Cal-Maine Foods Inc: Form 10-Q for the period ended Nov 30, 2024

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

Part I Item 1

of this Quarterly Report on Form 10-Q (“Quarterly Report”).

This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act of 1933

(the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating to our shell egg

and egg products business, including estimated future production data, expected construction schedules, projected construction

costs, potential future supply of and demand for our products, potential future corn and soybean price trends, potential future

impact on our business of the resurgence in United States (“U.S.”) commercial table egg layer flocks of highly pathogenic avian

influenza (“HPAI”), potential future impact on our business of inflation and changing interest rates, potential future impact on

our business of new legislation, rules or policies, potential outcomes of legal proceedings, including loss contingency accruals

and factors that may result in changes in the amounts recorded, and other projected operating data, including anticipated results

of operations and financial condition. Such forward-looking statements are identified by the use of words such as “believes,”

“intends,” “expects,” “hopes,” “may,” “should,” “plans,” “projected,” “contemplates,” “anticipates,” or similar words. Actual

outcomes or results could differ materially from those projected in the forward-looking statements. The forward-looking

statements are based on management’s current intent, belief, expectations, estimates, and projections regarding the Company

and its industry. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions, and

other factors that are difficult to predict and may be beyond our control. The factors that could cause actual results to differ

materially from those projected in the forward-looking statements include, among others, (i) the risk factors set forth in Part I

There have been no material changes in our exposure to market risk during the twenty-six weeks ended November 30, 2024

from the information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2024

Annual Report.

AND

PROCEDURES

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed

by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time

periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include,

without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that

we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive

and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding

required disclosure. Based on an evaluation of our disclosure controls and procedures conducted by our Chief Executive Officer

and Chief Financial Officer, together with other financial officers, such officers concluded that our disclosure controls and

procedures were effective as of November 30, 2024 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended November 30, 2024

that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

elsewhere in this report as well as those included in other reports we file from time to time with the Securities and Exchange

Commission (the “SEC”) (including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and

hazards inherent in the shell egg business (including disease, pests, weather conditions, and potential for product recall),

including but not limited to the current outbreak of HPAI affecting poultry in the U.S., Canada and other countries that was first

detected in commercial flocks in the U.S. in February 2022 and that first impacted our flocks in December 2023, (iii) changes

in the demand for and market prices of shell eggs and feed costs, (iv) our ability to predict and meet demand for cage-free and

other specialty eggs, (v) risks, changes, or obligations that could result from our recent or future acquisition of new flocks or

businesses and risks or changes that may cause conditions to completing a pending acquisition not to be met, (vi) risks relating

to changes in inflation and interest rates, (vii) our ability to retain existing customers, acquire new customers and grow our

product mix, (viii) adverse results in pending litigation matters, and (ix) global instability, including as a result of the war in

Ukraine, the conflicts in Israel and surrounding areas and attacks on shipping in the Red Sea. Readers are cautioned not to place

undue reliance on forward-looking statements because, while we believe the assumptions on which the forward-looking

statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate.

Further, forward-looking statements included herein are only made as of the respective dates thereof, or if no date is stated, as

of the date hereof. Except as otherwise required by law, we disclaim any intent or obligation to update publicly these forward-

looking statements, whether because of new information, future events, or otherwise.

GENERAL

Cal-Maine Foods, Inc. (the “Company,” “we,” “us,” “our”) is primarily engaged in the production, grading, packaging,

marketing and distribution of fresh shell eggs. Our operations are fully integrated and we have one operating and reportable

segment. We are the largest producer and distributor of fresh shell eggs in the U.S. Our total flock of approximately 48.1

million layers and 12.0 million pullets and breeders is the largest in the U.S. We sell our shell eggs and egg products to a

diverse group of customers, including national and regional grocery store chains, club stores, companies servicing independent

supermarkets in the U.S., foodservice distributors and egg product customers throughout the majority of the U.S. and aim to

maintain efficient, state-of-the-art operations located close to our customers.

Our operating results are materially impacted by market prices for eggs and feed grains (corn and soybean meal), which are

highly volatile, independent of each other, and out of our control. Generally, higher market prices for eggs have a positive

impact on our financial results while higher market prices for feed grains have a negative impact on our financial results.

Although we use a variety of pricing mechanisms in pricing agreements with our customers, we sell most of our conventional

shell eggs based on formulas that consider, in varying ways, independently quoted regional wholesale market prices for shell

eggs or formulas related to our costs of production which include the cost of corn and soybean meal. We do not sell eggs

directly to consumers or set the prices at which eggs are sold to consumers.

