EDGAR 10-K Filing

Company CIK: 16160
Filing Year: 2025
Filename: 16160_10-K_2025_0001562762-25-000170.json

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ITEM 1. BUSINESS
ITEM 1.
BUSINESS
Our Business
We are the largest producer and distributor of shell eggs in the United States. Our mission is to be the most sustainable producer
and
reliable
supplier
of
consistent,
high
quality
fresh
shell
eggs,
egg
products
and
prepared
foods
in
the
United
States.
Our
operating approach is built around operational
excellence, a "Culture of Sustainability" and
creating value for our stockholders,
customers, team
members and
communities. We
sell most
of our
products throughout
much of
the United
States (“U.S.”)
and
aim
to
maintain
efficient,
state-of-the-art
operations
located
close
to
our
customers.
We
were
founded
in
and
are
headquartered in Ridgeland,
Mississippi.
The Company has
one operating and
one reporting segment,
which is the
production, packaging, marketing
and distribution of
shell eggs, egg
products and prepared
foods. Our integrated
operations consist
of hatching chicks,
growing and
maintaining flocks
of pullets, layers and breeders,
manufacturing feed, and producing,
processing, packaging, and distributing
shell eggs. Layers are
mature female chickens,
pullets are female
chickens usually less
than 18 weeks
of age, and
breeders are male
and female chickens
used to
produce fertile
eggs to
be hatched
for egg
production flocks.
Our total
flock as
of May
31, 2025
consisted of
approximately
48.3 million layers and 11.5 million pullets and breeders.
Many of our customers rely on us to provide most of their
shell egg needs, including specialty and conventional eggs. Specialty
eggs encompass
a broad
range of
products. We
classify cage-free,
organic, brown,
free-range, pasture-raised
and nutritionally
enhanced eggs as specialty
eggs for accounting and
reporting purposes. We classify all other shell
eggs as conventional products.
While we report separate sales information for these egg types, there are many cost factors that are not specifically available for
conventional or
specialty eggs
due to
the nature
of egg
production. We
manage our
operations and
allocate resources
to these
types of eggs on a consolidated basis based on the demands of our customers.
We believe that one
of our important
competitive advantages
is our ability
to meet our
customers’ evolving
needs with a
favorable
product mix of conventional
and specialty eggs, including
cage-free, organic, brown, free-range,
pasture-raised and nutritionally-
enhanced eggs, as well as
egg products and prepared foods.
While a small part of
our current business, demand for
the free-range
and pasture-raised eggs we produce and sell continues to grow. They 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. We
have expanded
our
prepared foods
product offerings,
including with
our strategic
investment in
Crepini Foods,
LLC in
September 2024,
and our
acquisition of Echo Lake Foods, LLC (formerly Echo Lake Foods, Inc.) and certain related companies (collectively “Echo Lake
Foods”) subsequent to the end of our 2025 fiscal year.
Throughout
the
Company’s
history,
we
have
acquired
other
businesses
in
our
industry.
Since
1989,
we
have
acquired
and
integrated 25 businesses. Subsequent to the end of our 2025 fiscal year,
we acquired our 26
th
business when we purchased Echo
Lake
Foods.
For
information
on
our
recent
acquisitions,
refer
to
Part II. Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations - Acquisitions
and Part
II. Item
8. Notes
to Consolidated
Financial Statements,
Note 17 - Subsequent Events
.
When
we
use
“we,”
“us,”
“our,”
or
the
“Company”
in
this
report,
we
mean
Cal-Maine
Foods,
Inc.
and
our
consolidated
subsidiaries, unless
otherwise indicated
or the
context otherwise
requires. The
Company’s
fiscal year-end
is
on
the Saturday
closest to May 31. Our
fiscal year 2025 ended May
31, 2025, and the
first three fiscal quarters of
fiscal 2025 ended August 31,
2024, November 30, 2024, and March 1, 2025. All references herein to a fiscal year means our fiscal year and all references to a
year mean a calendar year.
Industry Background
According to the
U.S. Department of
Agriculture (“USDA”) Agricultural
Marketing Service, in
2024 approximately 71%
of table
eggs produced in the U.S. were sold as shell eggs, with 57% sold through food-at-home outlets such
as grocery and convenience
stores, 12%
sold to
food-away-from home
channels such
as restaurants
and 2%
exported. The
USDA estimated
that in
approximately 29% of eggs produced in
the U.S. were sold as egg
products (shell eggs broken and sold
in liquid, frozen, or dried
form) to institutions
(e.g. companies
producing baked
goods). For
information about
egg producers
in the
U.S., see
“Competition”
below.
Our industry has been greatly impacted by several outbreaks of highly pathogenic avian influenza (“HPAI”) in recent years. For
additional information regarding HPAI and its impact on our industry and business, see
Part I. Item 1A. Risk Factors
and
Part II.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - HPAI
.
Given historical
consumption trends,
we believe
that general
demand for
eggs in
the U.S.
increases basically
in line
with the
overall
U.S.
population
growth;
however,
specific
events
can
impact
egg
supply
and
consumption
in
a
particular
period,
as
occurred with the
2015 HPAI outbreak, the COVID-19
pandemic (particularly during
2020), and the
most recent HPAI outbreaks
starting
in
early
2022.
For
fiscal
2025,
shell
egg
household
penetration
is
approximately
97%.
According
to
the
USDA’s
Economic Research
Service, estimated
annual per
capita consumption
in the
United States
between 2020
and 2024
varied, ranging
from 271 to 288 eggs which is directly impacted by available supply.
The USDA calculates per capita consumption by dividing
total shell egg disappearance in the U.S. by the U.S. population.
The most significant
shift in demand in
recent years has been
among specialty eggs, particularly
cage-free eggs. For additional
information, see “Specialty Eggs” below.
Prices for Shell Eggs
Wholesale shell egg
sales prices are
a critical component
of revenue for
the Company.
Wholesale shell egg
prices are volatile,
cyclical, and impacted by
a number of factors, including
consumer demand, seasonal fluctuations, the
number and productivity
of laying
hens in
the U.S.
and outbreaks
of agricultural
diseases such
as HPAI.
We
believe the
majority of
conventional shell
eggs sold in
the U.S.
in the retail
and foodservice
channels are sold
at prices
that take into
account, in
varying ways, independently
quoted and certified wholesale market prices,
such as those published by Urner
Barry Publications, Inc. (“UB”) or the
USDA for
shell eggs; however, grain-based or variations of cost plus arrangements are also commonly utilized.
Wholesale prices for cage-free
eggs are quoted by
independent sources such as
UB and USDA. There
is no independently quoted
wholesale
market
price
for
other
specialty
eggs
such
as
nutritionally
enhanced,
organic,
pasture-raise
and
free-range
eggs.
Specialty eggs are typically sold at prices and terms negotiated directly with customers and in the case of cage-free eggs, can be
sold at
prices that
take into
account independently
quoted markets.
Historically,
prices for
specialty eggs
have generally
been
higher due to customer and consumer willingness to pay more for specialty eggs.
The weekly average price
for the southeast region
for large white
conventional shell eggs as
quoted by UB is
shown below for
the past three fiscal years along
with the five-year average price. The
actual prices that we realize on
any given transaction will
not necessarily equal
quoted market prices
because of the
individualized terms that
we negotiate with
individual customers which
are influenced
by many
factors. As
further discussed
in
Part II. Item 7. Management’s Discussion and Analysis - Results of
Operations
, egg prices in fiscal 2023 through fiscal 2025 were significantly impacted by HPAI.
Our pricing for
shell eggs is
negotiated with our
customers on individual
terms. We sell our shell
eggs at prices
based on formulas
that take into account,
in varying ways, independently
quoted regional wholesale market
prices for shell eggs,
formulas related
to
our
costs of
production,
such
as
grain-based
and variations
of
cost-plus arrangements,
or
hybrid models
including cost
of
production and wholesale market prices.
The majority of our conventional eggs are priced and sold under frameworks
that generally utilize market-based formulas tied to
independently quoted regional wholesale market
quotes.
The majority of our
specialty eggs are sold
under frameworks that do
not utilize market-based formulas, although we do have some customers that prefer market-based pricing for cage-free eggs. As
a result, specialty
egg prices typically
do not fluctuate
as much as
conventional pricing. We do not
sell eggs directly
to consumers
or set the prices at which eggs are sold to consumers.
Depending on market conditions, input costs and individualized contract terms,
the price we receive per dozen eggs in any
given
transaction may be more than or less than our production cost per dozen.
Feed Costs for Shell Egg Production
Feed is a primary
cost component in the
production of shell eggs
and represented 53.4%
of our fiscal 2025
farm production costs.
We routinely fill our
feed storage bins
during harvest season
when prices for
feed ingredients, primarily
corn and to
a lesser extent
soybean meal, 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.
The
difference can
be due
to transportation
costs, storage
costs, supply
and demand,
local conditions
and other
factors. 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
assure
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. As
the quality
and composition
of feed
is a
critical factor
in the
nutritional value
of shell
eggs and
health of
our chickens,
we formulate
and produce
the vast
majority of our own feed at our feed mills located near our production plants. Our annual feed requirements for fiscal
2025 were
2.1 million tons
of finished
feed, of
which we
manufactured 1.9 million
tons. We currently
have the
capacity to
store 215
thousand
tons of corn and soybean meal, and we replenish these stores as needed throughout the year.
Our primary feed ingredients, corn and soybean meal, are commodities that 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. We purchase the vast majority of
our corn and
soybean meal from U.S sources but may be forced to purchase internationally when U.S. supplies are not readily
available. Feed
grains are currently available
from an adequate number
of sources in the
U.S. As a point
of reference, a multi-year
comparison
of the average of
daily closing prices per
Chicago Board of Trade for
each quarter in our
fiscal years 2021-2025 are
shown below
for corn and soybean meal:
Shell Egg Production
Our percentage of dozens produced to sold was 88.6% of our total shell eggs sold in fiscal 2025. We supplement our production
through purchases of eggs from
others when needed. The quantity
of eggs purchased will vary
based on many factors such
as our
own production capabilities and current market conditions. In fiscal 2025, 90.8% of our production came
from Company-owned
facilities, and
9.2% from
contract producers.
The majority
of our
contract production
is with
family-owned farms
for organic,
pasture-raised and free-range eggs. Under a typical arrangement with a contract producer, we own the flock, furnish all feed and
critical supplies, own
the shell eggs
produced and assume market
risks. The contract
producers own and
operate their facilities
and are paid a fee based on production with incentives for performance.
The commercial production of shell eggs requires a source of baby
chicks for laying flock replacement. We
supply the majority
of our
chicks from
our breeder
farms
and hatch
them in
our hatcheries
in a
computer-controlled environment
and obtain
the
balance from commercial sources. The
chicks are grown in our
own pullet farms and
are placed into the laying
flock once they
reach maturity.
After eggs
are produced,
they are
cleaned, graded
and packaged.
Substantially all
our farms
have modern
“in-line” facilities
which
mechanically
gather,
clean,
grade
and
package
the
eggs
at
the
location
where
they
are
laid.
The
in-line
facilities
generate
significant efficiencies
and cost savings
compared to the
cost of
eggs produced from
non-in-line facilities, which
process eggs
that
have
been
laid
at
another
location
and
transported
to the
processing facility.
The
in-line facilities
also
produce a
higher
percentage of USDA Grade A
eggs, which sell at higher
prices. Eggs produced on farms
owned by contractors are brought
to our
processing plants to
be graded and
packaged. We maintain a Safe
Quality Food (“SQF”)
Management Program which
is overseen
by our Food Safety Department and
senior management team. As of May
31, 2025, every Company-owned processing
plant was
SQF certified. Because shell
eggs are perishable, we
do not maintain large egg
inventories. Our egg inventory
averaged five days
of sales during
fiscal 2025. We
believe our constant
focus on production
efficiencies and automation
throughout our vertically
integrated operations enable us to be a low-cost supplier in our markets.
We
are
proud
to
have
created,
implemented
and
maintained
what
we
believe
is
a
leading
poultry
Animal
Welfare
Program
(“AWP”).
We
have aligned our
AWP
with regulatory,
veterinary and our
third-party certifying bodies’
guidance to govern
the
welfare of animals in
our direct care and
our contract farmers’ care.
We
continually review our program to
monitor and evolve
standards that guide how
we hatch chicks, rear pullets
and nurture breeder and layer
hens. At each stage of
our animals’ lives, we
are dedicated to providing welfare conditions aligned to our commitment to the principles of the internationally recognized
Five
Freedoms of Animal Welfare
.
We
do not
use artificial
hormones in
the production
of our
eggs. Hormone
use in
the poultry
and egg
production industry
has
been
effectively
banned in
the U.S.
since the
1950s. We
have an
extensive written
protocol that
allows the
use of
medically
important
antibiotics
only
when
animal
health
is
at
risk,
consistent
with
guidance
from
the
United
States
Food
and
Drug
Administration
(“FDA”)
and
the
Guidance
for
Judicious
Therapeutic
Use
of
Antimicrobials
in
Poultry,
developed
by
the
American Association of
Avian Pathologists. When antibiotics are
medically necessary, a licensed veterinary
doctor will approve
and
administer
approved
doses
for
a
restricted
period.
We
do
not
use
antibiotics
for
growth
promotion
or
performance
enhancement.
Specialty Eggs
We
are
one
of
the
largest
producers
and
marketers
of
value-added
specialty
shell
eggs
in
the
U.S.,
which
continues
to
be
a
significant and
growing segment
of the market.
We classify cage-free, organic,
brown, free-range,
pasture-raised and
nutritionally
enhanced as specialty eggs
for accounting and reporting
purposes. Specialty eggs are
intended to meet
the demands of consumers
sensitive to environmental, health and/or animal welfare issues and to comply with state requirements for cage-free
eggs.
Ten
states
in
the
U.S.
have
passed
legislation
or
regulations
mandating
minimum
space
or
cage-free
requirements
for
egg
production or
mandated the
sale of
only cage-free
eggs and
egg products
in their states,
with implementation
of these laws
ranging
from January 2022 to January
2030. These states represent approximately
27% of the U.S. total
population according to the 2020
U.S. Census.
California, Massachusetts,
Colorado, Michigan,
Oregon, Washington,
and Nevada,
which collectively
represent
approximately 23% of the total estimated
U.S. population, have cage-free legislation in
effect.
Due to the national egg
shortage
caused by HPAI, Nevada temporarily suspended its cage-free egg mandate and other states are considering similar actions.
A significant
number of
our customers
previously 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
22.5% of our total net shell egg sales for
fiscal year
2025. At
the same
time, we
understand the
importance of
our continued
ability to
provide affordable
conventional
eggs in order to provide our customers with a variety of egg choices and to address hunger in our communities.
Branded Eggs
We are a member of the Eggland’s Best, Inc. cooperative (“EB”) and produce, market, distribute and sell
Egg-Land’s
Best®
and
Land O’
Lakes®
branded eggs under
license from EB
at our facilities
under EB guidelines.
EB hens
are fed a
proprietary diet
and offerings
include nutritionally
enhanced, cage-free,
organic, pasture-raised
and free-range
eggs.
Land O’
Lakes®
branded
eggs are produced by hens that are fed a whole-grain vegetarian diet and include brown, organic and cage-free eggs.
In 2024, EB
was the third
best-selling dairy brand
in the U.S.
The top three
best-selling branded specialty
egg SKUs in
2024 were
EB branded eggs
and seven out
of 10 best-selling
SKUs were EB
branded eggs. In
2024, our sales
(including sales from
affiliates)
represented approximately 50% of EB branded eggs and 46% of
Land O’ Lakes®
branded eggs nationwide.
Our
Farmhouse Eggs
® brand eggs are produced at
our facilities by hens that are
provided with a vegetarian diet. Our
offerings
of
Farmhouse Eggs
® include cage-free, organic
and pasture raised eggs.
We market organic, vegetarian and omega-3 eggs
under
our
4-Grain®
brand, which consists of conventional and
cage-free eggs. Our
Sunups®
and
Sunny Meadow®
brands are sold as
conventional eggs.
We also produce, market and distribute private label specialty and conventional shell eggs to several customers.
Egg Products and Prepared Foods
Our egg product
offerings include liquid
and frozen egg
products, as well
as prepared foods
such as hard-cooked
eggs, egg wraps,
protein pancakes,
crepes and
wrap-ups. Liquid
and frozen
egg products
are primarily
sold to
the institutional,
foodservice and
food manufacturing sectors in the U.S. Prepared foods are sold primarily within the retail and foodservice channels.
During March 2023, MeadowCreek Food,
LLC (“Meadowcreek”),
a majority-owned subsidiary,
began operations with a
focus
on being
a leading
provider of
hard-cooked eggs.
During second
fiscal quarter
2025, we
acquired the
remaining ownership
interest
in MeadowCreek and it became a wholly-owned subsidiary.
Effective on
September 9,
2024, we
completed a
strategic investment
with Crepini
LLC, establishing
a new
egg products
and
prepared foods venture. Crepini LLC,
founded in 2007, grew its
brand throughout the U.S.
and in Mexico featuring egg
wraps,
protein pancakes, crepes,
and wrap-ups, which
are sold online
and in over
3,500 retail stores.
The new entity, located in
Hopewell
Junction, New
York,
operates as
Crepini Foods
LLC (“Crepini”).
We
capitalized Crepini with
approximately $6.75
million in
cash
to
purchase
additional
equipment
and
other
assets
and
fund
working
capital
in
exchange
for
a
51%
interest
in
the
new
venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
Subsequent
to
fiscal
2025,
we
acquired
Echo
Lake
Foods
for
approximately
$258
million.
Echo
Lake
Foods
is
based
in
Burlington, Wisconsin and produces, packages,
markets and distributes prepared foods, including waffles,
pancakes, scrambled
eggs, frozen cooked
omelets, egg patties, toast
and diced eggs. For
additional information regarding
our acquisition of
Echo Lake
Foods, see
Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Acquisitions
and Part II. Item 8. Notes to Consolidated Financial Statements,
Note 17 - Subsequent Events
.
Summary of Product Sales
The
following
table
sets
forth
the
contribution
as
a
percentage
of
revenue
and
volumes
of
dozens
sold
of
conventional
and
specialty shell eggs and egg products and prepared food sales for the following fiscal years:
Revenue
Volume
Revenue
Volume
Revenue
Volume
Conventional Eggs
Branded
6.0
%
5.1
%
4.3
%
4.9
%
6.6
%
6.4
%
Private-label
53.8
49.7
46.8
54.4
52.9
52.6
Other
7.1
8.5
4.4
5.8
5.7
6.3
Total Conventional Eggs
66.9
%
63.3
%
55.5
%
65.1
%
65.2
%
65.3
%
Specialty Eggs
Branded
12.2
%
17.0
%
20.3
%
17.4
%
18.0
20.4
%
Private-label
14.1
17.8
18.5
16.3
11.3
12.9
Other
1.3
1.9
1.0
1.2
1.1
1.4
Total Specialty Eggs
27.6
%
36.7
%
39.8
%
34.9
%
30.4
%
34.7
%
Egg Products and Prepared Foods
4.6
%
3.8
%
3.9
%
Marketing and Distribution
In
fiscal
2025,
we
sold
our
products
in
states
through
the
southwestern,
southeastern,
mid-western,
mid-Atlantic
and
northeastern regions
of the
U.S. as
well as
Puerto Rico
through our
extensive distribution
network to
a diverse
group of
customers,
including national
and regional
grocery
store chains,
club stores,
companies servicing
independent supermarkets
in the
U.S.,
foodservice distributors and egg product consumers. Some of
our sales are completed through co-pack agreements -
a common
practice in the industry whereby production and processing of certain products are outsourced to another producer.
The majority of eggs sold are based on the daily or short-term needs of our customers. Most sales to established accounts are on
payment terms ranging
from seven to
30 days. Although
we have established
long-term relationships
with many
of our customers,
most of them are free to acquire shell eggs from other sources.
The shell eggs
we sell are
either delivered to
our customers’ warehouse
or retail stores,
by our own
fleet or contracted
refrigerated
delivery trucks, or are picked up by our customers at our processing facilities.
We
are a member of
the Eggland’s
Best, Inc. cooperative and
produce, market, distribute and
sell
Egg-Land’s
Best®
and
Land
O’ Lakes®
branded eggs directly
and through our
joint ventures, Specialty
Eggs, LLC and
Southwest Specialty Eggs,
LLC, under
exclusive
license
agreements
in
Alabama,
Arizona,
Florida,
Georgia,
Louisiana,
Mississippi
and
Texas,
and
in
portions
of
Arkansas, California, Kansas, Nevada,
North Carolina, Oklahoma and
South Carolina. We also have an exclusive
license in New
York City in addition to exclusivity in select
New York metropolitan areas, including areas within
New Jersey and Pennsylvania.
As discussed above under “Branded Eggs,” we also sell our own
Farmhouse Eggs
® and
4-Grain
® branded eggs.
Customers
Our top three
customers accounted for
an aggregate of
49.2%, 49.0% and
50.1% of our
net sales dollars
for fiscal 2025,
2024,
and 2023, respectively.
Our largest customer,
Walmart
Inc. (including Sam's Club),
accounted for 33.6%, 34.0%
and 34.2% of
net sales dollars for fiscal 2025, 2024 and 2023, respectively.
For shell
egg sales
in fiscal
2025, approximately
86% of
our revenue
related to
sales to
retail customers
and 13%
to sales
to
foodservice providers. Retail customers include primarily national and regional grocery store chains, club stores, and companies
servicing independent supermarkets in the U.S.
Foodservice customers include primarily companies that
sell food products and
related items to restaurants, healthcare and education facilities and hotels.
Competition
The production, processing, and distribution of shell
eggs is an intensely competitive business, which
has traditionally attracted
large numbers of producers in the U.S.
Shell egg competition is generally based on price, service and
product quality. The shell
egg
production
industry
remains
highly
fragmented.
According
to
Egg
Industry
Magazine
,
the
ten
largest
producers
owned
approximately 54% of industry table egg layer hens at calendar year-end 2024 and 2023.
Seasonality
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. Accordingly, we generally
expect our need
for working capital
to be highest during those quarters.
Growth Strategy
Our growth
strategy is
centered on
both organic
growth and
growth through
acquisitions while
also diversifying
our product
portfolio.
Organic
growth
is
a
core,
ongoing
focus
area
for
us
which
is
grounded
in our
culture of
operational
excellence to
streamline workflows, reduce waste,
optimize resources and enhance
productivity. We are committed to investing in our existing
operations to strive for improved profitability by increasing sales, lowering costs and maintaining exceptional customer service.
We
have continued to grow our production
of cage-free shell eggs and other
higher value specialty eggs such as
pasture-raised,
free-range and organic shell
eggs. In addition to organic
efforts, we believe that
we can continue to expand
the market reach of
our shell egg and egg product businesses, as
well as grow our prepared foods business through
accretive acquisitions that deliver
favorable returns through our operating model emphasizing synergies and efficient operations.
Trademarks and License Agreements
We own the trademarks
Farmhouse Eggs®
,
Sunups®
,
Sunny Meadow®
and
4Grain®
. We produce and
market
Egg-Land's Best
®
and
Land O’ Lakes
® branded eggs under license agreements with
EB. We
believe these trademarks and license agreements
are
important to our business.
Government Regulation
Our facilities and operations are
subject to regulation by various federal,
state, and local agencies, including, but
not limited to,
the FDA,
USDA, Environmental
Protection Agency
(“EPA”),
Occupational Safety
and Health
Administration (“OSHA”)
and
corresponding state agencies. The applicable regulations relate to grading, quality control, labeling, sanitary control
and reuse or
disposal of waste. Our shell egg facilities are subject to
periodic USDA, FDA, EPA and OSHA inspections. Our feed production
facilities are subject to FDA, EPA
and OSHA regulation and inspections. We maintain inspection programs and in certain cases
utilize
independent
third-party
certification
bodies
to
monitor
compliance
with
regulations,
our
own
standards
and
customer
specifications. It is possible that we will be required to incur significant costs for compliance with such statutes and regulations.
In the future, additional rules could be proposed that, if adopted, could increase our costs.
A number
of states
have passed
legislation or
regulations mandating
minimum space
or cage-free
requirements for
egg production
or have
mandated the
sale of
only cage-free
eggs and
egg products in
their states.
For further
information refer
to the
heading
“Specialty Eggs” within this section.
Environmental Regulation
Our operations and facilities are subject to various federal, state, and local environmental, health and safety
laws and regulations
governing, among
other
things, the
generation, storage,
handling, use,
transportation, disposal,
and remediation
of
hazardous
materials. Under these laws and
regulations, we must obtain
permits from governmental authorities,
including, but not limited to,
wastewater discharge permits. We
have made, and will continue
to make, capital and other
expenditures relating to compliance
with existing
environmental, health
and safety
laws and
regulations and
permits. We
are not
currently aware
of any
material
capital expenditures necessary to comply with such laws and regulations; however, as environmental, health and safety laws and
regulations are becoming increasingly more stringent, including those relating to
animal wastes and wastewater discharges, it is
possible that we will have to incur significant costs for compliance with such laws and regulations in the future.
Human Capital Resources
As of May
31, 2025, we
had 3,828 employees, of whom 3,064 worked
in egg production,
processing, and marketing,
231 worked
in feed
mill operations
and 533, including our
executive officers, were
administrative employees. Approximately
3.8% of
our
personnel
are
part-time, and we
utilize
temporary
employment
agencies
and
independent
contractors
to
augment
our
staffing needs when
necessary.
For
fiscal
2025,
we
had
1,975
average monthly
contingent workers.
As
of
May
31,
2025,
employees were covered by a collective bargaining agreement. We consider our relations with employees to be good.
Culture and Values
We are proud
to be contributing corporate citizens where we live and work and to help
create healthy, prosperous communities.
Our
colleagues help
us
continue to
enhance our
community contributions,
which
are driven
by
our longstanding
culture that
strives to promote an environment that upholds integrity and respect and provides opportunities for each colleague to
realize full
potential. These commitments
are encapsulated in the
Cal-Maine Foods’
Code of Ethics and
Business Conduct
and in our
Human
Rights Statement.
Health and Safety
Our top
priority is
the health
and safety
of our
employees, who
continue to
produce high-quality,
affordable products
for our
customers and contribute
to a stable
food supply. Our enterprise safety
committee is comprised of
two corporate safety
managers,
and
seven
local
site
compliance
managers.
The
committee
that
oversees health
and
safety reviews
our
written policies
and
changes to OSHA regulation standards annually and shares information as it relates to
outcomes from incidents monthly with all
our facilities to improve future performance and our health and safety practices. The
committee’s goals include working to help
ensure that our engagements with customers and regulators evidence our strong commitment to our workers’ health and safety.
Our commitment to our colleagues’ health includes a strong commitment to on-site worker safety, including a focus on accident
prevention and life safety.
Our Safety and Health Program is designed to promote best practices that
help prevent and minimize
workplace accidents and illnesses.
The scope of our Safety
and Health Program applies to
all enterprise colleagues. Additionally,
to help
protect the
health and
well-being of
our colleagues
and people
in our
value chain,
we require
that any
contractors or
vendors
acknowledge
and
agree
to
comply
with
the
guidelines
governed
by
our
Safety
and
Health
Program.
At
each
of
our
locations, our general managers are expected to uphold and implement our Safety and Health Program in alignment with OSHA
requirements. We
believe that this
program, which is
reviewed annually by
our senior management
team, contributes to
strong
safety outcomes. As part
of our Safety and
Health Program, we conduct
multi-lingual training that
covers topics such
as slip-and-
fall avoidance, respiratory
protection, prevention of
hazardous communication of
chemicals, the proper
use of personal
protective
equipment, hearing
conservation, emergency
response, lockout
and tagout
of equipment
and forklift
safety,
among others.
We
have
also
installed dry
hydrogen
peroxide biodefense
systems
in
our
processing
facilities
to
help
protect
our
colleagues’
respiratory health.
To help drive
our focus
on colleague
safety, we developed
safety committees
at each
of our
sites with
employee
representation from each department.
We
review the
success of
our safety
programs on
a monthly
basis to
monitor their
effectiveness and
the development
of any
trends that need to be addressed.
People
Our
strength
as
a
company
comes
from
our
employees
at
all
levels
and
we
have
a
long-established
culture
that
values
each
individual’s contributions and
encourages productivity
and growth. This
culture is driven by
our Board of
Directors (the
“Board”)
and
executive
management
team.
Our
Policy
against Harassment,
Discrimination,
Unlawful
or
Unethical
Conduct
and
Retaliation; Reporting
Procedure affirms our
commitment to
supporting our
employees regardless
of race, color, religion,
sex,
national origin or any other basis protected by applicable law.
We
are
an
Equal
Opportunity
Employer
that
prohibits
any
violation
of
applicable
federal,
state,
or
local
law
regarding
employment. Discrimination
on any
basis protected
by applicable
law is
prohibited. We
maintain strong
protocols to
help our
colleagues perform
their jobs
free from
harassment and
discrimination. We are committed
to offering our
colleagues opportunities
commensurate with our operational needs and their experiences, goals and contributions.
Recruitment, Development and Retention
We
believe
in
compensating
our
colleagues
with
fair
and
competitive
wages,
in
addition
to
offering
competitive
benefits.
Approximately 79%
of
our
employees
are paid
at
hourly
rates,
which
are
all
paid
at
rates
above
the
federal
minimum wage
requirement. We offer our full-time eligible
employees a range
of benefits, including company-paid
life insurance. The
Company
provides
a
comprehensive
self-insured
health
plan
and
pays
approximately
76%
of
the
costs
of
the
plan
for
participating
employees and their families
as of December 31,
2024. Recent benchmarking of
our health plan indicates
comparable benefits,
at lower employee contributions, when compared to an applicable Agriculture and Food Manufacturing sector grouping, as well
as peer group data. In addition, we offer employees the opportunity
to purchase an extensive range of other group plan benefits,
such as
dental, vision,
accident, critical
illness, disability
and voluntary
life. After
six months
of employment,
full-time employees
who
meet
eligibility
requirements may
elect
to
participate
in
our
KSOP
retirement
plan,
which
offers
a
range
of
investment
alternatives and includes many positive
features, such as automatic
enrollment with scheduled automatic contribution increases
and
loan
provisions.
Regardless
of
the
employees’
elections
to
contribute
to
the
KSOP,
the
Company
contributes
shares
of
Company stock or cash equivalent at 3% of participants’ eligible compensation for each pay period that hours are worked.
We
provide
extensive
training
and
development related
to
safety,
regulatory
compliance,
and
task
training.
We
invest
in
developing our future leaders through our Management Intern, Management Trainee and informal mentoring programs.
Sustainability
We understand that climate, and the potential consequences of climate change, freshwater availability and preservation of global
biodiversity, in addition
to responsible
management of
our flocks,
are vital
to the
production of
high-quality eggs
and egg
products
and to the success of
the Company. We have engaged in
agricultural production
for more than
60 years. Our
agricultural practices
continue to evolve as we continue to
strive to meet the need for nutritious, affordable foods
to feed a growing population even as
we exercise responsible
natural resource
stewardship and
conservation. We
published our most
recent sustainability report for
our fiscal 2024 in July 2025, which is available
on our website. Information contained on our website is not a
part of this report
on Form 10-K.
Our Corporate Information
We
maintain
a
website
at
www.calmainefoods.com
where
general
information
about our
business
and
corporate
governance
matters is
available. The
information contained
in our
website is
not a
part of
this report.
Our Annual
Reports on
Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, proxy statements, and all amendments to
those reports filed or
furnished pursuant to
Section 13(a) or
15(d) of the
Exchange Act are
available, free of
charge, through
our website as
soon as
reasonably
practicable
after
we
file
them
with,
or
furnish
them
to,
the
SEC.
In
addition,
the
SEC
maintains
a
website
at
www.sec.gov
that
contains
reports,
proxy
and
information
statements,
and
other
information
regarding
issuers
that
file
electronically with the SEC. Cal-Maine Foods, Inc. is a Delaware corporation, incorporated in 1969.

