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 April 8, 2025.
2
INDEX
Page
Number
Part I.
Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Other Information
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
3
PART
I.
FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
(Unaudited)
March 1, 2025
June 1, 2024
Assets
Current assets:
Cash and cash equivalents
$
$
Investment securities available-for-sale
Trade and other receivables, net
Income tax receivable
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant & equipment, net
Investments in unconsolidated entities
Goodwill
Intangible assets, net
Other long-term assets
Total Assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
Accrued wages and benefits
Accrued income taxes payable
Dividends payable
Accrued expenses and other liabilities
Total current liabilities
Other noncurrent liabilities
Deferred income taxes, net
Total liabilities
Commitments and contingencies - see Note 10
—
—
Stockholders’ equity:
Common stock ($
Common stock - authorized
Class A convertible common stock - authorized and issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
(
757
)
(
1,773
)
Common stock in treasury at cost –
at June 1, 2024
(
35,496
)
(
31,597
)
Total Cal-Maine Foods, Inc. stockholders’ equity
Noncontrolling interest in consolidated entity
(
3,104
)
Total stockholders’ equity
Total Liabilities and Stockholders’ Equity
$
$
See Notes to Condensed Consolidated Financial Statements.
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net sales
$
$
$
$
Cost of sales
Gross profit
Selling, general and administrative
(Gain) loss on involuntary conversions
(
9,929
)
(
9,929
)
(Gain) loss on disposal of fixed assets
(
306
)
(
1,001
)
(
44
)
Operating income
Other income (expense):
Interest income, net
Patronage dividends
Other, net
Total other income, net
Income before income taxes
Income tax expense
Net income
Less: Loss attributable to noncontrolling
interest
(
380
)
(
349
)
(
1,471
)
(
1,295
)
Net income attributable to Cal-Maine Foods,
Inc.
$
$
$
$
Net income per common share:
Basic
$
$
$
$
Diluted
$
$
$
$
Weighted average shares outstanding:
Basic
Diluted
See Notes to Condensed Consolidated Financial Statements.
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income
(In thousands)
(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net income
$
$
$
$
Other comprehensive income, before tax:
Unrealized holding gain on available-for-sale
securities, net of reclassification adjustments
Income tax expense related to items of other
comprehensive income
(
49
)
(
32
)
(
326
)
(
441
)
Other comprehensive income, net of tax
Comprehensive income
Less: Comprehensive loss attributable to the
noncontrolling interest
(
380
)
(
349
)
(
1,471
)
(
1,295
)
Comprehensive income attributable to Cal-
Maine Foods, Inc.
$
$
$
$
See Notes to Condensed Consolidated Financial Statements.
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
Cash flows from operating activities:
Net income
$
$
Depreciation and amortization
Deferred income taxes
(
14,749
)
Other adjustments, net
(
119,057
)
Net cash provided by operations
Cash flows from investing activities:
Purchases of investment securities
(
813,130
)
(
243,518
)
Sales and maturities of investment securities
Investment in unconsolidated entities
(
363
)
Distributions from unconsolidated entities
Acquisition of businesses
(
116,193
)
(
53,746
)
Purchases of property, plant and equipment
(
115,395
)
(
95,969
)
Net proceeds from disposal of property, plant and equipment
Net cash used in investing activities
(
385,126
)
(
118,438
)
Cash flows from financing activities:
Payments of dividends
(
160,805
)
(
42,965
)
Purchase of common stock by treasury
(
3,953
)
(
1,688
)
Principal payments on long-term debt
(
2,481
)
Principal payments on finance lease
(
214
)
Net cash used in financing activities
(
167,239
)
(
44,867
)
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
unaudited
condensed
consolidated
financial
statements
of
Cal-Maine
Foods,
Inc.
and
its
subsidiaries
(the
“Company,”
“we,” “us,” “our”) have
been prepared in accordance
with the instructions to
Form 10-Q and Article
10 of Regulation S-X
and
in accordance
with generally
accepted accounting
principles in
the United
States of
America (“GAAP”)
for interim
financial
reporting and should
be read in
conjunction with our
Annual Report on
Form 10-K for
the fiscal year
ended June 1,
2024 (the
“2024
Annual Report”).
These
statements
reflect
all
adjustments
that
are,
in
the
opinion
of
management,
necessary
to
a
fair
statement of the results for the interim periods presented and,
in the opinion of management, consist of adjustments of a
normal
recurring nature. Operating results
for the interim periods
are not necessarily indicative
of operating results for
the entire fiscal
year.
Fiscal Year
The Company’s
fiscal year
ends on
the Saturday
closest to
May 31.
Each of
the three-month
periods and
year-to-date periods
ended on March 1, 2025 and March 2, 2024 included
13
39 weeks
, respectively.
Use of Estimates
The preparation
of the
condensed consolidated
financial statements
in conformity
with GAAP
requires management
to make
estimates
and
assumptions
that
affect
the
amounts
reported
in
the
condensed
consolidated
financial
statements
and
accompanying notes. Actual results could differ from those estimates.
Investment Securities Available-for-Sale
The Company has
determined that its
debt securities
are available-for-sale
investments. We
classify these securities
as current
because the
amounts invested
are available
for current
operations. Available
-for-sale securities
are carried
at fair
value, based
on quoted market prices as of the balance sheet
date, with unrealized gains and losses recorded in other comprehensive income.
The
amortized cost
of
debt
securities is
adjusted
for
amortization of
premiums and
accretion of
discounts
to
maturity and
is
recorded in interest income. The Company regularly evaluates
changes to the rating of its debt
securities by credit agencies and
economic conditions to
assess and record
any expected credit
losses through allowance
for credit losses,
limited to the
amount
that fair value was less than the amortized cost basis.
The cost basis
for realized gains
and losses on
available-for-sale securities is
determined by the
specific identification method.
Gains
and
losses
are
recognized
in
other
income
(expenses)
as
Other,
net
in
the
Company’s
Condensed
Consolidated
Statements of Income. Interest and dividends on securities classified as available-for-sale are recorded in interest income.
Trade Receivables
Trade receivables are
stated at their carrying values,
which include a reserve for
credit losses. As of March
1, 2025 and June
1,
2024, reserves for credit losses were $
based
on
an
evaluation
of
each
customer’s
financial
condition
and
credit
history.
Collateral
is
generally
not
required.
The
Company minimizes
exposure to
counter party
credit risk
through credit
analysis and
approvals, credit
limits, and
monitoring
procedures.
In
determining
our
reserve
for
credit
losses,
receivables
are
assigned
an
expected
loss
based
on
historical
loss
information adjusted as needed for economic and other forward-looking factors.
Dividends Payable
We
accrue dividends at the
end of each quarter
according to the Company’s
dividend policy adopted by its
Board of Directors.
The Company pays
a dividend to
shareholders of its
Common Stock and Class
A Common Stock
on a quarterly
basis for each
quarter for
which the
Company reports net
income attributable
to Cal-Maine
Foods, Inc.
computed in
accordance with
GAAP
in an amount equal
to
one-third
following the last
day of such
quarter, except
for the fourth
fiscal quarter.
For the fourth
quarter, the
Company pays dividends
to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.
8
Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend for a subsequent
profitable quarter until the Company is profitable on
a cumulative basis computed from the
date of the most recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board of
Directors.
Revenue Recognition
The Company
recognizes revenue
through sale
of its
products to
customers through
retail, foodservice
and other
distribution
channels.
The
majority
of
the
Company’s
revenue
is
derived
from
agreements
or
contracts
with
customers
based
upon
the
customer
ordering
its
products
with
a
single
performance
obligation
of
delivering
the
product.
The
Company
believes
the
performance
obligation
is
met
upon
delivery
and
acceptance
of
the
product
by
our
customers,
which
generally
occurs
upon
shipment
or
delivery
to
a
customer
based
on
terms
of
the
sale.
Costs
paid
to
third
party
brokers
to
obtain
agreements
are
expensed as the Company’s agreements are generally less than one year.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
delivery of
the
products.
The
Company
periodically
offers
sales
incentives
or
other
programs
such
as
rebates,
discounts,
coupons,
volume-
based incentives, guaranteed sales
and other programs.
The Company records an
estimated allowance for costs
associated with
these programs, which is recorded as
a reduction in revenue at the
time of sale using historical trends
and projected redemption
rates
of
each
program.
The
Company
regularly
reviews
these
estimates
and
any
difference
between
the
estimated
costs
and
actual realization of these programs would be recognized the subsequent period.
Business Combinations
The Company applies the acquisition method of accounting, which requires that once control is obtained, all
the assets acquired
and liabilities assumed, including amounts
attributable to noncontrolling interests, are
recorded at their respective fair
values at
the date of acquisition. We determine the fair values of identifiable assets and liabilities internally,
which requires estimates and
the
use
of
various
valuation
techniques.
When
a
market
value
is
not
readily
available,
our
internal
valuation
methodology
considers the remaining estimated life of the assets acquired and what management believes is the market value for those assets.
We
typically use the income method approach for intangible assets
acquired in a business combination. Significant estimates in
valuing
certain
intangible
assets
include,
but
are
not
limited
to,
the
amount
and
timing
of
future
cash
flows,
growth
rates,
discount rates and useful lives. The
excess of the purchase price over
fair values of identifiable assets and
liabilities is recorded
as goodwill.
Loss Contingencies
Certain
conditions
may
exist
as
of
the
date
the
consolidated
financial
statements
are
issued
that
may
result
in
a
loss
to
the
Company but which will
only be resolved when
one or more future
events occur or fail
to occur.
The Company’s
management
and
its
legal
counsel
assess
such
contingent
liabilities,
and
such
assessment
inherently
involves
an
exercise
of
judgment.
In
assessing loss
contingencies related
to legal
proceedings that
are pending
against the
Company or
unasserted claims
that may
result in such
proceedings, the Company’s
legal counsel evaluates
the perceived merits
of any
legal proceedings or
unasserted
claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment
of a contingency
indicates it is
probable that a
material loss has
been incurred and
the amount of
the liability
can
be
estimated,
the
estimated
liability
would
be
accrued
in
the
Company’s
consolidated
financial
statements.
If
the
assessment
indicates
a
potentially
material
loss
contingency
is
not
probable,
but
is
reasonably
possible,
or
is
probable
but
cannot
be
estimated,
then
the
nature
of
the
contingent
liability,
together
with
an
estimate
of
the
range
of
possible
loss
if
determinable and
material, would
be disclosed.
Loss contingencies
considered remote
are generally
not disclosed
unless they
involve guarantees, in which case the nature of the guarantee would be disclosed.
The Company expenses the costs of litigation as they are incurred.
New Accounting Pronouncements and Policies
In
November
2023,
the
FASB
issued
Accounting
Standards
Update
(“ASU”)
2023-07,
Segment
Reporting
(Topic
280):
Improvements to Reportable Segment Disclosures
. This ASU requires enhanced disclosures about significant segment expenses
regularly provided
to the
chief operating
decision maker
that are
included within
each reported
measure of
segment profit
or
loss, and
requires all
annual disclosures
currently required by
Topic
280 to
be included
in interim
periods. ASU 2023-07
is to
be applied
retrospectively for
all periods
presented in
the financial
statements and
is effective
for fiscal
years beginning
after
9
December 15, 2023, and
interim periods within fiscal years
beginning after December 15,
2024, with early adoption
permitted.
The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statement disclosures.
In
December
2023,
the
FASB
issued ASU
2023-09,
Income
Taxes
(Topic
740)
–
Improvements
to
Income
Tax
Disclosures
.
This ASU
requires that
an entity,
on an
annual basis,
disclose additional
income tax
information, primarily
related to
the rate
reconciliation and income
taxes paid. The
ASU is intended
to enhance the
transparency and decision
usefulness of income
tax
disclosures.
ASU
2023-09
is
effective
for
annual
periods
beginning
after
December
15,
2024.
The
Company
is
currently
evaluating the impact of ASU 2023-09 on its consolidated financial statement disclosures.
In
November
2024,
the
FASB
issued
ASU
2024-03,
Income
Statement
—
Reporting
Comprehensive
Income
—
Expense
Disaggregation Disclosures (Subtopic
220-40)
. The objective of ASU 2024-03 is to improve
disclosures about a public entity’s
expenses, primarily through
additional disaggregation of
income statement expenses. Additionally,
in January 2025,
the FASB
further
clarified
the
effective
date
of
ASU
2024-03
with
the
issuance of ASU
2025-01.
ASU
2024-03 is effective
for
annual
periods beginning after December
15, 2026, and
interim periods within annual
reporting periods beginning after
December 15,
2027. Early adoption
is permitted and
may be applied
either on a
prospective or retrospective basis.
The Company is
currently
evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.
There are no other
new accounting pronouncements issued or
effective during the fiscal
year that had or
are expected to have a
material impact on our Consolidated Financial Statements.
Note 2 - Acquisitions
Acquisition of ISE America, Inc. Assets
Effective
, the
Company acquired
substantially all
of the
commercial shell
egg production,
processing and
egg
products breaking facilities
of ISE America,
Inc. and certain
of its affiliates
(“ISE”). The assets
acquired included commercial
shell
egg
production
and
processing
facilities
with
a
capacity
at
the
time
of
acquisition
of
approximately
hens, including
egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast
and
Mid-Atlantic
states,
and
production
operations
in
Maryland,
New
Jersey,
Delaware
and
South
Carolina.
The
Company
accounted for the acquisition as a business combination.
The
following
table
summarizes
the
consideration
paid
for
the
ISE
assets
and
the
amounts
of
assets
acquired
and
liabilities
assumed recognized at the acquisition date (in thousands):
Cash consideration paid
$
Recognized amounts of identifiable assets acquired and liabilities assumed
Inventories
$
Property, plant and equipment
Intangible assets
Liabilities assumed
(
308
)
Total identifiable net assets
$
Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying
value
as
management
believes
that
its
carrying
value
best
approximates
its
fair
value.
Feed
ingredients,
packaging
and
egg
inventory were all valued based on market prices as of June 28, 2024.
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Intangible
assets
consisted
primarily
of
customer
lists
acquired.
Customers
lists
were
valued
using
the
income
method
approach.
Acquisition of Deal-Rite Feeds, Inc. Assets
Effective
, the
Company acquired
certain assets
of Deal-Rite
Feeds, Inc.
and certain
of its
affiliates (“Deal-
Rite”)
for
approximately $
10
related equipment and
a retail feed
sales business located
in North Carolina.
