Core Viewpoint - Cal-Maine Foods Inc., the largest egg producer in the US, is experiencing a significant shift in consumer preferences towards specialty egg varieties that are perceived as more sustainable, impacting its conventional egg sales negatively [1][2][4]. Consumer Trends - There is a growing trend among US consumers favoring organic, premium, and sustainable food options, which is reflected in the increasing demand for specialty eggs such as cage-free and pasture-raised varieties [2][4]. - Specialty eggs are becoming the default choice for many consumers, leading to a boost in sales for Cal-Maine in these segments, although conventional eggs still represent the majority of the company's business [2][4]. Financial Performance - Cal-Maine's shares fell by as much as 7.9% following the release of quarterly earnings that missed analyst expectations, particularly in the conventional egg segment, which underperformed significantly [3][7]. - Revenue from the conventional egg segment grew by 4.4% year-over-year, reaching $505.9 million, but this was 13% below analyst expectations [7]. - Specialty eggs accounted for 36% of total egg sales, marking a 130-basis point increase, and are expected to continue growing, contributing nearly 40% to the company's net sales in the first quarter [8]. Strategic Outlook - In response to changing consumer demand, Cal-Maine is planning to invest more in specialty egg production and explore potential mergers and acquisitions to enhance its offerings [6][8]. - The company aims to expand its cage-free and pasture-raised production, guided by customer preferences regarding the pace and scale of these investments [7].

Cal-Maine Foods, the top US egg producer, is noticing a major trend in the market: consumers are shifting to fancier varieties that they consider to be more sustainable https://t.co/UZstPCiZWf ...

Economic Indicators - The ADP Research report indicated that US private employers cut 32,000 jobs in September, with the Midwest experiencing the largest losses [4][6] - The August employment figure was revised down to a loss of 3,000 jobs from a previously reported gain of 54,000 [4][6] - Analysts noted that the ADP survey has a smaller sample size compared to the government's monthly jobs report, which may affect its accuracy [4][6] Market Reactions - Treasury yields fell sharply, with the 10-year Treasury yield dropping to 4.09% from 4.16% and the two-year yield falling to 3.53% from 3.60% [5][6] - The S&P 500 fell 0.3%, the Dow Jones Industrial Average declined by 51 points (0.1%), and the Nasdaq composite dropped 0.4% [5][6] Company Performance - Cal-Maine Foods saw a 2.6% decline in stock price after reporting quarterly profits and revenues below analyst expectations, despite achieving its strongest-ever first quarter [5][6] - Nike's stock rose by 4.7% after surpassing profit estimates, driven by strong North American apparel sales [5][6] - Lithium Americas surged 22.5% after the US Department of Energy approved access to a $2.26 billion loan in exchange for an ownership stake [5][6] International Markets - International markets showed mixed performance, with European indexes rising following a varied session in Asia [5]

Financial Data and Key Metrics Changes - Net sales for Q1 2026 were $922.6 million, up 17.4% from $785.9 million in the previous year, driven by increased shell egg sales and contributions from recent acquisitions in prepared foods [13] - Gross profit improved to $311.3 million or 33.7% of net sales, up from $247.2 million or 31.5% of net sales last year, reflecting nearly 26% growth primarily due to higher shell egg selling prices and lower feed costs [15] - Operating income was $249.2 million or 27% of net sales, compared to $187 million or 23.8% a year ago, indicating a 320 basis point improvement [16] - Net income rose to $199.3 million or $4.12 per diluted share, up from $150 million or $3.06 per diluted share last year [16] Business Line Data and Key Metrics Changes - Shell egg sales reached $789.4 million, up 6.5%, with a 3.9% increase in net average selling price and a 7.5% increase in specialty egg sales volume [14] - Specialty eggs generated $283.5 million in sales, up 10%, with double-digit growth in cage-free and pasture-raised categories, accounting for more than 30% of net sales [14] - Prepared foods delivered $83.9 million in sales, an increase of over 800%, with Echo Lake Foods contributing $70.5 million, representing more than 9% of net sales this quarter [15] Market Data and Key Metrics Changes - The company noted that the conventional egg business continues to provide stability while specialty eggs and prepared foods are increasingly shaping the future of the portfolio [11] - The overall market for eggs remains strong, with eggs being one of the most affordable sources of high-quality protein, purchased by 97% of U.S. households [28][29] Company Strategy and Development Direction - The company aims to expand its specialty and prepared foods segments while leveraging vertical integration and operational excellence to remain a low-cost, reliable supplier [30] - The