Cal-Maine Foods Inc.
07/22/2026 | Press release | Distributed by Public on 07/22/2026 04:18
Annual Report for Fiscal Year Ending 05-30, 2026 (Form 10-K)
ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOF
OPERATIONS
RISK FACTORS;FORWARD-LOOKINGSTATEMENTS
Forinformationrelatingtoimportantrisksanduncertaintiesthatcouldmateriallyadverselyaffectourbusiness,securities,
financialcondition,operatingresults,orcashflow,referenceismadetothedisclosureset forthunder
Part I. Item 1A. Risk
Factors
. Inaddition,becausethefollowing discussionincludesnumerousforward-lookingstatementsrelating toourbusiness,
securities,financial condition,operatingresults andcash flow,reference is madeto the disclosure set forthunder
Part I. Item 1A.
Risk Factors
andtotheinformationset forthinthesectionofPartIimmediatelyprecedingItem1 aboveunderthecaption
"
Forward-Looking Statements
."
COMPANYOVERVIEW
Cal-Maine Foods,Inc. ("Cal-MaineFoods,"the"Company,""we," "us,""our")is thelargestegg companyin theU.S.and a
leadingplayer intheegg-basedfoodindustry,headquarteredin Ridgeland,Mississippi.Witha strongnationalfootprint,Cal-
Maine Foodsprovides nutritious,affordable,and sustainableprotein to millions of householdsevery day.In fiscal 2026, we sold
approximately1.2 billiondozenshelleggs.OurtotalflockasofMay30,2026ofapproximately50.0millionlayersand
14.5 millionpullets andbreeders is thelargest in theU.S.
TheCompany'sshelleggportfoliospansthefulleggvalueladder-fromconventionaltospecialty,includingcage-free,
nutritionallyenhanced,organic,brown,pasture-raisedandfree-rangeeggs-servingbothretailandfoodservicecustomers
nationwide.Cal-MaineFoodsalsoparticipatesinthegrowingpreparedfoodssector,withofferingssuchaspre-cookedegg
patties,omelets,foldedandscrambledeggformats,hard-cookedeggs,pancakes,waffles,andspecialtywraps.Ourbranded
portfolio includesEggland'sBest®,Land O'Lakes®,FarmhouseEggs®,4Grain®,Sunups®,Van's®, MeadowCreekFoods®,
andCrepini®.
We sellour products to a diverse groupof customers, includingnationaland regional grocery store chains, club stores,companies
servicing independentsupermarketsin theU.S.,and foodservicedistributorsserving restaurants,conveniencestores,healthcare
and educationfacilities, andhotelsthroughoutthe majorityof theU.S. andaim tomaintainefficient,state-of-the-artoperations
locatedclose to our customers.
Ourstrategyincludesthreeprimarypriorities:expandingspecialtyshell eggsandpreparedfoods,pursuing disciplinedgrowth
through acquisitionsand leveragingour scale, verticalintegration,operationalexcellence and financialstrength.Throughoutour
history, wehave acquiredother businesses in our industry. Since1989, we have acquiredand integrated28 businesses, and within
the last2 fiscalyears, wehave madevarious acquisitionsaimedat furtheringourgrowth strategy.For furtherdiscussionofour
acquisitions,refer to
Part I. Item 1. Business - Acquisitions
.
Our fiscal year end isthe Saturdayclosest to May 31. The fiscal years2026, 2025 and2024 each included 52 weeks. Allreferences
herein toa fiscalyearmeansour fiscal yearandall references toa yearmeana calendaryear.
Our operating results are materiallyimpactedby marketprices foreggs and feed grains (corn and soybeanmeal), whichare highly
volatile, independentof each other, andout of our control. Generally,higher marketprices for eggs havea positive impacton our
financial resultswhile highermarketprices forfeed grainshave anegative impacton our financialresults. Ourpricing forshell
eggsisnegotiatedwithourcustomersonindividualterms.Wesellourshell eggsatpricesbasedonformulasthattakeinto
account,invarying ways, one of the independentlyquoted regional wholesale market prices for shell eggs, our costs of production,
such as grain-based andvariationsof cost-plus arrangements, or hybrid models including cost of productionand wholesale market
prices.
Almostallofourconventionalshelleggsarepricedandsoldundermarket-basedpricing frameworksorthehybridmodels
described above,split almost evenly between such frameworks.The majorityof our specialty shell eggs arepriced and sold under
frameworksthat are basedon cost of production, althoughwe do havesome customersthat prefer market-based pricing forcage-
freeeggs. Asa result,specialtyshell eggpricestypically donot fluctuateas muchas conventionalshell egg prices.Wedo not
sell eggsdirectly toconsumersor set theprices at which eggsare sold toconsumers.
Retail sales ofshell eggs historicallyhave beenhighest duringthe fall and wintermonthsand lowest duringthe summermonths.
Prices forshell eggsfluctuatein response toseasonaldemandfactors anda naturalincrease inegg productionduring thespring
and earlysummer.Historically,shell eggprices tendto increasewith thestart of theschoolyear andtendto be highestpriorto
holidayperiods,particularlyThanksgiving,ChristmasandEaster.Asaresult,wehavehistoricallyexperienced,andmay
experiencein thefuture,lower shellegg sellingprices,salesvolumesandshell eggsales (andhaveincurred, andmayincur in
the future, netlosses)in our firstand fourthfiscal quartersending in August/Septemberand May/June,respectively.Becauseof
the seasonaland quarterlyfluctuations,comparisonsof our sales andoperatingresults between differentquarterswithin a single
fiscal yearare notnecessarily meaningfulcomparisons.
