What changed in CAL-MAINE FOODS INC's 10-K — 2024 vs 2025

ITEM 1. BUSINESS Our Business We are the largest producer and distributor of shell eggs in the United States.

Our mission is to be the most sustainable producer and reliable supplier of consistent, high quality fresh shell eggs and egg products in the country, demonstrating a "Culture of Sustainability" in everything we do, and creating value for our shareholders, customers, team members and communities.

We sell most of our shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S. and aim to maintain efficient, state-of-the-art operations located close to our customers. We were founded in 1957 by the late Fred R. Adams, Jr. and are headquartered in Ridgeland, Mississippi.

The Company has one reportable operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs. Our integrated operations consist of hatching chicks, growing and maintaining flocks of pullets, layers and breeders, manufacturing feed, and producing, processing, packaging, and distributing shell eggs.

Layers are mature female chickens, pullets are female chickens usually less than 18 weeks of age, and breeders are male and female chickens used to produce fertile eggs to be hatched for egg production flocks. Our total flock as of June 3, 2023 consisted of approximately 41.2 million layers and 10.8 million pullets and breeders.

Many of our customers rely on us to provide most of their shell egg needs, including specialty and conventional eggs. Specialty eggs encompass a broad range of products. We classify cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced as specialty eggs for accounting and reporting purposes. We classify all other shell eggs as conventional products.

While we report separate sales information for these egg types, there are many cost factors that are not specifically available for conventional or specialty eggs due to the nature of egg production.

We manage our operations and allocate resources to these types of eggs on a consolidated basis based on the demands of our customers. 4 We believe that 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. Throughout the Company’s history, we have acquired other companies in our industry.

Since 1989 through our fiscal year ended June 3, 2023, we have completed 23 acquisitions ranging in size from 160 thousand layers to 7.5 million layers.

Most recently, effective on May 30, 2021, the Company acquired the remaining 50% membership interest in Red River Valley Egg Farm, LLC (“Red River”), which owns and operates a specialty shell egg production complex that includes 1.7 million cage-free hens. For a further description of this transaction, refer to Part II. Item 8.

Notes to the Consolidated Financial Statements, Note 2 – Acquisition . We are also focused on additional ways to enhance our product mix and support new opportunities in the restaurant, institutional and commercial food preparation area. Beginning in fiscal 2022, we have invested approximately $32.3 million in Meadowcreek Foods, LLC (“Meadowcreek”), an egg products operation focused on offering hard-cooked eggs.

In addition to growth through acquisitions, we have also grown by making substantial investments in our business, primarily to increase our cage-free production capacity. When we use “we,” “us,” “our,” or the “Company” in this report, we mean Cal-Maine Foods, Inc. and our consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

The Company’s fiscal year-end is on the Saturday closest to May 31. Our fiscal year 2023 and fourth quarter ended June 3, 2023, included 53 weeks and 14 weeks, respectively. The first three fiscal quarters of fiscal 2023 ended August 27, 2022, November 26, 2022, and February 25, 2023, all included 13 weeks.

All references herein to a fiscal year means our fiscal year and all references to a year mean a calendar year. Industry Background According to the U.S.

Department of Agriculture (“USDA”) Agricultural Marketing Service, in 2022 approximately 71% of table eggs produced in the U.S. were sold as shell eggs, with 56.6% sold through food at home outlets such as grocery and convenience stores, 12.4% sold to food-away-from home channels such as restaurants and 1.7% exported.

The USDA estimated that in 2022 approximately 29.6% of eggs produced in the U.S. were sold as egg products (shell eggs broken and sold in liquid, frozen, or dried form) to institutions (e.g. companies producing baked goods). For information about egg producers in the U.S., see “Competition” below.

Our industry has been greatly impacted by the outbreaks of highly pathogenic avian influenza (“HPAI”), first detected in commercial flocks in the U.S. in February 2022 and continuing during our fiscal 2023. For additional information regarding HPAI and its impact on our industry and business, see Part II. Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .

Given historical consumption trends, we believe that general demand for eggs in the U.S. increases basically in line with the overall U.S. population growth; however, specific events can impact egg supply and consumption in a particular period, as occurred with the 2015 HPAI outbreak, the COVID-19 pandemic (particularly during 2020), and the most recent HPAI outbreak starting in early 2022.