---

ITEM 1A. RISK FACTORS
ITEM 1A.
RISK FACTORS
Our
business
and
results
of
operations
are
subject
to
numerous
risks
and
uncertainties,
many
of
which
are
beyond
our
control. The following is a description of
the known factors that
may materially affect our
business, financial condition or
results
of operations. They should
be considered
carefully,
in addition to
the information set
forth elsewhere
in this Annual
Report on
Form
10-K,
including
under
Part
II.
Item 7.
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations,
in
making
any
investment
decisions
with
respect
to
our
securities. Additional
risks
or
uncertainties
that
are
not
currently known
to us, or
that we are
aware of
but currently
deem to be
immaterial or that
could apply to
any company could
also materially adversely affect our business, financial condition or results of operations.
INDUSTRY RISK FACTORS
Market prices of
wholesale shell eggs
are volatile,
and decreases
in these prices
can adversely impact
our revenues
and
profits.
Our operating results are significantly affected by wholesale shell egg market prices, which fluctuate widely and are outside our
control. As a
result, our
prior performance
should not
be presumed
to be
an accurate
indication of
future performance.
Under
certain circumstances,
small increases
in production,
or small
decreases in demand,
within the industry
might have a
large adverse
effect on shell egg prices. Low shell egg prices adversely affect our revenues and profits.
Market prices for wholesale shell
eggs have been volatile and
cyclical. Shell egg prices have
risen in the past
during periods of
high demand such as the initial outbreak of the COVID-19 pandemic and periods when high protein diets are popular. Shell egg
prices
have
also
risen
during
periods
of
constrained
supply,
such
as
during
outbreaks
of
highly
pathogenic
avian
influenza
(“HPAI”).
During
times
when
prices
are
high,
the
egg
industry
has
typically
geared
up
to
produce
more
eggs,
primarily
by
increasing the number of layers, which historically has ultimately resulted in an oversupply of eggs, leading to a period of lower
prices.
As discussed
above in
Part I. Item 1. Business - Seasonality
, seasonal
fluctuations impact
shell egg
prices. Therefore,
comparisons
of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily
meaningful
comparisons.
A decline in consumer demand for shell eggs can negatively impact our business.
We believe high-protein diet trends, industry advertising campaigns, the improved nutritional reputation of eggs and an increase
in at-home consumption of eggs
during the COVID-19 pandemic, have
all contributed at one time
or another to increased shell
egg demand. However, it is possible that the demand
for shell eggs will decline in the
future. Adverse publicity relating to health
or safety
concerns and
changes in
the perception
of the
nutritional value
of shell
eggs, changes
in consumer
views regarding
consumption of animal-based
products, as well
as movement
away from high
protein diets,
could adversely
affect demand
for
shell eggs, which could have a material adverse effect on our future results of operations and financial condition.
Feed costs are volatile and increases in these costs can adversely impact our results of operations.
Feed costs are the
largest element of our
shell egg (farm) production
cost, ranging from 53%
to 63% of total
farm production cost
in the last five fiscal years.
Although feed ingredients,
primarily corn and soybean
meal, are available
from a number
of sources, we
do not have control
over
the prices
of the
ingredients we
purchase, which
are affected
by weather,
various global
and U.S.
supply and
demand factors,
transportation and
storage costs,
speculators, agricultural,
energy and
trade policies
in the
U.S. and
internationally,
and global
instability, including as
a result of the war in Ukraine,
the conflicts involving Israel and Iran and
attacks on shipping in the Red
Sea. For example, while
feed costs declined during
fiscal 2025, we saw
higher prices for corn
and soybean meal over
the last five
fiscal years as a
result of weather-related
shortfalls in production and
yields, ongoing supply chain
disruptions, and the Russia-
Ukraine war and its impact on the export markets. Our costs for corn and soybean meal are also affected by local basis prices.
Increases in feed costs unaccompanied by increases in
the selling price of eggs can have a
material adverse effect on the results
of our operations and
cash flow. Alternatively,
low feed costs can
encourage egg industry overproduction, possibly
resulting in
lower egg prices and lower revenue.
Agricultural risks, including
outbreaks of avian
diseases such as
HPAI,
have harmed and
in the future
could harm our
business.
Our shell egg production activities
are subject to a variety
of agricultural risks. Unusual or
extreme weather conditions, disease
and pests can materially and
adversely affect the quality and quantity
of shell eggs we produce
and distribute. Outbreaks of avian
influenza among poultry occur periodically worldwide and have occurred sporadically in the U.S. Recent HPAI outbreaks in the
U.S. caused
significant depopulation
of U.S.
commercial table
egg layer
flocks, lower
shell egg
supplies and
higher shell
egg
prices. During the third
and fourth quarters of
fiscal 2024, we experienced
HPAI outbreaks within our facilities located in
Kansas
and Texas,
which are now
fully operational. For
additional information, refer
to
Part II. Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations - HPAI
.
We
maintain controls
and procedures
designed to
reduce the
risk of
exposing our
flocks and
employees to
harmful diseases;
however, despite
these efforts, outbreaks
of avian diseases
can and do
still occur and
have adversely impacted,
and may in
the
future adversely impact, the health
of our flocks and could in the
future adversely impact the health
of our employees. Continued
or intensified spread of
HPAI could have a material adverse impact on
our financial results by
increasing government restrictions
on the sale and distribution of
our products and requiring us to
euthanize the affected layers. Negative publicity
from outbreaks
within our industry can
negatively impact customer perception. If
a substantial portion of
our layers or production
facilities
are
affected by any of these factors in any given quarter or year, our business, financial condition, and results of operations could be
materially and adversely affected.
Shell
eggs
and
shell
egg
products
are
susceptible to
microbial
contamination, and
we
may
be
required
to,
or
we
may
voluntarily, recall contaminated products.
Shell eggs
and shell
egg products
are vulnerable
to contamination by
pathogens such
as Salmonella
Enteritidis. The Company
maintains policies and procedures designed to comply with the complex
rules and regulations governing egg production, such as
The Final
Egg Rule
issued by
the FDA
“Prevention of
Salmonella Enteritidis
in Shell
Eggs During
Production, Storage,
and
Transportation,” and the FDA’s
Food Safety Modernization Act. Shipment of contaminated products, even if inadvertent, could
result in a
violation of law
and lead to
increased risk
of exposure to
product liability
claims, product
recalls and scrutiny
by federal
and
state
regulatory
agencies.
We
have
little,
if
any,
control
over
proper
handling
once
the
product
has
been
shipped
or
delivered. In
addition,
products
purchased
from
other
producers
could
contain
contaminants
that
might
be
inadvertently
redistributed by us. This has occurred in the past and we were
required to recall eggs redistributed to our customers. As such, we
might decide
or be
required to
recall a
product if
we, our
customers or
regulators believe
it poses
a potential
health risk. Any
product recall
could result
in a
loss of
consumer confidence
in our
products, adversely
affect our
reputation with
existing and
potential customers and
have a material
adverse effect on
our business, results
of operations and
financial condition. We currently
maintain insurance
with respect
to certain
of these
risks, including
product liability
insurance, business
interruption insurance,
product recall insurance and general liability insurance, but in many cases such insurance is
expensive, difficult to obtain and no
assurance can be
given that such
insurance can be
maintained in the
future on acceptable
terms, or in
sufficient amounts to
protect
us against losses
due to any such events, or at all.
Our
profitability
may
be
adversely
impacted
by
increases
in
other
input
costs
such
as
packaging
materials,
delivery
expenses, construction materials and equipment, including as a result of inflation and tariffs.
In addition to feed ingredient costs, other significant input costs include costs
of packaging materials and delivery expenses. Our
costs of
packing materials
increased during
the past
three fiscal
years due
to inflation
and higher
labor costs,
and during
also as a
result of supply
chain constraints initially caused
by the pandemic,
and these costs
may continue to increase.
We
also
experienced increases in delivery expenses during fiscal 2023 and 2022 due to increases in fuel and labor costs for
both our fleet
and contract trucking, and these
costs may continue to increase.
Changes in U.S. trade and
tariffs policies may cause higher costs
for construction materials, equipment, packaging and other
items. Increases in these costs are
largely outside of our control
and
could have a material adverse effect on our profitability and cash flow.
BUSINESS AND OPERATIONAL RISK FACTORS
Our acquisition growth strategy subjects us to various risks.
As discussed in
Part I. Item I. Business - Growth Strategy
, we plan to continue to pursue a growth strategy that includes,
in part,
selective acquisitions
of
other
businesses engaged
in
the production
and sale
of
shell
eggs, with
a priority
on
those that
will
facilitate our ability
to expand our
cage-free shell egg
production capabilities
in key locations
and markets.
We may over-estimate
or under-estimate the
demand for cage-free
eggs, which could
cause our acquisition
strategy to be
less-than-optimal for our
future
growth and profitability.
The number of existing businesses with
cage-free capacity that we may
be able to purchase is
limited,
as
most
production
of
shell
eggs
by
other
companies
in
our
markets
currently
does
not
meet
customer
demands
or
legal
requirements to be designated as cage-free. Conversely, if we acquire cage-free production capacity, which is more expensive to
purchase
and
operate,
and
customer
demands
or
legal
requirements
for
cage-free
eggs
were
to
change,
the
resulting
lack
of
demand for cage-free eggs may result in higher costs and lower profitability.
Acquisitions require capital resources and
can divert management’s attention from our existing
business. Acquisitions also entail
an inherent risk that
we could become
subject to contingent
or other liabilities,
including liabilities arising
from events or
conduct
prior to
our acquisition
of a
business that
were unknown
to us
at the
time of
acquisition. We
could incur
significantly greater
expenditures in integrating an acquired business than we anticipated at the time of its purchase.
We cannot assure you that we:
●
will identify suitable acquisition candidates;
●
can consummate acquisitions on acceptable terms;
●
can successfully integrate an acquired business into our operations; or
●
can successfully manage the operations of an acquired business.
No
assurance can
be
given
that
businesses
we
acquire
in
the
future
will
contribute
positively
to
our
results
of
operations
or
financial condition.
In addition,
federal antitrust
laws require
regulatory approval
of acquisitions
that exceed
certain threshold
levels of significance, and we cannot guarantee that such approvals would be obtained.
The consideration we pay
in connection with any
acquisition affects our financial
results. If we pay
cash, we could be
required
to
use
a
portion
of
our
available cash
or
credit
facility
to
consummate
the
acquisition.
To
the
extent
we
issue
shares
of
our
Common Stock, existing
stockholders may be
diluted. In addition,
acquisitions may result
in additional debt.
Our ability to
access
any additional capital
that may
be needed
for an
acquisition may be
adversely impacted by
higher interest rates
and economic
uncertainty.
We
may
not
realize
the
anticipated
benefits
of
our
acquisition
of
Echo
Lake
Foods
and
our
strategy
to
diversify
our
product mix to include more prepared foods.
As discussed
elsewhere in
this report,
we completed
our acquisition
of Echo
Lake Foods
on June
2, 2025.
Although we
had
already diversified our business
with some prepared foods
product offerings, the
acquisition of Echo Lake
Foods represented a
significant expansion of
this strategy.
Accordingly, we
may experience unexpected
challenges in integrating
and managing the
business of
Echo Lake
Foods. Integrating
Echo Lake
Foods’ business
may be
more costly
or time
consuming than
we expect.
Even if
the business
of Echo
Lake Foods
is successfully
integrated, we
may not
realize the
benefits we
expect from
the acquisition,
including the
synergies, cost
savings, reduction
in earnings
volatility,
margin expansion,
financial returns,
expanded customer
relationships, or sales
or growth opportunities.
Our experience managing
prepared foods businesses
is much more
limited than
our experience managing
our shell egg
and egg products
businesses, and our
strategy to diversity
our product mix
to include more
prepared foods may not produce the
favorable financial and other results
that we anticipate. For additional information
regarding
our
acquisition of
Echo Lake
Foods, see
Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations - Acquisitions
and
Part II. Item 8. Notes to Consolidated Financial Statements, Note 17 - Subsequent
Events
.
Global or
regional
health crises
including pandemics
or epidemics
could have
an adverse
impact on
our business
and
operations.
The
effects
of
global
or
regional
pandemics
or
epidemics can
significantly
impact
our
operations.
Although
demand
for
our
products could
increase as
a result
of restrictions
such as
travel bans
and restrictions,
quarantines, shelter-in-place
orders, and
business and government
shutdowns, which can
prompt more consumers
to eat at
home, these restrictions
could also significantly
increase our cost of doing
business due to labor shortages,
supply-chain disruptions, increased costs
and decreased availability of
packaging supplies or feed, and
increased medical and other costs.
We
experienced these impacts as a
result of the COVID-19
pandemic,
primarily
during
our
fiscal
years
and
2021.
The
pandemic
recovery
also
contributed
to
higher
inflation
and
interest
rates,
which
persist
and
may
continue
to
persist.
The
impacts
of
health
crises
are
difficult
to
predict
and
depend
on
numerous factors
including the severity,
length and
geographic scope of
the outbreak, resurgences
of the
disease and
variants,
availability and
acceptance of
vaccines, and
governmental, business
and individuals’
responses.
A resurgence
of COVID-19
and/or variants, or any future major
public health crisis, would disrupt our
business and could have a material adverse
effect on
our financial results.
Our largest customers have accounted
for a significant portion of
our net sales volume. Accordingly, our business
may be
adversely affected by the loss of, reduced purchases by, or pricing pressure from, one or more
of our large customers.
Our customers, such as supermarkets, warehouse clubs and food distributors, have continued to consolidate and consolidation is
expected to continue.
These consolidations have
produced larger customers and
potential customers with
increased buying power
that are more
capable of operating with
reduced inventories, opposing price
increases, and demanding lower
pricing, increased
promotional programs and specifically
tailored products. Because of
these trends, our volume
growth could slow or
we may need
to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results.
Our top three customers
accounted for an aggregate
of 49.2%, 49.0% and
50.1% of our net
sales dollars for fiscal
2025, 2024 and
2023, respectively.
Our largest
customer, Walmart
Inc. (including Sam's
Club), accounted for
33.6%, 34.0% and
34.2% of net
sales dollars for fiscal
2025, 2024 and 2023,
respectively. Although we have established long-term
relationships with most of
our
customers who continue to
purchase from us based
on our ability to
service their needs, they
are generally free to
acquire shell
eggs from other
sources. If, for any
reason, one or
more of our
large customers were
to purchase significantly
less of our
shell
eggs in the future, terminate their
purchases from us or demand significantly
lower pricing, and we were not
able to sell our shell
eggs to
new customers
at comparable
levels, it
would have
a material
adverse effect
on our
business, financial
condition, and
results of operations.
The recent high market prices
for eggs, primarily caused by the
HPAI-related
reduction in supply,
led to pressure from
customers to
change long-standing
market-based pricing
frameworks and/or
otherwise reduce
the price
of our
eggs. A
material change in
our sales arrangements
with key customers
could have a
material adverse effect
on our revenues,
gross
profits and
net income. Other
reactions to
high egg prices,
including by state
or federal government
agencies, may also
adversely impact our business.
Market prices for wholesale shell eggs have been volatile
and cyclical over time. Market prices for eggs
tend to increase during
and following outbreaks of
agricultural diseases in the
egg industry that reduce
the supply of eggs,
which has occurred during
the
current
HPAI
outbreak,
until
the
supply
and
demand
balance
is
restored.
Many
of
our
sales
arrangements
with
customers,
particularly for conventional eggs, are based on formulas that take into account, in varying ways, independently quoted regional
wholesale
market
prices
for
eggs.
The
recent
high
market
prices
for
eggs
have
led
to
pressure
from
customers
to
change
longstanding market-based pricing frameworks and/or otherwise reduce the price of our
eggs. To remain competitive
and retain
our
customers
and
gain
new
ones,
we
must
consider
our
customer
relationships
and
the
reactions
and
potential
reactions
of
competitors. A
material change
in our
sales arrangements
with key
customers could
have a
material adverse
effect on our
revenues
and gross profits.
Other
reactions
to
high
egg
prices
may
also
adversely
impact
our
business.
On
February
26,
2025,
the
U.S.
Secretary
of
Agriculture announced a
$1 billion comprehensive
strategy to curb
HPAI, protect the U.S. poultry industry, and lower
egg prices.
The Secretary’s
five-pronged strategy
includes an
additional $500
million for
biosecurity measures,
$400 million
in financial
relief for affected farmers, and $100 million for vaccine research, actions to reduce regulatory burdens, and exploring temporary
egg import options.
In March 2025,
we received a
civil investigative demand
in connection with
a widely publicized
investigation
by the
Antitrust Division
of the
Department of
Justice (“DOJ”)
into the
causes behind
nationwide increases
in egg
prices. In
addition,
persistent
high
egg
prices
may
cause
some
consumers
to
purchase
fewer
eggs.
Persistent high-price
cycles
and
the
existence of the
DOJ investigation may
also increase attention
on the egg
industry,
and the Company
specifically, by
state and
federal government agencies, which may lead
to additional government investigations or
related activities. The potential impacts
of these reactions on our
business are unclear,
unpredictable and may divert our
resources and attention from our
core business
activities, and they may have an adverse effect that could be material.
Our business is highly competitive.
The production and sale of fresh shell eggs, which accounted for 94.3% to 95.3% of our net sales in our last three fiscal years, is
intensely competitive.
We
compete with
a large
number of
competitors that
may prove
to be
more successful
than we
are in
producing, marketing and selling shell eggs. We cannot provide assurance that we will be able to compete successfully with any
or all of these companies. Increased competition could result in price reductions, greater
cyclicality, reduced margins and loss of
market share, which would negatively affect our business, results of operations, and financial condition. In
addition, our growth
strategy
includes
expansion
of
our
product
offerings
including
prepared
foods.
The
prepared
foods
business
is
intensely
competitive and includes
competition from
other prepared food
companies and
other suppliers of
prepared and convenience
foods
including
restaurants,
grocery
stores
and
convenience
stores,
many
of
which
have
more
experience
operating
prepared
and
convenience foods businesses.
We
are
dependent
on
our
management
team,
and
the
loss
of
any
key
member
of
this
team
may
adversely
affect
the
implementation of our business plan in a timely manner.
Our success depends
largely upon
the continued service
of our senior
management team. The
loss or interruption
of service of
one or more of
our key executive officers
could adversely affect our
ability to manage our
operations effectively and/or pursue
our growth strategy.
We
have not entered into
any employment or non-compete
agreements with any of
our executive officers.
Competition could cause us to lose talented employees, and unplanned turnover could deplete institutional knowledge and result
in increased costs due to increased competition for employees.
Our
business
is
dependent
on
our
information
technology
systems
and
software,
and
failure
to
protect
against
or
effectively respond to cyber-attacks, security
breaches, or other incidents involving those systems, could adversely affect
day-to-day operations and decision making processes and have an adverse effect on our performance and reputation.
The efficient operation of our business depends on our information technology systems, which we rely on to effectively manage
our
business
data,
communications,
logistics,
accounting,
regulatory
and
other
business
processes.
If
we
do
not
allocate
and
effectively manage the resources necessary
to build and sustain an
appropriate technology environment, our
business, reputation,
or financial results could be negatively impacted. In addition, our information technology systems may be vulnerable to damage
or
interruption
from
circumstances
beyond
our
control,
including
systems
failures,
natural
disasters,
terrorist
attacks,
viruses, ransomware, security breaches or cyber incidents. Cyber-attacks are becoming more sophisticated and
are increasing in
the number of attempts and frequency by groups and individuals with a wide range of motives. We have experienced and expect
to continue to experience attempted cyber-attacks of our information technology systems or networks.
We regularly engage
with third-party
service providers
as part
of our
operations to
provide a
high level
of service
to our
customers.
We have implemented certain practices and policies to minimize the potential risks associated with the exchange of
information
with contracted vendors.
Despite these practices
and policies, we
cannot guarantee that
information technology systems
of our
third-party service
providers will
prevent and
detect all
cybersecurity breaches
and incidents.
Although we
require third-party
service providers to
notify us upon
a potential breach
or incident, there
is a potential
risk that our
business, reputation, or
financial
results could be negatively impacted by cybersecurity incidents at their businesses.
Additionally, future or past
business transactions
(such as acquisitions
or integrations) could
expose us
to additional cybersecurity
risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated systems
and technologies.
Furthermore, we
may discover
security issues
that were
not found
during due
diligence of
such acquired
or
integrated businesses, and
it may be
difficult to
integrate businesses into
our information technology
environment and security
program.
Our information technology systems also subject us to numerous data privacy obligations. We may at times fail (or be perceived
to have failed) in our
efforts to comply with our
data privacy obligations. If we or
the third parties on which we
rely fail, or are
perceived to have failed, to address or comply with applicable data privacy obligations, we could face significant consequences,
including but
not limited
to government
enforcement actions
and litigation.
A security breach of
sensitive information
could result
in damage to
our reputation and our
relations with our customers
or employees. Any
such damage or interruption
could have a
material adverse effect on our business.
Technology
and related
business and
regulatory requirements
continue to
change rapidly.
Failure to
update or
replace legacy
systems
to
address
these
changes
could
result
in
increased
costs,
including
remediation
costs,
system
downtime,
third
party
litigation, regulatory actions or cyber security vulnerabilities which could have a material adverse effect on our business.
Labor shortages or increases in labor costs could adversely impact our business and results of operations.
Our
success
is
dependent
upon
recruiting,
motivating,
and
retaining
staff
to
operate
our
farms.
Approximately
79%
of
our
employees are
paid at
hourly rates,
often in
entry-level positions.
While all
our employees
are paid
at rates
above the
federal
minimum wage requirements, any significant increase
in local, state or federal
minimum wage requirements could increase our
labor costs. In
addition, any regulatory
changes requiring us to
provide additional employee benefits
or mandating increases
in
other employee-related costs, such
as unemployment insurance or
workers compensation, would increase our
costs. A shortage
in
the
labor
pool,
which
may
be
caused
by
competition
from
other
employers,
the
remote
locations
of
many
of
our
farms,
decreased labor
participation rates
or changes
in government-provided
support or
immigration laws
or policies,
particularly in
times of lower unemployment, could adversely affect
our business and results of operations. A
shortage of labor available to us
could cause our farms to operate with
reduced staff, which could negatively impact
our production capacity and efficiencies. In
fiscal 2022, our
labor costs increased
primarily due to
the COVID-19 pandemic
and its effects,
which caused us
to increase wages
in response to
labor shortages.
In fiscal 2024
and 2025, labor
wages continued to
rise due to
inflation and low
unemployment.
Accordingly, any significant labor shortages or increases in our labor costs could have a material adverse effect on our results of
operations.
LEGAL AND REGULATORY
RISK FACTORS
Pressure from animal rights groups regarding the treatment
of animals may subject
us to additional costs to
conform our
practices
to
comply
with
developing
standards
or
subject
us
to
marketing
costs
to
defend
challenges
to
our
current
practices and protect our image with our customers. In particular,
changes in customer preferences and state legislation
have accelerated an increase in demand for cage-free eggs, which increases uncertainty in our business
and increases our
costs.
We and many of our customers face
pressure from animal rights
groups, such as People
for the Ethical Treatment of
Animals and
the Humane Society of the United States, to require companies that supply food products
to operate their businesses in a manner
that
treats
animals
in
conformity
with
certain
standards
developed
or
approved
by
these
groups.
In
general,
we
may
incur
additional costs to conform
our practices to address
these standards or to
defend our existing practices
and protect our image
with
our customers. The
standards promoted by
these groups change
over time, but
typically require minimum
cage space for
hens,
among other requirements, and some of these groups have led successful legislative efforts to
ban any form of caged housing in
various states.
As
discussed
in
Part I. Item 1. Business - Government Regulation
,
ten
states
have
passed
minimum
space
and/or
cage-free
requirements for
hens, and
other states
are considering
such requirements.
In addition,
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. While we
anticipate that
our retail
and foodservice
customers will
continue to transition
to selling
cage-free eggs
given publicly
stated goals,
there is
no assurance
that this
transition will
take place
or take
place according
to the
timeline of
current cage-free
goals. For
example, customers may accelerate their transition to
stocking cage-free eggs, which may challenge
our ability to meet the cage-
free volume needs
of those customers
and result in
a loss of
shell egg sales.
Similarly,
customers who commit
to stock greater
proportional quantities of cage-free eggs
are under no obligation to
continue to do so, which
may result in an oversupply
of cage-
free eggs and
result in lower
specialty egg prices,
which could reduce
the return on
our capital investment
in cage-free production.
In
addition, on
July
9,
2025, the
DOJ filed
a
lawsuit
against the
State of
California alleging
that
California’s
cage-free laws
“impose burdensome red tape on the production of eggs and poultry products nationally in
violation of the Supremacy Clause of
the U.S. Constitution” and lead to higher egg prices for U.S. consumers.
The outcome of this litigation could further complicate
and the cage-free egg landscape and affect our ability to successfully navigate these issues.
Changing
our
infrastructure
and
operating
procedures
to
conform
to
consumer
preferences,
customer
demands,
laws
and
challenges to these
laws. has resulted
and will continue
to result in
additional costs, including
capital and operating
cost increases.
The USDA reported that the estimated U.S. cage-free flock was 129.2 million hens as of May 31, 2025, which
is approximately
44.9% of the total U.S. table egg layer hen population. According to the USDA Agricultural Marketing Service, as of December
approximately
221.4
million
hens,
or
about
73%
of
the
U.S.
non-organic
laying
flock
would
have
to
be
in
cage-free
production to meet projected cage-free commitments from the retailers, foodservice providers and food manufacturers that have
stated goals to transition to cage-free eggs.
In response
to our
customers’ announced goals
and increased
legal requirements for
cage-free eggs, we
have increased
capital
expenditures
to
increase
our
cage-free
production
capacity.
We
are
also
enhancing
our
focus
on
cage-free
capacity
when
considering acquisition
opportunities. Our
customers typically
do not
commit to
long-term purchases
of specific
quantities or
type of eggs with
us, and as a
result, we cannot predict
with any certainty which
types of eggs they
will require us to
supply in
future
periods.
The
production
of
cage-free
eggs
is
more
costly
than
the
production
of
conventional
eggs,
and
these
higher
production costs contribute to the
prices of cage-free eggs,
which historically have typically
been higher than conventional
egg
prices. Many
consumers prefer
to buy
less expensive
conventional shell
eggs. These
consumer preferences,
in addition
to the
regulatory
landscape,
may
in
turn
influence
our
customers’
future
needs
for
cage-free
and
conventional
eggs.
Due
to
these
uncertainties, we may over-estimate future demand for cage-free eggs, which could increase our costs unnecessarily,
or we may
under-estimate future demand for
cage-free eggs, which could harm
us competitively.
If our competitors obtain non-cancelable
long-term contracts to provide cage-free
eggs to our existing or
potential customers, then there may
be decreased demand for our
cage-free
eggs
due
to
these
lost
potential
sales.
If
we
and
our
competitors increase
cage-free
egg production
and
there is
no
commensurate increase in
demand for cage-free
eggs, this overproduction
could lead to
an oversupply of
cage-free eggs, reducing
the sales price for specialty eggs and our return on capital investments in cage-free production.
Failure
to
comply
with
applicable
governmental
regulations,
including
environmental
regulations,
could
harm
our
operating results,
financial condition,
and reputation. Further,
we may
incur significant
costs to
comply with
any such
regulations.
We are subject to federal,
state and local
regulations relating to
grading, quality control,
labeling, sanitary control,
waste disposal,
and other
areas of
our business.
As a
fully-integrated shell
egg producer,
our shell
egg facilities
are subject
to regulation
and
inspection by the USDA, OSHA, EPA and FDA, as well as state and local health and agricultural agencies, among others. All of
our shell egg production
and feed mill
facilities are subject
to FDA, EPA and OSHA regulation
and inspections. In
addition, rules
are often proposed that, if adopted as proposed, could increase our costs.
Our operations and facilities are subject to various federal, state and local environmental, health, and safety
laws and regulations
governing, among
other
things, the
generation, storage,
handling, use,
transportation, disposal,
and remediation
of
hazardous
materials. Under these laws and regulations, we are required to obtain permits from governmental authorities, including, but not
limited to wastewater discharge permits and manure and litter land applications.
If we
fail to
comply with
applicable laws or
regulations, or fail
to obtain necessary
permits, we could
be subject
to significant
fines and penalties or other sanctions, our reputation could be harmed, and our
operating results and financial condition could be
materially adversely
affected.
In addition,
because these
laws and
regulations are
becoming increasingly
more stringent,
it is
possible that we will be required to incur significant costs for compliance with such laws and regulations in the future.
Climate change and legal or regulatory responses may have an adverse impact on our business and results of operations.
Extreme weather
events, such
as derechos,
wildfires, drought,
tornadoes, hurricanes,
storms, floods
or other
natural disasters
could materially and adversely affect our operating results and financial condition. In fact, derechos, fires, floods, tornadoes and
hurricanes have affected our facilities or the facilities of other egg producers in the past. Increased
global temperatures and more
frequent occurrences
of extreme
weather events,
which may
be exacerbated
by climate
change, may
cause crop
and livestock
areas to
become unsuitable,
including due
to water
scarcity or
high or
unpredictable temperatures,
which may
result in
much
greater stress on food systems and more pronounced food insecurity globally. Lower global crop production, including corn and
soybean meal, which
are the primary
feed ingredients that
support the health
of our animals,
may result in
significantly higher
prices for these commodity inputs, impact
our ability to source the commodities
we use to feed our flocks, and
negatively impact
our ability to
maintain or grow
our operations. Climate
change may increasingly
expose workers and
animals to high
heat and
humidity
stressors
that
adversely
impact
poultry
production
and
our
costs.
Increased
greenhouse
gas
emissions
may
also
negatively impact air quality, soil quality and water quality, which may hamper
our ability to support our operations,
particularly
in higher water- and soil-stressed regions.
Increasing frequency
of severe
weather events,
whether tied
to climate
change or
any other
cause, may
negatively impact
our
ability to
raise poultry
and produce
eggs profitably
or to
operate our
transportation and
logistics supply
chains. Regulatory
controls
and market
pricing may
continue to
drive the
costs of
fossil-based fuels
higher,
which could
negatively impact
our ability
to
source commodities necessary
to operate
our farms or
plants and
our current
fleet of
vehicles. These
changes may
cause us
to
change, significantly, our day-to-day business operations and our strategy. Climate change and extreme weather events
may also
impact demand for
our products given
evolution of consumer
food preferences. Even
if we take
measures to position
our business
in anticipation
of such
changes, future
compliance with
legal or
regulatory requirements
may require
significant management
time, oversight and enterprise expense. We may also incur significant expense tied to regulatory fines if laws and regulations are
interpreted and applied in a manner
that is inconsistent with our business practices.
We
can make no assurances that our
efforts
to prepare
for these
adverse events
will be
in line
with future
market and
regulatory expectations
and our
access to
capital to
support our business may also be adversely impacted.
Current and
future
litigation and
other legal
matters could
expose us
to significant
liabilities and
adversely affect
our
business reputation.
We
and
certain
of
our
subsidiaries
are
involved
in
various
legal
proceedings
and
other
legal
matters. Litigation, government
investigations and
other legal matters
are inherently
unpredictable, and although
we believe we
have meaningful
defenses in these
matters, we may incur liabilities due
to adverse judgments or penalties or
we may enter into settlements of
claims, which could
have a material
adverse effect on
our results of
operations, cash flow
and financial condition.
For a discussion
of our ongoing
legal proceedings see
Part I. Item 3. Legal Proceedings
below and Part
II. Item 8.
Notes to the
Consolidated Financial Statements,
Note 16 - Commitments and Contingencies
.
Such lawsuits,
investigations and other
legal matters are
expensive to respond
to
and
defend,
divert
management’s
attention,
and
may
result
in
significant
adverse
judgments,
penalties
or
settlements. Legal
proceedings may expose us to negative publicity,
which could adversely affect our business reputation and customer preference
for our products and brands.
FINANCIAL AND ECONOMIC RISK FACTORS
Weak or unstable economic conditions, including continued high inflation
and interest rates, could negatively impact our
business.
Weak
or unstable economic conditions,
including continued high inflation
and interest rates, may
adversely affect our
business
by:
●
Limiting our access to capital markets or increasing the cost of capital we may need to grow or operate our business;
●
Changing consumer spending and habits and demand for eggs, particularly higher-priced eggs;
●
Restricting the supply of energy sources or increasing our cost to procure energy; or
●
Reducing the availability
of feed ingredients,
packaging material, and
other raw materials,
or increasing the
cost of these
items.
Deterioration of economic conditions could also negatively impact:
●
The financial condition of our suppliers, which may make it more difficult for them to supply raw materials;
●
The financial condition of our customers, which may decrease demand for eggs or increase our bad debt expense; or
●
The financial condition of our insurers, which
could increase our cost to obtain insurance,
and/or make it difficult for or
insurers to meet their obligations in the event we experience a loss due to an insured peril.
According
to
the
U.S.
Bureau
of
Labor
Statistics,
from
May
to
May
2022,
the
Consumer
Price Index for
All
Urban
Consumers (“CPI-U”) increased 8.5 percent, the largest 12-month
increase since the period ending December 1981. The
CPI-U
increased 4.1%, 3.3%, and 2.4% annually from May 2022 to May 2025. Inflationary costs have increased our input costs, and if
we are unable to pass these costs through to the customer it could have an adverse effect on our business.
We
hold significant
cash balances
in deposit
accounts with
deposits in
excess of
the amounts
insured by
the Federal
Deposit
Insurance Corporation
(“FDIC”). In
the event
of a bank
failure at
an institution where
we maintain deposits
in excess of
the FDIC-
insured amount, we may lose such excess deposits.
The
loss
of
any
registered
trademark
or
other
intellectual
property
could
enable
other
companies
to
compete
more
effectively with us.
We
utilize intellectual
property in
our business. For
example, we
own the
trademarks
Farmhouse Eggs®
,
4Grain®, Sunups®
,
and
Sunny Meadow®
. We
produce and market
Egg-Land’s
Best®
and
Land O’ Lakes
® under license agreements
with EB. We
have invested a
significant amount of
money in establishing
and promoting our
trademarked brands. The loss
or expiration of
any
intellectual property
could enable
our competitors
to compete
more effectively
with us
by allowing
them to
make and
sell products
substantially
similar
to
those
we
offer. This
could
negatively
impact
our
ability
to
produce
and
sell
those
products,
thereby
adversely affecting our operations.
Impairment in the
carrying value of
goodwill or other
assets could negatively
affect our results of
operations or net
worth.
Goodwill
represents
the
excess
of
the
cost
of
business
acquisitions
over
the
fair
value
of
the
identifiable
net
assets
acquired. Goodwill
is
reviewed
at
least
annually
for
impairment
by
assessing
qualitative
factors
to
determine
whether
the
existence of events or circumstances leads to a determination that it is
more likely than not that the fair value of a reporting unit
is less than
its carrying amount. As
of May 31,
2025, we had
$46.8 million of goodwill. While
we believe the
current carrying
value of this goodwill is
not impaired, future goodwill impairment
charges could adversely affect our results of
operations in any
particular period and our net worth.
Events beyond our control such as extreme weather and natural disasters could negatively impact our business.
Fire, bioterrorism,
pandemics, extreme
weather or
natural disasters,
including droughts,
floods, excessive
cold or
heat, water
rights restrictions, hurricanes or other
storms, could impair the health
or growth of our flocks, decrease
production or availability
of feed ingredients,
or interfere with
our operations due
to power outages,
fuel shortages, discharges
from overtopped or
breached
wastewater treatment lagoons, damage to our production
and processing facilities, labor shortages or disruption
of transportation
channels, among other things. Any of these factors could have a material adverse effect on our financial results.
RISK FACTORS RELATING
TO OUR COMMON STOCK
Provisions of our certificate
of incorporation, bylaws,
and Delaware law may
make an acquisition
of us or a
change in our
management more difficult.
Certain provisions of
our certificate of incorporation
and bylaws could
discourage, delay or
prevent a merger, acquisition or
other
change in control that stockholders may consider favorable, including transactions in which an investor might otherwise receive
a premium for its shares. These
provisions also could limit the price
that investors might be willing
to pay in the future for
shares
of our Common Stock, thereby depressing the
market price of our Common Stock. Stockholders
who wish to participate in these
transactions may
not have
the opportunity
to do
so. Furthermore,
these provisions
could prevent
or frustrate
attempts by
our
stockholders to replace or remove our management. These provisions:
●
provide for the
division of the
Board into three
classes as nearly
equal in size as
practicable with staggered three-year
terms and limit the removal of directors and the filling of vacancies;
●
authorize our Board to set the
terms of and issue preferred stock, without
stockholder approval, that could be issued to
persons friendly to management
or could operate as
a “poison pill” to
dilute the stock ownership
of a potential hostile
acquirer to prevent an acquisition that is not approved by our Board;
●
prohibit stockholder action by written consent;
●
prohibit stockholders from calling special meetings of stockholders;
●
establish advance notice requirements
for stockholder nominations
to our Board or
for stockholder proposals that
can be
acted on at stockholder meetings; and
●
require the approval of the
holders of at least 66-2/3%
of the voting power of all
then outstanding shares of capital
stock
of the Company entitled
to vote generally in
the election of directors,
voting together as a
single class, in order
to amend
our certificate of incorporation and bylaws.
In addition,
we are
governed by
the provisions
of Section
203 of
the Delaware
General Corporation
Law,
which may,
unless
certain criteria are
met, prohibit large stockholders,
in particular those
owning 15% or
more of our
outstanding voting stock,
from
merging or combining with us for a prescribed period of time.
The loss of controlled company status could disrupt our business.
Until April 14,
2025, our Company
was controlled
by members of
the family
of our founder,
Fred R. Adams,
Jr. since its founding
and since it became a public company.
As described in Part II. Item 8. Notes
to the Consolidated Financial Statements, Note 11
- Equity,
on April
14, 2025,
the Company
ceased to
be a
“controlled company”
under the
rules of
The Nasdaq
Stock Market
when all
of the
outstanding shares
of Class
A Common
Stock, all
of which
were controlled
by the
family,
were converted
to
Common Stock.
Immediately prior thereto,
members of
the family-controlled shares
of Class
A Common
Stock and
Common
Stock that
resulted in
voting power
of 53.2%.
After the
conversion of
the Class
A Common
Stock and
the subsequent
sale by
family members in a registered
public offering of 2,978,740
shares of Common Stock on
April 17, 2025, and as
reported on an
amendment to Schedule 13D, the
family beneficially owned approximately 6.1% of
our outstanding Common Stock. Adolphus
B. Baker,
Board Chair and a
family member, has
indicated that he is
willing to serve as
executive Board Chair at
least through
our 2027 annual meeting
of stockholders. The effect of
the loss of controlled
company status on the
trading price of our
Common
Stock and
on our
business is
uncertain, including
our ability
to retain
and hire
key personnel
and maintain
relationships with
customers and suppliers,
and on our
operating results. In
addition, our business
may be more
likely to be
disrupted by persons
seeking to influence or
effect a change
of control, change
of management or
change in governance of
our Company.
Any such
disruptions to our business could have a material adverse effect on our operations and financial results.
The price of
our Common Stock
may be affected
by the availability
of shares
for sale in
the market, and
investors may
experience significant dilution
as a result of
future issuances of our
securities, which could
materially and adversely
affect
the market price of our Common Stock.
The sale or availability for
sale of substantial amounts of
our Common Stock could adversely
impact the price of our
Common
Stock. Our Fourth Amended and Restated Certificate of Incorporation authorizes
us to issue 120,000,000 shares of our Common
Stock
and
10,000,000
shares
of
preferred
stock.
As
of
July
22,
2025,
there
were
48,497,477
shares
of
our
Common
Stock
outstanding and
no shares
of preferred
stock outstanding.
Accordingly,
a substantial
number of
shares of
our Common
Stock
remain authorized for issuance and could become available for sale in the market. Our Fourth
Amended and Restated Certificate
of Incorporation authorizes our
Board to set the
terms of and issue
preferred stock, without stockholder
approval, and such shares
if
issued
could
dilute
the
voting
and
economic
interests
of
holders
of
Common
Stock.
In
addition,
2,791,854
shares
of
our
Common
Stock
held
by
the
family
of
our
late
founder
remain
subject
to
the
registration
rights
provided
by
the
Agreement
Regarding Conversion, dated February 25, 2025, by and among the Company, DLNL, LLC and such family members. Also, we
may be obligated to
issue additional shares of
our Common Stock in
connection with employee benefit
plans (including equity
incentive plans or under our KSOP).
In
the
future,
we
may
decide
to
raise
capital
through
offerings
of
our
Common
Stock,
preferred
stock,
additional
securities
convertible into or exchangeable for our Common Stock of preferred stock, or rights
to acquire those securities or our Common
Stock or
preferred stock.
We
may also
issue such
securities as
consideration in
an acquisition. The
issuance of
such securities
could result in dilution of existing stockholders’
equity interests in us. Issuances of
substantial amounts of our Common Stock
or
preferred stock, or
the perception that
such issuances could
occur, may adversely affect prevailing
market prices for
our Common
Stock.
The price of our Common Stock may fluctuate significantly.
The market price of our Common Stock
has fluctuated significantly and may continue to
do so for various reasons including, but
not limited to, the following, many of which are beyond our control:
●
our quarterly or annual earnings or those of other companies in our industry;
●
the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
●
changes in recommendations by research analysts who track our Common Stock or the stock of other companies in our
industry, or a decision by such an analyst to reduce or cease coverage regarding our Common Stock;
●
changes in
general conditions
in the
U.S. and
global economy, financial
markets or
our industry, including
those resulting
from changes in trade and tariff
policies, changes in fuel prices
or fuel shortages, war, incidents of terrorism,
pandemics
or responses to such events;
●
changes
in
the
competitive
landscape
for
our
business,
including
any
changes
resulting
from
industry
consolidation
whether or not involving us;
●
our liquidity position;
●
future sales of our Common Stock;
●
any changes in our dividend policy or share repurchase program; and
●
the other risks described in this Risk Factors section.
The
actual
timing,
number
and
value
of
shares
repurchased
under
our
share
repurchase
program
will
be
determined
by
management in
its discretion
and will
depend on
a number
of factors,
including but
not limited
to, the
market price
of our
Common
Stock and general market and economic conditions. The share repurchase program may be suspended, modified or discontinued
at any time without prior notice.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B.
UNRESOLVED STAFF
COMMENTS
None.