Ourindustryhasbeen greatlyimpactedby severaloutbreaksof HPAIin recentyears.Following theHPAIoutbreaksin 2015,
there were noreportedsignificant outbreaksof HPAIin the commercialtableegg layer flocksuntil Februarythrough December
2022.Thereafter,therewere no HPAIcases affectingcommerciallayersuntil November2023.Since 2023,outbreaksof HPAI
have continuedto occur inU.S. poultry flocks.In 2024 and2025, 40.2 million and 45.2 million commercial layer hensand pullets
weredepopulateddue toHPAI,respectively.Todatein 2026,through July20,2026,19.2million layerhens andpullets have
been depopulateddue toHPAI.
An importantcompetitiveadvantagefor Cal-Maine Foodsis our ability tomeetour customers'evolving needswitha favorable
mix ofbrandedandprivate-label productsof conventionalandspecialtyshell eggs,includingcage-free, nutritionallyenhanced,
organic,brown, pasture-raised andfree-range eggs,as well aspreparedfoodsandegg products.
For furtherdescription ofour business,refer to
Part I. Item I. Business
.
TheCompanypreviously operatedas oneoperatingandone reportablesegment. Effectivein thefourthquarterof fiscal2026,
the Companydetermined its operationsare organizedinto three reportableoperatingsegments:(1) ConventionalShell Eggs;(2)
SpecialtyShell Eggs; and (3) Prepared Foods.As we have expandedour prepared foods productofferings throughoutfiscal 2026,
theseoperatingsegmentsalignwithhowtheCompany'smanagementreviews operatingresultsandmakesdecisionsabout
resourceallocationand strategicinitiatives. Allpriorfiscal year periodshave beenrecast toreflectthe new reportablesegments.
For furtherinformationon ourreportable segments,see
Note 15 - Segment Reporting
in PartII. Item8. Notesto Consolidated
FinancialStatements.
EXECUTIVEOVERVIEW
For fiscal2026, werecognizednet salesof $2.9billion andnet incomeof $316.7million.Werecorded agross profitof $672.0
million comparedto $1.9 billionfor fiscal2025. Thedecrease wasa resultof a decreasein the netaverageselling priceofshell
eggs, primarilyconventionalshell egg prices, partiallyoffsetby anexpansionof ourPreparedFoods segment.
Ouraverageconventionalshell egg priceper dozenforfiscal 2026declined50.9% comparedto fiscal 2025.Averagespecialty
shell egg priceper dozen declined9.5% comparedto fiscal year 2025. Eggprices declinedwith therepopulationof the egg layer
flock during fiscal2026. According to the USDA, the sizeof the layer hen flock was 312.0 millionhens at July 1, 2026, compared
to the five-yearaverageof 308.0 million hens.AmericanEgg Board estimatesthe U.S.laying flock
as
of May2026 at 340-347
millionhens,basedonproducerassessmentdatacollectedacrossthecommercialeggindustry,materiallyaboveUSDA's
published estimateandindicativeof abundantegg supplies.
In fiscal 2026, preparedfoods accountedfor $244.8 million or 8.4% of our net sales. Prepared food sales forfiscal 2026 increased
$240.8million, comparedto fiscal 2025,primarily dueto our acquisitionof EchoLakeFoods in thefirst quarterof fiscal2026.
Wholesaleshell eggpricesarevolatile,cyclical,andimpactedby anumberoffactors,includingconsumerdemand,seasonal
fluctuations,thenumberandproductivityoflayinghensintheU.S.,outbreaksof agriculturaldiseasessuchas HPAI,severe
weatherpatternsandretailers go-to-marketstrategiesandhow theymanagetheir inventories.Webelieve therecentdecline in
wholesaleegg pricesprimarilyreflectsimprovedeggsupply,followingdisruptionsassociatedwith HPAIinfiscalyear2025.
Comparedto the prior fiscalyear,panic-driven purchasingactivity appearsto have subsided,and improvedpipeline availability
relativeto thepriorfiscal yearappearsto havereducedthe needfor acceleratedpurchasingor inventorybuilds byretailersand
foodserviceoperators.Asa result,wholesaleshelleggpriceshavedeclined,whileretailshelleggpriceshaveadjustedmore
gradually.
RESULTSOF OPERATIONS
CONSOLIDATEDRESULTS
Fiscal YearEnded
2026 Comparedto
2025 Comparedto
May30, 2026
May31, 2025
June 1, 2024
2025% Change
2024% Change
Net sales
$
2,911,632
$
4,261,885
$
2,326,443
(31.7)
%
83.2
%
Operatingincome
350,186
1,536,539
312,452
(77.2)
391.8
Totalother income
60,818
66,603
47,519
(8.7)
40.2
Incometaxexpense
92,892
384,910
83,689
(75.9)
359.9
Less:Net income(loss) attributable
to noncontrollinginterest
1,430
(1,816)
(1,606)
(178.7)
13.1
Net incomeattributableto
Cal-Maine Foods,Inc.
