By the time the United States Federal Reserve convened for its Federal Open Markets Committee (FOMC) meeting in December, federal economic data had already pointed to a sustained cooling in consumer prices. The Consumer Price Index, for example, only rose 3.2%, from a year-over-year (Y/Y) perspective, in October, which was approximately 590 basis points lower than the peak price increase of 9.1% Y/Y in June 2022. That is to say, despite a slight, unexpected rise in CPI in August, consumer prices continued t ...

Cal-Maine Foods experienced HPAI outbreaks within our facilities in Kansas, resulting in depopulation of approximately 1.5 million layers and 240 thousand pullets, or approximately 3.3% of our total flock as of December 2, 2023, subsequent to period-end. Cal-Maine Foods believes that we can mitigate the loss of production through flock rotations. Cal-Maine Foods remains dedicated to robust biosecurity programs across our locations; however, no farm is immune from HPAI. HPAI is still present in the wild bird ...

Part I [Item 1. Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited Q1 FY2024 financial statements show significant declines in net income and operating cash flow, driven by lower egg prices [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 2, 2023, total assets slightly decreased to $1.90 billion, liabilities fell to $289.0 million, and equity remained stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 2, 2023 | June 3, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $1,064,058 | $1,124,925 | | **Total Assets** | **$1,900,367** | **$1,954,525** | | **Total Current Liabilities** | $126,382 | $182,731 | | **Total Liabilities** | $289,037 | $344,942 | | **Total Stockholders' Equity** | $1,611,330 | $1,609,583 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 FY2024 net sales declined to $459.3 million, resulting in an operating loss of $6.8 million and net income plummeting to $0.9 million Income Statement Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Sep 2, 2023 | Thirteen Weeks Ended Aug 27, 2022 | | :--- | :--- | :--- | | Net Sales | $459,344 | $658,344 | | Gross Profit | $45,433 | $217,490 | | Operating Income (Loss) | $(6,757) | $163,850 | | Net Income Attributable to Cal-Maine | $926 | $125,287 | | Diluted EPS | $0.02 | $2.57 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 FY2024 comprehensive income significantly decreased to $1.5 million, primarily due to the substantial drop in net income Comprehensive Income (in thousands) | Metric | Thirteen Weeks Ended Sep 2, 2023 | Thirteen Weeks Ended Aug 27, 2022 | | :--- | :--- | :--- | | Net Income | $411 | $125,134 | | Other Comprehensive Income (Loss), net of tax | $595 | $(754) | | Comprehensive Income | $1,006 | $124,380 | | Comprehensive Income Attributable to Cal-Maine | $1,521 | $124,533 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly decreased to $23.7 million, while investing activities provided $80.9 million and financing activities used $37.0 million Cash Flow Summary (in thousands) | Cash Flow Activity | Thirteen Weeks Ended Sep 2, 2023 | Thirteen Weeks Ended Aug 27, 2022 | | :--- | :--- | :--- | | Net cash provided by operations | $23,685 | $172,812 | | Net cash provided by (used in) investing | $80,880 | $(59,122) | | Net cash used in financing | $(37,046) | $(36,753) | | **Net change in cash** | **$67,519** | **$76,937** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, key financial items, legal proceedings, and a significant subsequent asset acquisition - The financial statements were prepared in accordance with U.S. GAAP for interim reporting and reflect all necessary adjustments of a normal recurring nature[15](index=15&type=chunk) - No new accounting pronouncements issued or effective during the fiscal year had or are expected to have a material impact on the company's Consolidated Financial Statements[30](index=30&type=chunk) Investment Securities by Type (in thousands) | Security Type | Estimated Fair Value (Sep 2, 2023) | Estimated Fair Value (June 3, 2023) | | :--- | :--- | :--- | | Corporate bonds | $126,941 | $138,577 | | US government and agency obligations | $94,264 | $100,769 | | Commercial paper | $8,898 | $56,409 | | Other | $19,516 | $49,329 | | **Total Current Investments** | **$249,619** | **$355,090** | Revenue by Product Category (in thousands) | Product Category | Q1 FY2024 | Q1 FY2023 | | :--- | :--- | :--- | | Conventional shell egg sales | $225,280 | $425,589 | | Specialty shell egg sales | $208,681 | $200,820 | | Egg products | $22,223 | $27,640 | | Other | $3,160 | $4,295 | | **Total** | **$459,344** | **$658,344** | - Subsequent to the quarter end, on September 28, 2023, the company entered into a definitive agreement to acquire substantially all the assets of Fassio Egg Farms, Inc., which has