Try our mobile app

Published: 2022-03-29 00:00:00 ET
<<<  go to CALM company page
HTTP/1.1 200 OK HTTP/1.1 200 OK X-Crawlera-Slave: 192.126.239.92:8800 X-Crawlera-Version: 1.60.1 accept-ranges: bytes content-type: text/html last-modified: Tue, 29 Mar 2022 20:07:01 GMT server: AmazonS3 x-amz-id-2: yf7FmD/sa+PQlmxGPHCkO7CfIYDvRzAQh1vaode4Xn3Xpv4oCznHBSfC1+tt5Ki542jt26NmiRc= x-amz-meta-mode: 33188 x-amz-meta-s3cmd-attrs: uid:504/gname:fitrprnt/uname:fitrprnt/gid:504/mode:33184/mtime:1648584411/atime:1648584411/md5:29a7da7b45925df99897f163a62f4899/ctime:1648584413 x-amz-replication-status: COMPLETED x-amz-request-id: 3NR55PZP3R4WEYHB x-amz-version-id: Q7n6nBR6wjNEQaRnzxf.7REGgt6xFQWF x-content-type-options: nosniff x-frame-options: SAMEORIGIN x-xss-protection: 1; mode=block x-akamai-transformed: 9 129235 0 pmb=mTOE,2 expires: Thu, 06 Apr 2023 12:22:39 GMT cache-control: max-age=0, no-cache, no-store pragma: no-cache date: Thu, 06 Apr 2023 12:22:39 GMT vary: Accept-Encoding akamai-x-true-ttl: -1 strict-transport-security: max-age=31536000 ; includeSubDomains ; preload set-cookie: ak_bmsc=F1EF70F9B49D4566DE97FBE02AECAEDE~000000000000000000000000000000~YAAQ1GIjF4fEyEiHAQAA2NaEVhPEu1sBgJS36aBxut/c0lCVzOGrqvsLTwQbc1eis8Vnkmit85/QZra5i8d1x+udCQcyBgmhIAh2y/5zAbSZoDT5kcxjELRNEypK0Ms8M33gk2Tt6wr4ftmUKDZHnbIj+bteJ+BYLdJ1q8hhiq1M5cE+FVIVdWle6T8ZOpyLf+e5Lw6qU0Tfqel40q401IZs5PaE+wbCKJ7ibKfHExG0usy5eYAEu93zn+HdaXw+Rx8448WMjMrBC8CpUNxMEMN9SDGywDNIr2p30d50+oP2XevJ1SqwTGkts571XF0xneGTzoBmehwvRUospsRx6yloWrvntJOCGp0hqJzXpYxIywdlfhvrjMeoKNchtSgBhIpv1c+c/NE=; Domain=.sec.gov; Path=/; Expires=Thu, 06 Apr 2023 14:22:39 GMT; Max-Age=7200; HttpOnly set-cookie: bm_mi=823D0983449406C2D704D8A4C1F0296D~YAAQ1GIjF4jEyEiHAQAA2NaEVhMJDNTWYbQMn3g/zZVJ6fkhNOObxGSIakjx1cAA8bQPvvHC2sHk/iCg20aAbrbrzZJLa205qRQpcbDKEBhdlBPhuMCk9oQQCw9YTcminCFgAXq37Q+abBzM+5luFe80b+WrNTzEpBqcLO7dakLPg0iz3XxmdVS12e2x2EkeVFUHzMpzZyM9Aza878orpSqQzUHcKIGeZqpk4+mjWib1yzxWDOOMB7osB+jSAMqGcsNQ1JtF9u3qengHOdN8excwOqhq2gfCuWXZgCqrlMLFzj9TuN8PsjatgY9bTYs8heXqusPMJ/6FwYOrXzAw1ol9c9S7Imkl+xYJP3khAfWuQdfAYWWFslLnzptwU6AX8JG3~1; Domain=.sec.gov; Path=/; Expires=Thu, 06 Apr 2023 12:22:39 GMT; Max-Age=0; Secure Transfer-Encoding: chunked Proxy-Connection: close Connection: close calm2022q3
FALSE --05-28 2022 0000016160 Q3 0.01 120000 70261 0.01 0.01 4800 4800 4800 P5Y P1M P2M P3M P6M P12M P1M 0.3333 0.3333 0.3333 ☐ ☐ ☐ ☑ 0000016160 2021-05-30 2022-02-26 0000016160 us-gaap:ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember 2020-08-24 2020-08-24 0000016160 us-gaap:PendingLitigationMember calm:StateOfTexasVCalMaineFoodsIncDbaWhartonAndWhartonCountyFoodsLLCMember 2020-04-23 2020-04-23 0000016160 us-gaap:PendingLitigationMember srt:MinimumMember calm:BellEtAlVCalMaineFoodsEtAlMember 2020-04-23 2020-04-23 0000016160 us-gaap:PendingLitigationMember srt:MaximumMember calm:BellEtAlVCalMaineFoodsEtAlMember 2020-04-23 2020-04-23 0000016160 calm:BentonCountyFoodsMember 2022-02-26 0000016160 calm:RedRiverValleyEggFarmLlcMember 2021-05-30 2022-02-26 0000016160 calm:RedRiverValleyEggFarmLlcMember 2022-02-26 0000016160 us-gaap:CommonStockMember 2022-03-29 0000016160 us-gaap:CommonClassAMember 2022-03-29 0000016160 2020-05-31 2021-02-27 0000016160 2022-02-26 0000016160 2021-05-29 0000016160 2021-11-28 2022-02-26 0000016160 calm:NonSpecialtyShellEggSalesMember 2021-11-28 2022-02-26 0000016160 calm:NonSpecialtyShellEggSalesMember 2021-05-30 2022-02-26 0000016160 calm:SpecialtyShellEggSalesMember 2021-11-28 2022-02-26 0000016160 calm:SpecialtyShellEggSalesMember 2021-05-30 2022-02-26 0000016160 calm:EggProductsMember 2021-11-28 2022-02-26 0000016160 calm:EggProductsMember 2021-05-30 2022-02-26 0000016160 calm:OtherMember 2021-11-28 2022-02-26 0000016160 calm:OtherMember 2021-05-30 2022-02-26 0000016160 calm:NonSpecialtyShellEggSalesMember 2020-11-29 2021-02-27 0000016160 calm:NonSpecialtyShellEggSalesMember 2020-05-31 2021-02-27 0000016160 calm:SpecialtyShellEggSalesMember 2020-11-29 2021-02-27 0000016160 calm:SpecialtyShellEggSalesMember 2020-05-31 2021-02-27 0000016160 calm:EggProductsMember 2020-11-29 2021-02-27 0000016160 calm:EggProductsMember 2020-05-31 2021-02-27 0000016160 calm:OtherMember 2020-11-29 2021-02-27 0000016160 calm:OtherMember 2020-05-31 2021-02-27 0000016160 2020-11-29 2021-02-27 0000016160 us-gaap:CommonStockMember 2022-02-26 0000016160 us-gaap:CommonStockMember 2021-05-29 0000016160 us-gaap:CommonClassAMember 2022-02-26 0000016160 us-gaap:CommonClassAMember 2021-05-29 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2021-11-27 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-11-27 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2022-02-26 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-02-26 0000016160 us-gaap:TreasuryStockMember 2021-11-27 0000016160 us-gaap:AdditionalPaidInCapitalMember 2021-11-27 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-11-27 0000016160 us-gaap:RetainedEarningsMember 2021-11-27 0000016160 us-gaap:NoncontrollingInterestMember 2021-11-27 0000016160 us-gaap:TreasuryStockMember 2022-02-26 0000016160 us-gaap:AdditionalPaidInCapitalMember 2022-02-26 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-02-26 0000016160 us-gaap:RetainedEarningsMember 2022-02-26 0000016160 us-gaap:NoncontrollingInterestMember 2022-02-26 0000016160 2021-11-27 0000016160 us-gaap:TreasuryStockMember 2021-11-28 2022-02-26 0000016160 us-gaap:AdditionalPaidInCapitalMember 2021-11-28 2022-02-26 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-11-28 2022-02-26 0000016160 us-gaap:RetainedEarningsMember 2021-11-28 2022-02-26 0000016160 us-gaap:NoncontrollingInterestMember 2021-11-28 2022-02-26 0000016160 us-gaap:TreasuryStockMember 2021-05-29 0000016160 us-gaap:AdditionalPaidInCapitalMember 2021-05-29 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-05-29 0000016160 us-gaap:RetainedEarningsMember 2021-05-29 0000016160 us-gaap:NoncontrollingInterestMember 2021-05-29 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-05-30 2022-02-26 0000016160 us-gaap:TreasuryStockMember 2021-05-30 2022-02-26 0000016160 us-gaap:AdditionalPaidInCapitalMember 2021-05-30 2022-02-26 0000016160 us-gaap:RetainedEarningsMember 2021-05-30 2022-02-26 0000016160 us-gaap:NoncontrollingInterestMember 2021-05-30 2022-02-26 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2021-05-29 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-05-29 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2020-11-28 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-11-28 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2021-02-27 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-02-27 0000016160 us-gaap:TreasuryStockMember 2020-11-28 0000016160 us-gaap:AdditionalPaidInCapitalMember 2020-11-28 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-11-28 0000016160 us-gaap:RetainedEarningsMember 2020-11-28 0000016160 us-gaap:TreasuryStockMember 2021-02-27 0000016160 us-gaap:AdditionalPaidInCapitalMember 2021-02-27 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-02-27 0000016160 us-gaap:RetainedEarningsMember 2021-02-27 0000016160 2020-11-28 0000016160 2021-02-27 0000016160 us-gaap:TreasuryStockMember 2020-11-29 2021-02-27 0000016160 us-gaap:AdditionalPaidInCapitalMember 2020-11-29 2021-02-27 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-11-29 2021-02-27 0000016160 us-gaap:RetainedEarningsMember 2020-11-29 2021-02-27 0000016160 us-gaap:TreasuryStockMember 2020-05-30 0000016160 us-gaap:AdditionalPaidInCapitalMember 2020-05-30 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-05-30 0000016160 us-gaap:RetainedEarningsMember 2020-05-30 0000016160 2020-05-30 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-05-31 2021-02-27 0000016160 us-gaap:TreasuryStockMember 2020-05-31 2021-02-27 0000016160 us-gaap:AdditionalPaidInCapitalMember 2020-05-31 2021-02-27 0000016160 us-gaap:RetainedEarningsMember 2020-05-31 2021-02-27 0000016160 us-gaap:CommonStockMember calm:CommonStockNonConvertibleMember 2020-05-30 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2020-05-30 0000016160 us-gaap:CommonStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember calm:CommonStockNonConvertibleMember 2020-05-30 0000016160 us-gaap:CommonClassAMember us-gaap:CommonStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 us-gaap:TreasuryStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 us-gaap:AdditionalPaidInCapitalMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 us-gaap:AccumulatedOtherComprehensiveIncomeMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2020-05-30 0000016160 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2020-05-30 0000016160 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember us-gaap:RetainedEarningsMember 2020-05-30 0000016160 calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember 2022-02-26 0000016160 us-gaap:StandbyLettersOfCreditMember calm:CreditAgreementMember 2022-02-26 0000016160 calm:CreditAgreementMember calm:SwinglineMember 2022-02-26 0000016160 calm:CreditAgreementMember calm:EurodollarTwelveMonthMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:EurodollarSixMonthMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:EurodollarThreeMonthMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:EurodollarTwoMonthMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:EurodollarOneMonthMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:BaseRateFederalFundsMember 2021-05-30 2022-02-26 0000016160 calm:CreditAgreementMember calm:BaseRateEurodollarMember 2021-05-30 2022-02-26 0000016160 srt:MinimumMember us-gaap:BaseRateMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 srt:MaximumMember us-gaap:BaseRateMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 srt:MinimumMember us-gaap:EurodollarMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 srt:MaximumMember us-gaap:EurodollarMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 srt:MinimumMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 srt:MaximumMember calm:CreditAgreementMember 2021-05-30 2022-02-26 0000016160 us-gaap:MunicipalBondsMember 2022-02-26 0000016160 us-gaap:CommercialPaperMember 2022-02-26 0000016160 us-gaap:CorporateDebtSecuritiesMember 2022-02-26 0000016160 us-gaap:CertificatesOfDepositMember 2022-02-26 0000016160 us-gaap:AssetBackedSecuritiesMember 2022-02-26 0000016160 us-gaap:MutualFundMember 2022-02-26 0000016160 us-gaap:MutualFundMember 2021-05-29 0000016160 us-gaap:MunicipalBondsMember 2021-05-29 0000016160 us-gaap:CommercialPaperMember 2021-05-29 0000016160 us-gaap:CorporateDebtSecuritiesMember 2021-05-29 0000016160 us-gaap:CertificatesOfDepositMember 2021-05-29 0000016160 us-gaap:AssetBackedSecuritiesMember 2021-05-29 0000016160 us-gaap:RetainedEarningsMember srt:RestatementAdjustmentMember 2020-05-30 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:MunicipalBondsMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:MunicipalBondsMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CertificatesOfDepositMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:MutualFundMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:MutualFundMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:MutualFundMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member 2021-05-29 0000016160 us-gaap:FairValueInputsLevel2Member 2021-05-29 0000016160 us-gaap:FairValueInputsLevel3Member 2021-05-29 0000016160 us-gaap:MunicipalBondsMember 2021-05-29 0000016160 us-gaap:CommercialPaperMember 2021-05-29 0000016160 us-gaap:CorporateDebtSecuritiesMember 2021-05-29 0000016160 us-gaap:CertificatesOfDepositMember 2021-05-29 0000016160 us-gaap:AssetBackedSecuritiesMember 2021-05-29 0000016160 us-gaap:MutualFundMember 2021-05-29 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:MunicipalBondsMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:MunicipalBondsMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CorporateDebtSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:CertificatesOfDepositMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:AssetBackedSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:AssetBackedSecuritiesMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member us-gaap:MutualFundMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member us-gaap:MutualFundMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member us-gaap:MutualFundMember 2022-02-26 0000016160 us-gaap:FairValueInputsLevel1Member 2022-02-26 0000016160 us-gaap:FairValueInputsLevel2Member 2022-02-26 0000016160 us-gaap:FairValueInputsLevel3Member 2022-02-26 0000016160 us-gaap:MunicipalBondsMember 2022-02-26 0000016160 us-gaap:CommercialPaperMember 2022-02-26 0000016160 us-gaap:CorporateDebtSecuritiesMember 2022-02-26 0000016160 us-gaap:CertificatesOfDepositMember 2022-02-26 0000016160 us-gaap:AssetBackedSecuritiesMember 2022-02-26 0000016160 us-gaap:MutualFundMember 2022-02-26 0000016160 calm:RedRiverValleyEggFarmLlcMember 2021-05-30 0000016160 srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember 2021-05-30 2021-08-28 0000016160 srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember 2021-08-29 2021-11-27 0000016160 srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember 2021-05-30 2022-02-26 0000016160 us-gaap:CommonStockMember 2021-02-27 0000016160 us-gaap:CommonClassAMember 2021-02-27 0000016160 calm:RedRiverValleyEggFarmLlcMember 2021-05-30 2021-05-30 0000016160 calm:RedRiverValleyEggFarmLlcMember 2021-05-29 utr:acre iso4217:USD xbrli:pure xbrli:shares iso4217:USD xbrli:shares dummy:Layers dummy:pullet_and_breeder
 
 
 
1
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
(State or other jurisdiction of incorporation or organization)
 
(I.R.S Employer Identification No.)
1052 Highland Colony Pkwy
,
Suite 200
,
Ridgeland
,
Mississippi
 
39157
 
(Address of principal executive offices)
 
(Zip Code)
(
601
)
948-6813
 
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
CALM
The
NASDAQ
 
Global Select Market
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant:
 
(1)
 
has
 
filed
 
all
 
reports
 
required
 
to
 
be
 
filed
 
by
 
Section
 
13
 
or
 
15(d)
 
of
 
the
Securities Exchange Act of
 
1934 during the
 
preceding 12 months (or
 
for such shorter period
 
that the registrant was
 
required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
 
No
☐
Indicate by check mark
 
whether the registrant has
 
submitted electronically every Interactive Data
 
File required to be
 
submitted
pursuant to
 
Rule 405 of
 
Regulation S-T (§232.405
 
of this
 
chapter) during
 
the preceding
 
12 months
 
(or for
 
such shorter period
that the registrant was required to submit such files).
Yes
☑
 
No
☐
Indicate by check
 
mark whether the
 
registrant is a
 
large accelerated filer,
 
an accelerated filer,
 
a non-accelerated filer,
 
a smaller
reporting
 
company,
 
or
 
an
 
emerging
 
growth
 
company.
 
