CAL-MAINE FOODS INC
10-Ks and 10-Qs
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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
,
,
,
(Address of principal executive offices)
(Zip Code)
(
)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
The
Indicate
by
check
mark
whether
the
registrant: (1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities Exchange Act of
1934 during the
preceding 12 months (or
for such shorter period
that the registrant was
required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☑
☐
Indicate by check mark
whether the registrant has
submitted electronically every Interactive Data
File required to be
submitted
pursuant to
Rule 405 of
Regulation S-T (§232.405
of this
chapter) during
the preceding
12 months
(or for
such shorter period
that the registrant was required to submit such files).
☑
☐
Indicate by check
mark whether the
registrant is a
large accelerated filer,
an accelerated filer,
a non-accelerated filer,
a smaller
reporting
company,
or
an
emerging
growth
company.
See
the
definitions
of
“large
accelerated
filer,”
“accelerated
filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☑
Accelerated filer
☐
Non – Accelerated filer
☐
Smaller reporting company
Emerging growth company
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying
with
any
new
or
revised
financial
accounting
standards
provided
pursuant
to
Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
☑
There were
value, outstanding as of January 7, 2025.
2
INDEX
Page
Number
Part I.
Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Other Information
Item 1.
Item 1A.
Item 2.
Item 6.
3
PART
I.
FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
(Unaudited)
November 30, 2024
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
$
Investment securities available-for-sale
Trade and other receivables, net
Income tax receivable
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant & equipment, net
Investments in unconsolidated entities
Goodwill
Intangible assets, net
Other long-term assets
Total Assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
Accrued wages and benefits
Accrued income taxes payable
Dividends payable
Accrued expenses and other liabilities
Total current liabilities
Other noncurrent liabilities
Deferred income taxes, net
Total liabilities
Commitments and contingencies - see Note 10
—
—
Stockholders’ equity:
Common stock ($
Common stock - authorized
Class A convertible common stock - authorized and issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
(
908
)
(
1,773
)
Common stock in treasury at cost –
shares at June 1, 2024
(
31,661
)
(
31,597
)
Total Cal-Maine Foods, Inc. stockholders’ equity
Noncontrolling interest in consolidated entity
(
3,104
)
Total stockholders’ equity
Total Liabilities and Stockholders’ Equity
$
$
See Notes to Condensed Consolidated Financial Statements.
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
November 30, 2024
December 2, 2023
Net sales
$
$
$
$
Cost of sales
Gross profit
Selling, general and administrative
Loss on involuntary conversions
(Gain) loss on disposal of fixed assets
(
1,479
)
Operating income
Other income (expense):
Interest income, net
Other, net
Total other income, net
Income before income taxes
Income tax expense
Net income
Less: Loss attributable to noncontrolling
interest
(
705
)
(
431
)
(
1,091
)
(
946
)
Net income attributable to Cal-Maine Foods,
Inc.
$
$
$
$
Net income per common share:
Basic
$
$
$
$
Diluted
$
$
$
$
Weighted average shares outstanding:
Basic
Diluted
See Notes to Condensed Consolidated Financial Statements.
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income
(In thousands)
(Unaudited)
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
November 30, 2024
December 2, 2023
Net income
$
$
$
$
Other comprehensive income (loss), before
tax:
Unrealized holding gain (loss) on available-
for-sale securities, net of reclassification
adjustments
(
573
)
Income tax benefit (expense) related to
items of other comprehensive income
(
218
)
(
277
)
(
409
)
Other comprehensive income (loss), net of tax
(
434
)
Comprehensive income
Less: Comprehensive loss attributable to the
noncontrolling interest
(
705
)
(
431
)
(
1,091
)
(
946
)
Comprehensive income attributable to Cal-
Maine Foods, Inc.
$
$
$
$
See Notes to Condensed Consolidated Financial Statements.
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
Cash flows from operating activities:
Net income
$
$
Depreciation and amortization
Deferred income taxes
(
13,825
)
Other adjustments, net
(
159,791
)
Net cash provided by operations
Cash flows from investing activities:
Purchases of investment securities
(
501,567
)
(
43,569
)
Sales and maturities of investment securities
Investment in unconsolidated entities
(
363
)
Distributions from unconsolidated entities
Acquisition of business
(
111,521
)
(
53,746
)
Purchases of property, plant and equipment
(
65,588
)
(
65,774
)
Net proceeds from disposal of property, plant and equipment
Net cash provided by (used in) investing activities
(
247,422
)
Cash flows from financing activities:
Payments of dividends
(
87,774
)
(
37,276
)
Purchase of common stock by treasury
(
60
)
(
5
)
Principal payments on long-term debt
(
2,477
)
Principal payments on finance lease
(
214
)
Net cash used in financing activities
(
90,311
)
(
37,495
)
Net change in cash and cash equivalents
(
97,582
)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
unaudited
condensed
consolidated
financial
statements
of
Cal-Maine
Foods,
Inc.
and
its
subsidiaries
(the
“Company,”
“we,” “us,” “our”) have
been prepared in accordance
with the instructions to
Form 10-Q and Article
10 of Regulation S-X
and
in accordance
with generally
accepted accounting
principles in
the United
States of
America (“GAAP”)
for interim
financial
reporting and should
be read in
conjunction with our
Annual Report on
Form 10-K for
the fiscal year
ended June 1,
2024 (the
“2024
Annual Report”).
These
statements
reflect
all
adjustments
that
are,
in
the
opinion
of
management,
necessary
to
a
fair
statement of the results for the interim periods presented and,
in the opinion of management, consist of adjustments of a
normal
recurring nature. Operating results
for the interim periods
are not necessarily indicative
of operating results for
the entire fiscal
year.
Fiscal Year
The Company’s
fiscal year
ends on
the Saturday
closest to
May 31.
Each of
the three-month
periods and
year-to-date periods
ended on November 30, 2024 and December 2, 2023 included
13
26 weeks
, respectively.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make
estimates and
assumptions that
affect the
amounts reported
in the
consolidated financial
statements and
accompanying notes.
Actual results
could differ from those estimates.
Investment Securities Available-for-Sale
The Company has
determined that its
debt securities
are available-for-sale
investments. We
classify these securities
as current
because the
amounts invested
are available
for current
operations. Available
-for-sale securities
are carried
at fair
value, based
on quoted market prices as of the balance sheet
date, with unrealized gains and losses recorded in other comprehensive income.
The
amortized cost
of
debt
securities is
adjusted
for
amortization of
premiums and
accretion of
discounts
to
maturity and
is
recorded in interest income. The Company regularly evaluates
changes to the rating of its debt
securities by credit agencies and
economic conditions to
assess and record
any expected credit
losses through allowance
for credit losses,
limited to the
amount
that fair value was less than the amortized cost basis.
The cost basis
for realized gains
and losses on
available-for-sale securities is
determined by the
specific identification method.
Gains
and
losses
are
recognized
in
other
income
(expenses)
as
Other,
net
in
the
Company’s
Condensed
Consolidated
Statements of Income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.
Trade Receivables
Trade
receivables are
stated at
their carrying
values, which
include a
reserve for
credit losses.
As of
November 30,
2024 and
June 1,
2024, reserves
for credit
losses were
$
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.
Dividends Payable
We
accrue dividends at the
end of each quarter
according to the Company’s
dividend policy adopted by its
Board of Directors.
The Company pays
a dividend to
shareholders of its
Common Stock and Class
A Common Stock
on a quarterly
basis for each
quarter for
which the
Company reports net
income attributable
to Cal-Maine
Foods, Inc.
computed in
accordance with
GAAP
in an amount equal
to
one-third
following the last
day of such
quarter, except
for the fourth
fiscal quarter.
For the fourth
quarter, the
Company pays dividends
to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.
8
Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend for a subsequent
profitable quarter until the Company is profitable on
a cumulative basis computed from the
date of the most recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board of
Directors.
Revenue Recognition
The Company
recognizes revenue
through sale
of its
products to
customers through
retail, foodservice
and other
distribution
channels.
The
majority
of
the
Company’s
revenue
is
derived
from
agreements
or
contracts
with
customers
based
upon
the
customer
ordering
its
products
with
a
single
performance
obligation
of
delivering
the
product.
The
Company
believes
the
performance
obligation
is
met
upon
delivery
and
acceptance
of
the
product
by
our
customers,
which
generally
occurs
upon
shipment
or
delivery
to
a
customer
based
on
terms
of
the
sale.
Costs
paid
to
third
party
brokers
to
obtain
agreements
are
expensed as the Company’s agreements are generally less than one year.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
delivery of
the
products.
The
Company
periodically
offers
sales
incentives
or
other
programs
such
as
rebates,
discounts,
coupons,
volume-
based incentives, guaranteed sales
and other programs.
The Company records an
estimated allowance for costs
associated with
these programs, which is recorded as
a reduction in revenue at the
time of sale using historical trends
and projected redemption
rates
of
each
program.
The
Company
regularly
reviews
these
estimates
and
any
difference
between
the
estimated
costs
and
actual realization of these programs would be recognized the subsequent period.
Business Combinations
The Company applies the acquisition method of accounting, which requires that once control is obtained, all
the assets acquired
and liabilities assumed, including amounts
attributable to noncontrolling interests, are
recorded at their respective fair
values at
the date of acquisition. We determine the fair values of identifiable assets and liabilities internally,
which requires estimates and
the
use
of
various
valuation
techniques.
When
a
market
value
is
not
readily
available,
our
internal
valuation
methodology
considers the remaining estimated life of the assets acquired and what management believes is the market value for those assets.