The acquired assets
will produce and
deliver feed
to our nearby shell egg production facilities. The Company accounted for the acquisition as a business combination.
Property,
plant and
equipment were valued
utilizing the
cost approach which
is based on
replacement or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
Goodwill
recorded
in
connection
with
the
Deal-Rite
acquisition
is
primarily
attributable
to
improved
efficiencies
from
integrating the assets of Deal-Rite with
the operations of the Company.
The Company recognized goodwill of $
result of the acquisition.
Other Acquisitions
Effective
,
the
Company
acquired
the
remaining
%
interest
in
our
majority-owned
subsidiary,
MeadowCreek Foods LLC.
Note 3 - Investment
Securities
The following represents the Company’s investment securities as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
June 1, 2024
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current investment securities
$
$
$
$
Available-for-sale
Proceeds from
sales and
maturities of
investment securities
available-for-sale
were $
the
thirty-nine
weeks
ended March
1,
2025
and
March
2,
2024,
respectively.
Gross
realized
gains
for
the
thirty-nine
weeks
ended
March
1,
2025
and
March
2,
2024
were
$
losses for the thirty-nine weeks ended March 1, 2025. Gross realized losses for the thirty-nine weeks ended March 2, 2024 were
$
11
Actual maturities may differ
from contractual maturities as
some borrowers have
the right to call
or prepay obligations
with or
without penalties. Contractual maturities of current investments at March 1, 2025 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Note 4 - Fair Value Measurements
The Company
is required
to categorize
both financial
and nonfinancial
assets and
liabilities based
on the
following fair
value
hierarchy. The
fair value
of an
asset is
the price
at which
the asset
could be
sold in
an orderly
transaction between
unrelated,
knowledgeable, and willing parties able to engage in the
transaction. A liability’s fair value
is defined as the amount that would
be paid
to transfer
the liability
to a
new obligor
in a
transaction between
such parties,
not
the amount
that would
be paid
to
settle the liability with the creditor.
•
Level 1
•
Level 2
directly or indirectly, including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market data
•
Level 3
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and Cash Equivalents, Accounts Receivable, and Accounts Payable
The carrying amount approximates fair value due to the short maturity of these instruments.
Assets and Liabilities Measured at Fair Value
on a Recurring Basis
In
accordance with
the
fair value
hierarchy described
above, the
following
table shows
the
fair value
of
financial assets
and
liabilities measured at fair value on a recurring basis as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
12
June 1, 2024
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total assets measured at fair value
$
$
$
$
Liabilities
Contingent consideration
$
$
$
$
Total liabilities measured at fair value
$
$
$
$
Investment securities
–
available-for-sale
classified as
Level 2
consist of
securities with
maturities of
three months
or longer
when purchased. We
classified these securities as current because amounts invested are readily available
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent consideration
classified as
Level 3
consists of
the potential
obligation to
pay an
earnout to
Fassio Egg
Farms, Inc.
(“Fassio”)
contingent
on
the
acquired
business
meeting
certain
return
on
profitability
milestones
over
a
three-year
commencing on the date of the acquisition in the second quarter of fiscal
2024. The fair value of the contingent consideration is
estimated
using
a
discounted
cash
flow
model.
Key
assumptions
and
unobservable
inputs
that
require
significant
judgement
used
in
the
estimate
include
weighted
average
cost
of
capital,
egg
prices,
projected
revenue
and
expenses
over
which
the
contingent considered
is measured,
and the
probability assessments
with respect
to the
likelihood of
achieving the
forecasted
projections.
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
Fair value adjustments
Balance, March 1, 2025
$
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
condensed consolidated statements of income.
Note 5 - Inventories
Inventories consisted of the following as of March 1, 2025 and June 1, 2024 (in thousands):
March 1, 2025
June 1, 2024
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
We
grow
and
maintain
flocks
of
layers
(mature
female
chickens),
pullets
(female
chickens,
under
18
weeks
of
age),
and
breeders (male and female chickens used to produce fertile eggs to
hatch for egg production flocks). Our total flock at March 1,
2025 and June 1, 2024
consisted of approximately
million layers, respectively.
13
Note 6 - Equity
On
February
25,
2025,
the
Company
entered
an
Agreement
Regarding
Conversion
(the
“Conversion
Agreement”)
by
and
among the
Company,
DLNL, LLC,
a Delaware
limited liability
company (“Daughters’
LLC”), and
Fred R. Adams
Jr.’s
four
daughters
and
Adolphus
B.
Baker,
Board
Chair
and
Mr. Adams’
son-in-law
(the
“Members”
and
together
with
Daughters’
LLC, the “Stockholder Parties”).
The Company’s
entry into the Conversion
Agreement was a result
of the Members informing
the
Company
that
they
were
potentially
interested
in
diversifying
their
respective
financial
portfolios,
including
through
the
potential sale of
all or
a portion of
the shares of
the Company’s
Common Stock, underlying
the Class A
Common Stock, held
by Daughters’
LLC, as
most of
them have
become more
focused on
their individual
estate planning
efforts and
philanthropic
endeavors.
The Conversion Agreement provides for the following:
●
The approval by
the Company’s
Board of Directors,
and approval by
Daughters’ LLC by
majority written consent, of
the
Third
Amended
and
Restated
Certificate
of
Incorporation
of
the
Company
(“Third
Amended
and
Restated
Charter”),
which
has
occurred.
The
Third
Amended
and
Restated
Charter
became
effective
upon
filing
with
the
Delaware Secretary of State on March 27, 2025 (the “Restated Charter Effective Date”).
●
The approval by the
Company’s Board of
Directors of the Amended
and Restated Bylaws of
the Company (“Restated
Bylaws”), which has occurred. The Restated Bylaws became effective on the Restated Charter Effective Date.
●
The agreement by the Stockholder Parties not to convert any shares of Class A Common Stock (“Class A Shares”) into
shares of
Common Stock
(“Common Shares”)
prior to
the later
of (i)
the Restated
Charter Effective
Date or
(ii) the
date
the
Company
obtained
an
amendment
to
its
Amended
and
Restated
Credit
Agreement
such
that
the
Class
A
Conversion, defined
below,
would not
result in
a “Change
of Control”
within the
meaning of
such agreement.
Both
conditions were met on March 27, 2025.
●
The agreement by the Stockholder Parties that if Daughters’ LLC converts any Class A Shares into Common Shares, it
will simultaneously convert all (but not less than all) Class A Shares into Common Shares (the “Class A Conversion”).
●
After
the
effective
date
of
the
Class
A
Conversion
(the
“Class
A
Conversion
Date”),
and
ending
on
the
12-month
anniversary
of
the
Class
A
Conversion
Date
(or,
if
earlier,
December 31, 2026),
certain
registration
rights
of
the
Members to offer or sell Common Shares in a registered offering under the Securities Act of 1933, as amended.
●
The adoption by the
Stockholder Parties of an
amended and restated limited
liability company operating agreement of
Daughters’ LLC, which provides
for certain changes
to permit Daughters’ LLC
to take the
actions provided for
in the
Conversion Agreement.
The
Conversion
Agreement,
including
the
documents
contemplated
by
that
agreement,
are
referred
to
collectively
as
the
“Transactions.”
The
Transactions
do
not
require
any
Stockholder
Party
to
convert
Class
A
Common
Shares
into
Common
Shares or to sell any Common Shares.
On February
25, 2025,
the Company’s
Board of
Directors approved
a new
$
repurchase program authorizes
the Company,
in management’s
discretion, to repurchase
Common Stock from
time to time
for
an
aggregate purchase
price up
to $
repurchases), subject to
market conditions and
other factors. The
actual timing, number
and value of
shares repurchased under
the
program
will be
determined by
management in
its discretion
and
will depend
on
a
number
of
factors,
including, but
not
limited to, the market price of the Common Stock and general market and economic conditions.
14
The following reflects equity activity for the thirteen weeks ended March 1, 2025 and March 2, 2024 (in thousands):
Thirteen Weeks Ended March 1, 2025
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at November
30, 2024
$
$
$
(
31,661
)
$
$
(
908
)
$
$
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(
3,835
)
—
—
—
(
2,758
)
Dividends ($
per share)
Common
—
—
—
—
—
(
152,932
)
—
(
152,932
)
Class A common
—
—
—
—
—
(
16,589
)
—
(
16,589
)
Net income (loss)
—
—
—
—
—
(
380
)
Balance at March 1,
2025
$
$
$
(
35,496
)
$
$
(
757
)
$
$
$
Thirteen Weeks Ended March 2, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at December
2, 2023
$
$
$
(
30,014
)
$
$
(
1,614
)
$
$
(
2,444
)
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(
1,583
)
—
—
—
(
571
)
Dividends ($
per share)
Common
—
—
—
—
—
(
44,111
)
—
(
44,111
)
Class A common
—
—
—
—
—
(
4,786
)
—
(
4,786
)
Net income (loss)
—
—
—
—
—
(
349
)
Balance at March 2,
2024
$
$
$
(
31,597
)
$
$
(
1,514
)
$
$
(
2,793
)
$
15
Thirty-nine Weeks Ended March 1, 2025
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 1,
2024
$
$
$
(
31,597
)
$
$
(
1,773
)
$
$
(
3,104
)
$
Other comprehensive
income, net of tax
—
—
—
—
—
—
Stock compensation
plan transactions
(
3,899
)
—
—
—
(
593
)
Contributions to
Crepini Foods LLC
—
—
—
—
—
—
Acquisition of
noncontrolling
interest in
MeadowCreek Foods
LLC
—
—
—
—
—
(
3,826
)
Dividends ($
per share)
Common
—
—
—
—
—
(
263,918
)
—
(
263,918
)
Class A common
—
—
—
—
—
(
28,627
)
—
(
28,627
)
Net income (loss)
—
—
—
—
—
(
1,471
)
Balance at March 1,
2025
$
$
$
(
35,496
)
$
$
(
757
)
$
$
$
Thirty-nine Weeks Ended March 2, 2024
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum.
Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at June 3,
2023
$
$
$
(
30,008
)
$
$
(
2,886
)
$
$
(
1,498
)
$
Other comprehensive
loss, net of tax
—
—
—
—
1,372
—
—
Stock compensation
plan transactions
(
1,589
)
—
—
—
Dividends ($
per share)
Common
—
—
—
—
—
(
49,501
)
—
(
49,501
)
Class A common
—
—
—
—
—
(
5,372
)
—
(
5,372
)
Net income (loss)
—
—
—
—
—
(
1,295
)
Balance at March 2,
2024
$
$
$
(
31,597
)
$
$
(
1,514
)
$
$
(
2,793
)
$
Note 7 - Net Income per Common Share
Basic net income per
share is based on
the weighted average Common Stock
and Class A Common
Stock outstanding. Diluted
net
income
per
share
is
based
on
weighted-average
common
shares
outstanding
during
the
relevant
period
adjusted
for
the
dilutive effect of share-based awards.
16
The
following
table
provides
a
reconciliation
of
the
numerators
and
denominators
used
to
determine
basic
and
diluted
net
income per common share (amounts in thousands, except per share data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Numerator
Net income
$
$
$
$
Less: Loss attributable to
noncontrolling interest
(
380
)
(
349
)
(
1,471
)
(
1,295
)
Net income attributable to Cal-Maine
Foods, Inc.
$
$
$
$
Denominator
Weighted-average common shares
outstanding, basic
Effect of dilutive restricted shares
Weighted-average common shares
outstanding, diluted
Net income per common share
attributable to Cal-Maine Foods, Inc.
Basic
$
$
$
$
Diluted
$
$
$
$
Note 8 - Revenue from Contracts with Customers
Net revenue is primarily generated through the sales of shell eggs and egg products. The Company’s shell egg product offerings
include specialty and conventional shell eggs.
Specialty shell eggs include cage-free, organic,
brown, free-range, pasture-raised
and nutritionally enhanced eggs. Conventional shell egg sales represent all other shell egg sales not
sold as specialty shell eggs.
The Company’s
egg products
offerings include
liquid and
frozen egg
products, as
well as
ready-to-eat products
such as
hard-
cooked
eggs,
egg
wraps,
protein
pancakes,
crepes
and
wrap-ups.
Liquid
and
frozen
egg
products
are
primarily
sold
to
the
institutional,
foodservice
and
food
manufacturing
sectors.
Ready-to-eat
products
are
sold
primarily
within
the
retail
and
foodservice channels.
The following table provides revenue disaggregated by product category (in thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Conventional shell egg sales
$
$
$
$
Specialty shell egg sales
Egg products
Other
$
$
$
$
Note 9 - Stock Based Compensation
Total
stock-based compensation expense was
$
March 2, 2024, respectively.
Unrecognized compensation
expense as
a result
of non-vested
shares of
restricted stock
outstanding under
the Amended
and
Restated 2012 Omnibus
Long-Term Incentive
Plan at March
1, 2025 of
$
period of
Stock Compensation Plans in our 2024 Annual Report for further information on our stock compensation plans.
17
The Company’s restricted share activity for the thirty-nine weeks ended March 1, 2025 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, June 1, 2024
$
Granted
Vested
(
108,058
)
Forfeited
(
4,324
)
Outstanding, March 1, 2025
$
Note 10 - Commitments and Contingencies
LEGAL PROCEEDINGS
Civil Investigative Demand
In March 2025, the Company received a
civil investigative demand from the Department of Justice
(“DOJ”) in connection with
an antitrust investigation
to determine whether
there is, has
been or may
be a violation
of the antitrust
laws by anticompetitive
conduct
by
and
among
egg
producers.
The
Company
is
cooperating
with
the
investigation.
Management
cannot
predict
the
eventual scope,
duration or
outcome of
this investigation
and is
unable to
estimate the
amount or
range of
potential losses,
if
any, at this time.
State of Texas v.
Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
On April 23,
2020, the Company
and its subsidiary
Wharton County Foods,
LLC (“WCF”) were
named as defendants
in State
of
Texas
v.
Cal-Maine Foods,
Inc. d/b/a
Wharton; and
Wharton County
Foods, LLC,
Cause No.
2020-25427,
in the
District
Court of
Harris County,
Texas.
The State
of Texas
(the “State”)
asserted claims
based on
the Company’s
and WCF’s
alleged
violation
of
the
Texas
Deceptive
Trade
Practices—Consumer
Protection
Act,
Tex.
Bus.
&
Com.
