calm2023q1

Index

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

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

August 27, 2022

☐

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

check

mark

whether

the

registrant:

(1)

has

filed

all

reports

required

filed

Section

15(d)

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

☑

☐

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

☑

☐

Indicate by

check mark

whether the registrant

is a large

accelerated filer,

an accelerated

filer, a

non-accelerated filer,

a smaller

reporting

company,

emerging

growth

company.

See

the

definitions

“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

☐

emerging

growth

company,

indicate

check

mark

the

registrant

has

elected

not

use

the

extended

transition

period

for

complying

with

any

new

revised

financial

accounting

standards

provided

pursuant

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

☐

☑

There were

44,135,851

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 September 27, 2022.

Index

INDEX

Page

Number

Part I.

Financial Information

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets -

August 27, 2022 and May 28, 2022

Condensed Consolidated Statements of Operations -

Thirteen Weeks Ended August 27, 2022 and August 28, 2021

Condensed Consolidated Statements of Comprehensive Income -

Thirteen Weeks Ended August 27, 2022 and August 28, 2021

Condensed Consolidated Statements of Cash Flows -

Thirteen Weeks Ended August 27, 2022 and August 28, 2021

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II.

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Index

PART

FINANCIAL

INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except for par value amounts)

(Unaudited)

August 27, 2022

May 28, 2022

Assets

Current assets:

Cash and cash equivalents

136,021

59,084

Investment securities available-for-sale

145,784

115,429

Trade and other receivables, net

178,217

177,257

Income tax receivable

42,147

Inventories

265,754

263,316

Prepaid expenses and other current assets

10,965

4,286

Total current

assets

778,888

661,519

Property, plant &

equipment, net

688,656

677,796

Investments in unconsolidated entities

15,674

15,530

Goodwill

44,006

Intangible assets, net

17,592

18,131

Other long-term assets

9,913

10,507

Total Assets

1,554,729

1,427,489

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued expenses

188,689

148,018

Dividends payable

41,742

36,656

Total current

liabilities

230,431

184,674

Other noncurrent liabilities

9,706

10,274

Deferred income taxes, net

126,629

128,196

Total liabilities

366,766

323,144

Commitments and contingencies - see Note 11

—

Stockholders’ equity:

Common stock ($

0.01

par value):

Common stock - authorized

120,000

shares, issued

70,261

703

Class A convertible common stock - authorized and issued

4,800

Paid-in capital

69,017

67,989

Retained earnings

1,149,399

1,065,854

Accumulated other comprehensive loss, net of tax

(2,350)

(1,596)

Common stock in treasury at cost –

26,125

shares at August 27, 2022 and

26,121

at May 28, 2022

(28,495)

(28,447)

Total Cal-Maine Foods,

Inc. stockholders’ equity

1,188,322

1,104,551

Noncontrolling interest in consolidated entity

(359)

(206)

Total stockholders’

equity

1,187,963

1,104,345

Total Liabilities and Stockholders’

Equity

1,554,729

1,427,489

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Thirteen Weeks

Ended

August 27, 2022

August 28, 2021

Net sales

658,344

324,986

Cost of sales

440,854

318,341

Gross profit

217,490

6,645

Selling, general and administrative

53,607

46,525

(Gain) loss on disposal of fixed assets

(213)

Operating income (loss)

163,850

(39,667)

Other income (expense):

Interest income, net

903

232

Royalty income

428

273

Equity income of unconsolidated entities

144

135

Other, net

155

5,163

Total other income, net

1,630

5,803

Income (loss) before income taxes

165,480

(33,864)

Income tax expense (benefit)

40,346

(15,838)

Net income (loss)

125,134

(18,026)

Less: Loss attributable to noncontrolling interest

(153)

—

Net income (loss) attributable to Cal-Maine Foods, Inc.

125,287

(18,026)

Net income (loss) per common share:

Basic

2.58

(0.37)

Diluted

2.57

(0.37)

Weighted average

shares outstanding:

Basic

48,623

48,858

Diluted

48,811

48,858

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of

Comprehensive Income (Loss)

(In thousands)

(Unaudited)

Thirteen Weeks

Ended

August 27, 2022

August 28, 2021

Net income (loss)

125,134

(18,026)

Other comprehensive income (loss), before tax:

Unrealized holding loss on available-for-sale securities, net of reclassification

adjustments

(997)

(224)

Income tax benefit related to items of other comprehensive income

243

Other comprehensive loss, net of tax

(754)

(170)

Comprehensive income (loss)

124,380

(18,196)

Less: Comprehensive loss attributable to the noncontrolling interest

(153)

—

Comprehensive income (loss) attributable to Cal-Maine Foods, Inc.