strategy includes pursuing disciplined M&A to drive mix uplift and geographic expansion, with a focus on higher value categories [30] - Investments in modernization and biosecurity have been significant, with over $80 million spent since 2015 to safeguard flock health [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges posed by high-path avian influenza and emphasized the importance of biosecurity measures [59] - The company anticipates continued growth in specialty and prepared foods, which are expected to improve the quality of earnings and lead to margin expansion [25][30] - Management highlighted the favorable demand environment for eggs, driven by health trends and affordability, positioning the company well for future growth [29][30] Other Important Information - The company ended the quarter with $252 million in cash and equivalents and $1 billion in investments, remaining virtually debt-free [20] - A dividend of $1.37 per share is scheduled for payment on November 13, 2025 [21] Q&A Session Summary Question: Pricing capture relative to industry benchmarks - Management acknowledged some pricing slippage but emphasized the importance of long-term customer relationships and the balance of opportunity and downside protection [36][38] Question: Echo Lake's performance and future revenue growth - Management expressed excitement about Echo Lake's strong performance and indicated that they are on track to exceed initial financial and operational expectations [40][42] Question: Supply situation and layer flock recovery - Management noted that while the USDA reported lower numbers, there are concerns about high-path avian influenza affecting supply, and emphasized the importance of supply stabilization [50][52] Question: Prepared foods and specialty eggs growth - Management confirmed double-digit growth in specialty eggs and indicated ongoing investments in capacity growth for these segments [68][70] Question: Share repurchases and capital allocation strategy - Management stated that share repurchases are an important part of their capital allocation strategy, with a focus on opportunistic purchases [78][81] Question: Competitive landscape for eggs versus other proteins - Management highlighted that eggs remain the most affordable source of protein and are well-positioned to benefit from consumer trends favoring health and affordability [83][86]

Financial Performance - Cal-Maine Foods achieved record first quarter results in FY26, with net sales of $922.6 million, a 17.4% increase year-over-year[5] - Gross profit reached $311.3 million, up 25.9% year-over-year[5] - Operating income increased to $249.2 million, a 33.3% increase year-over-year[5] - Net income rose to $199.3 million, a 32.9% increase year-over-year[5] - Diluted EPS increased to $4.12, a 34.6% increase year-over-year[5] - Net cash flow from operations was $278.6 million, a 137.2% increase year-over-year[5] Strategic Initiatives and Diversification - Specialty Eggs and Prepared Foods grew to nearly 40% of net sales in Q1 FY26[9] - Prepared Foods increased to more than 9% of net sales[9] - Specialty Eggs expanded to nearly 36% of shell egg sales[9] Echo Lake Foods Acquisition - Echo Lake Foods contributed $70.5 million in revenue in Q1 FY26 since the acquisition[16] - A new $15 million investment was approved to expand capacity, add automation, and improve packaging at Echo Lake Foods[17] Shareholder Returns - The company aims to sustain dividends, representing one-third of GAAP net income[19] - Opportunistic share repurchases are planned under a $500 million authorization, with $450 million remaining[19]

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Group 1 - U.S. stock futures are lower, with Dow futures dropping over 200 points [1] - Cal-Maine Foods Inc reported weaker-than-expected first-quarter results, with earnings of $4.12 per share, missing the consensus estimate of $5.35 per share [1] - Quarterly sales for Cal-Maine Foods were $922.602 million, also below the analyst consensus estimate of $960.313 million [1] Group 2 - Cal-Maine Foods shares fell 8.6% to $86.00 in pre-market trading [2] - Etoiles Capital Group Co Ltd shares tumbled 27.1% to $12.32 after a previous gain of 14% [4] - Enanta Pharmaceuticals Inc shares declined 12.1% to $10.50 following the announcement of an upsized public offering [4] - Fortress Biotech Inc shares fell 10.3% to $3.31 after a 5% decline on Tuesday [4] - Tilray Brands Inc shares decreased 7% to $1.61 after a 6% dip on Tuesday [4] - AAR Corp shares dipped 6.7% to $83.60 after announcing a public offering of 3,000,000 shares [4] - Cytokinetics, Inc. shares fell 5.3% to $52.04 in pre-market trading [4] - Quad/Graphics Inc shares declined 4% to $6.01 in pre-market trading [4]