Code
§§
17.41-17.63
(“DTPA”).
The
State
claimed
that
the
Company
and
WCF
offered
shell
eggs
at
excessive
or
exorbitant
prices
during
the
COVID-19
state
of
emergency
and
made
misleading
statements
about
shell
egg
prices.
The
State
sought
temporary
and
permanent
injunctions
against
the
Company
and
WCF
to
prevent
further
alleged
violations
of
the
DTPA,
along
with
over
$
prejudice. On September 11,
2020, the State filed a
notice of appeal, which was
assigned to the Texas
Court of Appeals for the
First
District.
On
August
16,
2022,
the
appeals
court
reversed
and
remanded
the
case
back
to
the
trial
court
for
further
proceedings. On October 31, 2022, the Company and WCF appealed the First District Court’s
decision to the Supreme Court of
Texas.
On September
29, 2023,
the Supreme
Court of
Texas
denied the
Company’s
Petition for
Review and
remanded to
the
trial court
for further
proceedings. The
district court
entered a
pre-trial order
scheduling pre-trial
proceedings and
tentatively
setting
a
trial
date
for
August
11,
2025.
On
November 30,
2024,
the
State
filed
an
amended petition,
primarily
to
address
a
procedural
deficiency
that
required
the
State
to
generally
plead
it
was
seeking
monetary
relief
over
$
restitution,
civil
penalties,
attorney’s
fees
and
costs.
Pre-trial
proceedings
are
progressing
in
accordance
with
the
court’s
schedule. Management believes the risk of material loss related to this matter to be remote.
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
As previously
reported, on
September 25,
2008, the
Company was
named as
one of
several defendants
in numerous
antitrust
cases involving
the United
States shell
egg industry.
The Company
settled all
of these
cases, except
for the
claims of
certain
plaintiffs who sought substantial damages allegedly arising from the purchase of egg products
(as opposed to shell eggs). These
remaining plaintiffs are
Kraft Food Global,
Inc., General Mills, Inc.,
and Nestle USA, Inc.
(the “Egg Products Plaintiffs”)
and,
until a subsequent settlement was reached as described below, The Kellogg Company.
On September
13, 2019,
the case
with the
Egg Products
Plaintiffs was
remanded from
a multi-district
litigation proceeding
in
the
United
States
District
Court
for
the
Eastern
District
of
Pennsylvania,
In
re
Processed
Egg
Products
Antitrust
Litigation,
MDL No. 2002, to the United States District Court for
the Northern District of Illinois, Kraft Foods Global, Inc. et
al. v. United
Egg Producers,
Inc. et
al., Case
No. 1:11
-cv-8808, for
trial. The
Egg Products
Plaintiffs
alleged that
the Company
and other
defendants
violated
Section
1
of
the
Sherman
Act,
15.
U.S.C.
§
1,
by
agreeing
to
limit
the
production
of
eggs
and
thereby
illegally
to
raise
the
prices
that plaintiffs
paid
for processed
egg products.
In
particular,
the
Egg Products
Plaintiffs
attacked
18
certain features of the United
Egg Producers animal-welfare guidelines and program
used by the Company and many
other egg
producers.
On October 24, 2019, the Company entered into a
confidential settlement agreement with The Kellogg Company dismissing all
claims against the Company
for an amount that
did not have
a material impact on
the Company’s
financial condition or results
of operations.
On November
11,
2019, a
stipulation for
dismissal was
filed with
the court,
and on
March 28,
2022, the
court
dismissed the Company with prejudice.
The trial of this case began on October 17, 2023. On December 1, 2023, the jury returned a decision awarding the
Egg Products
Plaintiffs $
defendants,
jointly
and
severally,
totaling
$
motion for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment.
On December 13, 2024,
the
court
granted
defendants’
November
20,
2024
motion
to
stay
enforcement
of
the
judgment
and
entered
an
agreed
order
requiring the
defendants to
post security
during post-judgment
proceedings and
appeal, and
stayed proceedings
to enforce
the
judgment until the disposition of the post-judgment motions and ultimate appeals. On
December 17, 2024, the Company posted
a bond
in the
approximate amount
of $
appeal the trial court’s
decision. Another defendant posted a
bond for the remaining amount.
The Company intends to continue
to vigorously defend the claims asserted by the Egg Products Plaintiffs.
If the
jury’s
decision is
ultimately upheld,
the Company
would be
jointly and
severally liable
with other
defendants for
treble
damages,
or
$
Plaintiffs’
reasonable
attorneys’
fees.
During
our
second
fiscal
quarter
of
2024,
we
recorded
an
accrued
expense
of
$
million in
selling, general
and administrative
expenses in
the Company’s
Condensed Consolidated
Statements of
Income and
classified
as
other
noncurrent
liabilities
in
the
Company’s
Condensed
Consolidated
Balance
Sheets.
Although
less
than
the
bond
posted
by
the
Company,
the
accrual
represents
our
estimate
of
the
Company’s
proportional
share
of
the
reasonably
possible ultimate damages award, excluding the Egg Product Plaintiffs’
attorneys’ fees that we believe would be approximately
offset by the credits noted
above. We
have entered into a judgment allocation
and joint defense agreement with the
other major
producer
defendant
remaining
in
the
case
and
are
in
discussions
with
other
defendants
regarding
their
contributions.
Our
accrual may change
in the future
based on the
outcome of those
discussions and may
also be revised
in whole or
in part in
the
future to the extent we are successful in further proceedings in the litigation.
State of Oklahoma Watershed Pollution Litigation
On June
18, 2005, the
State of Oklahoma
filed suit, in
the United States
District Court for
the Northern District
of Oklahoma,
against Cal-Maine
Foods, Inc.
and Tyson
Foods, Inc.,
Cobb-Vantress,
Inc., Cargill,
Inc., George’s,
Inc., Peterson
Farms, Inc.
and
Simmons Foods,
Inc.,
and
certain
of
their affiliates.
The
State of
Oklahoma claims
that
through
the disposal
of
chicken
litter the defendants
polluted the Illinois
River Watershed.
This watershed provides
water to eastern
Oklahoma. The complaint
sought
injunctive relief
and
monetary damages,
but
the
claim for
monetary damages
was
dismissed by
the
court. Cal-Maine
Foods,
Inc.
discontinued
operations
in
the
watershed
in
or
around
2005.
Since
the
litigation
began,
Cal-Maine
Foods,
Inc.
purchased
%
of
the
membership
interests
of
Benton
County
Foods,
LLC,
which
is
an
ongoing
commercial
shell
egg
operation within
the Illinois
River Watershed.
Benton County
Foods, LLC
is not
a defendant
in the
litigation. We
also have
a
number of small contract producers that operate in the area.
The non-jury trial in the case began in September 2009 and concluded in February 2010. On January 18, 2023, the court entered
findings of fact
and conclusions of
law in favor
of the State
of Oklahoma, but
no penalties were
assessed. The court
found the
defendants
liable
for
state
law
nuisance,
federal
common
law
nuisance,
and
state
law
trespass.
The
court
also
found
the
producers
vicariously
liable for
the
actions of
their
contract producers.
The
court directed
the
parties
to
confer
in attempt
to
reach
agreement
on
appropriate
remedies.
On
June
12,
2023,
the
court
ordered
the
parties
to
mediate
before
retired
Tenth
Circuit
Chief
Judge
Deanell
Reece
Tacha,
but
the
mediation
was
unsuccessful.
On
June
26,
2024,
the
district
court
denied
defendants’
motion
to
dismiss
the
case.
On
September
13,
2024,
a
status
hearing
was
held
and
the
court
scheduled
an
evidentiary hearing
for December
3, 2024,
to determine
whether any
legal remedy
is available
based on
the now
14 year
old
record
and
changed
circumstances
of
the
Illinois
River
watershed.
On
November
5,
2024
the
court
denied
defendants’
September 20,
2024 motion
to certify
an interlocutory
appeal. The
evidentiary hearing
proceeded as
scheduled and
concluded
on
December
17,
2024.
The
court
directed
the
parties
to
present
their
proposed
findings
of
fact
and
conclusions
of
law
and
supporting
briefs
by
January
30,
2025.
The parties
submitted their
post-trial briefs
on
January 20,
2025.
While
management
believes there
is a
reasonable possibility
of a
material loss
from the
case, at
the present
time, it
is not
possible to
estimate the
amount
of
monetary
exposure,
if
any,
to
the
Company
due
to
a
range
of
factors,
including
the
following,
among
others:
uncertainties
inherent
in
any
assessment
of
potential
costs
associated
with
injunctive
relief
or
other
penalties
based
on
a
decision in a case tried
over 14 years ago based
on environmental conditions that existed at
the time, the lack of
guidance from
the
court
as
to
what
might
be
considered
appropriate
remedies,
the
ongoing
litigation
with
the
State
of
Oklahoma,
and
19
uncertainty regarding what our proportionate share of any remedy would be, although we believe that our share compared to the
other defendants is small.
Other Matters
In addition to the above,
the Company is involved in
various other claims and litigation
incidental to its business. Although
the
outcome of
these matters
cannot be determined
with certainty,
management, upon the
advice of counsel,
is of
the opinion that
the final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
Note 11 - Subsequent Events
Second Amendment to Amended and Restated Credit Agreement
On
March
25,
2025,
the
Company
entered
into
the
Second
Amendment
(the
“Second
Amendment”)
to
its
Amended
and
Restated Credit
Agreement (as
amended,
the “Credit
Agreement”)). Under
the
Credit Agreement,
a Change
of
Control is
an
event
of
default.
The
Second
Amendment
amended
the
definition
of
Change
of
Control
to
exclude
from
that
definition
the
conversion (the “Class A Conversion”) of all outstanding shares of the Company’s Class A Common Stock into Common Stock
in accordance with the Conversion Agreement.
Under the Second Amendment, prior to the Class A Conversion, the definition of Change of Control is unchanged. On and after
the Class A
Conversion, Change of Control
will mean any
of (i) the
acquisition by any “person”
or “group” (as
such terms are
used in
sections 13(d)
and 14(d)
of the
Securities Exchange
Act of
1934, as
amended) at
any time
of beneficial
ownership of
% or more of
the outstanding capital stock
or other equity interests
of the Company on
a fully-diluted basis, (ii)
the failure
of individuals who
are members of
the board of
directors (or similar
governing body) of
the Company on
the effective date
of
the Second Amendment (together with any new or replacement directors whose initial nomination for election was approved by
a majority of the directors who were either directors on the effective date of the Second Amendment or previously so approved)
to constitute a majority
of the board of
directors (or similar governing
body) of the
Company, or
(iii) any “Change of
Control”
(or words of
like import), as
defined in any
agreement or indenture
relating to any
issue of Material
Indebtedness of any
Loan
Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.
For
additional
information
regarding
the
Credit
Facility,
see
Note
10
–
Credit
Facility
to
the
audited
consolidated
financial
statements included in the 2024 Annual Report.
Third Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
On
March
27,
2025,
the
Company’s
Third
Amended
and
Restated
Certificate
of
Incorporation
was
filed
with
the
Delaware
Secretary
of
State
and
became
effective.
Also
on
March
27,
2025,
the
Company’s
Amended
and
Restated
Bylaws
became
effective.
Agreement to Acquire Echo Lake Foods, Inc.
On
April
8,
2025,
the
Company
signed
a
definitive
agreement
to
acquire
Echo
Lake
Foods,
Inc.
(“Echo
Lake
Foods”)
for
approximately $
hand. Echo
Lake Foods
was founded
in 1941
and acquired
by the
Meinerz family
in 1981.
Based in
Burlington, Wisconsin,
Echo Lake Foods produces, packages, markets and distributes ready-to-eat egg products and
breakfast foods, including waffles,
pancakes, scrambled eggs, frozen cooked omelets, egg patties,
toast and diced eggs. The transaction has
been approved by both
companies’ boards of directors and
is expected to close
by the end of
fiscal 2025 following completion of
regulatory approvals
and subject to customary closing conditions.
The transaction is not subject to shareholder approval.
20
ITEM
2.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
The following
should be
read in
conjunction with
Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations included
in Part II
Item 7 of
the Company’s
Annual Report on
Form 10-K for
its fiscal year
ended June 1,
2024
(the “2024 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2024 Annual
Report and in
This
report contains
numerous forward-looking
statements within
the meaning
of
Section 27A
of
the Securities
Act of
1933
(the “Securities
Act”) and
Section 21E
of the
Securities Exchange Act
of 1934
(the “Exchange
Act”) relating
to our
shell egg
and egg products
business, including estimated future
production data, expected
construction schedules, projected
construction
costs, potential
future supply
of and
demand for
our products,
potential future
corn and
soybean price
trends, potential
future
impact on our business of the resurgence in United States (“U.S.”) commercial table egg layer flocks of highly pathogenic avian
influenza (“HPAI”),
potential future impact
on our business
of inflation and
changing interest rates,
potential future impact
on
our business of
new legislation, rules
or policies, potential
outcomes of legal
proceedings, including loss
contingency accruals
and factors that may result in
changes in the amounts recorded, and other
projected operating data, including anticipated results
of operations
and financial
condition. Such
forward-looking statements
are identified
by the
use of
words such
as “believes,”
“intends,” “expects,”
“hopes,” “may,”
“should,” “plans,”
“projected,” “contemplates,”
“anticipates,” or
similar words.
Actual
outcomes
or
results
could
differ
materially
from
those
projected
in
the
forward-looking
statements.
The
forward-looking
statements are
based on
management’s
current intent,
belief, expectations,
estimates, and
projections regarding
the Company
and its
industry.
These statements
are not
guarantees of
future performance
and involve
risks, uncertainties,
assumptions, and
other factors
that
are difficult
to predict
and may
be beyond
our control.
The factors
that
could cause
actual results
to differ
materially from those
projected in the
forward-looking statements include,
among others, (i)
the risk factors
set forth in
Part II
Item 1A
Risk Factors
of this
Quarterly Report
on Form
10-Q and
Part I
Item 1A
Risk Factors
of our
Annual Report
on Form
10-K
for
the
year
ended
June
1,
2024,
as
well
as
those
included
in
other
reports
we
file
from
time
to
time
with
the
SEC
(including our Quarterly Reports on Form 10-Q and Current Reports on Form
8-K), (ii) the effect of the potential conversion of
all of
the Company’s
Class A
Common Stock
into Common
Stock and
resulting loss
by the
Company of
controlled company
status under
the rules
of The
Nasdaq Stock
Market on
the trading
price of
the Company’s
Common Stock,
the ability
of the
Company to
retain and
hire key
personnel and
maintain relationships
with its
customers and
suppliers, and
on the
Company’s
operating results
and business
generally,
(iii) the
impact on
the
trading price
of the
Company’s
Common Stock
as a
result of
the sale
or marketing, or
potential sale or
marketing, of a
significant number of
shares of
the Company’s
Common Stock held
by the family of our
late founder, Fred R.