---

ITEM 2. PROPERTIES
ITEM 2.
PROPERTIES
The table
below provides
summary information
about the
primary operational
facilities we
use in
our business
as of
May 31,
2025.
Type
Quantity
(a)
Production Capacity
Location
Breeding Facilities
House up to 215,000 hens
MS
Feed Mills
Production capacity of 1,000 tons of
feed per hour
AL, AR, FL, GA, KS, KY,
MO, MS, NC,
NJ, OH, OK, SC, TN, TX, UT
Hatcheries
Hatch up to 712,600 chicks per
week
MO, MS
Processing and Packaging
Approximately 674,700 dozen shell
eggs per hour
AL, AR, FL, GA, KS, KY,
LA, MD,
MO, MS, NJ, OH, OK, SC, TX, UT
Pullet Facilities
House up to 14.3 million pullets
AR, DE, FL, GA, KS, KY,
MD, MS, NJ,
OH, SC, TX, UT
Shell Egg Production
House up to 51.8 million layers
AL, AR, FL, GA, KS, KY,
LA, MD, MS,
NJ, OH, OK, SC, TX, UT
Egg Products and Prepared
Foods Processing Facilities
Production capacity of 72,700 lbs.
per hour
GA, MO, NY,
SC, TX
(a)
We
own and
operate all
of these
facilities. The
table does
not include
idled facilities
or contract
production and
growers.
We
also
have
ongoing
construction
projects
to
further
expand
the
Company’s
cage-free
egg
production
capabilities.
These
projects include
expanding our
cage-free egg
production at
existing
farms or
converting
conventional housing
into cage-free
production.
These
projects
will
phase
into
production
through
fiscal
2026.
For
additional
information,
see
Part II. Item 7.
Management’s Discussion and Analysis - Results of Operations - Liquidity and Capital Resources
.
As of
May 31,
2025, we
owned approximately
33.2 thousand acres
of land.
There are
no material
mortgages or
liens on
our
properties.

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3.
LEGAL PROCEEDINGS
Refer to the description of certain legal proceedings under Part II. Item
8. Notes to the Consolidated Financial Statements,
Note
16 - Commitments and Contingencies
, which discussion is incorporated herein by reference.

---

ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART
II.

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM
5.
MARKET
FOR
REGISTRANT’S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER PURCHASES OF EQUITY SECURITIES
We
began fiscal
year 2025
with two
classes of
capital stock,
Common Stock
and Class
A Common
Stock. During
fiscal year
2025, we retired our Class A Common Stock following the conversion of all of
these shares into Common Stock. Our Common
Stock trades on the Nasdaq Global Select Market under the symbol “CALM”.
With the conversion of Class
A Common Stock, we are no longer
a “controlled company” under the rules of The Nasdaq
Stock
Market. For
additional information,
see
Part I. Item 1A. Risk Factors
.
At July 11,
2025, there
were approximately
230 record
holders
of
our
Common
Stock
and
approximately
97,658
beneficial
owners
whose
shares
were
held
by
nominees
or
broker
dealers. For additional information about
our capital structure and the
conversion of our Class A
Common Stock into Common
Stock, see
Note 11 - Equity
in Part II. Item 8. Notes to the Consolidated Financial Statements and Exhibit 4.1 to this report.
Dividends
Cal-Maine has
a variable
dividend policy
adopted by
the Board. Pursuant
to the
policy, Cal-Maine pays
a dividend
to stockholders
of its Common Stock (and, when it was outstanding, 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 generally accepted accounting
principles
(“GAAP”)
in
the
U.S.,
in
an
amount
equal
to
one-third
(1/3)
of
such
quarterly
net
income. Dividends
are
paid
to
stockholders 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
stockholders 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
last quarter
for which
a dividend
was paid. Under
the Company's
Credit
Facility, dividends are restricted to the amount permitted under the Company’s current dividend policy,
and may not be paid if a
default exists or will
arise after giving effect
to the dividend or
if the sum of
cash and cash equivalents of
the Company and its
subsidiaries plus availability under the Credit Facility equals less than $50 million.
Stock Performance Graph
The
Company
utilized
the
(i)
Russell
Total
Return,
and
(ii)
S&P
Composite
Food
Products
Industry
Index
to
benchmark the Company’s
total shareholder return. The
Company is a
member of each
of these indexes
and believes the
other
companies
included
in
these
indexes
provide
products
and
services
similar
to
Cal-Maine
Foods.
The
graph
presents
total
shareholder return and assumes $100 was invested on May 29, 2020 in the stock or index and dividends were reinvested.
May 29, 2020
May 28, 2021
May 27, 2022
June 2, 2023
May 31, 2024
May 30, 2025
Cal-Maine Foods, Inc.
$
100.00
$
78.41
$
108.43
$
117.77
$
158.30
$
264.77
Russell 2000 Total Return
100.00
164.56
138.45
136.40
156.55
158.40
S&P Composite 1500 Food
Products Industry Index
100.00
124.39
133.27
140.76
128.16
118.82
Issuer Purchases of Equity Securities
The following table is a summary of our fourth quarter 2025 shares repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Approximate
Shares Purchased
Dollar Value of
Total Number
Average
as Part of Publicly
Shares that May Yet
of Shares
Price Paid
Announced Plans
Be Purchased Under
Period
Purchased
per Share
or Programs
the Plans or Programs (a)
3/02/25 to 3/29/25
-
$
-
-
$
-
3/30/25 to 4/26/25
551,876
90.60
551,876
450,000,034
4/27/25 to 5/31/25
-
-
-
-
551,876
$
-
551,876
$
450,000,034
(a)
On February 25, 2025,
the Company announced a $500
million share repurchase program.
The share repurchase program
authorizes the Company, in management’s discretion, to repurchase shares of Common Stock from time
to time for an aggregate
purchase price
up to
$500 million
(exclusive of
any fees,
taxes, commissions
or other
expenses related
to such
repurchases),
subject to market conditions and other
factors. The share repurchase program does
not obligate the Company to repurchase any
specific amount of shares, does
not have an expiration date,
and may be suspended, modified
or discontinued at any time
without
prior notice. For
additional information regarding
the shares repurchased
under the program
during the fourth
quarter of 2025,
see
Note 11 - Equity
in Part II. Item 8. Notes to the Consolidated Financial Statements.
Recent Sales of Unregistered Securities
Except as
previously disclosed
relating to
the issuance
of Common
Stock upon
conversion of
the Class
A Common
Stock, no
sales of securities without registration under the Securities Act of 1933 occurred during our fiscal year ended May 31, 2025.
Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
(a)
(b)
(c)
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
Weighted average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a))
Equity compensation plans
approved by stockholders
-
$
-
813,298
Equity compensation plans not
approved by stockholders
-
-
-
Total
-
$
-
813,298
(a)
There were no outstanding options, warrants or rights as of May 31, 2025. There were 212,717 shares of restricted
stock outstanding under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan as of May 31, 2025.
(b)
There were no outstanding options, warrants or rights as of May 31, 2025.
(c)
Reflects shares available for
future issuance as of
May 31, 2025 under
our Amended and Restated 2012
Omnibus
Long-Term Incentive Plan.
For additional
information, see
Note 13 - Stock-Based Compensation
in Part
II. Item
8. Notes
to the
Consolidated Financial
Statements.