We
typically use the income method approach for intangible assets
acquired in a business combination. Significant estimates in
valuing
certain
intangible
assets
include,
but
are
not
limited
to,
the
amount
and
timing
of
future
cash
flows,
growth
rates,
discount rates and useful lives. The
excess of the purchase price over
fair values of identifiable assets and
liabilities is recorded
as goodwill.
Loss Contingencies
Certain
conditions
may
exist
as
of
the
date
the
consolidated
financial
statements
are
issued
that
may
result
in
a
loss
to
the
Company but which will
only be resolved when
one or more future
events occur or fail
to occur.
The Company’s
management
and
its
legal
counsel
assess
such
contingent
liabilities,
and
such
assessment
inherently
involves
an
exercise
of
judgment.
In
assessing loss
contingencies related
to legal
proceedings that
are pending
against the
Company or
unasserted claims
that may
result in such
proceedings, the Company’s
legal counsel evaluates
the perceived merits
of any
legal proceedings or
unasserted
claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment
of a contingency
indicates it is
probable that a
material loss has
been incurred and
the amount of
the liability
can
be
estimated,
the
estimated
liability
would
be
accrued
in
the
Company’s
consolidated
financial
statements.
If
the
assessment
indicates
a
potentially
material
loss
contingency
is
not
probable,
but
is
reasonably
possible,
or
is
probable
but
cannot
be
estimated,
then
the
nature
of
the
contingent
liability,
together
with
an
estimate
of
the
range
of
possible
loss
if
determinable and
material, would
be disclosed.
Loss contingencies
considered remote
are generally
not disclosed
unless they
involve guarantees, in which case the nature of the guarantee would be disclosed.
The Company expenses the costs of litigation as they are incurred.
New Accounting Pronouncements and Policies
No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our
Consolidated Financial Statements.
9
Note 2 - Acquisitions
Acquisition of ISE America, Inc. Assets
Effective
, the
Company acquired
substantially all
of the
commercial shell
egg production,
processing and
egg
products breaking facilities
of ISE America,
Inc. and certain
of its affiliates
(“ISE”). The assets
acquired included commercial
shell
egg
production
and
processing
facilities
with
a
capacity
at
the
time
of
acquisition
of
approximately
hens, including
egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast
and
Mid-Atlantic
states,
and
production
operations
in
Maryland,
New
Jersey,
Delaware
and
South
Carolina.
The
Company
accounted for the acquisition as a business combination.
Pending the
finalization of
the Company’s
valuation, the following
table summarizes
the consideration paid
for the
ISE assets
and the amounts of assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
Property, plant and equipment
Intangible assets
Liabilities assumed
(
308
)
Total identifiable net assets
$
Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value
as
management
believes
that
its
carrying
value
best
approximates
its
fair
value.
Feed
ingredients,
packaging
and
egg
inventory were all valued based on market prices as of June 28, 2024.
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible
assets
consisted
primarily
of
customer
lists
acquired.
Customers
lists
were
valued
using
the
income
method
approach.
Other Acquisitions
Effective
November
30,
2024,
the
Company
acquired
the
remaining
%
interest
in
our
majority-owned
subsidiary,
MeadowCreek Foods LLC.
Note 3 - Investment
Securities
The following represents the Company’s investment securities as of November 30, 2024 and June 1, 2024 (in thousands):
November 30, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
10
June 1, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
Available-for-sale
Proceeds from
sales and
maturities of
investment securities
available-for-sale
were $
the twenty-six
weeks ended November
30, 2024
and December
2, 2023,
respectively.
Gross realized
gains for
the twenty-six
weeks ended November 30, 2024 and December 2, 2023 were $
realized
losses
for
the
twenty-six
weeks
ended
November
30,
2024.
Gross
realized
losses
for
the
twenty-six
weeks
ended
December 2, 2023 were $
Actual maturities may differ
from contractual maturities as
some borrowers have
the right to call
or prepay obligations
with or
without penalties. Contractual maturities of current investments at November 30, 2024 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Note 4 - Fair Value Measurements
The Company
is required
to categorize
both financial
and nonfinancial
assets and
liabilities based
on the
following fair
value
hierarchy. The
fair value
of an
asset is
the price
at which
the asset
could be
sold in
an orderly
transaction between
unrelated,
knowledgeable, and willing parties able to engage in the
transaction. A liability’s fair value
is defined as the amount that would
be paid
to transfer
the liability
to a
new obligor
in a
transaction between
such parties,
not
the amount
that would
be paid
to
settle the liability with the creditor.
•
Level 1
•
Level 2
directly or indirectly, including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market data
•
Level 3
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
short maturity of these instruments.
11
Assets and Liabilities Measured at Fair Value
on a Recurring Basis
In
accordance with
the
fair value
hierarchy described
above, the
following
table shows
the
fair value
of
financial assets
and
liabilities measured at fair value on a recurring basis as of November 30, 2024 and June 1, 2024 (in thousands):
November 30, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
June 1, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
Investment securities
–
available-for-sale
classified as
Level 2
consist of
securities with
maturities of
three months
or longer
when purchased. We
classified these securities as current because amounts invested are readily available
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent consideration
classified as
Level 3
consists of
the potential
obligation to
pay an
earnout to
Fassio Egg
Farms, Inc.
(“Fassio”)
contingent
on
the
acquired
business
meeting
certain
return
on
profitability
milestones
over
a
three-year
commencing on the date of the acquisition in the second quarter of fiscal
2024. The fair value of the contingent consideration is
estimated
using
a
discounted
cash
flow
model.
Key
assumptions
and
unobservable
inputs
that
require
significant
judgement
used
in
the
estimate
include
weighted
average
cost
of
capital,
egg
prices,
projected
revenue
and
expenses
over
which
the
contingent considered
is measured,
and the
probability assessments
with respect
to the
likelihood of
achieving the
forecasted
projections.
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
Fair value adjustments
Balance, November 30, 2024
$
12
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
condensed consolidated statements of income.
Note 5 - Inventories
Inventories consisted of the following as of November 30, 2024 and June 1, 2024 (in thousands):
November 30, 2024
June 1, 2024
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
We
grow
and
maintain
flocks
of
layers
(mature
female
chickens),
pullets
(female
chickens,
under
18
weeks
of
age),
and
breeders
(male
and
female
chickens
used
to
produce
fertile
eggs
to
hatch
for
egg
production
flocks).
Our
total
flock
at
November 30,
2024 and
June 1,
2024 consisted
of approximately
million and
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended November 30, 2024 and December 2, 2023 (in thousands):
Thirteen Weeks Ended November 30, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at August 31,
2024
$
$
$
(
31,632
)
$
$
(
474
)
$
$
(
3,490
)
$
Other comprehensive
income, net of tax
—
—
—
—
(
434
)
—
—
(
434
)
Stock compensation
plan transactions
(
29
)
—
—
—
Contributions to
Crepini Foods LLC
—
—
—
—
—
—
Aquisition of
noncontrolling
interest in
MeadowCreek Foods
LLC
—
—
—
—
—
(
3,826
)
Dividends ($
per share)
Common
—
—
—
—
—
(
65,911
)
—
(
65,911
)
Class A common
—
—
—
—
—
(
7,147
)
—
(
7,147
)
Net income (loss)
—
—
—
—
—
(
705
)
Balance at November
30, 2024
$
$
$
(
31,661
)
$
$
(
908
)
$
$
$
13
Thirteen Weeks Ended December 2, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at September
2, 2023
$
$
$
(
30,014
)
$
$
(
2,291
)
$
$
(
2,013
)
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
—
—
—
Dividends ($
per share)
Common
—
—
—
—
—
(
5,125
)
—
(
5,125
)
Class A common
—
—
—
—
—
(
557
)
—
(
557
)
Net income (loss)
—
—
—
—
—
(
431
)
Balance at December
2, 2023
$
$
$
(
30,014
)
$
$
(
1,614
)
$
$
(
2,444
)
$
Twenty-six Weeks
Ended November 30, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 1,
2024
$
$
$
(
31,597
)
$
$
(
1,773
)
$
$
(
3,104
)
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(
64
)
—
—
—
Contributions to
Crepini Foods LLC
—
—
—
—
—
—
Aquisition of
noncontrolling
interest in
MeadowCreek Foods
LLC
—
—
—
—
—
(
3,826
)
Dividends ($
per share)
Common
—
—
—
—
—
(
110,986
)
—
(
110,986
)
Class A common
—
—
—
—
—
(
12,038
)
—
(
12,038
)
Net income (loss)
—
—
—
—
—
(
1,091
)
Balance at November
30, 2024
$
$
$
(
31,661
)
$
$
(
908
)
$
$
$
14
Twenty-six Weeks
Ended December 2, 2023
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 3,
2023
$
$
$
(
30,008
)
$
$
(
2,886
)
$
$
(
1,498
)
$
Other comprehensive
loss, net of tax
—
—
—
—
1,272
—
—
Stock compensation
plan transactions
(
6
)
—
—
—
Dividends ($
per share)
Common
—
—
—
—
—
(
5,390
)
—
(
5,390
)
Class A common
—
—
—
—
—
(
586
)
—
(
586
)
Net income (loss)
—
—
—
—
—
(
946
)
Balance at December
2, 2023
$
$
$
(
30,014
)
$
$
(
1,614
)
$
$
(
2,444
)
$
Note 7 - Net Income per Common Share
Basic net income per
share is based on
the weighted average Common Stock
and Class A Common
Stock outstanding. Diluted
net
income
per
share
is
based
on
weighted-average
common
shares
outstanding
during
the
relevant
period
adjusted
for
the
dilutive effect of share-based awards.