Adams Jr., as
part of their potential portfolio diversification
efforts, (iv) the risks and
hazards
inherent
in
the
shell
egg
business
(including
disease,
pests,
weather
conditions,
and
potential
for
product
recall),
including but not limited to the current outbreak of HPAI affecting poultry
in the U.S., Canada and other countries that was first
detected in commercial flocks in the U.S. in February 2022
and that first impacted our flocks in December 2023, (v)
changes in
the
demand for
and
market prices
of
shell eggs
and feed
costs, (vi)
the impacts
and potential
future
impacts of
government,
customer and consumer
reactions to recent
high market prices
for eggs, including
but not limited
to efforts
to increase imports
of
eggs
and
egg
products,
pressure
to
change
long-standing pricing
frameworks,
lower
consumer demand
for
eggs,
and
the
pending DOJ
antitrust investigation,
(vii) our
ability to
predict and
meet demand
for cage-free
and other
specialty eggs,
(viii)
risks,
changes, or
obligations that
could result
from our
recent or
future acquisition
of new
flocks or
businesses and
risks
or
changes that
may cause
conditions to
completing a
pending acquisition,
such as
the pending
acquisition of
Echo Lake
Foods,
not to
be met,
(ix) risks
relating to
changes in
inflation and
interest rates,
(x) our
ability to
retain existing
customers, acquire
new
customers
and
grow
our
product
mix,
(xi)
adverse
results
in
pending
litigation
and
other
legal
matters,
and
(xii)
global
instability,
including as
a result
of the
war in
Ukraine, the
conflicts in
Israel and
surrounding areas
and attacks
on shipping
in
the Red
Sea. Readers
are cautioned
not to
place undue
reliance on
forward-looking statements
because, while
we believe
the
assumptions on
which the
forward-looking statements
are based
are reasonable,
there can
be no
assurance that
these forward-
looking
statements
will
prove
to
be
accurate.
Further,
forward-looking
statements
included
herein
are
made
only
as
of
the
respective dates
thereof, or
if
no
date
is
stated,
as
of
the date
hereof.
Except
as otherwise
required by
law,
we
disclaim any
intent or obligation to update
publicly these forward-looking statements, whether because
of new information, future events,
or
otherwise.
GENERAL
Cal-Maine
Foods,
Inc.
(the
“Company,”
“we,”
“us,”
“our”)
is
primarily
engaged
in
the
production,
grading,
packaging,
marketing and
distribution of
fresh shell
eggs. Our
operations are
fully integrated
and we
have one
operating and
reportable
segment.
We
are
the
largest
producer
and
distributor
of
fresh
shell
eggs
in
the
U.S.
Our
total
flock
of
approximately
48.9
million
layers
and
12.3
million
pullets
and
breeders
is
the
largest
in
the
U.S.
We
sell
our
shell
eggs
and
egg
products
to
a
diverse group of customers,
including national and regional
grocery store chains, club
stores, companies servicing independent
21
supermarkets in
the U.S.,
foodservice distributors
and egg
product customers
throughout the
majority of
the U.S.
and aim
to
maintain efficient, state-of-the-art operations located close to our customers.
Our operating
results are
materially impacted
by market
prices for
eggs and
feed grains
(corn
and soybean
meal), which
are
highly
volatile,
independent
of
each
other,
and
out
of
our
control.
Generally,
higher
market
prices
for
eggs
have
a
positive
impact
on
our
financial
results
while
higher
market
prices
for
feed
grains
have
a
negative
impact
on
our
financial
results.
Although we
use a
variety of
pricing frameworks
with our
customers for
conventional and specialty
eggs, we
sell most
of our
conventional
shell
eggs
based
on
formulas
that
consider,
in
varying
ways,
independently
quoted
regional
wholesale
market
prices for shell eggs or formulas related to our costs of production which include the cost of corn and soybean meal. We
sell the
majority
of
our
specialty
eggs
at
prices
and
terms
negotiated
directly
with
our
customers.
We
do
not
sell
eggs
directly
to
consumers or set the prices at which eggs are sold to consumers.
Retail
sales
of
shell
eggs
historically
have
been
highest
during
the
fall
and
winter
months
and
lowest
during
the
summer
months. Prices
for shell
eggs fluctuate
in response
to seasonal
demand factors
and a
natural increase
in egg
production during
the
spring
and
early
summer.
Historically,
shell
egg
prices
tend
to
increase
with
the
start
of
the
school
year
and
tend
to
be
highest
prior
to
holiday
periods,
particularly
Thanksgiving,
Christmas
and
Easter.
Consequently,
and
all
other
things
being
equal, we would expect to
experience lower selling prices, sales volumes
and net income (and may
incur net losses) in our
first
and
fourth
fiscal
quarters
ending
in
August/September
and
May/June,
respectively.
Because
of
the
seasonal
and
quarterly
fluctuations,
comparisons
of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily meaningful comparisons.
We
routinely
fill
our
storage
bins
during
harvest
season
when
prices
for
feed
ingredients
are
generally
lower.
To
ensure
continued availability
of feed
ingredients, we
may enter
into contracts
for future
purchases of
corn and
soybean meal,
and as
part
of
these
contracts,
we
may
lock-in
the
basis
portion
of
our
grain
purchases
several
months
in
advance.
Basis
is
the
difference between
the local
cash price
for grain
and the
applicable futures
price. A
basis contract
is a
common transaction
in
the grain
market that
allows us
to lock-in
a basis
level for
a specific
delivery period
and wait
to set
the futures
price at
a later
date. Furthermore,
due to
the more
limited supply
for organic
ingredients,
we may
commit to
purchase organic
ingredients in
advance to help ensure supply. Ordinarily,
we do not enter into long-term contracts beyond a year to purchase corn and soybean
meal
or
hedge
against
increases
in
the
prices
of
corn
and
soybean
meal.
Corn
and
soybean
meal
are
commodities
and
are
subject
to
volatile
price
changes
due
to
weather,
various
supply
and
demand
factors,
transportation
and
storage
costs,
speculators, agricultural,
energy and
trade policies
in the
U.S. and
internationally,
and global
instability that
could disrupt
the
supply chain.
An important competitive advantage for Cal-Maine Foods is our ability to meet
our customers’ evolving needs with a favorable
mix of branded
and private-label products
of conventional and
specialty eggs, including
cage-free, organic,
brown, free-range,
pasture-raised and nutritionally-enhanced eggs as well as egg products.
HPAI
Outbreaks of HPAI
have continued to
occur in U.S.
poultry flocks. In
calendar year 2024,
40.2 million commercial
layer hens
and pullets
were depopulated
due to
HPAI,
and in
calendar year
2025, an
additional 32.9
million commercial
layer hens
and
pullets
have
been
depopulated
through
March.
The
United
States
Depart
of
Agriculture
(the
“USDA”)
reported
that
the
estimated table-egg layer flock was approximately 285 million as of March 1, 2025, the lowest level since September 2015.
HPAI
is
currently
widespread
in
the
wild
bird
population
worldwide.
We
remain
dedicated
to
robust
biosecurity
programs
across our
locations and
have invested
more than
$70 million
in biosecurity
technology,
equipment, procedures,
and training
across our locations since the last major HPAI outbreak in 2015. However,
no farm is immune from HPAI. For example, during
the third and
fourth quarters of
fiscal 2024, we
experienced HPAI
outbreaks within our
facilities located in
Kansas and Texas,
which
are now
fully
operational. According
to
the
U.S.
Centers for
Disease Control
and Prevention
(“CDC”), as
of April
1,
2025,
there were
outbreaks
in 996
herds
of
dairy
cows
in
17
states,
and 70
human
cases
in
the
U.S., almost
entirely
among
poultry and dairy workers. However,
in 2024, one of the human
cases resulted in severe illness after
the patient was exposed to
sick and
dead birds
in backyard
flocks. The
patient, who
was reported
to have
underlying health
conditions, died
in January
2025. There have
been no reported
cases of person-to-person
spread. According to
the CDC, the
human health risk
to the U.S.
public from the
HPAI
virus is considered
to be low.
The extent of
possible future outbreaks among
U.S. commercial egg
layer
flocks,
with
heightened
risk
during
migration
seasons,
cannot
be
predicted.
According
to
the
USDA,
HPAI
cannot
be
transmitted through safely handled and properly cooked eggs. There is no
known risk related to HPAI
associated with eggs that
are currently in the market and no eggs have been recalled. For additional information, see the 2024 Annual Report, Part II Item
7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – HPAI.”
22
We
have taken proactive
steps to help
mitigate the tight
egg supply situation
across the country.
Our efforts
resulted in a
14%
increase
in
the
average
number
of
layer
hens
(reflecting
both
organic
and
inorganic
expansion)
and
a
24%
increase
in
total
chicks hatched during
the third quarter
of fiscal 2025
compared to the
prior-year quarter.
Our breeder flocks
increased 33% as
of
the
end
of
the
third
fiscal
quarter
of
2025
compared
to
the
end
of
the
prior-year
quarter.
We
also
continue
to
invest
in
expansion
projects,
including
expected
completion
in
calendar
2025
of
approximately
$60
million
in
ongoing
expansion
projects
within
our
current
operations
that
are
expected
to
add
approximately
1.1
million
cage-free
layer
hens
and
250,000
pullets,
and
the
successful
conversion
of
a
new
egg
processing
facility
and
hatchery
in
Dexter,
Missouri,
projected
to
add
additional capacity of 1.2 million free range hens by calendar year end.
CAGE-FREE EGGS
Ten
states have
passed
legislation or
regulations mandating
minimum space
or
cage-free requirements
for
egg production
or
mandated
the
sale
of
only
cage-free
eggs
and
egg
products
in
their
states,
with
implementation
of
these
laws
ranging
from
January 2022
to January
2030. These
states represent
approximately 27%
of
the U.S.
total population
according to
the 2020
U.S. Census.
California, Massachusetts,
Colorado, Michigan,
Oregon, Washington,
and Nevada,
which collectively
represent
approximately 23% of the total estimated U.S. population, have cage-free legislation currently in effect.
Due to the national egg
shortage caused
by HPAI,
Nevada temporarily
suspended the
cage-free egg
mandate and
other states
are considering
similar
actions.
A significant number of our customers have announced goals
to either exclusively offer cage-free eggs or
significantly increase
the
volume
of
cage-free
egg
sales
in
the
future,
subject
in
most
cases
to
availability
of
supply,
affordability
and
consumer
demand, among
other contingencies.
Our customers
typically do
not
commit to
long-term purchases
of specific
quantities or
types
of
eggs
with
us,
and
as
a
result,
it
is
difficult
to
accurately
predict
customer
requirements
for
cage-free
eggs.
We
are
focused
on
adjusting
our
cage-free production
capacity
with
a
goal
of
meeting
the
future
needs
of
our
customers
in
light
of
changing state requirements
and our customers’
goals. As always,
we strive to
offer a product
mix that aligns
with current and
anticipated
customer purchase
decisions.
We
are
engaging with
our
customers
to
help
them
meet
their
announced
goals
and
needs. We have
invested significant capital in recent years to acquire and construct cage-free facilities, and
we expect our focus
for future
expansion will
continue to
include cage-free
facilities. Our
volume of
cage-free egg
sales has
continued to
increase
and account
for a
larger share
of our
product mix.
Cage-free egg
revenue represented
approximately 19.2%
of our
total shell
egg revenue for the third quarter of fiscal year 2025. At the same time, we understand the importance of our continued ability to
provide
conventional
eggs
in
order
to
provide
our
customers
with
a
variety
of
egg
choices
and
to
address
hunger
in
our
communities.
For
additional
information,
see
the
2024
Annual
Report,
Part
I
Item
1,
“Business
–
Specialty
Eggs,”
“Business
–
Growth
Strategy” and
“Business –
Government Regulation,”
and the
first risk
factor in
Part I
Item 1A,
“Risk Factors”
under the
sub-
heading “Legal and Regulatory Risk Factors.”
ACQUISITIONS
Effective February
3, 2025,
we acquired
certain assets
of Deal-Rite
Foods, Inc.
and certain
of its
affiliates (“Deal-Rite”).
The
assets
acquired
included
two
feed
mills,
storage
facilities,
usable
grain,
vehicles,
related
equipment
and
a
retail
feed
sales
business
located
in
North
Carolina.
The
acquired
assets
will
produce
and
deliver
feed
to
our
nearby
shell
egg
production
facilities.
During the
first quarter
of fiscal
2025, we
acquired substantially
all the
commercial shell
egg production,
processing and
egg
products
breaking
assets
of
ISE
America,
Inc.
and
certain
of
its
affiliates
(“ISE”).
The
assets
acquired
included
commercial
shell
egg
production
and
processing
facilities
with
a
capacity
at
the
time
of
acquisition
of
approximately
4.7
million
laying
hens, including 1.0 million
cage-free, and 1.2 million
pullets, feed mills, approximately
4,000 acres of land,
inventories and an
egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast
and Mid-Atlantic
states, and
production operations
in Maryland,
New Jersey,
Delaware and
South Carolina.
These production
assets
are
our
first
in
Maryland,
New
Jersey
and
Delaware.
We
believe
this
acquisition
provides
us
with
an
opportunity
to
significantly enhance our market reach
in the Northeast and Mid-Atlantic
states. See further discussion in
of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.
Effective on
September 9,
2024, we
completed a
strategic investment
with Crepini
LLC, establishing
a new
egg products
and
prepared foods venture.
Crepini LLC, founded
in 2007, grew
its brand throughout
the United States
and Mexico featuring
egg
wraps, protein pancakes, crepes, and
wrap-ups, which are sold
online and in over 3,500
retail stores. The new entity,
located in
Hopewell Junction,
New York,
operates as
Crepini Foods
LLC (“Crepini”).
We
capitalized Crepini
with approximately
$6.75
million in cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the
new venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.