See
 
the
 
definitions
 
of
 
“large
 
accelerated
 
filer,”
 
“accelerated
 
filer”,
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer
☑
Accelerated filer
 
☐
Non – Accelerated filer
 
☐
Smaller reporting company
 
☐
Emerging growth company
 
☐
If
 
an
 
emerging
 
growth
 
company,
 
indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
has
 
elected
 
not
 
to
 
use
 
the
 
extended
transition
 
period
 
for
 
complying
 
with
 
any
 
new
 
or
 
revised
 
financial
 
accounting
 
standards
 
provided
 
pursuant
 
to
Section 13(a) of the Exchange Act
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
 
No
☑
There were
44,140,283
 
shares of Common
 
Stock, $0.01 par
 
value, and
4,800,000
 
shares of Class
 
A Common Stock,
 
$0.01 par
value, outstanding as of March 29, 2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3
PART
 
I.
 
FINANCIAL
INFORMATION
ITEM 1.
 
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except for par value amounts)
 
 
February 26, 2022
May 29, 2021
Assets
Current assets:
Cash and cash equivalents
$
15,589
$
57,352
Investment securities available-for-sale
81,125
112,158
Trade and other receivables, net
138,654
84,123
Income tax receivable
41,383
42,516
Inventories
240,087
218,375
Prepaid expenses and other current assets
5,872
5,407
Total current assets
522,710
519,931
Property, plant & equipment, net
671,373
589,417
Finance lease right-of-use asset, net
409
525
Operating lease right-of-use asset, net
1,168
1,724
Investments in unconsolidated entities
15,794
54,941
Goodwill
44,006
35,525
Intangible assets, net
18,686
20,341
Other long-term assets
7,849
6,770
Total Assets
$
1,281,995
$
1,229,174
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
120,665
$
89,191
Current portion of finance lease obligation
222
215
Current portion of operating lease obligation
486
691
Total current liabilities
121,373
90,097
Long-term finance lease obligation
271
438
Long-term operating lease obligation
682
1,034
Other noncurrent liabilities
10,673
10,416
Deferred income taxes, net
118,753
114,408
Total liabilities
251,752
216,393
Commitments and contingencies - see Note 13
—
—
Stockholders’ equity:
Common stock ($
0.01
 
par value):
Common stock - authorized
120,000
 
shares, issued
70,261
 
shares
703
703
Class A convertible common stock - authorized and issued
4,800
 
shares
48
48
Paid-in capital
66,909
64,044
Retained earnings
992,523
975,977
Accumulated other comprehensive loss, net of tax
(1,413)
(558)
Common stock in treasury at cost –
26,121
 
shares at February 26, 2022 and
26,202
shares at May 29, 2021
(28,439)
(27,433)
Total Cal-Maine Foods, Inc. stockholders’ equity
1,030,331
1,012,781
Noncontrolling interest in consolidated entity
(88)
—
Total stockholders’ equity
1,030,243
1,012,781
Total Liabilities and Stockholders’ Equity
$
1,281,995
$
1,229,174
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
 
 
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Net sales
$
477,485
$
359,080
$
1,184,195
$
999,189
Cost of sales
385,903
311,563
1,042,221
876,457
Gross profit
91,582
47,517
141,974
122,732
Selling, general and administrative
52,686
47,656
146,991
135,494
(Gain) loss on disposal of fixed assets
(674)
354
(2,855)
476
Operating income (loss)
39,570
(493)
(2,162)
(13,238)
Other income (expense):
Interest income, net
79
591
440
2,181
Royalty income
326
321
877
906
Patronage dividends
10,120
9,004
10,120
9,004
Equity income of unconsolidated entities
1,809
1,872
2,208
1,886
Other, net
1,144
537
8,169
1,485
Total other income, net
13,478
12,325
21,814
15,462
Income before income taxes
53,048
11,832
19,652
2,224
Income tax expense (benefit)
13,594
(1,716)
(2,921)
(4,080)
Net income
39,454
13,548
22,573
6,304
Less: Loss attributable to noncontrolling interest
(63)
—
(91)
—
Net income attributable to Cal-Maine Foods, Inc.
$
39,517
$
13,548
$
22,664
$
6,304
Net income per common share:
Basic
$
0.81
$
0.28
$
0.46
$
0.13
Diluted
$
0.81
$
0.28
$
0.46
$
0.13
Weighted average shares outstanding:
Basic
48,886
48,530
48,888
48,511
Diluted
49,036
48,659
49,035
48,649
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income
(in thousands)
(unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Net income
$
39,454
 
$
13,548
 
$
22,573
 
$
6,304
Other comprehensive income (loss), before tax:
Unrealized holding loss on available-for-sale
securities, net of reclassification adjustments
(551)
(378)
(1,130)
(283)
Income tax benefit related to items of other
comprehensive income
134
92
275
69
Other comprehensive loss, net of tax
(417)
(286)
(855)
(214)
Comprehensive income
39,037
13,262
21,718
6,090
Less: Comprehensive loss attributable to the
noncontrolling interest
(63)
—
(91)
—
Comprehensive income attributable to Cal-Maine
Foods, Inc.
$
39,100
$
13,262
$
21,809
$
6,090
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
Cash flows from operating activities:
Net income
$
22,573
$
6,304
Depreciation and amortization
50,996
44,391
Deferred income taxes
(3,861)
9,970
Other adjustments, net
(48,884)
(45,936)
Net cash provided by operations
20,824
14,729
Cash flows from investing activities:
Purchases of investment securities
(47,135)
(59,415)
Sales and maturities of investment securities
76,377
85,202
Investment in unconsolidated entities
(3,000)
—
Distributions from unconsolidated entities
400
5,813
Acquisition of business, net of cash acquired
(44,823)
—
Purchases of property, plant and equipment
(49,170)
(73,796)
Net proceeds from disposal of property, plant and equipment
6,041
3,273
Net cash used in investing activities
(61,310)
(38,923)
Cash flows from financing activities:
Purchase of common stock by treasury
(1,120)
(871)
Principal payments on finance lease
(160)
(153)
Contributions
3
5
Net cash used in financing activities
(1,277)
(1,019)
Net change in cash and cash equivalents
(41,763)
(25,213)
Cash and cash equivalents at beginning of period
57,352
78,130
Cash and cash equivalents at end of period
$
15,589
$
52,917
Supplemental Information:
Cash paid for operating leases
$
625
$
703
Interest paid
$
230
$
193
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
 
unaudited
 
condensed
 
consolidated
 
financial
 
statements
 
of
 
Cal-Maine
 
Foods,
 
Inc.
 
and
 
its
 
subsidiaries
 
(the
 
"Company,"
"we,"
 
"us,"
 
"our")
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
the
 
instructions
 
to
 
Form
 
10-Q
 
and
 
Article
 
10
 
of
 
Regulation
 
S-X.
Therefore, they do
 
not include all
 
of the information
 
and footnotes required
 
by generally accepted
 
accounting principles in
 
the
United
 
States
 
of
 
America
 
("GAAP")
 
for
 
complete
 
financial
 
statements
 
and
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
our
 
Annual
Report
 
on
 
Form
 
10-K
 
for
 
the
 
fiscal
 
year
 
ended
 
May
 
29,
 
2021
 
(the
 
"2021
 
Annual
 
Report").
 
These
 
statements
 
reflect
 
all
adjustments that are, in the opinion of management, necessary to a fair
 
statement of the results for the interim periods presented
and,
 
in
 
the
 
opinion
 
of
 
management,
 
consist
 
of
 
adjustments
 
of
 
a
 
normal
 
recurring
 
nature.
 
Operating
 
results
 
for
 
the
 
interim
periods are not necessarily indicative of operating results for the entire fiscal year.
Fiscal Year
The Company's
 
fiscal year
 
ends on
 
the Saturday
 
closest to
 
May 31.
 
Each of
 
the three-month
 
periods and
 
year-to-date periods
ended on February 26, 2022 and February 27, 2021 included 13 weeks and 39 weeks, respectively
.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make
 
estimates and
assumptions that
 
affect the
 
amounts reported
 
in the
 
consolidated financial
 
statements and
 
accompanying notes.
 
Actual results
could differ from those estimates.
The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly
changing
 
and
 
difficult
 
to
 
predict.
 
Therefore,
 
our
 
accounting
 
estimates
 
and
 
assumptions
 
might
 
change
 
materially
 
in
 
future
periods in response to COVID-19.
Investment Securities
Our investment
 
securities are
 
accounted for
 
in accordance
 
with ASC
 
320, “Investments
 
- Debt
 
and Equity
 
Securities” (“ASC
320”).
 
The
 
Company
 
considers
 
all
 
its
 
debt
 
securities
 
for
 
which
 
there
 
is
 
a
 
determinable
 
fair
 
market
 
value,
 
and
 
there
 
are
 
no
restrictions
 
on
 
the
 
Company's
 
ability
 
to
 
sell
 
within
 
the
 
next
 
12
 
months,
 
as
 
available-for-sale.
 
We
 
classify
 
these
 
securities
 
as
current, because the amounts invested are available for
 
current operations. Available-for-sale
 
securities are carried at fair value,
with unrealized
 
gains and
 
losses reported
 
as a
 
separate component
 
of stockholders’
 
equity.
 
The Company
 
regularly evaluates
changes to the
 
rating of its
 
debt securities by credit
 
agencies and economic conditions
 
to assess and
 
record any expected credit
losses through the
 
allowance for credit
 
losses, limited to
 
the amount that
 
fair value was
 
less than the
 
amortized cost basis.
 
The
cost
 
basis
 
for
 
realized
 
gains
 
and
 
losses
 
on
 
available-for-sale
 
securities
 
is
 
determined
 
by
 
the
 
specific
 
identification
 
method.
Gains and losses are recognized in other income (expenses) as Other, net in the Company's Condensed Consolidated Statements
of Income.
 
Investments in
 
mutual funds
 
are classified
 
as “Other
 
long-term assets”
 
in the
 
Company’s
 
Condensed Consolidated
Balance Sheets.
Trade Receivables
 
Trade
 
receivables are
 
stated at
 
their carrying
 
values, which
 
include a
 
reserve for
 
credit losses.
 
At February
 
26, 2022
 
and May
29,
 
2021,
 
reserves
 
for
 
credit
 
losses
 
were
 
$
725
 
thousand
 
and
 
$
795
 
thousand,
 
respectively.
 
The
 
Company
 
extends
 
credit
 
to
customers based on an
 
evaluation of each customer's financial
 
condition and credit history.
 
Collateral is generally not required.
The
 
Company
 
minimizes
 
exposure
 
to
 
counter
 
party
 
credit
 
risk
 
through
 
credit
 
analysis
 
and
 
approvals,
 
credit
 
limits,
 
and
monitoring
 
procedures.
 
In
 
determining
 
our
 
reserve
 
for
 
credit
 
losses,
 
receivables
 
are
 
assigned
 
an
 
expected
 
loss
 
based
 
on
historical loss information adjusted as needed for economic and other forward-looking factors.
Business Combinations
The
 
Company applies
 
fair value
 
accounting guidance
 
to measure
 
non-financial assets
 
and
 
liabilities associated
 
with business
acquisitions. These
 
assets and
 
liabilities are
 
measured at
 
fair value
 
for
 
the initial
 
purchase price
 
allocation.
 
The fair
 
value of
8
non-financial assets acquired is determined internally. Our internal valuation methodology for non-financial assets considers the
remaining estimated life of the assets acquired and what management believes is the market value for those assets.
Change in Accounting Principle
Effective
 
May
 
31,
 
2020,
 
the
 
Company
 
adopted
 
ASU
 
2016-13,
 
Financial
 
Instruments
 
–
 
Credit
 
Losses
 
(Topic
 
326),
 
which
 
is
intended
 
to
 
improve
 
financial
 
reporting
 
by
 
requiring
 
more
 
timely
 
recording
 
of
 
credit
 
losses
 
on
 
loans
 
and
 
other
 
financial
instruments held by financial institutions and other organizations. The guidance replaces the prior “incurred loss” approach with
an “expected
 
loss” model and
 
requires measurement of
 
all expected credit
 
losses for
 
financial assets held
 
at the
 
reporting date
based
 
on
 
historical
 
experience,
 
current
 
conditions,
 
and
 
reasonable
 
and
 
supportable
 
forecasts.
 
The
 
Company
 
adopted
 
the
guidance on
 
a modified
 
retrospective basis
 
through a
 
cumulative effect
 
adjustment to
 
retained earnings
 
as of
 
the beginning
 
of
the period of
 
adoption. The Company evaluated
 
its current methodology of
 
estimating allowance for doubtful
 
accounts and the
risk
 
profile
 
of
 
its
 
receivables
 
portfolio
 
and
 
developed
 
a
 
model
 
that
 
includes
 
the
 
qualitative
 
and
 
forecasting
 
aspects
 
of
 
the
“expected
 
loss”
 
model
 
under
 
the
 
amended
 
guidance.
 
The
 
Company
 
finalized
 
its
 
assessment
 
of
 
the
 
impact
 
of
 
the
 
amended
guidance and recorded a $
422
 
thousand cumulative increase to retained earnings at May 31, 2020.
Immaterial Error Correction
Effective
 
on
 
May
 
30,
 
2021,
 
the
 
Company
 
acquired
 
the
 
remaining
50
%
 
membership
 
interest
 
in
 
Red
 
River
 
Valley
 
Egg
 
Farm,
LLC (“Red
 
River”), including
 
certain liabilities.
 
During the
 
Company’s
 
third quarter
 
of fiscal
 
2022, management
 
determined
that
 
it
 
had
 
not
 
properly
 
eliminated
 
select
 
intercompany
 
sales
 
and
 
cost
 
of
 
sales
 
transactions
 
between
 
Red
 
River
 
and
 
the
corresponding other
 
wholly-owned subsidiaries
 
of the
 
Company in
 
its first
 
and second
 
quarter 2022
 
Condensed Consolidated
Statements of Income. The errors resulted in
 
an overstatement of Net Sales and Cost
 
of Sales of $
6.7
 
million in the first quarter
of
 
fiscal
 
2022
 
and
 
$
9.2
 
million
 
in
 
the
 
second
 
quarter
 
of
 
fiscal
 
2022.
 
There
 
was
no
 
impact
 
to
 
Operating
 
income
 
(loss),
 
Net
income (loss) or Net income (loss) per share.
 
We
 
evaluated
 
the
 
errors
 
quantitatively
 
and
 
qualitatively
 
in
 
accordance
 
with
 
Staff
 
Accounting
 
Bulletin
("SAB") No. 99 Materiality, and
 
SAB No. 108 Considering
 
the
 
Effects
 
of
 
Prior
 
Year
 
Misstatements
 
when
 
Quantifying
Misstatements
 
in
 
the
 
Current
 
Year
 
Financial
 
Statements, and
 
determined
 
that
 
the
 
related
 
impact
 
was not material
 
to
 
our
condensed consolidated
 
financial statements
 
for the
 
first or
 
second quarters
 
of fiscal
 
2022, but
 
that correcting
 
the cumulative
impact
 
of
 
the
 
errors
 
would
 
be
 
relevant
 
to
 
our
 
Condensed
 
Consolidated
 
Statements
 
of
 
Income
 
for
 
the third
 
quarter
ended February 26, 2022. Accordingly, we have reflected the correction of the immaterial errors as a reduction of Net Sales and
Cost of Sales in the accompanying Condensed Consolidated Statements of Income for the thirty-nine weeks ended February 26,
2022.
 
 
Note 2 – Acquisition
Effective
 
on
 
May
 
30,
 
2021,
 
the
 
Company
 
acquired
 
the
 
remaining
50
%
 
membership
 
interest
 
in
 
Red
 
River
 
Valley
 
Egg
 
Farm,
LLC (“Red River”),
 
including certain liabilities. As a result of the
 
acquisition, Red River became a wholly owned
 
subsidiary of
the Company.
 