Group 1 - U.S. stock futures are lower, with Dow futures falling more than 200 points [1] - Cal-Maine Foods Inc reported quarterly earnings of $4.12 per share, missing the analyst consensus estimate of $5.35 per share [1] - Cal-Maine Foods' quarterly sales were $922.602 million, also missing the analyst consensus estimate of $960.313 million [1] Group 2 - Cal-Maine Foods shares dipped 8.6% to $86.00 in pre-market trading [2] - Etoiles Capital Group Co Ltd shares tumbled 27.1% to $12.32 in pre-market trading after a previous gain of 14% [4] - Enanta Pharmaceuticals Inc fell 12.1% to $10.50 after announcing the pricing of an upsized public offering of common stock [4] - Fortress Biotech Inc declined 10.3% to $3.31 after a 5% drop on Tuesday [4] - Tilray Brands Inc decreased 7% to $1.61 after a 6% dip on Tuesday [4] - AAR Corp dipped 6.7% to $83.60 following the pricing of a public offering of 3,000,000 shares of common stock [4] - Cytokinetics, Inc. fell 5.3% to $52.04 in pre-market trading [4] - Quad/Graphics Inc declined 4% to $6.01 in pre-market trading [4]

Core Insights - The largest egg producer in the U.S. reported fiscal first-quarter earnings and revenue that fell short of market expectations [1] Financial Performance - The company's earnings for the fiscal first quarter did not meet analysts' forecasts, indicating potential challenges in operational efficiency or market conditions [1] - Revenue figures also missed expectations, suggesting a possible decline in demand or pricing pressures within the egg production sector [1]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides Cal-Maine Foods, Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, acquisitions, investments, and contingencies [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Cal-Maine Foods, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes on accounting policies, acquisitions, and financial details [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | :-------------------- | | Cash and cash equivalents | $251,920 | $499,392 | $(247,472) | | Investment securities | $1,001,475 | $892,708 | $108,767 | | Inventories | $328,429 | $295,670 | $32,759 | | Property, plant & equipment, net | $1,195,545 | $1,026,684 | $168,861 | | Goodwill | $75,815 | $46,776 | $29,039 | | Intangible assets, net | $50,444 | $15,157 | $35,287 | | Total Assets | $3,196,392 | $3,084,619 | $111,773 | | Total current liabilities | $269,951 | $308,371 | $(38,420) | | Total Liabilities | $494,475 | $518,604 | $(24,129) | | Total stockholders' equity | $2,701,917 | $2,566,015 | $135,902 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over a specific period | Metric | Thirteen Weeks Ended August 30, 2025 (in thousands) | Thirteen Weeks Ended August 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :-------------------------------- | :-------------------------------------------------- | :-------------------------------------------------- | :-------------------- | :------------- | | Net sales | $922,602 | $785,871 | $136,731 | 17.4% | | Cost of sales | $611,288 | $538,653 | $72,635 | 13.5% | | Gross profit | $311,314 | $247,218 | $64,096 | 25.9% | | Operating income | $249,184 | $186,957 | $62,227 | 33.3% | | Income before income taxes | $263,265 | $197,953 | $65,312 | 33.0% | | Net income | $199,107 | $149,590 | $49,517 | 33.1% | | Net income attributable to Cal-Maine Foods, Inc. | $199,340 | $149,976 | $49,364 | 32.9% | | Basic EPS | $4.13 | $3.08 | $1.05 | 34.1% | | Diluted EPS | $4.12 | $3.06 | $1.06 | 34.6% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income components, reflecting total non-owner changes in equity | Metric | Thirteen Weeks Ended August 30, 2025 (in thousands) | Thirteen Weeks Ended August 31, 2024 (in thousands) | Change (in thousands) | YoY Change (%) | | :------------------------------------------------ | :-------------------------------------------------- | :-------------------------------------------------- | :-------------------- | :------------- | | Net income | $199,107 | $149,590 | $49,517 | 33.1% | | Other comprehensive income, net of tax | $1,961 | $1,299 | $662 | 50.9% | | Comprehensive income | $201,068 | $150,889 | $50,179 | 33.3% | | Comprehensive income attributable to Cal-Maine Foods, Inc. | $201,301 | $151,275 | $50,026 | 33.1% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Thirteen Weeks Ended August 30, 2025 (in thousands) | Thirteen Weeks Ended August 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------------------------------- | :-------------------------------------------------- | :-------------------- | | Net cash provided by operations | $278,604 | $117,452 | $161,152 | | Net cash used in investing activities | $(409,714) | $(135,871) | $(273,843) | | Net cash used in financing activities | $(114,181) | $(37,792) | $(76,389) | | Net change in cash, cash equivalents and restricted cash | $(245,291) | $(56,211) | $(189,080) | | Cash, cash equivalents and restricted cash at end of period | $254,101 | $181,667 | $72,434 | - The significant increase in cash used in investing activities was primarily due to the acquisition of businesses (**$275.3 million** in 2025 vs **$111.5 million** in 2024) and purchases of investment securities (**$270.3 million** in 2025 vs **$202.2 million** in 2024)[15](index=15&type=chunk) - Payments of dividends increased substantially from **$37.8 million** in the prior year to **$114.2 million** in the current period[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements, covering