124,533

(18,196)

See Notes to Condensed Consolidated Financial Statements.

Index

Cal-Maine Foods, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirteen Weeks

Ended

August 27, 2022

August 28, 2021

Cash flows from operating activities:

Net income (loss)

125,134

(18,026)

Depreciation and amortization

17,312

17,389

Deferred income taxes

(1,324)

(15,838)

Other adjustments, net

31,690

(7,637)

Net cash provided by (used in) operations

172,812

(24,112)

Cash flows from investing activities:

Purchases of investment securities

(51,834)

(1,388)

Sales and maturities of investment securities

20,296

39,388

Distributions from unconsolidated entities

—

400

Acquisition of business, net of cash acquired

—

(44,823)

Purchases of property,

plant and equipment

(27,662)

(11,233)

Net proceeds from disposal of property,

plant and equipment

1,171

Net cash used in investing activities

(59,122)

(16,485)

Cash flows from financing activities:

Payments of dividends

(36,653)

—

Purchase of common stock by treasury

(45)

(18)

Principal payments on finance lease

(55)

(53)

Net cash used in financing activities

(36,753)

(71)

Net change in cash and cash equivalents

76,937

(40,668)

Cash and cash equivalents at beginning of period

59,084

57,352

Cash and cash equivalents at end of period

136,021

16,684

See Notes to Condensed Consolidated Financial Statements.

Index

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

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

and

accordance

with generally

accepted

accounting

principles in

the

United

States of

America

(“GAAP”)

for

interim

financial

reporting and should

be read in conjunction

with our Annual Report

on Form 10-K

for the fiscal year

ended May 28,

2022 (the

“2022

Annual

Report”).

These

statements

reflect

all

adjustments

that

are,

the

opinion

management,

necessary

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 ended on

August 27, 2022

and August 28, 2021 included

13 weeks

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.

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

determinable

fair

market

value,

and

there

are

restrictions

the

Company's

ability

sell

within

the

months,

available-for-sale.

classify

these

securities

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

available-for-sale

securities

determined

the

specific

identification

method.

Gains and losses are recognized in other income

(expenses) as Other, net in the Company's

Condensed Consolidated Statements

Operations.

Investments

mutual

funds

are

classified

“Other

long-term

assets”

the

Company’s

Condensed

Consolidated Balance Sheets.

Trade Receivables

Trade receivables

are stated at

their carrying

values, which

include a reserve

for credit losses.

As of August

27, 2022

and May

28,

2022,

reserves

for

credit

losses

were

716

thousand

and

775

thousand,

respectively.

The

Company

extends

credit

customers based on

an evaluation of

each customer's financial

condition and credit

history.

Collateral is generally

not required.

The

Company

minimizes

exposure

counter

party

credit

risk

through

credit

analysis

and

approvals,

credit

limits,

and

monitoring

procedures.

determining

our

reserve

for

credit

losses,

receivables

are

assigned

expected

loss

based

historical loss information adjusted as needed for economic and

other forward-looking factors.

Immaterial Error Correction

Effective

May

30,

2021,

the

Company

acquired

the

remaining

membership

interest

Red

River

Valley

Egg

Farm,

LLC (“Red

River”),

including

certain

liabilities. During

the Company’s

third

quarter of

fiscal 2022,

management

determined

that

had

not

properly

eliminated

select

intercompany

sales

and

cost

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

Operations.

The

errors

resulted

overstatement

Net

Sales and

Cost of

Sales

6.7

million

in the

first

Index

quarter of fiscal 2022

and $

9.2

million in the second

quarter of fiscal 2022.

There was

impact to Operating

loss, Net income

(loss) or Net income (loss) per share.

evaluated

the

errors

quantitatively

and

qualitatively

accordance

with

Staff

Accounting

Bulletin

("SAB") No. 99 Materiality,

and

SAB No. 108 Considering

the

Effects

Prior

Year

Misstatements

when

Quantifying

Misstatements

the

Current

Year

Financial

Statements, and

determined

that

the

impact

was not material

our

condensed

consolidated

financial statements

for

the first

or second

quarters

of fiscal

2022,

but that

correcting

the cumulative

impact

the

errors

would

relevant

our

Condensed

Consolidated

Statements

Operations

for

the third

quarter

ended February

26,

2022. Accordingly,

have

reflected

the

correction

the

immaterial

error

for

the

first

quarter

fiscal

2022 as a reduction of Net Sales and Cost of Sales in the accompanying Condensed

Consolidated Statements of Operations.