Red River owns and operates
 
a specialty shell egg production
 
complex with approximately
1.7
 
million cage-free
laying
 
hens,
 
cage-free
 
pullet
 
capacity,
 
feed
 
mill,
 
processing
 
plant,
 
related
 
offices
 
and
 
outbuildings
 
and
 
related
 
equipment
located on approximately
400
 
acres near Bogata, Texas.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
The
 
following
 
table
 
summarizes
 
the
 
consideration
 
paid
 
for
 
Red
 
River
 
and
 
the
 
amounts
 
of
 
the
 
assets
 
acquired
 
and
 
liabilities
assumed recognized at the acquisition date:
Cash consideration paid
$
48,500
Fair value of the Company's equity interest in Red River held before the business combination
48,500
$
97,000
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash
$
3,677
Accounts receivable, net
1,980
Inventory
8,789
Property, plant and equipment
85,002
Liabilities assumed
(2,448)
Deferred income taxes
(8,481)
Total identifiable net assets
88,519
Goodwill
8,481
$
97,000
Cash and
 
accounts receivable
 
acquired along
 
with liabilities
 
assumed were
 
valued at
 
their carrying
 
value which
 
approximates
fair value due to the short maturity of these instruments.
Inventory consisted primarily
 
of flock, feed
 
ingredients, packaging, and
 
egg inventory.
 
Flock inventory was
 
valued at carrying
value as management believes that their carrying value
 
best approximates their fair value.
 
Feed ingredients, packaging and egg
inventory were all valued based on market prices as of May 30, 2021.
 
Property,
 
plant and
 
equipment were valued
 
utilizing the
 
cost approach which
 
is based on
 
replacement or reproduction
 
costs of
the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.
The Company
 
recognized a
 
gain of
 
$
4.5
 
million as
 
a result
 
of remeasuring
 
to fair
 
value its
50
% equity
 
interest in
 
Red River
held before the business combination. The gain was recorded in other income and expense under the heading “Other, net” in the
Company’s
 
Condensed Consolidated
 
Statements of
 
Income. The
 
acquisition of
 
Red River
 
resulted in
 
a discrete
 
tax benefit
 
of
$
8.3
 
million, which
 
includes a
 
$
7.3
 
million decrease
 
in deferred
 
income tax
 
expense related
 
to the
 
outside-basis of
 
our equity
investment
 
in
 
Red
 
River,
 
with
 
a
 
corresponding
 
non-recurring,
 
non-cash
 
$
954,000
 
reduction
 
to
 
income
 
taxes
 
expense
 
on
 
the
non-taxable
 
remeasurement
 
gain
 
associated
 
with
 
the
 
acquisition.
 
As
 
part
 
of
 
the
 
acquisition
 
accounting,
 
the
 
Company
 
also
recorded
 
an
 
$
8.5
 
million
 
deferred
 
tax
 
liability
 
for
 
the
 
difference
 
in
 
the
 
inside-basis
 
of
 
the
 
acquired
 
assets
 
and
 
liabilities
assumed. The recognition
 
of deferred tax
 
liabilities resulted in
 
the recognition of
 
goodwill. None of
 
the goodwill recognized is
expected to be deductible for income tax purposes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
Note 3 - Investment
Securities
The following represents the Company’s investment securities as of February 26, 2022 and May 29, 2021 (in thousands):
February 26, 2022
Amortized
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
514
$
—
$
3
$
511
Commercial paper
9,980
—
23
9,957
Corporate bonds
61,634
—
344
61,290
Certificates of deposits
1,268
—
12
1,256
Asset backed securities
8,205
—
94
8,111
Total current investment securities
$
81,601
$
—
$
476
$
81,125
Mutual funds
$
2,967
$
—
$
53
$
2,914
Total noncurrent investment securities
$
2,967
$
—
$
53
$
2,914
May 29, 2021
Amortized
 
Cost
Unrealized
 
Gains
Unrealized
Losses
Estimated
 
Fair Value
Municipal bonds
$
16,424
$
56
$
—
$
16,480
Commercial paper
1,998
—
—
1,998
Corporate bonds
80,092
608
—
80,700
Certificates of deposits
1,077
—
1
1,076
Asset backed securities
11,914
—
10
11,904
Total current investment securities
$
111,505
$
664
$
11
$
112,158
Mutual funds
$
2,306
$
1,810
$
—
$
4,116
Total noncurrent investment securities
$
2,306
$
1,810
$
—
$
4,116
Available-for-sale
Proceeds from
 
sales and
 
maturities of
 
investment securities available-for-sale
 
were $
76.4
 
million and
 
$
85.2
 
million during
 
the
thirty-nine weeks ended February
 
26, 2022 and
 
February 27, 2021,
 
respectively.
 
Gross realized gains
 
for the thirty-nine
 
weeks
ended February 26, 2022 and February 27, 2021 were $
181
 
thousand and $
116
 
thousand, respectively. Gross realized losses for
the thirty-nine weeks ended February 26, 2022 and February 27, 2021 were $
67
 
thousand and $
17
 
thousand, respectively. There
were
no
 
allowances for credit losses at February 26, 2022 and May 29, 2021.
Actual maturities may differ
 
from contractual maturities as
 
some borrowers have
 
the right to
 
call or prepay
 
obligations with or
without penalties. Contractual maturities of current investments at February 26, 2022 are as follows (in thousands):
Estimated Fair Value
Within one year
$
52,391
1-5 years
28,734
Total
$
81,125
Noncurrent
 
Proceeds
 
from
 
sales
 
and
 
maturities
 
of
 
noncurrent
 
investment
 
securities
 
were
 
$
4.9
 
million
 
during
 
the
 
thirty-nine
 
weeks
ended February
 
26,
 
2022.
 
Gross
 
realized
 
gains
 
for
 
the
 
thirty-nine
 
weeks
 
ended February
 
26,
 
2022
 
were
 
$
2.2
 
million. There
were
 
no
 
realized
 
losses
 
for
 
the
 
thirty-nine
 
weeks
 
ended February
 
26,
 
2022.
 
There
 
were
no
 
sales
 
of
 
noncurrent
 
investment
securities during the thirty-nine weeks ended February 27, 2021.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11
Note 4 - Fair Value Measurements
The Company
 
is required
 
to categorize
 
both financial
 
and nonfinancial
 
assets and
 
liabilities based
 
on the
 
following fair
 
value
hierarchy. The
 
fair value
 
of an
 
asset is
 
the price
 
at which
 
the asset
 
could be
 
sold in
 
an orderly
 
transaction between
 
unrelated,
knowledgeable, and willing parties able to engage in the
 
transaction. A liability’s fair value
 
is defined as the amount that would
be paid
 
to transfer
 
the liability
 
to a
 
new obligor
 
in a
 
transaction between
 
such parties,
 
not
 
the amount
 
that would
 
be paid
 
to
settle the liability with the creditor.
•
Level 1
 
- Quoted prices in active markets for identical assets or liabilities
•
Level 2
 
- Inputs
 
other than
 
quoted prices
 
included in
 
Level 1
 
that are
 
observable for
 
the asset
 
or liability,
 
either
directly or indirectly, including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market data
•
Level 3
 
- Unobservable inputs for the asset or liability that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
 
The carrying amount approximates fair value due to the
short maturity of these instruments.
Lease obligations:
 
The carrying value of the Company’s lease obligations is at its present value which approximates fair value.
Assets and Liabilities Measured at Fair Value
 
on a Recurring Basis
In
 
accordance with
 
the
 
fair value
 
hierarchy described
 
above, the
 
following
 
table shows
 
the
 
fair value
 
of
 
financial assets
 
and
liabilities measured at fair value on a recurring basis as of February 26, 2022 and May 29, 2021 (in thousands):
February 26, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
511
$
—
$
511
Commercial paper
—
9,957
—
9,957
Corporate bonds
—
61,290
—
61,290
Certificates of deposits
—
1,256
—
1,256
Asset backed securities
—
8,111
—
8,111
Mutual funds
2,914
—
—
2,914
Total assets measured at fair value
$
2,914
$
81,125
$
—
$
84,039
May 29, 2021
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
16,480
$
—
$
16,480
Commercial paper
—
1,998
—
1,998
Corporate bonds
—
80,700
—
80,700
Certificates of deposits
—
1,076
—
1,076
Asset backed securities
—
11,904
—
11,904
Mutual funds
4,116
—
—
4,116
Total assets measured at fair value
$
4,116
$
112,158
$
—
$
116,274
Investment securities
 
–
 
available-for-sale
 
classified as
 
Level 2
 
consist of
 
securities with
 
maturities of
 
three months
 
or longer
when purchased. We
 
classified these securities as current because amounts invested are readily available
 
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Note 5 - Inventories
Inventories consisted of the following as of February 26, 2022 and May 29, 2021 (in thousands):
 
February 26, 2022
May 29, 2021
Flocks, net of amortization
$
137,086
$
123,860
Eggs and egg products
24,153
21,084
Feed and supplies
78,848
73,431
$
240,087
$
218,375
We
 
grow
 
and
 
maintain
 
flocks
 
of
 
layers
 
(mature
 
female
 
chickens),
 
pullets
 
(female
 
chickens,
 
under
 
18
 
weeks
 
of
 
age),
 
and
breeders (male and female chickens used to produce fertile eggs to
 
hatch for egg production flocks). Our total flock at February
26, 2022 consisted of approximately
9.4
 
million pullets and breeders and
42.7
 
million layers.
 
Note 6 - Accrued Dividends Payable and Dividends per Common Share
We
 
accrue dividends at the
 
end of each quarter
 
according to the Company’s
 
dividend policy adopted by its
 
Board of Directors.
The Company pays
 
a dividend to
 
shareholders of its
 
Common Stock and Class
 
A Common Stock
 
on a quarterly
 
basis for each
quarter for
 
which the
 
Company reports net
 
income attributable
 
to Cal-Maine
 
Foods, Inc.
 
computed in
 
accordance with
 
GAAP
in an amount equal
 
to one-third (
1/3
) of such quarterly
 
income. Dividends are paid
 
to shareholders of record as
 
of the 60th day
following the last
 
day of
 
such quarter,
 
except for the
 
fourth fiscal quarter.
 
For the fourth
 
quarter, the
 
Company pays dividends
to shareholders of record on the 65th day after the quarter end. Dividends are payable on the 15th day following the record date.
Following a quarter for which the Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend for a subsequent
 
profitable quarter until the Company is profitable on
 
a cumulative basis computed from the
date of the most
 
recent quarter for which
 
a dividend was paid.
 
For the third quarter
 
of fiscal 2022, we
 
will pay a
 
cash dividend
of approximately $
0.125
 
per share to holders
 
of our Common Stock
 
and Class A Common
 
Stock. The amount of
 
the accrual is
recorded in Accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets.
On
 
our
 
Condensed
 
Consolidated
 
Statements
 
of
 
Income,
 
we
 
determine
 
dividends
 
per
 
common
 
share
 
in
 
accordance
 
with
 
the
computation in the following table (in thousands, except per share data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Net income attributable to Cal-Maine Foods,
Inc.
$
39,517
$
13,548
$
22,664
$
6,304
Cumulative losses to be recovered prior to
payment of divided at beginning of period
(21,097)
(8,614)
(4,244)
(1,370)
Net income available for dividend
$
18,420
$
4,934
$
18,420
$
4,934
1/3 of net income attributable to Cal-Maine
Foods, Inc. available for dividend
6,140
1,645
6,140
1,645
Common stock outstanding (shares)
44,140
44,056
Class A common stock outstanding (shares)
4,800
4,800
Total common stock outstanding (shares)
48,940
48,856
Dividends per common share*
$
0.125
$
0.034
$
0.125
$
0.034
*Dividends
 
per
 
common
 
share
 
=
1/3
 
of
 
Net
 
income
 
attributable
 
to
 
Cal-Maine
 
Foods,
 
Inc.
 
available
 
for
 
dividend
 
÷
 
Total
 
common
 
stock
outstanding (shares).
Note 7 – Credit Facility
On November
 
15, 2021,
 
we entered
 
into an
 
Amended and
 
Restated Credit
 
Agreement (the
 
“Credit Agreement”)
 
with a
five
-
year
 
term.
 
The
 
Credit
 
Agreement
 
amended
 
and
 
restated
 
the
 
Company’s
 
previously
 
existing
 
credit
 
agreement
 
dated
 
July
 
10,
2018.
 
The
 
Credit
 
Agreement
 
provides
 
for
 
an
 
increased
 
senior
 
secured
 
revolving
 
credit
 
facility
 
(the
 
“Credit
 
Facility”
 
or
“Revolver”),
 
in
 
an
 
initial
 
aggregate
 
principal
 
amount
 
of
 
up
 
to
 
$
250
 
million,
 
which
 
includes
 
a
 
$
15
 
million
 
sublimit
 
for
 
the
13
issuance
 
of
 
standby
 
letters
 
of
 
credit
 
and
 
a
 
$
15
 
million
 
sublimit
 
for
 
swingline
 
loans.
 
The
 
Credit
 
Facility
 
also
 
includes
 
an
accordion
 
feature
 
permitting,
 
with
 
the
 
consent
 
of
 
BMO
 
Harris
 
Bank
 
N.A.
 
(the
 
“Administrative
 
Agent”),
 
an
 
increase
 
in
 
the
Credit Facility in
 
the aggregate up
 
to $
200
 
million by
 
adding one or
 
more incremental senior
 
secured term loans
 
or increasing
one or more times
 
the revolving commitments under
 
the Revolver.
 
As of February 26,
 
2022,
no
 
amounts were borrowed under
the Credit Facility and $
4.1
 
million in standby letters of credit were issued under the Credit Facility.
The
 
interest
 
rate
 
in
 
connection
 
with
 
loans
 
made
 
under
 
the
 
Credit
 
Facility
 
is
 
based
 
on,
 
at
 
the
 
Company’s
 
election,
 
either
 
the
Eurodollar Rate
 
plus
 
the Applicable
 
Margin
 
or
 
the
 
Base Rate
 
plus
 
the Applicable
 
Margin.
 
The “Eurodollar
 
Rate” means
 
the
reserve adjusted rate
 
at which Eurodollar
 
deposits in the
 
London interbank market
 
for an interest
 
period of
one
,
two
,
three
,
six
or
twelve
 
months (as
 
selected by
 
the Company)
 
are quoted.
 
The “Base
 
Rate” means
 
a fluctuating
 
rate per
 
annum equal
 
to the
highest
 
of
 
(a)
 
the
 
federal
 
funds
 
rate
 
plus
0.50
%
 
per
 
annum,
 
(b)
 
the
 
prime
 
rate
 
of
 
interest
 
established
 
by
 
the
 
Administrative
Agent, and (c) the Eurodollar Rate for an interest period of
one
 
month plus
1
% per annum, subject to certain interest rate floors.
The
 
“Applicable
 
Margin”
 
means
0.00
%
 
to
0.75
%
 
per
 
annum
 
for
 
Base
 
Rate
 
Loans
 
and
1.00
%
 
to
1.75
%
 
per
 
annum
 
for
Eurodollar
 
Rate
 
Loans,
 
in
 
each
 
case
 
depending
 
upon
 
the
 
Total
 
Funded
 
Debt
 
to
 
Capitalization Ratio
 
for
 
the
 
Company
 
at
 
the
quarterly pricing date.
 