$
316,682
$
1,220,048
$
277,888
(74.0)
%
339.0
%
Net Sales
Net salesfor fiscal year2026 was$2.9 billioncomparedto $4.3billion infiscal2025,a decreaseof $1.3billion or31.7%.The
decreasewas primarilydue tothe decreaseinprices for conventionalshell egg,as thelayerpopulationrecoveredin 2025fro
m
the recentHPAIoutbreaks,partiallyoffsetby sales growthdue toacquisitionsmadeduring fiscal2026, particularlyEcho Lake
Foods.For furtherdiscussion, referto "SegmentResults" within thissection.
Net salesfor fiscal year2025 were $4.3billion comparedto $2.3 billion in fiscal2024, an increaseof $1.9 billionor 83.2%.The
increase wasprimarilydueto theincrease inpricesfor conventionalshell eggsdueto a resurgenceof HPAIoutbreaksin 2024
and2025,which decreasedsupply.
For moreinformationregarding the HPAIoutbreaks,refer to
Part I. Item 1. Business - HPAI
.
OperatingIncome
For fiscal 2026, operatingincome was $350.2 millioncomparedto $1.5 billionin fiscal 2025, a decreaseof $1.2 billion, or 77.2%.
Thedecreasewasprimarilyduetoa decreaseinpricesforconventionalshell egg,partiallyoffsetbyadecreaseinpriceand
volumeof outsideegg purchases. For furtherdiscussion, referto "SegmentResults" within thissection.
Operating income was $1.5 billionin fiscal 2025 comparedto $312.5 millionin fiscal 2024, an increaseof $1.2 billion,or 391.8%.
The increasewas primarilydue to higher net averageselling prices,particularlyfor conventionalshell eggs, and highershell egg
volumes,as well aslower feedingredient prices,partiallyoffsetby anincrease in volumeandprice of outsideegg purchases.
For more informationregarding shell egg andfeed prices, referto
Part I. Item 1. Business - Prices for Shell Eggs and Feed Costs
for Shell Egg Production.
Other Income(Expense)
Totalotherincome(expense)consistsofitemsnotdirectlychargedto,orrelatedto,operationssuchasinterestincomeand
expense,equity inincomeor lossof unconsolidatedentities, andpatronagedividends, amongother items. Patronagedividends
are paidto us fromour membershipin the EB cooperative.
Werecorded interestincomeof $46.7million infiscal2026, comparedto $48.7million infiscal2025,primarilydue to slightly
lower cash andcash equivalentsand investmentsecuritiesavailable-for-sale balancesas the Companyused these investmentsfor
acquisitionsthroughoutfiscal 2026.We recordedinterest expenseof $556thousandand $612thousandinfiscal 2026and 2025,
respectively,primarilyrelatedto commitmentfees underour Credit Facility describedbelow.
Werecorded interestincomeof $48.7 millionin fiscal 2025,an increaseof $16.4million comparedto fiscal 2024, primarilydue
to significantlyhighercashandcashequivalentsand investmentsecurities available-for-sale balancesand yields. Werecorded
interestexpenseof $612thousandin fiscal 2025primarily relatedto commitmentfees underour Credit Facility.
IncomeTaxes
For fiscal 2026,our pre-tax incomewas $411.0 million, comparedto $1.6 billionfor fiscal 2025.Werecognizeda tax provision
of $92.9million forfiscal2026 comparedto $384.9millionin fiscal2025.Forfiscal 2026,the primarydifferencebetweenthe
U.S.statutoryrateof21%andtheeffectiverateof22.6%wasrelatedtostateincometaxes.Forfiscal2025,theprimary
differencesbetweenthe U.S.statutoryrate of 21%and theeffectivetax rateof 24.0%relatedto stateincometaxes, federaltax
credits, andcertain non-taxable and non-deductibleitems. Forfiscal 2024, incometax expensewas $83.7 millionwith an effective
taxrate of23.2%.
Itemscausingoureffectivetaxrate todifferfromthefederalstatutoryincometaxrate of21% arestateincometaxes,certain
federaltaxcredits andcertainitems includedin incomeor lossfor financialreportingpurposesthatare notincluded intaxable
incomeor lossfor incometaxpurposes, includingtaxexemptinterest income,certainnondeductibleexpenses,andnet income
or lossattributableto noncontrollinginterest.
Net income(loss) attributableto noncontrollinginterest
Net incomeattributableto noncontrollinginterestwas$1.4million forfiscal2026 comparedto anet lossof $1.8million and a
net loss $1.6 million for fiscal 2025 andfiscal 2024, respectively. The increase in net income attributableto noncontrolling interest
for fiscal 2026as comparedto fiscal 2025was dueto increasesales volumeof ourCrepini Foods of406%.
Net IncomeAttributableto Cal-Maine Foods,Inc.
Net incomeattributableto Cal-Maine Foods,Inc.for fiscal2026was$316.7million,or $6.65per basicand$6.63per diluted
share, comparedto $1.2billion,or $25.04per basic and$24.95per diluted sharefor fiscal 2025.
Net incomeattributableto Cal-Maine Foods,Inc.forfiscal2024was $277.9million,or$5.70per basicand$5.69per diluted
share.