Retail sales of shell eggs historically have been highest during the fall and winter months and lowest during the summer

months. Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during

the spring and early summer. Historically, shell egg prices tend to increase with the start of the school year and tend to be

highest prior to holiday periods, particularly Thanksgiving, Christmas and Easter. Consequently, and all other things being

equal, we would expect to experience lower selling prices, sales volumes and net income (and may incur net losses) in our first

and fourth fiscal quarters ending in August/September and May/June, respectively. Because of the seasonal and quarterly

fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not

necessarily meaningful comparisons.

We routinely fill our storage bins during harvest season when prices for feed ingredients are generally lower. To ensure

continued availability of feed ingredients, we may enter into contracts for future purchases of corn and soybean meal, and as

part of these contracts, we may lock-in the basis portion of our grain purchases several months in advance. Basis is the

difference between the local cash price for grain and the applicable futures price. A basis contract is a common transaction in

the grain market that allows us to lock-in a basis level for a specific delivery period and wait to set the futures price at a later

date. Furthermore, due to the more limited supply for organic ingredients, we may commit to purchase organic ingredients in

advance to help ensure supply. Ordinarily, we do not enter into long-term contracts beyond a year to purchase corn and soybean

meal or hedge against increases in the prices of corn and soybean meal. Corn and soybean meal are commodities and are

subject to volatile price changes due to weather, various supply and demand factors, transportation and storage costs,

speculators, agricultural, energy and trade policies in the U.S. and internationally, and global instability that could disrupt the

supply chain.

An important competitive advantage for Cal-Maine Foods is our ability to meet our customers’ evolving needs with a favorable

mix of branded and private-label products of conventional and specialty eggs, including cage-free, organic, brown, free-range,

pasture-raised and nutritionally-enhanced eggs as well as egg products.

CAGE-FREE EGGS

Ten states have passed legislation or regulations mandating minimum space or cage-free requirements for egg production or

mandated the sale of only cage-free eggs and egg products in their states, with implementation of these laws ranging from

January 2022 to January 2030. These states represent approximately 27% of the U.S. total population according to the 2020

U.S. Census. California, Massachusetts, Colorado, Oregon, Washington, and Nevada, which collectively represent

approximately 20% of the total estimated U.S. population, have cage-free legislation currently in effect.

A significant number of our customers have announced goals to either exclusively offer cage-free eggs or significantly increase

the volume of cage-free egg sales in the future, subject in most cases to availability of supply, affordability and consumer

demand, among other contingencies. Our customers typically do not commit to long-term purchases of specific quantities or

types of eggs with us, and as a result, it is difficult to accurately predict customer requirements for cage-free eggs. We are

focused on adjusting our cage-free production capacity with a goal of meeting the future needs of our customers in light of

changing state requirements and our customers’ goals. As always, we strive to offer a product mix that aligns with current and

anticipated customer purchase decisions. We are engaging with our customers to help them meet their announced goals and

needs. We have invested significant capital in recent years to acquire and construct cage-free facilities, and we expect our focus

for future expansion will continue to include cage-free facilities. Our volume of cage-free egg sales has continued to increase

and account for a larger share of our product mix. Cage-free egg revenue represented approximately 23.4% of our total shell

egg revenue for the second quarter of fiscal year 2025. At the same time, we understand the importance of our continued ability

to provide conventional eggs in order to provide our customers with a variety of egg choices and to address hunger in our

communities.

For additional information, see the 2024 Annual Report, Part I Item 1, “Business – Specialty Eggs,” “Business – Growth

Strategy” and “Business – Government Regulation,” and the first risk factor in Part I Item 1A, “Risk Factors” under the sub-

heading “Legal and Regulatory Risk Factors.”

ACQUISITIONS

During the first quarter of fiscal 2025, we acquired substantially all the commercial shell egg production, processing and egg

products breaking assets of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial

shell egg production and processing facilities with a capacity at the time of acquisition of approximately 4.7 million laying

hens, including 1.0 million cage-free, and 1.2 million pullets, feed mills, approximately 4,000 acres of land, inventories and an

egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast

and Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. These production

assets are our first in Maryland, New Jersey and Delaware. We believe this acquisition provides us with an opportunity to significantly enhance our market reach in the Northeast and Mid-Atlantic states. See further discussion in

Note 2 – Acquisition

of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

Effective on September 9, 2024, we completed a strategic investment with Crepini LLC, establishing a new egg products and

prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout the United States and Mexico featuring egg

wraps, protein pancakes, crepes, and wrap-ups, which are sold online and in over 3,500 retail stores. The new entity, located in

Hopewell Junction, New York, operates as Crepini Foods LLC (“Crepini”). We capitalized Crepini with approximately $6.75

million in cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the

new venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture.