23
In
fiscal
2022,
we
announced
a
strategic
investment
in
a
new
entity,
MeadowCreek
Food,
LLC
(“MeadowCreek”),
which
became
a
majority-owned
subsidiary.
During
March
2023,
MeadowCreek
began
operations
with
a
focus
on
being
a
leading
provider of
hard-cooked eggs.
During second
quarter 2025,
we acquired
the remaining
ownership interests
in MeadowCreek
and it became a wholly-owned subsidiary.
In
second
quarter
2024,
we
acquired
the
assets
of
Fassio
Egg
Farms,
Inc.
(“Fassio”)
related
to
its
commercial
shell
egg
production and processing business. Fassio
owned and operated commercial shell
egg production and processing facilities
with
a
capacity
at
the
time
of
acquisition
of
approximately
1.2
million
laying
hens,
primarily
cage-free,
a
feed
mill,
pullets,
a
fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. This acquisition provided
us with
an opportunity
to expand
our market
presence in
Utah and
the western
U.S., particularly
for cage-free
eggs. In
fourth
quarter 2024, we
acquired a broiler
processing plant, hatchery
and feed mill
in Dexter,
Missouri, which we
repurposed for use
in shell egg production.
EXECUTIVE OVERVIEW
For the
third quarter
and first
three quarters of
fiscal 2025,
we recorded
a gross
profit of
$716.1 million
and $1,319.4
million,
respectively, compared to $218.6
million and $355.1 million, respectively,
for the same periods of fiscal 2024, primarily driven
by an
increase in
the net
average selling
price of
shell eggs,
primarily conventional
egg prices,
as well
as an
increase in
total
dozens
sold.
Our
results
were
also
positively
impacted
by
lower
feed
costs
and
our
recent
acquisitions
discussed
above,
partially offset by an increase in the volume and price of outside egg purchases.
Our net
average selling
price per
dozen for
the third
quarter of
fiscal 2025
was $4.060
compared to
$2.247 in
the prior-year
period. Conventional egg
prices per dozen
were $4.766
compared to $2.152
for the prior-year
period, and specialty
egg prices
per dozen were $2.784 compared to $2.415 for the prior-year period. Egg prices in the third quarter of fiscal 2025 were elevated
compared to the prior-year period primarily due to the resurgence of HPAI
outbreaks, which decreased supply during the higher
seasonal demand cycle. According to
the USDA, the monthly average
size of the layer hen
flock from December 2024 through
February
(which most
closely
aligns with
our
third fiscal
quarter)
2025
was
approximately 302.7
million
hens,
which
was a
decrease of
11.0 million
layers,
or 3.5%,
compared to
the same
period in
the prior
year.
The daily
average price for
the Urner
Barry southeast
large index
for the
third quarter
of fiscal
2025 increased
156% from
the comparable
period in
the prior
year.
Subsequent to third quarter fiscal
2025, the Urner Barry southeast
large index decreased to
$3.99 per dozen as of
April 4, 2025
from a high of $8.69 per dozen as of February 28, 2025. For more information about historical shell egg prices, see Part I Item I
of our 2024 Annual Report.
Our dozens sold for
the third quarter of
fiscal 2025 increased 10.2%
compared to the third
quarter of fiscal 2025.
Demand was
strong
during
the
third
fiscal
quarter,
which
is
typically
a
period
of
higher
seasonal
demand.
We
believe
that
other
factors
positively
impacting
demand
included
severe
weather
events
during
the
quarter,
including
the
historic
snowstorms
in
the
southern U.S. in
January 2025, which
prompted families to
stock up on
staples including eggs,
and reported recommendations
of
eggs
as
a
good
source
of
lean
protein
for
individuals
taking
GLP-1
medications.
In
addition
to
strong
consumer
demand
during the quarter,
we had an
increase in production capacity
with the acquisitions of
the commercial shell egg
production and
processing business of ISE during the first quarter of fiscal 2025.
Our farm
production costs
per dozen
produced for
the third
quarter of
fiscal 2025
decreased 5.7%,
or $0.06
compared to
the
prior year period,
primarily due to
lower feed costs.
Feed costs per
dozen produced decreased 9.6%,
or $0.05, compared
to the
third quarter
of fiscal
2024, primarily
due to
lower feed
ingredient prices.
For information
about historical
corn and
soybean
meal prices,
see Part
I Item
I of
our 2024
Annual Report.
Our egg
purchases and
other cost
of sales
increased $163.8
million
quarter-over-quarter and
$397.8 million
comparing year-to-date
periods, primarily
due to
higher shell
egg prices
as well
as an
increase
in
dozens
purchased
to
supply
eggs
for
our
customers,
including
those
acquired
in
our
ISE
acquisition,
during
the
higher seasonal demand cycle while the nation experienced lower supply due to HPAI.
24
RESULTS OF OPERATIONS
The following table sets
forth, for the periods
indicated, certain items from
our Condensed Consolidated Statements
of Income
expressed as a percentage of net sales.
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
49.5
%
68.9
%
58.2
%
78.9
%
Gross profit
50.5
%
31.1
%
41.8
%
21.1
%
Selling, general and administrative
5.6
%
9.3
%
7.0
%
11.6
%
(Gain) loss on involuntary conversions
—
%
(1.4)
%
—
%
(0.6)
%
Operating income
44.9
%
23.2
%
34.8
%
10.1
%
Total other income, net
1.9
%
3.2
%
1.6
%
2.2
%
Income before income taxes
46.8
%
26.4
%
36.4
%
12.3
%
Income tax expense
10.9
%
5.5
%
8.7
%
2.6
%
Net income
35.9
%
20.9
%
27.7
%
9.7
%
Less: Loss attributable to noncontrolling
interest
—
%
—
%
—
%
(0.1)
%
Net income attributable to Cal-Maine
Foods, Inc.
35.9
%
20.9
%
27.7
%
9.8
%
NET SALES
Total
net sales
for the
third quarter
of fiscal
2025 were
$1.4 billion
compared to
$703.1 million
for the
same period
of fiscal
2024.
Shell egg sales
represented 94.9% and 96.1%
of total net
sales for the
third quarters of fiscal
2025 and 2024,
respectively.
The
Company’s
shell
egg
offerings,
for
both
branded
and
private-label
products,
include
specialty
and
conventional
shell
eggs.
Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. Conventional
shell
eggs
sales
represent
all
other
shell
egg
sales
not
sold
as
specialty
shell
eggs.
The
Company’s
egg
products
offerings
include liquid and frozen egg products and ready-to-eat products such as hard-cooked eggs, egg wraps, protein pancakes, crepes
and wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.
Total
net sales
for the
thirty-nine weeks
ended March
1, 2025
were $3.2
billion, compared
to $1.7
billion for
the comparable
period of fiscal 2024.
Shell egg
sales represented
94.7% and
95.4% of
total net
sales for
the thirty-nine
weeks ended
March 1,
2025 and
March 2,
2024, respectively.
25
The table below presents net sales in key categories (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
% Change
March 1, 2025
March 2, 2024
% Change
Shell Eggs
$
1,345,382
$
675,912
99.0
%
$
2,990,756
$
1,608,377
85.9
%
Egg products
61,024
21,759
180.5
136,850
63,994
113.8
Other
11,279
5,405
108.7
30,621
13,283
130.5
Total net sales
$
1,417,685
$
703,076
101.6
%
$
3,158,227
$
1,685,654
87.4
%
The table below presents an analysis of our shell egg sales (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
March 1, 2025
March 2, 2024
Shell egg sales
Conventional
$
1,016,438
75.6
%
$
413,619
61.2
%
$
2,118,065
70.8
%
$
919,498
57.2
%
Specialty
328,944
24.4
262,293
38.8
%
872,691
29.2
688,879
42.8
Total shell egg sales
$
1,345,382
100.0
%
$
675,912
100.0
%
$
2,990,756
100.0
%
$
1,608,377
100.0
%
Dozens sold
Conventional
213,247
64.3
%
192,182
63.9
%
622,833
64.1
%
566,174
65.7
%
Specialty
118,148
35.7
108,597
36.1
348,385
35.9
295,904
34.3
Total dozens sold
331,395
100.0
%
300,779
100.0
%
971,218
100.0
%
862,078
100.0
%
Net average selling price per dozen
Conventional
$
4.766
$
2.152
$
3.401
$
1.624
Specialty
$
2.784
$
2.415
$
2.505
$
2.328
All shell eggs
$
4.060
$
2.247
$
3.079
$
1.866
Shell egg sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
In the
third quarter of
fiscal 2025,
conventional egg sales
increased $602.8 million,
or 145.7%,
compared to the
third
quarter
of
fiscal
2024,
primarily
due
to
a
121.5%
increase
in
the
prices
for
conventional
eggs,
which
resulted
in
a
$557.4 million increase in net sales, and a 11.0%
increase in the volume of conventional eggs sold, which resulted in a
$45.3 million increase in net sales. Results for
the third quarter of 2025 were positively impacted
by our acquisition of
ISE during the
current fiscal year
as well as
the resumption of
full operations at
our facility in
Chase, KS, which
was
shut down in the prior year quarter due to an HPAI outbreak.
-
Specialty egg sales increased
$66.7 million, or 25.4%,
in the third quarter
of fiscal 2025 compared
to the third quarter
of
fiscal
2024,
primarily
due
to
a
15.3%
increase
in
prices
for
specialty
eggs,
which
resulted
in
a
$43.6
million
increase
in
net
sales
and
a
8.8%
increase
in
the
volume
of
specialty
eggs
sold,
which
resulted
in
a
$23.1
million
increase in net sales.
-
See “Executive Overview” above for additional discussion.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
For the thirty-nine weeks ended March 1, 2025,
conventional egg sales increased $1.2 billion, or 130.4%, compared to
the
same
period
of
fiscal
2024,
primarily
due
to
the
increase
in
the
prices
for
conventional
shell
eggs.
Prices
for
conventional
eggs increased
109.4%, which
resulted in
a $1.1
billion increase
in net
sales. A
10.0% increase
in the
volume of conventional eggs sold resulted in a $92.0 million increase in net sales.
-
Specialty egg
sales increased
$183.8 million,
or 26.7%,
for the
thirty-nine weeks
ended March
1, 2025
compared to
the same period in
fiscal 2024, primarily due
to a 17.7% increase
in the volume of
specialty eggs sold, which
resulted
in a
$122.2 million
increase in
net sales
and a
7.6% increase
in prices
for specialty
eggs, which
resulted in
a $61.7
million increase in net sales.
26
Egg products sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Egg
products
sales
increased
$39.3
million,
or
180.5%,
for
the
third
quarter
of
fiscal
2025
compared
to
the
same
period of
fiscal 2024,
primarily due
to a
200.5% increase
in sales
of liquid
eggs, which
had a
$22.0 million
positive
impact on net
sales, and
a 46.1% increase
in liquid eggs
pounds sold, which
resulted in a
$6.6 million increase
in net
sales. Results for the third quarter of 2025 were positively impacted by our
recent acquisition of ISE, which included a
breaking facility.
-
Sales from
hard-cooked eggs
increased $6.6
million or
181.5% in
the third
quarter of
fiscal 2025
compared to
fiscal
2024 as more processing capabilities are coming online from our investments in MeadowCreek.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Egg
products
sales
increased
$72.9
million,
or
113.8%,
primarily
due
to
a
118.0%
increase
in
sales
of
liquid
eggs,
which
had
a
$31.6
million
positive
impact
on
net
sales,
and
a
42.0%
increase
in
liquid
eggs
pounds
sold,
which
resulted in a $17.4 million increase in net sales.
-
Sales from hard-cooked eggs increased $18.7
million, or 188.6%, in the
first three quarters of fiscal 2025
compared to
the same period in fiscal 2024, primarily for the reasons described above.
Other
-
Other
sales
increased
compared
to
the
prior
year
periods
primarily
due
to
higher
feed
sales
related
to
our
ISE
acquisition.
COST OF SALES
Cost of
sales consists
of costs
directly related
to producing,
processing and
packing shell
eggs, purchases
of shell
eggs from
outside
sources,
processing
and
packing
of
egg
products
and
other
non-egg
costs. Farm
production
costs
are
those
costs
incurred
at
the
egg
production
facility,
including
feed,
facility
(including
labor),
hen
amortization
and
other
related
farm
production costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
%
Change
March 1, 2025
March 2, 2024
%
Change
Cost of sales
Farm production
$
266,056
$
248,650
7.0
%
$
766,003
$
760,525
0.7
%
Processing, packaging,
and warehouse
101,631
86,423
17.6
292,165
253,096
15.4
Egg purchases and other
cost of sales
291,703
127,925
128.0
658,182
260,375
152.8
Egg products
42,180
21,506
96.1
122,502
56,523
116.7
Total cost of sales
$
701,570
$
484,504
44.8
%
$
1,838,852
$
1,330,519
38.2
%
Farm production costs (per
dozen produced)
Feed
$
0.492
$
0.544
(9.6)
%
$
0.489
$
0.564
(13.3)
%
Other
$
0.418
$
0.421
(0.7)
%
$
0.420
$
0.431
(2.6)
%
Total farm production cost
$
0.910
$
0.965
(5.7)
%
$
0.909
$
0.995
(8.6)
%
Outside egg purchases
(average cost per dozen)
$
5.10
$
2.44
109.0
%
$
3.69
$
2.09
76.6
%
Dozens produced
293,087
259,527
12.9
%
847,962
774,984
9.4
%
Percent produced to sold
88.4%
86.3%
2.4
%
87.3%
89.9%
(2.9)
%
27
Farm Production
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Feed
costs
per
dozen
produced
decreased
9.6%
in
the
third
quarter
of
fiscal
2025
compared
to
the
third
quarter
of
fiscal 2024.
This decrease
was primarily
due to
lower prices
for soybean
meal, one
of our
primary feed
ingredients.
The decrease in feed cost per dozen resulted in a decrease in cost of sales of $15.2 million for the third quarter of fiscal
2025 compared to the prior period quarter.
-
For the
third quarter of
fiscal 2025,
the average Chicago
Board of Trade
(“CBOT”) daily
market price was
$4.68 per
bushel
of
corn
and
$298
per
ton
of
soybean
meal,
representing
an
increase
of
3.8%
and
a
decrease
of
19.3%,
respectively, as compared to the average CBOT daily market prices for the third quarter of fiscal 2024.