SEGMENTRESULTS
ConventionalShell Eggs
Fiscal YearEnded
2026Comparedto
2025Comparedto
May30, 2026
May31, 2025
June 1, 2024
2025% Change
2024% Change
Net sales
$
1,348,076
$
2,755,859
$
1,247,292
(51.1)
%
120.9
%
Cost ofsales
1,059,179
1,393,212
970,031
(24.0)
%
43.6
Selling, generalandadministrative
72,256
72,644
63,560
(0.5)
%
14.3
Segment income
$
216,641
$
1,290,003
$
213,701
(83.2)
%
503.6
%
Fiscal 2026comparedto fiscal 2025
-
Net salesdecreased$1.4 billion,or 51.1%comparedto fiscal 2025,primarilydue toa decreaseof 50.9%in pricesfor
conventionalshelleggs,resultingina$1.4billiondecreaseinnetsales.Volumesforconventionalshelleggswere
relativelyflatcomparedto fiscal 2025.
-
Cost of sales decreased$334.0 million, or24.0% comparedto fiscal 2025, primarily dueto a 23.8% decreasein the cost
per dozensold as totalvolume soldwas relatively flat.Cost per dozensold decreasedprimarilydue to a decreasein the
price andvolumeof outsideegg purchasescomparedto theprior fiscal year.
Fiscal 2025comparedto fiscal 2024
-
Net sales increased$1.5 billion, or120.9% in fiscal 2025comparedto fiscal 2024primarily dueto an increase of99.7
%
inpricesforconventionalshell eggs,whichresultedina$1.4billionincreaseinnetsales,anda 10.6%increasein
volumeof conventionaldozenssold, which resulted in a $132.5 million increase in net sales.
-
Cost of sales increased$423.2 million,or 43.6% infiscal 2025comparedto fiscal 2024, primarily due a 29.8%increase
in thecost per dozensold as wellas an increaseof 10.6%in sales volume.Cost per dozensold increasedprimarilydue
to the increasein theaverageprice and volumeof outside eggpurchases, whichwas partiallyoffsetby a 5.6% decrease
in productioncost primarily drivenby lower feedingredient pricesas ourproductionincreased9.1%.
-
Selling,general, andadministrativeexpensesincreased$9.1 million,or 14.3%in fiscal2025 comparedto fiscal 2024,
primarily due to increaseddelivery and employeerelated costs. The increase in delivery costs relatedto a 10.6% increase
in volume of conventionalshell eggs sold due to our acquisition of ISE America,Inc. ("ISE") andour facilities in Chase,
KS and Farwell, TX returningto full operationsin fiscal 2025 followingHPAIoutbreaksinthe third and fourthquarters
offiscal2024.Employeerelatedcostsincreasedduetoanincreaseinbonusescomparedtofiscal2025.Formore
informationregarding our acquisitions,refer to
Note 2 - Acquisitions
in Part II. Item 8. Notesto ConsolidatedFinancial
Statements.For more informationregarding HPAI,refer to
Part I. Item 1. Business - HPAI
.
SpecialtyShell Eggs
Fiscal YearEnded
2026Comparedto
2025Comparedto
May30, 2026
May31, 2025
June 1, 2024
2025% Change
2024% Change
Net sales
$
1,070,458
$
1,154,951
$
873,619
(7.3)
%
32.2
%
Cost ofsales
777,920
717,411
648,236
8.4
%
10.7
Selling, generalandadministrative
110,994
103,938
89,188
6.8
%
16.5
Segment income
$
181,544
$
333,602
$
136,195
(45.6)
%
144.9
%
Fiscal 2026comparedto fiscal 2025
-
Net salesdecreased$84.5million,or7.3%comparedto fiscal2025, primarilydue toadecreaseof 9.5%in pricesof
specialtyshell eggs,resulting ina $112.6million decreasein netsales, partiallyoffsetby a2.4% increasein specialty
dozenssold, resulting ina $28.1million increasein net sales.
-
Cost of sales increased$60.5million, or 8.4%comparedto fiscal 2025, primarilydue toa 5.9% increasein the cost per
dozen soldas well as anincrease of2.4% in salesvolume.Cost per dozensold increasedas ourspecialty shellegg mix
shiftedto higher costspecialtytypes.
-
Selling, general,and administrativeexpenses increased$7.1 million,or 6.8% comparedto fiscal 2025, primarilydue to
a$4.7millionincreaseinfranchisefees.Infiscal2025,thehigherpricesforconventionalshelleggscomparedto
specialty shelleggs diminished theneed to promote specialtyshell eggs, duringwhich time,EB temporarily reducedthe
relatedfranchisefeesforcertainspecialtyshellegg brandsto encouragecontinuedproductionof thesebrandedeggs.
Additionally,delivery chargesincreased$2.3 million asspecialtydozens soldincreased 2.4%comparedto fiscal 2025.
Fiscal 2025comparedto fiscal 2024
-
Netsalesincreased$281.3million,or 32.2%infiscal2025comparedto fiscal2024primarilyduetoanincreaseof
20.7%in volume of specialty shell eggs sold,which resulted in a $180.9million increase in net sales, and a 9.5% increase
in pricesof specialtyshell eggs, whichresulted in a$100.5million increase in netsales.
-
Cost of sales increased $69.2million, or 10.7% in fiscal 2025comparedto fiscal 2024, primarily due to a 20.7% increase
in sales volume,partially offsetby an 8.3% decreasein the cost per dozen sold.Cost per dozensold decreasedprimarily
due to a 8.3%decrease in our productioncosts primarilydriven by lowerfeed ingredientprices infiscal 2025compared
to fiscal 2024.