accounting policies and specific accounts [Note 1 - Summary of Significant Accounting Policies](index=7&type=section&id=Note%201%20-%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - The Company's dividend policy dictates a quarterly dividend equal to **one-third (1/3)** of quarterly net income attributable to Cal-Maine Foods, Inc., subject to cumulative profitability from the most recent dividend payment[20](index=20&type=chunk) - Revenue is recognized upon delivery and acceptance of products by customers, with sales incentives and programs recorded as a reduction in revenue at the time of sale[21](index=21&type=chunk)[22](index=22&type=chunk) - The Company is evaluating the impact of new accounting pronouncements: **ASU 2023-09** (Income Tax Disclosures, effective after Dec 15, 2024) and **ASU 2024-03/2025-01** (Expense Disaggregation Disclosures, effective after Dec 15, 2026)[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2 - Acquisition](index=9&type=section&id=Note%202%20-%20Acquisition) This note details the acquisition of Echo Lake Foods, LLC, including its financial impact and goodwill recognition - Effective June 2, 2025, Cal-Maine Foods acquired Echo Lake Foods, LLC for a cash consideration of **$275.4 million**, expanding its prepared foods business[28](index=28&type=chunk)[29](index=29&type=chunk) | Acquired Asset/Liability | Amount (in thousands) | | :----------------------- | :-------------------- | | Cash | $115 | | Investment securities | $14,147 | | Accounts receivable | $31,923 | | Inventories | $21,601 | | Property, plant & equipment | $151,697 | | Intangible assets | $36,800 | | Accounts payable and other current liabilities | $(13,047) | | Goodwill | $29,039 | - Goodwill of **$29.0 million** from the Echo Lake Foods acquisition is primarily attributable to projected synergies and is deductible for tax purposes[33](index=33&type=chunk) [Note 3 - Investment Securities Available-for-Sale](index=10&type=section&id=Note%203%20-%20Investment%20Securities%20Available-for-Sale) This note provides a breakdown of investment securities, their fair values, and contractual maturities | Security Type | August 30, 2025 Fair Value (in thousands) | May 31, 2025 Fair Value (in thousands) | | :------------------------------ | :---------------------------------------- | :--------------------------------------- | | Municipal bonds | $22,140 | $21,698 | | Commercial paper | $81,504 | $90,830 | | Corporate bonds | $538,393 | $431,508 | | Certificates of deposits | $4,968 | $5,194 | | US government and agency obligations | $245,084 | $240,395 | | Treasury bills | $109,386 | $103,083 | | Total current investment securities | $1,001,475 | $892,708 | | Contractual Maturities (August 30, 2025) | Estimated Fair Value (in thousands) | | :--------------------------------------- | :---------------------------------- | | Within one year | $472,795 | | 1-5 years | $528,680 | | Total | $1,001,475 | [Note 4 - Fair Value Measurements](index=10&type=section&id=Note%204%20-%20Fair%20Value%20Measurements) This note describes the valuation techniques and inputs used for assets and liabilities measured at fair value - All investment securities available-for-sale are classified as **Level 2** in the fair value hierarchy, utilizing observable inputs like yields, credit risks, default rates, and volatility[39](index=39&type=chunk) - Contingent consideration of **$21.5 million** is classified as **Level 3**, representing a potential earnout obligation to Fassio Egg Farms, Inc., valued using a discounted cash flow model with significant judgment in assumptions[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 5 - Inventories](index=12&type=section&id=Note%205%20-%20Inventories) This note details the composition of inventories, including flocks, feed, supplies, raw materials, and finished goods | Inventory Category | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | | :----------------- | :----------------------------- | :-------------------------- | | Flocks, net | $168,968 | $166,507 | | Feed and supplies | $107,165 | $99,188 | | Raw materials and finished goods | $52,296 | $29,975 | | Total Inventories | $328,429 | $295,670 | - The total flock at August 30, 2025, consisted of approximately **11.1 million** pullets and breeders and **48.5 million** layers[41](index=41&type=chunk) [Note 6 - Equity](index=12&type=section&id=Note%206%20-%20Equity) This note outlines changes in stockholders' equity, including retained earnings, comprehensive income, and dividends | Equity Item | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Retained earnings | $2,698,811 | $2,565,928 | | Accumulated other comprehensive income (loss) | $954 | $(1,007) | | Total stockholders' equity | $2,701,917 | $2,566,015 | - Dividends of **$66.5 million** (**$1.371 per share**) were paid for the thirteen weeks ended August 30, 2025, compared to **$49.9 million** (**$1.019 per share**) in the prior year period[42](index=42&type=chunk) [Note 7 - Net Income per Common Share](index=12&type=section&id=Note%207%20-%20Net%20Income%20per%20Common%20Share) This