The
following
table
provides
a
reconciliation
of
the
numerators
and
denominators
used
to
determine
basic
and
diluted
net
income per common share (amounts in thousands, except per share data):
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
November 30, 2024
December 2, 2023
Numerator
Net income
$
$
$
$
Less: Loss attributable to
noncontrolling interest
(
705
)
(
431
)
(
1,091
)
(
946
)
Net income attributable to Cal-Maine
Foods, Inc.
$
$
$
$
Denominator
Weighted-average common shares
outstanding, basic
Effect of dilutive restricted shares
Weighted-average common shares
outstanding, diluted
Net income per common share
attributable to Cal-Maine Foods, Inc.
Basic
$
$
$
$
Diluted
$
$
$
$
15
Note 8 - Revenue from Contracts with Customers
Net revenue is primarily generated through the sales of shell eggs and egg products. The Company’s shell egg product offerings
include specialty and conventional shell eggs.
Specialty shell eggs include cage-free, organic,
brown, free-range, pasture-raised
and nutritionally enhanced eggs. Conventional shell egg sales represent all other shell egg sales not
sold as specialty shell eggs.
The Company’s
egg products
offerings include
liquid and
frozen egg
products, as
well as
ready-to-eat products
such as
hard-
cooked
eggs,
egg
wraps,
protein
pancakes,
crepes
and
wrap-ups.
Liquid
and
frozen
egg
products
are
primarily
sold
to
the
institutional,
foodservice
and
food
manufacturing
sectors.
Ready-to-eat
products
are
sold
primarily
within
the
retail
and
foodservice channels.
The following table provides revenue disaggregated by product category (in thousands):
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
November 30, 2024
December 2, 2023
Conventional shell egg sales
$
$
$
$
Specialty shell egg sales
Egg products
Other
$
$
$
$
Note 9 - Stock Based Compensation
Total stock-based compensation expense was $
and December 2, 2023, respectively.
Unrecognized compensation
expense as
a result
of non-vested
shares of
restricted stock
outstanding under
the Amended
and
Restated
2012
Omnibus
Long-Term
Incentive
Plan
at
November
30,
2024
of
$
average period of
14 - Stock Compensation Plans in our 2024 Annual Report for further information on our stock compensation plans.
The Company’s restricted share activity for the twenty-six weeks ended November 30, 2024 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, June 1, 2024
$
Vested
(
3,016
)
Forfeited
(
2,892
)
Outstanding, November 30, 2024
$
Note 10 - Commitments and Contingencies
LEGAL PROCEEDINGS
State of Texas v.
Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23,
2020, the Company
and its subsidiary
Wharton County Foods,
LLC (“WCF”) were
named as defendants
in State
of
Texas
v.
Cal-Maine Foods,
Inc. d/b/a
Wharton; and
Wharton County
Foods, LLC,
Cause No.
2020-25427,
in the
District
Court of
Harris County,
Texas.
The State
of Texas
(the “State”)
asserted claims
based on
the Company’s
and WCF’s
alleged
violation
of
the
Texas
Deceptive
Trade
Practices—Consumer
Protection
Act,
Tex.
Bus.
&
Com.
Code
§§
17.41-17.63
(“DTPA”).
The
State
claimed
that
the
Company
and
WCF
offered
shell
eggs
at
excessive
or
exorbitant
prices
during
the
COVID-19
state
of
emergency
and
made
misleading
statements
about
shell
egg
prices.
The
State
sought
temporary
and
permanent
injunctions
against
the
Company
and
WCF
to
prevent
further
alleged
violations
of
the
DTPA,
along
with
over
$
prejudice. On September 11,
2020, the State filed a
notice of appeal, which was
assigned to the Texas
Court of Appeals for the
First
District.
On
August
16,
2022,
the
appeals
court
reversed
and
remanded
the
case
back
to
the
trial
court
for
further
16
proceedings. On October 31, 2022, the Company and WCF appealed the First District Court’s
decision to the Supreme Court of
Texas.
On September
29, 2023,
the Supreme
Court of
Texas
denied the
Company’s
Petition for
Review and
remanded to
the
trial court
for further
proceedings. The
district court
entered a
pre-trial order
scheduling pre-trial
proceedings and
tentatively
setting
a
trial
date
for
August
11,
2025.
On
November 30,
2024,
the
State
filed
an
amended petition,
primarily
to
address
a
procedural
deficiency
that
required
the
State
to
generally
plead
it
was
seeking
monetary
relief
over
$
restitution, civil
penalties, attorney’s
fees and
costs. Management
believes the
risk of
material loss
related to
this matter
to be
remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
As previously
reported, on
September 25,
2008, the
Company was
named as
one of
several defendants
in numerous
antitrust
cases involving
the United
States shell
egg industry.
The Company
settled all
of these
cases, except
for the
claims of
certain
plaintiffs who sought substantial damages allegedly arising from the purchase of egg products
(as opposed to shell eggs). These
remaining plaintiffs are
Kraft Food Global,
Inc., General Mills, Inc.,
and Nestle USA, Inc.
(the “Egg Products Plaintiffs”)
and,
until a subsequent settlement was reached as described below, The Kellogg Company.
On September
13, 2019,
the case
with the
Egg Products
Plaintiffs was
remanded from
a multi-district
litigation proceeding
in
the
United
States
District
Court
for
the
Eastern
District
of
Pennsylvania,
In
re
Processed
Egg
Products
Antitrust
Litigation,
MDL No. 2002, to the United States District Court for
the Northern District of Illinois, Kraft Foods Global, Inc. et
al. v. United
Egg Producers,
Inc. et
al., Case
No. 1:11
-cv-8808, for
trial. The
Egg Products
Plaintiffs
alleged that
the Company
and other
defendants
violated
Section
1
of
the
Sherman
Act,
15.
U.S.C.
§
1,
by
agreeing
to
limit
the
production
of
eggs
and
thereby
illegally
to
raise
the
prices
that plaintiffs
paid
for processed
egg products.
In
particular,
the
Egg Products
Plaintiffs
attacked
certain features of the United
Egg Producers animal-welfare guidelines and program
used by the Company and many
other egg
producers.
On October 24, 2019, the Company entered into a
confidential settlement agreement with The Kellogg Company dismissing all
claims against the Company
for an amount that
did not have
a material impact on
the Company’s
financial condition or results
of operations.
On November
11,
2019, a
stipulation for
dismissal was
filed with
the court,
and on
March 28,
2022, the
court
dismissed the Company with prejudice.
The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the
Egg Products
Plaintiffs $
defendants,
jointly
and
severally,
totaling
$
motion for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment.
On December 13, 2024,
the
court
granted
defendants’
November
20,
2024
motion
to
stay
enforcement
of
the
judgment
and
entered
an
agreed
order
requiring the
defendants to
post security
during post-judgment
proceedings and
appeal, and
stayed proceedings
to enforce
the
judgment until the disposition of the post-judgment motions and ultimate appeals. On
December 17, 2024, the Company posted
a bond
in the
approximate amount
of $
appeal the trial court’s
decision. Another defendant posted a
bond for the remaining amount,
The Company intends to continue
to vigorously defend the claims asserted by the Egg Products Plaintiffs.
If the
jury’s
decision is
ultimately upheld,
the Company
would be
jointly and
severally liable
with other
defendants for
treble
damages,
or
$
Plaintiffs’
reasonable
attorneys’
fees.
During
our
second
fiscal
quarter
of
2024,
we
recorded
an
accrued
expense
of
$
million in
selling, general
and administrative
expenses in
the Company’s
Condensed Consolidated
Statements of
Income and
classified
as
other
noncurrent
liabilities
in
the
Company’s
Condensed
Consolidated
Balance
Sheets.
Although
less
than
the
bond
posted
by
the
Company,
the
accrual
represents
our
estimate
of
the
Company’s
proportional
share
of
the
reasonably
possible ultimate damages award, excluding the Egg Product Plaintiffs’
attorneys’ fees that we believe would be approximately
offset by the credits noted
above. We
have entered into a judgment allocation
and joint defense agreement with the
other major
producer
defendant
remaining
in
the
case
and
are
in
discussions
with
other
defendants
regarding
their
contributions.
Our
accrual may change
in the future
based on the
outcome of those
discussions and may
also be revised
in whole or
in part in
the
future to the extent we are successful in further proceedings in the litigation.
State of Oklahoma Watershed Pollution Litigation
On June
18, 2005, the
State of Oklahoma
filed suit, in
the United States
District Court for
the Northern District
of Oklahoma,
against Cal-Maine
Foods, Inc.
and Tyson
Foods, Inc.,
Cobb-Vantress,
Inc., Cargill,
Inc., George’s,
Inc., Peterson
Farms, Inc.
and
Simmons Foods,
Inc.,
and
certain
of
their affiliates.
The
State of
Oklahoma claims
that
through
the disposal
of
chicken
litter the defendants
polluted the Illinois
River Watershed.
This watershed provides
water to eastern
Oklahoma. The complaint
sought
injunctive relief
and
monetary damages,
but
the
claim for
monetary damages
was
dismissed by
the
court. Cal-Maine
Foods,
Inc.
discontinued
operations
in
the
watershed
in
or
around
2005.
Since
the
litigation
began,
Cal-Maine
Foods,
Inc.