-
Selling,general, andadministrativeexpenses increased$14.8 million,or 16.5%in fiscal 2025 comparedto fiscal 2024,
primarilydue toan$11.1million increase in delivery expenseresulting fromhigher contracttrucking expenses.
PreparedFoods
Fiscal YearEnded
2026Comparedto
2025Comparedto
May30, 2026
May31, 2025
June 1, 2024
2025% Change
2024% Change
Net sales
$
244,802
$
4,050
$
-
5,944.5
%
100.0
%
Cost ofsales
185,370
4,511
-
4,009.3
100.0
Selling, generalandadministrative
25,550
1,658
-
1,441.0
100.0
Segment income
$
33,882
$
(2,119)
$
-
(1,699.0)
%
100.0
%
Fiscal 2026comparedto fiscal 2025
-
Net salesincreased$240.8 million,comparedto fiscal 2025,primarilydue tothe significantexpansionof ourprepared
foods segment followingour acquisitionof Echo Lake Foods.For more informationregarding ouracquisitions,refer to
Note 2 - Acquisitions
in PartII. Item8. Notes to ConsolidatedFinancialStatements.
-
Cost of sales increased$180.8 million comparedto fiscal 2025, primarily due to increasedproductionresulting from the
acquisitionof EchoLakeFoods.
-
Selling,general,andadministrativeexpensesincreased$24.1million,comparedtofiscal2025,primarilydueto
increasedemployeecosts anddelivery chargesresulting fromthe acquisitionof EchoLakeFoods.
Fiscal 2025comparedto fiscal 2024
-
Net salesincreased$4.1million infiscal 2025comparedto fiscal 2024due tothe acquisitionofCrepini duringfiscal
2025.Formoreinformationregardingouracquisitions,referto
Note 2 - Acquisitions
inPartII.Item8.Notesto
ConsolidatedFinancialStatements.
-
Cost ofsales increased$4.5 million in fiscal2025comparedto fiscal 2024due tothe acquisitionof Crepini.
-
Sales,general,andadministrativeexpensesincreased$1.7millioninfiscal2025comparedto fiscal2024duetothe
acquisitionof Crepini.
UnallocatedIncome(Expenses)
Fiscal YearEnded
2026Comparedto
2025Comparedto
May30, 2026
May31, 2025
June 1, 2024
2025% Change
2024% Change
Other - segmentincome
$
19,044
$
42,091
$
33,566
(54.8)
%
25.4
%
UnallocatedcorporateSG&A(a)
(108,353)
(127,141)
(94,516)
(14.8)
34.5
Gain (loss)on involuntary
conversions
8,819
(156)
23,532
(5,753.2)
(100.7)
Gain (loss)on disposalof fixed
assets
(1,391)
(26)
(637.1)
(1,096.2)
(a)
UnallocatedcorporateSG&Aprimarilyconsistsof unallocatedcorporateoverheadcosts, administrativeexpenses,and
amortizationthatare notdirectly relatedor allocatedto theoperatingsegments.
Fiscal 2026comparedto fiscal 2025
-
Other -segmentincomedecreased$23.0 million,or 54.8%comparedto fiscal 2025, primarilydue to
a
decrease inthe
averageselling price ofour co-packegg sales as well as liquid andfrozenegg products.
-
UnallocatedcorporateSG&Adecreased$18.8million, or14.8%, comparedto fiscal 2025,primarilydue toa decrease
inthe accrualforemployeebonusescomparedto thepriorfiscalyearaswellas a$15.0millionadjustmentin fiscal
2025tothefairvalueofcontingentconsiderationassociatedwiththe FassioEggFarms,Inc.("Fassio")acquisition.
Thesewerepartiallyoffsetbyadditionalamortizationof intangiblesthatwereacquiredfromouracquisitionsduring
fiscal 2026.For moreinformationregarding our acquisitions,refer to
Note 2 - Acquisitions
in PartII. Item 8. Notesto
ConsolidatedFinancialStatements.
-
In fiscal2026,we recognized$8.8million ofgains frominvoluntaryconversions,primarilydrivenby a$7.5million
gain recordedin the first quarterrelated to businessinterruptioninsurancerecoveriesassociatedwith a weather-related
eventthatoccurred in fiscal 2021.
Fiscal 2025comparedto fiscal 2024
-
Other -segmentincomeincreased$8.5 million,or 25.4%in fiscal2025comparedto fiscal 2024primarilydue toan
increasein volumeof liquideggproductssold, primarilyrelatedtothe acquisitionof ISE,whichincludeda breaking
facility.
-
UnallocatedcorporateSG&Aincreased $32.6 millionor 34.5% comparedto fiscal 2024, primarilydue employee related
costs whichincreaseddue toan increasein employeebonusesand a $15.0million adjustmentinfiscal 2025compared
to a $5.5 millionadjustmentto increase the fair value of contingentconsiderationassociatedwith the Fassio acquisition
andincreasedprofessionalfees mainlyassociatedwith $6.6 milliontransactioncosts recordedin thefourthquarter of
fiscal2025 forEcho LakeFoods acquisition.These werepartiallyoffsetby a$19.6 millionreductionin litigationloss
contingencyaccrual.