a capacity of approximately **1.2 million laying hens**, primarily cage-free[92](index=92&type=chunk) - The company is involved in several legal proceedings, including antitrust litigation with Egg Products Plaintiffs (trial set for October 17, 2023) and watershed pollution litigation in Oklahoma, with management believing a material adverse outcome is reasonably possible but unable to estimate monetary exposure[5](index=5&type=chunk)[86](index=86&type=chunk)[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 FY2024's significant financial downturn, driven by a 48.7% drop in conventional egg prices, impacting gross profit despite lower feed costs, as the company pursues cage-free investments [Executive Overview](index=16&type=section&id=Executive%20Overview) Q1 FY2024 results were impacted by volatile egg prices, with a significant drop in conventional egg prices reducing gross profit, as the company expands cage-free capacity - Cal-Maine Foods is the largest producer and distributor of fresh shell eggs in the U.S., with a flock of approximately **41.9 million layers** and **10.0 million pullets and breeders**[97](index=97&type=chunk) - The U.S. layer hen flock has largely recovered from the HPAI outbreak but remains slightly below the five-year average, with numbers at **318.2 million** as of September 1, 2023, up **3.1%** from a year ago[69](index=69&type=chunk)[70](index=70&type=chunk) - The company is expanding its cage-free production to meet evolving state requirements and customer goals, with cage-free egg revenue representing approximately **33.0% of total net shell egg revenue** for Q1 FY2024[66](index=66&type=chunk) Q1 FY2024 vs. Q1 FY2023 Key Metrics | Metric | Q1 FY2024 | Q1 FY2023 | | :--- | :--- | :--- | | Net Average Selling Price / Dozen | $1.589 | $2.275 | | Conventional Egg Price / Dozen | $1.241 | $2.368 | | Specialty Egg Price / Dozen | $2.278 | $2.101 | | Gross Profit (in millions) | $45.4 | $217.5 | [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Q1 FY2024 net sales decreased 30.2% to $459.3 million, driven by a 47.1% drop in conventional egg prices, resulting in a 9.9% gross margin and an operating loss Shell Egg Sales Analysis (Q1 FY2024 vs Q1 FY2023) | Category | Net Sales Change | Price Change | Volume Change | | :--- | :--- | :--- | :--- | | Conventional Eggs | -47.1% | -47.6% | +1.0% | | Specialty Eggs | +3.9% | +8.4% | -4.2% | Cost of Sales Analysis (per dozen produced) | Cost Component | Q1 FY2024 | Q1 FY2023 | % Change | | :--- | :--- | :--- | :--- | | Feed | $0.597 | $0.667 | -10.5% | | Other Farm Production | $0.439 | $0.379 | +15.8% | | **Total Farm Production** | **$1.036** | **$1.046** | **-1.0%** | - Other farm production costs increased primarily due to higher flock amortization from increased cage-free production and a **16.5% increase in labor costs**[163](index=163&type=chunk)[164](index=164&type=chunk) - Selling, general, and administrative (SGA) expenses decreased **2.5% to $52.2 million**, primarily due to lower delivery expenses and franchise fees[200](index=200&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $937.7 million in working capital and no long-term debt, despite lower net cash from operations - Working capital was **$937.7 million** at September 2, 2023, compared to **$942.2 million** at June 3, 2023[172](index=172&type=chunk) - The company has no long-term debt outstanding and access to a **$250 million** senior secured revolving credit facility, under which no amounts were borrowed as of September 2, 2023[174](index=174&type=chunk) Approved Material Construction Projects (in thousands) | Project Type | Projected Completion | Total Projected Cost | Remaining Cost | | :--- | :--- | :--- | :--- | | Cage-Free Layer & Pullet Houses | Fiscal 2024-2027 | $190,607 | $88,981 | | Feed Mill | Fiscal 2025 | $10,800 | $10,764 | | **Total** | | **$201,407** | **$99,745** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk exposure occurred during Q1 FY2024 compared to prior Annual Report disclosures - There have been no material changes in the company's exposure to market risk during the thirteen weeks ended September 2, 2023[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of September 2, 2023, with no material changes to internal controls - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 2, 2023[215](index=215&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[192](index=192&type=chunk) Part II [Item 1. Legal Proceedings](index=26&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Legal proceedings information is incorporated by reference from Note 9 of the Condensed Consolidated Financial Statements and the 2023 Annual Report - Information regarding legal proceedings is incorporated by reference from Note 9 of the Notes to Condensed Consolidated Financial Statements