The Company will
 
pay a commitment
 
fee on the
 
unused portion of
 
the Credit Facility
 
payable quarterly
from
0.15
%
 
to
0.25
%
 
in
 
each
 
case
 
depending
 
upon
 
the
 
Total
 
Funded
 
Debt
 
to
 
Capitalization
 
Ratio
 
for
 
the
 
Company
 
at
 
the
quarterly pricing date. The Credit Agreement contains customary provisions regarding replacement of the Eurodollar Rate.
The
 
Credit Facility
 
is
 
guaranteed by
 
all the
 
current and
 
future wholly-owned
 
direct and
 
indirect domestic
 
subsidiaries of
 
the
Company (the “Guarantors”),
 
and is secured
 
by a first-priority
 
perfected security interest
 
in substantially all
 
of the Company’s
and
 
the
 
Guarantors’
 
accounts,
 
payment
 
intangibles,
 
instruments
 
(including
 
promissory
 
notes),
 
chattel
 
paper,
 
inventory
(including farm products) and deposit accounts maintained with the Administrative Agent.
The Credit
 
Agreement for
 
the Credit
 
Facility contains
 
customary covenants,
 
including restrictions
 
on the
 
incurrence of
 
liens,
incurrence of additional
 
debt, sales of
 
assets and other
 
fundamental corporate changes
 
and investments. The
 
Credit Agreement
requires maintenance of
 
two financial covenants:
 
(i) a maximum
 
Total
 
Funded Debt to
 
Capitalization Ratio tested
 
quarterly of
no greater than
50
%; and (ii) a requirement to maintain Minimum Tangible
 
Net Worth
 
at all times of $
700
 
Million plus
50
% of
net
 
income
 
(if
 
net
 
income
 
is
 
positive)
 
less
 
permitted
 
restricted
 
payments
 
for
 
each
 
fiscal
 
quarter
 
after
 
November
 
27,
 
2021.
Additionally, the
 
Credit Agreement requires that Fred
 
R. Adams Jr.’s
 
spouse, natural children, sons-in-law or grandchildren,
 
or
any trust, guardianship,
 
conservatorship or custodianship for
 
the primary benefit of
 
any of the
 
foregoing, or any
 
family limited
partnership, similar limited liability company or other entity
 
that
100
% of the voting control of such
 
entity is held by any of the
foregoing, shall maintain at least
50
% of the Company's voting
 
stock. Failure to satisfy any
 
of these covenants will constitute
 
a
default under the terms of the Credit Agreement. Further, under
 
the terms of the Credit Agreement, payment of dividends under
the
 
Company's
 
current
 
dividend
 
policy
 
of
one-third
 
of
 
the
 
Company's
 
net
 
income
 
computed
 
in
 
accordance
 
with
 
GAAP
 
and
payment of other dividends or
 
repurchases by the Company of
 
its capital stock is allowed,
 
as long as after giving
 
effect to such
dividend payments
 
or repurchases
 
no default
 
has occurred
 
and is
 
continuing and
 
the sum
 
of cash
 
and cash
 
equivalents of
 
the
Company and its subsidiaries plus availability under the Credit Facility equals at least $
50
 
million.
The Credit
 
Agreement also
 
includes customary
 
events of
 
default and
 
customary remedies
 
upon the
 
occurrence of
 
an event
 
of
default, including acceleration of the amounts
 
due under the Credit Facility and
 
foreclosure of the collateral securing the
 
Credit
Facility.
At February 26, 2022, we were in compliance with the covenant requirements of the Credit Facility.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14
Note 8 - Equity
The following reflects equity activity for the
 
thirteen and thirty-nine weeks ended February 26,
 
2022 and February 27, 2021 (in
thousands):
Thirteen Weeks Ended February 26, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at November
27, 2021
$
703
$
48
$
(27,450)
$
66,019
$
(996)
$
959,124
$
(25)
$
997,423
Other comprehensive
loss, net of tax
—
—
—
—
(417)
—
—
(417)
Stock compensation
plan transactions
—
—
(989)
890
—
—
—
(99)
Dividends
—
—
—
—
—
(6,118)
—
(6,118)
Net income (loss)
—
—
—
—
—
39,517
(63)
39,454
Balance at February
26, 2022
$
703
$
48
$
(28,439)
$
66,909
$
(1,413)
$
992,523
$
(88)
$
1,030,243
Thirteen Weeks Ended February 27, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Accum.
Class A
Treasury
Paid In
Other Comp.
Retained
Amount
Amount
Amount
Capital
Income (Loss)
Earnings
Total
Balance at November 28, 2020
$
703
$
48
$
(26,723)
$
62,206
$
151
$
968,325
$
1,004,710
Other comprehensive loss, net of tax
—
—
—
—
(286)
—
(286)
Stock compensation plan transactions
—
—
(826)
964
—
—
138
Dividends
—
—
—
—
—
(1,661)
(1,661)
Net income
—
—
—
—
—
13,548
13,548
Balance at February 27, 2021
$
703
$
48
$
(27,549)
$
63,170
$
(135)
$
980,212
$
1,016,449
Thirty-nine Weeks Ended February 26, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 29,
2021
$
703
$
48
$
(27,433)
$
64,044
$
(558)
$
975,977
$
—
$
1,012,781
Other comprehensive
loss, net of tax
—
—
—
—
(855)
—
—
(855)
Stock compensation
plan transactions
—
—
(1,006)
2,865
—
—
—
1,859
Contributions
—
—
—
—
—
—
3
3
Dividends
—
—
—
—
—
(6,118)
—
(6,118)
Net income (loss)
—
—
—
—
—
22,664
(91)
22,573
Balance at February
26, 2022
$
703
$
48
$
(28,439)
$
66,909
$
(1,413)
$
992,523
$
(88)
$
1,030,243
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15
Thirty-nine Weeks Ended February 27, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Accum.
Class A
Treasury
Paid In
Other Comp.
Retained
Amount
Amount
Amount
Capital
Income (Loss)
Earnings
Total
Balance at May 30, 2020
$
703
$
48
$
(26,674)
$
60,372
$
79
$
975,147
$
1,009,675
Impact of ASC 326
—
—
—
—
—
422
422
Balance at May 31 2020
703
48
(26,674)
60,372
79
975,569
1,010,097
Other comprehensive loss, net of tax
—
—
—
—
(214)
—
(214)
Stock compensation plan transactions
—
—
(875)
2,793
—
—
1,918
Contributions
—
—
—
5
—
—
5
Dividends
—
—
—
—
—
(1,661)
(1,661)
Net income
—
—
—
—
—
6,304
6,304
Balance at February 27, 2021
$
703
$
48
$
(27,549)
$
63,170
$
(135)
$
980,212
$
1,016,449
Note 9 - Net Income per Common Share
 
Basic net income per
 
share is based on
 
the weighted average Common Stock
 
and Class A Common
 
Stock outstanding. Diluted
net
 
income
 
per
 
share
 
is
 
based
 
on
 
weighted-average
 
common
 
shares
 
outstanding
 
during
 
the
 
relevant
 
period
 
adjusted
 
for
 
the
dilutive effect of share-based awards.
The
 
following
 
table
 
provides
 
a
 
reconciliation
 
of
 
the
 
numerators
 
and
 
denominators
 
used
 
to
 
determine
 
basic
 
and
 
diluted
 
net
income per common share (amounts in thousands, except per share data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Numerator
Net income
$
39,454
$
13,548
$
22,573
$
6,304
Less: Loss attributable to noncontrolling
interest
(63)
—
(91)
—
Net income attributable to Cal-Maine
Foods, Inc.
$
39,517
$
13,548
$
22,664
$
6,304
Denominator
Weighted-average common shares
outstanding, basic
48,886
48,530
48,888
48,511
Effect of dilutive restricted shares
150
129
147
138
Weighted-average common shares
outstanding, diluted
49,036
48,659
49,035
48,649
Net income per common share attributable to
Cal-Maine Foods, Inc.
Basic
$
0.81
$
0.28
$
0.46
$
0.13
Diluted
$
0.81
$
0.28
$
0.46
$
0.13
Note 10 - Revenue Recognition
Satisfaction of Performance Obligation
Most of the Company’s
 
revenue is derived from
 
contracts with customers based on
 
the customer placing an
 
order for products.
Pricing for
 
the most
 
part is
 
determined when
 
the Company
 
and the
 
customer agree
 
upon the
 
specific order,
 
which establishes
the contract for that order.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16
Revenues are
 
recognized in
 
an amount
 
that reflects
 
the net
 
consideration we
 
expect to
 
receive in
 
exchange for
 
the goods. Our
shell eggs
 
are sold
 
at prices
 
related to
 
independently quoted
 
wholesale market
 
prices, negotiated
 
prices or
 
formulas related
 
to
our costs
 
of production.
 
The Company’s
 
sales predominantly
 
contain a
 
single performance
 
obligation. We
 
recognize revenue
upon satisfaction of the
 
performance obligation with the
 
customer, which typically
 
occurs within days of
 
the Company and the
customer agreeing upon the order.
Returns and Refunds
Some of our contracts include a guaranteed
 
sale clause, pursuant to which we
 
credit the customer’s account for product that
 
the
customer is unable to
 
sell before expiration. The Company records
 
an estimate of returns and
 
refunds by using historical
 
return
data and
 
comparing to
 
current period
 
sales and
 
accounts receivable. The
 
allowance is
 
recorded as
 
a reduction
 
in sales
 
with a
corresponding reduction in trade accounts receivable.
Sales Incentives Provided to Customers
The
 
Company
 
periodically
 
provides
 
incentive
 
offers
 
to
 
its
 
customers
 
to
 
encourage
 
purchases.
 
Such
 
offers
 
include
 
current
discount offers (e.g.,
 
percentage discounts off
 
current purchases), inducement offers
 
(e.g., offers for
 
future discounts subject
 
to
a minimum
 
current purchase),
 
and other
 
similar offers.
 
Current discount
 
offers, when
 
accepted by
 
customers, are
 
treated as
 
a
reduction to
 
the sales
 
price of
 
the related
 
transaction, while
 
inducement offers,
 
when accepted
 
by customers,
 
are treated
 
as a
reduction
 
to
 
sales
 
price
 
based
 
on
 
estimated
 
future
 
redemption
 
rates.
 
Redemption
 
rates
 
are
 
estimated
 
using
 
the
 
Company’s
historical experience
 
for similar
 
inducement offers.
 
Current discount
 
and inducement
 
offers
 
are presented
 
as a
 
net amount
 
in
‘‘Net sales.’’
Disaggregation of Revenue
The following table provides revenue disaggregated by product category (in thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Conventional shell egg sales
$
280,633
$
203,189
$
685,678
$
560,297
Specialty shell egg sales
182,945
145,210
462,319
408,537
Egg products
12,749
9,098
33,516
25,736
Other
1,158
1,583
2,682
4,619
$
477,485
$
359,080
$
1,184,195
$
999,189
Contract Costs
The Company can incur costs to obtain or fulfill a contract with a customer.
 
If the amortization period of these costs is less than
one year,
 
they are
 
expensed as
 
incurred. When
 
the amortization
 
period is
 
greater than
 
one year,
 
a contract
 
asset is
 
recognized
and is amortized
 
over the contract
 
life as a
 
reduction in net
 
sales. As of
 
February 26, 2022
 
and February 27,
 
2021, the balance
for contract assets is immaterial.
Contract Balances
The Company
 
receives payment
 
from customers
 
based on
 
specified terms
 
that are
 
generally less
 
than 30
 
days from
 
delivery.
There are rarely contract assets or liabilities related to performance under the contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17
Note 11 - Leases
Expenses related to
 
operating leases, amortization
 
of finance leases,
 
right-of-use assets, and
 
finance lease interest
 
are included
in Cost of sales, Selling general and administrative expense, and Interest income, net in the Condensed Consolidated Statements
of Income. The Company’s lease cost consists of the following (in thousands):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 26, 2022
Operating lease cost
$
200
$
625
Finance lease cost
Amortization of right-of-use asset
$
44
$
132
Interest on lease obligations
$
6
$
20
Short term lease cost
$
1,086
$
3,221
Future minimum lease payments under non-cancelable leases are as follows (in thousands):
As of February 26, 2022
Operating Leases
Finance Leases
Remainder fiscal 2022
$
180
$
60
2023
539
240
2024
380
217
2025
130
—
2026
26
—
2027
5
—
Total
1,260
517
Less imputed interest
(92)
(24)
Total
$
1,168
$
493
The
 
weighted-average
 
remaining
 
lease
 
term
 
and
 
discount
 
rate
 
for
 
lease
 
liabilities
 
included
 
in
 
our
 
Condensed
 
Consolidated
Balance Sheet are as follows:
As of February 26, 2022
Operating Leases
Finance Leases
Weighted-average remaining lease term (years)
2.4
1.8
Weighted-average discount rate
5.9
%
4.9
%
Note 12 - Stock Based Compensation
Total
 
stock-based compensation expense
 
was $
3.0
 
million and $
2.8
 
million for the
 
thirty-nine weeks ended
 
February 26, 2022
and February 27, 2021, respectively.
Unrecognized compensation
 
expense as
 
a result
 
of non-vested
 
shares of
 
restricted stock
 
outstanding under
 
the Amended
 
and
Restated
 
2012
 
Omnibus
 
Long-Term
 
Incentive
 
Plan
 
at
 
February
 
26,
 
2022
 
of
 
$
8.1
 
million
 
will
 
be
 
recorded
 
over
 
a
 
weighted
average period of
2.3
 
years. Refer to Part II
 
Item 8, Notes to Consolidated
 
Financial Statements and Supplementary Data, Note
16: Stock Compensation Plans in our 2021 Annual Report for further information on our stock compensation plans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
The Company’s restricted share activity for the thirty-nine weeks ended February 26, 2022 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, May 29, 2021
302,147
$
39.37
Granted
113,142
41.13
Vested
(90,778)
42.53
Forfeited
(3,932)
37.81
Outstanding, February 26, 2022
320,579
$
39.12
Note 13 - Commitments and Contingencies
Financial Instruments
The
 
Company
 
maintained
 
standby
 
letters
 
of
 
credit
 
(“LOCs”)
 
totaling
 
$
4.1
 
million
 
at
 
February
 
26,
 
2022,
 
which
 
were
 
issued
under
 
the
 
Company's
 
Credit
 
Facility.
 
The
 
outstanding
 
LOCs
 
are
 
for
 
the
 
benefit
 
of
 
certain
 
insurance
 
companies
 
and
 
are
 
not
recorded as a liability on the consolidated balance sheets.
 
LEGAL PROCEEDINGS
State of Texas v.
 
Cal-Maine Foods, Inc. d/b/a Wharton; and Wharton County Foods, LLC
 
On April 23,
 
2020, the Company
 
and its subsidiary
 
Wharton County Foods,
 
LLC (“WCF”) were
 
named as defendants
 
in State
of
 
Texas
 
v.
 
Cal-Maine Foods,
 
Inc. d/b/a
 
Wharton; and
 
Wharton County
 
Foods, LLC,
 
Cause No.
 
2020-25427,
 
in the
 
District
Court of
 
Harris County,
 
Texas.
 
The State
 
of Texas
 
(the “State”)
 
asserted claims
 
based on
 
the Company’s
 
and WCF’s
 
alleged
violation
 
of
 
the
 
Texas
 
Deceptive
 
Trade
 
Practices—Consumer
 
Protection
 
Act,
 
Tex.
 
Bus.
 
&
 
Com.
 
Code
 
§§
 
17.41-17.63
(“DTPA”).
 
The
 
State
 
claimed
 
that
 
the
 
Company
 
and
 
WCF
 
offered
 
shell
 
eggs
 
at
 
excessive
 
or
 
exorbitant
 
prices
 
during
 
the
COVID-19
 
state
 
of
 
emergency
 
and
 
made
 
misleading
 
statements
 
about
 
shell
 
egg
 
prices.
 
The
 
State
 
sought
 
temporary
 
and
permanent
 
injunctions
 
against
 
the
 
Company
 
and
 
WCF
 
to
 
prevent
 
further
 
alleged
 
violations
 
of
 
the
 
DTPA,
 
along
 
with
 
over
$
100,000
 
in damages. On August 13, 2020, the court granted the defendants’ motion to dismiss the State’s original petition with
prejudice. On September 11,
 
2020, the State filed a
 
notice of appeal, which was
 
assigned to the Texas
 
Court of Appeals for the
First District. The
 
State filed its
 
opening brief on
 
December 7, 2020.
 
The Company and
 
WCF filed their
 
response on February
8,
 
2021.
 
On
 
February
 
11,
 
2022,
 
the
 
Texas
 
Court
 
of
 
Appeals
 
heard
 
oral
 
argument
 
but
 
has
 
not
 
issued
 
a
 
ruling.
 
Management
believes the risk of material loss related to this matter to be remote.
Bell et al. v. Cal-Maine Foods et al.
 
On April
 
30, 2020,
 
the Company
 
was named
 
as one
 
of several
 
defendants in
 
Bell et
 
al. v.
 
Cal-Maine Foods
 
et al.,
 
Case No.
1:20-cv-461,
 
in
 
the
 
Western
 
District
 
of
 
Texas,
 
Austin
 
Division.
 
The
 
defendants
 
include
 
numerous
 
grocery
 
stores,
 
retailers,
producers, and farms. Plaintiffs assert that defendants violated the DTPA
 
by allegedly demanding exorbitant or excessive prices
for eggs
 
during the
 
COVID-19 state
 
of emergency.
 
Plaintiffs
 
request certification
 
of a
 
class of
 
all consumers
 
who purchased
eggs
 
in
 
Texas
 
sold,
 
distributed,
 
produced,
 
or
 
handled
 
by
 
any
 
of
 
the
 
defendants
 
during
 
the
 
COVID-19
 
state
 
of
 
emergency.
Plaintiffs seek to enjoin the Company and
 
other defendants from selling eggs at a price more
 
than 10% greater than the price of
eggs prior
 
to the
 
declaration of
 
the state
 
of emergency
 
and damages
 
in the
 
amount of
 
$
10,000
 
per violation,
 
or $
250,000
 
for
each violation
 
impacting anyone
 
over 65
 
years old.
 