17
purchased
%
of
the
membership
interests
of
Benton
County
Foods,
LLC,
which
is
an
ongoing
commercial
shell
egg
operation within
the Illinois
River Watershed.
Benton County
Foods, LLC
is not
a defendant
in the
litigation. We
also have
a
number of small contract producers that operate in the area.
The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered
findings of fact
and conclusions of
law in favor
of the State
of Oklahoma, but
no penalties were
assessed. The court
found the
defendants
liable
for
state
law
nuisance,
federal
common
law
nuisance,
and
state
law
trespass.
The
court
also
found
the
producers
vicariously
liable for
the
actions of
their
contract producers.
The
court directed
the
parties
to
confer
in attempt
to
reach
agreement
on
appropriate
remedies.
On
June
12,
2023,
the
court
ordered
the
parties
to
mediate
before
retired
Tenth
Circuit
Chief
Judge
Deanell
Reece
Tacha,
but
the
mediation
was
unsuccessful.
On
June
26,
2024,
the
district
court
denied
defendants’
motion
to
dismiss
the
case.
On
September
13,
2024,
a
status
hearing
was
held
and
the
court
scheduled
an
evidentiary hearing
for December
3, 2024,
to determine
whether any
legal remedy
is available
based on
the now
14 year
old
record
and
changed
circumstances
of
the
Illinois
River
watershed.
On
November
5,
2024
the
court
denied
defendants’
September 20,
2024 motion
to certify
an interlocutory
appeal. The
evidentiary hearing
proceeded as
scheduled and
concluded
on
December
17,
2024.
The
court
directed
the
parties
to
present
their
proposed
findings
of
fact
and
conclusions
of
law
and
supporting briefs by
January 30, 2025.
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.
18
ITEM
2.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
The following
should be
read in
conjunction with
Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations included
in Part II
Item 7 of
the Company’s
Annual Report on
Form 10-K for
its fiscal year
ended June 1,
2024
(the “2024 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2024 Annual
Report and in
This
report contains
numerous forward-looking
statements within
the meaning
of
Section 27A
of
the Securities
Act of
1933
(the “Securities
Act”) and
Section 21E
of the
Securities Exchange Act
of 1934
(the “Exchange
Act”) relating
to our
shell egg
and egg products
business, including estimated future
production data, expected
construction schedules, projected
construction
costs, potential
future supply
of and
demand for
our products,
potential future
corn and
soybean price
trends, potential
future
impact on our business of the resurgence in United States (“U.S.”) commercial table egg layer flocks of highly pathogenic avian
influenza (“HPAI”),
potential future impact
on our business
of inflation and
changing interest rates,
potential future impact
on
our business of
new legislation, rules
or policies, potential
outcomes of legal
proceedings, including loss
contingency accruals
and factors that may result in
changes in the amounts recorded, and other
projected operating data, including anticipated results
of operations
and financial
condition. Such
forward-looking statements
are identified
by the
use of
words such
as “believes,”
“intends,” “expects,”
“hopes,” “may,”
“should,” “plans,”
“projected,” “contemplates,”
“anticipates,” or
similar words.
Actual
outcomes
or
results
could
differ
materially
from
those
projected
in
the
forward-looking
statements.
The
forward-looking
statements are
based on
management’s
current intent,
belief, expectations,
estimates, and
projections regarding
the Company
and its
industry.
These statements
are not
guarantees of
future performance
and involve
risks, uncertainties,
assumptions, and
other factors
that
are difficult
to predict
and may
be beyond
our control.
The factors
that
could cause
actual results
to differ
materially from
those projected
in the
forward-looking statements
include, among
others, (i)
the risk
factors set
forth in
Part I
Item
1A
Risk
Factors
of
the
2024
Annual
Report,
the
risk
factors
(if
any)
set
forth
in
Part
II
Item
1A
Risk
Factors
and
elsewhere in
this report
as well
as those
included in
other reports
we file
from time
to time
with the
Securities and
Exchange
Commission (the “SEC”) (including our
Quarterly Reports on Form
10-Q and Current Reports
on Form 8-K), (ii)
the risks and
hazards
inherent
in
the
shell
egg
business
(including
disease,
pests,
weather
conditions,
and
potential
for
product
recall),
including but not limited to the current outbreak of HPAI affecting poultry
in the U.S., Canada and other countries that was first
detected in commercial
flocks in the
U.S. in February
2022 and that
first impacted our
flocks in December
2023, (iii) changes
in the demand
for and market
prices of shell
eggs and feed
costs, (iv) our
ability to predict and
meet demand for
cage-free and
other specialty
eggs, (v)
risks, changes,
or obligations
that could
result from
our recent
or future
acquisition of
new flocks
or
businesses and risks or
changes that may cause
conditions to completing a pending
acquisition not to be
met, (vi) risks relating
to
changes
in
inflation
and
interest
rates,
(vii)
our
ability
to
retain
existing
customers,
acquire
new
customers
and
grow
our
product mix,
(viii) adverse
results in
pending litigation
matters, and
(ix) global
instability,
including as
a result
of the
war in
Ukraine, the conflicts in Israel and surrounding areas and attacks on shipping in the Red Sea. Readers are cautioned not to place
undue
reliance
on
forward-looking
statements
because,
while
we
believe
the
assumptions
on
which
the
forward-looking
statements are based are
reasonable, there can be
no assurance that
these forward-looking statements will
prove to be
accurate.
Further, forward-looking
statements included herein
are only made
as of the
respective dates thereof,
or if no
date is stated,
as
of the date
hereof. Except as
otherwise required by
law, we
disclaim any intent
or obligation to
update publicly these
forward-
looking statements, whether because of new information, future events, or otherwise.
GENERAL
Cal-Maine
Foods,
Inc.
(the
“Company,”
“we,”
“us,”
“our”)
is
primarily
engaged
in
the
production,
grading,
packaging,
marketing and
distribution of
fresh shell
eggs. Our
operations are
fully integrated
and we
have one
operating and
reportable
segment.
We
are
the
largest
producer
and
distributor
of
fresh
shell
eggs
in
the
U.S.
Our
total
flock
of
approximately
48.1
million
layers
and
12.0
million
pullets
and
breeders
is
the
largest
in
the
U.S.
We
sell
our
shell
eggs
and
egg
products
to
a
diverse group of customers,
including national and regional
grocery store chains, club
stores, companies servicing independent
supermarkets in
the U.S.,
foodservice distributors
and egg
product customers
throughout the
majority of
the U.S.
and aim
to
maintain efficient, state-of-the-art operations located close to our customers.
Our operating
results are
materially impacted
by market
prices for
eggs and
feed grains
(corn
and soybean
meal), which
are
highly
volatile,
independent
of
each
other,
and
out
of
our
control.
Generally,
higher
market
prices
for
eggs
have
a
positive
impact
on
our
financial
results
while
higher
market
prices
for
feed
grains
have
a
negative
impact
on
our
financial
results.
Although we
use a
variety of pricing
mechanisms in pricing
agreements with our
customers, we sell
most of
our conventional
shell eggs
based on
formulas that
consider,
in varying
ways, independently
quoted regional
wholesale market
prices for
shell
eggs
or
formulas
related
to
our
costs
of
production
which
include
the
cost
of
corn
and
soybean
meal.
We
do
not
sell
eggs
directly to consumers or set the prices at which eggs are sold to consumers.
19
Retail
sales
of
shell
eggs
historically
have
been
highest
during
the
fall
and
winter
months
and
lowest
during
the
summer
months. Prices
for shell
eggs fluctuate
in response
to seasonal
demand factors
and a
natural increase
in egg
production during
the
spring
and
early
summer.
Historically,
shell
egg
prices
tend
to
increase
with
the
start
of
the
school
year
and
tend
to
be
highest
prior
to
holiday
periods,
particularly
Thanksgiving,
Christmas
and
Easter.
Consequently,
and
all
other
things
being
equal, we would expect to
experience lower selling prices, sales volumes
and net income (and may
incur net losses) in our
first
and
fourth
fiscal
quarters
ending
in
August/September
and
May/June,
respectively.
Because
of
the
seasonal
and
quarterly
fluctuations,
comparisons
of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily meaningful comparisons.
We
routinely
fill
our
storage
bins
during
harvest
season
when
prices
for
feed
ingredients
are
generally
lower.
To
ensure
continued availability
of feed
ingredients, we
may enter
into contracts
for future
purchases of
corn and
soybean meal,
and as
part
of
these
contracts,
we
may
lock-in
the
basis
portion
of
our
grain
purchases
several
months
in
advance.
Basis
is
the
difference between
the local
cash price
for grain
and the
applicable futures
price. A
basis contract
is a
common transaction
in
the grain
market that
allows us
to lock-in
a basis
level for
a specific
delivery period
and wait
to set
the futures
price at
a later
date. Furthermore,
due to
the more
limited supply
for organic
ingredients,
we may
commit to
purchase organic
ingredients in
advance to help ensure supply. Ordinarily,
we do not enter into long-term contracts beyond a year to purchase corn and soybean
meal
or
hedge
against
increases
in
the
prices
of
corn
and
soybean
meal.
Corn
and
soybean
meal
are
commodities
and
are
subject
to
volatile
price
changes
due
to
weather,
various
supply
and
demand
factors,
transportation
and
storage
costs,
speculators, agricultural,
energy and
trade policies
in the
U.S. and
internationally,
and global
instability that
could disrupt
the
supply chain.
An important competitive advantage for Cal-Maine Foods is our ability to meet
our customers’ evolving needs with a favorable
mix of branded
and private-label products
of conventional and
specialty eggs, including
cage-free, organic,
brown, free-range,
pasture-raised and nutritionally-enhanced eggs as well as egg products.