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6.
RESERVED

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM
7.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
RISK FACTORS; FORWARD
-LOOKING STATEMENTS
For
information
relating
to
important
risks
and
uncertainties
that
could
materially
adversely
affect
our
business,
securities,
financial
condition,
operating results,
or
cash
flow,
reference is
made
to
the
disclosure set
forth
under
Part I. Item 1A. Risk
Factors
. In
addition, because
the following
discussion includes
numerous forward-looking
statements relating
to our
business,
securities, financial condition, operating
results and cash flow, reference is made
to the disclosure set forth
under
Part I. Item 1A.
Risk Factors
and
to
the
information
set
forth
in
the
section
of
Part
I
immediately preceding
Item
above
under
the
caption
“
Forward-Looking Statements
.”
COMPANY OVERVIEW
Cal-Maine Foods, Inc. is primarily
engaged in the production, grading,
packaging, marketing and distribution
of fresh shell eggs,
including
conventional,
cage-free,
organic,
brown,
free-range,
pasture-raised
and
nutritionally-enhanced eggs,
as
well
as
egg
products and a variety of prepared
foods. Our fiscal year end is
the Saturday closest to May 31. The fiscal
years 2025 and 2024
included 52 weeks and fiscal year 2023 included 53 weeks. The
Company, which is headquartered in
Ridgeland, Mississippi, is
the
largest
producer
and
distributor
of
fresh
shell
eggs
in
the
United
States
(“U.S”).
In
fiscal
2025,
we
sold
approximately
1.3 billion dozen shell
eggs, which we
believe represented approximately
24% of domestic
shell egg consumption.
Our total flock
as of May 31, 2025 of
approximately 48.3 million layers and 11.5
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 throughout the majority of
the U.S.
The Company has one operating and one
reportable segment, which is the production, packaging, marketing and
distribution of
shell eggs, egg products
and prepared foods. Many of
our customers rely on
us to provide most
of their shell egg
needs, including
specialty and
conventional eggs. We
have recently
expanded our
prepared foods
product offerings,
as described
in this
report.
For further description of our business, refer to
Part I. Item I. Business
.
ACQUISITIONS
During the
first quarter
of fiscal
2025, we
acquired substantially
all the
commercial shell
egg production,
processing and
egg
products breaking assets of ISE America, Inc. and certain of its
affiliates (“ISE”). The assets acquired included commercial shell
egg
production
and
processing
facilities
with
a
capacity
at
the
time
of
acquisition of
approximately 4.7
million
laying
hens,
including 1.0
million cage-free,
and 1.2
million pullets,
feed mills,
approximately 4,000
acres of
land, inventories
and an
egg
products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and
Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. These production assets
are our first in Maryland, New Jersey and Delaware. We believe this acquisition provides us with an opportunity to significantly
enhance our market reach in the Northeast and Mid-Atlantic states.
During the second
quarter of fiscal
2025, we completed
a strategic investment
with Crepini LLC,
establishing a new
egg products
and prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout
the U.S. and Mexico featuring egg wraps,
protein pancakes, crepes,
and wrap-ups, which
are sold online
and in over
3,500 retail stores.
The new entity, located in
Hopewell
Junction, New
York,
operates as
Crepini Foods
LLC (“Crepini”).
We
capitalized Crepini with
approximately $6.75
million in
cash
to
purchase
additional
equipment
and
other
assets
and
fund
working
capital
in
exchange
for
a
51%
interest
in
the
new
venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
In fiscal 2022,
we announced a
strategic investment in
a new entity, MeadowCreek Food,
LLC (“MeadowCreek”), which
became
a majority-owned subsidiary of
the Company.
During the fourth quarter
of fiscal 2023,
MeadowCreek began operations with
a
focus on
being a
leading provider
of hard-cooked
eggs. During
the second
quarter of
fiscal 2025,
we acquired
the remaining
ownership interests in MeadowCreek and it became a wholly-owned subsidiary of the Company.
During the
third quarter
of fiscal
2025, we
acquired certain
assets of
Deal-Rite Foods,
Inc. and
certain of
its affiliates
(“Deal-
Rite”). The assets acquired included two feed mills, storage facilities, usable
grain, vehicles, related equipment and a retail feed
sales business located
in North
Carolina. The acquired
assets will produce
and deliver feed
to our nearby
shell egg production
operations.
In 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. Fassio
owned and operated
commercial shell egg
production and processing
facilities
with a
capacity at
the time
of acquisition
of approximately
1.2 million
laying hens,
primarily cage-free,
a feed
mill, pullets,
a
fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. This acquisition provided
us with an opportunity to expand our market presence in Utah and the western U.S., particularly for cage-free eggs.
In the fourth quarter of fiscal 2024, we acquired a broiler processing
plant, hatchery and feed mill in Dexter, Missouri, which we
repurposed for use in shell egg production.
For additional discussion of our
acquisitions during fiscal 2024 and 2025,
see
Note 2 - Acquisitions
in Part II. Item 8.
Notes to
Consolidated Financial Statements.
In addition, subsequent to our fiscal 2025, the Company acquired Echo Lake Foods, LLC (formerly Echo Lake Foods, Inc.) and
certain related companies (collectively “Echo Lake Foods”). Echo Lake
Foods is based in Burlington, Wisconsin
and produces,
packages,
markets
and
distributes
prepared
foods,
including
waffles,
pancakes,
scrambled
eggs,
frozen
cooked
omelets,
egg
patties, toast and diced
eggs. The purchase price
was approximately $258 million
and was funded with
available cash on hand.
Refer to
Part II. Item 8. Notes to the Consolidated Financial Statements, Note 17 - Subsequent Events
.
HPAI
Outbreaks of HPAI
have continued
to occur
in U.S. poultry
flocks. 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
time
period.
Thereafter,
there were
no HPAI
cases affecting
commercial layers
until November
2023. In
calendar year
2024, 40.2
million
commercial
layer
hens
and
pullets
were
depopulated
due
to
HPAI,
and
in
calendar
year
2025,
an
additional
39.0
million
commercial layer hens
and pullets
were depopulated
through May
due to
HPAI.
The United
States Department of
Agriculture
(the “USDA”) reported that the
estimated table-egg layer flock as of
June 1, 2025 was approximately
285.5 million, compared to
304.3 million, 321.6 million, 311.5 million and 330.5 million as of June 1, 2024, 2023, 2022 and 2021, respectively.
HPAI is currently widespread in the wild bird population
worldwide. We remain dedicated to robust biosecurity programs
across
our locations and have invested more than $75 million in biosecurity
technology, equipment, procedures, and training across our
locations since the
last major HPAI
outbreak in 2015.
However, no
farm is immune
from HPAI.
For example, during
the third
and fourth quarters of fiscal 2024, we experienced
HPAI
outbreaks within our facilities located in Kansas and
Texas, which are
now fully operational. According
to the U.S. Centers
for Disease Control and
Prevention (“CDC”), as of
June 5, 2025, there
were
outbreaks in
1,073 herds
of dairy
cows in
17 states,
and 70
human cases
in the
U.S., almost
entirely among
poultry and
dairy
workers. In
2024, one
of the
human cases
resulted in
severe illness
after the
patient was
exposed to
sick and
dead birds
in backyard
flocks. The patient, who
was reported to have
underlying health conditions, died in
January 2025. There have been
no reported
cases
of
person-to-person
spread.
According
to
the
CDC,
the
human
health
risk
to
the
U.S.
public
from
the
HPAI
virus
is
considered to be low. The rate of depopulations slowed during our fourth quarter fiscal 2025 compared to our
third quarter fiscal
2025 and there
were no reported
significant depopulations in
June and through
July 22, 2025.
However, the
extent of possible
future outbreaks among U.S.
commercial egg layer
flocks, with heightened risk
during migration seasons, cannot
be predicted.
According to the USDA, HPAI
cannot be transmitted through safely handled and properly cooked eggs. There is no known risk
related to HPAI associated with eggs that are currently in the market and no eggs
have been recalled. For additional information,
refer to
Part I. Item 1A. Risk Factors
.
We
have taken proactive
steps to help
mitigate the tight
egg supply situation
across the country.
Our efforts
resulted in a
18%
increase in
the average
number of
layer hens
(reflecting re-start
of prior
year facility
outages and
both organic
and inorganic
expansion) and a 56% increase
in total chicks hatched during
the fourth quarter of
fiscal 2025 compared to
the prior-year quarter.
Our breeder flocks increased 48% as of the end of
fiscal 2025 compared to the end of fiscal 2024. We
also continue to invest in
expansion projects
within our
current operations
that are
expected to
add approximately
1.1 million
cage-free layer
hens and
250,000 pullets by
the end of
calendar 2025, and
added production support
through the integration
of recently acquired
assets,
including the processing facilities from ISE and feed mills from Deal-Rite.
Executive Overview of Results - Fiscal Years Ended May 31, 2025, June 1, 2024 and June 3, 2023
Fiscal Year Ended
May 31, 2025
June 1, 2024
June 3, 2023
Net sales (in thousands)
$
4,261,885
$
2,326,443
$
3,146,217
Gross profit (in thousands)
$
1,850,885
$
541,571
$
1,196,457
Net income attributable to Cal-Maine Foods, Inc.
$
1,220,048
$
277,888
$
758,024
Net income per share attributable to Cal-Maine Foods, Inc.
Basic
$
25.04
$
5.70
$
15.58
Diluted
$
24.95
$
5.69
$
15.52
Net average shell egg price
(a)
$
3.134
$
1.932
$
2.622
Average UB Southeast Region - Shell Eggs - White Large
$
4.474
$
2.049
$
3.115
Feed costs per dozen produced
$
0.490
$
0.550
$
0.676
(a) The net average shell
egg selling price is the
blended price for all
sizes and grades of shell
eggs, including graded and
non-graded shell egg sales, breaking stock and undergrades.
For fiscal 2024,
net sales decreased
to $2.3 billion,
gross profit to
$541.6 million and
net income to
$277.9 million. The
decreases
compared to fiscal 2023
were primarily a result
of a decrease in
average egg selling prices.
The average UB southeastern
large
index price for fiscal 2024
decreased 34% compared to fiscal
2023. The decrease is
due in large part
to the recovery of
the egg
supply
following
the
HPAI
outbreaks
during
most
of
calendar
year
2022.
However,
the
resurgence
of
HPAI
beginning
in
November 2023 resulted
in the UB
southeastern large index
price being 9.1%
higher in the
fourth quarter of
fiscal 2024 compared
to the fourth quarter of fiscal 2023.
Our dozens sold for fiscal 2024
remained relatively flat compared to fiscal
2023. We had an increase in production capacity with
the acquisition
of the
commercial shell
egg production
and processing
business of
Fassio Egg
Farms, Inc.
during fiscal
2024,
which was offset by the temporary decrease in production due to the HPAI outbreaks at our facilities.
For fiscal 2025, we recognized net sales of $4.3 billion and net income of $1.2 billion. We recorded a gross profit of $1.9 billion
compared to $541.6
million for
fiscal 2024, primarily
driven by an
increase in the
net average selling
price of shell
eggs, primarily
conventional egg prices, as well
as an increase in total
dozens sold. Our results were
also positively impacted by lower
feed costs
and our
recent acquisitions
discussed above,
and were
partially offset
by an
increase in
the volume
and price
of outside
egg
purchases.
Our net average selling price
per dozen for fiscal 2025
was $3.134 compared to $1.932
in fiscal 2024. Conventional egg
prices
per dozen were
$3.490 compared to
$1.730 for the
prior year, and specialty
egg prices per
dozen were $2.519
compared to $2.309
for the
prior year.
Egg prices
in fiscal
2025 were
elevated compared
to fiscal
2024, primarily
due to
the resurgence
of HPAI
outbreaks, which decreased supply during
the higher seasonal demand
cycle. According to the
USDA, the size of
the layer hen
flock was 285.5 million hens
at June 1, 2025, compared
to the five-year average of
313.1 million hens. The daily average
price
for the Urner Barry southeast large index for fiscal 2025 increased 118.3%
from fiscal 2024.
Our dozens sold
for fiscal 2025
increased 11.8%
compared to fiscal
2024. We
had an
increase in production
capacity with the
acquisitions of
the commercial
shell egg
production and
processing business
of ISE
during the
first quarter
of fiscal
2025. In
addition, sales increased in part due to increased volumes of outside egg purchases to provide shell
eggs to our customers during
the peak of HPAI outbreaks during the second and third quarters of fiscal 2025.
Our feed costs per dozen
produced decreased to $0.490 in
fiscal 2025, compared to $0.550
in fiscal 2024. For fiscal
year 2025,
the average Chicago Board
of Trade
(“CBOT”) daily market price
was $4.38 per bushel
for corn and $311
per ton for soybean
meal, representing decreases of 8.1% and 20.1%, respectively,
compared to the daily average CBOT prices for
fiscal 2024. Our
egg purchases and other cost of sales increased $439.4 million compared to fiscal 2024,
primarily due to higher shell egg prices
as well
as an
increase in
dozens purchased
to supply
eggs for
our customers,
including those
acquired in
our ISE
acquisition,
during the higher seasonal demand cycle while the nation experienced lower supply due to HPAI.
RESULTS OF OPERATIONS
The following table sets
forth, for the fiscal
years indicated, certain items
from our Consolidated Statements
of Income expressed
as a percentage of net sales.
Fiscal Year Ended
May 31, 2025
June 1, 2024
Net sales
100.0
%
100.0
%
Cost of sales
56.6
%
76.7
%
Gross profit
43.4
%
23.3
%
Selling, general and administrative
7.4
%
10.9
%
Gain on involuntary conversions
-
%
(1.0)
%
Operating income
36.0
%
13.4
%
Total other income
1.6
%
2.0
%
Income before income taxes
37.6
%
15.4
%
Income tax expense
9.0
%
3.6
%
Net income
28.6
%
11.8
%
Less:
Net loss attributable to noncontrolling interest
-
%
(0.1)
%
Net income attributable to Cal-Maine Foods, Inc.
28.6
%
11.9
%
Fiscal Year
Ended May 31, 2025 Compared to Fiscal Year Ended June 1, 2024
NET SALES
Total net sales for fiscal 2025 were $4.3 billion compared to $2.3 billion for the prior fiscal year.
Shell egg sales represented
94.3% and 95.3% of
total net sales in
fiscal 2025 and 2024,
respectively. The
Company’s shell
egg
offerings, for both branded and
private-label products, include specialty
and conventional shell eggs.
Specialty shell eggs include
cage-free,
organic,
brown,
free-range,
pasture-raised
and
nutritionally
enhanced
shell
eggs.
Conventional
shell
eggs
sales
represent all
other shell
egg sales
not sold
as specialty
shell eggs.
The Company’s
egg products
and prepared
foods offerings
include liquid and
frozen egg products
and prepared foods
such as hard-cooked
eggs, egg wraps,
protein pancakes, crepes
and
wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.
The table below presents net sales in key categories (in thousands, except percentage data):
Fiscal Year Ended
May 31,
June 1, 2024
% Change
Shell Eggs
$
4,019,910
$
2,217,408
81.3
%
Egg products and prepared foods
198,833
89,009
123.4
Other
43,142
20,026
115.4
Total net sales
$
4,261,885
$
2,326,443
83.2
%
The table below presents an analysis of our shell egg sales (in thousands, except percentage data):
May 31, 2025
June 1, 2024
Shell egg sales
Conventional
$
2,835,423
70.5
%
$
1,291,743
58.3
%
Specialty
1,184,487
29.5
%
925,665
41.7
%
Total shell egg sales
4,019,910
100.0
%
2,217,408
100.0
%
Dozens sold
Conventional
812,396
63.3
%
746,687
65.1
%
Specialty
470,215
36.7
%
400,946
34.9
%
Total dozens sold
1,282,611
100.0
%
1,147,633
100.0
%
Net average selling price per dozen
Conventional
$
3.490
$
1.730
Specialty
$
2.519
$
2.309
All shell eggs
$
3.134
$
1.932
Shell egg sales
-
For
fiscal
2025,
shell
egg
sales
increased
$1.8
billion
compared
to
fiscal
2024,
primarily
due
to
the
increase
in
net
average selling prices for conventional eggs, and to a lesser extent the increase in dozens sold.
-
For fiscal 2025, conventional egg sales increased $1.5 billion, or 119.5%, compared to fiscal 2024, primarily due to the
increase
in
conventional
egg
prices.
Changes in
price resulted
in
a $1.4
billion
increase in
net
sales and
changes
in
volume resulted
in a
$114
million increase
in net
sales. Conventional
egg prices
increased significantly
during fiscal
2025 due to a resurgence of HPAI outbreaks, which decreased the supply.
-
Specialty egg
sales increased
$258.8 million,
or 28.0%,
for fiscal
2025 compared
to fiscal
2024, primarily
due to a
17.3%
increase in
the volume
of specialty
dozens sold,
and to
a lesser
extent a
9.1% increase
in price.
Changes in
volume
resulted in a $159.9 million increase in net sales and changes in price resulted in a $98.7 million increase in net sales.
-
Our dozens sold
for fiscal 2025
increased 11.8%
compared to fiscal
2024. We
had an
increase in production
capacity
with the acquisition
of the commercial
shell egg production
and processing business
of ISE during
the first quarter
of
fiscal 2025 as well as the resumption of full operations at our facilities in Chase, KS, and Farwell, TX, which were shut
down in the third and fourth quarters of fiscal 2024 due to HPAI outbreaks.
Egg products and prepared foods sales
-
Egg products and prepared foods sales increased $109.8 million, or 123.4% compared to fiscal 2024, primarily due to a
138.7% increase in sales of liquid eggs, which had a $54.9
million positive impact on net sales, and a 41.4% increase in
volume of liquid egg products sold.
The increase in volume, which had a
$23.3 million positive impact on net
sales, is
primarily related to the acquisition of ISE, which included a breaking facility.
-
Our egg products net average selling price increased in fiscal 2025, compared to fiscal 2024 as the supply of shell eggs
used to produce egg products decreased due to the resurgence of HPAI outbreaks.
-
Sales from hard-cooked eggs increased
$22.7 million or 137.3% to 39.1
million in fiscal 2025, compared to
fiscal 2024,
as more processing capabilities came online throughout fiscal 2025 from our investments in MeadowCreek.
Other
-
Other sales increased compared to
the prior year period primarily
due to higher feed sales
related to our ISE acquisition.
COST OF SALES
Cost of
sales consists
of costs
directly related
to producing,
processing and
packing shell
eggs, purchases
of shell
eggs from
outside sources, processing and packing of egg products and other non-egg costs. Farm production costs are those costs
incurred
at the egg production facility, including feed, facility
(including labor), hen amortization and
other related farm production costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Fiscal Year Ended
May 31, 2025
June 1, 2024
% Change
Cost of Sales
Farm production
$
1,035,638
$
987,861
4.8
%
Processing, packaging, and warehouse
396,116
335,949
17.9
Egg purchases and other cost of sales
819,619
380,200
115.6
Egg products and prepared foods
159,627
80,862
97.4
Total cost of sales
$
2,411,000
$
1,784,872
35.1
%
Farm production costs (per dozen produced)
Feed
$
0.490
$
0.550
(10.9)
%
Other
$
0.428
$
0.433
(1.2)
%
Total farm production cost
$
0.918
$
0.983
(6.6)
%
Outside egg purchases (average cost per dozen)
$
3.67
$
2.16
69.9
%
Dozens produced
1,135,955
1,018,835
11.5
%
Percent produced to sold
88.6%
88.8%
(0.2)
%
Farm Production
-
Feed costs
per dozen
produced decreased
10.9% in
fiscal 2025
compared to
fiscal 2024,
primarily due
to lower
feed
ingredient prices. The decrease in feed cost per dozen
resulted in a decrease in cost of sales of
$68.2 million compared
to the prior year.
-
For fiscal 2025, the average daily CBOT market price was $4.38 per bushel for corn and $311 per ton of soybean meal,
representing decreases of 8.1% and 20.1%, respectively, as compared to the average daily CBOT prices for fiscal 2024.
-
Other farm production costs per dozen produced decreased primarily due to lower flock amortization. Feed costs
reached their peak in the second quarter of fiscal 2023 and have since trended downward. Lower costs resulted in
lower capitalized values of the flocks during the grow out phase, which reduced amortization cost over time.
Current indications for corn
and soybean project
a neutral stocks-to-use ratio
in the near term
compared with the levels
prevailing
today; however,
as long
as outside
factors remain
uncertain (including
weather patterns
and global
supply chain
disruptions),
volatility could remain.
Processing, packaging, and warehouse
-
Processing, packaging, and
warehouse costs increased
primarily due to
an 11.7%
increase in the
volume of processed
dozens as well as an increase in costs of packaging materials.
Egg purchases and other cost of sales
-
Costs in
this category
increased primarily due
to higher
shell egg
prices as
the average
cost per
dozen of
outside egg
purchases increased 69.9%
compared to fiscal
2024, as well
as due to an
increase of 27.6%
in dozens purchased.
Dozens
purchased increased due
to purchasing more
eggs to supply
our customers while
the nation experienced
lower supply
due to HPAI.
GROSS PROFIT
Gross
profit,
as
a
percentage
of
net
sales,
was
43.4%
for
fiscal
2025,
compared
to
23.3%
for
fiscal
2024.
The
increase
was
primarily due to higher net average selling
prices, particularly for conventional eggs, and higher volumes,
as well as lower feed
ingredient prices, partially offset by the increase in volume and price of outside egg purchases.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative (“SGA”)
expenses include costs of delivery, marketing, and
other general and administrative
expenses. Delivery expense includes contract trucking expense
and all costs to maintain and operate
our fleet of trucks to deliver
products to
customers including
the related
payroll expenses.
Marketing expense
includes franchise
fees that
are submitted
to
Eggland’s Best, Inc. (“EB”) to
support the EB
brand, brokerage and
commission fees, and
other general marketing
expenses such
as
payroll expenses
for our
in-house sales
team. Other
general
and
administrative expenses
include corporate
payroll related
expenses
and
other
general
corporate
overhead
costs.
The
following
table
presents
an
analysis
of
our
SGA
expenses
(in
thousands):
Fiscal Year Ended
May 31, 2025
June 1, 2024
$ Change
% Change
Delivery expense
$
93,460
$
72,742
$
20,718
28.5
%
Marketing expense
53,861
52,285
1,576
3.0
%
Litigation loss contingency accrual
-
19,648
(19,648)
N.M.
%
Other general and administrative expenses
167,128
107,950
59,178
54.8
%
Total
$
314,449
$
252,625
$
61,824
24.5
%
N.M. - Not Meaningful
Delivery expense
-
The increased delivery expense is primarily due to an increase
in our sales volumes of egg and egg products
compared
to fiscal 2024.
Contract trucking
expenses increased
in connection
with our
acquisition of
ISE and our
facilities in
Chase,
KS and Farwell, TX being fully operational in fiscal year 2025.
Marketing expense
-
Marketing expense increased
slightly in fiscal
2025 compared to
fiscal 2024 primarily
due to an
increase in franchise
fees as specialty sales increased.
Litigation loss contingency accrual
-
In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in
pending anti-trust
litigation. See
further discussion
in
Note 16 - Commitments and Contingencies
of Part
II. Item
8.
Notes to Consolidated Financial Statements.
Other general and administrative expenses
-
The increase
in other
general and
administrative expense
is primarily
due both
to an
increase in
the accrual
for anticipated
employee bonuses
and to
a $15
million increased
adjustment to
the fair
value of
contingent consideration
associated
with the
Fassio acquisition.
See further
discussion in
Note 4 - Fair Value Measurements
of Part
II. Item
8. Notes
to
Consolidated Financial Statements.
(GAIN) LOSS ON INVOLUNTARY
CONVERSIONS
For fiscal 2025
and 2024, we
recorded a loss
of $156 thousand
and gain of
$23.5 million, respectively. The gain
recorded in fiscal
2024 was due
to recoveries
under indemnity
and insurance
programs that exceeded
the amortized
book value
of the covered
assets
and our direct costs, primarily related to the HPAI outbreaks
at our Kansas and Texas facilities.
OPERATING
INCOME
As a result of the above, our operating income was $1.5 billion for fiscal 2025, compared to $312.5 million for fiscal 2024.
OTHER INCOME (EXPENSE)
Total
other
income
(expense)
consists
of
items
not
directly
charged
to,
or
related
to, operations
such
as
interest
income
and
expense, equity in
income or loss
of unconsolidated entities,
and patronage dividends, among
other items. Patronage dividends
are paid to us from our membership in the EB cooperative.
The Company recorded interest income of $48.7 million
in fiscal 2025, compared to $32.3 million in
fiscal 2024, primarily due
to significantly higher
cash and cash
equivalents and investment
securities available-for-sale balances
and yields. We
recorded
interest expense of $612
thousand and $549 thousand
in fiscal 2025 and
2024, respectively, primarily related to commitment
fees
on our Credit Facility described below.
INCOME TAXES
For the fiscal year ended
May 31, 2025, our pre-tax
income was $1.6 billion, compared
to $360.0 million for fiscal
2024. Income
tax expense
of $384.9
million was
recorded for
fiscal 2025
with an
effective tax
rate of
24.0%.
For fiscal
2024, income
tax
expense was $83.7 million with an effective tax rate of 23.2%.
Items causing
our effective
tax rate
to differ
from the
federal statutory
income tax
rate of
21% are
state income
taxes, certain
federal tax credits
and certain items included
in income or
loss for financial reporting
purposes that are
not included in taxable
income or loss
for income tax
purposes, including tax exempt
interest income, certain nondeductible
expenses, and net
income
or loss attributable to noncontrolling interest.
NET LOSS ATTRIBUTABLE
TO NONCONTROLLING INTEREST
Net loss attributable
to noncontrolling interest
was $1.8 million
for fiscal 2025
compared to a
$1.6 million net
loss for fiscal
2024.
NET INCOME ATTRIBUTABLE
TO CAL-MAINE FOODS, INC.
As a result
of the above,
net income attributable
to Cal-Maine Foods,
Inc. for fiscal
2025 was $1.2
billion, or $25.04
per basic
and $24.95 per diluted share, compared to $277.9 million, or $5.70 per basic and $5.69 per diluted share for fiscal 2024.
Fiscal Year
Ended June 1, 2024 Compared to Fiscal Year Ended June 3, 2023
The discussion of our results of operations for the fiscal year ended June 1, 2024 compared to the fiscal year ended June 3, 2023
can be found in Part II.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations in
the
Company’s fiscal 2024 Annual Report on Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
We aim to maintain
a strong balance
sheet and liquidity, particularly
given the cyclical
nature of our
business. We believe a
strong
balance sheet supports our growth opportunities and stockholder returns. Our priorities for the use of cash in
recent periods have
included the payment of
dividends pursuant to our
variable dividend policy, inorganic growth through acquisitions
of businesses,
organic
growth
including
construction
and
conversion
of
cage-free
facilities
and
investment
in
value-added
products,
and
maintenance capital expenditures.
Working Capital and Current Ratio
Our working
capital at
May 31,
2025 was
$1.7 billion, compared
to $1.0
billion at
June 1,
2024. The
calculation of
working
capital is defined as
current assets less current
liabilities. Our current ratio was
6.4 at May 31,
2025 compared to 5.5
at June 1,
2024. The current ratio is calculated by dividing
current assets by current liabilities. The increase
in our current ratio is primarily
due to the increase in total current assets, which increased by $726.3 million to $2.0 billion at May 31, 2025, due to increases in
cash
and
cash
equivalents
and
investment
securities
available-for-sale.
Due
to
seasonal
factors
described
in
Part I. Item I.
Business - Seasonality
, we generally
expect our
need for working
capital to be
highest in
the fourth and
first fiscal
quarters ending
in May/June and August/September, respectively.
Cash Flows from Operating Activities
Net cash
provided by
operating activities
was $1.2
billion for
fiscal 2025,
compared to
$451.4 million for
fiscal 2024.
The increase
in
cash
flow
from
operating
activities
resulted
primarily
from
higher
net
average
selling
prices
per
dozen,
particularly
for
conventional eggs, increased volume of sales and
a decrease in feed ingredient costs compared
to the prior year,
partially offset
by the increase in volume and price of outside egg purchases.
Cash Flows from Investing Activities
For fiscal 2025, $575.5 million was
used in investing activities, primarily due
to purchases of investment securities,
purchases of
property, plant and equipment
and the acquisition
of assets of
ISE compared to
$412.6 million used
in investing activities
in fiscal
2024, primarily due to purchases
of investment securities, purchases of
property, plant and equipment and the Fassio acquisition.
Purchases of investment
securities were $1.2
billion in fiscal
2025 compared to
$573.6 million in
fiscal 2024. Sales
and maturities
of investment securities were
$907.6 million in fiscal
2025, compared to $358.9 million
for fiscal 2024. The increase
in sales and
maturities of investment securities is primarily due to the maturities of
short-term investments during fiscal 2025. Cash paid for
business acquisitions was $116.2 million in
fiscal 2025, primarily related to
the ISE acquisition, and
$53.7 million in fiscal 2024,
related to
the Fassio
acquisition. Purchases
of property,
plant and
equipment were
$161.3 million
and $147.1
million in
fiscal
2025 and 2024, respectively, primarily reflecting progress on our construction projects.
Cash Flows from Financing Activities
We
paid
dividends
totaling
$330.3
million
and
$91.9
million
in
fiscal
and
2024,
respectively.
During
fiscal
2025,
we
repurchased $54.0 million
in shares of
Common Stock, primarily
under our share
repurchase program. See
“Share Repurchase
Program,” below.
Increase (decrease) in Cash and Cash Equivalents
As of May 31, 2025, cash increased $261.5 million since June 1, 2024, compared to a $54.9 million decrease
during fiscal 2024.
The increase is primarily due to the increase in net sales during fiscal 2025.
Acquisition of Echo Lake Foods
Subsequent to our fiscal 2025 year-end, we acquired Echo Lake Foods. The purchase price was approximately $258 million and
was funded with available cash on hand. For additional information, refer to Part II. Item 8. Notes to the Consolidated Financial
Statements,
Note 17 - Subsequent Events
.
Credit Facility
On November 15,
2021, we entered
into an Amended
and Restated Credit
Agreement (as amended,
the “Credit Agreement”)
with
a five-year term. The Credit Agreement provides
for a senior secured revolving credit facility
(the “Credit Facility”), in an initial
aggregate principal amount of up to $250 million. As of May 31, 2025, no amounts were borrowed under the Credit Facility. As
of May 31, 2025, we
had $4.7 million in outstanding
standby letters of credit, which
were issued under our Credit
Facility for the
benefit of
certain insurance
companies. On
March 25,
2025, we
entered into
the Second
Amendment to
the Credit
Facility to
amend the definition
of Change of
Control to exclude
the conversion of
all outstanding shares
of Class A
Common Stock into
Common Stock.
Refer to
Part II.
Item 8.
Notes to
the Financial
Statements,
Note 10 - Credit Facility
for further
information
regarding our long-term debt.
Share Repurchase Program
On
February
25,
2025,
the
Board
approved
a
new
$500
million
share
repurchase
program.
The
share
repurchase
program
authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for
an aggregate purchase
price up
to $500
million (exclusive
of any
fees, taxes,
commissions or
other expenses
related to
such repurchases),
subject to
market
conditions
and
other
factors.
The
actual
timing,
number
and
value
of
shares
repurchased
under
the
program
will
be
determined by
management in
its discretion
and will
depend on
a number
of factors,
including, but
not limited
to, the
market
price of the Common Stock and general market and economic conditions.
The Company expects to strategically and opportunistically repurchase shares from time to time through solicited or unsolicited
transactions in the
open market, in
privately negotiated transactions
or by other
means in accordance
with securities laws.
The
Company expects that share repurchases under the program will be
funded from one or a combination of existing cash balances
and future free
cash flow.
The share repurchase
program does not
obligate the Company
to repurchase any
specific amount of
shares, does
not have an
expiration date, and
may be suspended,
modified or
discontinued at
any time without
prior notice. During
fiscal
2025,
the
Company
repurchased
approximately
$50
million
in
shares
under
the
program.
See