in this report and from the company's 2023 Annual Report[211](index=211&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes occurred in risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - There have been no material changes in the risk factors previously disclosed in the Company's 2023 Annual Report[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=26&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%2C%20USE%20OF%20PROCEEDS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) During Q1 FY2024, the company repurchased shares primarily to satisfy employee tax withholding obligations related to restricted stock vesting Q1 2024 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | 06/04/23 to 07/01/23 | — | — | | 07/02/23 to 07/29/23 | 106 | $44.75 | | 07/30/23 to 09/02/23 | — | — | | **Total** | **106** | **$44.75** | - The repurchased shares were withheld by the company to satisfy employee tax withholding obligations related to the vesting of restricted common stock[194](index=194&type=chunk) [Item 6. Exhibits](index=26&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed, including corporate documents, officer certifications, and Inline XBRL documents - Exhibits filed with this report include officer certifications required by the Sarbanes-Oxley Act and various Inline XBRL taxonomy documents[181](index=181&type=chunk) [Signatures](index=27&type=section&id=Signatures) The report was duly signed on October 3, 2023, by the Vice President and Chief Financial Officer and Vice President – Accounting - The report was duly signed on October 3, 2023, by Max P. Bowman, Vice President and Chief Financial Officer, and Matthew S. Glover, Vice President – Accounting[183](index=183&type=chunk)[197](index=197&type=chunk)

53 and entities that are permitted to receive and hold shares of Class A Common Stock, with ten votes per share, without such shares converting into shares of Common Stock, with one vote per share ("Permitted Transferees"). The Permitted Transferees include arrangements and entities such as revocable trusts and limited liability companies that could hold Class A Common Stock for the benefit of Immediate Family Members. Each Permitted Transferee must have a relationship, specifically defined in the Restated ...

Financial Performance - For Q3 fiscal 2023, the company recorded a gross profit of $463.0 million, a significant increase from $91.6 million in the same period of fiscal 2022, primarily due to higher shell egg prices [122]. - Total net sales for the third quarter of fiscal 2023 were $997.5 million, a 109.0% increase from $477.5 million in the same period of fiscal 2022 [144]. - For the thirty-nine weeks ended February 25, 2023, total net sales reached $2.46 billion, compared to $1.18 billion for the same period in fiscal 2022, marking a 108.5% increase [145]. - Net income for the third quarter of fiscal 2023 was 32.3% of total net sales, compared to 8.3% in the same period of fiscal 2022 [144]. - Operating income for Q3 FY2023 was $407.8 million, compared to $39.6 million for the same period in FY2022 [224]. - Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended February 25, 2023, was $647.1 million, or $13.31 per basic share, compared to $22.6 million or $0.46 per basic share for the same period of fiscal 2022 [229]. - The company recorded a pre-tax income of $852.6 million for the thirty-nine weeks ended February 25, 2023, compared to $19.7 million for the same period of fiscal 2022 [227]. Sales and Pricing - Conventional egg sales increased by $408.4 million, or 145.5%, in the third quarter of fiscal 2023, primarily due to a $415.9 million increase in prices [149]. - Specialty egg sales rose by $89.3 million, or 48.8%, in the third quarter of fiscal 2023, driven by a 36.0% increase in prices and a 9.4% increase in volume sold [149]. - Egg products net sales increased by $19.8 million, or 155.6%, for the third quarter of fiscal 2023, primarily due to a 142.8% increase in selling prices [152]. - The average net selling price per dozen for Q3 fiscal 2023 was $3.298, compared to $1.612 in the prior-year period, with conventional egg prices at $3.678 and specialty egg prices at $2.616 [3]. - Total dozens sold increased by 1.3% to 291.4 million dozen in Q3 fiscal 2023, with specialty dozens sold rising by 9.4% [4]. Production and Costs - Farm production costs per dozen produced increased by 18.2%, or $0.166, in the third quarter of fiscal 2023, mainly due to higher feed ingredient costs [143]. - Cost of sales for the third quarter of fiscal 2023 was $534.5 million, up from $385.9 million in the same period of fiscal 2022 [154]. - The increase in payroll, taxes, and benefits expense was primarily due to an increase in the accrual for anticipated performance-based bonuses and increased wages due to inflation [195]. - Labor costs increased by 36% due to higher use of contract labor and wage increases in Q3 fiscal 2023 [6]. - Packaging material costs increased by 15.5% and labor costs rose by 13.7% due to inflation and labor shortages [215]. Market Conditions - The outbreak of highly pathogenic avian influenza (HPAI) has led to the depopulation of approximately 43.3 million commercial layer hens since February 2022, impacting overall egg supply [138]. - The USDA reported a decrease of 3.8% in layer hen inventory compared to the previous year, with current numbers at 312.9 million [139]. - The company expects to continue facing volatility in market prices for eggs and feed grains, which significantly impacts financial results [133]. - The company expects continued upward pricing pressures on corn and soybean due to tight supplies and market volatility [214]. - Corn and soybean supplies remained tight in Q3 FY2023, leading to upward pricing pressures and market volatility affecting feed costs [214]. Strategic Initiatives - The company announced a strategic investment of $18.5 million in Meadow Creek Foods, LLC, to support the growing demand for hard-cooked eggs [117]. - The company is focused on expanding cage-free facilities to meet customer demand, with some customers aiming for 70% cage-free eggs by the end of 2030 [121]. - The company is enhancing its product mix to include free-range and pasture-raised eggs, catering to evolving consumer preferences [136]. - The company formed a new egg farmer cooperative, ProEgg, to enhance market presence in the western United States [7]. - The company is participating in the ProEgg cooperative to improve supply chain stability and customer support in the western states [137]. Interest and Dividends - The company earned $9.4 million of interest income for the thirty-nine weeks ended February 25, 2023, compared to $702 thousand for the same period of fiscal 2022, driven by higher investment balances and interest rates [198]. - The company recorded $6.3 million in interest income for Q3 FY2023, a significant increase from $205 thousand in the same period of FY2022 [225]. - The company paid dividends of $144.6 million for the thirty-nine weeks ended February 25, 2023 [207].

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements for Cal-Maine Foods, Inc. for the quarterly period ended November 26, 2022 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Cal-Maine Foods' unaudited condensed consolidated financial statements for Q2 FY2023, highlighting significant growth in assets, sales, and profitability due to record egg prices [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.76 billion from $1.43 billion, with stockholders' equity rising to $1.32 billion, reflecting strong retained earnings growth Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | Nov 26, 2022 | May 28, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $974,010 | $661,519 | | **Total Assets** | **$1,763,440** | **$1,427,489** | | **Total Current Liabilities** | $306,549 | $184,674 | | **Total Liabilities** | $443,135 | $323,144 | | **Total Stockholders' Equity** | **$1,320,305** | **$1,104,345** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales for the quarter more than doubled to $801.7 million, resulting in a net income of $198.6 million, driven by significantly higher egg prices Statement of Operations Summary (in thousands USD, except per share data) | Metric | Thirteen Weeks Ended Nov 26, 2022 | Thirteen Weeks Ended Nov 27, 2021 | Twenty-six Weeks Ended Nov 26, 2022 | Twenty-six Weeks Ended Nov 27, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $801,700 | $381,723 | $1,460,044 | $706,709 | | **Gross Profit** | $317,849 | $43,747 | $535,339 | $50,392 | | **Operating Income (Loss)** | $259,868 | $(2,065) | $423,718 | $(41,732) | | **Net Income (Loss) Attributable to Cal-Maine** | $198,587 | $1,173 | $323,874 | $(16,853) | | **Diluted EPS** | $4.07 | $0.02 | $6.63 | $(0.34) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly improved to $344.8 million, primarily due to higher net income, with cash and cash equivalents increasing to $178.6 million Cash Flow Summary for Twenty-six Weeks Ended (in thousands USD) | Cash Flow Activity | Nov 26, 2022 | Nov 27, 2021 | | :--- | :--- | :--- | | **Net cash provided by (used in) operations** | $344,787 | $(15,492) | | **Net cash used in investing activities** | $(146,703) | $(26,255) | | **Net cash used in financing activities** | $(78,533) | $(121) | | **Net change in cash and cash equivalents** | $119,551 | $(41,868) | | **Cash and cash equivalents at end of period** | $178,635 | $15,484 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed information on accounting policies, investment securities, revenue recognition, and legal contingencies, including revenue disaggregation