On December
 
1, 2020,
 
the Company
 
and certain
 
other defendants
 
filed a
motion to
 
dismiss the
 
plaintiffs’ amended
 
class action
 
complaint. The
 
plaintiffs subsequently
 
filed a
 
motion to
 
strike, and
 
the
motion to
 
dismiss and
 
related proceedings were
 
referred to
 
a United
 
States magistrate
 
judge. On
 
July 14,
 
2021, the
 
magistrate
judge
 
issued
 
a
 
report
 
and
 
recommendation
 
to
 
the
 
court
 
that
 
the
 
defendants’
 
motion
 
to
 
dismiss
 
be
 
granted
 
and
 
the
 
case
 
be
dismissed without prejudice
 
for lack of
 
subject matter jurisdiction.
 
On September 20,
 
2021, the
 
court adopted the
 
magistrate’s
report
 
and
 
recommendation
 
in
 
its
 
entirety
 
and
 
granted
 
defendants’
 
motion
 
to
 
dismiss
 
plaintiffs’
 
first
 
amended
 
class
 
action
complaint; thereafter,
 
the court
 
entered a
 
final judgment
 
in favor
 
of the
 
Company and
 
certain other
 
defendants dismissing
 
the
case without prejudice.
 
On October 18,
 
2021, plaintiffs
 
filed a motion
 
to alter or
 
amend the final
 
judgement and allow
 
a filing
of
 
a
 
second
 
amended
 
complaint.
 
The
 
Company
 
responded
 
on
 
November
 
1,
 
2021.
 
The
 
court
 
has
 
not
 
ruled
 
on
 
the
 
plaintiffs’
motion.
 
 
 
19
Kraft Foods Global, Inc. et al. v. United Egg Producers, Inc. et al.
 
As previously
 
reported, on
 
September 25,
 
2008, the
 
Company was
 
named as
 
one of
 
several defendants
 
in numerous
 
antitrust
cases involving
 
the United
 
States shell
 
egg industry.
 
The Company
 
settled all
 
of these
 
cases, except
 
for the
 
claims of
 
certain
plaintiffs who sought substantial damages allegedly arising from the purchase of egg products
 
(as opposed to shell eggs). These
remaining plaintiffs
 
are Kraft Food
 
Global, Inc., General
 
Mills, Inc., and
 
Nestle USA, Inc.
 
(the “Egg
 
Products Plaintiffs”)
 
and
The Kellogg Company.
On September
 
13, 2019,
 
the case
 
with the
 
Egg Products
 
Plaintiffs was
 
remanded from
 
a multi-district
 
litigation proceeding
 
in
the
 
United
 
States
 
District
 
Court
 
for
 
the
 
Eastern
 
District
 
of
 
Pennsylvania,
 
In
 
re
 
Processed
 
Egg
 
Products
 
Antitrust
 
Litigation,
MDL No. 2002, to the United States District Court for
 
the Northern District of Illinois, Kraft Foods Global, Inc. et
 
al. v. United
Egg
 
Producers,
 
Inc.
 
et
 
al.,
 
Case
 
No.
 
1:11-cv-8808,
 
for
 
trial.
 
The
 
Egg
 
Products
 
Plaintiffs
 
allege
 
that
 
the
 
Company
 
and
 
other
defendants
 
violated
 
Section
 
1
 
of
 
the
 
Sherman
 
Act,
 
15.
 
U.S.C.
 
§
 
1,
 
by
 
agreeing
 
to
 
limit
 
the
 
production
 
of
 
eggs
 
and
 
thereby
illegally to raise the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs are
 
attacking
certain features of the United
 
Egg Producers animal-welfare guidelines and program
 
used by the Company and many
 
other egg
producers. The Egg
 
Products Plaintiffs
 
seek to
 
enjoin the
 
Company and other
 
defendants from engaging
 
in antitrust violations
and seek
 
treble money
 
damages. The
 
parties filed
 
a joint
 
status report
 
on May
 
18, 2020.
 
On August
 
4, 2021,
 
by docket
 
entry,
the
 
court
 
instructed
 
the
 
parties
 
to
 
jointly
 
submit
 
a
 
second
 
status
 
report
 
to
 
the
 
court
 
that
 
included
 
a
 
proposed
 
schedule
 
for
preparing a final pretrial order. On
 
August 25, 2021, the parties filed a joint status report, and on
 
August 26, 2021, the court, by
docket entry, informed the parties that the need to discuss issues was no longer necessary and that a scheduled August 30, 2021,
status hearing was stricken. No trial schedule has yet been entered by the court.
In addition,
 
on October
 
24, 2019,
 
the Company
 
entered into
 
a confidential
 
settlement agreement
 
with The
 
Kellogg Company
dismissing
 
all
 
claims
 
against
 
the
 
Company
 
for
 
an
 
amount
 
that
 
did
 
not
 
have
 
a
 
material
 
impact
 
on
 
the
 
Company’s
 
financial
condition or results of operations. On
 
November 11, 2019, a
 
stipulation for dismissal was filed with
 
the court, but the court
 
has
not yet entered a judgment on the filing.
The Company intends to continue to defend the remaining case with the Egg Products Plaintiffs
 
as vigorously as possible based
on
 
defenses
 
which
 
the
 
Company
 
believes
 
are
 
meritorious
 
and
 
provable.
 
Adjustments,
 
if
 
any,
 
which
 
might
 
result
 
from
 
the
resolution of
 
this remaining
 
matter with
 
the Egg
 
Products Plaintiffs
 
have not
 
been reflected
 
in the
 
financial statements.
 
While
management
 
believes
 
that
 
there
 
is
 
still
 
a
 
reasonable
 
possibility
 
of
 
a
 
material
 
adverse
 
outcome
 
from
 
the
 
case
 
with
 
the
 
Egg
Products Plaintiffs,
 
at the present
 
time, it is
 
not possible to
 
estimate the amount
 
of monetary exposure,
 
if any,
 
to the Company
due to a range of factors, including the following, among
 
others: the matter is in the early stages of preparing for
 
trial following
remand;
 
any
 
trial
 
will
 
be
 
before
 
a
 
different
 
judge
 
and
 
jury
 
in
 
a
 
different
 
court
 
than
 
prior
 
related
 
cases;
 
there
 
are
 
significant
factual issues
 
to be
 
resolved; and
 
there are
 
requests for
 
damages other
 
than compensatory
 
damages (i.e.,
 
injunction and
 
treble
money damages).
State of Oklahoma Watershed Pollution Litigation
On June 18,
 
2005, the
 
State of Oklahoma
 
filed suit,
 
in the United
 
States District
 
Court for
 
the Northern District
 
of Oklahoma,
against Cal-Maine Foods, Inc. and Tyson Foods, Inc. and affiliates,
 
Cobb-Vantress,
 
Inc., Cargill, Inc. and its affiliate, George’s,
Inc. and its
 
affiliate, Peterson Farms,
 
Inc. and Simmons Foods,
 
Inc. The State of
 
Oklahoma claims that through
 
the disposal of
chicken litter
 
the defendants
 
have polluted
 
the Illinois
 
River Watershed.
 
This watershed
 
provides water
 
to eastern
 
Oklahoma.
The complaint
 
seeks injunctive
 
relief and
 
monetary damages,
 
but the
 
claim for
 
monetary damages
 
has been
 
dismissed by
 
the
court.
 
Cal-Maine
 
Foods,
 
Inc.
 
discontinued
 
operations
 
in
 
the
 
watershed.
 
Accordingly,
 
we
 
do
 
not
 
anticipate
 
that
 
Cal-Maine
Foods,
 
Inc.
 
will
 
be
 
materially
 
affected
 
by
 
the
 
request
 
for
 
injunctive
 
relief
 
unless
 
the
 
court
 
orders
 
substantial
 
affirmative
remediation. Since the
 
litigation began, Cal-Maine
 
Foods, Inc. purchased
100
% of the
 
membership interests of
 
Benton County
Foods, LLC,
 
which is
 
an ongoing
 
commercial shell
 
egg operation
 
within the
 
Illinois River
 
Watershed.
 
Benton County
 
Foods,
LLC is not a defendant in the litigation.
The trial in the case began in September 2009 and concluded in February 2010.
 
The case was tried without a jury,
 
and the court
has not yet issued its ruling. Management believes the risk of material loss related to this matter to be remote.
Other Matters
In addition to the above,
 
the Company is involved in
 
various other claims and litigation
 
incidental to its business. Although
 
the
outcome of
 
these matters
 
cannot be determined
 
with certainty,
 
management, upon the
 
advice of counsel,
 
is of
 
the opinion that
the final outcome should not have a material effect on the Company’s consolidated results of operations or financial position.
20
Note 14 - Related Party Transaction
On
 
August
 
24,
 
2020,
 
Mrs.
 
Jean
 
Reed
 
Adams,
 
the
 
wife
 
of
 
the
 
Company’s
 
late
 
founder
 
Fred
 
R.
 
Adams,
 
Jr.,
 
and
 
the
 
Fred
 
R.
Adams,
 
Jr.
 
Daughters’
 
Trust,
 
dated
 
July
 
20,
 
2018
 
(the
 
“Daughters’
 
Trust”),
 
of
 
which
 
the
 
daughters
 
of
 
Mr.
 
Adams
 
are
beneficiaries
 
(together,
 
the
 
“Selling
 
Stockholders”),
 
completed
 
a
 
registered
 
secondary public
 
offering
 
of
6,900,000
 
shares
 
of
Common Stock held by them, pursuant to a previously disclosed Agreement Regarding Common Stock (the “Agreement”) filed
as an exhibit to our 2021 Annual Report. Mrs. Adams and the Daughters’ Trust advised the Company that they were conducting
the
 
offering
 
in
 
order
 
to
 
pay
 
estate
 
taxes
 
related
 
to
 
the
 
settlement
 
of
 
Mr.
 
Adam’s
 
estate
 
and
 
to
 
obtain
 
liquidity.
 
The
 
public
offering
 
was
 
made
 
pursuant
 
to
 
the
 
Company’s
 
effective
 
shelf
 
registration
 
statement
 
on
 
Form
 
S-3
 
(File
 
No.
 
333-227742),
including the Prospectus contained therein dated October
 
9, 2018, and a related
 
Prospectus Supplement dated August 19, 2020,
each of which
 
is on file
 
with the Securities and
 
Exchange Commission. The public
 
offering involved only
 
the sale of
 
shares of
Common
 
Stock
 
that
 
were
 
already
 
outstanding,
 
and
 
thus
 
the
 
Company
 
did
 
not
 
issue
 
any
 
new
 
shares
 
or
 
raise
 
any
 
additional
capital in
 
the offering.
 
The expenses
 
of
 
the offering
 
(not including
 
the underwriting
 
discount and
 
legal fees
 
and expenses
 
of
legal
 
counsel
 
for
 
the
 
Selling
 
Stockholders,
 
which
 
were
 
paid
 
by
 
the
 
Selling
 
Stockholders)
 
paid
 
by
 
the
 
Company
 
were
 
$
1.1
million. Pursuant to the Agreement, the Selling Stockholders reimbursed the Company $
551
 
thousand.
 
21
ITEM
 
2.
 
MANAGEMENT’S
DISCUSSION
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
OPERATIONS
The following
 
should be
 
read in
 
conjunction with
 
Management’s
 
Discussion and
 
Analysis of
 
Financial Condition
 
and Results
of Operations included in Part II
 
Item 7 of the Company’s
 
Annual Report on Form 10-K for
 
its fiscal year ended May 29,
 
2021
(the “2021 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2021 Annual
Report and in
 
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
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
 
COVID-19
 
pandemic,
 
potential
 
future
 
impact
 
on
 
our
 
business
 
of
 
new
 
legislation,
 
rules
 
or
 
policies,
 
potential
outcomes
 
of
 
legal
 
proceedings,
 
and
 
other
 
projected
 
operating
 
data,
 
including
 
anticipated
 
results
 
of
 
operations
 
and
 
financial
condition.
 
Such
 
forward-looking
 
statements
 
are
 
identified
 
by
 
the
 
use
 
of
 
words
 
such
 
as
 
“believes,”
 
“intends,”
 
“expects,”
“hopes,”
 
“may,”
 
“should,”
 
“plans,”
 
“projected,”
 
“contemplates,”
 
“anticipates,”
 
or
 
similar
 
words.
 
Actual
 
outcomes
 
or
 
results
could differ
 
materially from
 
those
 
projected in
 
the forward-looking
 
statements. The forward-looking
 
statements are
 
based on
management’s
 
current
 
intent,
 
belief,
 
expectations,
 
estimates,
 
and
 
projections
 
regarding
 
the
 
Company
 
and
 
its
 
industry. These
statements
 
are
 
not
 
guarantees
 
of
 
future
 
performance
 
and
 
involve
 
risks,
 
uncertainties,
 
assumptions,
 
and
 
other
 
factors
 
that
 
are
difficult
 
to predict
 
and may
 
be beyond
 
our control. The
 
factors that
 
could cause
 
actual results
 
to differ
 
materially from
 
those
projected in
 
the forward-looking
 
statements include,
 
among others,
 
(i) the
 
risk factors
 
set forth
 
in Part
 
I Item
 
1A of
 
the 2021
Annual Report
 
(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
 
highly
 
pathogenic
 
avian
 
influenza
 
(HPAI)
affecting poultry
 
in the
 
U.S., Canada
 
and other
 
countries (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
 
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
 
the
 
evolving
 
COVID-19
 
pandemic,
 
including
 
without
limitation increased costs
 
and rising
 
inflation and interest
 
rates, and
 
(vii) adverse
 
results in pending
 
litigation matters. 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
 
under
 
one
 
operating
 
segment.
 
We
 
are
 
the
largest producer and
 
distributor of fresh
 
shell eggs in
 
the United States
 
(“U.S.”). Our total
 
flock of approximately
 
42.7 million
layers
 
and
 
9.4
 
million
 
pullets
 
and
 
breeders
 
is
 
the
 
largest
 
in
 
the
 
U.S.
 
We
 
sell
 
most
 
of
 
our
 
shell
 
eggs
 
to
 
a
 
diverse
 
group
 
of
customers, including national
 
and regional grocery
 
store chains, club
 
stores, companies servicing
 
independent supermarkets in
the U.S., food
 
service distributors and
 
egg product consumers
 
in states across
 
the southwestern, southeastern, mid-western
 
and
mid-Atlantic regions of the U.S.
We
 
are a
 
member of
 
the Eggland’s
 
Best, Inc.
 
(“EB”) cooperative
 
and produce,
 
market, and
 
distribute EB
 
and Land
 
O'Lakes
branded
 
eggs,
 
both
 
directly
 
and
 
through
 
our
 
joint
 
ventures
 
Specialty
 
Eggs,
 
LLC
 
and
 
Southwest
 
Specialty
 
Eggs,
 
LLC,
 
under
exclusive
 
license
 
agreements
 
in
 
Alabama,
 
Arizona,
 
Florida,
 
Georgia,
 
Louisiana,
 
Mississippi
 
and
 
Texas
 
and
 
in
 
portions
 
of
Arkansas, California, Nevada,
 
North Carolina,
 
Oklahoma and South
 
Carolina.
 
We
 
also have an
 
exclusive license in
 
New York
City in addition to exclusivity in select New York metropolitan areas, including areas within New Jersey and Pennsylvania.
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.
 
As
 
an
 
example of
 
the
volatility in the market prices of shell eggs, the Urner-Barry White
 
Large, Southeast Regional Egg Market Price per dozen eggs
(“UB southeast large index”) for the first three quarters of fiscal year 2022 ranged from a low of $1.00 in June 2021 to a high of
$2.06 in February 2022.
22
Generally,
 
we purchase
 
primary feed
 
ingredients, mainly
 
corn and
 
soybean meal,
 
at current
 
market prices.
 
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, and agricultural, energy and trade policies in the U.S. and internationally.
 
An important competitive advantage for Cal-Maine Foods is our ability to meet
 
our customers’ evolving needs with a favorable
product
 
mix
 
of
 
conventional
 
and
 
specialty
 
eggs,
 
including
 
cage-free,
 
organic
 
and
 
other
 
specialty
 
offerings,
 
as
 
well
 
as
 
egg
products.
 
We
 
have
 
also
 
enhanced
 
our
 
efforts
 
to
 
provide
 
free-range
 
and
 
pasture-raised
 
eggs
 
that
 
meet
 
consumers’
 
evolving
choice
 
preferences.
 
While
 
a
 
small
 
part
 
of
 
our
 
current
 
business,
 
the
 
free-range
 
and
 
pasture-raised
 
eggs
 
we
 
produce
 
and
 
sell
represent attractive offerings to a subset
 
of consumers, and therefore our customers, and help
 
us continue to serve as the trusted
provider of quality food choices.
Specialty shell
 
eggs have
 
been a
 
significant and
 
growing portion
 
of the
 
market. In
 
recent years,
 
a significant
 
number of
 
large
restaurant chains, food service companies
 
and grocery chains, including our
 
largest customers, announced goals to
 
transition to
an
 
exclusively
 
cage-free
 
egg
 
supply
 
chain
 
by
 
specified
 
future
 
dates.
 