According to the USDA’s Economic Research Service, estimated annual per capita consumption in the United States between 2018 and 2022 varied, ranging from 279 to 292 eggs. In calendar year 2022, per capita U.S. consumption was estimated to be 279 eggs, or approximately 5.4 eggs per person per week.

According to the USDA, the decline in consumption was primarily due to limited availability caused by the outbreak of HPAI. As of July 18, 2023, the USDA projects that the per capita consumption will increase in calendar year 2023 and 2024 to 282.6 and 292.7, respectively.

The USDA calculates per capita consumption by dividing total shell egg disappearance in the U.S. by the U.S. population. Prices for Shell Eggs Wholesale shell egg sales prices are a critical component of revenue for the Company.

Wholesale shell egg prices are volatile, cyclical, and impacted by a number of factors, including consumer demand, seasonal fluctuations, the number and productivity of laying hens in the U.S. and outbreaks of agricultural diseases such as HPAI.

While we use several different pricing mechanisms in pricing agreements with our customers, we believe the majority of conventional shell eggs sold in the U.S. in the retail and foodservice channels are sold at prices that take into account, in varying ways, independently quoted wholesale market prices, such as those published by Urner Barry Publications, Inc.

(“UB”) for shell eggs, however, grain-based and cost plus arrangements are being utilized in the food service channel and some western markets.

We sell the majority of our conventional shell eggs based on formulas that take into account, in varying ways, independently quoted regional wholesale market prices for shell eggs 5 or formulas related to our costs of production, which include the cost of corn and soybean meal.

We do not sell eggs directly to consumers or set the prices at which eggs are sold to consumers. The weekly average price for the southeast region for large white conventional shell eggs as quoted by UB is shown below for the past three fiscal years along with the five-year average price. As further discussed in Part II. Item 7.

Management’s Discussion and Analysis – Results of Operations , conventional shell egg prices rose during the fourth quarter of fiscal 2022 and first three quarters of fiscal 2023, due to the reduced supply related to the HPAI outbreak first detected in commercial flocks in February 2022, steady shell egg demand and higher production costs.

Conventional shell egg prices continued to rise into the fourth quarter of fiscal 2023 followed by a substantial decline, as demand for shell eggs began to decrease in line with typical seasonal variance and as supply increased due to the repopulating of HPAI -affected layer flocks.

The actual prices that we realize on any given transaction will not necessarily equal quoted market prices because of the individualized terms that we negotiate with individual customers which are influenced by many factors.

Depending on market conditions, input costs and individualized contract terms, the price we receive per dozen eggs in any given transaction may be more than or less than our farm production and other costs per dozen. Specialty eggs are typically sold at prices and terms negotiated directly with customers.

Historically, prices for specialty eggs have experienced less volatility than prices for conventional shell eggs and have generally been higher due to customer and consumer willingness to pay more for specialty eggs. However, throughout most of fiscal 2023 conventional egg prices exceeded specialty egg prices.

Conventional egg prices generally respond more quickly to market conditions because we sell the majority of our conventional shell eggs based on formulas that adjust periodically and take into account, in varying ways, independently quoted regional wholesale market prices for shell eggs or formulas related to our costs of production.

Because the majority of our specialty eggs are typically sold at prices and terms negotiated directly with customers, specialty egg prices do not fluctuate as much as conventional pricing. Feed Costs for Shell Egg Production Feed is a primary cost component in the production of shell eggs and represented 63.1% of our fiscal 2023 farm production costs.

We routinely fill our storage bins during harvest season when prices for feed ingredients, primarily corn and to a lesser extent soybean meal, are generally lower.

To ensure continued availability of feed ingredients, we may enter into contracts for future purchases of corn and soybean meal, and as part of these contracts, we may lock-in the basis portion of our grain purchases several months in advance. Basis is the difference between the local cash price for grain and the applicable futures price.

A basis 6 contract is a common transaction in the grain market that allows us to lock-in a basis level for a specific delivery period and wait to set the futures price at a later date. Furthermore, due to the more limited supply for organic ingredients, we may commit to purchase organic ingredients in advance to help assure supply.

Ordinarily, we do not enter into long-term contracts beyond a year to purchase corn and soybean meal or hedge against increases in the prices of corn and soybean meal.

As the quality and composition of feed is a critical factor in the nutritional value of shell eggs and health of our chickens, we formulate and produce the vast majority of our own feed at our feed mills located near our production plants.