and litigation updates Disaggregation of Revenue by Product (in thousands USD) | Product Category | Thirteen Weeks Ended Nov 26, 2022 | Thirteen Weeks Ended Nov 27, 2021 | Twenty-six Weeks Ended Nov 26, 2022 | Twenty-six Weeks Ended Nov 27, 2021 | | :--- | :--- | :--- | :--- | :--- | | Conventional shell egg sales | $541,917 | $221,142 | $967,506 | $403,172 | | Specialty shell egg sales | $227,778 | $146,917 | $428,598 | $279,375 | | Egg products | $28,052 | $11,401 | $55,692 | $20,767 | | Other | $3,953 | $2,263 | $8,248 | $3,395 | | **Total** | **$801,700** | **$381,723** | **$1,460,044** | **$706,709** | - The company is involved in several legal proceedings, including antitrust litigation with Kraft Foods and others, and a watershed pollution case with the State of Oklahoma; management believes the risk of material loss from these matters is **remote** or cannot be estimated at this time[75](index=75&type=chunk)[78](index=78&type=chunk)[85](index=85&type=chunk) Inventory Breakdown (in thousands USD) | Inventory Type | Nov 26, 2022 | May 28, 2022 | | :--- | :--- | :--- | | Flocks, net of amortization | $156,782 | $144,051 | | Eggs and egg products | $28,343 | $26,936 | | Feed and supplies | $95,457 | $92,329 | | **Total** | **$280,582** | **$263,316** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes record Q2 FY2023 financial performance to significantly higher egg prices due to HPAI-driven supply reduction and strong demand, despite rising production costs - The ongoing HPAI outbreak has been a primary driver of market conditions, depopulating approximately **43.3 million** commercial layer hens in the U.S. as of December 2022, leading to near-record high prices[104](index=104&type=chunk)[107](index=107&type=chunk) - The company is focused on expanding its cage-free production to meet legislative mandates and customer commitments, noting that some customers have extended their cage-free transition timelines[109](index=109&type=chunk)[110](index=110&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales for Q2 FY2023 reached a record $801.7 million, a 110% increase YoY, driven by higher egg prices, despite increased cost of sales and SGA expenses Shell Egg Sales Analysis (Q2 FY2023 vs Q2 FY2022) | Metric | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Average Selling Price / Dozen** | | | | | Conventional | $2.883 | $1.151 | +150.5% | | Specialty | $2.370 | $1.898 | +24.9% | | **Dozens Sold (thousands)** | | | | | Conventional | 187,976 | 192,135 | -2.2% | | Specialty | 96,110 | 77,420 | +24.1% | - Atypically, the average selling price for conventional eggs (**$2.883/dozen**) exceeded that of specialty eggs (**$2.370/dozen**) due to the rapid market response of conventional egg pricing to the supply shortage caused by HPAI[112](index=112&type=chunk)[125](index=125&type=chunk) Farm Production Costs per Dozen Produced (Q2 FY2023 vs Q2 FY2022) | Cost Component | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Feed | $0.685 | $0.529 | +29.5% | | Other | $0.386 | $0.349 | +10.6% | | **Total** | **$1.071** | **$0.878** | **+22.0%** | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's financial position strengthened with working capital increasing to $667.5 million, robust cash flow from operations, and continued investment in cage-free facilities - Working capital increased to **$667.5 million** at November 26, 2022, from **$476.8 million** at May 28, 2022, demonstrating enhanced liquidity[177](index=177&type=chunk) - The company had **no long-term debt** outstanding and had access to a **$250 million** senior secured revolving credit facility, under which no amounts were borrowed[181](index=181&type=chunk) Material Construction Projects for Cage-Free Facilities (as of Nov 26, 2022, in thousands USD) | Projected Completion | Total Projected Cost | Spent to Date | Remaining Cost | | :--- | :--- | :--- | :--- | | Fiscal 2023 | $156,572 | $140,381 | $16,191 | | Fiscal 2024 | $42,591 | $2,057 | $40,534 | | Fiscal 2025 | $95,806 | $22,526 | $73,280 | | **Total** | **$294,969** | **$164,964** | **$130,005** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk exposure were reported for the period compared to the prior fiscal year's Annual Report - **No material changes** in market risk exposure were reported for the period[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed **effective** at a reasonable assurance level as of the end of the quarter[189](index=189&type=chunk) - There were **no material changes** to the company's internal control over financial reporting during the quarter[190](index=190&type=chunk) [Part II. Other Information](index=29&type=section&id=Part%20II.