Part II. Item 5. Issuer
Purchases of Equity Securities
and Part II. Item 8. Notes to the Financial Statements,
Note 11 - Equity
for further information.
Dividends
In
accordance
with
our
variable
dividend
policy,
we
will
pay
a
cash
dividend
totaling
approximately
$114.2
million,
or
approximately $2.362 per share, to holders
of our Common Stock with respect
to our fourth quarter of fiscal
2025. The amount
paid per
share will vary
based on
the number of
outstanding shares on
the record date.
The dividend is
payable on August
19,
2025 to holders of record on August 4, 2025.
Material Cash Requirements
Material cash
requirements for operating
activities primarily consist
of feed
ingredients, processing, packaging
and warehouse
costs, employee related costs, and
other general operating expenses, which
we expect to be paid
from our cash from operations
and cash and investment
securities on hand for
at least the next
12 months. While volatile
egg prices and feed
ingredient costs,
among
other
things, make
long-term predictions
difficult,
we
have
substantial liquid
assets and
availability under
our
Credit
Facility to fund future operating requirements.
Our material cash requirements for capital expenditures consist primarily of our projects to increase our cage-free production
capacity. We
continue to monitor the increasing demand for cage-free eggs and to engage with our customers in efforts to help
them achieve their announced timelines for cage-free egg sales. The following table presents material construction
projects
approved as of May 31, 2025 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of
May 31, 2025
Remaining
Projected Cost
Feed Mill
Fiscal 2026
$
9,800
$
4,936
$
4,864
Egg Products Expansion
Fiscal 2026
19,576
10,958
8,618
Cage-Free Layer & Pullet Houses
Fiscal 2026
219,004
179,281
39,723
$
248,380
$
195,175
$
53,205
As of May
31, 2025, we
had $75.5 million
of purchase obligations
outstanding, all of
which is due
within one year.
Purchase
obligations primarily
include contractual
agreements to
purchase feed ingredients
and commitments
to make
capital expenditures.
Timing
of payments
and actual
amounts paid
may be
different depending
on the
timing of
the receipt
of goods
or services
or
changes to agreed-upon amounts for some obligations.
We
believe our
current cash
balances, investments,
projected cash
flows from
operations, and
available borrowings
under our
Credit Facility will
be sufficient
to fund our
capital needs for
at least the
next 12 months
and to fund
our capital commitments
currently in place thereafter.
IMPACT OF RECENTLY
ISSUED ACCOUNTING STANDARDS
For information on changes in accounting principles and new accounting principles, see “
New Accounting Pronouncements and
Policies
” in Part II. Item 8. Notes to Consolidated Financial Statements,
Note 1 - Summary of Significant Accounting Policies
.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements
in accordance with U.S. GAAP
requires management to make estimates
and assumptions
that affect the
reported amounts
of assets
and liabilities
at the
date of
the financial
statements and
the reported
amounts of
revenues
and expenses
during the
reporting period. Actual
results could
differ materially
from these
estimates. Critical
accounting estimates
are those estimates made in accordance with GAAP that involve a significant level
of estimation uncertainty and have had or are
reasonably likely to have a
material impact on the financial condition
or results of operations. Our
critical accounting estimates
are described below.
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.
The
excess
of
the
purchase
price
over
fair
values
of
identifiable
assets
and
liabilities
is
recorded
as
goodwill.
We
typically use
the income
method approach
for intangible
assets acquired
in a
business combination.
Significant judgment
exists in valuing certain
intangible assets and the
most significant assumptions
requiring judgment involve estimating
the amount
and timing of future
cash flows, growth rates,
discount rates selected to
measure the risks inherent
in the future cash
flows and
the asset’s expected useful lives.
The
fair
values of
identifiable assets
and
liabilities are
generally
determined internally
and
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 significant
judgment is required
as management determines
the fair market
value for those assets.
Due
to
inherent
industry
uncertainties
including
volatile
egg
prices
and
feed
costs,
unanticipated
market
changes, events,
or
circumstances may occur that could affect the estimates and assumptions used, which could result in subsequent impairments.
INVENTORIES
Inventories of eggs, feed, supplies and flocks
are valued principally at the lower of
cost or net realizable value. If market
prices
for eggs
and feed
grains move
substantially lower,
we record
adjustments to
write down
the carrying
values of
eggs and
feed
inventories to fair market value. The cost associated
with flock inventories, consisting principally of chick
purchases or hatching
costs,
feed,
labor,
contractor
payments
and
overhead
costs,
are
accumulated
during
the
hatching
and
growing
periods
of
approximately
weeks. Capitalized
flock
costs
are
then
amortized
over
the
flock’s
productive
life,
generally
one
to
two
years. Judgment exists in determining the flock’s
productive life including factors such as laying
rate and egg size, molt cycles,
and customer demand. Furthermore, other factors such as hen type
or weather conditions could affect the productive life.
These
factors could make
our estimates of
productive life differ
materially from actual
results. Flock mortality
is charged to cost
of sales
as
incurred. High
mortality
from
disease
or
extreme
temperatures
will
result
in
abnormal
write-downs
to
flock
inventories. Management
continually
monitors
each
flock
and
attempts
to
take
appropriate
actions
to
minimize
the
risk
of
mortality loss.
GOODWILL
As a result of acquiring businesses,
the Company had $46.8 million of goodwill
as of May 31, 2025, representing
1.5% of total
assets
and
1.8%
of
stockholders’
equity.
Goodwill
is
evaluated
for
impairment
annually
(or
more
frequently
if
impairment
indicators arise) by first
performing a qualitative assessment
to determine whether a
quantitative goodwill 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.
During
our
annual
impairment
test,
which
was
the
first
day
of
the
fourth
quarter,
we
determined
that
goodwill
passed
the
qualitative assessment and therefore no quantitative analysis of goodwill impairment was necessary in fiscal 2025.
The
Company
has
determined
that
all
of
our
locations
share
similar
economic
characteristics
and
support
each
other
in
the
production of eggs and customer support.
Therefore, we aggregate all our locations
as a single reporting unit for
testing goodwill
for
impairment.
When
the
Company
acquires
a
new
location,
we
determine
whether
it
should
be
integrated
into
our
single
reporting unit
or treated
as a separate
reporting unit.
Historically, we have concluded
that acquired
operations should
be integrated
into our single reporting unit due to the
operational changes, redistribution of customers, and significant
changes in management
that occur when we acquire businesses, which result in the acquired operations sharing similar economic characteristics with the
rest of our locations. Once goodwill associated with acquired operations becomes
part of goodwill of our single reporting unit, it
no longer represents the particular acquired operations that gave rise to the goodwill. We
may conclude that a business acquired
in the future should be treated as a separate reporting unit, in which case it would be tested separately for goodwill impairment.
Judgment exists in management’s evaluation of the qualitative factors which include macroeconomic conditions, the current egg
industry environment, cost
inputs such as
feed ingredients and
overall financial performance.
Furthermore, judgment exists
in the
evaluation of
the threshold
of whether
it is
more likely
than not
that the
fair value
of a
reporting unit
is less
than its
carrying
amount. Uncertainty exists due to uncontrollable events that could occur that could negatively affect our operating conditions.
REVENUE RECOGNITION
Revenue
recognition
is
completed upon
satisfaction of
the
performance obligation
which
generally
occurs
upon
shipment
or
delivery to a customer based on terms of the sale.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
delivery of
the
products. The Company periodically
offers sales incentives or other
programs such as rebates,
discounts, coupons, volume-based
incentives, guaranteed sales
and other programs.
The Company records
an estimated allowance
for costs associated
with these
programs, which is recorded
as a reduction in
revenue at the time
of sale using historical
trends and projected redemption
rates
of
each program.
The Company
regularly reviews
these estimates
and
any difference
between the
estimated costs
and actual
realization of these programs would be recognized in the subsequent period.
As the estimates
noted above are
based on historical
information, we do
not believe that
there will be
a material change
in the
estimates and assumptions used to recognize revenue. However, if actual results varied significantly from our estimates, it could
expose us to material gains or losses.
LOSS CONTINGENCIES
The Company evaluates whether a loss contingency exists,
and if the assessment of a
contingency indicates it is probable that a
material loss has been
incurred and the amount
of the loss can
be reasonably estimated, the
estimated loss would be
accrued in
the Company’s financial statements. The Company expenses the costs of litigation as they are incurred.
Except for
the $19.6
million litigation loss
contingency accrual in
fiscal 2024,
there were no
loss contingency accruals
for the
past three fiscal years. Our evaluation of whether loss contingencies exist primarily relates to litigation matters. The
outcome of
litigation is
uncertain due
to, among
other things,
uncertainties regarding
the facts
will be
established during
the proceedings,
uncertainties regarding
how the
law will
be applied
to the
facts established,
and uncertainties
regarding the
calculation of
any
potential damages or
the costs of
any potential injunctive
relief. If the
facts discovered or
the Company’s
assumptions change,
future
accruals
for
loss
contingencies
may
be
required.
Results
of
operations
may
be
materially
affected
by
losses
or
a
loss
contingency accrual resulting from adverse legal proceedings.
INCOME TAXES
We
determine our effective tax
rate by estimating our
permanent differences resulting from
differing treatment of
items for tax
and accounting purposes. Judgment and uncertainty
exist with management’s application of tax regulations
and evaluation of the
more-likely-than-not recognition and measurement thresholds. We are periodically audited by taxing authorities. An adverse tax
settlement could have a negative impact on our effective tax rate and our results of operations.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS
COMMODITY PRICE RISK
Our primary exposure to
market risk arises from
changes in the prices
of conventional eggs, which
are subject to significant
price
fluctuations that are largely beyond our control. We are focused on growing our specialty shell egg business, in part because the
selling prices of
specialty shell eggs
are generally not
as volatile as
conventional shell egg
prices. Our exposure to
market risk
also includes changes in the
prices of corn and soybean
meal, which are commodities subject
to significant price fluctuations due
to market conditions that are largely beyond our control. 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 and commit to purchase organic ingredients to help assure
supply. Ordinarily,
we do
not enter long-term
contracts beyond a
year to purchase
corn and soybean
meal or hedge
against increases in
the price of
corn
and soybean meal. The following
table outlines the impact of
price changes for corn
and soybean meal on feed
costs per dozen
as feed ingredient pricing varies:
Change in price per bushel of corn
$
(0.84)
$
(0.56)
$
(0.28)
$
0.00
$
0.28
$
0.56
$
0.84
Change
in price
per ton
soybean
meal
$
(76.38)
0.43
0.44
0.45
0.46
0.47
0.48
0.49
$
(50.92)
0.44
0.45
0.46
0.47
0.48
0.49
0.50
$
(25.46)
0.45
0.46
0.47
0.48
0.49
0.50
0.51
$
0.00
0.46
0.47
0.48
0.49
(a)
0.50
0.51
0.52
$
25.46
0.47
0.48
0.49
0.50
0.51
0.52
0.53
$
50.92
0.48
0.49
0.50
0.51
0.52
0.53
0.54
$
76.38
0.49
0.50
0.51
0.52
0.53
0.54
0.55
(a)
Based on 2025 actual costs, table flexes feed cost inputs to show $0.01 impacts to per dozen egg feed production costs.
INTEREST RATE
RISK
We
have
a
$250 million
Credit
Facility,
borrowings
under
which
would
bear
interest
at
variable
rates.
No
amounts
were
outstanding under that facility during fiscal
2025 or fiscal 2024. Under our current
policies, we do not use interest
rate derivative
instruments to manage our exposure to interest rate changes.
FIXED INCOME SECURITIES RISK
At May 31, 2025, the effective maturity of our cash equivalents and investment securities available for sale was 8.6 months, and
the composite credit
rating of the
holdings are A+
/ A1 /
A+ (S&P /
Moody’s /
Fitch). Generally speaking,
rising interest rates
decrease
the
value
of
fixed
income
securities
portfolios.
As
of
May
31,
2025,
the
estimated
fair
value
of
our
fixed
income
securities portfolio was
approximately $892.7 million
and reflected net
unrealized losses of
approximately $149 thousand.
For
additional
information
see
Note 1 - Summary of Significant Accounting Policies
under
the
heading
“Investment
Securities
Available-for-Sale” and
Note 3 - Investment Securities Available-for-Sale
in Part II. Item 8. Notes
to the Consolidated Financial
Statements.
CONCENTRATION
OF CREDIT RISK
Our financial instruments exposed to concentrations of
credit risk consist primarily of trade receivables.
Concentrations of credit
risk with respect
to receivables are
limited due to
our large
number of customers
and their dispersion
across geographic areas,
except that at
May 31, 2025
and June 1,
2024, 28.1% and
26.8%, respectively,
of our net
accounts receivable balance
was due
from
Walmart
Inc.
(including
Sam’s
Club).
No
other
single
customer
or
customer
group
represented
10%
or
greater
of
net
accounts receivable at May 31, 2025 and June 1, 2024.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8.
FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Ridgeland, Mississippi
Opinion on the Consolidated Financial Statements
We
have audited the
accompanying consolidated balance sheets
of Cal-Maine Foods,
Inc. and Subsidiaries
as of May
31, 2025 and June 1,
2024, the related consolidated statements
of income, comprehensive income, stockholders’
equity, and cash
flows for each of the three years in the period ended May 31, 2025, and
the related consolidated notes and schedule listed in the
Index
at
Items
15(a)(1)
and
15(a)(2)
(collectively referred
to
as
the
“consolidated financial
statements”). In
our
opinion,
the
consolidated
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
Cal-Maine
Foods,
Inc.
and
Subsidiaries as of
May 31, 2025
and June 1,
2024, and the
results of their
operations and their
cash flows for
each of the
three
years in
the period
ended May
31, 2025,
in conformity
with accounting
principles generally
accepted in
the United
States of
America.
We
also have
audited, in
accordance with
the standards
of the
Public Company
Accounting Oversight
Board (United
States) (“PCAOB”),
the Cal-Maine
Foods, Inc.
and Subsidiaries’ internal
control over
financial reporting
as of
May 31,
2025,
based
on
the
criteria
established
in
Internal
Control
-
Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of the Treadway Commission and our report dated July 22, 2025 expressed an unqualified opinion.
Basis for Opinion
These
consolidated
financial
statements
are
the
responsibility
of
the
entities’
management.
Our
responsibility
is
to
express an
opinion on
these consolidated
financial statements
based on
our audits.
We
are a
public accounting
firm registered
with the PCAOB
and are required to be independent with respect
to Cal-Maine Foods, Inc. and Subsidiaries in accordance
with
the U.S.
federal securities
laws and
the applicable
rules and
regulations of
the Securities
and Exchange
Commission and
the
PCAOB.
We
conducted our
audits in
accordance with
the standards
of the
PCAOB. Those
standards require
that we
plan and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement of the consolidated financial statements, whether due
to error or fraud, and performing procedures
that respond to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated financial
statements. Our
audits also
included evaluating
the accounting
principles used
and significant
estimates
made by
management, as
well as
evaluating the
overall presentation
of the
consolidated financial
statements. We
believe our
audits provide a reasonable basis for our opinion.
Critical Audit Matter
The
critical
audit
matter
communicated
below
is
a
matter
arising
from
the
current
period
audit
of
the
consolidated
financial statements
that were
communicated or
required to
be
communicated to
the Audit
Committee and
that: (1)
relate to
accounts or
disclosures that
are material
to the
consolidated financial
statements and
(2) involved
our especially
challenging,
subjective, or complex
judgments. The communication of
the critical audit matter
does not alter
in any way our
opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing
a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Contingent Liabilities - Litigation and Claims - Refer to Note 16 in the Consolidated Financial Statements
Critical Audit Matter Description
Cal-Maine Foods, Inc. and Subsidiaries record liabilities for legal proceedings and
claims in those instances where they
can reasonably estimate the amount of the loss and when the liability is probable. Where the reasonable estimate of the probable
loss is a range, Cal-Maine Foods, Inc. and Subsidiaries record the most likely estimate of the
loss, or the low end of the range if
there is no one
best estimate. Cal-Maine Foods,
Inc. and Subsidiaries either
disclose the amount
of a possible loss
or range of loss
in
excess
of
established
accruals
if
estimable,
or
states
that
such
an
estimate
cannot
be
made.
Cal-Maine
Foods,
Inc.
and
Subsidiaries disclose significant legal proceedings
and claims even where liability
is not probable or
the amount of the liability
is not
estimable, or
both, if
Cal-Maine Foods, Inc.
and Subsidiaries believe
there is
at least
a reasonable
possibility that
a loss
may be incurred.
We identified litigation and claims
as a critical
audit matter because
of the challenges
auditing management’s judgments
applied
in
determining
the
likelihood
of
loss
related
to
the
resolution
of
such
claims.
Specifically,
auditing
management’s
determination of whether
any contingent loss
arising from the
related litigation and
claims is probable,
reasonably possible, or
remote, and the related disclosures, is subjective and requires significant judgment due to the sensitivity of the issue.
How the Critical Audit Matter was addressed during the Audit
Addressing the
matter involved
performing procedures
and evaluating
audit evidence
in connection
with forming
our
overall
opinion
on
the
consolidated
financial
statements.
These
procedures
included
testing
the
effectiveness
of
the
controls
relating to
the Cal-Maine
Foods, Inc.
and Subsidiaries’
evaluation of
the liability
related to
legal proceedings
and claims,
including
controls over determining
the likelihood of
a loss and
whether the amount
of loss can
be reasonably estimated,
as well as
financial
statement disclosures over the legal proceedings and claims. These procedures also included obtaining and evaluating the letters
of audit inquiry
with external legal
counsel, evaluating the
reasonableness of Cal-Maine
Foods, Inc. and
Subsidiaries’ assessment
regarding
whether
an
unfavorable
outcome
is
reasonably
possible
or
probable,
and
reasonably
estimable,
evaluating
the
sufficiency of
Cal-Maine Foods,
Inc. and
Subsidiaries’ disclosures
related to
legal proceedings
and claims
and evaluating
the
completeness and accuracy of Cal-Maine Foods, Inc. and Subsidiaries’ legal contingencies.
/s/ Frost, PLLC
We have served as the Company’s
auditor since 2007.
Little Rock, Arkansas
July 22, 2025
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except for par value amounts)
May 31, 2025
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
499,392
$
237,878
Investment securities available-for-sale
892,708
574,499
Receivables:
Trade receivables, net
244,079
138,550
Income tax receivable
13,057
10,459
Other
15,225
13,433
Total receivables, net
272,361
162,442
Inventories, net
295,670
261,782
Prepaid expenses and other current assets
7,979
5,238
Total current assets
1,968,110
1,241,839
Property, plant & equipment, net
1,026,684
857,234
Investments in unconsolidated entities
11,095
11,195
Goodwill
46,776
45,776
Intangible assets, net
15,157
15,996
Other assets
16,797
12,721
Total assets
$
3,084,619
$
2,184,761
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable
$
101,033
$
75,862
Dividends payable
114,163
37,760
Accrued wages and benefits
60,263
32,971
Income tax payable
-
43,348
Accrued expenses and other current liabilities
32,912
37,802
Total current liabilities
308,371
227,743
Other liabilities
55,582
17,109
Deferred income taxes
154,651
142,866
Total liabilities
518,604
387,718
Commitments and contingencies - see
Note 16
-
-
Stockholders’ equity:
Common stock ($
0.01
par value):
Common stock - authorized
120,000
shares, issued
75,061
and
70,261
shares in
2025 and 2024, respectively
Class A convertible common stock - authorized and issued
4,800
shares in 2024
-
Paid-in capital
80,845
76,371
Retained earnings
2,565,928
1,756,395
Accumulated other comprehensive loss, net of tax
(1,007)
(1,773)
Common stock in treasury, at cost -
26,567
and
26,022
shares in 2025 and 2024,
respectively
(85,893)
(31,597)
Total Cal-Maine Foods, Inc. stockholders’ equity
2,560,624
1,800,147
Noncontrolling interest in consolidated equity
5,391
(3,104)
Total stockholders’ equity
2,566,015
1,797,043
Total liabilities and stockholders’ equity
$
3,084,619
$
2,184,761
See Notes to Consolidated Financial Statements.
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share amounts)
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Net sales
$
4,261,885
$
2,326,443
$
3,146,217
Cost of sales
2,411,000
1,784,872
1,949,760
Gross profit
1,850,885
541,571
1,196,457
Selling, general and administrative
314,449
252,625
232,207
(Gain) loss on involuntary conversions
(23,532)
(3,345)
(Gain) loss on disposal of fixed assets
(259)
(131)
Operating income
1,536,539
312,452
967,726
Other income (expense):
Interest expense
(612)
(549)
(583)
Interest income
48,671
32,275
18,553
Patronage dividends
11,197
11,331
10,239
Equity in income of unconsolidated entities
6,221
1,420
Other, net
1,126
3,042
1,869
Total other income
66,603
47,519
30,824
Income before income taxes
1,603,142
359,971
998,550
Income tax expense
384,910
83,689
241,818
Net income
1,218,232
276,282
756,732
Less:
Net loss attributable to noncontrolling interest
(1,816)
(1,606)
(1,292)
Net income attributable to Cal-Maine Foods, Inc.
$
1,220,048
$
277,888
$
758,024
Net income per share attributable to Cal-Maine Foods, Inc.:
Basic
$
25.04
$
5.70
$
15.58
Diluted
$
24.95
$
5.69
$
15.52
Weighted average shares outstanding:
Basic
48,719
48,717
48,648
Diluted
48,891
48,873
48,834
See Notes to Consolidated Financial Statements.
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of
Comprehensive Income
(in thousands)
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
Net income
$
1,218,232
$
276,282
$
756,732
Other comprehensive income (loss), before tax:
Unrealized holding gain (loss) available-for-sale securities, net of
reclassification adjustments
1,271
(1,714)
(Increase) decrease in accumulated post-retirement benefits obligation, net of
reclassification adjustments
(27)
Other comprehensive income (loss), before tax
1,438
(1,741)
Income tax expense (benefit) related to items of other comprehensive income
(loss)
(451)
Other comprehensive income (loss), net of tax
1,113
(1,290)
Comprehensive income
1,218,998
277,395
755,442
Less: comprehensive loss attributable to the noncontrolling interest
(1,816)
(1,606)
(1,292)
Comprehensive income attributable to Cal-Maine Foods, Inc.
$
1,220,814
$
279,001
$
756,734
See Notes to Consolidated Financial Statements.
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(in thousands)
Accum.
Other
Common Stock
Comp.
Shares
Amount
Class A
Shares
Class A
Amount
Treasury
Shares
Treasury
Amount
Paid In
Capital
Retained
Earnings
Income
(loss)
Noncontrolling
Interest
Total
Balance at May 28, 2022
70,261
$
4,800
$
26,121
$
(28,447)
$
67,989
$
1,065,854
$
(1,596)
$
(206)
1,104,345
Stock compensation plan transactions
-
-
-
-
(44)
(1,561)
4,123
-
-
-
2,562
Dividends ($
5.161
per share)
Common
-
-
-
-
-
-
-
(227,993)
-
-
(227,993)
Class A common
-
-
-
-
-
-
-
(24,773)
-
-
(24,773)
Net income (loss)
-
-
-
-
-
-
-
758,024
-
(1,292)
756,732
Other comprehensive loss, net of tax
-
-
-
-
-
-
-
-
(1,290)
-
(1,290)
Balance at June 3, 2023
70,261
4,800
-
26,077
(30,008)
72,112
1,571,112
(2,886)
(1,498)
1,609,583
Stock compensation plan transactions
-
-
-
-
(55)
(1,589)
4,259
-
-
-
2,670
Dividends ($
1.889
per share)
Common
-
-
-
-
-
-
-
(83,565)
-
-
(83,565)
Class A common
-
-
-
-
-
-
-
(9,040)
-
-
(9,040)
Net income (loss)
-
-
-
-
-
-
-
277,888
-
(1,606)
276,282
Other comprehensive loss, net of tax
-
-
-
-
-
-
-
-
1,113
-
1,113
Balance at June 1, 2024
70,261
4,800
26,022
(31,597)
76,371
1,756,395
(1,773)
(3,104)
1,797,043
Stock compensation plan transactions
-
-
-
-
(7)
(3,900)
4,474
-
-
-
Conversion of Class A Shares
4,800
(4,800)
(48)
-
-
-
-
-
-
-
Repurchase of Shares
-
-
-
-
(50,396)
-
-
-
-
(50,396)
Contributions to Crepini Foods LLC
-
-
-
-
-
-
-
-
-
6,485
6,485
Acquisition of noncontrolling interest in
MeadowCreek Foods LLC
-
-
-
-
-
-
-
(3,826)
-
3,826
-
Dividends ($
8.319
per share)
Common
-
-
-
-
-
-
-
(378,062)
-
-
(378,062)
Class A common
-
-
-
-
-
-
-
(28,627)
-
-
(28,627)
Net income (loss)
-
-
-
-
-
-
-
1,220,048
-
(1,816)
1,218,232
Other comprehensive income, net of tax
-
-
-
-
-
-
-
-
-
Balance at May 31, 2025
75,061
$
-
$
-
26,567
$
(85,893)
$
80,845
$
2,565,928
$
(1,007)
$
5,391
$
2,566,015
See Notes to Consolidated Financial Statements.
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Cash flows from operating activities:
Net income
$
1,218,232
$
276,282
$
756,732
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
94,021
80,241
72,234
Deferred income taxes
11,570
(9,672)
24,467
Stock compensation expense, net of amounts paid
4,527
4,358
4,205
Loss on change in fair value contingent consideration
15,000
5,500
-
Other operating activities, net
(15,426)
(6,908)
(1,491)
Change in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in trade receivables
(104,997)
(27,570)
58,129
(Increase) decrease in inventories
(12,224)
28,800
(21,102)
Increase (decrease) in income taxes payable/receivable
(45,946)
91,567
(42,218)
Increase in accounts payable and current accrued expenses
65,311
9,353
14,944
Decrease in other operating assets and liabilities
(5,334)
(553)
(2,890)
Net cash provided by operating activities
1,224,734
451,398
863,010
Cash flows from investing activities:
Purchases of investments
(1,213,593)
(573,565)
(530,781)
Sales of investments
907,640
358,932
291,832
Acquisition of businesses, net of cash acquired
(116,193)
(53,746)
-
Investment in unconsolidated entities
-
(363)
(1,673)
Distributions from unconsolidated entities
4,050
3,000
1,500
Purchases of property, plant and equipment
(161,255)
(147,116)
(136,569)
Net proceeds from disposal of property, plant and equipment
3,882
Net cash used in investing activities
(575,469)
(412,586)
(375,111)
Cash flows from financing activities:
Principal payments on long-term debt
(2,481)
-
-
Principal payments on finance lease
-
(214)
(224)
Purchase of common stock by treasury
(53,953)
(1,688)
(1,643)
Payments of dividends
(330,290)
(91,856)
(252,292)
Net cash used in financing activities
(386,724)
(93,758)
(254,159)
Increase (decrease) in cash and cash equivalents
262,541
(54,946)
233,740
Cash, cash equivalents and restricted cash at beginning of year
237,878
292,824
59,084
Cash, cash equivalents and restricted cash at end of year
$
500,419
$
237,878
$
292,824
Supplemental information:
Income taxes paid
$
426,172
$
35,101
$
258,247
See Notes to Consolidated Financial Statements.
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Summary of Significant Accounting Policies
Nature of Operations
Cal-Maine
Foods,
Inc.
(“we,”
“us,”
“our,”
or
the
“Company”)
is
primarily
engaged
in
the
production,
grading,
packaging,
marketing and distribution of fresh shell eggs, including
conventional, cage-free, organic, brown, free-range, pasture-raised and
nutritionally-enhanced eggs, as well
as egg products
and a variety of
prepared foods. The Company,
which is headquartered in
Ridgeland, Mississippi, is the largest
producer and distributor of
fresh shell eggs in
the United States and
sells most of its
shell
eggs throughout the majority of the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of all wholly-owned subsidiaries and of majority-owned subsidiaries
over which we exercise control. All significant intercompany transactions and accounts have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year-end is on the Saturday closest to May 31. The fiscal years ending on May 31, 2025 and June 1, 2024
included
weeks and the fiscal year ended June 3, 2023 included
weeks.
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”)
in the United States of America 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.
Cash and Cash Equivalents
The
Company
considers
all
highly
liquid
investments
with
a
maturity
of
three
months
or
less
when
purchased
to
be
cash
equivalents.
We
maintain
bank
accounts
that
are
insured
by
the
Federal
Deposit
Insurance
Corporation
up
to
$
250,000
. The
Company
routinely
maintains
cash
balances
with
certain
financial
institutions
in
excess
of
federally
insured
amounts.
The
Company has not experienced any loss in such
accounts. The Company manages this risk through maintaining
cash deposits and
other highly liquid investments in high quality financial institutions.
Investment Securities Available-for-Sale
The Company has determined that its debt
securities are available-for-sale investments and are
classified as current because the
amounts
invested
are
available for
current
operations.
Available-for-sale
securities
are
carried
at
fair
value,
based
on
quoted
market
prices
as
of
the
balance
sheet
date,
with
unrealized
gains
and
losses
recorded
in
other
comprehensive
income.
The
amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity and is recorded
in interest income. The Company regularly evaluates changes to the rating of its debt securities
by credit agencies and economic
conditions to
assess and
record any
expected credit
losses through
allowance for
credit losses,
limited to
the amount
that fair
value was less than the amortized cost basis.
The cost basis
for realized gains
and losses on
available-for-sale securities is
determined by the
specific identification method.
Gains and losses are
recognized in other income
(expense) as “Other, net” in
the Company’s Consolidated Statements of
Income.
Interest
and
dividends
on
securities
classified
as
available-for-sale
are
recorded
in
“Interest
income”
in
the
Company’s
Consolidated Statements of Income.
Trade Receivables
Trade receivables are stated at their
carrying values, which include a
reserve for credit losses. At
May 31, 2025 and June
1, 2024,
reserves for credit losses were $
thousand and $
thousand, respectively. The Company extends credit to customers 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.
At
May
31,
and
June
1,
2024,
one
customer
accounted
for
approximately
28.1
% and
26.8
% of the Company’s trade accounts receivable, respectively.
Inventories
Inventories
of
eggs,
feed,
supplies
and flocks
are valued
principally
at
the
lower of
cost
or
net
realizable value.
The
cost
of
inventories is determined by either the first-in, first-out method or the weighted-average method.
The
cost
associated
with
flocks,
consisting
principally
of
chicks,
feed,
labor,
contractor
payments
and
overhead
costs,
are
accumulated during a growing period of approximately
weeks. Flock costs are amortized to cost of sales over
the productive
lives of the flocks, generally
one
to
two years
. As the amortization period of the flocks is relatively short, disclosure of the gross
cost and accumulated amortization is omitted. Flock mortality is charged to cost of sales as incurred.
Property, Plant and Equipment
Property, plant
and equipment are stated
at cost. Depreciation is
provided by the straight-line
method over the estimated
useful
lives, which
are
to
years for
buildings and
improvements and
to
years for
machinery and
equipment. Expenditures
that significantly
extend the
useful life
of the
related assets
are capitalized.
Normal repairs
and maintenance
are expensed
as
incurred. When property, plant, and equipment
are retired, sold, or
otherwise disposed of, the