In fiscal 2022, we announced a strategic investment in a new entity, MeadowCreek Food, LLC (“MeadowCreek”), which

became a majority-owned subsidiary. During March 2023, MeadowCreek began operations with a focus on being a leading

provider of hard-cooked eggs. During second quarter 2025, we acquired the remaining ownership interests in MeadowCreek

and it became a wholly-owned subsidiary.

In second quarter 2024, we acquired the assets of Fassio Egg Farms, Inc. (“Fassio”) related to its commercial shell egg

production and processing business. Fassio owned and operated commercial shell egg production and processing facilities with

a capacity at the time of acquisition of approximately 1.2 million laying hens, primarily cage-free, a feed mill, pullets, a

fertilizer production and composting operation and land located in Erda, Utah, outside Salt Lake City. This acquisition provided

us with an opportunity to expand our market presence in Utah and the western U.S., particularly for cage-free eggs. In fourth

quarter 2024, we acquired a broiler processing plant, hatchery and feed mill in Dexter, Missouri for use in shell egg production.

HPAI

Outbreaks of HPAI have continued to occur in U.S. poultry flocks. In In calendar 2024, 38.4 million commercial layer hens and

1.8 million pullets were depopulated due to HPAI. Approximately 13.6 million commercial layer hens and 500,000 pullets were

depopulated in December 2024 alone.

Our facilities in Kansas and Texas which experienced HPAI in fiscal 2024 are now fully operational.

We remain dedicated to robust biosecurity programs across our locations; however, no farm is immune from HPAI. HPAI is

currently widespread in the wild bird population worldwide. According to the U.S. Centers for Disease Control and Prevention

(“CDC”), as of January 6, 2025, there were outbreaks in 917 herds of dairy cows in 16 states, and in 2024 there were 66 human

cases in the U.S., almost entirely among poultry and dairy workers. However, in 2024, one of the human cases resulted in

severe illness after the patient was exposed to sick and dead birds in backyard flocks. The patient, who was reported to have

underlying health conditions, died in January 2025. There have been no reported cases of person-to-person spread. According

to the CDC, the human health risk to the U.S. public from the HPAI virus is considered to be low. The extent of possible future

outbreaks among U.S. commercial egg layer flocks, with heightened risk during migration seasons, cannot be predicted.

According to the USDA, HPAI cannot be transmitted through safely handled and properly cooked eggs. There is no known risk

related to HPAI associated with eggs that are currently in the market and no eggs have been recalled. For additional

information, see the 2024 Annual Report, Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and

Results of Operations – HPAI.”

EXECUTIVE OVERVIEW

For the second quarter and first two quarters of fiscal 2025, we recorded a gross profit of $356.0 million and $603.3 million,

respectively, compared to $91.1 million and $136.6 million, respectively, for the same periods of fiscal 2024, primarily driven

by an increase in the net average selling price of shell eggs, primarily conventional egg prices, as well as an increase in total

dozens sold, primarily specialty dozens sold. Our results were also positively impacted by lower feed costs and our recent

acquisitions discussed above, partially offset by an increase in the volume and price of outside egg purchases.

Our net average selling price per dozen for the second quarter of fiscal 2025 was $2.740 compared to $1.730 in the prior-year

period. Conventional egg prices per dozen were $2.943 compared to $1.458 for the prior-year period, and specialty egg prices

per dozen were $2.387 compared to $2.277 for the prior-year period. Egg prices in the second quarter of fiscal 2025 were

elevated compared to the prior-year period primarily due to the resurgence of HPAI outbreaks, which decreased supply, among

other factors. According to the USDA, the monthly average size of the layer hen flock from September through November

(which most closely aligns with our second fiscal quarter) 2024 was approximately 310.7 million hens, which was a decrease of

9.7 million layers, or 3.0%, compared to the same period in the prior year. The daily average price for the Urner Barry southeast

large index for the second quarter of fiscal 2025 increased 102.1% from the comparable period in the prior year. For more

information about historical shell egg prices, see Part I Item I of our 2024 Annual Report.

Our dozens sold for the second quarter of fiscal 2025 increased 14.5% compared to the second quarter of fiscal 2024. In

addition to robust demand, we had an increase in production capacity with the acquisitions of the commercial shell egg

production and processing business of ISE during the first quarter of fiscal 2025.