-
Other farm production
costs decreased primarily due
to lower flock
amortization. Feed costs reached
their peak in the
second quarter of
fiscal 2023 and
have since trended
downward. Lower costs
result in lower
capitalized values of
the
flocks during the grow out phase, which reduced amortization cost over time.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Feed costs per
dozen produced decreased
13.3% in the
thirty-nine weeks ended
March 1, 2025
compared to the
same
period of
fiscal 2024, primarily
due to
lower feed
ingredient prices. The
decrease in
feed cost
per dozen
resulted in a
decrease in cost of sales of $63.6 million compared to the prior year period.
-
For the
year-to-date period,
the average
CBOT daily
market price
was $4.29
per bushel
of corn
and $316
per ton
of
soybean meal, representing decreases of
11.8%
and 21.5%, respectively,
compared to the average CBOT
daily market
prices for the comparable period in the prior year.
-
Other farm production costs decreased due to lower flock amortization, for the reasons described above.
Current
indications
for
corn
and
soybean
project
a
favorable
stocks-to-use
ratio
near
the
levels
prevailing
today
for
the
remainder of
fiscal 2025;
however,
as long
as outside
factors remain
uncertain (including
weather patterns
and global
supply
chain disruptions), volatility could remain.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Processing,
packaging,
and
warehouse
costs
increased
17.6%
compared
to
the
third
quarter
of
fiscal
2024
due
to
a
13.5% increase in the volume of processed dozens as well as an increase in costs of packaging materials.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Processing,
packaging,
and
warehouse
costs
increased
15.4%
compared
to
the
first
three
quarters
of
fiscal
2025,
primarily
due
a
10.3%
increase
in
the
volume
of
processed
dozens
as
well
as
an
increase
in
costs
of
packaging
materials.
Egg purchases and other cost of sales
Third Quarter – Fiscal 2025 vs. Fiscal 2024
-
Costs in
this category
increased primarily due
to higher
shell egg
prices as
the average
cost per
dozen of
outside egg
purchases increased 109.0%
compared to third
quarter of fiscal
2024, as well
as due to
an increase of
8.8% in dozens
purchased.
Dozens
purchased
increased
due
to
purchasing
more
eggs
to
supply
our
customers
during
the
higher
seasonal demand cycle while the nation experienced lower supply due to HPAI.
Thirty-nine weeks – Fiscal 2025 vs. Fiscal 2024
-
Costs in
this category
increased primarily due
to higher
shell egg
prices as
the average
cost per
dozen of
outside egg
purchases increased
76.6% compared
to fiscal
2024, as
well as
an increase
of 46.2%
in dozens
purchased, primarily
for the reasons described above.
GROSS PROFIT
Gross profit for the thirteen weeks ended
March 1, 2025 was $716.1 million compared
to $218.6 million for the same period
of
2024. Gross
profit for
the thirty-nine
weeks ended
March 1,
2025 was
$1.3 billion
compared to
$355.1 million
for the
same
period of
2024. The
increases were
primarily due
to higher
net average
selling prices,
particularly for
conventional eggs,
and
28
higher
volumes,
as
well
as
lower
feed
ingredient
prices,
partially
offset
by
the
increase
in
volume
and
price
of
outside
egg
purchases.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,
general,
and
administrative
(“SGA”)
expenses
include
costs
of
delivery,
marketing,
and
other
general
and
administrative expenses. Delivery expense
includes contract trucking expense
and all costs to
maintain and operate our
fleet of
trucks to
deliver products
to customers
including the
related payroll
expenses. Marketing
expense includes
franchise fees
that
are
submitted
to
Eggland’s
Best,
Inc.
(“EB”)
to
support
the
EB
brand,
brokerage
and
commission
fees,
and
other
general
marketing expenses
such as
payroll expenses
for our
in-house sales
team. Other
general and
administrative expenses
include
corporate payroll
related expenses
and other
general corporate
overhead costs.
The following
table presents
an analysis
of our
SGA expenses (in thousands):
Thirteen Weeks Ended
March 1, 2025
March 2, 2024
$ Change
% Change
Delivery expense
$
23,476
$
18,832
$
4,644
24.7
%
Marketing expense
11,240
14,149
(2,909)
(20.6)
%
Other general and administrative
expenses
45,251
33,039
12,212
37.0
%
Total
$
79,967
$
66,020
$
13,947
21.1
%
Third Quarter – Fiscal 2025 vs. Fiscal 2024
Delivery expense
-
The increased delivery expense is primarily due to an increase
in our sales volumes of egg and egg products
compared
to
the
prior
year
period.
Contract
trucking
expenses
increased
in
connection
with
our
acquisition
of
ISE
and
our
facility in
Chase, KS
being
fully
operational in
the
current fiscal
quarter.
We
also obtained
some new
business and
additional shipping routes in order to meet our customers’ needs at their locations.
Marketing expense
-
The decrease in marketing
expense is primarily due to
a decrease in franchise fees.
The higher prices for conventional
eggs compared to specialty eggs diminished the need to promote specialty eggs; as a result EB temporarily reduced the
related franchise fees for certain specialty egg brands to encourage continued production of these branded
eggs.
Other general and administrative expense
-
The
increase
in
other
general
and
administrative
expense
is
primarily
due
both
to
an
increase
in
the
accrual
for
anticipated employee bonuses
and to the
increased adjustment to
the fair value
of contingent consideration
associated
with the
Fassio acquisition.
See further
discussion in
of the
Notes to
Condensed
Consolidated Financial Statements included in this Quarterly Report.
Thirty-nine Weeks Ended
March 1, 2025
March 2, 2024
$ Change
% Change
Delivery expense
$
68,206
$
54,229
$
13,977
25.8
%
Marketing expense
40,666
38,809
1,857
4.8
%
Litigation loss contingency accrual
—
19,648
(19,648)
(100.0)
%
Other general and administrative
expenses
110,660
82,158
28,502
34.7
%
Total
$
219,532
$
194,844
$
24,688
12.7
%
Thirty-six weeks – Fiscal 2025 vs. Fiscal 2024
Delivery expense
-
The increased delivery expense is primarily due to the reasons described above
29
Marketing expense
-
The increase
in marketing
expense is
primarily due
to an
increase in
franchise fees
in the
first half
of fiscal
2025 as
specialty
egg
sales
increased,
partially
offset
by
the
reduction
in
fees
in
the
third
quarter
of
fiscal
2025
described
above.
Litigation loss contingency accrual
-
In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in
pending
anti-trust
litigation.
See
further
discussion
in
Condensed Consolidated Financial Statements included in this Quarterly Report.
Other general and administrative expense
-
The increase in other
general and administrative expense
is primarily for the
reasons described above, as
well as costs
associated with the acquisition of ISE assets that occurred during the first quarter of fiscal 2025.
GAIN ON INVOLUNTARY
CONVERSION
In the third quarter of fiscal 2024, we recorded a gain of $9.9 million due to recoveries under indemnity and insurance programs
that exceeded the amortized book value of the covered assets and our direct
costs, primarily related to the HPAI
outbreak at our
Kansas facility.
OPERATING
INCOME
For the
third quarter of
fiscal 2025,
we recorded
operating income of
$635.7 million
compared to
operating income of
$162.8
million for the same period of fiscal 2024.
For the thirty-nine weeks ended March 1,
2025, we recorded operating income of $1.1 billion
compared to operating income of
$170.3 million for the same period of fiscal 2024.
OTHER INCOME (EXPENSE)
Total
other
income
(expense)
consists
of
items
not
directly
charged
or
related
to
operations,
such
as
interest
income
and
expense, equity in
income or loss of
unconsolidated entities, and patronage
dividends, among other
items. Patronage dividends
are paid to us from our membership in the EB cooperative.
For the third quarter of fiscal 2025, we
earned $12.8 million of interest income compared to $7.8 million for
the same period of
fiscal 2024, primarily due to higher average cash and cash
equivalents and investment securities available-for-sale balances and
yields. The Company recorded interest expense of $146 thousand and $247 thousand for the third quarters ended March 1, 2025
and March 2, 2024, respectively.
For the
thirty-nine weeks ended
March 1, 2025,
we earned $32.6
million of
interest income compared
to $22.4 million
for the
same period
of fiscal
2024, primarily due
to higher
average cash
and cash
equivalents and
investment securities
available-for-
sale balances and yields. The Company recorded interest expense of $457 thousand and $523 thousand for the thirty-nine weeks
ended March 1, 2025 and March 2, 2024, respectively.
INCOME TAXES
For the third quarter
of fiscal 2025, our
pre-tax income was $663.0
million, compared to $185.2 million
for the third quarter
of
fiscal 2024. Income tax expense of $154.9 million
was recorded for third quarter 2025 with
an effective tax rate of 23.4%.
This
includes the
discrete tax
benefit of
$5.7 million
associated with
the fiscal
2024 provision-to-return
adjustments. Excluding the
discrete tax
benefit, income
tax expense
was $160.8
million for
the third
quarter of
fiscal 2025
with an
adjusted effective
tax
rate
of
24.2%.
For
the
third
quarter
2024,
income
tax
expense
was
$38.8
million
with
an
effective
tax
rate
of
21.0%.
This
includes the
discrete tax
benefit of
$6.4 million
associated with
the fiscal
2023 provision-to-return
adjustments. Excluding the
discrete tax benefit, income tax expense was $45.2 million with an adjusted effective tax rate of 24.4%.
For
the
thirty-nine
weeks
ended
March
1,
2025,
pre-tax
income
was
$1.1
billion,
compared
to
$208.0
million
for
the
same
period of fiscal
2024. Income tax
expense of $273.8
million was recorded
for the thirty-nine
weeks ended March
1, 2025 with
an effective tax rate of 23.8%. This includes the discrete tax benefit of $5.7 million associated with the fiscal 2024 provision-to-
return adjustments.
Excluding the
discrete tax
benefit, income
tax expense
was $279.5
million with
an adjusted
effective
tax
rate of
24.3%. For
the same
period of
fiscal 2024,
income tax
expense was
$44.7 million
with an
effective tax
rate of
21.5%.
30
This includes the discrete tax benefit
of $6.4 million associated with the
fiscal 2023 provision-to-return adjustments. Excluding
the discrete tax benefit, income tax expense was $51.0 million with an adjusted effective tax rate of 24.5%.
Items causing
our effective
tax rate
to differ
from the
federal statutory
income tax
rate of
21% are
state income
taxes, certain
federal tax credits
and certain items included
in income or
loss for financial reporting
purposes that are
not included in taxable
income or loss
for income tax
purposes, including tax exempt
interest income, certain nondeductible
expenses, and net
income
or loss attributable to noncontrolling interest.
NET INCOME ATTRIBUTABLE
TO CAL-MAINE FOODS, INC.
Net income attributable
to Cal-Maine Foods,
Inc. for the
third quarter ended
March 1, 2025
was $508.5 million,
or $10.42 per
basic and $10.38 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $146.7 million, or
$3.01 per basic and $3.00 per diluted common share, for the same period of fiscal 2024.
Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended March 1, 2025, was $877.6 million, or
$17.99
per
basic
and
$17.92
per
diluted
common
share,
compared
to
net
income
attributable
to
Cal-Maine
Foods,
Inc.
of
$164.6
million or $3.38 per basic and $3.37 per diluted common share, for the same period of fiscal 2024.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Current Ratio
Our working
capital was
$1.5 billion
at March
1, 2025
compared to
$1.0 billion
at June
1, 2024.
The calculation
of working
capital is defined as current
assets less current liabilities. Our current ratio
was 3.9 at March 1,
2025 compared to 5.5 at June
1,
2024. The
decrease in
our current
ratio is
primarily due
to the
increase in
both income
taxes and
trade payables.
The current
ratio is calculated by dividing current assets by current liabilities.
Cash Flows from Operating Activities
For the
thirty-nine weeks
ended March
1, 2025,
$811.7 million
in net
cash was
provided by
operating activities,
compared to
$237.6
million
provided
by
operating
activities
for
the
comparable
period
in
fiscal
2024.
The
increase
in
cash
flow
from
operating
activities
resulted
primarily
from
higher
net
average
selling
prices
per
dozen,
particularly
for
conventional
eggs,
increased
volume
of
sales
and
a
decrease
in
feed
ingredient
costs
compared
to
the
prior-year
period,
partially
offset
by
the
increase in volume and price of outside egg purchases.
Cash Flows from Investing Activities
For the thirty-nine weeks ended March 1, 2025,
$385.1 million was used in investing activities, primarily due
to the acquisition
of assets of
ISE, and purchases of
property, plant
and equipment compared
to $118.4
million used in
investing activities in the
same period of fiscal 2024, primarily
due to purchases of investment securities.
Purchases of investment securities were $813.1
million during the thirty-nine weeks ended March 1, 2025 and sales and maturities of investment securities were $654.4
million
during the period. Sales
and maturities of investment securities
were $273.9 million in the
prior year period while
purchases of
investment
securities were
$243.5
million
during
the
period.
The
increase
in
sales
and
maturities
of
investment
securities
is
primarily due
to the
maturities of
short-term investments
during the
first three
quarters of
fiscal 2025.
Cash paid
for business
acquisitions
was
$116.2
million
in
the
thirty-nine
weeks
ended
March
1,
2025,
primarily
related
to
the
ISE
acquisition,
and
$53.7 million in the prior year period, related to the Fassio acquisition. Purchases of property,
plant and equipment were $115.4
million and
$96.0 million
in the
first three
quarters of
fiscal 2025
and 2024,
respectively,
primarily reflecting
progress on
our
construction projects.
Cash Flows from Financing Activities
We
paid
dividends of
$160.8 million
for the
thirty-nine weeks
ended March
1,
2025
compared to
$43.0 million
in the
same
prior-year period.
As of
March 1,
2025, cash
increased $259.4
million since
June 1,
2024, compared
to $74.3
million during
the same
period of
fiscal 2024. The increase is primarily due to the increase in net sales during fiscal 2025.
31
Credit Facility
On
November
15,
2021,
we
entered
into
a
credit
agreement
that
provides
for
a
senior
secured
revolving
credit
facility
(the
“Credit Facility”), in an initial aggregate principal amount of up to
$250 million with a five-year term. As of March 1, 2025,
no
amounts were borrowed under
the Credit Facility and
we had $4.7
million in outstanding
standby letters of
credit issued under
our Credit Facility for the
benefit of certain insurance companies. On
March 25, 2025, we entered
into the Second Amendment
to
the
Credit
Facility.
Refer
to
Part
I.