asset’s carrying amount and related
accumulated depreciation are removed from the accounts and
any gain or loss is included in
operations. 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.
Investments in Unconsolidated Entities
The equity method of accounting is
used when the Company can exert
significant influence over an entity,
but does not control
its financial
and operating
decisions. Under
the equity
method, original
investments are
recorded at
cost and
adjusted by
the
Company’s share of
undistributed earnings
or losses
of these
entities. Equity
investments without
readily determinable
fair values,
when
the
Company
does
not
have
the
ability
to
exercise
significant
influence
over
the
investee,
are
recorded
at
cost,
less
impairment, plus or minus observable price changes.
Goodwill
Goodwill
represents
the
excess
of
the
purchase
price
over
the
fair
value
of
the
identifiable
net
assets
acquired.
Goodwill
is
evaluated for
impairment at
least annually
or more
frequently if
impairment indicators
arise by
first performing
a qualitative
assessment to determine whether a
quantitative goodwill 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, trademarks and right of
use intangibles. They are amortized over their
estimated useful lives of
to
years. The
gross
cost
and
accumulated
amortization
of
intangible
assets
are
removed
when
the
recorded
amounts
are
fully
amortized and the
asset is no
longer in use
or the contract
has expired. When
certain events or
changes in operating
conditions
occur, asset lives may
be adjusted and
an impairment assessment
may be performed
on the recoverability
of the carrying
amounts.
Indefinite life assets are recorded at fair value in business acquisitions and represent water rights. They are not amortized, but
are reviewed for impairment at least annually or more frequently if impairment indicators arise.
Insurance Liabilities and Restricted Cash
The
Company
uses
a
combination
of
insurance
and
self-insurance
programs,
including
a
wholly-owned
captive
insurance
subsidiary (the “Captive”) to
provide coverage for the
potential liabilities for workers’
compensation, auto liability and general
liability risks. Liabilities
associated with
these risks
that are retained
by the
Company are not
discounted and are
estimated, in
part, by considering historical claims experience, severity
factors and other actuarial assumptions. These liabilities
are recorded
within “Accrued
expenses and
other current
liabilities” in
the Company’s
Consolidated Balance
Sheets and
were $
8.0
million
and $
4.9
million at May 31, 2025 and June 1, 2024, respectively.
The Captive maintains certain levels
of cash and cash
equivalents which are restricted in
use to secure the
insurer’s obligations
for workers’ compensation, auto
liability and general liability
programs.
As of May
31, 2025, restricted cash
was $
1.0
million
and is recorded within “Prepaid expenses and other current assets” in the Company’s Consolidated Balance Sheets.
The Company also
maintains a medical plan
covering substantially all full-time
employees. Under the plan,
the Company self-
insures its
portion of
medical claims
and uses
stop-loss insurance
to limit
its portion
of medical
claims to
$
275,000
per occurrence.
Liabilities
associated
with
these
risks
are
estimated
in
part
by
considering
historical
claims
experience,
medical
cost
trends,
demographic factors, severity factors and other actuarial assumptions.
The Company’s expenses including
accruals for incurred
but not reported claims were
approximately $
22.8
million, $
23.0
million, and $
21.9
million in fiscal years 2025,
2024, and 2023,
respectively. The
liability recorded for
incurred but not
reported claims was
$
3.0
million and $
2.8
million as of
May 31, 2025,
and
June
1,
2024,
respectively
and
are
classified
within
“Accrued
expenses
and
other
current
liabilities”
in
the
Company’s
Consolidated Balance Sheets.
Dividend Payable
Dividends are accrued at the end of each quarter
according to the Company’s dividend
policy adopted by its Board of Directors
(“Board”). The Company pays
a dividend to stockholders
of its 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 net income. Dividends are paid to stockholders
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 stockholders 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.
Revenue Recognition
The Company
recognizes revenue
through sale
of its
products to
customers through
retail, foodservice
and other
distribution
channels.
The
majority
of
the
Company’s
revenue
is
derived
from
agreements
or
contracts
with
customers
based
upon
the
customer
ordering
its
products
with
a
single
performance
obligation
of
delivering
the
product.
The
Company
believes
the
performance
obligation
is
met
upon
delivery
and
acceptance
of
the
product
by
our
customers,
which
generally
occurs
upon
shipment or delivery
to a customer
based on terms of
the sale. Costs
paid to third
party brokers to
obtain agreements are
expensed
as the Company’s agreements are generally less than one year.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
delivery of
the
products. The Company periodically
offers sales incentives or other
programs such as rebates,
discounts, coupons, volume-based
incentives, guaranteed sales
and other programs.
The Company records
an estimated allowance
for costs associated
with these
programs, which is recorded
as a reduction in
revenue at the time
of sale using historical
trends and projected redemption
rates
of
each program.
The Company
regularly reviews
these estimates
and
any difference
between the
estimated costs
and actual
realization of these programs would be recognized the subsequent period.
Shipping and Distribution
Costs
to
deliver
product
to
customers
are
included
in
selling,
general
and
administrative
expenses
in
the
accompanying
Consolidated Statements of
Income and totaled
$
93.5
million, $
72.7
million, and $
77.5
million in fiscal
years 2025, 2024,
and
2023, respectively.
Income Taxes
Income
taxes
are
accounted
for
using
the
liability
method.
Deferred
income
taxes
reflect
the
net
tax
effects
of
temporary
differences
between
the
carrying
amounts
of
assets
and
liabilities
for
financial
reporting
purposes
and
the
amounts
used
for
income tax
purposes. The Company’s policy
with respect
to evaluating
uncertain tax
positions is
based upon
whether management
believes it
is more
likely than
not the
uncertain tax
positions will
be sustained
upon review
by the
taxing authorities. The
tax
positions must meet the more-likely-than-not recognition threshold with consideration given to the amounts and probabilities of
the outcomes
that could
be realized
upon settlement
using the
facts, circumstances
and information
at the
reporting date. The
Company will
reflect only
the portion
of the
tax benefit
that will
be sustained
upon resolution
of the
position and
applicable
interest on the portion of the tax benefit not recognized. The Company
initially and subsequently measures the largest amount of
tax benefit
that is
greater than
50% likely
to be
realized upon
settlement with a
taxing authority that
has full
knowledge of
all
relevant
information. The
Company
records
interest
and
penalties on
uncertain
tax
positions
as
a
component
of
income
tax
expense. Based upon
management’s assessment,
there are no
uncertain tax positions
expected to have
a material impact on
the
Company’s consolidated financial statements.
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 (Loss) 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 the 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. The
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
or less
than the
net book
value of
damaged assets,
including poultry, clean-up and
demolition costs,
and other
direct post-event
costs are recorded
within “Gain (loss)
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 consolidated
financial statements
are issued
that may
result in
a loss
to the
Company
but which will only be resolved
when one or more future events
occur or fail to occur. The Company’s management and its legal
counsel assess
such contingent
liabilities, and
such assessment
inherently involves
an exercise
of judgment.
In assessing
loss
contingencies related
to legal
proceedings that
are pending
against the
Company or
unasserted claims
that may
result in
such
proceedings, the Company’s
legal counsel evaluates the
perceived merits of any
legal proceedings or unasserted claims
as well
as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment
of a contingency
indicates it is
probable that a
material loss has
been incurred and
the amount of
the liability
can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment
indicates a
potentially material
loss contingency
is not
probable, but
is reasonably
possible, or
is probable
but cannot
be estimated,
then the
nature of
the contingent
liability,
together with
an estimate of
the range of
possible loss
if determinable
and material,
would be disclosed. Loss
contingencies considered remote are generally
not disclosed unless they
involve guarantees, in which
case the nature of the guarantee would be disclosed.
The Company expenses the costs of litigation as they are incurred.
New Accounting Pronouncements and Policies
In November 2023,
the Financial Accounting Standards
Board (“FASB
”) issued Accounting Standards
Update (“ASU”) 2023-
07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
. This ASU requires enhanced disclosures
about significant
segment expenses
regularly provided
to the
chief operating
decision maker
that are
included within
each reported
measure of segment profit or
loss, and requires all
annual disclosures currently required by
Topic 280
to be included in
interim
periods. The Company adopted ASU 2023-07 effective
fiscal year 2025. The pronouncement was adopted retrospectively
to all
prior periods presented. For additional information, refer to
Note 15 - Segment Reporting
.
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic
740) - Improvements to Income Tax
Disclosures
. This
ASU
requires
that
an
entity,
on
an
annual
basis,
disclose
additional
income
tax
information,
primarily
related
to
the
rate
reconciliation and income
taxes paid. The
ASU is intended
to enhance the
transparency and decision
usefulness of income
tax
disclosures.
ASU
2023-09
is
effective
for
annual
periods
beginning
after
December
15,
2024.
The
Company
is
currently
evaluating the impact of ASU 2023-09 on its consolidated financial statement disclosures.
In
November
2024,
the
FASB
issued
ASU
2024-03,
Income
Statement
-
Reporting
Comprehensive
Income
-
Expense
Disaggregation Disclosures (Subtopic
220-40)
. The objective of ASU 2024-03 is to improve
disclosures about a public entity’s
expenses, primarily through
additional disaggregation of
income statement expenses. Additionally,
in January 2025,
the FASB
further
clarified
the
effective
date
of
ASU
2024-03
with
the
issuance of ASU
2025-01.
ASU
2024-03 is effective
for
annual
periods beginning after December
15, 2026, and
interim periods within annual
reporting periods beginning after
December 15,
2027. Early adoption
is permitted and
may be applied
either on a
prospective or retrospective basis.
The Company is
currently
evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.
Note 2 - Acquisitions
Acquisition of ISE America, Inc. Assets
Effective
June 28, 2024
, the
Company acquired
substantially all
of
the commercial
shell egg
production, processing
and egg
products breaking facilities
of ISE America,
Inc. and certain
of its affiliates
(“ISE”). The assets
acquired included commercial
shell egg production and processing facilities with a capacity at the time of acquisition
of approximately
4.7
million laying hens,
including
1.0
million cage-free,
and
1.2
million pullets,
feed mills,
approximately
4,000
acres of
land, inventories
and an
egg
products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and
Mid-Atlantic states, and
production operations
in Maryland, New
Jersey, Delaware and South
Carolina.
The Company accounted
for the acquisition as a business combination.
The
following
table
summarizes
the
consideration
paid
for
the
ISE
assets
and
the
amounts
of
assets
acquired
and
liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
111,521
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
20,547
Property, plant and equipment
90,572
Intangible assets
Liabilities assumed
(308)
Total identifiable net assets
$
111,521
Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value
as
management
believes
that
its
carrying
value
best
approximates
its
fair
value.
Feed
ingredients,
packaging
and
egg
inventory were all valued based on market prices as of June 28, 2024.
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible assets consisted primarily of customer lists acquired. Customers lists were valued
using the income method approach.
Acquisition of Deal-Rite Feeds, Inc. Assets
Effective
February 3, 2025
, the Company
acquired certain assets
of Deal-Rite Feeds,
Inc. and certain
of its affiliates
(“Deal-Rite”)
for approximately
$
4.7
million. The
assets acquired
included two
feed mills,
storage facilities,
usable grain,
vehicles, related
equipment and
a retail
feed sales
business located
in North
Carolina. The
acquired assets
will produce
and deliver
feed to
our
nearby shell egg production facilities. The Company accounted for the acquisition as a business combination.
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Goodwill recorded in
connection with the
Deal-Rite acquisition is
primarily attributable to
improved efficiencies from
integrating
the assets of Deal-Rite with the operations of the Company. The Company recognized goodwill of $
1.0
million as a result of the
acquisition.
Other Acquisitions and Investments
Effective
September 9, 2024
, the Company completed a strategic investment with Crepini LLC, establishing a new egg products
and prepared
foods venture.
The new
entity, located in
Hopewell Junction,
New York, operates as
Crepini Foods
LLC (“Crepini”).
The Company
capitalized Crepini with
approximately $
6.75
million in
cash to
purchase additional equipment
and other
assets
and fund
working capital
in exchange
for a
% interest
in the
new venture.
Crepini LLC
contributed its
existing assets
and
business in exchange for a
% interest in the new venture.
Effective
November
30,
2024,
the
Company
acquired
the
remaining
9.23
%
interest
in
our
majority-owned
subsidiary,
MeadowCreek Foods LLC.
Acquisition of Fassio Egg Farms, Inc. Assets
Effective
October 4, 2023
, the Company announced the acquisition of the assets of Fassio Egg Farms, Inc. (“Fassio”), related to
its commercial shell
egg production and
processing business. Fassio
owned and operated
commercial shell egg
production and
processing facilities
with a
capacity at
the time
of acquisition
of approximately
1.2
million laying
hens, primarily
cage-free, a
feed mill, pullets,
a fertilizer production
and composting operation
and land located
in Erda, Utah,
outside Salt Lake
City.
The
Company accounted for the acquisition as a business combination.
The following
table summarizes
the consideration
paid for
the Fassio
assets and
the amounts
of assets
acquired and
liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
53,746
Fair value of contingent consideration
1,000
Total estimated purchase consideration
54,746
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventory
$
6,164
Property, plant and equipment
44,540
Intangible assets
2,272
Other long-term assets
Liabilities assumed
(143)
Total identifiable net assets
52,976
Goodwill
1,770
$
54,746
Inventory consisted primarily
of flock, feed
ingredients, packaging, and
egg inventory.
Flock inventory was
valued at carrying
value
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.
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
period, commencing
on
the date
of
the
acquisition. The initial
fair value of the
contingent consideration was
estimated using a
discounted cash flow model.
This liability
is recorded within “Other liabilities” in the Company’s Consolidated Balance Sheets.
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
$
1.8
million as a
result
of the acquisition.
Note 3 - Investment Securities Available-for-Sale
The
following
presents
the
Company’s
investment
securities
available-for-sale
as
of
May
31,
and
June
1,
(in
thousands):
May 31, 2025
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
21,695
$
$
-
$
21,698
Commercial paper
90,880
-
90,830
Corporate bonds
431,378
-
431,508
Certificates of deposits
5,200
-
5,194
US government and agency obligations
240,655
-
240,395
Treasury bills
103,119
-
103,083
Total current investment securities
$
892,927
$
$
$
892,708
June 1, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
4,100
$
-
$
$
4,059
Commercial paper
137,856
-
137,735
Corporate bonds
233,289
-
232,592
Certificates of deposits
3,505
-
3,491
US government and agency obligations
154,520
-
154,269
Asset backed securities
3,154
-
3,124
Treasury bills
39,239
-
39,229
Total current investment securities
$
575,663
$
-
$
1,164
$
574,499
Proceeds from the
sales and maturities
of available-for-sale
securities were $
907.6
million, $
358.9
million, and $
291.8
million
during fiscal 2025, 2024, and 2023, respectively.
Gross realized gains for fiscal 2025, 2024, and 2023
were $
thousand, $
thousand, and
$
thousand, respectively.
There were
no
gross realized
losses for
fiscal 2025.
Gross realized
losses for
fiscal
2024, and 2023 were $
thousand, and $
thousand, respectively. There was
no
allowance for credit losses at
May 31, 2025 and
June 1, 2024.
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 investment securities at May 31, 2025 are as follows (in thousands):
Estimated Fair Value
Within one year
$
449,577
1-5 years
443,131
Total
$
892,708
Note 4 - Fair Value Measures
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
- Quoted prices in active markets for identical assets or liabilities
●
Level 2
- Inputs
other than
quoted prices
included in
Level 1
that are
observable for
the asset
or liability,
either
directly or indirectly, including:
o
Quoted prices for similar assets or liabilities in active markets
o
Quoted prices for identical or similar assets in non-active markets
o
Inputs other than quoted prices that are observable for the asset or liability
o
Inputs derived principally from or corroborated by other observable market data
●
Level 3
- Unobservable inputs for
the asset or liability
supported by little or
no market activity and
are significant
to the fair value of the assets or liabilities
The disclosure of fair value of certain financial assets and liabilities recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
The carrying amount approximates fair value due to the
short maturity of these instruments.
Assets and Liabilities Measured at Fair Value
on a Recurring Basis
In accordance with the fair value hierarchy
described above, the following table shows the
fair value of our financial assets and
liabilities that are required to be measured at fair value on a recurring basis as of May 31, 2025 and June 1, 2024 (in thousands):
May 31, 2025
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
-
$
21,698
$
-
$
21,698
Commercial paper
-
90,830
-
90,830
Corporate bonds
-
431,508
-
431,508
Certificates of deposits
-
5,194
-
5,194
US government and agency obligations
-
240,395
-
240,395
Treasury bills
-
103,083
-
103,083
Total investment securities available-for-sale
measured at fair value
$
-
$
892,708
$
-
$
892,708
Liabilities
Contingent consideration
-
-
21,500
21,500
Total liabilities measured at fair value
$
-
$
-
$
21,500
$
21,500
June 1, 2024
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
-
$
4,059
$
-
$
4,059
Commercial paper
-
137,735
-
137,735
Corporate bonds
-
232,592
-
232,592
Certificates of deposits
-
3,491
-
3,491
US government and agency obligations
-
154,269
-
154,269
Asset backed securities
-
3,124
-
3,124
Treasury bills
-
39,229
-
39,229
Total investment securities available-for-sale
measured at fair value
$
-
$
574,499
$
-
$
574,499
Liabilities
Contingent consideration
-
-
6,500
6,500
Total liabilities measured at fair value
$
-
$
-
$
6,500
$
6,500
Investment securities available-for-sale
are all classified
as Level 2
and consist of
securities with maturities of
three months or
longer when purchased. Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent
consideration
classified
as
Level
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
period, commencing on
the date of the acquisition. The
fair value of the contingent consideration
is estimated using a discounted cash
flow model. Key
assumptions and
unobservable inputs
that require
significant judgement
used in
the estimate
include weighted
average cost
of
capital, egg prices, projected revenue
and expenses over the period
for which the contingent consideration
is measured, and the
probability assessments with respect to the likelihood of achieving the
forecasted projections. See further discussion in
Note 2 -
Acquisition
.
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
6,500
Fair value adjustments
15,000
Balance, May 31, 2025
$
21,500
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
consolidated statements of income.
Note 5 - Inventories
Inventories consisted of the following (in thousands):
May 31, 2025
June 1, 2024
Flocks, net of amortization
$
166,507
$
149,985
Eggs and egg products
29,743
25,217
Feed and supplies
99,420
86,580
$
295,670
$
261,782
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 May 31, 2025 and
June 1,
2024, consisted
of approximately
11.5
million and
11.8
million pullets
and breeders
and
48.3
million and
39.9
million
layers, respectively.
The Company expensed amortization and mortality associated with the flocks to cost of sales as follows (in thousands):
May 31, 2025
June 1, 2024
June 3, 2023
Amortization
$
196,248
$
198,298
$
186,973
Mortality
10,619
10,640
10,455
Total flock costs charged to cost of sales
$
206,867
$
208,938
$
197,428
Note 6 - Property, Plant and Equipment
Property, plant and equipment consisted of the following (in thousands):
May 31, 2025
June 1, 2024
Land and improvements
$
158,627
$
131,051
Buildings and improvements
722,552
627,121
Machinery and equipment
876,024
782,736
Construction-in-progress
148,621
121,266
1,905,824
1,662,174
Less: accumulated depreciation
879,140
804,940
$
1,026,684
$
857,234
Depreciation expense was $
91.1
million, $
77.2
million and $
69.4
million in the fiscal years
ended May 31, 2025, June 1,
2024,
and June 3, 2023, respectively.
Note 7 - Investment in Unconsolidated Entities
As of May 31,
2025 and June 1,
2024, the Company owned
% of Specialty Eggs,
LLC (“Specialty Eggs”) and
of Southwest
Specialty Eggs, LLC
(“Southwest Specialty Eggs”),
which are accounted
for using the
equity method of
accounting. Specialty
Eggs owns the Egg-Land’s Best franchise
for most of Georgia and
South Carolina, as well
as a portion of
western North Carolina
and eastern Alabama. Southwest Specialty Eggs owns the Egg-Land’s Best franchise for Arizona, southern California and Clark
County, Nevada (including Las Vegas).
Equity method investments are included in “Investments in unconsolidated entities” in the accompanying Consolidated Balance
Sheets and totaled $
10.3
million and $
8.2
million at May 31, 2025 and June 1, 2024, respectively.
Equity in income
of unconsolidated entities
of $
6.2
million, $
1.4
million, and $
thousand from
these entities
has been included
in the Consolidated Statements of Income for fiscal 2025, 2024, and 2023, respectively.
The following relates to the Company’s transactions with these unconsolidated affiliates (in thousands):
For the fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Sales to unconsolidated entities
$
110,106
$
100,553
$
136,351
Purchases from unconsolidated entities
76,167
63,916
75,024
Distributions from unconsolidated entities
4,050
3,000
1,500
May 31, 2025
June 1, 2024
Accounts receivable from unconsolidated entities
$
5,090
$
8,490
Accounts payable to unconsolidated entities
1,233
Note 8 - Goodwill and Other Intangible Assets
Goodwill and other intangibles consisted of the following (in thousands):
Other Intangibles
Franchise
Customer
Non-compete
Water
Total
Goodwill
rights
relationships
agreements
rights
Trademark
intangibles
Balance June 3, 2023
$
44,006
$
13,414
$
$
$
$
$
59,903
Additions
1,770
-
-
2,222
-
4,042
Amortization
-
(1,627)
(362)
(134)
-
(50)
(2,173)
Balance June 1, 2024
45,776
11,787
2,942
61,772
Additions
1,000
-
-
2,319
Amortization
-
(1,596)
(353)
(157)
-
(52)
(2,158)
Balance May 31, 2025
$
46,776
$
10,191
$
$
$
2,942
$
$
61,933
For the Other Intangibles listed above, the gross carrying amounts and accumulated amortization are as follows (in thousands):
May 31, 2025
June 1, 2024
Gross carrying
Accumulated
Gross carrying
Accumulated
amount
amortization
amount
amortization
Other intangible assets:
Franchise rights
$
29,284
$
(19,093)
$
29,284
$
(17,497)
Customer relationships
1,700
(745)
2,900
(2,292)
Non-compete agreements
1,435
(683)
1,500
(876)
Water rights *
2,942
-
2,942
-
Trademark
(17)
(365)
Total
$
35,695
$
(20,538)
$
37,026
$
(21,030)
*
Water rights are an indefinite life intangible asset.
No significant residual value
is estimated for these
intangible assets. Aggregate amortization
expense for fiscal years
2025, 2024,
and 2023 totaled $
2.2
million.
The following table presents the total estimated amortization of intangible assets for the five succeeding years (in thousands):
For fiscal year
Estimated amortization expense
$
1,984
1,981
1,911
1,849
1,758
Thereafter
2,732
Total
$
12,215
Note 9 - Employee Benefit Plans
KSOP
The Company
has a
KSOP plan
that covers
substantially all
of the
Company’s
employees (the
“Plan”). The Company
makes
contributions
to the
Plan at
a
rate
of
% of
participants’ eligible
compensation, plus
an additional
amount determined
at
the
discretion
of
the
Board. Contributions
can
be
made
in
cash
or
the
Company’s
Common
Stock,
and
vest
immediately. The
Company’s cash contributions to the Plan were $
5.5
million, $
4.3
million, and $
4.3
million in fiscal years 2025, 2024 and 2023,
respectively.
The Company did
no
t make direct
contributions of the
Company’s
Common Stock in
fiscal years 2025,
2024, or
2023. Dividends
on the
Company’s
Common Stock
are paid
to the
Plan in
cash. The Plan
acquires the
Company’s
Common
Stock, which
is listed
on the
Nasdaq Global
Select Market,
by using
the dividends
and the
Company’s
cash contributions
to
purchase
shares
in
the
public
markets. The
Plan
sells
Common
Stock
on
the
Nasdaq
to
pay
benefits
to
Plan
participants. Participants
may
make
contributions
to
the
Plan
up
to
the
maximum
allowed
by
Internal
Revenue
Service
regulations. The Company does not match participant contributions.
Deferred Compensation and Other Postretirement Plans
The Company maintains several deferred compensation and other
postretirement plans for certain officers and
a select group of
management and
highly compensated
employees of
the Company.
The liability
recorded related
to these
agreements was $
4.1
million and $
3.8
million at May
31, 2025 and
June 1, 2024,
respectively and is
classified within “Accrued
expenses and other
current liabilities”
and “Other
liabilities” in
the Company’s
Consolidated Balance
Sheets. The
related expense
for these
plans
was $
1.5
million, $
1.2
million and $
thousand in fiscal 2025, 2024 and 2023, respectively.
Note 10 - Credit Facility
For
fiscal
years
2025,
and
2023,
interest
expense
was
$
thousand,
$
thousand,
and
$
thousand,
respectively,
primarily related to commitment fees on the Credit Facility described below.
On November 15,
2021, we entered
into an Amended
and Restated Credit
Agreement (as amended,
the “Credit Agreement”)
with
a five-year
term. The
Credit Agreement
provides for
a senior
secured revolving
credit facility
(the “Credit
Facility” or
“Revolver”)
in an initial aggregate principal amount of up to $
million, which includes a $
million sublimit for the issuance of standby
letters of credit and a $
million sublimit for swingline loans. The Credit Facility also includes an accordion feature permitting,
with the consent of BMO Harris
Bank N.A. (the “Administrative Agent”), an increase
in the Credit Facility in the
aggregate up
to $
million by
adding one
or more
incremental senior
secured term
loans or
increasing one
or more
times the
revolving
commitments under the Revolver.
No
amounts were borrowed under
the Credit Facility as
of May 31, 2025
or June 1,
2024 or
during fiscal 2025 or fiscal 2024. The Company had $
4.7
million of outstanding standby letters of credit issued under the Credit
Facility at May 31, 2025.
On May 26, 2023, we
entered into the First Amendment
(the “First Amendment”) to the
Credit Agreement, which replaced the
London Interbank Offered Rate interest rate benchmark with the secured overnight financing rate as administered
by the Federal
Reserve Bank of New
York
or a successor
administrator of the secured
overnight financing rate
(“SOFR”). The interest rate
in
connection with
loans made under
the Credit
Facility is
based on,
at the
Company’s
election, either
the Adjusted
Term
SOFR
Rate plus the Applicable Margin or the
Base Rate plus the Applicable Margin. The
“Adjusted Term SOFR”
means with respect
to any tenor, the per annum rate equal to the sum of (i) Term SOFR as defined in the Credit Agreement plus (ii)
0.10
% (10 basis
points); provided, if Adjusted
Term
SOFR determined as provided
above shall ever be
less than the Floor,
then Adjusted Term
SOFR shall be deemed to
be the Floor. The “Floor” means the
rate per annum of interest
equal to
0.00
%. The “Base Rate” means
a fluctuating rate per annum equal to the highest of (a) the federal
funds rate plus
0.50
% per annum, (b) the prime rate of interest
established by the Administrative Agent,
and (c) the Adjusted Term
SOFR for a
one
-month tenor plus
1.00
%. The “Applicable
Margin” means
0.00
% to
0.75
% per annum for Base Rate Loans
and
1.00
% to
1.75
% per annum for SOFR Loans,
in each case
depending upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date. The Company will
pay a commitment
fee on
the unused
portion of
the Credit
Facility payable
quarterly from
0.15
% to
0.25
%, in
each case
depending
upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date.
The Credit
Facility is
guaranteed by
substantially all
the current
and future
wholly-owned direct
and indirect
domestic subsidiaries
of
the
Company
(the
“Guarantors”),
and
is
secured
by
a
first-priority
perfected
security
interest
in
substantially
all
of
the
Company’s and the
Guarantors’ accounts,
payment intangibles,
instruments (including
promissory notes),
chattel paper, inventory
(including farm products) and deposit accounts maintained with the Administrative Agent.
The Credit Agreement
contains customary covenants,
including restrictions on
the incurrence of
liens, incurrence of
additional
debt, sales of
assets and other
fundamental corporate changes
and investments. The
Credit Agreement requires maintenance
of
two financial covenants: (i) a maximum Total
Funded Debt to Capitalization Ratio tested quarterly
of no greater than
%; and
(ii) a requirement to maintain Minimum Tangible Net Worth
at all times of $
Million plus
% of net income (if net income
is positive) less permitted restricted payments for each fiscal quarter after November 27, 2021.
On March
25, 2025,
the Company
entered into
the Second
Amendment (the
“Second Amendment”)
to the
Credit Agreement.
Under the
Credit Agreement,
a Change
of Control
is an
event of
default. The
Second Amendment
amended the
definition of
Change of
Control to
exclude from
that definition
the conversion
(the “Class
A Conversion”)
of all
outstanding shares
of the
Company’s Class A Common Stock into Common Stock which occurred on April 14, 2025.
The Second
Amendment states
that after
the Class
A Conversion,
Change of
Control will
mean any
of the
following: (i)
the
acquisition by
any “person”
or “group”
(as such
terms are
used in
sections 13(d)
and 14(d)
of the
Securities Exchange
Act of
1934, as amended) at any
time of beneficial ownership
of 30.0% or more of
the outstanding capital stock
or other equity interests
of the Company on a fully-diluted
basis, (ii) the failure of individuals
who are members of the
Board (or similar governing body)
of the Company on
the effective date
of the Second
Amendment (together with any
new or replacement directors
whose initial
nomination for election was approved
by a majority of the
directors who were either directors
on the effective date of the Second
Amendment or previously so
approved) to constitute a
majority of the Board
(or similar governing body)
of the Company, or (iii)
any “Change
of Control”
(or words
of like
import), as
defined in
any agreement
or indenture
relating to
any issue
of Material
Indebtedness of any Loan Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.
Further, under
the terms of
the Credit Agreement,
payment of dividends
under the Company’s
current dividend policy
of one-
third of the Company’s net income, computed in accordance
with GAAP,
and payment of other dividends or repurchases by the
Company of its
capital stock is
allowed, as long
as after giving
effect to such
dividend payments or repurchases
no default has
occurred and is continuing and the sum of cash and cash equivalents of the Company and its
subsidiaries plus availability under