Our farm production costs per dozen produced for the second quarter of fiscal 2025 decreased 8.5%, or $0.08 compared to the

prior year period, primarily due to lower feed costs. Feed costs per dozen produced decreased 12.8%, or $0.07, compared to the

second quarter of fiscal 2024, primarily due to lower feed ingredient prices. For information about historical corn and soybean

meal prices, see Part I Item I of our 2024 Annual Report. Our egg purchases and other cost of sales increased $126.4 million

quarter-over-quarter, primarily due to higher shell egg prices as well as an increase in dozens purchased to supply eggs for our

customers, including those acquired in our ISE acquisition, during the higher seasonal demand cycle while the nation

experienced lower supply due to HPAI.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items from our Condensed Consolidated Statements of Income

expressed as a percentage of net sales.

Thirteen Weeks Ended

Twenty-six Weeks Ended

November 30,

2024

December 2, 2023

November 30,

2024

December 2, 2023

Net sales

100.0

100.0

100.0

100.0

Cost of sales

62.7

82.6

65.3

86.1

Gross profit

37.3

17.4

34.7

13.9

Selling, general and administrative

8.1

14.5

8.0

13.1

(Gain) loss on disposal of fixed assets

0.1

(0.1)

Operating income

29.2

2.8

26.8

0.8

Total other income, net

1.1

1.5

1.3

1.6

Income before income taxes

30.3

4.3

28.1

2.4

Income tax expense

7.4

1.1

6.8

0.6

Net income

22.9

3.2

21.3

1.8

Less: Loss attributable to noncontrolling

interest

(0.1)

(0.1)

(0.1)

(0.1)

Net income attributable to Cal-Maine

Foods, Inc.

23.0

3.3

21.4

1.9

NET SALES

Total net sales for the second quarter of fiscal 2025 were $954.7 million compared to $523.2 million for the same period of

fiscal 2024.

Shell egg sales represented 94.6% and 95.3% of total net sales for the second quarters of fiscal 2025 and 2024, respectively.

The Company’s shell egg offerings, for both branded and private-label products, include specialty and conventional shell eggs.

Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs. Conventional

shell eggs sales represent all other shell egg sales not sold as specialty shell eggs. The Company’s egg products offerings

include liquid and frozen egg products and ready-to-eat products such as hard-cooked eggs, egg wraps, protein pancakes, crepes

and wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.

Total net sales for the twenty-six weeks ended November 30, 2024 were $1.7 billion, compared to $982.6 million for the

comparable period of fiscal 2024.

Shell egg sales represented 94.5% and 94.9% of total net sales for the twenty-six weeks ended November 30, 2024 and

December 2, 2023, respectively.

The table below presents net sales in key categories (in thousands, except percentage data):

Thirteen Weeks Ended

Twenty-six Weeks Ended

November 30, 2024

December 2, 2023

% Change

November 30, 2024

December 2, 2023

% Change

Shell Egg

903,861

498,504

81.3

1,645,374

932,465

76.5

Egg products

40,651

20,012

103.1

75,826

42,235

79.5

Other

10,159

4,718

115.3

19,342

7,878

145.5

Total net sales

954,671

523,234

82.5

1,740,542

982,578

77.1

The table below presents an analysis of our shell egg sales (in thousands, except percentage data):

Thirteen Weeks Ended

Twenty-six Weeks Ended

November 30, 2024

December 2, 2023

November 30, 2024

December 2, 2023

Shell egg sales

Conventional

616,891

68.3

280,599

56.3

1,101,627

67.0

505,879

54.3

Specialty

286,970

31.7

217,905

43.7

543,747

33.0

426,586

45.7

Total shell egg sales

903,861

100.0

498,504

100.0

1,645,374

100.0

932,465

100.0

Dozens sold

Conventional

209,597

63.5

192,462

66.8

409,586

64.0

373,992

66.6

Specialty

120,247

36.5

95,711

33.2

230,237

36.0

187,307

33.4

Total dozens sold

329,844

100.0

288,173

100.0

639,823

100.0

561,299

100.0

Net average selling price per dozen

Conventional

2.943

1.458

2.690

1.353

Specialty

2.387

2.277

2.362

2.277

All shell eggs

2.740

1.730

2.572

1.661

Shell egg sales

Second Quarter – Fiscal 2025 vs. Fiscal 2024

In the second quarter of fiscal 2025, conventional egg sales increased $336.3 million, or 119.8%, compared to the

second quarter of fiscal 2024, primarily due to a 101.9% increase in the prices for conventional eggs, which resulted in

a $311.3 million increase in net sales, and a 8.9% increase in the volume of conventional eggs sold, which resulted in a

$25.0 million increase in net sales. Results for the second quarter of 2025 were positively impacted by our recent

acquisition of ISE.