note presents the calculation of basic and diluted earnings per share for the reporting periods | Metric | Thirteen Weeks Ended August 30, 2025 | Thirteen Weeks Ended August 31, 2024 | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Net income attributable to Cal-Maine Foods, Inc. | $199,340 (in thousands) | $149,976 (in thousands) | | Basic EPS | $4.13 | $3.08 | | Diluted EPS | $4.12 | $3.06 | | Weighted-average common shares outstanding, basic | 48,281 (in thousands) | 48,761 (in thousands) | | Weighted-average common shares outstanding, diluted | 48,424 (in thousands) | 48,932 (in thousands) | [Note 8 - Stock Based Compensation](index=13&type=section&id=Note%208%20-%20Stock%20Based%20Compensation) This note details stock-based compensation expense and activity for equity-based awards | Metric | Thirteen Weeks Ended August 30, 2025 | Thirteen Weeks Ended August 31, 2024 | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Total stock-based compensation expense | $1.3 million | $1.1 million | - Unrecognized compensation expense for non-vested equity-based awards was **$8.0 million** as of August 30, 2025, to be recognized over a weighted average period of **2.0 years**[47](index=47&type=chunk) | Equity-Based Award Activity (Thirteen Weeks Ended August 30, 2025) | Number of Shares | Weighted Average Grant Date Fair Value | | :------------------------------------------------- | :--------------- | :------------------------------------- | | Outstanding, May 31, 2025 | 212,717 | $66.93 | | Granted | 13,518 | $101.14 | | Vested | (529) | $54.10 | | Forfeited | (793) | $73.93 | | Outstanding, August 30, 2025 | 224,913 | $68.99 | [Note 9 - Segment Reporting](index=14&type=section&id=Note%209%20-%20Segment%20Reporting) This note describes the company's single reportable segment and provides revenue breakdowns by product and sales channel - The Company operates as a single reportable segment: production, packaging, marketing, and distribution of shell eggs, prepared foods, and egg products[49](index=49&type=chunk) | Product Category | Thirteen Weeks Ended August 30, 2025 (in thousands) | Thirteen Weeks Ended August 31, 2024 (in thousands) | YoY Change (%) | | :----------------- | :-------------------------------------------------- | :-------------------------------------------------- | :------------- | | Conventional shell egg sales | $505,941 | $484,736 | 4.4% | | Specialty shell egg sales | $283,456 | $256,777 | 10.4% | | Prepared foods | $83,936 | $8,938 | 839.1% | | Egg products | $37,107 | $26,237 | 41.4% | | Other | $12,162 | $9,183 | 32.4% | | Total | $922,602 | $785,871 | 17.4% | | Sales Channel | Thirteen Weeks Ended August 30, 2025 (in thousands) | Thirteen Weeks Ended August 31, 2024 (in thousands) | YoY Change (%) | | :-------------- | :-------------------------------------------------- | :-------------------------------------------------- | :------------- | | Retail | $739,787 | $669,709 | 10.5% | | Foodservice | $152,085 | $109,845 | 38.5% | | Other | $30,730 | $6,317 | 386.5% | | Total | $922,602 | $785,871 | 17.4% | [Note 10 - Commitments and Contingencies](index=14&type=section&id=Note%2010%20-%20Commitments%20and%20Contingencies) This note discloses ongoing legal proceedings, antitrust investigations, and potential financial liabilities - The Company received a Civil Investigative Demand from the DOJ and a subpoena from New York State in March and August 2025, respectively, related to antitrust investigations into anticompetitive conduct and high egg prices[53](index=53&type=chunk) - In the Kraft Foods Global, Inc. antitrust case, a jury awarded **$17.8 million** in damages in December 2023, leading to a final judgment of **$43.6 million** (trebled) against the Company and other defendants in November 2024. The Company posted a **$23.9 million** bond and intends to appeal[59](index=59&type=chunk) - In the State of Oklahoma Watershed Pollution Litigation, the court found defendants jointly and severally liable for nuisance and trespass in January 2023. The State is seeking over **$100 million** in total fines, including approximately **$18.2 million** from the Company, but management believes the ultimate loss will be substantially less[64](index=64&type=chunk) [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 discusses the company's financial performance, condition, and strategic priorities for Q1 FY26, including market dynamics, acquisitions, and operational results [COMPANY OVERVIEW](index=17&type=section&id=COMPANY%20OVERVIEW) This section provides an overview of Cal-Maine Foods' business, strategic focus, and market position as the largest U.S. egg company - Cal-Maine Foods is the largest egg company in the U.S., offering a full portfolio from conventional to specialty eggs and prepared foods, with fully integrated operations and the largest flock in the U.S. (**48.5 million** layers, **11.1 million** pullets/breeders as of Aug 30, 2025)[68](index=68&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) - The Company's strategy focuses on expanding specialty eggs and prepared foods, pursuing disciplined growth