the Credit Facility equals at least $
million.
The Credit
Agreement also
includes customary
events of
default and
customary remedies
upon the
occurrence of
an event
of
default, including acceleration of the amounts
due under the Credit Facility and
foreclosure of the collateral securing the
Credit
Facility.
At May 31, 2025, we were in compliance with the covenant requirements of the Credit Agreement.
Note 11 - Equity
As of May 31, 2025, the Company’s authorized shares of capital stock consisted of
million shares of Common Stock and
million shares of preferred stock, par value $
0.01
per share. As of May 31, 2025,
no
shares of preferred stock were outstanding.
Prior to the conversion of all of the Company’s outstanding shares of Class A Common Stock into Common
Stock (the “Class A
Conversion”), which
occurred on
April 14,
2025, the
Company had
two
classes of
capital stock,
Common Stock
and Class
A
Common Stock,
which were
similar in
most respects
except that
the Common
Stock had
one
vote per
share and
the Class
A
Common Stock
had
votes per
share. In
addition, each
share of
Class A
Common Stock
was convertible
into
one
share of
Common Stock
at the
option of
the holder
at any
time, and,
generally,
would automatically
convert into
Common Stock upon
transfer outside of the control of the family of Fred R.
Adams Jr., the Company’s
late founder. Prior to the
Class A Conversion,
Mr. Adams’ family controlled all of the outstanding shares of Class A Common Stock, all of which were held by
DLNL, LLC, a
Delaware limited liability company
(“Daughters’ LLC”), and thereby
controlled a majority of
the Company’s total voting power;
as a result, the Company was a “controlled company” under the rules of The Nasdaq Stock Market.
On February 25, 2025, the Company
entered an Agreement Regarding Conversion
(the “Conversion Agreement”) by and among
the Company, Daughters’ LLC
and its members,
namely Fred R. Adams
Jr.’s four daughters and Adolphus
B. Baker, Board
Chair
and
Mr. Adams’
son-in-law (the
“Members” and
together with
Daughters’ LLC,
the
“Stockholder Parties”).
The
Company’s
entry into the Conversion Agreement was
a result of the Members
informing the Company that they were
potentially interested
in diversifying
their respective
financial portfolios,
including through
the potential
sale of
all or
a portion
of the
shares of
the
Company’s
Common
Stock
underlying
the
Class
A
Common
Stock,
as
most
of
them
have
become
more
focused
on
their
individual estate planning efforts and philanthropic endeavors.
The Conversion Agreement provided for the following:
●
The approval by
the Board, and
approval by Daughters’
LLC by majority
written consent, of
the Third Amended
and
Restated Certificate of
Incorporation of the
Company (“Third Amended
and Restated Charter”),
which became effective
upon filing with the Delaware Secretary of State on March 27, 2025.
●
The approval
by the
Board of
the Amended
and Restated
Bylaws of
the Company,
which became
effective when
the
Third Amended and Restated Charter became effective.
●
The agreement by the Stockholder Parties not to convert any shares of Class A Common Stock into shares of Common
Stock prior to the later of (i) the effective date of the Third Amended and Restated Charter or (ii) the date the
Company
obtained an amendment to its Credit Agreement such that the Class A Conversion, defined below, would not result in a
“Change of Control” within the meaning of the Credit Agreement. Both conditions were met on March 27, 2025.
●
The agreement by the Stockholder Parties that if Daughters’ LLC converted any Class
A Common Stock into Common
Stock,
it
would
simultaneously
convert
all
(but
not
less
than
all)
Class
A
Common
Stock
into
Common
Stock
(the
“Class A Conversion”).
●
After
the
effective
date
of
the
Class
A
Conversion
(the
“Class
A
Conversion
Date”),
and
ending
on
the
12-month
anniversary
of
the
Class
A
Conversion
Date
(or,
if
earlier,
December 31, 2026),
certain
registration
rights
of
the
Members to offer or sell Common
Stock in a registered offering under the Securities Act of 1933, as amended.
●
The adoption by the
Stockholder Parties of an
amended and restated limited
liability company operating agreement of
Daughters’ LLC, which provided
for certain changes to
permit Daughters’ LLC to
take the actions provided
for in the
Conversion Agreement.
The Conversion Agreement, including the documents contemplated by that agreement, did
not require any Stockholder Party to
convert Class A Common Stock into Common Stock or to sell any Common Stock.
Also on
February 25, 2025,
the Board approved
a new $
million share repurchase
program. The share
repurchase program
authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for
an aggregate purchase
price up
to $
million (exclusive
of any
fees, taxes,
commissions or
other expenses
related to
such repurchases),
subject to
market
conditions
and
other
factors.
The
actual
timing,
number
and
value
of
shares
repurchased
under
the
program
will
be
determined by
management in
its discretion
and will
depend on
a number
of factors,
including, but
not limited
to, the
market
price of the Common Stock and general market and economic conditions.
The Class A Conversion occurred on April 14, 2025, at which time the Company was no longer a controlled company under the
rules of The
Nasdaq Stock Market.
On April 15,
2025, the Company
filed a Certificate
of Retirement with
the Delaware Secretary
of
State,
retiring
the
Class
A
Common
Stock.
Promptly
thereafter,
the
Company
filed
the
Fourth
Amended
and
Restated
Certificate of Incorporation with
the Delaware Secretary of
State, which became effective
upon filing, reflecting the
retirement
of the Class A Common Stock.
On April 15, 2025,
in connection with the
offer and sale (the “Offering”)
of
2,978,740
shares of Common Stock
by the Members,
the Company entered into
a stock repurchase agreement
with the Members, pursuant
to which the Company
agreed to repurchase
551,876
shares
of
Common
Stock
(the
“Repurchased
Shares”),
which
were
not
included
in
the
Offering,
contingent
upon
completion of the
Offering, at the
per share price
paid by the
underwriter in the
Offering, resulting in
a total purchase
price of
approximately $
million. The
Offering and
the Company’s purchase
of the
Repurchased Shares
pursuant to
the stock
repurchase
agreement were completed on
April 17, 2025
. The Company incurred expenses of $
1.7
million in connection with the Offering.
Pursuant to the Conversion Agreement, the Selling Stockholders will reimburse the Company $
thousand.
As of May 31, 2025, no shares other than the Repurchased Shares had
been repurchased under the Company’s share repurchase
program, leaving $
million available under the program.
Note 12 - Net Income per Common Share
Basic net income per share attributable
to Cal-Maine Foods, Inc. is based on
the weighted average Common Stock and Class
A
Common Stock
outstanding. All
shares of
Class A
Common Stock
were converted
into Common
Stock on
April 14,
2025. Diluted
net income per share attributable to Cal-Maine Foods, Inc. is based on weighted-average Common Stock outstanding during the
relevant period adjusted for the dilutive effect of share-based awards.
The following table provides
a reconciliation of the
numerators and denominators
used to determine basic
and diluted net income
per common share attributable to Cal-Maine Foods, Inc. (amounts in thousands, except per share data):
May 31, 2025
June 1, 2024
June 3, 2023
Numerator
Net income
$
1,218,232
$
276,282
$
756,732
Less: Net loss attributable to noncontrolling interest
(1,816)
(1,606)
(1,292)
Net income attributable to Cal-Maine Foods, Inc.
$
1,220,048
$
277,888
$
758,024
Denominator
Weighted-average common shares outstanding, basic
48,719
48,717
48,648
Effect of dilutive securities of restricted shares
Weighted-average common shares outstanding, diluted
48,891
48,873
48,834
Net income per common share attributable to Cal-Maine Foods, Inc.
Basic
$
25.04
$
5.70
$
15.58
Diluted
$
24.95
$
5.69
$
15.52
Note 13 - Stock-Based Compensation
The Company’s
stock-based compensation plan,
the Amended and
Restated Cal-Maine Foods,
Inc. 2012 Omnibus
Long-Term
Incentive Plan (the
“LTIP
Plan”), provides for
the granting of
equity-based awards such
as restricted stock,
performance stock
units and stock options. Awards may be granted under the LTIP
Plan to any employee, any non-employee member of the Board,
and any
consultant who
is a
natural person
and provides
services to
us or
one of
our subsidiaries
(except for
incentive stock
options, which may be granted only to our employees). The maximum number of shares of Common Stock available for awards
under the
LTIP
Plan is
2,000,000
of which
813,298
shares remained
available for
issuance as
of May
31, 2025,
and may
be
authorized but unissued shares or treasury shares. Common Stock issued from treasury shares under the plan was
47,700
shares,
86,803
shares and
84,969
shares for fiscal 2025, 2024 and 2023, respectively.
Restricted Stock
Restricted stock
outstanding under
the LTIP
Plan vests
three years
from the
grant date,
or upon
death or
disability,
change in
control, or retirement (subject to certain requirements). The restricted stock contains
no other service or performance conditions.
Restricted stock is awarded in
the name of the recipient
and, except for the right
of disposal, constitutes issued and
outstanding
shares of the Company’s Common Stock for all corporate purposes during the period of restriction including the right to receive
dividends. Compensation expense is
a fixed amount based
on the grant date
closing price and is
amortized on a straight-line
basis
over the vesting period. Forfeitures are recognized as they occur.
Total
stock-based
compensation
expense
was
$
4.5
million,
$
4.4
million,
and
$
4.2
million
in
fiscal
2025,
2024,
and
2023,
respectively.
Our unrecognized compensation expense as
a result of non-vested
shares was $
8.0
million at May 31,
2025 and $
7.5
million at
June 1,
2024. The unrecognized
compensation expense
will be
amortized to
stock compensation
expense over
a period
of 2.1
years.
A summary of our equity award activity and related information for our restricted stock is as follows:
Number of
Shares
Weighted Average
Grant
Date Fair Value
Outstanding, June 3, 2023
294,140
$
43.72
Granted
86,803
54.94
Vested
(101,660)
37.82
Forfeited
(1,329)
44.68
Outstanding, June 1, 2024
277,954
$
49.38
Granted
47,700
109.97
Vested
(108,058)
41.32
Forfeited
(4,879)
54.86
Outstanding, May 31, 2025
212,717
$
66.93
Note 14 - Income Taxes
Income tax expense consisted of the following:
Fiscal year ended
May 31, 2025
June 1, 2024
June 3, 2023
Current:
Federal
$
312,000
$
83,721
$
180,521
State
61,340
9,640
36,830
373,340
93,361
217,351
Deferred:
Federal
12,703
(7,371)
19,952
State
(1,133)
(2,301)
4,515
11,570
(9,672)
24,467
$
384,910
$
83,689
$
241,818
Significant components of the Company’s deferred tax liabilities and assets were as follows:
May 31, 2025
June 1, 2024
Deferred tax liabilities:
Property, plant and equipment
$
128,789
$
120,402
Inventories
35,041
29,297
Investment in affiliates
2,205
Other
6,485
6,437
Total deferred tax liabilities
172,520
157,040
Deferred tax assets:
Accrued expenses
3,620
3,230
State operating loss carryforwards
Other comprehensive income
Other
13,473
9,936
Total deferred tax assets
17,869
14,174
Net deferred tax liabilities
$
154,651
$
142,866
The differences between income tax expense at the Company’s effective income tax rate and income tax expense at the statutory
federal income tax rate were as follows:
Fiscal year end
May 31, 2025
June 1, 2024
June 3, 2023
Statutory federal income tax
$
337,042
$
75,931
$
209,418
State income taxes, net
47,169
5,798
32,662
Other, net
1,960
(262)
$
384,910
$
83,689
$
241,818
As of
May 31,
2025, we
had
no
significant unrecognized tax
benefits. Accordingly,
the Company had
no
accrued interest
and
penalties related to uncertain tax positions.
We
are subject
to income
tax in
many jurisdictions
within the
U.S. We
are currently
not under
audit by
the Internal
Revenue
Service
or
by
any
state
and
local
tax
authorities.
Tax
periods
for
all
years
beginning
with
fiscal
year
remain
open
to
examination by federal and state taxing jurisdictions to which we are subject.
Note 15 - Segment Reporting
The
Company
has
one
operating
and
one
reportable
segment,
which
is
the
production,
grading,
packaging,
marketing
and
distribution of shell eggs and egg products. The Company is managed on a consolidated basis.
The Company’s
operating segment
is determined
on the
basis of
our organizational
structure and
information that
is regularly
reviewed by our
Chief Operating Decision Maker
(“CODM”). The Company’s
CODM is Sherman Miller,
President and Chief
Executive Officer.
The CODM reviews
net income, which
is reported on
the Consolidated Statements of
Income, to assess
the
performance
and
make
decisions
on
how
to
allocate
resources
to
the
segment.
The
CODM
utilizes
consolidated
expense
information regularly provided in the CODM
package in order to assist with assessing
performance and deciding how to allocate
resources,
which
align
with
the
consolidated
expense
categories
as
disclosed
on
the
face
of
the
Consolidated
Statements
of
Income. The measure of segment assets is reported on the Consolidated Balance Sheet as Total assets.
Revenue primarily derives from the sales of shell eggs and egg products throughout the Unites States. The Company’s shell egg
product offerings
include specialty
and
conventional shell
eggs.
Specialty shell
eggs include
cage-free, organic,
brown, free-
range, pasture-raised and nutritionally enhanced
eggs. Conventional shell eggs
sales represent all other shell
egg sales not sold as
specialty
shell
eggs.
The
Company’s
egg
products
offerings
include
liquid
and
frozen
egg
products,
as
well
as
ready-to-eat
products
such
as
hard-cooked
eggs,
egg
wraps,
protein
pancakes,
crepes
and
wrap-ups.
Other
sales
represent
feed
sales,
miscellaneous byproducts and resale products.
The following table provides revenue disaggregated by product category (in thousands):
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Conventional shell egg sales
$
2,835,423
$
1,291,743
$
2,051,961
Specialty shell egg sales
1,184,487
925,665
956,993
Egg products and prepared foods
198,833
89,009
122,270
Other
43,142
20,026
14,993
$
4,261,885
$
2,326,443
$
3,146,217
The following table provides revenue disaggregated by sales channel (in thousands):
Fiscal years ended
May 31, 2025
June 1, 2024
June 3, 2023
52 weeks
52 weeks
53 weeks
Retail
$
3,613,828
$
2,046,230
$
2,693,162
Foodservice
608,166
267,428
427,886
Other
39,891
12,785
25,169
$
4,261,885
$
2,326,443
$
3,146,217
Retail customers include primarily national and regional grocery store chains, club stores, and companies servicing independent
supermarkets
in
the
U.S.
Foodservice
customers
include
primarily
companies
that
sell
food
products
and
related
items
to
restaurants, healthcare and education facilities and hotels.
Our largest customer, Walmart Inc. (including Sam’s Club) accounted for
33.6
%,
34.0
% and
34.2
% of net sales dollars for fiscal
2025, 2024, and 2023, respectively.
Note 16 - Commitments and Contingencies
Civil Investigative Demand
In
March
2025,
the
Company
received
a
Civil
Investigative
Demand
(“CID”)
from
the
Department
of
Justice
(“DOJ”)
in
connection with an antitrust
investigation to determine whether
there is, has been
or may be a
violation of the antitrust
laws by
anticompetitive
conduct
by
and
among
egg
producers.
The
Company
is
complying
with
the
CID
and
cooperating
with
the
investigation.
Management
cannot
predict
the
eventual
scope,
duration
or
outcome
of
these
investigations
and
is
unable
to
estimate the amount or range of potential losses, if any, at this time.
State of Texas v.
Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23, 2020, the Company
and its subsidiary Wharton County Foods,
LLC (“WCF”) were named as defendants
in State of
Texas v.
Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton
County Foods, LLC, Cause No. 2020-25427, in
the District Court
of Harris County, Texas.
The State of Texas (the “State”) asserted claims based on the Company’s
and WCF’s alleged violation
of the
Texas
Deceptive Trade
Practices-Consumer Protection
Act, Tex.
Bus. &
Com. Code
§§ 17.41-17.63
(“DTPA”).
The
State claimed
that the
Company and
WCF offered
shell eggs
at excessive
or exorbitant
prices during
the COVID-19
state of
emergency and made
misleading statements
about shell
egg prices.
The State
sought temporary
and permanent
injunctions against
the Company and WCF to prevent further alleged violations of the DTPA, along with over $
100,000
in damages. On August 13,
2020, the
court granted the
defendants’ motion to
dismiss the State’s
original petition with
prejudice. On September
11, 2020,
the State filed a notice
of appeal, which was assigned
to the Texas
Court of Appeals for the
First District. On August 16,
2022,
the
appeals
court
reversed
and
remanded
the
case
back
to
the
trial
court
for
further
proceedings.
On
October
31,
2022,
the
Company and
WCF appealed
the First
District Court’s
decision to
the Supreme
Court of
Texas.
On September
29, 2023,
the
Supreme Court of Texas denied the Company’s
Petition for Review and remanded to the trial court for further proceedings. The
district court entered an order scheduling pre-trial proceedings and a
pre-trial conference for August 11, 2025. On November 30,
2024, the State filed an amended petition, primarily to address
a procedural deficiency that required the State to generally plead
it
was
seeking
monetary
relief
over
$
1.0
million
including
restitution,
civil
penalties,
attorney’s
fees
and
costs.
Pre-trial
proceedings are progressing
in accordance with
the court’s schedule. Management believes
the risk of
material loss related
to this
matter to be remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
On September 25,
2008, the Company
was named as
one of
several defendants in
numerous antitrust cases
involving the U.S.
shell
egg
industry.
The Company
settled all
of
these cases,
except for
the claims
of
certain plaintiffs
who sought
substantial
damages allegedly arising
from the purchase
of egg products
(as opposed to
shell eggs). These
remaining plaintiffs are
Kraft Food
Global, Inc.,
General Mills,
Inc., and
Nestle USA,
Inc. (the
“Egg Products
Plaintiffs”) and,
until a
subsequent settlement
was
reached as described below, The Kellogg Company.
On September 13, 2019, the
case with the Egg Products
Plaintiffs was remanded from a multi-district
litigation proceeding in the
United States District
Court for the
Eastern District of
Pennsylvania, In re
Processed Egg Products
Antitrust Litigation, MDL
No.
2002,
to
the
United
States
District
Court
for
the
Northern
District
of
Illinois,
Kraft
Foods
Global,
Inc.
et
al.
v.
United
Egg
Producers, Inc.
et al., Case
No. 1:11-cv-8808, for
trial. The
Egg Products
Plaintiffs alleged that
the Company
and other
defendants
violated Section 1 of the
Sherman Act, 15. U.S.C. §
1, by agreeing to limit
the production of eggs and
thereby illegally to raise
the prices that plaintiffs paid for
processed egg products. In particular, the Egg
Products Plaintiffs attacked certain features
of the
United Egg Producers animal-welfare guidelines and program used by the Company and many other egg producers.
On October 24, 2019, the Company entered into a
confidential settlement agreement with The Kellogg Company dismissing all
claims against the Company
for an amount that
did not have
a material impact on
the Company’s
financial condition or results
of operations.
On November
11,
2019, a
stipulation for
dismissal was
filed with
the court,
and on
March 28,
2022, the
court
dismissed the Company with prejudice.
The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the
Egg Products
Plaintiffs $
17.8
million in damages. On
November 6, 2024, the
court entered a final
judgement against the Company and
other
defendants, jointly
and severally, totaling
$
43.6
million after
trebling. On
December 4,
2024, the
Company filed
a renewed
motion
for judgment as a
matter of law or
for a new trial,
and a motion to alter
or amend the judgment.
On December 13, 2024,
the court
granted defendants’ November 20,
2024 motion to stay
enforcement of the judgment
and entered an agreed
order requiring the
defendants to post security during post-judgment
proceedings and appeal, and stayed proceedings
to enforce the judgment until
the disposition of
the post-judgment motions
and ultimate appeals.
On December 17,
2024, the Company
posted a bond
in the
approximate amount of
$
23.9
million, representing
a portion
of the
total bond
required to
preserve the
right to
appeal the
trial
court’s
decision. Another
defendant posted
a bond
for the
remaining amount.
The Company
intends to
continue to
vigorously
defend the claims asserted by the Egg Products Plaintiffs.
If the
jury’s
decision is
ultimately upheld,
the Company
would be
jointly and
severally liable
with other
defendants for
treble
damages,
or
$
43.6
million,
subject
to
credit
for
certain
settlements
with
previous
settling
defendants,
plus
the
Egg
Product
Plaintiffs’ reasonable attorneys’ fees. During our
second fiscal quarter of 2024,
we recorded an accrued expense
of $
19.6
million
in selling, general and administrative expenses
in the Company’s
Condensed Consolidated Statements of Income and classified
as other noncurrent liabilities in the Company’s Condensed Consolidated Balance Sheets. Although less than the
bond posted by
the
Company,
the
accrual
represents
our
estimate
of
the
Company’s
proportional
share
of
the
reasonably
possible
ultimate
damages award, excluding
the Egg Product
Plaintiffs’ attorneys’ fees
that we believe
would be approximately
offset by the
credits
noted above. We have entered into a judgment allocation and joint defense agreement
with the other defendants remaining in the
case. Our accrual may change in the future to the extent we are successful in further proceedings in the litigation.
State of Oklahoma Watershed Pollution Litigation
On June
18, 2005, the
State of Oklahoma
filed suit, in
the United States
District Court for
the Northern District
of Oklahoma,
against Cal-Maine Foods, Inc.
and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc., Peterson Farms, Inc. and
Simmons Foods, Inc., and certain of their affiliates. The State of Oklahoma claims that through the disposal of chicken litter the
defendants polluted
the Illinois
River Watershed.
This watershed
provides water
to eastern
Oklahoma. The
complaint sought
injunctive relief and monetary damages, but the claim for monetary damages was dismissed by the court. Cal-Maine Foods, Inc.
discontinued operations in the watershed
in or around 2005. Since
the litigation began, Cal-Maine Foods,
Inc. purchased
%
of the
membership interests
of Benton
County Foods,
LLC, which
is an
ongoing commercial
shell egg
operation within
the Illinois
River
Watershed.
Benton
County
Foods,
LLC
is
not
a
defendant
in
the
litigation.
We
also
have
a
number
of
small
contract
producers that operate in the area.
The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered
findings of fact
and conclusions of
law in favor
of the State
of Oklahoma, but
no penalties were
assessed. The court
found the
defendants liable for state
law nuisance, federal
common law nuisance, and
state law trespass. The
court also found the
producers
vicariously liable for
the actions of
their contract producers.
On June
12, 2023,
the court ordered
the parties to
mediate before
retired Tenth Circuit Chief Judge Deanell Reece Tacha, but the mediation was unsuccessful. On June 26, 2024, the district court
denied defendants’
motion to
dismiss the
case. On
September 13,
2024, a
status hearing
was held
and the
court scheduled
an
evidentiary hearing
for December
3, 2024,
to determine
whether any
legal remedy
is available
based on
the now
14 year
old
record and changed circumstances of the Illinois River watershed.
On June 17, 2025, the court entered an opinion and
order that
found that the State satisfied its burden to show that conditions in the Illinois River watershed have not materially changed since
the original
trial and
the case
in not
moot. The
court instructed
the parties
to submit
proposed forms
of final
judgment. While
management believes there
is a
reasonable possibility of
a material loss
from the
case, at
the present
time, it
is not
possible to
estimate the
amount of
monetary exposure,
if any,
to the
Company due
to a
range of
factors, including
the following,
among
others: uncertainties inherent in any
assessment of potential costs associated
with injunctive relief or
other penalties based on
a
decision in a case tried
over 14 years ago based
on environmental conditions that existed at
the time, the lack of
guidance from
the court as to
what might be
considered appropriate remedies,
the ongoing litigation
with the State
of Oklahoma, and
uncertainty
regarding
what
our
proportionate
share
of
any
remedy
would
be,
although
we
believe
that
our
share
compared
to
the
other
defendants is small.
Other Matters
In addition to the above,
the Company is involved in
various other claims and litigation
incidental to its business. Although
the
outcome of these matters
cannot be determined with
certainty, management, upon the advice of
counsel, is of the
opinion that the
final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
Note 17 - Subsequent Events
Effective June 2, 2025, the Company completed its previously announced acquisition of Echo Lake Foods, LLC (formerly Echo
Lake Foods,
Inc.) and
certain related
companies (collectively
“Echo Lake
Foods”). Echo
Lake Foods
is based
in Burlington,
Wisconsin and produces, packages, markets and distributes prepared foods, including waffles, pancakes, scrambled eggs, frozen
cooked omelets, egg patties,
toast and diced eggs.
The purchase price was
approximately $
million, excluding expected tax
assets resulting from the transaction, and was funded with available cash on hand.
The Company has not included
certain disclosures due to
the timing of the
transaction relative to the
date of the report containing
these Financial Statements and because the initial accounting for the business combination is incomplete.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM
9.
CHANGES IN
AND DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING AND
FINANCIAL
DISCLOSURE
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A.
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
Securities Exchange
Act of
1934, as
amended (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
May 31,
2025 at
the reasonable
assurance
level.
Internal Control Over Financial Reporting
(a)
Management’s Report on Internal Control Over Financial Reporting
The following sets
forth, in accordance
with Section 404(a)
of the Sarbanes-Oxley
Act of 2002
and Item 308
of the Securities
and Exchange Commission’s Regulation S-K, the report of management on our internal control over financial reporting.
1.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting.
“Internal control over
financial reporting” is
a process designed
by, or under the supervision
of, our Chief
Executive
Officer and Chief Financial Officer,
together with other financial officers, and effected by the Board, management
and
other
personnel,
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 and includes those policies and procedures that:
●
Pertain to the maintenance of records that
in reasonable detail accurately and fairly reflect
the transactions
and dispositions of our assets;
●
Provide reasonable assurance that transactions
are recorded as necessary to
permit preparation of financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
our
receipts
and
expenditures are being made
only in accordance with
authorizations of our management
and directors; and
●
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
2.
Our management,
in accordance
with Rule
13a-15(c) under
the Exchange
Act
and with
the participation
of our
Chief
Executive
Officer
and
Chief
Financial
Officer,
together
with
other
financial
officers,
evaluated
the
effectiveness
of
our
internal
control
over
financial
reporting
as
of
May
31,
2025. The
framework
on
which
management’s
evaluation
of
our
internal
control
over
financial
reporting
is
based
is
the
“Internal
Control
-
Integrated
Framework”
published
in
by
the
Committee
of
Sponsoring
Organizations
(“COSO”)
of
the
Treadway Commission.
3.
Management has determined that our internal control over financial reporting as of May
31, 2025 is effective. It is
noted
that
internal
control
over
financial
reporting
cannot
provide
absolute
assurance
of
achieving
financial
reporting objectives, but rather reasonable assurance of achieving such objectives.
4.
The attestation report of FROST, PLLC on our internal control over financial reporting, which includes that firm’s
opinion on the effectiveness of our internal control over financial reporting, is set forth below.
(b)
Attestation Report of the Registrant’s Public Accounting Firm
Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting
Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Ridgeland, Mississippi
Opinion on Internal Control Over Financial Reporting
We have
audited Cal-Maine Foods, Inc. and Subsidiaries’ internal control over financial reporting as of
May 31, 2025,
based
on
criteria
established
in
Internal
Control
-
Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of the Treadway
Commission (“COSO”).
In our opinion, Cal-Maine Foods, Inc.
and Subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of May 31, 2025, based on criteria established in
Internal Control - Integrated Framework
issued by the COSO.
We
also have
audited, in
accordance with
the standards
of the
Public Company
Accounting Oversight
Board (United
States) (“PCAOB”), the consolidated balance sheets and the related
consolidated statements of income, comprehensive income,
stockholders’ equity, and cash flows of Cal-Maine Foods, Inc.
and Subsidiaries and our report dated July 22, 2025 expressed an
unqualified opinion.
Basis for Opinion
Cal-Maine
Foods,
Inc.
and
Subsidiaries’
management
is
responsible
for
maintaining
effective
internal
control
over
financial
reporting,
and
for
their
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying Management’s Report on Internal Control Over Financial Reporting in Item 9A.
Our responsibility is to express
an opinion on
the entities’ internal
control over financial
reporting based on
our audit.
We are a public accounting firm
registered
with the PCAOB and are required to be
independent with respect to Cal-Maine Foods, Inc. and
Subsidiaries in accordance with
the U.S.
federal securities
laws and
the applicable
rules and
regulations of
the Securities
and Exchange
Commission and
the
PCAOB.
We
conducted our
audit in
accordance with
the standards
of
the PCOAB.
Those standards
require that
we plan
and
perform the audit to
obtain reasonable assurance about
whether effective internal control
over financial reporting was
maintained
in all
material respects.
Our audit
of internal
control over
financial reporting
included obtaining
an understanding
of internal
control over
financial reporting,
assessing the
risk that
a material
weakness exists,
and testing
and evaluating
the design
and
operating effectiveness of internal control based on
the assessed risk. Our audit also included performing
such other procedures
as we considered necessary in the circumstances. We believe our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
An entities’ internal control over
financial reporting is a process
designed to provide reasonable assurance
regarding the
reliability of financial reporting
and the preparation of
consolidated financial statements for
external purposes in accordance
with
accounting principles generally
accepted in the
United States of
America. An
entities’ internal control
over financial reporting
includes those
policies and
procedures that
(1) pertain
to the
maintenance of
records that,
in reasonable
detail, accurately
and
fairly reflect the transactions and dispositions of
the assets of the entities; (2) provide
reasonable assurance that transactions are
recorded
as
necessary
to
permit
preparation
of
consolidated
financial
statements
in
accordance
with
accounting
principles
generally accepted
in the
United States
of America,
and that
receipts and
expenditures of
the entities
are being
made only
in
accordance
with
authorizations
of
management
and
directors
of
the
entities;
and
(3)
provide
reasonable
assurance
regarding
prevention or
timely detection of
unauthorized acquisition, use,
or disposition
of the
entities’ assets
that could
have a
material
effect on the consolidated financial statements.
Because of
its inherent
limitations, internal
control over
financial reporting
may not
prevent or
detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
Frost, PLLC
Little Rock, Arkansas
July 22, 2025
(c)
Changes in Internal Control Over Financial Reporting
In
connection
with
its
evaluation
of
the
effectiveness,
as
of
May
31,
2025,
of
our
internal
control
over
financial
reporting,
management determined that there was no change in our internal control over financial reporting that occurred during the fourth
quarter ended
May 31,
2025, that
has materially
affected, or
is reasonably
likely to
materially affect,
our internal
control over
financial reporting.