Additionally,
 
several
 
states,
 
representing
 
approximately
24% of the U.S. total population according to the 2020 U.S. Census, have passed legislation requiring that all eggs
 
sold in those
states
 
must
 
be
 
cage-free
 
eggs
 
by
 
specified
 
future
 
dates,
 
and
 
other
 
states
 
are
 
considering
 
such
 
legislation.
 
In
 
California
 
and
Massachusetts,
 
which represent about 14% of the total U.S. population according to the 2020
 
U.S. Census, cage-free legislation
went into effect January
 
1, 2022. For additional
 
information, see the 2021
 
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.”
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.
COVID-19
Since early
 
2020, the
 
coronavirus (“COVID-19”) outbreak,
 
characterized as
 
a pandemic
 
by the
 
World
 
Health Organization
 
on
March
 
11,
 
2020,
 
has
 
caused
 
significant
 
disruptions
 
in
 
international
 
and
 
U.S.
 
economies
 
and
 
markets.
 
We
 
understand
 
the
challenges
 
and
 
difficult
 
economic
 
environment
 
facing
 
families
 
in
 
the
 
communities
 
where
 
we
 
live
 
and
 
work,
 
and
 
we
 
are
committed
 
to
 
helping
 
where
 
we
 
can.
 
We
 
have
 
provided
 
food
 
assistance
 
to
 
those
 
in
 
need
 
by
 
donating
 
approximately
 
679
thousand
 
dozen
 
eggs
 
to
 
date
 
in
 
fiscal
 
2022.
 
We
 
believe
 
we
 
are
 
taking
 
all
 
reasonable
 
precautions
 
in
 
the
 
management
 
of
 
our
operations in response
 
to the COVID-19
 
pandemic. Our top
 
priority is the
 
health and safety
 
of our
 
employees, who work
 
hard
each day
 
to produce
 
eggs for
 
our customers.
 
As part
 
of the
 
nation’s
 
food supply,
 
we work
 
in a
 
critical infrastructure industry,
and
 
we
 
believe
 
we
 
have
 
a
 
special
 
responsibility
 
to
 
maintain
 
our
 
normal
 
work
 
schedule.
 
As
 
such,
 
we
 
are
 
in
 
regular
communication with our managers across our operations and continue to closely monitor the situation in our facilities and in the
communities where we live and work. We have implemented procedures designed to protect our employees, taking into account
guidelines published
 
by the
 
Centers for
 
Disease Control
 
and other
 
government health
 
agencies, and
 
we have
 
strict sanitation
protocols and
 
biosecurity measures
 
in place
 
throughout our
 
operations with
 
restricted access
 
to visitors.
 
There are
 
no known
indications that COVID-19 affects chickens or can be transferred through the food supply.
 
We
 
continue to proactively monitor
 
and manage operations during
 
the COVID-19 pandemic, including
 
additional related costs
that
 
we incurred
 
or may
 
incur in
 
the future.
 
The pandemic
 
had a
 
negative impact
 
on our
 
business through
 
disruptions in
 
the
supply chain such as increased costs
 
and limited availability of packaging supplies,
 
and increased labor costs and medical costs
and, more recently, inflation.
In
 
the third
 
quarters of
 
fiscal 2022
 
and 2021,
 
we spent
 
approximately $534
 
thousand and
 
$397 thousand
 
(excluding medical
insurance claims)
 
related to
 
the pandemic
 
and its
 
effects,
 
respectively.
 
The majority
 
of these
 
expenses in
 
fiscal 2022
 
resulted
from additional labor
 
costs and increased
 
cost of packaging
 
materials, primarily reflected
 
in cost of
 
sales. In
 
fiscal 2021, most
of
 
these
 
expenses
 
related
 
to
 
additional
 
labor
 
costs,
 
primarily
 
reflected
 
in
 
cost
 
of
 
sales.
 
Medical
 
insurance
 
claims
 
related
 
to
COVID-19 paid during the third quarter of
 
fiscal 2022 were an additional $424 thousand as
 
compared to $322 thousand paid in
the comparable quarter in fiscal 2021.
23
For
 
the
 
thirty-nine
 
weeks
 
ended
 
2022
 
and
 
2021,
 
we
 
spent
 
approximately
 
$1.8
 
million
 
(excluding
 
medical
 
insurance
 
claims)
related to
 
the pandemic
 
and its
 
effects. The
 
majority of
 
these expenses
 
in fiscal
 
2022 resulted
 
from additional
 
labor costs
 
and
increased
 
cost
 
of
 
packaging
 
materials,
 
primarily
 
reflected
 
in
 
cost
 
of
 
sales.
 
In
 
fiscal
 
2021,
 
most
 
of
 
these
 
expenses
 
related
 
to
additional labor costs, primarily reflected in cost of sales. Medical insurance claims related to COVID-19 paid during the thirty-
nine
 
weeks
 
ended 2022
 
were
 
an
 
additional $1.6
 
million
 
as compared
 
to $1.1
 
million paid
 
in
 
the comparable
 
period
 
in
 
fiscal
2021.
EXECUTIVE OVERVIEW
For the third
 
quarter of fiscal
 
2022, we recorded
 
a gross profit
 
of $91.6 million
 
compared to $47.5
 
million for the
 
same period
of
 
fiscal
 
2021,
 
with
 
the
 
increase
 
due
 
primarily
 
to
 
higher
 
shell
 
egg
 
prices
 
and
 
increased
 
volume
 
of
 
specialty
 
eggs.
 
Our
 
total
dozens sold
 
increased 2.8%
 
to 287.7
 
million dozen
 
shell eggs
 
for
 
the third
 
quarter of
 
fiscal 2022
 
compared to
 
279.7
 
million
dozen for
 
the same
 
period of
 
fiscal
 
2021. For
 
the third
 
quarter of
 
fiscal 2022,
 
conventional dozens
 
sold decreased
 
5.2%
 
and
specialty dozens sold increased 24.1%
 
as compared to the same
 
quarter in fiscal 2021. Specialty
 
dozens sold increased as more
cage-free facilities came into production, retailers continue shift to selling cage-free products and cage-free legislation went into
full effect in California on January 1, 2022.
The
 
daily
 
average
 
price
 
for
 
the
 
UB
 
southeast
 
large
 
index
 
for
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022
 
increased
 
46.8%
 
from
 
the
comparable period
 
in
 
the
 
prior year.
 
Our
 
net
 
average
 
selling price
 
per
 
dozen
 
for
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022
 
was
 
$1.612
compared
 
to $1.246
 
in the
 
prior-year
 
period.
 
Hen numbers
 
reported by
 
the USDA
 
as of
 
March 1,
 
2022, were
 
322.7 million,
which is
 
approximately 5.4
 
million less
 
hens than
 
the comparable
 
period of
 
the prior
 
year.
 
The USDA
 
also reported
 
that the
hatch
 
from
 
October
 
2021
 
through
 
February
 
2022
 
decreased
 
5.5%
 
compared
 
to
 
the
 
prior-year
 
period.
 
As
 
of
 
March
 
1,
 
2022,
table-type eggs in incubators totaled 55.4 million, a decrease of 7.6% versus the prior-year period.
We
 
are
 
closely
 
monitoring the
 
recently reported
 
outbreaks of
 
highly pathogenic
 
avian influenza
 
(“HPAI”).
 
According
 
to
 
the
U.S.
 
Centers for
 
Disease Control
 
and Prevention,
 
these detections
.
 
There
have been no positive tests for HPAI
 
at any Cal-Maine Foods’ owned or contracted production facility to date. As
 
of March 28,
2022, the USDA
 
division of Animal
 
and Plant Health
 
Inspection Service (“APHIS”),
 
reported that approximately
 
11.5 million
commercial layer
 
hens or
 
about 3.6%
 
of the
 
table egg
 
layer flock
 
based on
 
February 2022
 
reported layer
 
numbers, have
 
been
depopulated due to
 
HPAI.
 
Pullets impacted comprise
 
approximately 830,000, or
 
about 0.7 percent
 
of the February
 
2022 pullet
inventory. We
 
believe we have implemented and continue to maintain robust biosecurity programs across our
 
locations. We are
also working
 
closely with
 
federal, state
 
and local
 
government officials
 
and focused
 
industry groups to
 
mitigate the
 
risk of
 
this
and future outbreaks and effectively manage our response, if needed.
 
Our farm production costs
 
per dozen produced for
 
the third quarter of
 
fiscal 2022 increased 16.9%,
 
or $0.132, compared to
 
the
third quarter
 
of fiscal
 
2021. This
 
increase was
 
primarily due
 
to increased
 
prices for
 
feed ingredients.
 
For the
 
third quarter
 
of
fiscal 2022, the average
 
Chicago Board of Trade
 
(“CBOT”) daily market price
 
was $6.13 per
 
bushel for corn and
 
$412 per ton
for soybean meal, representing an increase of 23.5% and a decrease of 2.5%, respectively, compared to the average daily CBOT
prices for
 
the comparable
 
period in
 
the prior
 
year.
 
Other farm
 
production
 
costs for
 
the third
 
quarter of
 
fiscal 2022
 
increased
11.8% versus the comparable period in the prior fiscal year, driven by higher flock amortization and facility expense.
Effective
 
May
 
30,
 
2021,
 
we
 
acquired
 
the
 
remaining
 
50%
 
membership
 
interest
 
in
 
Red
 
River
 
Valley
 
Egg
 
Farm,
 
LLC
 
(“Red
River”). Red River owns and operates a specialty shell egg production complex with approximately 1.7 million cage-free laying
hens, cage-free
 
pullet capacity,
 
feed mill,
 
processing plant,
 
related offices
 
and outbuildings
 
and related
 
equipment located
 
on
approximately 400
 
acres near
 
Bogata, Texas.
 
For additional
 
information, see
 
of the
 
Notes to
 
Condensed
Consolidated Financial Statements included in this Quarterly Report.
During October
 
2021, we
 
announced that
 
our Board
 
of Directors
 
approved a
 
strategic investment
 
that will
 
specialize in
 
high-
value
 
commercial
 
product
 
solutions
 
targeting
 
specific
 
needs
 
in
 
the
 
food
 
industry.
 
The
 
initial
 
focus
 
will
 
include
 
hard-cooked
eggs.
 
The
 
new
 
entity,
 
located
 
in
 
Neosho,
 
Missouri,
 
will
 
operate
 
as
 
MeadowCreek
 
Foods,
 
LLC
 
(“MeadowCreek”).
 
We
 
will
capitalize MeadowCreek with
 
up to $18.5
 
million in debt
 
and equity to
 
purchase property and
 
equipment and to
 
fund working
capital, and we
 
will retain a
 
controlling interest in
 
the venture. We
 
will serve as
 
the preferred provider
 
to supply specialty
 
and
conventional
 
eggs
 
that
 
MeadowCreek
 
needs
 
to
 
manufacture
 
egg
 
products.
 
MeadowCreek’s
 
marketing
 
plan
 
is
 
designed
 
to
extend
 
our
 
reach
 
in
 
the
 
foodservice
 
and
 
retail
 
marketplace
 
and
 
bring
 
new
 
opportunities
 
in
 
the
 
restaurant,
 
institutional
 
and
industrial food products arenas.
Also, during
 
October 2021,
 
we announced
 
that our
 
Board of
 
Directors approved
 
a $23.0
 
million capital
 
project to
 
expand our
cage-free egg production at our
 
Okeechobee, Florida, production facility.
 
The project is designed
 
to include the construction of
two cage-free layer houses and one cage-free
 
pullet house with capacity for approximately 400,000
 
cage-free hens and 210,000
pullets, respectively.
 
Construction has
 
commenced, with
 
first pullet
 
placements planned
 
by mid-May
 
2022 and
 
the first
 
layer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24
house planned to be finished by October 1, 2022, with project completion expected by February 1, 2023. The Company plans to
fund the project through a combination of available cash on hand, investments and operating cash flow.
Effective December 5,
 
2021, we made
 
an additional investment
 
in our joint
 
venture Southwest Specialty Eggs,
 
LLC to acquire
warehouse
 
and
 
distribution
 
capability
 
to
 
expand
 
Southwest
 
Specialty
 
Eggs,
 
LLC’s
 
customer
 
base
 
in the
 
southern
California, Arizona and Nevada
 
markets. This strategic investment
 
is proving to
 
be incrementally
 
accretive as additional
 
cases
of
 
specialty
 
and
 
cage-free
 
eggs
 
began
 
distribution
 
through
 
the
 
warehouse
 
in
 
early
 
December
 
as
 
customers
 
prepared
 
for
 
the
California’s January 1, 2022 cage-free mandate.
RESULTS OF OPERATIONS
The following table sets
 
forth, for the periods
 
indicated, certain items from
 
our Condensed Consolidated Statements
 
of Income
expressed as a percentage of net sales.
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
80.8
%
86.8
%
88.0
%
87.7
%
Gross profit
19.2
%
13.2
%
12.0
%
12.3
%
Selling, general and administrative
11.0
%
13.3
%
12.4
%
13.6
%
(Gain) loss on disposal of fixed assets
(0.1)
%
0.1
%
(0.2)
%
—
%
Operating income (loss)
8.3
%
(0.2)
%
(0.2)
%
(1.3)
%
Total other income, net
2.8
%
3.4
%
1.8
%
1.5
%
Income before income taxes
11.1
%
3.2
%
1.6
%
0.2
%
Income tax expense (benefit)
2.8
%
(0.5)
%
(0.2)
%
(0.4)
%
Net income
8.3
%
3.7
%
1.8
%
0.6
%
NET SALES
Total net
 
sales for the third quarter of
 
fiscal 2022 were $477.5 million compared
 
to $359.1 million for the same
 
period of fiscal
2021.
Net shell egg
 
sales represented 97.3%
 
and 97.5% of
 
total net sales
 
for the
 
third quarters of
 
fiscal 2022 and
 
2021, respectively.
Shell
 
egg
 
sales
 
classified
 
as
 
“Other”
 
represent
 
sales
 
of
 
hard-cooked
 
eggs,
 
hatching
 
eggs
 
and
 
other
 
miscellaneous
 
products
included with our shell egg operations.
 
Total
 
net sales
 
for the
 
thirty-nine weeks
 
ended February
 
26, 2022
 
were $1,184.2
 
million, compared
 
to $999.2
 
million for
 
the
comparable period of fiscal 2021.
Net
 
shell
 
egg
 
sales
 
represented
 
97.2%
 
and
 
97.4%
 
of
 
total
 
net
 
sales
 
for
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
26,
 
2022
 
and
February 27, 2021, respectively.
 
Total
 
conventional
 
dozens
 
sold
 
for
 
the
 
first,
 
second
 
and
 
third
 
quarters
 
were
 
183.9
 
million,
 
192.1
 
million
 
and
 
192.5
 
million,
respectively.
 
Total
 
specialty
 
dozens
 
sold
 
for
 
the
 
first,
 
second
 
and
 
third
 
quarters
 
were
 
70.8
 
million,
 
77.4
 
million
 
and
 
95.1
million, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
The table below presents an analysis of our conventional and specialty shell egg sales (in thousands, except percentage data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
February 26, 2022
February 27, 2021
Total net sales
$
477,485
$
359,080
$
1,184,195
$
999,189
Conventional
$
280,633
60.4
%
$
203,189
58.0
%
$
685,678
59.6
%
$
560,297
57.5
%
Specialty
182,945
39.4
%
145,210
41.5
%
462,319
40.2
%
408,537
42.0
%
Egg sales, net
463,578
99.8
%
348,399
99.5
%
1,147,997
99.8
%
968,834
99.5
%
Other
1,158
0.2
%
1,583
0.5
%
2,682
0.2
%
4,619
0.5
%
Net shell egg sales
$
464,736
100.0
%
$
349,982
100.0
%
$
1,150,679
100.0
%
$
973,453
100.0
%
Net shell egg sales as a
percent of total net sales
97.3
%
97.5
%
97.2
%
97.4
%
Dozens sold:
Conventional
192,511
66.9
%
203,070
72.6
%
568,511
70.0
%
599,625
73.4
%
Specialty
95,140
33.1
%
76,645
27.4
%
243,310
30.0
%
217,735
26.6
%
Total dozens sold
287,651
100.0
%
279,715
100.0
%
811,821
100.0
%
817,360
100.0
%
Net average selling price per
dozen:
Conventional
$
1.458
$
1.001
$
1.206
$
0.934
Specialty
$
1.923
$
1.895
$
1.900
$
1.876
All shell eggs
$
1.612
$
1.246
$
1.414
$
1.185
Egg products sales:
 
Egg products net sales
12,749
9,098
33,516
25,736
Pounds sold
15,947
15,569
47,225
46,565
Net average selling price per
pound
0.799
0.584
0.710
0.553
Shell egg net sales
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
In
 
the
 
third
 
quarter of
 
fiscal 2022,
 
conventional
 
egg
 
sales
 
increased
 
$77.4
 
million,
 
or
 
38.1%,
 
compared
 
to
 
the
 
third
quarter of fiscal
 
2021, primarily due
 
to the increase
 
in price for
 
conventional shell eggs,
 
partially offset
 
by a decrease
in volume
 
of conventional
 
eggs sold.
 