%20Other%20Information) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) Refers to detailed discussions of legal proceedings in Note 9 of the financial statements and the 2022 Annual Report - For information on legal proceedings, the report directs readers to **Note 9** of the financial statements[193](index=193&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported compared to the 2022 Annual Report on Form 10-K - **No material changes** in risk factors were disclosed compared to the 2022 Annual Report[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No purchases of Common Stock were made by or on behalf of the company or any affiliated purchaser during Q2 FY2023 - There were **no company stock repurchases** during the second quarter of fiscal 2023[195](index=195&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Quarterly Report, including CEO and CFO certifications and Inline XBRL documents - Lists various exhibits filed with the report, such as officer certifications and XBRL data files[196](index=196&type=chunk)

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the thirteen weeks ended August 27, 2022, reflect a significant turnaround with net income of $125.1 million and total assets of $1.55 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 27, 2022, total assets increased to $1.55 billion, total liabilities to $366.8 million, and stockholders' equity to $1.19 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | August 27, 2022 | May 28, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $778,888 | $661,519 | | **Total Assets** | **$1,554,729** | **$1,427,489** | | **Total Current Liabilities** | $230,431 | $184,674 | | **Total Liabilities** | **$366,766** | **$323,144** | | **Total Stockholders' Equity** | **$1,187,963** | **$1,104,345** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the thirteen weeks ended August 27, 2022, net sales more than doubled to $658.3 million, resulting in a gross profit of $217.5 million and net income of $125.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | **Net Sales** | $658,344 | $324,986 | | **Gross Profit** | $217,490 | $6,645 | | **Operating Income (Loss)** | $163,850 | $(39,667) | | **Net Income (Loss) Attributable to Cal-Maine** | $125,287 | $(18,026) | | **Diluted EPS** | $2.57 | $(0.37) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first thirteen weeks of fiscal 2023, net cash from operations was $172.8 million, leading to a $76.9 million increase in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | **Net cash provided by (used in) operations** | $172,812 | $(24,112) | | **Net cash used in investing activities** | $(59,122) | $(16,485) | | **Net cash used in financing activities** | $(36,753) | $(71) | | **Net change in cash and cash equivalents** | $76,937 | $(40,668) | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail revenue sources, including $425.6 million from conventional shell eggs, dividend policy, and legal contingencies with remote risk of material loss Disaggregation of Revenue (in thousands) | Product Category | Thirteen Weeks Ended Aug 27, 2022 | Thirteen Weeks Ended Aug 28, 2021 | | :--- | :--- | :--- | | Conventional shell egg sales | $425,589 | $182,030 | | Specialty shell egg sales | $200,820 | $132,458 | | Egg products | $27,640 | $9,366 | | Other | $4,295 | $1,132 | | **Total** | **$658,344** | **$324,986** | - For the first quarter of fiscal 2023, the company will pay a cash dividend of approximately **$0.853 per share**, with a policy to pay **one-third of quarterly net income**[54](index=54&type=chunk)[55](index=55&type=chunk) - The company is a defendant in several legal cases, including antitrust litigation and a deceptive trade practices lawsuit, but management believes the risk of material loss is **remote**[78](index=78&type=chunk)[84](index=84&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes record first-quarter results to significantly higher shell egg prices, offsetting increased production costs, while actively managing HPAI risks and investing in cage-free facilities [Executive Overview and Market Conditions](index=17&type=section&id=Executive%20Overview%20and%20Market%20Conditions) Record gross profit of $217.5 million in Q1 FY2023 was driven by a 133.8% increase in egg prices due to HPAI supply reduction and strong demand, alongside growth in specialty egg sales - Conventional egg prices rose **133.8%** in Q1 FY2023 due to decreased supply from the HPAI outbreak[110](index=110&type=chunk) - As of September 27, 2022, no Cal-Maine Foods' facilities tested positive for HPAI, though the industry-wide outbreak led to the depopulation of approximately **35.6 million** commercial layer hens[102](index=102&type=chunk) - Ten states have mandated cage-free egg sales, with cage-free eggs representing **19.4%** of the company's shell egg revenues in Q1 FY2023[104](index=104&type=chunk)[105](index=105&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Record net