Our annual feed requirements for fiscal 2023 were 2.0 million tons of finished feed, of which we manufactured 1.9 million tons. We currently have the capacity to store 182 thousand tons of corn and soybean meal, and we replenish these stores as needed throughout the year.

While we do not import corn or soy directly from the region, the Russia-Ukraine War has had a negative impact on the worldwide supply of grain, including corn, putting upward pressure on prices.

We purchase the vast majority of our corn and soybean meal from U.S sources but may be forced to purchase internationally when U.S. supplies are not readily available. Feed grains are currently available from an adequate number of sources in the U.S.

As a point of reference, a multi-year comparison of the average of daily closing prices per Chicago Board of Trade for each period in our fiscal calendar are shown below for corn and soybean meal: Shell Egg Production Our percentage of dozens produced to sold was 92.3% of our total shell eggs sold in fiscal 2023, with 91.8% of such production coming from company-owned facilities, and 8.2% from contract producers.

ITEM 1A. RISK FACTORS Our business and results of operations are subject to numerous risks and uncertainties, many of which are beyond our control. The following is a description of the known factors that may materially affect our business, financial condition or results of operations.

They should be considered carefully, in addition to the information set forth elsewhere in this Annual Report on Form 10-K, including under Part II.

There is no public trading market for the Class A Common Stock. All outstanding Class A shares are owned by a limited liability company of which Adolphus Baker, our Chairman, is the sole managing member and will be voted at the direction of Mr. Baker.

At July 14, 2023, there were approximately 319 record holders of our Common Stock and approximately 73,626 beneficial owners whose shares were held by nominees or broker dealers. For additional information about our capital structure, see Note 11 - Equity in Part II. Item 8. Notes to the Consolidated Financial Statements.

Dividends Cal-Maine has a variable dividend policy adopted by its Board of Directors.

Pursuant to the policy, Cal-Maine 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 21 (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 will pay 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 last quarter for which a dividend was paid.

Under the Company's Credit Facility, dividends are restricted to the amount permitted under the Company’s current dividend policy, and may not be paid if a default exists or will arise after giving effect to the dividend or if the sum of cash and cash equivalents of the Company and its subsidiaries plus availability under the Credit Facility equals less than $50 million.

Stock Performance Graph The Company utilized the (i) Russell 2000 Total Return, and (ii) S&P Composite 1500 Food Products Industry Index to benchmark the Company’s total shareholder return. The Company is a member of each of these indexes and believes the other companies included in these indexes provide products and services similar to Cal-Maine Foods.

The graph presents total shareholder return and assumes $100 was invested on June 1, 2018 in the stock or index and dividends were reinvested.

June 1, 2018 May 31, 2019 May 29, 2020 May 28, 2021 May 27, 2022 June 3, 2023 Cal-Maine Foods, Inc. $ 100.00 $ 80.69 $ 97.12 $ 76.16 $ 105.31 $ 114.38 Russell 2000 Total Return 100.00 90.16 87.06 143.27 120.53 118.75 S&P Composite 1500 Food Products Industry Index 100.00 105.74 116.41 144.80 155.14 163.85 22 Issuer Purchases of Equity Securities The following table is a summary of our fourth quarter 2023 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 2/26/23 to 3/25/23 — $ — — — 3/26/23 to 4/22/23 10,551 48.62 — — 4/23/23 to 6/03/23 — — — — 10,551 $ 48.62 — — (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.

Recent Sales of Unregistered Securities No sales of securities without registration under the Securities Act of 1933 occurred during our fiscal year ended June 3, 2023.

Securities Authorized for Issuance under Equity Compensation Plans Equity Compensation Plan Information (a) (b) (c) Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by shareholders — $ — 294,140 Equity compensation plans not approved by shareholders — — — Total — $ — 294,140 (a) There were no outstanding options, warrants or rights as of June 3, 2023.

There were 941,593 shares of restricted stock outstanding under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan as of June 3, 2023. (b) There were no outstanding options, warrants or rights as of June 3, 202 3. (c) Reflects shares available for future issuance as of June 3, 2023 under our Amended and Restated 2012 Omnibus Long-Term Incentive Plan.

For additional information, see Note 14 – Stock Compensation Plans in Part II. Item 8. Notes to the Consolidated Financial Statements.