CAGE-FREE EGGS
Ten
states have
passed
legislation or
regulations mandating
minimum space
or
cage-free requirements
for
egg production
or
mandated
the
sale
of
only
cage-free
eggs
and
egg
products
in
their
states,
with
implementation
of
these
laws
ranging
from
January 2022
to January
2030. These
states represent
approximately 27%
of
the U.S.
total population
according to
the 2020
U.S.
Census.
California,
Massachusetts,
Colorado,
Oregon,
Washington,
and
Nevada,
which
collectively
represent
approximately 20% of the total estimated U.S. population,
have cage-free legislation currently in effect.
A significant number of our customers have announced goals
to either exclusively offer cage-free eggs or
significantly increase
the
volume
of
cage-free
egg
sales
in
the
future,
subject
in
most
cases
to
availability
of
supply,
affordability
and
consumer
demand, among
other contingencies.
Our customers
typically do
not
commit to
long-term purchases
of specific
quantities or
types
of
eggs
with
us,
and
as
a
result,
it
is
difficult
to
accurately
predict
customer
requirements
for
cage-free
eggs.
We
are
focused
on
adjusting
our
cage-free production
capacity
with
a
goal
of
meeting
the
future
needs
of
our
customers
in
light
of
changing state requirements
and our customers’
goals. As always,
we strive to
offer a product
mix that aligns
with current and
anticipated
customer purchase
decisions.
We
are
engaging with
our
customers
to
help
them
meet
their
announced
goals
and
needs. We have
invested significant capital in recent years to acquire and construct cage-free facilities, and
we expect our focus
for future
expansion will
continue to
include cage-free
facilities. Our
volume of
cage-free egg
sales has
continued to
increase
and account
for a
larger share
of our
product mix.
Cage-free egg
revenue represented
approximately 23.4%
of our
total shell
egg revenue for the second quarter of fiscal year 2025. At the same time, we
understand the importance of our continued ability
to
provide
conventional
eggs
in
order
to
provide
our
customers
with
a
variety
of
egg
choices
and
to
address
hunger
in
our
communities.
For
additional
information,
see
the
2024
Annual
Report,
Part
I
Item
1,
“Business
–
Specialty
Eggs,”
“Business
–
Growth
Strategy” and
“Business –
Government Regulation,”
and the
first risk
factor in
Part I
Item 1A,
“Risk Factors”
under the
sub-
heading “Legal and Regulatory Risk Factors.”
ACQUISITIONS
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
20
significantly enhance our market reach
in the Northeast and Mid-Atlantic
states. See further discussion in
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.
Effective on
September 9,
2024, we
completed a
strategic investment
with Crepini
LLC, establishing
a new
egg products
and
prepared foods venture.
Crepini LLC, founded
in 2007, grew
its brand throughout
the United States
and Mexico featuring
egg
wraps, protein pancakes, crepes, and
wrap-ups, which are sold
online and in over 3,500
retail stores. The new entity,
located in
Hopewell Junction,
New York,
operates as
Crepini Foods
LLC (“Crepini”).
We
capitalized Crepini
with approximately
$6.75
million in cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the
new venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
In
fiscal
2022,
we
announced
a
strategic
investment
in
a
new
entity,
MeadowCreek
Food,
LLC
(“MeadowCreek”),
which
became
a
majority-owned
subsidiary.
During
March
2023,
MeadowCreek
began
operations
with
a
focus
on
being
a
leading
provider of
hard-cooked eggs.
During second
quarter 2025,
we acquired
the remaining
ownership interests
in MeadowCreek
and it became a wholly-owned subsidiary.
In
second
quarter
2024,
we
acquired
the
assets
of
Fassio
Egg
Farms,
Inc.
(“Fassio”)
related
to
its
commercial
shell
egg
production and processing business. Fassio
owned and operated commercial shell
egg production and processing facilities
with
a
capacity
at
the
time
of
acquisition
of
approximately
1.2
million
laying
hens,
primarily
cage-free,
a
feed
mill,
pullets,
a
fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. This acquisition provided
us with
an opportunity
to expand
our market
presence in
Utah and
the western
U.S., particularly
for cage-free
eggs. In
fourth
quarter 2024, we acquired a broiler processing plant, hatchery and feed mill in Dexter, Missouri for use in shell egg production.
HPAI
Outbreaks of HPAI have continued to occur in U.S. poultry flocks. In In
calendar 2024, 38.4 million commercial layer hens and
1.8 million pullets were depopulated due to HPAI. Approximately 13.6 million commercial layer hens and 500,000 pullets were
depopulated in December 2024 alone.
Our facilities in Kansas and Texas which experienced HPAI
in fiscal 2024 are now fully operational.
We
remain dedicated
to robust
biosecurity programs
across our
locations; however,
no farm
is immune
from HPAI.
HPAI
is
currently widespread in the
wild bird population worldwide.
According to the U.S.
Centers for Disease Control
and Prevention
(“CDC”), as of January 6, 2025, there were outbreaks in 917
herds of dairy cows in 16 states, and in 2024
there were 66 human
cases
in
the
U.S.,
almost
entirely
among
poultry
and
dairy
workers.
However,
in
2024,
one
of
the
human
cases
resulted
in
severe illness
after the
patient was
exposed to
sick and
dead birds
in backyard
flocks.
The patient,
who was
reported to
have
underlying health
conditions, died
in January
2025. There
have been
no reported
cases of
person-to-person spread.
According
to the CDC, the human health risk to the
U.S. public from the HPAI
virus is considered to be low.
The extent of possible future
outbreaks
among
U.S.
commercial
egg
layer
flocks,
with
heightened
risk
during
migration
seasons,
cannot
be
predicted.
According to the USDA, HPAI
cannot be transmitted through safely handled and properly cooked eggs. There is no known risk
related
to
HPAI
associated
with
eggs
that
are
currently
in
the
market
and
no
eggs
have
been
recalled.
For
additional
information, see
the 2024
Annual Report,
Part II
Item 7
“Management’s
Discussion and
Analysis of
Financial Condition
and
Results of Operations – HPAI.”
EXECUTIVE OVERVIEW
For the
second quarter
and first
two quarters
of fiscal
2025, we
recorded a
gross profit
of $356.0
million and
$603.3 million,
respectively,
compared to $91.1
million and $136.6
million, respectively,
for the same
periods of fiscal
2024, primarily driven
by an
increase in
the net
average selling
price of
shell eggs,
primarily conventional
egg prices,
as well
as an
increase in
total
dozens
sold,
primarily
specialty
dozens
sold.
Our
results
were
also
positively
impacted
by
lower
feed
costs
and
our
recent
acquisitions discussed above, partially offset by an increase in the volume and price of outside egg purchases.
Our net
average selling price
per dozen for
the second quarter
of fiscal 2025
was $2.740 compared
to $1.730 in
the prior-year
period. Conventional egg
prices per dozen
were $2.943
compared to $1.458
for the prior-year
period, and specialty
egg prices
per
dozen
were
$2.387
compared
to
$2.277
for
the
prior-year
period.
Egg
prices
in
the
second
quarter
of
fiscal
2025
were
elevated compared to the prior-year
period primarily due to the resurgence
of HPAI
outbreaks, which decreased supply,
among
other
factors.
According
to
the USDA,
the
monthly average
size of
the
layer hen
flock
from
September through
November
(which most closely aligns with our second fiscal quarter) 2024 was approximately 310.7 million hens, which was a decrease of
9.7 million layers, or 3.0%, compared to the same period in the prior year. The daily average price for the Urner Barry southeast
large
index
for
the
second
quarter
of
fiscal
2025
increased
102.1%
from
the
comparable
period
in
the
prior
year.
For
more
information about historical shell egg prices, see Part I Item I of our 2024 Annual Report.
21
Our
dozens
sold
for
the
second
quarter
of
fiscal
2025
increased
14.5%
compared
to
the
second
quarter
of
fiscal
2024.
In
addition
to
robust
demand,
we
had
an
increase
in
production
capacity
with
the
acquisitions
of
the
commercial
shell
egg
production and processing business of ISE during the first quarter of fiscal 2025.
Our farm production
costs per dozen
produced for the
second quarter of
fiscal 2025 decreased
8.5%, or $0.08
compared to the
prior year period, primarily due to lower feed costs. Feed costs
per dozen produced decreased 12.8%, or $0.07, compared to the
second quarter of
fiscal 2024, primarily
due to lower
feed ingredient prices.
For information about
historical corn and
soybean
meal prices,
see Part
I Item
I of
our 2024
Annual Report.
Our egg
purchases and
other cost
of sales
increased $126.4
million
quarter-over-quarter, 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 periods
indicated, certain items from
our Condensed Consolidated Statements
of Income
expressed as a percentage of net sales.
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30,
2024
December 2, 2023
November 30,
2024
December 2, 2023
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
62.7
%
82.6
%
65.3
%
86.1
%
Gross profit
37.3
%
17.4
%
34.7
%
13.9
%
Selling, general and administrative
8.1
%
14.5
%
8.0
%
13.1
%
(Gain) loss on disposal of fixed assets
—
%
0.1
%
(0.1)
%
—
%
Operating income
29.2
%
2.8
%
26.8
%
0.8
%
Total other income, net
1.1
%
1.5
%
1.3
%
1.6
%
Income before income taxes
30.3
%
4.3
%
28.1
%
2.4
%
Income tax expense
7.4
%
1.1
%
6.8
%
0.6
%
Net income
22.9
%
3.2
%
21.3
%
1.8
%
Less: Loss attributable to noncontrolling
interest
(0.1)
%
(0.1)
%
(0.1)
%
(0.1)
%
Net income attributable to Cal-Maine
Foods, Inc.