through acquisitions, and leveraging its scale, vertical integration, operational excellence, and financial strength[72](index=72&type=chunk) - Operating results are materially impacted by volatile market prices for eggs and feed grains; conventional eggs are primarily market-based, while most specialty eggs are sold under non-market-based frameworks[73](index=73&type=chunk)[74](index=74&type=chunk) [HPAI](index=18&type=section&id=HPAI) This section discusses the impact of Highly Pathogenic Avian Influenza on the layer flock and the company's mitigation efforts - In calendar year 2025, an additional **42.4 million** commercial layer hens and pullets were depopulated due to HPAI as of September 30, 2025, following **40.2 million** in 2024[78](index=78&type=chunk) - The estimated U.S. table-egg layer flock as of August 1, 2025, was approximately **296.9 million**, a decrease from **301.9 million** in the prior year[79](index=79&type=chunk) - The Company increased its average number of layer hens by **10%** and total chicks hatched by **77%** in Q1 FY26 YoY, and is investing in expansion projects to add approximately **1.1 million** cage-free layer hens and **250,000** pullets by end of calendar 2025 to mitigate tight egg supply[80](index=80&type=chunk) [CAGE-FREE EGGS](index=19&type=section&id=CAGE-FREE%20EGGS) This section highlights legislative mandates and the company's progress and revenue contribution from cage-free egg sales - Ten states have passed legislation or regulations mandating cage-free egg production or sales, with implementation ranging from January 2022 to January 2030, representing approximately **27%** of the U.S. total population[81](index=81&type=chunk) - Cage-free egg revenue represented approximately **27.3%** of total shell egg revenue for the first quarter of fiscal year 2026, reflecting continued investment in cage-free facilities[82](index=82&type=chunk) [ACQUISITIONS](index=19&type=section&id=ACQUISITIONS) This section details recent acquisitions, including Echo Lake Foods, and their contributions to the company's business expansion - Effective June 2, 2025, the Company acquired Echo Lake Foods, LLC, which contributed **$70.5 million** to prepared foods revenue in Q1 FY26 and expanded its product line and customer base[83](index=83&type=chunk)[84](index=84&type=chunk) - Other recent acquisitions include Deal-Rite Foods, Inc. (feed mills, Q3 FY25), a strategic investment in Crepini LLC (egg products/prepared foods venture, Q2 FY25), full ownership of MeadowCreek Food, LLC (hard-cooked eggs, Q2 FY25), and ISE America, Inc. (shell egg production/processing, Q1 FY25)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [EXECUTIVE OVERVIEW](index=20&type=section&id=EXECUTIVE%20OVERVIEW) This section provides a high-level summary of key financial performance drivers, including gross profit, sales volumes, and production costs - Gross profit for Q1 FY26 increased to **$311.3 million** from **$247.2 million** in Q1 FY25, driven by higher net average selling prices for shell eggs, increased specialty egg volumes, lower feed ingredient prices, and the Echo Lake Foods acquisition[89](index=89&type=chunk) | Metric | Q1 FY26 Average Price per Dozen | Q1 FY25 Average Price per Dozen | YoY Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :------------- | | All shell eggs | $2.486 | $2.392 | 3.9% | | Conventional egg prices | $2.539 | $2.424 | 4.7% | | Specialty egg prices | $2.396 | $2.335 | 2.6% | - Dozens sold increased by **2.5%** in Q1 FY26 compared to Q1 FY25, benefiting from fully operational facilities in Kansas and Texas and full production capacity from the ISE acquisition[91](index=91&type=chunk) | Farm Production Cost per Dozen Produced | Q1 FY26 | Q1 FY25 | YoY Change (%) | | :-------------------------------------- | :------ | :------ | :------------- | | Feed | $0.473 | $0.494 | (4.3)% | | Other | $0.458 | $0.421 | 8.8% | | Total | $0.931 | $0.915 | 1.7% | [RESULTS OF OPERATIONS](index=21&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial results, including net sales, cost of sales, and operating expenses [NET SALES](index=21&type=section&id=NET%20SALES) This section analyzes the company's net sales performance, breaking down revenue by product category and sales channels | Category | Q1 FY26 Net Sales (in thousands) | Q1 FY25 Net Sales (in thousands) | YoY Change (%) | | :---------------- | :------------------------------- | :------------------------------- | :------------- | | Total net sales | $922,602 | $785,871 | 17.4% | | Shell Eggs | $789,397 | $741,513 | 6.5% | | Prepared foods | $83,936 | $8,938 | 839.1% | | Egg products | $37,107 | $26,237 | 41.4% | - Shell egg sales represented **85.6%** of total net sales in Q1 FY26, down from **94.4%** in Q1 FY25, reflecting the growth in prepared foods[98](index=98&type=chunk) - Conventional egg sales increased **4.4%** (**$21.2 million**) due to a **4.7%** price increase, while specialty egg sales increased **10.4%** (**$26.7 million**) due to a **7.5%** volume increase and a **2.6%** price increase[104](index=104&type=chunk) [COST OF