-
Infiscal2025,lossoninvoluntaryconversionwas$156thousandcomparedto
a
$23.5million gainoninvoluntary
conversionin fiscal 2024. The decrease of $23.7million wasprimarily dueto recoveries infiscal 2024under indemnity
andinsuranceprogramsthatexceededthe amortizedbookvalueof thecoveredassetsandourdirect costs,primarily
relatedto theHPAIoutbreakatour KansasandTexasfacilities thatoccurred in fiscal2024.
LIQUIDITYAND CAPITALRESOURCES
We aim to maintaina strong balance sheet and liquidity, particularlygiven the cyclical natureof our business. We believe astrong
balancesheet supports our growthopportunitiesand stockholderreturns. Our prioritiesfor theuse of cash inrecent periodshave
included the paymentof dividends pursuantto our variable dividend policy,inorganic growththrough acquisitionsof businesses,
organicgrowthincludingconstructionandconversionofcage-freefacilitiesandinvestmentinvalue-addedproducts,and
maintenancecapitalexpenditures.
WorkingCapitalandCurrent Ratio
OurworkingcapitalatMay30, 2026was $1.4billion,comparedto $1.7billionatMay31, 2025.Thecalculationofworking
capital isdefined ascurrent assetsless current liabilities.Our currentratio was7.7 at May30, 2026comparedto 6.4 atMay 31,
2025. The currentratio is calculatedby dividing current assetsby current liabilities.The increasein our currentratio is primarily
dueto thedecreaseintotalcurrentliabilities,specificallydividendspayable,which decreasedby $114.1millioncomparedto
May31,2025.Duetoseasonalfactorsdescribedin
Part I. Item I. Business - Seasonality
, wegenerallyexpectourneedfor
workingcapitalto be highest in thefourthandfirst fiscal quartersending in May/June andAugust/September,respectively.
CashFlows fromOperating Activities
Netcashprovidedbyoperatingactivitieswas$479.8millionforfiscal2026,comparedto$1.2billionforfiscal2025.The
decrease incash flow fromoperating activitiesresulted primarilyfrom lowernet averageegg sales prices perdozen,particularly
for conventionalshell eggs, partially offsetby the increasein volume andhigher price of outsideegg purchasesin the prior fiscal
year.
CashFlows Used in InvestingActivities
For fiscal 2026, $503.8million was used in investing activities, primarily due to the acquisitionof assets of Echo Lake, Creighton,
andotherbusinessesaswellassalesandmaturitiesofinvestmentsecuritiescomparedto$575.5million usedininvesting
activitiesin fiscal 2025,primarilydue topurchasesof investmentsecurities,purchasesof property,plant andequipmentand the
acquisitionof assetsof ISE.Purchasesof investmentsecuritieswere$648.9million infiscal2026comparedto $1.2billion in
fiscal2025.Sales andmaturitiesofinvestmentsecuritieswere$745.2millioninfiscal2026,comparedto $907.6millionfor
fiscal2025.Cashpaidforbusinessacquisitionswas$427.8millioninfiscal2026,primarilyrelatedtotheEchoLakeand
Creightonacquisitions,and$116.2millioninfiscal2025,relatedtotheISEacquisition.Purchasesofproperty,plantand
equipmentwere$151.2million and$161.3millionin fiscal2026and2025, respectively,primarilyreflectingprogressonour
constructionprojects.
CashFlows Used in FinancingActivities
Wepaiddividendstotaling$231.6millionand$330.3millioninfiscal2026and2025, respectively.Werepurchased$131.1
million in shares of CommonStock in fiscal 2026, comparedto $54.0 million in fiscal 2025, primarily under ourshare repurchase
program.See "ShareRepurchaseProgram," below.
Increase(decrease)in CashandCashEquivalents
As ofMay30,2026, cashandcashequivalentsdecreased$386.9millionsinceMay31,2025, comparedto
a
$262.5million
increaseduringfiscal2025. Thedecreaseis primarilyduetothe acquisitionsofEchoLakeFoods,CreightonBrothers,LLC,
CleanEgg, LLC,and Van'sFoods, totaling$452.6 million.Refer toPart II.Item 8. Notesto theFinancialStatements,
Note 2 -
Acquisitions
for furtherinformationregarding our recentacquisitions.
Credit Facility
OnNovember15,2021,weenteredintoanAmendedandRestatedCredit Agreement(asamended,the "CreditAgreement"),
expiring November21, 2026. The Credit Agreementprovides fora senior securedrevolving credit facility (the"Credit Facility"),
up to $250 million.As of May 30,2026, no amountswere borrowed underthe Credit Facility.As of May 30,2026, we had$5.9
million inoutstandingstandbyletters of credit,which wereissued underourCredit Facilityfor thebenefitof certaininsurance
companies.Refer to Part II. Item 8. Notesto the Financial Statements,
Note 10 - Credit Facility
for further informationregarding
our long-termdebt.
Share RepurchaseProgram
In February2025,the Company'sBoardof Directors ("Board")approveda $500million share repurchaseprogram.The share
repurchaseprogramauthorizes theCompany,in management'sdiscretion, to repurchaseshares of ourcommonstock fromtime
to time foran aggregatepurchaseprice upto $500million(exclusive ofany fees,taxes,commissionsor otherexpensesrelated
to suchrepurchases),subject tomarketconditionsand otherfactors. Theactualtiming, numberand valueof sharesrepurchased
under the programwill be determinedby managementinits discretion andwill dependon a number of factors,including, but not
limitedto,themarketpriceofourcommonstockandgeneralmarketandeconomicconditions.TheCompanyrepurchased
1,571,950and 551,876shares during fiscal 2026and 2025,respectively,under the program.As of the end of fiscal2026, we had
remaining authorizationto purchaseup to$320.7million under the repurchaseprogram.