Changes in
 
price resulted
 
in a
 
$88.0 million
 
increase and
 
the change
 
in volume
resulted in a $10.6 million decrease in net sales, respectively.
-
We believe prices for conventional eggs were positively impacted by a better alignment of the conventional production
layer
 
hen
 
flock
 
and
 
customer
 
and
 
consumer
 
demand.
 
According
 
to
 
reports
 
from
 
the
 
USDA,
 
the
 
average
 
number
 
of
hens producing
 
white and
 
brown conventional
 
eggs for
 
February 2022
 
decreased 31.7
 
million, or
 
13.1%, versus
 
the
prior-year
 
comparable period.
 
USDA Agriculture
 
Marketing
 
Service reported
 
shell
 
eggs
 
broken for
 
foodservice and
further processing
 
increased 7.9% compared
 
to the
 
comparable prior-year
 
period. We
 
believe lower
 
conventional egg
prices in the prior-year period were primarily tied to a surplus of conventional eggs entering the retail channel from the
foodservice channel exceeding demand during this phase of the pandemic.
-
Conventional
 
egg
 
volume
 
sales
 
decreased
 
5.2%.
 
We
 
believe
 
many
 
consumers
 
have
 
evolved
 
their
 
preferences
 
to
purchase higher-priced specialty eggs for at-home meal preparation due to the perceived health and
 
welfare benefits of
specialty eggs, various state laws
 
mandating the sale of cage-free
 
and the public commitments by
 
most retailers to sell
more cage-free
 
products. Per
 
Information Resources,
 
Inc. (“IRI”),
 
Total
 
US –
 
Multi Outlet,
 
conventional white
 
shell
egg
 
dozens
 
sales
 
decreased
 
13.7%
 
during
 
the
 
latest
 
13
 
weeks
 
ended
 
February
 
27,
 
2022
 
versus
 
the
 
prior-year
comparable period.
-
Specialty egg sales increased
 
$37.7 million, or 26.0%,
 
in the third quarter
 
of fiscal 2022 compared
 
to the third quarter
of
 
fiscal
 
2021,
 
primarily
 
due
 
to
 
a
 
24.1%
 
increase
 
in
 
the
 
volume
 
of
 
specialty
 
eggs
 
sold,
 
which
 
resulted
 
in
 
a
 
$35.0
million increase in
 
net sales. Per
 
IRI, Total
 
US – Multi
 
Outlet for the
 
latest 13 weeks
 
ended February 27,
 
2022, cage-
free eggs
 
dozens sold
 
(including free-range,
 
pasture-raised and
 
organic) increased
 
21.3%. We
 
believe this
 
increase in
 
26
demand is due
 
to California’s
 
cage-free mandate going
 
into-effect January
 
1, 2022,
 
as well
 
as more retailers’
 
shifting
to selling more cage-free products.
-
Our specialty egg
 
sales in
 
the third quarter
 
of fiscal
 
2022 versus
 
the prior-year
 
period benefitted from
 
our acquisition
of
 
the remaining
 
50% membership
 
interest in
 
Red River,
 
which helped
 
drive our
 
cage-free egg
 
sales. Our
 
cage-free
sales
 
also
 
benefitted
 
from
 
our
 
continued
 
investment
 
in
 
expanded
 
cage-free
 
capabilities
 
as
 
additional
 
cage-free
production capacity came online during the quarter. Cage-free egg sales for the first, second and third quarters of fiscal
2022 were 22.3%, 22.4% and 24.1% of our total net shell egg sales, respectively.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
For
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
26,
 
2022,
 
conventional
 
egg
 
sales
 
increased
 
$125.4
 
million
 
or
 
22.4%
compared
 
to
 
the
 
same period
 
of
 
fiscal 2021,
 
primarily
 
due
 
to
 
the
 
increase in
 
price,
 
partially
 
offset
 
by
 
a
 
decrease in
volume
 
of
 
conventional
 
eggs
 
sold.
 
Changes
 
in
 
price
 
resulted
 
in
 
a
 
$154.6
 
million
 
increase
 
and
 
change
 
in
 
volume
resulted in a $29.1 million decrease in net sales, respectively.
-
We believe prices for conventional eggs were positively impacted by a better alignment of the conventional production
layer hen flock and customer and consumer demand.
 
USDA Agriculture Marketing Service reported shell eggs broken
for
 
foodservice
 
and
 
further
 
processing
 
increased
 
10.2%
 
compared
 
to
 
the
 
comparable
 
prior-year
 
period.
 
We
 
believe
lower conventional
 
egg prices
 
in the
 
prior-year period
 
were primarily
 
tied to
 
a surplus
 
of conventional
 
eggs entering
the retail channel from the foodservice channel exceeding demand during this phase of the pandemic.
-
The decrease in
 
volume of conventional
 
eggs sold was
 
primarily due to
 
elevated retail demand
 
during the first
 
half of
fiscal 2021
 
due to
 
consumers’ preferences
 
to purchase
 
eggs for
 
in-home meal
 
preparation due
 
to the
 
pandemic. We
saw this consumer
 
preference begin to
 
shift in the
 
fourth quarter of
 
fiscal 2021 as
 
consumers began to
 
resume out-of-
home
 
dining
 
and
 
prepare
 
fewer
 
meals
 
at
 
home.
 
Per
 
Information
 
Resources,
 
Inc.
 
(“IRI”),
 
Total
 
US
 
–
 
Multi
 
Outlet,
conventional white shell egg dozens sales decreased 12.6% during the latest 39
 
weeks ended February 27, 2022 versus
the prior-year comparable period.
-
Specialty egg sales increased $53.8
 
million, or 13.2%, for the
 
thirty-nine weeks ended February 26, 2022
 
compared to
the same period of
 
fiscal 2021, primarily due
 
to an 11.7%
 
increase in the volume
 
of specialty dozens sold
 
and a slight
increase in specialty egg prices. Changes in price resulted in a $5.8 million increase and change in volume resulted in a
$48.0 million increase in net sales,
 
respectively. We
 
also benefitted from our additional cage-free
 
production capacity.
Cage-free egg sales for the thirty-nine weeks ended February 26, 2022 were 23.0% of our total net shell egg sales.
Egg products net sales
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Egg
 
products
 
net
 
sales
 
increased
 
$3.7
 
million
 
or
 
40.1%
 
for
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022
 
compared
 
to
 
the
 
same
period of fiscal 2021,
 
primarily due to a
 
36.8% selling price increase,
 
which had a $3.4
 
million positive impact on
 
net
sales.
-
Selling prices for egg products in
 
the third quarter of fiscal 2021
 
were negatively impacted by a decline in
 
foodservice
demand due
 
to the
 
pandemic. Our
 
egg products
 
net average
 
selling price
 
increased in
 
the third
 
quarter of
 
fiscal 2022
compared to
 
the same
 
period in
 
fiscal 2021
 
as foodservice
 
channel demand
 
has begun
 
to shift
 
more to
 
pre-pandemic
levels.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Egg products
 
net sales
 
increased $7.8
 
million or
 
30.2%, primarily
 
due to
 
a 28.4%
 
selling price
 
increase compared
 
to
the first thirty-nine weeks of fiscal 2021, which had a $7.4 million positive impact on net sales.
-
Our egg products
 
net average selling
 
price increased in
 
the thirty-nine weeks
 
end February 26,
 
2022, compared to
 
the
same
 
period
 
in
 
fiscal
 
2021
 
as
 
foodservice
 
channel
 
demand
 
has
 
begun
 
to
 
shift
 
more
 
towards
 
pre-pandemic
 
levels.
Selling
 
prices
 
for
 
egg
 
products
 
in
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
27,
 
2021
 
were
 
negatively
 
impacted
 
by
 
a
decline in foodservice
 
demand during the
 
more restrictive phases
 
of governmental and
 
business shutdowns due
 
to the
pandemic.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
COST OF SALES
Costs of sales for
 
the third quarter of
 
fiscal 2022 were $385.9
 
million compared to $311.6
 
million for the same
 
period of fiscal
2021. For the
 
thirty-nine weeks ended
 
February 26, 2022
 
and February 27,
 
2021, total cost
 
of sales were
 
$1,042.2 million and
$876.5 million, respectively.
Cost of
 
sales consists
 
of costs
 
directly related
 
to producing,
 
processing and
 
packing shell
 
eggs, purchases
 
of shell
 
eggs from
outside producers, processing and packing of liquid and frozen egg products and other non-egg costs. Farm production costs are
those costs incurred
 
at the egg
 
production facility,
 
including feed, facility,
 
hen amortization, and
 
other related farm
 
production
costs.
The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):
Thirteen Weeks Ended
Thirty-nine Weeks Ended
February 26,
2022
February 27,
2021
%
Change
February 26,
2022
February 27,
2021
%
Change
Cost of Sales:
Farm production
$
239,389
$
190,883
25.4
%
$
668,855
$
531,877
25.8
%
Processing, packaging, and warehouse
77,116
63,640
21.2
211,649
187,014
13.2
Egg purchases and other (including
change in inventory)
59,135
50,443
17.2
133,968
137,001
(2.2)
Total shell eggs
375,640
304,966
23.2
1,014,472
855,892
18.5
Egg products
10,263
6,597
55.6
27,749
20,565
34.9
Total
$
385,903
$
311,563
23.9
%
$
1,042,221
$
876,457
18.9
%
Farm production costs (per dozen
produced)
Feed
$
0.562
$
0.467
20.3
%
$
0.546
$
0.422
29.4
%
Other
$
0.350
$
0.313
11.8
%
$
0.350
$
0.318
10.1
%
Total
$
0.912
$
0.780
16.9
%
$
0.896
$
0.740
21.1
%
Outside egg purchases (average cost per
dozen)
$
1.75
$
1.26
38.9
%
$
1.57
$
1.23
27.6
%
Dozens produced
264,433
248,130
6.6
%
757,677
731,205
3.6
%
Percent produced to sold
91.9%
88.7%
3.6
%
93.3%
89.5%
4.2
%
Farm Production
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Feed
 
costs per
 
dozen
 
produced
 
increased 20.3%
 
in
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022
 
compared
 
to
 
the third
 
quarter of
fiscal 2021.
 
This increase
 
was primarily
 
due
 
to
 
increased prices
 
for
 
corn, our
 
primary feed
 
ingredient. For
 
the
 
third
quarter
 
of
 
fiscal 2022,
 
the
 
average
 
daily
 
Chicago
 
Board
 
of
 
Trade
 
(“CBOT”) market
 
price
 
was
 
$6.13 per
 
bushel
 
for
corn representing an increase of 23.5 percent compared to the average
 
daily CBOT prices for the third quarter of fiscal
2021.
 
-
Other farm
 
production costs
 
increased due
 
to higher
 
flock amortization,
 
primarily from
 
an increase
 
in our
 
cage-free
production, which has
 
higher capitalized costs. Also,
 
our higher feed
 
costs, which began to
 
rise in our
 
third quarter of
fiscal 2021, are capitalized in our flocks during pullet production and increased our amortization expense.
-
We had higher facility expense as more cage-free facilities came into production.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Feed
 
costs per
 
dozen
 
produced
 
increased
 
29.4%
 
in
 
the
 
thirty-nine weeks
 
ended
 
February 26,
 
2022
 
compared
 
to
 
the
same period
 
of fiscal
 
2021, primarily
 
due to
 
higher feed
 
ingredient prices
 
resulting from
 
weather-related shortfalls
 
in
production and yields, which have placed additional pressure on domestic supplies.
-
Other farm
 
production costs
 
increased due
 
to higher
 
flock amortization,
 
primarily from
 
an increase
 
in our
 
cage-free
production,
 
which
 
has
 
higher
 
capitalized
 
costs.
 
Also,
 
higher
 
feed
 
costs,
 
which
 
began
 
to
 
rise
 
in
 
our
 
third
 
quarter
 
of
fiscal 2021, are capitalized in our flocks during pullet production and increased our amortization expense.
 
 
28
-
We had higher facility expense as more cage-free facilities came into production.
Processing, packaging, and warehouse
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Cost of
 
packaging materials
 
increased 17.7%
 
compared to
 
the third
 
quarter of
 
fiscal 2021
 
as supply
 
chain constraints
initially
 
caused
 
by
 
the
 
pandemic
 
increased
 
costs
 
for
 
packaging
 
products
 
and
 
manufacturers
 
implemented
 
pandemic
surcharges.
 
Costs also increased due to rising inflation.
-
Labor costs increased
 
16.3% due to
 
wage increases in
 
response to labor
 
shortages, primarily due
 
to the pandemic
 
and
its effects.
-
Dozens
 
processed
 
increased
 
6.6%
 
compared
 
to
 
the
 
third
 
quarter
 
of
 
fiscal
 
2021,
 
which
 
resulted
 
in
 
a
 
$4.5
 
million
increase in costs.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Cost of
 
packaging materials
 
increased 10.8%
 
compared to
 
the thirty-nine
 
weeks ended
 
February 27,
 
2021 as
 
supply
chain
 
constraints
 
initially
 
caused
 
by
 
the
 
pandemic
 
increased
 
costs
 
for
 
packaging
 
products
 
and
 
manufacturers
implemented pandemic surcharges.
 
Costs also increased due to rising inflation.
-
Labor costs increased
 
15.3% due to
 
wage increases in
 
response to labor
 
shortages, primarily due
 
to the pandemic
 
and
its effects.
-
Dozens processed increased 3.2%
 
compared to the thirty-nine
 
weeks ended February 27,
 
2021, which resulted in
 
$6.1
million increase in costs.
Egg purchases and other (including change in inventory)
Third Quarter – Fiscal 2022 vs. Fiscal 2021
-
Costs in
 
this category
 
increased primarily
 
due to
 
higher egg
 
prices, partially
 
offset
 
by the
 
decrease in
 
the volume
 
of
outside egg purchases, as our percentage of produced to sold increased to 91.9% from 88.7%.
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
-
Costs
 
in
 
this
 
category
 
decreased
 
primarily
 
due
 
to
 
the
 
decrease
 
in
 
the
 
volume
 
of
 
outside
 
egg
 
purchases,
 
as
 
our
percentage of produced to sold increased to 93.3% from 89.5%, partially offset by higher egg prices.
Looking
 
forward
 
throughout
 
the
 
rest
 
of
 
fiscal
 
2022,
 
market
 
indications
 
point
 
to
 
higher
 
corn
 
and
 
soybean
 
prices
 
and
 
higher
volatility tied to the Russia-Ukraine war and higher export demand.
GROSS PROFIT
 
Gross profit for the third quarter of fiscal 2022
 
was $91.6 million compared to $47.5 million for the
 
same period of fiscal 2021.
The increase of $44.1 million was primarily due to higher egg prices as well as the increased volume of specialty eggs, partially
offset by the increased cost of feed ingredients and processing costs.
Gross profit
 
for the
 
thirty-nine weeks
 
ended February
 
26, 2022
 
was $142.0
 
million compared
 
to $122.7
 
million for
 
the same
period of fiscal
 
2021. The increase
 
of $19.3 million
 
was primarily due
 
to higher egg
 
prices as well
 
as the increased
 
volume of
specialty eggs, partially offset by the increased cost of feed ingredients and processing costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,
 
general,
 
and
 
administrative
 
expenses
 
("SGA")
 
include
 
costs
 
of
 
marketing,
 
distribution,
 
accounting
 
and
 
corporate
overhead. The following table presents an analysis of our SGA expenses (in thousands):
Thirteen Weeks Ended
February 26, 2022
February 27, 2021
$ Change
% Change
Specialty egg expense
$
17,318
$
16,162
$
1,156
7.2
%
Delivery expense
16,440
13,359
3,081
23.1
%
Payroll, taxes and benefits
11,398
10,195
1,203
11.8
%
Stock compensation expense
1,007
964
43
4.5
%
Other expenses
6,523
6,976
(453)
(6.5)
%
Total
$
52,686
$
47,656
$
5,030
10.6
%
Third Quarter – Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Specialty egg
 
expense which
 
includes franchise
 
fees, advertising
 
and promotion
 
costs generally
 
tracks with
 
specialty
egg volumes
 
which were
 
up 24.1%
 
for the
 
third quarter
 
of fiscal
 
2022 compared
 
to the
 
same period
 
of fiscal
 
2021.
 