Specialty egg sales increased $69.1 million, or 31.7%, in the second quarter of fiscal 2025 compared to the second

quarter of fiscal 2024, primarily due to a 25.6% increase in the volume of specialty eggs sold, which resulted in a

$55.9 million increase in net sales and a 4.8% increase in prices for specialty eggs, which resulted in a $13.2 million

increase in net sales.

Demand for specialty eggs increased in the second quarter of fiscal 2025 as conventional egg prices rose. Specialty

dozens sold represented 36.5% of our shell egg dozens sold for the second quarter of fiscal 2025 compared to 33.2%

for the prior-year period. Additionally, demand continues to be impacted by cage-free requirements becoming

effective for Nevada, Oregon and Washington on January 1, 2024.

See “Executive Overview” above for additional discussion.

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

• For the twenty-six weeks ended November 30, 2024, conventional egg sales increased $595.8 million, or 117.8%,

compared to the same period of fiscal 2024, primarily due to the increase in the prices for conventional shell eggs.

Prices for conventional eggs increased 98.8%, which resulted in a $547.6 million increase in net sales. A 9.5%

increase in the volume of conventional eggs sold resulted in a $48.2 million increase in net sales.

Specialty egg sales increased $117.2 million, or 27.5%, for the twenty-six weeks ended November 30, 2024 compared

to the same period in fiscal 2024, primarily due to a 22.9% increase in the volume of specialty eggs sold, which resulted in a $

97.8 million increase in net sales and a 3.7% increase in prices for specialty eggs, which resulted in a

$19.6 million increase in net sales.

Egg products sales

Second Quarter – Fiscal 2025 vs. Fiscal 2024

Egg products sales increased $20.6 million, or 103.1%, for the second quarter of fiscal 2025 compared to the same

period of fiscal 2024, primarily due to a 63.5% increase in liquid eggs pounds sold, which had a $7.9 million positive

impact on net sales, and a 25.2% increase in the net average selling price per pound of liquid eggs, which resulted in a

$5.1 million increase in net sales. Results for the second quarter of 2025 were positively impacted by our recent

acquisition of ISE, which included a breaking facility.

Sales from hard-cooked eggs increased $6.4 million or 212.5% in the second quarter of fiscal 2025 compared to fiscal

2024 as more processing capabilities are coming online from our investments in MeadowCreek and Crepini.

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

• Egg products sales increased $33.6 million, or 79.5%, primarily due to a 39.9% increase in liquid eggs pounds sold,

which had a $10.9 million positive impact on net sales, and a 25.0% increase in the net average selling price per pound

of liquid eggs, which resulted in a $9.5 million increase in net sales.

Sales from hard-cooked eggs increased $12.1 million, or 194.6%, in the first two quarters of fiscal 2025 compared to

the same period in fiscal 2024, primarily for the reasons described above.

Other

Other sales increased compared to the prior year periods primarily due to higher feed sales related to our ISE

acquisition.

COST OF SALES

Cost of sales consists of costs directly related to producing, processing and packing shell eggs, purchases of shell eggs from

outside sources, processing and packing of egg products and other non-egg costs. Farm production costs are those costs

incurred at the egg production facility, including feed, facility (including labor), hen amortization and other related farm

production costs.

The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):

Thirteen Weeks Ended

Twenty-six Weeks Ended

November 30,

2024

December 2,

2023

Change

November 30,

2024

December 2,

2023

Change

Cost of sales

Farm production

258,246

258,367

499,947

511,874

(2.3)

Processing, packaging,

and warehouse

98,823

84,767

16.6

190,534

166,673

14.3

Egg purchases and other

cost of sales

198,030

71,654

176.4

366,479

132,451

176.7

Egg products

43,530

17,316

151.4

80,322

35,017

129.4

Total cost of sales

598,629

432,104

38.5

1,137,282

846,015

34.4

Farm production costs (per

dozen produced)

Feed

0.483

0.554

(12.8)

0.488

0.575

(15.1)

Other

0.418

0.431

(3.0)

0.421

0.435

(3.2)

Total farm production cost

0.901

0.985

(8.5)

0.909

1.010

(10.0)

Outside egg purchases

(average cost per dozen)

3.22

2.03

58.6

3.03

1.84

64.7

Dozens produced

288,036

265,101

8.7

554,875

515,457

7.6

Percent produced to sold

87.3%

92.0%

(5.1)

86.7%

91.8%

(5.6)

Farm Production

Second Quarter – Fiscal 2025 vs. Fiscal 2024

Feed costs per dozen produced decreased 12.8% in the second quarter of fiscal 2025 compared to the second quarter of

fiscal 2024. This decrease was primarily due to lower prices for corn and soybean meal, our primary feed ingredients.