The Companyexpects to strategicallyandopportunisticallyrepurchaseshares fromtime to timethrough solicited or unsolicited
transactionsin the openmarket,in privatelynegotiatedtransactionsor by othermeansin accordancewith securities laws.The
Companyexpects that sharerepurchasesunder the program will be fundedfrom existing cash balancesand futurefree cash flow.
Thesharerepurchaseprogramdoes notobligatetheCompanyto repurchaseanyspecific amountof shares,doesnot havean
expirationdate,andmaybe suspended,modifiedor discontinuedatanytimewithoutprior notice.See
Part II. Item 5. Issuer
Purchases of Equity Securities
andPart II.Item8. Notes to theFinancialStatements,
Note 11 - Equity
for furtherinformation.
Dividends
In accordancewith our variabledividend policy,wewill notpay a cashdividendto holdersof ourCommonStock withrespect
to our fourthquarter of fiscal2026. The Companywillnot paya dividend fora subsequentprofitable quarteruntil the Company
is profitableon acumulativebasiscomputedfromthe dateof thelast quarterin whichadividend waspaid.At theendof the
fourth quarterof fiscal2026, theamountof cumulativelosses to be recoveredbeforepaymentof adividend was$35.9 million.
MaterialCashRequirements
Materialcashrequirementsfor operatingactivitiesprimarilyconsistof feedingredients,processing,packagingandwarehouse
costs,employeerelatedcosts,maintenancecapitalexpendituresandothergeneraloperatingexpenses.Ourmaterialcash
requirementsfor growth capitalexpenditures consistprimarilyof our constructionprojects to increaseour productioncapacity of
prepared foodsand cage-free shell egg production. Webelieve our currentcash balances,investments,projectedcash flows from
operations,andavailableborrowings underourCredit Facilitywill besufficientto fundourcashneeds foratleast thenext12
monthsand to fund our capital commitmentscurrently inplace thereafter.Future acquisitions of businesses mayrequire additional
financing.
IMPACTOF RECENTLYISSUED ACCOUNTINGSTANDARDS
For informationon changesin accountingprinciplesand new accountingprinciples, see"
New AccountingPronouncementsand
Policies
" in Part II. Item8. Notes to ConsolidatedFinancialStatements,
Note 1 - Summary of Significant Accounting Policies
.
CRITICALACCOUNTINGESTIMATES
The preparationof financial statementsinaccordancewithU.S. GAAP requiresmanagementto make estimatesand assumptions
that affectthe reported amounts of assets and liabilities at the date of the financial statements and the reported amounts ofrevenues
and expensesduring the reporting period. Actual results could differmaterially fromthese estimates. Critical accountingestimates
are those estimatesmadein accordancewithGAAP thatinvolve a significantlevel of estimationuncertaintyand havehad or are
reasonablylikely tohave a materialimpacton thefinancialconditionor results of operations.Our critical accountingestimates
are describedbelow.
BusinessCombinations
The Companyapplies the acquisitionmethodof accounting,which requiresthat oncecontrol is obtained,all theassets acquired
and liabilitiesassumed,includingamountsattributableto noncontrollinginterests,are recordedattheir respectivefair valuesat
thedateof acquisition.Theexcessofthepurchasepriceoverfairvaluesofidentifiableassetsandliabilities isrecordedas
goodwill.
Weusevariousmodelsandmethodstodeterminethefairvaluesofidentifiableassetsandliabilities,suchastop-downand
bottom-upapproachfor inventory,cost methodandmarketapproachfor property,relief-from-royaltyandmulti-periodexcess
earnings tovalue intangibles.Significantestimatesin valuingcertain intangibleassets include,but are not limitedto, the amount
andtiming of futurecashflows, growth rates, discountrates anduseful lives.
Thefairvaluesofidentifiableassetsandliabilitiesaregenerallydeterminedinternallyandrequiresestimatesandtheuseof
variousvaluationtechniques.Whena marketvalueisnot readilyavailable,ourinternalvaluationmethodologyconsidersthe
remainingestimatedlife ofthe assetsacquiredandsignificantjudgmentis requiredas managementdeterminesthe fairmarket
valuefor thoseassets.
Duetoinherentindustryuncertaintiesincludingvolatileeggpricesandfeedcosts,unanticipatedmarketchanges,events,or
circumstancesmayoccur thatcould affectthe estimatesandassumptionsused,which could result in subsequentimpairments.
Inventories
Inventoriesof eggs,feed, suppliesand flocksare valuedprincipallyat the lowerofcost or netrealizablevalue. Ifmarketprices
foreggsandfeedgrains movesubstantiallylower,werecordadjustmentsto writedownthecarryingvaluesof eggsandfeed
inventories tofair marketvalue. The cost associatedwith flock inventories,consisting principallyof chick purchasesor hatching
costs,feed,labor,contractorpaymentsandoverheadcosts,areaccumulatedduringthehatchingandgrowingperiodsof
approximately22weeks. Capitalizedflockcostsarethenamortizedovertheflock'sproductivelife,generallyonetotwo
years. Judgmentexists indeterminingthe flock'sproductivelife includingfactorssuch aslaying rateand eggsize, moltcycles,
and customerdemand.Furthermore,other factorssuch as hentypeor weatherconditionscould affectthe productivelife. These
factorscould makeour estimates of productivelifediffermaterially fromactual results. Flock mortalityis charged to cost of sales
asincurred. Highmortalityfromdiseaseorextremetemperatureswillresultinabnormalwrite-downstoflock
inventories.Managementcontinuallymonitorseachflockandattemptstotakeappropriateactionstominimizetheriskof
mortalityloss.