---

ITEM 9B. OTHER INFORMATION
ITEM 9B.
OTHER INFORMATION
During our fourth
quarter of fiscal
2025, no director
or officer of
the Company
adopted
or
terminated
any Rule 10b5-1
trading
arrangement or
non-Rule
10b5-1
trading arrangement, as such terms are defined in Item 408(a) or Regulation S-K.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as set forth below, the information concerning
directors, executive officers and corporate
governance required by Item 10
is
incorporated
by
reference
from
our
definitive
proxy
statement
which
is
to
be
filed
pursuant
to
Regulation
14A
under
the
Securities Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.
We have adopted a Code of
Ethics and Business
Conduct that applies
to our directors,
officers and employees, including
the chief
executive officer
and principal
financial and
accounting officers
of the
Company.
We
will provide
a copy
of the
code free
of
charge to any person that requests a copy by writing to:
Cal-Maine Foods, Inc.
1052 Highland Colony Pkwy, Suite 200
Ridgeland, MS
Attn.:
Investor Relations
Requests can be made by phone at (601) 948-6813.
A
copy
is
also
available
at
our
website
www.calmainefoods.com
under
the
heading
“Investor
Relations
-
Corporate
Governance.” We
intend
to
disclose
any
amendments
to,
or
waivers
from,
the
Code
of
Ethics
and
Business
Conduct
on
our
website promptly following the date
of any such amendment or waiver. Information contained on
our website is not a part
of this
report.

---

ITEM 11. EXECUTIVE COMPENSATION
ITEM 11.
EXECUTIVE COMPENSATION
The information concerning executive compensation required by Item 11 is incorporated by reference from our definitive proxy
statement which is
to be filed
pursuant to Regulation
14A under the
Securities Exchange Act
of 1934 in
connection with our
Annual Meeting of Stockholders.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
The information
concerning security
ownership of
certain beneficial
owners and
management and
related stockholder
matters
required by Item 12 is incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation
14A under the Securities Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13.
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
information
concerning
certain
relationships
and
related
transactions,
and
director
independence
required
by
Item
is
incorporated by
reference from
our definitive
proxy statement
which is
to be
filed pursuant
to Regulation
14A under
the Securities
Exchange Act of 1934 in connection with our 2025 Annual Meeting of Stockholders.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14.
PRINCIPAL ACCOUNTANT
FEES AND SERVICES
The information
concerning principal
accountant fees
and services
required by
Item 14
is incorporated
by reference
from our
definitive
proxy
statement
which
is
to
be
filed
pursuant
to
Regulation
14A
under
the
Securities
Exchange
Act
of
in
connection with our 2025 Annual Meeting of Stockholders.
PART
IV.

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT
SCHEDULES
(a)(1)
Financial Statements
The following consolidated financial
statements and notes thereto
of Cal-Maine Foods, Inc.
and its subsidiaries are
included in
Item 8 and are filed herewith:
Report of Independent Registered Public Accounting Firm
(PCAOB
)
Consolidated Balance Sheets - May 31, 2025 and June 1, 2024
Consolidated Statements of Income - Fiscal Years Ended May 31, 2025, June 1, 2024, and June 3, 2023
Consolidated Statements of Comprehensive Income - Fiscal Years Ended May 31, 2025, June 1, 2024, and June
3, 2023
Consolidated Statements of Changes in Stockholders' Equity for the Fiscal Years Ended May 31, 2025, June 1,
2024, and June 3, 2023
Consolidated Statements of Cash Flows for the Fiscal Years Ended May 31, 2025, June 1, 2024, and June 3, 2023
Notes to Consolidated Financial Statements
(a)(2)
Financial Statement Schedule
All schedules are
omitted either because
they are not
applicable or required, or
because the required
information is included
in
the financial statements or notes thereto.
(a)(3)
Exhibits Required by Item 601 of Regulation S-K
See Part (b) of this Item 15.
(b)
Exhibits Required by Item 601 of Regulation S-K
The following exhibits are filed herewith or incorporated by reference:
Exhibit
Number
Exhibit
2.1
Echo Lake Purchase Agreement (incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q, filed
April 8, 2025)
3.1
Fourth Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to
Exhibit 4.1 in the Registrant’s Form S-3, filed April 15, 2025, Registration No. 333-286548)
3.2
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's
Form 8-K, filed March 27, 2025)
4.1**
Description of Registrant's Securities Registered Under Section 12 of the Exchange Act
10.1
Amended and Restated Credit Agreement, dated November 15, 2021, among Cal-Maine Foods, Inc., the
Guarantors, BMO Harris Bank N.A., as Administrative Agent, and the Lenders (incorporated by reference to
Exhibit 10.1 in the Registrant's Form 8-K, filed November 19, 2021)
10.2
First Amendment to Credit Agreement, dated May 26, 2023, among Cal-Maine Foods, Inc., the Guarantors,
BMO Harris Bank N.A., as Administrative Agent, and the Lenders (incorporated by reference to Exhibit 10.5
to the Registrant's Form 10-K filed July 25, 2023)
10.3
Second Amendment entered into as of March 25, 2025 to Amended and Restated Credit Agreement between
Cal-Maine Foods, Inc. and certain subsidiaries as guarantors, BMO Bank N.A. as administrative agent and the
lenders party thereto (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, filed March 27,
2025)
10.4
Agreement Regarding Conversion dated February 25, 2025 by and among Cal-Maine Foods, Inc. DLNL, LLC,
and each member of DLNL, LLC (incorporated by reference to Exhibit 99.1 to the Registrant's Form 8-K,
filed February 25, 2025)
10.5*
Form of Indemnification Agreement with Directors and Officers (incorporated by reference to Exhibit 99.2 to
the Registrant’s Form 8-K, filed March 27, 2025)
10.6*
Cal-Maine Foods, Inc. KSOP, as amended and restated, effective April 1, 2012 (incorporated by reference to
Exhibit 4.4 in the Registrant’s Form S-8, filed March 30, 2012)
10.7*
Cal-Maine Foods, Inc. KSOP Trust, as amended and restated, effective April 1, 2012 (incorporated by
reference to Exhibit 4.5 in the Registrant’s Form S-8, filed March 30, 2012)
10.8*
Amended and Restated Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Registrant’s Form 8-K filed October 2, 2020)
10.9*
Amendment No. 1 to the Amended and Restated Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive
Plan (incorporated by reference to Exhibit 99.3 to the Registrant’s Form 8-K, filed March 27, 2025)
10.10*
Form of Restricted Stock Agreement for Amended and Restated Cal-Maine Foods, Inc. 2012 Omnibus Long-
Term Incentive Plan (incorporated by reference to Exhibit 10.8 to the Registrant's Form 10K filed July 19,
2022)
10.11*
Form of Performance Share Unit Awards (incorporated by reference to Exhibit 10.7 to the Registrant’s Form
10-Q, filed April 8, 2025)
10.12*
Form of Severance and Change in Control Agreement (incorporated by reference to Exhibit 10.6 to the
Registrant’s Form 10-Q, filed April 8, 2025)
10.13*
Supplemental Executive Retirement Plan, adopted March 24, 2023 (incorporated by reference to Exhibit 10.1
to the Registrant’s Form 8-K filed March 27, 2023)
10.14*
Split Dollar Life Insurance Plan, adopted March 24, 2023 (incorporated by reference to Exhibit 10.2 to the
Registrant’s Form 8-K filed March 27, 2023)
10.15*
Deferred Compensation Plan, dated November 15, 2021 (incorporated by reference to Exhibit 10.2 in the
Registrant's Form 8-K, filed November 19, 2021)
19.1
Insider Trading Policy (incorporated by reference to Exhibit 19.1 in the Registrant's Form 10-K, filed July 23,
2024)
21**
Subsidiaries of the Registrant
23.1**
Consent of FROST, PLLC
31.1**
Rule 13a-14(a) Certification of Chief Executive Officer
31.2**
Rule 13a-14(a) Certification of Chief Financial Officer
32***
Section 1350 Certifications of the Chief Executive Officer and the Chief Financial Officer
Incentive-Based Compensation Recovery Policy (incorporated by reference to Exhibit 97 in the Registrant's
Form 10-K, filed July 23, 2024)
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
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Management contract or compensatory plan or arrangement
**
Filed herewith as an Exhibit
***
Furnished herewith as an Exhibit
+
Submitted electronically with this Annual Report on Form 10-K
(c)
Financial Statement Schedules Required by Regulation S-X
All schedules for which provision is made in
the applicable accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are inapplicable and therefore have been omitted.