The decrease in feed cost per dozen resulted in a decrease in cost of sales of $20.5 million for the second quarter of

fiscal 2025 compared to the prior period quarter.

For the second quarter of fiscal 2025, the average Chicago Board of Trade (“CBOT”) daily market price was $4.17 per

bushel of corn and $311 per ton of soybean meal, representing decreases of 13.0% and 25.3%, respectively, as

compared to the average CBOT daily market prices for the second quarter of fiscal 2024.

Other farm production costs decreased primarily due to lower flock amortization. Feed costs reached their peak in the

second quarter of fiscal 2023 and have since trended downward. Lower costs result in lower capitalized values of the

flocks during the grow out phase, which reduced amortization cost over time.

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

Feed costs per dozen produced decreased 15.1% in the twenty-six weeks ended November 30, 2024 compared to the

same period of fiscal 2024, primarily due to lower feed ingredient prices. The decrease in feed cost per dozen resulted

in a decrease in cost of sales of $48.3 million compared to the prior year period.

For the year-to-date period, the average CBOT daily market price was $4.10 per bushel of corn and $326 per ton of

soybean meal, representing decreases of 18.8% and 22.4%, respectively, compared to the average CBOT daily market

prices for the comparable period in the prior year.

Other farm production costs decreased due to lower flock amortization, for the reasons described above.

Current indications for corn and soybean project a favorable stocks-to-use ratio near the levels prevailing today for the

remainder of fiscal 2025; however, as long as outside factors remain uncertain (including weather patterns and global supply

chain disruptions), volatility could remain.

Processing, packaging, and warehouse

Second Quarter – Fiscal 2025 vs. Fiscal 2024

Processing, packaging, and warehouse costs increased 16.6% compared to the second quarter of fiscal 2024 due to a

9.7% increase in the volume of processed dozens as well as an increase in costs of packaging materials.

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

Processing, packaging, and warehouse costs increased 14.3% compared to the first two quarters of fiscal 2025,

primarily due an 8.6% increase in the volume of processed dozens as well as an increase in costs of packaging

materials.

Egg purchases and other cost of sales

Second Quarter – Fiscal 2025 vs. Fiscal 2024

Costs in this category increased primarily due to higher shell egg prices as the average cost per dozen of outside egg

purchases increased 58.6% compared to second quarter of fiscal 2024, as well as due to an increase of 80.3% in dozens

purchased. Dozens purchased increased due to purchasing more eggs to supply our customers during the higher

seasonal demand cycle while the nation experienced lower supply due to HPAI.

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

Costs in this category increased primarily due to higher shell egg prices as the average cost per dozen of outside egg

purchases increased 64.7% compared to fiscal 2024, as well as an increase of 73.8% in dozens purchased, primarily

for the reasons described above.

GROSS PROFIT

Gross profit, as a percentage of net sales, was 31.5% for the second quarter of fiscal 2025 compared to 9.9% for the same

period of fiscal 2024. Gross profit for the twenty-six weeks ended November 30, 2024 was $603.3 million compared to $136.6

million for the same period of 2024. The increase was primarily due to higher net average selling price as well as lower feed

ingredient prices, partially offset by the increase in volume and price of outside egg purchases.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general, and administrative (“SGA”) expenses include costs of delivery, marketing, and other general and

administrative expenses. Delivery expense includes contract trucking expense and all costs to maintain and operate our fleet of

trucks to deliver products to customers including the related payroll expenses. Marketing expense includes franchise fees that

are submitted to Eggland’s Best, Inc. (“EB”) to support the EB brand, brokerage and commission fees, and other general

marketing expenses such as payroll expenses for our in-house sales team. Other general and administrative expenses include

corporate payroll related expenses and other general corporate overhead costs. The following table presents an analysis of our

SGA expenses (in thousands):

Thirteen Weeks Ended

November 30, 2024

December 2, 2023

$ Change

% Change

Delivery expense

23,666

17,706

5,960

33.7

Marketing expense

15,074

12,197

2,877

23.6

Litigation loss contingency accrual

19,648

(19,648)

(100.0)

Other general and administrative

expenses

38,893

27,027

11,866

43.9

Total

77,633

76,578

1,055

1.4

Second Quarter – Fiscal 2025 vs. Fiscal 2024

Delivery expense

The increased delivery expense is primarily due to an increase in dozens sold in the second quarter of fiscal 2025

compared to the second quarter of fiscal 2024.

Marketing expense

The increase in marketing expense is primarily due to an increase in franchise fees as specialty egg sales increased

compared to the second quarter of fiscal 2024.

Litigation loss contingency accrual

• In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in

pending anti-trust litigation. See further discussion in

Note 10 - Commitments and Contingencies

of the Notes to

Condensed Consolidated Financial Statements included in this Quarterly Report.