New Accounting Pronouncements and Policies

No new accounting pronouncement issued or effective

during the fiscal year had or is expected to have a material

impact on our

Consolidated Financial Statements.

Note 2 - Investment

Securities

The following represents the Company’s

investment securities as of August 27, 2022 and May 28, 2022 (in

thousands):

August 27, 2022

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

15,032

—

155

14,877

Commercial paper

15,936

—

15,883

Corporate bonds

81,711

—

1,237

80,474

Certificates of deposits

3,263

—

3,215

US government and agency obligations

8,190

—

8,103

Asset backed securities

15,620

—

227

15,393

Treasury bills

7,870

—

7,839

Total current

investment securities

147,622

—

1,838

145,784

Mutual funds

3,467

—

130

3,337

Total noncurrent

investment securities

3,467

—

130

3,337

May 28, 2022

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Estimated

Fair Value

Municipal bonds

10,136

—

10,104

Commercial paper

14,940

—

14,868

Corporate bonds

74,167

—

483

73,684

Certificates of deposits

1,263

—

1,245

US government and agency obligations

2,205

—

2,209

Asset backed securities

13,456

—

137

13,319

Total current

investment securities

116,167

742

115,429

Mutual funds

3,826

—

3,752

Total noncurrent

investment securities

3,826

—

3,752

Available-for-sale

Proceeds from

sales and

maturities of

investment securities

available-for-sale

were $

20.3

million and

39.4

million during

the

thirteen

weeks

ended August

27,

2022

and

August

28,

2021,

respectively.

Gross

realized

gains

for

the

thirteen

weeks

ended

August 27, 2022

and August 28,

2021 were $

thousand and $

127

thousand, respectively.

Gross realized

losses for the thirteen

weeks

ended

August

27,

2022

and

August

28,

2021

were

thousand

and

thousand,

respectively.

There

were

allowances

for credit losses at August 27, 2022 and May 28, 2022.

Index

Actual maturities

may differ

from contractual

maturities as some

borrowers have

the right to

call or prepay

obligations with

without penalties. Contractual maturities of current investments at August

27, 2022 are as follows (in thousands):

Estimated Fair Value

Within one year

64,148

1-5 years

81,636

Total

145,784

Noncurrent

There were

sales of noncurrent

investment securities during

the thirteen weeks

ended August 27,

2022. Proceeds from

sales

and maturities of noncurrent

investment securities were $

385

thousand during the thirteen

weeks ended August 28, 2021.

Gross

realized gains for

the thirteen weeks

ended August 28, 2021

were $

130

thousand. There were

realized losses for

the thirteen

weeks ended August 28, 2021.

Note 3 - 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

paid

transfer

the

liability

new

obligor

transaction

between

such

parties,

not

the

amount

that

would

be paid

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.

Index

Assets and Liabilities Measured at Fair

Value

on a Recurring Basis

accordance

with

the

fair

value

hierarchy

described

above,

the

following

table

shows

the

fair

value

financial

assets and

liabilities measured at fair value on a recurring basis as of August 27, 2022 and May 28,

2022 (in thousands):

August 27, 2022

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

14,877

—

14,877

Commercial paper

—

15,883

—

15,883

Corporate bonds

—

80,474

—

80,474

Certificates of deposits

—

3,215

—

3,215

US government and agency obligations

—

8,103

—

8,103

Asset backed securities

—

15,393

—

15,393

Treasury bills

—

7,839

—

7,839

Mutual funds

3,337

—

3,337

Total assets measured at fair

value

3,337

145,784

—

149,121

May 28, 2022

Level 1

Level 2

Level 3

Balance

Assets

Municipal bonds

—

10,104

—

10,104

Commercial paper

—

14,868

—

14,868

Corporate bonds

—

73,684

—

73,684

Certificates of deposits

—

1,245

—

1,245

US government and agency obligations

—

2,209

—

2,209

Asset backed securities

—

13,319

—

13,319

Mutual funds

3,752

—

3,752

Total assets measured at fair

value

3,752

115,429

—

119,181

Investment

SEC Form 10-Q filed by Cal-Maine Foods Inc.