Goodwill
As a resultof acquiringbusinesses,the Companyhad $97.1million of goodwillas ofMay 30,2026, representing3.1%of total
assetsand3.7%ofstockholders'equity.Goodwillisevaluatedforimpairmentannually(ormorefrequentlyifimpairment
indicatorsarise) by first performinga qualitativeassessmentto determine whether a quantitativegoodwilltest is necessary.After
assessingthe totalityof eventsor circumstances,if wedetermineit ismore likelythannot thatthe fairvalueof a reportingunit
is lessthanits carryingamount,thenwe performadditionalquantitativetests to determinethemagnitudeof anyimpairment.
Duringourannualimpairmenttest,whichwasthefirstdayofthefourthquarter,wedeterminedthatgoodwillpassedthe
qualitativeassessmentandthereforeno quantitativeanalysisof goodwill impairmentwas necessaryin fiscal 2026.
As partof thechangetoourreportableoperatingsegmentsin fiscal2026,thegoodwillof theCompany'shistoricalreporting
units were reallocatedto the new reporting units on a relativefair value basisas of the date of the reorganization.The Company's
determinationof fairvalueinvolved theuse ofestimatesandassumptions.Following theallocationof goodwill,the Company
performedaquantitativeimpairmenttest, forwhichtheCompanydeterminedthe estimatedfairvalueofeachreportingunit
exceededitscarryingvalueandthereforenoimpairmentwasidentified.WhentheCompanyacquiresanewlocation,a
determinationis made on how toallocategoodwillamongthe reportingunits. See
Note 8 - Goodwill and Other Intangible Assets
for updateddisclosures regarding theallocationof goodwill.
Judgment existsin management'sevaluationof the qualitativefactorswhich include macroeconomicconditions,the currentegg
industry environment,cost inputs such as feed ingredientsand overall financialperformance.Furthermore, judgmentexists in the
evaluationof thethresholdofwhetheritis morelikelythannot thatthefairvalueofareporting unitis less thanits carrying
amount.Uncertaintyexists due touncontrollableeventsthatcould occurthatcould negativelyaffectour operatingconditions.
RevenueRecognition
Revenuerecognitioniscompleteduponsatisfactionof theperformanceobligationwhichgenerallyoccursuponshipmentor
delivery toa customerbasedon termsof thesale.
Revenuesarerecognizedinanamountthat reflectsthe netconsiderationweexpectto receivein exchangefordeliveryof the
products. The Companyperiodically offers sales incentivesor other programssuch as rebates,discounts,coupons, volume-based
incentives,guaranteedsales andother programs.TheCompanyrecords anestimatedallowancefor costsassociatedwith these
programs,whichis recordedas a reductionin revenueat the timeof saleusinghistoricaltrends andprojectedredemptionrates
ofeachprogram.TheCompanyregularlyreviewstheseestimatesandanydifferencebetweentheestimatedcostsandactual
realizationof theseprogramswould be recognizedin thesubsequentperiod.
As theestimatesnotedaboveare basedon historical information,we donot believethatthere willbe amaterialchangein the
estimatesand assumptionsused to recognize revenue.However,if actualresults varied significantlyfromour estimates,it could
exposeus to materialgains or losses.
Loss Contingencies
The Companyevaluateswhether a losscontingencyexists,and if theassessmentof a contingencyindicatesit isprobable that
a
material losshasbeen incurredand theamountof the loss canbe reasonablyestimated,the estimatedloss would be accruedin
the Company'sfinancialstatements.The Companyexpensesthe costsof litigation astheyare incurred.
The Companyaccrued$4.0 million in litigationloss contingencyin fiscal 2026and $19.6million infiscal 2024.Therewere no
loss contingency accrualsfor fiscal 2025. Our evaluationof whether losscontingencies existprimarily relates to litigationmatters.
The outcomeof litigation is uncertain due to,amongother things, uncertaintiesregarding the factsthatwillbe establishedduring
theproceedings,uncertaintiesregardinghowthelawwillbeappliedtothefactsestablished,anduncertaintiesregardingthe
calculationofanypotentialdamagesor thecostsofanypotentialinjunctiverelief.IfthefactsdiscoveredortheCompany's
assumptionschange, futureaccruals forloss contingenciesmaybe required. Resultsof operationsmaybe materiallyaffectedby
losses ora loss contingencyaccrualresulting from adverselegal proceedings.
IncomeTaxes
Wedetermineoureffectivetax rateby estimatingour permanentdifferences resultingfromdifferingtreatmentof itemsfor tax
and accountingpurposes. Judgmentand uncertaintyexist with management'sapplicationof tax regulationsand evaluationof the
more-likely-than-not recognitionand measurementthresholds. We are periodicallyauditedby taxing authorities.An adversetax
settlementcould havea negativeimpacton our effectivetaxrateandour results of operations.
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