Specialty dozens
 
sold to
 
outside distributors
 
including unconsolidated
 
affiliates, Specialty
 
Eggs, LLC
 
and Southwest
Specialty Eggs, LLC, increased which reduced related costs that we generally incur for specialty egg sales to retailers.
 
Delivery expense
-
The increased
 
delivery expense
 
is primarily
 
due to
 
the increase
 
in fuel
 
and labor
 
costs for
 
both our
 
fleet and
 
contract
trucking.
Payroll, taxes and benefits expense
-
The increase in payroll, taxes and benefits
 
is primarily due to increased wages for standard annual
 
raises as well as the
addition of Red River. The accrual for anticipated performance-based bonuses also increased.
Thirty-nine Weeks Ended
February 26, 2022
February 27, 2021
$ Change
% Change
Specialty egg expense
$
45,295
$
42,898
$
2,397
5.6
%
Delivery expense
44,771
38,905
5,866
15.1
%
Payroll, taxes and benefits
32,640
31,526
1,114
3.5
%
Stock compensation expense
2,983
2,789
194
7.0
%
Other expenses
21,302
19,376
1,926
9.9
%
Total
$
146,991
$
135,494
$
11,497
8.5
%
Thirty-nine weeks – Fiscal 2022 vs. Fiscal 2021
Specialty egg expense
-
Specialty egg
 
expense which
 
includes franchise
 
fees, advertising
 
and promotion
 
costs generally
 
tracks with
 
specialty
egg volumes
 
which were
 
up 11.7%
 
for the
 
thirty-nine weeks end
 
February 26,
 
2022, compared
 
to the
 
same period
 
of
fiscal 2021.
 
Specialty dozens sold to outside distributors including unconsolidated affiliates,
 
Specialty Eggs, LLC and
Southwest Specialty Eggs,
 
LLC, increased which
 
reduced related costs
 
that we generally
 
incur for specialty
 
egg sales
to retailers.
 
Delivery expense
-
The increased
 
delivery expense
 
is primarily
 
due to
 
the increase
 
in fuel
 
and labor
 
costs for
 
both our
 
fleet and
 
contract
trucking.
Other expenses
-
The increase in other
 
expenses is primarily due
 
to property losses
 
incurred that were not
 
covered by insurance as
 
well
as increased premiums for property and casualty insurance programs.
30
OPERATING
 
INCOME (LOSS)
For
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
recorded
 
operating
 
income
 
of
 
$39.6
 
million
 
compared
 
to
 
operating
 
loss
 
of
 
$493
thousand for the same period of fiscal 2021.
For the thirty-nine weeks ended February 26, 2022, we recorded an operating loss of $2.2 million compared to an operating loss
of $13.2 million for the same period of fiscal 2021.
OTHER INCOME (EXPENSE)
 
Total
 
other
 
income
 
(expense)
 
consists
 
of
 
items
 
not
 
directly
 
charged
 
or
 
related
 
to
 
operations,
 
such
 
as
 
interest
 
income
 
and
expense, royalty income, equity income or loss of unconsolidated entities, and patronage income, among other items.
For
 
the
 
third
 
quarter
 
of
 
fiscal
 
2022,
 
we
 
earned
 
$205
 
thousand
 
of
 
interest
 
income
 
compared
 
to
 
$661
 
thousand
 
for
 
the
 
same
period
 
of
 
fiscal
 
2021.
 
The
 
decrease
 
resulted
 
from
 
significantly
 
lower
 
investment
 
balances.
 
The
 
Company
 
recorded
 
interest
expense
 
of
 
$126
 
thousand
 
and
 
$70
 
thousand
 
for
 
the
 
third
 
quarters
 
ended
 
February
 
26,
 
2022
 
and
 
February
 
27,
 
2021,
respectively.
For the
 
thirty-nine weeks ended
 
February 26, 2022,
 
we earned
 
$702 thousand
 
of interest
 
income compared to
 
$2.4 million
 
for
the
 
same
 
period
 
of
 
fiscal
 
2021.
 
The
 
decrease
 
resulted
 
from
 
significantly lower
 
investment balances.
 
The
 
Company
 
recorded
interest
 
expense
 
of
 
$262
 
thousand
 
and
 
$205
 
thousand
 
for
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
26,
 
2022
 
and
 
February
 
27,
2021, respectively.
Patronage dividends, which represent distributions from our membership in Eggland’s Best, Inc. were $10.1 million and $9.0
million for the thirteen and thirty-nine weeks ended February 26, 2022 and February 27, 2021, respectively. Patronage
dividends are paid once a year based on the profits of Eggland’s Best as well as its available cash.
For the third
 
quarter of fiscal
 
2022, equity income
 
of unconsolidated entities
 
was $1.8 million
 
compared to $1.9
 
million in the
prior-year period.
For the thirty-nine weeks ended February 26, 2022, equity income of unconsolidated entities was $2.2 million compared to $1.9
million in the prior-year period.
Other, net for
 
the third quarter ended February 26, 2022,
 
was income of $1.1 million compared
 
to income of $537 thousand for
the same period of fiscal 2021.
Other, net
 
for the thirty-nine
 
weeks ended February
 
26, 2022, was
 
income of $8.2
 
million compared to
 
income of $1.5
 
million
for the
 
same period
 
of fiscal
 
2021.
 
The majority
 
of the
 
increase is
 
due
 
to our
 
acquisition of
 
the remaining
 
50% membership
interest in
 
Red River
 
as we
 
recognized a
 
$4.5 million
 
gain due
 
to the
 
remeasurement of our
 
equity investment,
 
along with
 
the
$1.4 million payment related to review and adjustment of our various marketing agreements.
INCOME TAXES
For the
 
third quarter of
 
fiscal 2022,
 
pre-tax income was
 
$53.0 million compared
 
to $11.8
 
million for the
 
same period of
 
fiscal
2021. We
 
recorded income tax expense
 
of $13.6 million for
 
the third quarter of
 
fiscal 2022, which reflects
 
an effective tax
 
rate
of 25.6%.
 
Excluding the impact of discrete
 
items related to a
 
$5.0 million net tax
 
benefit recorded in the
 
third quarter of fiscal
2021 in connection
 
with the Coronavirus
 
Aid, Relief, and
 
Economic Security Act
 
(the “CARES Act”),
 
income tax expense
 
for
the comparable period of fiscal 2021 was $3.3 million, which reflects an adjusted effective tax rate of 27.9%.
For the
 
thirty-nine weeks
 
ended February
 
26, 2022,
 
pre-tax income
 
was $19.7
 
million compared
 
to $2.2
 
million for
 
the same
period of fiscal 2021. We
 
recorded an income tax benefit of $2.9 million, which includes the discrete tax benefit of $8.3 million
as discussed
 
in
 
of the
 
Notes to
 
Condensed Consolidated
 
Financial Statements
 
in this
 
Quarterly Report.
Excluding the discrete tax benefit, income tax
 
expense was $5.3 million with an
 
adjusted effective tax rate of 27.3%,
 
compared
to income tax expense
 
of $934 thousand for the
 
comparable period of fiscal 2021,
 
which reflects an effective
 
tax rate of 41.8%
excluding the impact of the $5.0 million discrete net tax benefit recorded in connection with the CARES Act.
 
Our effective tax rate differs
 
from the federal statutory income tax rate
 
due to state income taxes, certain
 
federal tax credits and
certain
 
items
 
included
 
in
 
income
 
for
 
financial
 
reporting
 
purposes
 
that
 
are
 
not
 
included
 
in
 
taxable
 
income
 
for
 
income
 
tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31
purposes,
 
including
 
tax
 
exempt
 
interest
 
income,
 
certain
 
nondeductible
 
expenses
 
and
 
net
 
income
 
or
 
loss
 
attributable
 
to
 
our
noncontrolling interest.
NET INCOME ATTRIBUTABLE
 
TO CAL-MAINE FOODS, INC.
Net income attributable to Cal-Maine Foods, Inc. for the third quarter ended February 26, 2022, was $39.5 million, or $0.81 per
basic and
 
diluted common
 
share, compared
 
to net
 
income attributable
 
to Cal-Maine
 
Foods, Inc.
 
of $13.5
 
million or
 
$0.28 per
basic and diluted common share for the same period of fiscal 2021.
Net
 
income
 
attributable
 
to
 
Cal-Maine
 
Foods,
 
Inc.
 
for
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
26,
 
2022,
 
was
 
$22.7
 
million,
 
or
$0.46 per
 
basic and
 
diluted common
 
share, compared
 
to net
 
income attributable
 
to Cal-Maine
 
Foods, Inc.
 
of $6.3
 
million or
$0.13 per basic and diluted common share for the same period of fiscal 2021.
CAPITAL RESOURCES AND LIQUIDITY
Our working capital at February
 
26, 2022 was $401.3 million,
 
compared to $429.8 million at
 
May 29, 2021. The
 
calculation of
working capital
 
is defined
 
as current
 
assets less
 
current liabilities.
 
Our current
 
ratio was
 
4.31 at
 
February 26,
 
2022, compared
with 5.77 at May 29, 2021.
We
 
had
 
no
 
long-term
 
debt
 
outstanding
 
at
 
February
 
26,
 
2022
 
or
 
May
 
29,
 
2021.
 
On
 
November
 
15,
 
2021,
 
we
 
entered
 
into
 
an
Amended and Restated Credit Agreement (the
 
“Credit Agreement”) with a five-year
 
term. The Credit Agreement amended
 
and
restated
 
the
 
Company’s
 
previously
 
existing
 
credit
 
agreement
 
dated
 
July
 
10,
 
2018.
 
The
 
Credit
 
Agreement
 
provides
 
for
 
an
increased senior secured
 
revolving credit facility
 
(the “Credit Facility”),
 
in an
 
initial aggregate principal
 
amount of up
 
to $250
million. As
 
of February
 
26, 2022,
 
no amounts
 
were borrowed
 
under the
 
Credit Facility.
 
We
 
have $4.1
 
million in
 
outstanding
standby
 
letters
 
of
 
credit,
 
issued
 
under
 
our
 
Credit
 
Facility
 
for
 
the
 
benefit
 
of
 
certain
 
insurance
 
companies.
 
For
 
additional
information,
 
see
 
of
 
the
 
Notes
 
to
 
Condensed
 
Consolidated
 
Financial
 
Statements
 
included
 
in
 
this
Quarterly Report.
 
For the thirty-nine weeks ended February 26, 2022,
 
$20.8 million in net cash was provided by
 
operating activities, compared to
$14.7 million provided
 
by operating activities
 
for the comparable
 
period in fiscal
 
2021. This is
 
primarily due to
 
the higher egg
prices partially offset by increased costs of feed ingredients compared to the prior-year period.
We
 
continue to
 
invest in
 
our facilities,
 
with $49.2
 
million used
 
to purchase
 
property,
 
plant and
 
equipment for
 
the thirty-nine
weeks ended February
 
26, 2022, compared
 
to $73.8 million
 
in the same
 
period of fiscal
 
2021. We
 
also acquired the
 
remaining
50%
 
membership
 
interest
 
in
 
Red
 
River
 
during
 
our
 
first
 
quarter
 
of
 
fiscal
 
2022
 
for
 
$48.5
 
million.
 
Sales
 
and
 
maturities
 
of
investment
 
securities,
 
net
 
of
 
purchases,
 
were
 
$29.2
 
million
 
for
 
the
 
thirty-nine
 
weeks
 
ended
 
February
 
26,
 
2022,
 
compared
 
to
$25.8
 
million
 
for
 
the
 
comparable period
 
in
 
fiscal
 
2021.
 
We
 
received
 
$400
 
thousand
 
in
 
distributions
 
from
 
an
 
unconsolidated
entity in the first three quarters of fiscal 2022 compared to $5.8 million for the same period fiscal of 2021.
 
As of February 26, 2022, cash decreased $41.8 million
 
since May 29, 2021, compared to a decrease of
 
$25.2 million during the
same period of fiscal 2021.
We
 
continue to
 
monitor the
 
increasing demand
 
for cage-free
 
eggs and
 
to engage
 
with our
 
customers in
 
an effort
 
to achieve
 
a
smooth transition to meet their
 
announced commitment timeline for cage-free
 
egg sales. We
 
have invested approximately $502
million in facilities, equipment and related operations to expand our cage-free production
 
starting with our first facility in 2008.
The following table presents material construction projects approved as of February 26, 2022 (in thousands):
Project(s) Type
Projected
 
Completion
Projected Cost
Spent as of February
26, 2022
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses/Processing
Facility
Fiscal 2022
$
130,918
108,579
22,339
Cage-Free Layer & Pullet Houses
Fiscal 2023
24,752
6,262
18,490
$
155,670
$
114,841
$
40,829
We believe our current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient to fund our
current capital needs.
 
32
RECENTLY ISSUED/ADOPTED ACCOUNTING STANDARDS
For
 
information
 
on
 
changes
 
in
 
accounting
 
principles
 
and
 
new
 
accounting
 
policies,
 
see
 
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
2021 Annual Report.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
ITEM 3. QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during the thirty-six weeks ended February 26, 2022 from
the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2021 Annual Report.
ITEM 4.
 
CONTROLS
AND
PROCEDURES
Disclosure Controls and Procedures
Our disclosure controls
 
and procedures are
 
designed to
 
provide reasonable assurance
 
that information required
 
to be disclosed
by us in the reports we file
 
or submit under the Exchange Act is recorded,
 
processed, summarized and reported, within the time
periods specified
 
in the
 
Securities and
 
Exchange Commission’s
 
rules and
 
forms. Disclosure controls
 
and procedures
 
include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports
 
that
we file or submit under
 
the Exchange Act is accumulated and
 
communicated to management, including our principal
 
executive
and
 
principal
 
financial
 
officers,
 
or
 
persons
 
performing
 
similar
 
functions,
 
as
 
appropriate
 
to
 
allow
 
timely
 
decisions
 
regarding
required disclosure. Based on an evaluation of our disclosure controls and procedures conducted by our Chief Executive Officer
and
 
Chief
 
Financial
 
Officer,
 
together
 
with
 
other
 
financial
 
officers,
 
such
 
officers
 
concluded
 
that
 
our
 
disclosure
 
controls
 
and
procedures were effective as of February 26, 2022 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 February
 
26, 2022
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART
 
II. OTHER INFORMATION
ITEM 1.
 
LEGAL PROCEEDINGS
Refer
 
to
 
the
 
discussion
 
of
 
certain
 
legal
 
proceedings
 
involving
 
the
 
Company
 
and/or
 
its
 
subsidiaries
 
in
 
(i)
 
our
 
2021
 
Annual
Report,
 
Part I
 
Item 3
 
Legal Proceedings,
 
and Part
 
II
 
Item 8,
 
Notes
 
to Consolidated
 
Financial
 
Statements and
 
Supplementary
Data, Note 18: Commitments and Contingencies, and (ii)
 
in this Quarterly Report in
of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated herein by reference.
 
ITEM 1A.
 
RISK
FACTORS
There have been no material changes in the risk factors previously disclosed in the Company’s 2021 Annual Report.
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
The following table is a summary of our third quarter 2022 share repurchases:
Issuer Purchases of Equity Securities
Total Number of
Maximum Number
Shares Purchased
of Shares that
Total Number
Average
as Part of Publicly
May Yet
 
Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
11/28/21 to 12/25/21
206
$
36.32
—
—
12/26/21 to 01/22/22
26,780
41.00
—
—
01/23/22 to 02/26/22
—
—
—
—
26,986
$
40.96
—
—
(1)
 
As permitted under our Amended and Restated 2012 Omnibus Long-Term
 
Incentive Plan, these shares were withheld by us to satisfy tax withholding
 
 
obligations for employees in connection with the vesting of restricted common stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
*
Filed herewith as an Exhibit.
 
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
 
SIGNATURES
Pursuant to the
 
requirements of the
 
Securities Exchange Act
 
of 1934, the
 
registrant has duly
 
caused this report
 
to be signed
 
on
its behalf by the undersigned, thereunto duly authorized.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
 
March 29, 2022
/s/ Max P.
 
Bowman
Max P.
 
Bowman
Vice President, Chief Financial Officer
(Principal Financial Officer)
໿
Date:
 
March 29, 2022
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
໿