23.0
%
3.3
%
21.4
%
1.9
%
NET SALES
Total
net sales
for the
second quarter
of fiscal
2025 were
$954.7 million
compared to
$523.2 million
for the
same period
of
fiscal 2024.
Shell egg
sales represented
94.6% and
95.3% of
total net
sales for
the second
quarters of
fiscal 2025
and 2024,
respectively.
The Company’s
shell egg offerings,
for both branded and
private-label products, include specialty and
conventional shell eggs.
Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. Conventional
shell
eggs
sales
represent
all
other
shell
egg
sales
not
sold
as
specialty
shell
eggs.
The
Company’s
egg
products
offerings
include liquid and frozen egg products and ready-to-eat products such as hard-cooked eggs, egg wraps, protein pancakes, crepes
and wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.
Total
net
sales
for
the
twenty-six
weeks
ended
November
30,
2024
were
$1.7
billion,
compared
to
$982.6
million
for
the
comparable period of fiscal 2024.
Shell
egg
sales
represented
94.5%
and
94.9%
of
total
net
sales
for
the
twenty-six
weeks
ended
November
30,
2024
and
December 2, 2023, respectively.
22
The table below presents net sales in key categories (in thousands, except percentage data):
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
% Change
November 30, 2024
December 2, 2023
% Change
Shell Egg
$
903,861
$
498,504
81.3
%
$
1,645,374
$
932,465
76.5
%
Egg products
40,651
20,012
103.1
75,826
42,235
79.5
Other
10,159
4,718
115.3
19,342
7,878
145.5
Total net sales
$
954,671
$
523,234
82.5
%
$
1,740,542
$
982,578
77.1
%
The table below presents an analysis of our shell egg sales (in thousands, except percentage data):
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
November 30, 2024
December 2, 2023
Shell egg sales
Conventional
$
616,891
68.3
%
$
280,599
56.3
%
$
1,101,627
67.0
%
$
505,879
54.3
%
Specialty
286,970
31.7
217,905
43.7
%
543,747
33.0
426,586
45.7
Total shell egg sales
$
903,861
100.0
%
$
498,504
100.0
%
$
1,645,374
100.0
%
$
932,465
100.0
%
Dozens sold
Conventional
209,597
63.5
%
192,462
66.8
%
409,586
64.0
%
373,992
66.6
%
Specialty
120,247
36.5
95,711
33.2
230,237
36.0
187,307
33.4
Total dozens sold
329,844
100.0
%
288,173
100.0
%
639,823
100.0
%
561,299
100.0
%
Net average selling price per dozen
Conventional
$
2.943
$
1.458
$
2.690
$
1.353
Specialty
$
2.387
$
2.277
$
2.362
$
2.277
All shell eggs
$
2.740
$
1.730
$
2.572
$
1.661
Shell egg sales
Second Quarter – Fiscal 2025 vs. Fiscal 2024
-
In
the
second
quarter
of
fiscal
2025,
conventional
egg
sales
increased
$336.3
million,
or
119.8%,
compared
to
the
second quarter of fiscal 2024, primarily due to a 101.9% increase in the prices for conventional eggs, which resulted in
a $311.3 million increase in net sales, and a 8.9% increase in the volume of conventional eggs sold, which resulted in a
$25.0
million
increase
in
net
sales.
Results
for
the
second
quarter
of
2025
were
positively
impacted
by
our
recent
acquisition of ISE.
-
Specialty
egg sales
increased
$69.1
million, or
31.7%,
in the
second quarter
of
fiscal 2025
compared
to
the
second
quarter
of
fiscal
2024,
primarily
due
to
a
25.6%
increase
in
the
volume
of
specialty
eggs
sold,
which
resulted
in
a
$55.9 million
increase in net
sales and
a 4.8%
increase in prices
for specialty
eggs, which
resulted in
a $13.2
million
increase in net sales.
-
Demand for
specialty eggs
increased in
the second
quarter of
fiscal 2025
as conventional
egg prices
rose. Specialty
dozens sold
represented 36.5% of
our shell
egg dozens
sold for
the second
quarter of
fiscal 2025
compared to 33.2%
for
the
prior-year
period.
Additionally,
demand
continues
to
be
impacted
by
cage-free
requirements
becoming
effective for Nevada, Oregon and Washington on January 1, 2024.
-
See “Executive Overview” above for additional discussion.
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
-
For
the
twenty-six
weeks
ended
November
30,
2024,
conventional
egg
sales
increased
$595.8
million,
or
117.8%,
compared
to
the
same period
of
fiscal
2024, primarily
due
to
the
increase in
the
prices for
conventional shell
eggs.
Prices
for
conventional
eggs
increased
98.8%,
which
resulted
in
a
$547.6
million
increase
in
net
sales.
A
9.5%
increase in the volume of conventional eggs sold resulted in a $48.2 million increase in net sales.
-
Specialty egg sales increased $117.2
million, or 27.5%, for the twenty-six
weeks ended November 30, 2024 compared
to
the
same
period
in
fiscal
2024,
primarily
due
to
a
22.9%
increase
in
the
volume
of
specialty
eggs
sold,
which
23
resulted in
a $
97.8 million
increase in
net sales
and a
3.7% increase
in prices
for specialty
eggs, which
resulted in
a
$19.6 million increase in net sales.
Egg products sales
Second Quarter – Fiscal 2025 vs. Fiscal 2024
-
Egg
products sales
increased $20.6
million, or
103.1%,
for the
second quarter
of
fiscal 2025
compared to
the
same
period of fiscal
2024, primarily due
to a 63.5%
increase in liquid
eggs pounds sold, which
had a $7.9
million positive
impact on net sales, and a
25.2% increase in the net average selling
price per pound of liquid eggs,
which resulted in a
$5.1
million
increase
in
net
sales.
Results
for
the
second
quarter
of
2025
were
positively
impacted
by
our
recent
acquisition of ISE, which included a breaking facility.
-
Sales from hard-cooked eggs increased
$6.4 million or 212.5% in
the second quarter of fiscal
2025 compared to fiscal
2024 as more processing capabilities are coming online from our investments in MeadowCreek and Crepini.
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
-
Egg products
sales increased
$33.6 million,
or 79.5%,
primarily due
to a
39.9% increase
in liquid
eggs pounds
sold,
which had a $10.9 million positive impact on net sales, and a 25.0% increase in the net average selling price per pound
of liquid eggs, which resulted in a $9.5 million increase in net sales.
-
Sales from hard-cooked
eggs increased $12.1
million, or 194.6%,
in the first
two quarters of
fiscal 2025
compared to
the same period in fiscal 2024, primarily for the reasons described above.
Other
-
Other
sales
increased
compared
to
the
prior
year
periods
primarily
due
to
higher
feed
sales
related
to
our
ISE
acquisition.
24
COST OF SALES
Cost of
sales consists
of costs
directly related
to producing,
processing and
packing shell
eggs, purchases
of shell
eggs from
outside
sources,
processing
and
packing
of
egg
products
and
other
non-egg
costs. Farm
production
costs
are
those
costs
incurred
at
the
egg
production
facility,
including
feed,
facility
(including
labor),
hen
amortization
and
other
related
farm
production costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Thirteen Weeks Ended
Twenty-six Weeks
Ended
November 30,
2024
December 2,
2023
%
Change
November 30,
2024
December 2,
2023
%
Change
Cost of sales
Farm production
$
258,246
$
258,367
—
%
$
499,947
$
511,874
(2.3)
%
Processing, packaging,
and warehouse
98,823
84,767
16.6
190,534
166,673
14.3
Egg purchases and other
cost of sales
198,030
71,654
176.4
366,479
132,451
176.7
Egg products
43,530
17,316
151.4
80,322
35,017
129.4
Total cost of sales
$
598,629
$
432,104
38.5
%
$
1,137,282
$
846,015
34.4
%
Farm production costs (per
dozen produced)
Feed
$
0.483
$
0.554
(12.8)
%
$
0.488
$
0.575
(15.1)
%
Other
$
0.418
$
0.431
(3.0)
%
$
0.421
$
0.435
(3.2)
%
Total farm production cost
$
0.901
$
0.985
(8.5)
%
$
0.909
$
1.010
(10.0)
%
Outside egg purchases
(average cost per dozen)
$
3.22
$
2.03
58.6
%
$
3.03
$
1.84
64.7
%
Dozens produced
288,036
265,101
8.7
%
554,875
515,457
7.6
%
Percent produced to sold
87.3%
92.0%
(5.1)
%
86.7%
91.8%
(5.6)
%
Farm Production
Second Quarter – Fiscal 2025 vs. Fiscal 2024
-
Feed costs per dozen produced decreased 12.8% in the second quarter of fiscal 2025 compared to the second quarter of
fiscal 2024. This decrease
was primarily due to
lower prices for corn
and soybean meal, our
primary feed ingredients.
The decrease
in feed
cost per
dozen resulted
in a
decrease in
cost of
sales of
$20.5 million
for the
second quarter
of
fiscal 2025 compared to the prior period quarter.
-
For the second quarter of fiscal 2025, the average Chicago Board of Trade (“CBOT”) daily market price was $4.17 per
bushel
of
corn
and
$311
per
ton
of
soybean
meal,
representing
decreases
of
13.0%
and
25.3%,
respectively,
as
compared to the average CBOT daily market prices for the second quarter of fiscal 2024.
