
smooth transition toward their announced timelines for cage-free egg sales. The following table presents material construction
projects approved as of March 2, 2024 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of March 2,
2024
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2025
72,915
49,379
23,536
Feed Mill
Fiscal 2025
10,479
3,165
7,314
Dexter, MO Renovations
Fiscal 2025
11,000
-
11,000
Cage-Free Layer & Pullet Houses
Fiscal 2026
82,298
66,823
15,475
Cage-Free Layer & Pullet Houses
Fiscal 2027
56,923
32,991
23,932
$
233,615
$
152,358
$
81,257
We believe our current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient to fund our
current cash needs for at least the next 12 months.
IMPACT OF RECENTLY ISSUED/ADOPTED ACCOUNTING STANDARDS
For information 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
2023 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the thirty-nine weeks ended March 2, 2024 from the
information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2023 Annual
Report.
ITEM 4. CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified 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 2, 2024 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended March 2, 2024 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
32
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 2023 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
There have been no material changes in the risk factors previously disclosed in the Company’s 2023 Annual Report, except as
reported herein in Part I Item 2 under the heading “HPAI.”
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table is a summary of our third quarter 2024 share repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Number
Shares Purchased
of Shares that
Total Number
Average
as Part of Publicly
May Yet Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
12/03/23 to 12/30/23
—
$
—
—
—
12/31/23 to 01/27/24
30,650
54.91
—
—
01/28/24 to 03/02/24
—
—
—
—
30,650
$
54.91
—
—
(1) As permitted under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan, these shares were withheld by us to satisfy tax withholding
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
33
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 2, 2024
/s/ Max P. Bowman
Max P. Bowman
Vice President, Chief Financial Officer
(Principal Financial Officer)
Date:
April 2, 2024
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
Exhibit 31.1
1
Certification
Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Sherman L. Miller, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Cal-Maine Foods, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d)
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ Sherman L. Miller
Sherman L. Miller
President and Chief Executive Officer
Date:
April 2, 2024
Exhibit 31.2
1
Certification
Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Max P. Bowman, certify that
1.
I have reviewed this Quarterly Report on Form 10-Q of Cal-Maine Foods, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ Max P. Bowman
Max P. Bowman
Vice President and Chief Financial Officer
Date:
April 2, 2024
Exhibit 32
1
Certifications Pursuant to 18 U.S.C. §1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Cal-Maine Foods, Inc. (the “Company”),
hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March
2, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Sherman L. Miller
Sherman L. Miller
President and Chief Executive Officer
/s/ Max P. Bowman
Max P. Bowman
Vice President and Chief Financial Officer
Date:
April 2, 2024