sales of $658.3 million, driven by higher conventional and specialty egg prices, led to an operating income of $163.9 million despite increased cost of sales and SGA expenses Shell Egg Sales Analysis (Q1 FY2023 vs Q1 FY2022) | Category | Net Average Selling Price per Dozen | Dozens Sold (thousands) | | :--- | :--- | :--- | | **Conventional** | $2.368 (up 139%) | 179,712 (down 2.3%) | | **Specialty** | $2.101 (up 12%) | 95,605 (up 35.1%) | | **All Shell Eggs** | **$2.275 (up 84%)** | **275,317 (up 8.1%)** | Farm Production Costs per Dozen Produced | Cost Component | Q1 FY2023 | Q1 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Feed | $0.667 | $0.545 | 22.4% | | Other | $0.379 | $0.353 | 7.4% | | **Total** | **$1.046** | **$0.898** | **16.5%** | - SGA expenses increased by **$7.1 million (15.2%)**, primarily due to a **$6.0 million (42.9%)** rise in delivery expenses from higher fuel and labor costs[137](index=137&type=chunk)[141](index=141&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company's financial position strengthened with $172.8 million in operating cash flow, no long-term debt, and $150.9 million remaining for cage-free expansion projects - Net cash provided by operating activities was **$172.8 million** for the quarter, a significant improvement from the **$24.1 million** used in the prior-year period[150](index=150&type=chunk)[152](index=152&type=chunk) - The company had **no long-term debt** outstanding and access to a **$250 million** senior secured revolving credit facility as of August 27, 2022[155](index=155&type=chunk) Approved Material Construction Projects (in thousands) | Project Type | Total Projected Cost | Cost Incurred to Date | Remaining Projected Cost | | :--- | :--- | :--- | :--- | | **Cage-Free Expansions** | **$293,858** | **$143,003** | **$150,855** | [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its market risk exposure during the thirteen weeks ended August 27, 2022 - There have been **no material changes** in the company's market risk exposure during the first quarter of fiscal 2023[161](index=161&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 27, 2022, with no material changes to internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were **effective** as of the end of the quarter[162](index=162&type=chunk) - **No material changes** to the internal control over financial reporting occurred during the quarter[163](index=163&type=chunk) Part II. Other Information [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the detailed discussion of legal proceedings found in Note 11 of the financial statements - Information regarding legal proceedings is detailed in **Note 11** of the financial statements[166](index=166&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to the risk factors previously disclosed in its 2022 Annual Report on Form 10-K - There have been **no material changes** in the risk factors from those disclosed in the 2022 Annual Report[167](index=167&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 FY2023, the company repurchased 895 shares at an average price of $50.74 to satisfy employee tax withholding obligations for vested restricted stock - The company repurchased **895 shares** during the quarter to satisfy employee tax withholding obligations related to vested restricted stock[168](index=168&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL data files

Company Overview - The company is the largest producer and distributor of shell eggs in the U.S., with a total flock of approximately 42.2 million layers and 11.5 million pullets and breeders as of May 28, 2022[6]. - The company has completed 23 acquisitions since 1989, with the most recent acquisition of Red River Valley, which includes 1.7 million layers[8]. - The company is a member of the Eggland's Best cooperative, producing and marketing branded eggs under exclusive license agreements[23]. - The shell egg production industry remains highly fragmented, with the ten largest producers owning approximately 53% of industry table egg layer hens[27]. Financial Performance - Total net sales for fiscal 2022 were $1,777.2 million, an increase of 31.7% compared to $1,349.0 million for fiscal 2021[95]. - Gross profit increased by $176.4 million to $337.1 million in fiscal 2022, primarily due to higher selling prices for conventional eggs[91]. - Net income attributable to Cal-Maine Foods, Inc. was 7.5% for fiscal 2022, a significant increase from 0.2% in fiscal 2021[92]. - Operating income for fiscal 2022 was $143.5 million, compared to an operating loss of $26.3 million in fiscal 2021[102]. - The company reported a comprehensive income of $131,612,000 for the fiscal year ended May 28, 2022, compared to $1,423,000 in the previous year[141]. Production and Sales - In fiscal 2022, 94.3% of the total shell eggs