SALES](index=23&type=section&id=COST%20OF%20SALES) This section details the components of cost of sales, including farm production, prepared foods, and egg products | Cost of Sales Category | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :--------------------- | :--------------------- | :--------------------- | :------------- | | Total cost of sales | $611,288 | $538,653 | 13.5% | | Farm production | $259,927 | $241,701 | 7.5% | | Prepared foods | $65,214 | $10,115 | 544.7% | | Egg products | $21,406 | $26,677 | (19.8)% | - Feed costs decreased **4.3%** in Q1 FY26 due to lower soybean meal prices, resulting in a **$5.9 million** decrease in cost of sales[109](index=109&type=chunk) - Prepared foods costs increased significantly by **$51.7 million**, primarily due to the acquisition of Echo Lake Foods[109](index=109&type=chunk) [GROSS PROFIT](index=24&type=section&id=GROSS%20PROFITS) This section analyzes the drivers behind changes in gross profit, including pricing, volumes, and feed costs | Metric | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :--------- | :--------------------- | :--------------------- | :------------- | | Gross profit | $311,314 | $247,218 | 25.9% | - The increase in gross profit was primarily due to higher net average selling prices for shell eggs (especially conventional), higher specialty volumes, lower feed ingredient prices, and contributions from Echo Lake Foods[110](index=110&type=chunk) [SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES](index=24&type=section&id=SELLING%2C%20GENERAL%2C%20AND%20ADMINISTRATIVE%20EXPENSES) This section details the components and changes in selling, general, and administrative expenses | Expense Category | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :----------------- | :--------------------- | :--------------------- | :------------- | | Delivery expense | $26,043 | $21,064 | 23.6% | | Marketing expense | $14,462 | $14,352 | 0.8% | | Other general and administrative expenses | $29,009 | $26,516 | 9.4% | | Total SGA expenses | $69,514 | $61,932 | 12.2% | - Delivery expense increased due to higher sales volumes from the Echo Lake Foods acquisition and increased specialty shell egg sales[117](index=117&type=chunk) - Other general and administrative expenses increased primarily due to the acquisition of Echo Lake Foods[117](index=117&type=chunk) [GAIN ON INVOLUNTARY CONVERSION](index=24&type=section&id=GAIN%20ON%20INVOLUNTARY%20CONVERSION) This section reports on gains from business interruption insurance recoveries - The Company recorded a **$7.5 million** gain in Q1 FY26 from business interruption insurance recoveries related to a fiscal 2021 weather event[112](index=112&type=chunk) [OPERATING INCOME](index=24&type=section&id=OPERATING%20INCOME) This section presents the company's operating income and its year-over-year change | Metric | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :------------- | :--------------------- | :--------------------- | :------------- | | Operating income | $249,184 | $187,000 | 33.3% | [OTHER INCOME (EXPENSE)](index=24&type=section&id=OTHER%20INCOME%20(EXPENSE)) This section details other non-operating income and expenses, primarily interest income | Metric | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :------------- | :--------------------- | :--------------------- | :------------- | | Interest income, net | $12,850 | $9,785 | 31.3% | | Total other income, net | $14,081 | $10,996 | 28.1% | - Interest income increased primarily due to higher average cash, cash equivalents, and investment securities balances, coupled with higher yields[115](index=115&type=chunk) [INCOME TAXES](index=24&type=section&id=INCOME%20TAXES) This section presents the company's income tax expense and effective tax rate | Metric | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :------------- | :--------------------- | :--------------------- | :------------- | | Income before income taxes | $263,265 | $197,953 | 33.0% | | Income tax expense | $64,158 | $48,363 | 32.7% | | Effective tax rate | 24.4% | 24.4% | 0.0% | [NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.](index=25&type=section&id=NET%20INCOME%20ATTRIBUTABLE%20TO%20CAL-MAINE%20FOODS%2C%20INC.) This section reports the net income attributable to Cal-Maine Foods, Inc. and corresponding earnings per share | Metric | Q1 FY26 (in thousands) | Q1 FY25 (in thousands) | YoY Change (%) | | :------------- | :--------------------- | :--------------------- | :------------- | | Net income attributable to Cal-Maine Foods, Inc. | $199,340 | $149,976 | 32.9% | | Basic EPS | $4.13 | $3.08 | 34.1% | | Diluted EPS | $4.12 | $3.06 | 34.6% | [LIQUIDITY AND CAPITAL RESOURCES](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's financial liquidity, cash flow activities, and capital expenditure plans | Metric | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | | :------------ | :----------------------------- | :-------------------------- | | Working capital | $1,576,903 | $1,659,739 | | Current ratio | 6.8 | 6.4 | - Net cash provided by operating activities increased to **$278.6 million** in Q1 FY26 from **$117.5 