Other general and administrative expense

The increase in other general and administrative expense is primarily due both to an increase in the accrual for

anticipated employee bonuses and to the increased adjustment to the fair value of contingent consideration associated

with the Fassio acquisition. See further discussion in

Note 4 – Fair Value Measurements

of the Notes to Condensed

Consolidated Financial Statements included in this Quarterly Report.

Twenty-six Weeks Ended

November 30, 2024

December 2, 2023

$ Change

% Change

Delivery expense

44,730

35,397

9,333

26.4

Marketing expense

29,426

24,661

4,765

19.3

Litigation loss contingency accrual

19,673

(19,673)

(100.0)

Other general and administrative

expenses

65,409

49,093

16,316

33.2

Total

139,565

128,824

10,741

8.3

Twenty-six weeks – Fiscal 2025 vs. Fiscal 2024

Delivery expense

The increased delivery expense is primarily due to an increase in dozens sold compared to the prior year period.

Marketing expense

The increase in marketing expense is primarily due to an increase in franchise fees as specialty egg sales increased

compared to the prior year period.

Other general and administrative expense

The increase in other general and administrative expense is primarily for the reasons described above, as well as costs

associated with the acquisition of ISE assets that occurred during the first quarter of fiscal 2025.

OPERATING INCOME

For the second quarter of fiscal 2025, we recorded operating income of $278.1 million compared to operating income of $14.2

million for the same period of fiscal 2024.

For the twenty-six weeks ended November 30, 2024, we recorded operating income of $465.0 million compared to operating

income of $7.5 million for the same period of fiscal 2024.

OTHER INCOME (EXPENSE)

Total other income (expense) consists of items not directly charged or related to operations, such as interest income and

expense, equity in income or loss of unconsolidated entities, and patronage income, among other items. Patronage dividends are

paid to us from our membership in the EB cooperative.

For the second quarter of fiscal 2025, we earned $9.9 million of interest income compared to $7.1 million for the same period

of fiscal 2024, primarily due to higher average cash and cash equivalents and investment securities available-for-sale balances and yields. The Company recorded interest expense of $150 thousand and $134 thousand for the second quarters ended

November 30, 2024 and December 2, 2023, respectively.

For the twenty-six weeks ended November 30, 2024, we earned $19.9 million of interest income compared to $14.6 million for

the same period of fiscal 2024, primarily due to higher average cash and cash equivalents and investment securities available-

for-sale balances and yields. The Company recorded interest expense of $310 thousand and $276 thousand for the twenty-six

weeks ended November 30, 2024 and December 2, 2023, respectively.

INCOME TAXES

For the second quarter of fiscal 2025, our pre-tax income was $289.0 million, compared to $22.1 million for the second quarter

of fiscal 2024. Income tax expense of $70.6 million was recorded for second quarter 2025 with an effective tax rate of 24.4%.

For second quarter 2024, income tax expense was $5.5 million with an effective tax rate of 25.0%.

For the twenty-six weeks ended November 30, 2024, pre-tax income was $486.9 million, compared to $22.9 million for the

same period of fiscal 2024. Income tax expense of $119.0 million was recorded for the twenty-six weeks ended November 30,

2024 with an effective tax rate of 24.4%. For the same period of fiscal 2024, income tax expense was $5.9 million with an

effective tax rate of 25.7%.

Items causing our effective tax rate to differ from the federal statutory income tax rate of 21% are state income taxes, certain

federal tax credits and certain items included in income or loss for financial reporting purposes that are not included in taxable

income or loss for income tax purposes, including tax exempt interest income, certain nondeductible expenses, and net income

or loss attributable to noncontrolling interest.

NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.

Net income attributable to Cal-Maine Foods, Inc. for the second quarter ended November 30, 2024 was $219.1 million, or

$4.49 per basic and $4.47 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $17.0

million, or $0.35 per basic and diluted common share, for the same period of fiscal 2024.

Net income attributable to Cal-Maine Foods, Inc. for the twenty-six weeks ended November 30, 2024, was $369.0 million, or

$7.57 per basic and $7.54 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $17.9

million or $0.37 per basic and diluted common share, for the same period of fiscal 2024.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital and Current Ratio

Our working capital was $1.2 billion at November 30, 2024 compared to $1.0 billion at June 1, 2024. The calculation of

working capital is defined as current assets less current liabilities. Our current ratio was 5.5 at November 30, 2024 and June 1,

2024. The current ratio is calculated by dividing current assets by current liabilities.

Cash Flows from Operating Activities

For the twenty-six weeks ended November 30, 2024, $240.2 million in net cash was provided by operating activities, compared

to $73.7 million provided by operating activities for the comparable period in fiscal 2024. The increase in cash flow from

operating activities resulted primarily from higher net average selling prices per dozen, increased volume of sales and a

decrease in feed ingredient costs compared to the prior-year period, partially offset by the increase in volume and price of

outside egg purchases.