-
Other farm production
costs decreased primarily due
to lower flock
amortization. Feed costs reached
their peak in the
second quarter of
fiscal 2023 and
have since trended
downward. Lower costs
result in lower
capitalized values of
the
flocks during the grow out phase, which reduced amortization cost over time.
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
-
Feed costs
per dozen
produced decreased
15.1% in
the twenty-six
weeks ended
November 30,
2024 compared
to the
same period of fiscal 2024,
primarily due to lower feed
ingredient prices. The decrease in
feed cost per dozen resulted
in a decrease in cost of sales of $48.3 million compared to the prior year period.
-
For the
year-to-date period,
the average
CBOT daily
market price
was $4.10
per bushel
of corn
and $326
per ton
of
soybean meal, representing decreases of
18.8% and 22.4%, respectively,
compared to the average CBOT
daily market
prices for the comparable period in the prior year.
25
-
Other farm production costs decreased due to lower flock amortization, for the reasons described above.
Current
indications
for
corn
and
soybean
project
a
favorable
stocks-to-use
ratio
near
the
levels
prevailing
today
for
the
remainder of
fiscal 2025;
however,
as long
as outside
factors remain
uncertain (including
weather patterns
and global
supply
chain disruptions), volatility could remain.
Processing, packaging, and warehouse
Second Quarter – Fiscal 2025 vs. Fiscal 2024
-
Processing, packaging,
and warehouse
costs increased
16.6% compared
to the
second quarter
of fiscal
2024 due
to a
9.7% increase in the volume of processed dozens as well as an increase in costs of packaging materials.
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
-
Processing,
packaging,
and
warehouse
costs
increased
14.3%
compared
to
the
first
two
quarters
of
fiscal
2025,
primarily
due
an
8.6%
increase
in
the
volume
of
processed
dozens
as
well
as
an
increase
in
costs
of
packaging
materials.
Egg purchases and other cost of sales
Second Quarter – Fiscal 2025 vs. Fiscal 2024
-
Costs in
this category
increased primarily due
to higher
shell egg
prices as
the average
cost per
dozen of
outside egg
purchases increased 58.6% compared to second quarter of fiscal 2024, as well as due to an increase of 80.3% in dozens
purchased.
Dozens
purchased
increased
due
to
purchasing
more
eggs
to
supply
our
customers
during
the
higher
seasonal demand cycle while the nation experienced lower supply due to HPAI.
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
-
Costs in
this category
increased primarily due
to higher
shell egg
prices as
the average
cost per
dozen of
outside egg
purchases increased
64.7% compared
to fiscal
2024, as
well as
an increase
of 73.8%
in dozens
purchased, primarily
for the reasons described above.
GROSS PROFIT
Gross
profit,
as
a
percentage
of
net
sales,
was
31.5%
for
the
second
quarter
of
fiscal
2025
compared
to
9.9%
for
the
same
period of fiscal 2024.
Gross profit for the
twenty-six weeks ended November 30,
2024 was $603.3 million compared
to $136.6
million for
the same
period of
2024. The
increase was
primarily due
to higher
net average
selling price
as well
as lower
feed
ingredient prices,
partially offset by the increase in volume and price of outside egg purchases.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,
general,
and
administrative
(“SGA”)
expenses
include
costs
of
delivery,
marketing,
and
other
general
and
administrative expenses. Delivery expense
includes contract trucking expense
and all costs to
maintain and operate our
fleet of
trucks to
deliver products
to customers
including the
related payroll
expenses. Marketing
expense includes
franchise fees
that
are
submitted
to
Eggland’s
Best,
Inc.
(“EB”)
to
support
the
EB
brand,
brokerage
and
commission
fees,
and
other
general
marketing expenses
such as
payroll expenses
for our
in-house sales
team. Other
general and
administrative expenses
include
corporate payroll
related expenses
and other
general corporate
overhead costs.
The following
table presents
an analysis
of our
SGA expenses (in thousands):
Thirteen Weeks Ended
November 30, 2024
December 2, 2023
$ Change
% Change
Delivery expense
$
23,666
$
17,706
$
5,960
33.7
%
Marketing expense
15,074
12,197
2,877
23.6
%
Litigation loss contingency accrual
-
19,648
(19,648)
(100.0)
%
Other general and administrative
expenses
38,893
27,027
11,866
43.9
%
Total
$
77,633
$
76,578
$
1,055
1.4
%
Second Quarter – Fiscal 2025 vs. Fiscal 2024
26
Delivery expense
-
The
increased
delivery
expense
is
primarily
due
to
an
increase
in
dozens
sold
in
the
second
quarter
of
fiscal
2025
compared to the second quarter of fiscal 2024.
Marketing expense
-
The
increase in
marketing expense
is
primarily due
to
an increase
in franchise
fees
as specialty
egg sales
increased
compared to the second quarter of fiscal 2024.
Litigation loss contingency accrual
-
In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in
pending
anti-trust
litigation.
See
further
discussion
in
Condensed Consolidated Financial Statements included in this Quarterly Report.
Other general and administrative expense
-
The
increase
in
other
general
and
administrative
expense
is
primarily
due
both
to
an
increase
in
the
accrual
for
anticipated employee bonuses
and to the
increased adjustment to
the fair value
of contingent consideration
associated
with the
Fassio acquisition.
See further
discussion in
of the
Notes to
Condensed
Consolidated Financial Statements included in this Quarterly Report.
Twenty-six Weeks
Ended
November 30, 2024
December 2, 2023
$ Change
% Change
Delivery expense
$
44,730
$
35,397
$
9,333
26.4
%
Marketing expense
29,426
24,661
4,765
19.3
%
Litigation loss contingency accrual
—
19,673
(19,673)
(100.0)
%
Other general and administrative
expenses
65,409
49,093
16,316
33.2
%
Total
$
139,565
$
128,824
$
10,741
8.3
%
Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024
Delivery expense
-
The increased delivery expense is primarily due to an increase in dozens sold compared to the prior year period.
Marketing expense
-
The
increase in
marketing expense
is
primarily due
to
an increase
in franchise
fees
as specialty
egg sales
increased
compared to the prior year period.
Other general and administrative expense
-
The increase in other
general and administrative expense
is primarily for the
reasons described above, as
well as costs
associated with the acquisition of ISE assets that occurred during the first quarter of fiscal 2025.
OPERATING
INCOME
For the second
quarter of fiscal 2025,
we recorded operating income
of $278.1 million compared
to operating income of
$14.2
million for the same period of fiscal 2024.
For the
twenty-six weeks
ended November
30, 2024,
we recorded
operating income
of $465.0
million compared
to operating
income of $7.5 million for the same period of fiscal 2024.
OTHER INCOME (EXPENSE)
Total
other
income
(expense)
consists
of
items
not
directly
charged
or
related
to
operations,
such
as
interest
income
and
expense, equity in income or loss of unconsolidated entities, and patronage income, among other items. Patronage dividends are
paid to us from our membership in the EB cooperative.
For the second
quarter of fiscal
2025, we earned
$9.9 million of
interest income compared
to $7.1 million
for the same
period
of fiscal
2024, primarily due
to higher
average cash and
cash equivalents and
investment securities available-for-sale
balances
27
and
yields.
The
Company
recorded
interest
expense
of
$150
thousand
and
$134
thousand
for
the
second
quarters
ended
November 30, 2024 and December 2, 2023, respectively.
For the twenty-six weeks ended November 30,
2024, we earned $19.9 million of
interest income compared to $14.6 million for
the same
period of
fiscal 2024, primarily
due to
higher average
cash and cash
equivalents and
investment securities available-
for-sale balances
and yields.
The Company
recorded interest
expense of
$310 thousand
and $276
thousand for
the twenty-six
weeks ended November 30, 2024 and December 2, 2023, respectively.
INCOME TAXES
For the second quarter of fiscal
2025, our pre-tax income was $289.0
million, compared to $22.1 million for the
second quarter
of fiscal 2024.
Income tax expense
of $70.6 million
was recorded for
second quarter 2025
with an effective
tax rate of
24.4%.
For second quarter 2024, income tax expense was $5.5 million with an effective tax rate of 25.0%.
For
the
twenty-six weeks
ended November
30, 2024,
pre-tax
income was
$486.9
million,
compared to
$22.9
million for
the
same period of
fiscal 2024. Income
tax expense of
$119.0 million
was recorded for
the twenty-six weeks ended
November 30,
2024
with
an effective
tax
rate
of
24.4%.
For
the
same
period
of
fiscal 2024,
income
tax
expense was
$5.9
million
with
an
effective tax rate of 25.7%.
Items causing
our effective
tax rate
to differ
from the
federal statutory
income tax
rate of
21% are
state income
taxes, certain
federal tax credits
and certain items included
in income or
loss for financial reporting
purposes that are
not included in taxable
income or loss
for income tax
purposes, including tax exempt
interest income, certain nondeductible
expenses, and net
income
or loss attributable to noncontrolling interest.
NET INCOME ATTRIBUTABLE
TO CAL-MAINE FOODS, INC.
Net
income
attributable
to
Cal-Maine
Foods,
Inc.
for
the
second
quarter
ended
November
30,
2024
was
$219.1
million,
or
$4.49 per
basic and
$4.47 per
diluted common
share, compared
to net
income attributable
to Cal-Maine
Foods, Inc.
of $17.0
million, or $0.35 per basic and diluted common share, for the same period of fiscal 2024.