million** in Q1 FY25, driven by increased revenue from shell egg sales and the Echo Lake Foods acquisition[122](index=122&type=chunk) - Net cash used in investing activities significantly increased to **$409.7 million** in Q1 FY26 from **$135.9 million** in Q1 FY25, primarily due to the Echo Lake Foods acquisition (**$275.3 million**) and increased purchases of investment securities[123](index=123&type=chunk) - The Company paid **$114.2 million** in dividends in Q1 FY26, up from **$37.8 million** in Q1 FY25[124](index=124&type=chunk) - The Board approved a **$500 million** share repurchase program in February 2025, with **$450 million** remaining authorization as of Q1 FY26. No shares were repurchased under this program during Q1 FY26[127](index=127&type=chunk)[128](index=128&type=chunk) | Capital Project Type | Projected Completion | Projected Cost (in thousands) | Spent as of Aug 30, 2025 (in thousands) | Remaining Projected Cost (in thousands) | | :------------------- | :------------------- | :---------------------------- | :-------------------------------------- | :-------------------------------------- | | Feed Mills | Fiscal 2026 | $9,800 | $7,386 | $2,414 | | Prepared Foods Expansion | Fiscal 2026 | $14,853 | - | $14,853 | | Egg Products Expansion | Fiscal 2026 | $19,582 | $15,891 | $3,691 | | Cage-Free Layer & Pullet Houses | Fiscal 2026 | $213,107 | $186,976 | $26,131 | | Total | | $257,342 | $210,253 | $47,089 | [Impact of Recently Issued Accounting Standards](index=26&type=section&id=Impact%20of%20Recently%20Issued%20Accounting%20Standards) This section addresses the evaluation of new accounting pronouncements and their potential impact on financial disclosures - The Company refers to Note 1 for information on new accounting pronouncements and policies, including ASU 2023-09 and ASU 2024-03/2025-01, which are currently being evaluated for their impact on financial statement disclosures[132](index=132&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms no changes to the critical accounting estimates previously identified - There have been no changes to the critical accounting estimates identified in the Company's 2025 Annual Report[134](index=134&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the company's market risk exposure were reported for the thirteen weeks ended August 30, 2025 - No material changes in market risk exposure were reported for the thirteen weeks ended **August 30, 2025**[135](index=135&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) The company confirms effective disclosure controls and procedures, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were effective as of **August 30, 2025**, at the reasonable assurance level[136](index=136&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **August 30, 2025**[137](index=137&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=Part%20II.%20Other%20Information) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [ITEM 1. LEGAL PROCEEDINGS](index=28&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 for detailed information on ongoing legal proceedings, including antitrust investigations and litigation - Legal proceedings are discussed in detail in Note 10 of the Condensed Consolidated Financial Statements[139](index=139&type=chunk) [ITEM 1A. RISK FACTORS](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors were reported - No material changes in risk factors were reported from the 2025 Annual Report[140](index=140&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes share repurchases, including shares withheld for tax obligations, and details the remaining authorization under the share repurchase program | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------- | :------------------------------- | :--------------------------- | | 06/01/25 to 06/28/25 | 194 | $98.13 | | 06/29/25 to 07/26/25 | — | — | | 07/27/25 to 08/30/25 | — | — | | Total | 194 | $98.13 | - **194 shares** were withheld to satisfy tax withholding obligations for employees in connection with the vesting of restricted common stock[141](index=141&type=chunk) - As of August 30, 2025, **$450 million** remained authorized under the **$500 million** share repurchase program approved in February 2025[141](index=141&type=chunk)[142](index=142&type=chunk) [ITEM 5. OTHER INFORMATION](index=28&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q1 FY26 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 FY26[143](index=143&type=chunk) [ITEM 6. EXHIBITS](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements, corporate documents, and certifications - The exhibits include the Echo Lake Purchase Agreement, corporate governance documents, CEO/CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL Taxonomy Extension Documents[146](index=146&type=chunk) [Signatures](index=30&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission by the Principal Financial Officer and Principal Accounting Officer - The report is signed by Max P. Bowman, Vice President, Chief Financial Officer, and Matthew S. Glover, Vice President – Accounting, on October 1, 2025[148](index=148&type=chunk)