Item
I,
Notes
to
Consolidated
Financial
Statements,
included
in
this
report,
Exhibit
10.2
to
this
report
and
Part
II
Item
8,
Notes
to
Consolidated
Financial
Statements
and
Supplementary Data, Note 10
- Credit Facility included
in our 2024
Annual Report for further
information regarding our long-
term debt.
Share Repurchase Program
On February
25, 2025,
the Board
of Directors
approved a
new $500
million share
repurchase program.
The share
repurchase
program authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for an aggregate
purchase price
up to
$500 million
(exclusive of
any fees,
taxes, commissions
or other
expenses related
to such
repurchases),
subject to
market conditions
and other
factors. The
actual timing,
number and
value of
shares repurchased
under the
program
will be
determined by
management in
its discretion
and will
depend on
a number
of factors,
including, but
not limited
to, the
market price of the Common Stock and general market and economic conditions.
The Company expects to strategically and opportunistically repurchase shares from time to time through solicited or unsolicited
transactions in the
open market, in
privately negotiated transactions
or by other
means in accordance
with securities laws.
It is
also
possible
that
the
Company could
use
a
portion of
its share
repurchase
program to
repurchase
some of
the
shares
of
the
Company’s
Common
Stock
held
by
the
family
of
our
late
founder,
Fred
R.
Adams
Jr.,
as
part
of
their
potential
portfolio
diversification.
Any
repurchases
from
the
family
would
require
special
approval
from
a
Special
Committee
of
the
Board
of
Directors.
The
Company
expects
that
share
repurchases
under
the
program
will
be
funded
from
one
or
a
combination
of
existing cash
balances and
future free
cash flow.
The share
repurchase program
does not
obligate the
Company to
repurchase
any specific
amount of
shares, does
not have
an expiration
date, and
may be
suspended, modified
or discontinued
at any
time
without prior notice.
Dividends
In
accordance
with
our
variable
dividend
policy,
we
will
pay
a
cash
dividend
totaling
approximately
$169.5
million,
or
approximately $3.456 per share, to holders
of our Common Stock and Class
A Common Stock with respect to
our third quarter
of fiscal 2025. The amount paid per share will vary based on
the number of outstanding shares on the record date. The dividend
is payable on May 15, 2025 to holders of record on April 30, 2025.
Material Cash Requirements
Material cash
requirements for operating
activities primarily consist
of feed
ingredients, processing, packaging
and warehouse
costs, employee related costs, and
other general operating expenses, which
we expect to be paid
from our cash from operations
and cash and investment
securities on hand for
at least the next
12 months. While volatile
egg prices and feed
ingredient costs,
among
other
things, make
long-term predictions
difficult,
we
have
substantial liquid
assets and
availability under
our
Credit
Facility to fund future operating requirements.
Our material cash
requirements for capital expenditures
consist primarily of our
construction projects to
increase our cage-free
production
capacity.
We
continue to
monitor the
increasing demand
for cage-free
eggs and
to
engage with
our
customers
in
efforts
to achieve
a smooth
transition toward
their announced
timelines for
cage-free egg
sales. The
following table
presents
material construction projects approved as of March 1, 2025 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of March 1,
2025
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2025
$
4,396
$
3,796
$
600
Feed Mills
Fiscal 2026
16,593
8,055
8,538
Egg Products Expansion
Fiscal 2026
20,213
7,093
13,120
Cage-Free Layer & Pullet Houses
Fiscal 2026
199,667
155,444
44,223
$
240,869
$
174,388
$
66,481
32
These projects
include the
addition of
five new
cage-free layer
houses and
two pullet
houses across
our locations
in Florida,
Georgia,
Utah
and
Texas.
We
expect
the
projects
to
be
completed
in
calendar
2025
with
expected
additional
production
capacity
for
approximately
1.1
million
cage-free
layer
hens
and
250
thousand
pullets.
We
are
also
investing
$15
million
to
expand our egg products processing facility in Blackshear, Georgia to add extended shelf-life liquid eggs products.
We
believe our
current cash
balances, investments,
projected cash
flows from
operations, and
available borrowings
under our
Credit
Facility
will
be
sufficient
to
fund
our
capital
expenditure
cash
needs
for
at
least
the
next
12
months
and
to
fund
our
capital commitments currently in place thereafter.
IMPACT OF RECENTLY
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
information
on
changes
in
accounting
principles
and
new
accounting
policies,
see
CRITICAL ACCOUNTING ESTIMATES
Critical accounting
estimates are
those estimates
made in
accordance with
U.S. generally
accepted accounting
principles that
involve
a
significant
level
of
estimation
uncertainty
and
have
had
or
are
reasonably
likely
to
have
a
material
impact
on
our
financial condition
or results
of operations.
There have
been no
changes to
our critical
accounting estimates
identified in
our
2024 Annual Report.
ITEM 3. QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the thirty-nine weeks ended March 1, 2025 from the
information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2024 Annual
Report.
ITEM 4.
CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls
and procedures are
designed to
provide reasonable assurance
that information required
to be disclosed
by us in the reports we file
or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time
periods specified
in the
Securities and
Exchange Commission’s
rules and
forms. Disclosure controls
and procedures
include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports
that
we file or submit under
the Exchange Act is accumulated and
communicated to management, including our principal
executive
and
principal
financial
officers,
or
persons
performing
similar
functions,
as
appropriate
to
allow
timely
decisions
regarding
required disclosure. Based on an evaluation of our disclosure controls and procedures conducted by our Chief Executive Officer
and
Chief
Financial
Officer,
together
with
other
financial
officers,
such
officers
concluded
that
our
disclosure
controls
and
procedures were effective as of March 1, 2025 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change
in our internal control
over financial reporting that
occurred during the quarter
ended March 1, 2025
that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
33
PART
II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
Refer
to
the
discussion
of
certain
legal
proceedings
involving
the
Company
and/or
its
subsidiaries
in
(i)
our
2024
Annual
Report,
Part I
Item 3
Legal Proceedings,
and Part
II
Item 8,
Notes
to Consolidated
Financial
Statements and
Supplementary
Data,
Note
16
-
Commitments
and
Contingencies,
and
(ii)
in
this
Quarterly
Report
in
reference.
ITEM 1A.
RISK
FACTORS
Except as set
forth below,
there have been
no material changes
in the risk
factors previously disclosed
in the Company’s
2024
Annual Report.
Provisions of
our certificate
of incorporation,
bylaws, and
Delaware law
may make
an acquisition
of us
or a
change in
our management more difficult.
Certain
provisions of
our certificate
of
incorporation and
bylaws could
discourage, delay
or
prevent a
merger,
acquisition or
other change
in control
that stockholders may
consider favorable,
including transactions
in which
an investor
might otherwise
receive a premium for
its shares. These provisions
also could limit the
price that investors might
be willing to pay
in the future
for
shares
of
our
Common
Stock,
thereby
depressing
the
market
price
of
our
Common
Stock.
Stockholders
who
wish
to
participate in these transactions may not
have the opportunity to do
so. Furthermore, these provisions could prevent or
frustrate
attempts by our stockholders to replace or remove our management. These provisions:
●
provide for the
division of the
Board into three
classes as nearly
equal in size as
practicable with staggered three-year
terms and limit the removal of directors and the filling of vacancies;
●
authorize our Board to set the
terms of and issue preferred stock, without
stockholder approval, that could be issued to
persons friendly to management
or could operate as
a “poison pill” to
dilute the stock ownership
of a potential hostile
acquirer to prevent an acquisition that is not approved by our Board;
●
prohibit stockholder action by written consent;
●
prohibit stockholders from calling special meetings of stockholders;
●
establish advance notice
requirements for stockholder
nominations to our
Board or for
stockholder proposals that
can
be acted on at stockholder meetings; and
●
require the
approval of
the holders
of
at
least 66-2/3%
of
the voting
power of
all then
outstanding shares
of capital
stock of the Company entitled to vote generally in the election of directors, voting together as a single class, in order to
amend our certificate of incorporation and bylaws.
In addition,
we are
governed by
the provisions
of Section
203 of
the Delaware
General Corporation
Law,
which may,
unless
certain criteria
are met,
prohibit large
stockholders, in
particular those
owning 15%
or more
of our
outstanding voting
stock,
from merging or combining with us for a prescribed period of time.
The potential loss, or loss, of controlled company status could disrupt our business.
Our Company has been
controlled by members of
the family of our
founder, Fred
R. Adams, Jr.
since its founding and
since it
became
a
public
company.
As
previously
disclosed,
family
members
have
informed
the
Company
that
they
are
potentially
interested
in diversifying
their respective
financial
portfolios,
including through
the
potential sale
of
all
or
a
portion
of
their
equity
interests
in
the
Company
(the
“Potential
Portfolio
Diversification”),
which
could
involve
the
conversion
of
all
of
the
outstanding
Class
A
Common
Stock.
Such
a
conversion
would
result
in
the
family
no
longer
controlling
a
majority
of
the
voting
power
of
our
outstanding
equity
securities
and
in
our
Company
ceasing
to
be
a
“controlled
company”
under
Nasdaq
rules. Adolphus B. Baker,
Board Chair and a family
member, has indicated
that he is willing to
serve as executive Board Chair
at least
through
our 2027
annual meeting
of stockholders.
The effect
of the
loss of
controlled company
status on
the trading
price of our Common Stock and on our business is uncertain, including our ability to retain and hire key personnel and maintain
relationships
with
customers and
suppliers, and
on
our
operating
results. In
addition, our
business
may
be
more
likely
to
be
disrupted by persons seeking
to influence or effect
a change of control,
change of management or
change in governance of
our
Company. Any such disruptions to our business could have a material adverse effect on our operations and financial results.
34
Sales of substantial amounts of our Common Stock in
the public markets, or the perception that
such sales might occur,
could cause the trading price of our Common Stock to decline.
Sales of a substantial number of shares of
our Common Stock into the public markets in
connection with the Potential Portfolio
Diversification, or the perception that such sales might occur, could cause the trading price of our Common Stock to decline.
The recent
high market
prices for
eggs, primarily caused
by the
HPAI-related
reduction in
supply,
has led
to pressure
from
customers
to
change
long-standing
market-based
pricing
frameworks
and/or
otherwise
reduce
the
price
of
our
eggs. A
material
change
in
our
sales
arrangements
with
key
customers
could
have
a
material
adverse
effect
on
our
revenues,
gross
profits
and
net
income.
Other
reactions
to
high
egg
prices,
including
by
state
or
federal
government
agencies, may also adversely impact our business.
Market prices for wholesale shell eggs have been volatile
and cyclical over time. Market prices for eggs
tend to increase during
and following outbreaks
of agricultural diseases
in the
egg industry
that reduce the
supply of
eggs, which has
occurred during
the current
HPAI
outbreak, until
the supply
and demand
balance is
restored. Many
of our
sales arrangements
with customers,
particularly for conventional eggs, are based on formulas that take into account, in varying ways, independently quoted regional
wholesale market prices
for eggs. The
recent high market
prices for eggs
have led to
pressure from customers
to change
long-
standing market-based pricing frameworks and/or otherwise
reduce the price of our
eggs. To
remain competitive and retain our
customers
and
gain
new
ones,
we
must
consider
our
customer
relationships
and
the
reactions
and
potential
reactions
of
competitors.
A
material
change
in
our
sales
arrangements
with
key
customers
could
have
a
material
adverse
effect
on
our
revenues and gross profits.
Other
reactions
to
high
egg
prices
may
also
adversely
impact
our
business.
On
February
26,
2025,
the
U.S.
Secretary
of
Agriculture announced
a $1
billion-dollar comprehensive
strategy to
curb HPAI,
protect the
U.S. poultry
industry,
and lower
egg prices. The Secretary’s
five-pronged strategy includes an additional $500
million for biosecurity measures, $400 million
in
financial relief for affected
farmers, and $100 million
for vaccine research, actions
to reduce regulatory burdens,
and exploring
temporary
egg
import
options.
As
disclosed
elsewhere
herein,
in
March
2025,
we
received
a
civil
investigative
demand
in
connection with a widely publicized investigation
by the Antitrust Division of
the Department of Justice into
the causes behind
nationwide increases
in egg
prices. In
addition, persistent
high egg
prices during
the peak
of the
current HPAI
outbreak may
have caused
and may
in the
future cause
some consumers
to purchase
fewer eggs.
Such persistent
high-price cycles
may also
increase
attention
on
the
egg
industry
by
state
and
federal
government
agencies,
which
may
lead
to
additional
government
investigations or related
activities. The potential impacts
of these reactions
on our business
are unclear,
unpredictable and may
divert our resources and attention from our core business activities, and they may have an adverse effect that could be material.
For
additional
information,
see,
in
this
report,
Part
I.
Item
1.
Notes
to
the
Consolidated
Financial
Statements,
of
Operations –
HPAI.
See
also the
following risk
factors in
Part I.
Item IA.
in our
2024 Annual
Report:
“Market prices
of
wholesale shell eggs are
volatile, and decreases in
these prices can adversely impact our revenues
and profits.”; “Agricultural
risks, including outbreaks of avian diseases such as HPAI,
have harmed and in the future could harm our business.”
Current and
future
litigation and
other legal
matters could
expose us
to significant
liabilities and
adversely affect
our
business reputation.
We
and
certain of
our
subsidiaries are
involved in
various legal
proceedings and
other
legal matters.
Litigation, government
investigations and
other legal
matters are
inherently unpredictable,
and although
we believe
we have
meaningful defenses
in
these matters,
we may
incur liabilities
due to
adverse judgments
or enter
into settlements
of claims
that could
have a
material
adverse effect
on our
results of operations,
cash flow
and financial condition.
For further
discussion, see, in
this report,
Part I.
Item 1.
Notes to
the Consolidated
Financial Statements,
Note 10
– Commitments
and Contingencies
and, in
our 2024
Annual
Report,
Part
I.
Item
3.
Legal
Proceedings
and
Part
II.
Item
8.
Notes
to
the
Consolidated
Financial
Statements,
Note
16
–
Commitments and Contingencies. Such lawsuits, investigations
and other legal matters are
expensive to respond to and
defend,
divert management’s
attention, and may
result in
significant adverse judgments
or settlements.
Legal proceedings may
expose
us
to
negative
publicity,
which
could
adversely
affect
our
business
reputation
and
customer
preference
for
our
products
and
brands.
The Company’s pending Echo Lake Acquisition may not be completed and, if completed, may not achieve the results we
anticipate.