Cash Flows from Investing Activities

For the twenty-six weeks ended November 30, 2024, $247.4 million was used in investing activities, primarily due to the

acquisition of assets of ISE, and purchases of property, plant and equipment. This compares to $32.8 million provided by

investing activities in the same period of fiscal 2024, primarily due to sales and maturities of investment securities. Sales and

maturities of investment securities were $426.5 million in the twenty-six weeks ended November 30, 2024 and purchases of

investment securities were $501.6 million during the period. Sales and maturities of investment securities were $196.1 million

in the prior year period while purchases of investment securities were $43.6 million during the period. The increase in sales and

maturities of investment securities is primarily due to the maturities of short-term investments during the first two quarters of fiscal 2025. Purchases of property, plant and equipment were $65.6 million and $65.8 million in the first two quarters of fiscal

2025 and 2024, respectively, primarily reflecting progress on our construction projects.

Cash Flows from Financing Activities

We paid dividends of $87.8 million for the twenty-six weeks ended November 30, 2024 compared to $37.3 million in the same

prior-year period.

As of November 30, 2024, cash decreased $97.6 million since June 1, 2024, compared to an increase of $69.0 million during

the same period of fiscal 2024. The decrease is primarily due to the acquisition of assets of ISE during fiscal 2025.

Credit Facility

On November 15, 2021, we entered into a credit agreement that provides for a senior secured revolving credit facility (the

“Credit Facility”), in an initial aggregate principal amount of up to $250 million with a five-year term. As of November 30,

2024, no amounts were borrowed under the Credit Facility. We have $4.7 million in outstanding standby letters of credit issued

under our Credit Facility for the benefit of certain insurance companies. Refer to Part II Item 8, Notes to Consolidated Financial

Statements and Supplementary Data, Note 10 - Credit Facility included in our 2024 Annual Report for further information

regarding our long-term debt.

Dividends

In accordance with our variable dividend policy, we will pay a cash dividend totaling approximately $73.0 million, or

approximately $1.489 per share, to holders of our Common Stock and Class A Common Stock with respect to our second

quarter of fiscal 2025. The amount paid per share will vary based on the number of outstanding shares on the record date. The

dividend is payable on February 13, 2025 to holders of record on January 29, 2025.

Material Cash Requirements

Material cash requirements for operating activities primarily consist of feed ingredients, processing, packaging and warehouse

costs, employee related costs, and other general operating expenses, which we expect to be paid from our cash from operations

and cash and investment securities on hand for at least the next 12 months. While volatile egg prices and feed ingredient costs,

among other things, make long-term predictions difficult, we have substantial liquid assets and availability under our Credit

Facility to fund future operating requirements.

Our material cash requirements for capital expenditures consist primarily of our construction projects to increase our cage-free

production capacity. We continue to monitor the increasing demand for cage-free eggs and to engage with our customers in

efforts to achieve a smooth transition toward their announced timelines for cage-free egg sales. The following table presents

material construction projects approved as of November 30, 2024 (in thousands):

Project(s) Type

Projected

Completion

Projected Cost

Spent as of

November 30, 2024

Remaining

Projected Cost

Cage-Free Layer & Pullet Houses

Fiscal 2025

83,167

79,340

3,827

Feed Mills

Fiscal 2026

16,593

6,376

10,217

Egg Products Expansion

Fiscal 2026

15,361

15,361

Cage-Free Layer & Pullet Houses

Fiscal 2026

195,996

126,117

69,879

311,117

211,833

99,284

The table reflects approximately $60 million in new capital projects added since the end of first quarter 2025. These projects

include the addition of five new cage-free layer houses and two pullet houses across our locations in Florida, Georgia, Utah and

Texas. We expect the projects to be completed with additional production capacity for approximately 1.1 million cage-free

layer hens and 250 thousand pullets by late summer 2025. We are also investing $15 million to expand our egg products

processing facility in Blackshear, Georgia to add extended shelf-life liquid eggs products.

We expect the processing plant and hatchery that we acquired in fourth quarter 2024 and repurposed for use in shell egg

production to be online in our next fiscal quarter. We have been working with local contract growers and have commitments

that would result in approximately 1.2 million additional free-range hens by fall 2025.

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

Note 1 - Summary of Significant

Accounting Policies

of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

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.