sold were produced, with 91.7% from company-owned facilities and 8.3% from contract producers[17]. - Sales of cage-free eggs represented approximately 22.1% of shell egg revenues for fiscal year 2022[18]. - Conventional eggs accounted for 59.8% of revenue and 69.0% of volume in fiscal 2022, while total specialty eggs contributed 36.5% of revenue and 31.0% of volume[22]. - The company sold approximately 1,083.8 million dozen shell eggs in fiscal 2022, representing about 20% of domestic shell egg consumption[87]. Market Conditions - Wholesale shell egg prices are volatile and influenced by factors such as consumer demand and supply fluctuations, with prices rising in the fourth quarter of fiscal 2022 due to HPAI[11]. - The highly pathogenic avian influenza outbreak impacted approximately 30.7 million laying hens in 2022 through June, affecting supply and prices[43]. - The average per capita U.S. egg consumption in 2021 was estimated to be 280 eggs, or approximately 5.4 eggs per person per week[10]. - Specialty eggs are generally sold at higher prices and have experienced less volatility compared to conventional shell eggs[13]. Cost Structure - In fiscal 2022, feed costs represented 61.9% of the company's farm production costs, with annual feed requirements of 1.9 million tons[14]. - Feed costs per dozen produced rose to $0.571 in fiscal 2022, a 28.1% increase from $0.446 in fiscal 2021[91]. - The average Chicago Board of Trade daily market price for corn was $6.31 per bushel and $392.06 per ton for soybean meal in fiscal 2022, representing increases of 38.3% and 6.1%, respectively[93]. Investments and Expansion - The company plans to invest $105 million to expand cage-free egg production capabilities, including new facilities in Florida and Utah, expected to be completed by 2023 and 2025 respectively[8]. - The company has invested up to $18.5 million in MeadowCreek Foods, LLC, to specialize in high-value commercial egg product solutions, with production expected to start in late fiscal 2023 second quarter[21]. - Approximately $516 million has been invested in facilities and equipment to expand cage-free production since 2008, with a projected cost of $131.974 million for a new facility expected to be completed in fiscal 2023[116]. Regulatory and Compliance - Ten states have passed legislation mandating cage-free requirements for egg production, affecting approximately 27% of the U.S. population[30]. - The company may face significant costs to comply with evolving animal welfare regulations, particularly regarding cage-free egg production[56]. - The company is closely monitoring HPAI outbreaks and has implemented robust biosecurity measures across its locations[10]. Workforce and Diversity - As of May 28, 2022, the company employed 2,985 individuals, with 2,346 in egg production, processing, and marketing, and 197 in feed mill operations[32]. - Women represent 29% of the company's board, while 52% of the workforce identifies as racial or ethnic minorities, highlighting diversity efforts[36]. - Approximately 76% of employees are paid at hourly rates, with most earning above the federal minimum wage[37]. Risks and Challenges - The company faces risks from agricultural factors, including outbreaks of avian disease, which can adversely affect the quality and quantity of shell eggs produced[52]. - Cyber-attacks and security breaches pose risks to the company's information technology systems, potentially impacting operations and reputation[52]. - Labor costs increased significantly in fiscal 2021 and 2022 due to pandemic-related wage increases, with approximately 76% of employees paid hourly[53]. Shareholder Returns - The company has a variable dividend policy, paying dividends equal to one-third of quarterly net income attributable to the company[77]. - Total dividends paid increased to $6.1 million in fiscal 2022 from $1.7 million in fiscal 2021, reflecting a significant rise in shareholder returns[113].

BMO Global Farm to Market Conference May 18, 2022 Dolph Baker, Chairman and Chief Executive Officer Max Bowman, Chief Financial Officer Forward-looking statements and use of non-GAAP financial measures Forward‐Looking and Cautionary Statements This presentation contains "forward‐looking statements" relating to, among other things, our shell egg business, including estimated future production data, expected construction schedules, projected construction costs, potential future supply of and demand for our pr ...

Index UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☑ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended February 26, 2022 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to ____________ Commission File Number: 001-38695 CAL-MAINE FOODS, INC. (Exact name of registrant as specified in its charter) Delaware 64-0500378 (S ...