The completion
of the
Company’s
pending acquisition
of Echo
Lake Foods
is subject
to a
number of
risks and
uncertainties,
many of which are outside of the Company’s control, including:
●
conditions to the closing of the proposed transaction may not be satisfied;
35
●
antitrust clearance required for the proposed transaction may not be obtained, or required antitrust clearance may delay
the
proposed
transaction
or
result
in
the
imposition
of
conditions
that
could
have
a
material
adverse
effect
on
the
Company
or
Echo
Lake
Foods
or
cause
certain
conditions
to
closing
not
to
be
satisfied,
which
could
result
in
the
termination of the acquisition agreement;
●
the timing of completion of the proposed transaction is uncertain;
●
the
business
of
the
Company
or
Echo
Lake
Foods
may
suffer
as
a
result
of
uncertainty
surrounding
the
proposed
transaction;
●
events, changes or other circumstances could occur that could give rise to the termination of the acquisition agreement;
●
there are
risks related
to disruption of
management’s
attention from
the ongoing
business operations
of the
Company
or Echo Lake Foods due to the proposed transaction;
●
the
announcement
or
pendency
of
the
proposed
transaction
could
affect
the
relationships
of
the
Company
or
Echo
Lake
Foods
with
its
customers,
supplier,
operating
results
and
business
generally,
including
on
the
ability
of
the
Company or Echo Lake Foods to retain employees; and
●
the Company or
Echo Lake Foods
may be adversely
affected by other
economic, business, and/or
competitive factors
as well as management’s response to any of the aforementioned factors.
Although we have already
diversified our business with
ready-to-eat product offerings,
the Echo Lake Acquisition
represents a
significant expansion of
this strategy.
Accordingly, we
may experience unexpected
challenges in integrating
and managing the
business of
Echo Lake
Foods. Integrating
Echo Lake
Foods’ business
may be
more costly
or time
consuming than
we expect.
Even if
the acquisition
is completed
and the
business of
Echo Lake
Foods is
successfully integrated,
we may
not realize
the
benefits
we
expect
from
the
acquisition,
including
the
synergies,
cost
savings,
reduction
in
earnings
volatility,
margin
expansion, financial returns, expanded customer relationships, or sales or growth opportunities.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table is a summary of our third quarter 2025 share repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Approximate
Shares Purchased
Dollar Value of
Total Number
Average
as Part of Publicly
Shares that May Yet
of Shares
Price Paid
Announced Plans
Be Purchased Under
Period
Purchased (1)
per Share
Or Programs
the Plans or Programs (2)
12/01/24 to 12/28/24
—
$
—
—
$
—
12/29/24 to 01/25/25
35,202
109.97
—
—
01/26/25 to 03/01/25
198
107.78
—
500,000,000
35,400
$
109.96
—
$
500,000,000
(1)
As permitted under our Amended and Restated 2012 Omnibus Long-Term
Incentive Plan, 32,023 shares were withheld by us to satisfy tax withholding
obligations
for employees
in connection
with the
vesting of
restricted common
stock.
To
assist
outside
directors with
the payment
of taxes
due
upon
vesting of restricted stock, 3,377 shares were purchased.
(2)
On February 25, 2025, the Company announced a new $500 million share repurchase
program. The share repurchase program authorizes the Company,
in
management’s discretion,
to repurchase shares of
Common Stock from time
to time for an
aggregate purchase price
up to $500 million
(exclusive of any
fees, taxes, commissions or other expenses related to such repurchases), subject to market conditions
and other factors.
ITEM 5.
OTHER INFORMATION
Echo Lake Purchase Agreement
On
April 8, 2025,
the
Company
entered
into
a
Securities
Purchase
Agreement
(the
“Purchase
Agreement”),
with
Echo
Lake
Foods,
Inc.
(“Echo
Lake
Foods”),
Scott
Meinerz,
as
Sellers’
Representative,
and
certain
selling
entities
owned
by
the
Wisconsin-based
Meinerz
family
(collectively,
the
“Sellers”).
Under
the
Purchase
Agreement,
the
Company
has
agreed
to
acquire Echo
Lake Foods
and certain
related companies
(collectively,
the “Echo
Lake Company
Group”) for
a cash
purchase
price of
approximately $258 million, excluding
expected tax
assets resulting from
the transaction,
to be
funded from
available
cash
on
hand
(the
“Echo
Lake
Acquisition”).
The
purchase
price
is
subject
to
customary
working
capital
and
related
adjustments.
Echo
Lake Foods
was
founded
in 1941
and
acquired by
the
Meinerz
family
in
1981. Based
in
Burlington, Wisconsin,
Echo
Lake
Foods
produces,
packages,
markets
and
distributes
ready-to-eat
egg
products
and
breakfast
foods,
including
waffles,
pancakes, scrambled
eggs, frozen
cooked omelets, egg
patties, toast and
diced eggs.
Echo Lake Foods
had annual
revenues of
36
approximately $240 million
in 2024.
Echo Lake
Foods will
operate as
a stand-alone
component of
the Company’s
integrated
operations with its four production facilities strategically located in Wisconsin, Indiana and Kentucky.
The transaction
is expected
to close
in the
Company’s
fourth fiscal
quarter.
The transaction
is not
subject to
approval by
the
Company’s stockholders
or by the
equityholders of any
member of the
Echo Lake Company
Group. The consummation
of the
Echo Lake Acquisition
is subject to
customary closing conditions, including,
among others, (i) the
expiration or termination of
the applicable waiting
period under the
Hart-Scott-Rodino Antitrust Improvements
Act of 1976,
as amended (the
“HSR Act”),
(ii) the
accuracy
of
the
representations
and
warranties
of
each
party
(subject
to
certain
materiality
qualifiers),
and
(iii) the
performance in all material respects by each party of its obligations under the Purchase
Agreement. The Company’s obligations
are also conditioned upon the absence of a material adverse effect on the Echo Lake Company Group.
The Purchase
Agreement also
contains customary
representations, warranties
and covenants,
including covenants
by the
Echo
Lake
Company Group
to conduct
its business
in
the ordinary
course consistent
with past
practice
and to
refrain from
taking
certain actions prior to the closing of the transaction without the Company’s
consent. In addition, the Sellers and the Echo Lake
Group have agreed
not to directly
or indirectly solicit
competing acquisition proposals
or to
enter into discussions
concerning,
or provide confidential information in connection with, any unsolicited competing acquisition proposals.
If
the
Echo
Lake
Acquisition
has
not
closed by
July 7, 2025
(“Outside
Date”),
then
either
the
Sellers’
Representative or
the
Company
may
terminate
the
Purchase
Agreement.
However,
if
the
closing
has
not
occurred
solely
because
the
applicable
waiting period under the HSR Act
has not expired or been terminated,
and all other conditions to closing
have been satisfied or
waived
(other than
those pre-closing
restructuring steps
and
conditions that
by
their terms
are to
be satisfied
at
the closing),
either the Company or the Sellers’ Representative may extend the Outside Date for up to an additional 30 days.
The
foregoing
summary
of
the
Purchase Agreement
and
the
transactions contemplated
by
the
Purchase
Agreement does
not
purport
to
be
complete
and
is
subject
to,
and
qualified
in
its
entirety
by,
the
full
text
of
the
Purchase Agreement,
a
copy
of
which is attached to this
Form 10-Q as Exhibit 10.5 and is incorporated
herein by reference. The Purchase Agreement
has been
included
to
provide
investors
and
stockholders
with
information
regarding
its
terms.
It
is
not
intended
to
provide
any
other
factual
information
about
the
Company,
or
the
Echo
Lake
Company
Group.
The
representations,
warranties
and
covenants
contained in the
Purchase Agreement were
made only for
purposes of the
Purchase Agreement as
of the specific
dates therein,
were
solely
for
the
benefit
of
the
parties
to
the
Purchase
Agreement,
may
be
subject
to
limitations
agreed
upon
by
the
contracting parties,
including being
qualified by
confidential disclosures
made for
the purposes
of
allocating contractual
risk
between the parties to the Purchase Agreement instead of establishing these matters
as facts, and may be subject to standards of
materiality
applicable
to
the
contracting
parties
that
differ
from
those
applicable
to
investors.
Investors
are
not
third-party
beneficiaries
under
the
Purchase
Agreement
and
should
not
rely
on
the
representations,
warranties
and
covenants
or
any
descriptions thereof
as characterizations
of the
actual state
of facts
or condition
of the
Company or
the Echo
Lake Company
Group. Moreover, information concerning
the subject matter of the
representations and warranties may change
after the date of
the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Severance and Change in Control Agreements
Effective as of April 8, 2025, the Company entered into a Severance and Change in Control Agreement (each, an “Agreement”)
with
each
of
Sherman
Miller,
Max
Bowman,
Todd
Walters,
Rob
Holladay
and
Scott
Hull
(each,
an
“Executive”
and
collectively,
the “Executives”).
The Agreements
continue in
effect through
May 31,
2030, after
which they
will automatically
renew
for
additional one-year
periods unless
prior
written notice
of
non-renewal
is
provided by
the Company
in
accordance
with the terms of the Agreement.
Under each
Agreement, if
the Company
terminates the
Executive without
Cause or
the Executive
terminates employment
for
Good Reason during the term of
the Agreement and prior to a
Change in Control (as such terms
are defined in the Agreement),
the Executive will receive
a lump-sum cash payment
equal to the sum
of (a) an amount
in lieu of his
annual bonus for the
year
of
termination
equal
to
the
average
of
the
annual
bonuses
awarded
to
the
Executive
for
the
three
fiscal
years
immediately
preceding
the termination
date (the
“Termination
Bonus”), plus
(b)
two times
for Mr.
Miller
and one
and
one-half times
for
each other
Executive the
sum of
(i) the
Executive’s
base salary
in effect
at the
time of
termination plus
(ii) the
average of
the
annual bonuses awarded to
the Executive for the
three fiscal years immediately
preceding the termination date.
In addition, the
Company shall continue
to provide insurance
and welfare benefits
to the Executive
until the
earlier of the
third anniversary of
the termination date or the date the Executive accepts new employment (the “Benefit Continuation”).
Additionally,
if
the
Company
or
its
successor
terminates
the
Executive
during
the
two-year
period
following
a
Change
in
Control, other than
by reason of
death, disability or
Cause, or the
Executive terminates employment for
Good Reason (as
such
terms
are
defined
in
the
Agreement),
the
Executive
will
receive
a
lump-sum
cash
payment
equal
to
the
sum
of
(a)
his
Termination
Bonus plus
(b) three
times for
Mr.
Miller and
two times
for each
other Executive
the sum
of (i)
the Executive’s
base salary
in effect
at the
termination date,
or if
higher, immediately
preceding the
Change in
Control (with
such base
salary
37
being determined without
regard to any
reduction that would
provide the Executive
a basis to
terminate employment for
Good
Reason),
plus
(ii)
the
average
of
the
annual
cash
bonuses
paid
to
the
Executive
for
the
three
full
fiscal
years
immediately
preceding the date of the Change in Control,
or, if a higher amount
results, the termination date. In addition, the Company shall
provide
the
Benefit
Continuation.
If
any
part
of
the
payments
or
benefits
received
by
the
Executive
in
connection
with
a
termination following a Change in Control constitutes an excess parachute payment under Section 4999 of the Internal Revenue
Code,
the
Executive
will
receive
the
greater
of
(a)
the
amount
of
such
payments
and
benefits
reduced
so
that
none
of
the
amount constitutes an
excess parachute payment,
net of income
taxes, or (b)
the amount of
such payments and
benefits, net of
income taxes and net of excise taxes under Section 4999 of the Internal Revenue Code.
The
Agreements
also
require
the
Executives
to
deliver
a
release
in
favor
of
the
Company
in
order
to
receive
the
severance
benefits.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the form
of the Severance and Change in Control Agreement, which is filed as Exhibit 10.6 hereto and incorporated herein by reference.
Performance Share Unit Awards
The Compensation
Committee (the
“Committee”) of the
Company’s Board
of Directors
has implemented
a new
performance-
based component under the Company’s
long-term executive compensation program, which provides for awards of performance
share units (“PSUs”) to certain key
executives. On April 8, 2025, the
Committee approved awards of PSUs to
each of Sherman
Miller, Max Bowman, Todd
Walters, Rob
Holladay, Adolphus Baker
and Scott Hull, which awards will be
effective on June 1,
2025
(the
“Grant
Date”).
The
number
of
PSUs
granted,
which
amount
represents
the
target
award,
will
be
determined
by
dividing 40%
of each
executive’s current
base salary
by the
per share
closing price
of the
Company’s Common
Shares on
the
Grant Date, and
rounding down to
the nearest unit.
Each PSU represents
the right to
receive one Common
Share, provided the
applicable service and performance conditions are met. Specifically, the terms of the PSUs provide that they will pay out
after a
three-year performance
period contingent
on (a)
the executive’s
continued service
through the
performance period,
except as
otherwise
provided
in
the
Performance
Share
Unit
Agreement,
and
(b)
the
Company’s
achievement
of
specific
performance
goals
tied
to
the
following
two
equally
weighted
measures:
the
Company’s
cumulative
adjusted
EBITDA
and
relative
total
shareholder
return
compared
to
a
peer
group.
Depending
on
the
level
of
achievement
of
these
two
measures
over
the
performance period, the PSUs will pay out between 0% and 150% of the target award.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the form
of the Performance Share Unit Agreement, which is filed as Exhibit 10.7 hereto and incorporated herein by reference.
38
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
10.1
10.2
10.3
10.4
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
39
SIGNATURES
Pursuant to the
requirements of the
Securities Exchange Act
of 1934, the
registrant has duly
caused this report
to be signed
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
April 8, 2025
/s/ Max P.
Bowman
Max P.
Bowman
Vice President, Chief Financial Officer
(Principal Financial Officer)
Date:
April 8, 2025
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
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 March 1, 2025 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 ContingenciesNote 11 - Subsequent EventsItem 2. Management SItem 1A Risk Factors Of This Quarterly Report on Form 10-q and Part I Item 1A Risk Factors Of Our Annual Report on FormItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. ControlsPart II. Other InformationItem 1. Legal ProceedingsItem 1A. RiskItem 1. Notes To The Consolidated Financial Statements, Note 10 Commitments and Contingencies And, in Our 2024 AnnualItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 5. Other InformationItem 6. Exhibits