Net income
attributable to
Cal-Maine Foods,
Inc. for
the twenty-six weeks
ended November
30, 2024,
was $369.0
million, or
$7.57 per
basic and
$7.54 per
diluted common
share, compared
to net
income attributable
to Cal-Maine
Foods, Inc.
of $17.9
million or $0.37 per basic and diluted common share, for the same period of fiscal 2024.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Current Ratio
Our
working
capital
was
$1.2
billion
at
November
30,
2024
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 5.5
at November 30, 2024
and June 1,
2024. The current ratio is calculated by dividing current assets by current liabilities.
Cash Flows from Operating Activities
For the twenty-six weeks ended November 30, 2024, $240.2 million in
net cash was provided by operating activities, compared
to
$73.7
million
provided
by
operating
activities
for
the
comparable
period
in
fiscal
2024.
The
increase
in
cash
flow
from
operating
activities
resulted
primarily
from
higher
net
average
selling
prices
per
dozen,
increased
volume
of
sales
and
a
decrease
in
feed
ingredient
costs
compared
to
the
prior-year
period,
partially
offset
by
the
increase
in
volume
and
price
of
outside egg purchases.
Cash Flows from Investing Activities
For
the
twenty-six
weeks
ended
November
30,
2024,
$247.4
million
was
used
in
investing
activities,
primarily
due
to
the
acquisition
of
assets
of
ISE,
and
purchases
of
property,
plant
and
equipment.
This
compares
to
$32.8
million
provided
by
investing activities
in the
same period
of fiscal
2024, primarily
due to
sales and
maturities of
investment securities.
Sales and
maturities of
investment securities
were $426.5
million in
the twenty-six
weeks
ended November
30, 2024
and purchases
of
investment securities were
$501.6 million during
the period. Sales
and maturities of
investment securities were
$196.1 million
in the prior year period while purchases of investment securities were $43.6 million during the period. The increase
in sales and
maturities of
investment securities
is primarily
due to
the maturities
of short-term
investments during
the first
two quarters
of
28
fiscal 2025. Purchases of
property, plant
and equipment were $65.6
million and $65.8 million
in the first
two quarters of
fiscal
2025 and 2024, respectively, primarily reflecting progress on our construction projects.
Cash Flows from Financing Activities
We
paid dividends of $87.8 million for
the twenty-six weeks ended November 30, 2024
compared to $37.3 million in the
same
prior-year period.
As of
November 30,
2024, cash
decreased $97.6
million since
June 1,
2024, compared
to an
increase of
$69.0 million
during
the same period of fiscal 2024. The decrease is primarily due to the acquisition of assets of ISE during fiscal 2025.
Credit Facility
On
November
15,
2021,
we
entered
into
a
credit
agreement
that
provides
for
a
senior
secured
revolving
credit
facility
(the
“Credit Facility”),
in an
initial aggregate
principal amount
of up
to $250
million with
a five-year
term. As
of November
30,
2024, no amounts were borrowed under the Credit Facility.
We have
$4.7 million in outstanding standby letters of credit issued
under our Credit Facility for the benefit of certain insurance companies. Refer to Part II Item 8, Notes to Consolidated Financial
Statements
and
Supplementary
Data,
Note
10
-
Credit
Facility
included
in
our
2024
Annual
Report
for
further
information
regarding our long-term debt.
Dividends
In
accordance
with
our
variable
dividend
policy,
we
will
pay
a
cash
dividend
totaling
approximately
$73.0
million,
or
approximately
$1.489
per
share,
to
holders
of
our
Common
Stock
and
Class
A
Common
Stock
with
respect
to
our
second
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 February 13, 2025 to holders of record on January 29, 2025.
Material Cash Requirements
Material cash
requirements for operating
activities primarily consist
of feed
ingredients, processing, packaging
and warehouse
costs, employee related costs, and
other general operating expenses, which
we expect to be paid
from our cash from operations
and cash and investment
securities on hand for
at least the next
12 months. While volatile
egg prices and feed
ingredient costs,
among
other
things, make
long-term predictions
difficult,
we
have
substantial liquid
assets and
availability under
our
Credit
Facility to fund future operating requirements.
Our material cash
requirements for capital expenditures
consist primarily of our
construction projects to
increase our cage-free
production
capacity.
We
continue to
monitor the
increasing demand
for cage-free
eggs and
to
engage with
our
customers
in
efforts
to achieve
a smooth
transition toward
their announced
timelines for
cage-free egg
sales. The
following table
presents
material construction projects approved as of November 30, 2024 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of
November 30, 2024
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2025
$
83,167
$
79,340
$
3,827
Feed Mills
Fiscal 2026
16,593
6,376
10,217
Egg Products Expansion
Fiscal 2026
15,361
-
15,361
Cage-Free Layer & Pullet Houses
Fiscal 2026
195,996
126,117
69,879
$
311,117
$
211,833
$
99,284
The table reflects approximately $60 million in new capital projects added since the end of first quarter 2025. These projects
include the addition of five new cage-free layer houses and two pullet houses across our locations in Florida, Georgia, Utah and
Texas. We
expect the projects to be completed with additional production capacity for approximately 1.1 million cage-free
layer hens and 250 thousand pullets by late summer 2025. We are also investing $15 million to expand our egg products
processing facility in Blackshear, Georgia to add extended shelf-life liquid eggs products.
We expect the processing plant and hatchery that we acquired in fourth quarter 2024 and repurposed for use in shell egg
production to be online in our next fiscal quarter. We
have been working with local contract growers and have commitments
that would result in approximately 1.2 million additional free-range hens by fall 2025.
29
We believe our current cash balances, investments, projected cash flows from operations, and available borrowings under our
Credit Facility will be sufficient to fund our capital expenditure cash needs for at least the next 12 months and to fund our
capital commitments currently in place thereafter.
IMPACT OF RECENTLY
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
information
on
changes
in
accounting
principles
and
new
accounting
policies,
see
CRITICAL ACCOUNTING ESTIMATES
Critical accounting
estimates are
those estimates
made in
accordance with
U.S. generally
accepted accounting
principles that
involve
a
significant
level
of
estimation
uncertainty
and
have
had
or
are
reasonably
likely
to
have
a
material
impact
on
our
financial condition
or results
of operations.
There have
been no
changes to
our critical
accounting estimates
identified in
our
2024 Annual Report.
ITEM 3. QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the twenty-six weeks ended November 30, 2024
from the information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2024
Annual Report.
ITEM 4.
CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls
and procedures are
designed to
provide reasonable assurance
that information required
to be disclosed
by us in the reports we file
or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time
periods specified
in the
Securities and
Exchange Commission’s
rules and
forms. Disclosure controls
and procedures
include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports
that
we file or submit under
the Exchange Act is accumulated and
communicated to management, including our principal
executive
and
principal
financial
officers,
or
persons
performing
similar
functions,
as
appropriate
to
allow
timely
decisions
regarding
required disclosure. Based on an evaluation of our disclosure controls and procedures conducted by our Chief Executive Officer
and
Chief
Financial
Officer,
together
with
other
financial
officers,
such
officers
concluded
that
our
disclosure
controls
and
procedures were effective as of November 30, 2024 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change in our
internal control over financial reporting that occurred during
the quarter ended November 30, 2024
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
30
PART
II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
Refer
to
the
discussion
of
certain
legal
proceedings
involving
the
Company
and/or
its
subsidiaries
in
(i)
our
2024
Annual
Report,
Part I
Item 3
Legal Proceedings,
and Part
II
Item 8,
Notes
to Consolidated
Financial
Statements and
Supplementary
Data,
Note
16
-
Commitments
and
Contingencies,
and
(ii)
in
this
Quarterly
Report
in
reference.
ITEM 1A.
RISK
FACTORS
There have been no material changes in the risk factors previously disclosed in the Company’s 2024 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table is a summary of our second quarter 2025 share repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Number
Shares Purchased
of Shares that
Total Number
Average
as Part of Publicly
May Yet
Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
09/01/24 to 09/28/24
—
$
—
—
—
09/29/24 to 10/26/24
285
94.16
—
—
10/27/24 to 11/30/24
—
—
—
—
285
$
94.16
—
—
(1)
As permitted under our Amended and Restated 2012 Omnibus Long-Term
Incentive Plan, these shares were withheld by us to satisfy tax withholding
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
31
SIGNATURES
Pursuant to the
requirements of the
Securities Exchange Act
of 1934, the
registrant has duly
caused this report
to be signed
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
January 7, 2025
/s/ Max P.
Bowman
Max P.
Bowman
Vice President, Chief Financial Officer
(Principal Financial Officer)
Date:
January 7, 2025
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
TABLE OF CONTENTS
Part I. FinancialItem 1. Financial StatementsNote 1 - Summary Of Significant Accounting PoliciesNote 2 - AcquisitionsNote 3 - InvestmentNote 4 - Fair Value MeasurementsNote 5 - Inventories Inventories Consisted Of The Following As Of November 30, 2024 and June 1, 2024 (in Thousands):Note 5 - InventoriesNote 6 - EquityNote 7 - Net Income Per Common ShareNote 8 - Revenue From Contracts with CustomersNote 9 - Stock Based CompensationNote 10 - Commitments and ContingenciesItem 2. Management SItem 1A Risk Factors Of The 2024 Annual Report, The Risk Factors (if Any) Set Forth in Part II Item 1A Risk Factors andItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. ControlsPart II. Other InformationItem 1. Legal ProceedingsItem 1A. RiskItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 6. Exhibits