CAL-MAINE FOODS INC 10-Q

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 31, 2025 (the “2025 Annual Report”), and the accompanying financial statements and notes included in Part II Item 8 of the 2025 Annual Report and in Part I Item 1 of this Quarterly Report on Form 10-Q (“Quarterly Report”). This Quarterly 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 business, including potential future supply of and demand for our products, potential future corn and soybean price trends, potential future impact on our business of highly pathogenic avian influenza (“HPAI”), estimated future production data, expected construction schedules, projected construction costs, potential future impact on our business of inflation and changing interest rates, potential future impact on our business of new legislation, rules or policies, potential outcomes of legal proceedings, including loss contingency accruals and factors that may result in changes in the amounts recorded, other projected operating data, including anticipated results of operations and financial condition, and potential future cash returns to stockholders including the timing and amount of any repurchases under our share repurchase program. 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 Risk Factors of our 2025 Annual Report, as updated in Part II Item 1A of our quarterly report on Form 10-Q for the quarter ended November 29, 2025, as well as those included in other reports we file from time to time with the United States Securities and Exchange Commission (“SEC”) (including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell egg, egg products and prepared foods operations (including, as applicable, disease, pests, weather conditions, and potential for product recall), including but not limited to the current outbreak of HPAI affecting poultry in the U.S., Canada and other countries that was first detected in commercial flocks in the U.S. in February 2022 and that impacted our flocks in the third and fourth quarters of fiscal 2024 and again in March 2026, (iii) changes in the demand for and market prices of shell eggs and feed costs as well as increase in input costs for prepared foods, (iv) our ability to predict and meet demand for cage-free and other specialty eggs, (v) risks, changes, or obligations that could result from our recent or future acquisition of new flocks or businesses, such as our acquisition of Echo Lake Foods completed June 2, 2025, and risks or changes that may cause conditions to completing a pending acquisition not to be met, (vi) our ability to successfully integrate and manage recently acquired businesses like Echo Lake Foods and realize the expected benefits of such acquisitions, including synergies, cost savings, reduction in earnings volatility, margin expansion, financial returns, expanded customer relationships, or sales or growth opportunities, (vii) our ability to compete effectively with existing competitors and new market entrants, retain existing customers, acquire new customers and grow our product mix including our prepared foods product offerings, (viii) the impacts of government, customer and consumer reactions to high market prices for eggs, including, without limitation, potential new or expanded government regulations, (ix) potential impacts to our business as a result of our Company ceasing to be a “controlled company” under the rules of The Nasdaq Stock Market on April 14, 2025, (x) risks relating to potential changes in inflation, interest rates and trade and tariff policies, (xi) adverse results in pending litigation and other legal matters, and (xii) global instability, including as a result of geopolitical conflicts and other uncertainties. The actual timing, number and value of shares repurchased under our share repurchase program will be determined by management in its discretion and will depend on a number of factors, including but not limited to, the market price of our Common Stock and general market and economic conditions. The share repurchase program may be suspended, modified or discontinued at any time without prior notice. 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 made only 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. COMPANY OVERVIEW Cal-Maine Foods, Inc. (“Cal-Maine Foods,” the “Company,” “we,” “us,” “our”) is the largest egg company in the U.S. and a leading player in the egg-based food industry. With a strong national footprint, Cal-Maine Foods provides nutritious, affordable, and sustainable protein to millions of households every day. Index 21 The Company’s shell egg portfolio spans the full egg value ladder—from conventional to specialty, including cage-free, organic, brown, free-range, pasture-raised, and nutritionally enhanced eggs—serving both retail and foodservice customers nationwide. Cal-Maine Foods also participates in the growing prepared foods sector, with offerings such as pre-cooked egg patties, omelets, folded and scrambled egg formats, hard-cooked eggs, pancakes, waffles, and specialty wraps. Our branded portfolio includes Eggland’s Best®, Land O’Lakes®, Farmhouse Eggs®, 4Grain®, Sunups®, MeadowCreek Foods®, and Crepini®. Our operations are integrated, and we have one operating and one reportable segment. Our total flock as of February 28, 2026, of approximately 48.0 million layers and 14.3 million pullets and breeders, is the largest in the U.S. We sell our products to a diverse group of customers, including national and regional grocery store chains, club stores, companies servicing independent supermarkets in the U.S., and foodservice distributors serving restaurants, convenience stores, healthcare and education facilities, and hotels throughout the majority of the U.S. and aim to maintain efficient, state-of-the-art operations located close to our customers. Our strategy includes three primary priorities: expanding specialty eggs and prepared foods, pursuing disciplined growth through acquisitions and leveraging our scale, vertical integration, operational excellence and financial strength. 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. Our pricing for shell eggs is negotiated with our customers on individual terms. We sell our shell eggs at prices based on formulas that take into account, in varying ways, independently quoted regional wholesale market prices for shell eggs, formulas related to our costs of production, such as grain-based and variations of cost-plus arrangements, or hybrid models including cost of production and wholesale market prices. Almost all of our conventional eggs are priced and sold under market-based pricing frameworks or the hybrid models described above, split almost evenly between such frameworks. The majority of our specialty eggs are priced and sold under frameworks that are based on cost of production, although we do have some customers that prefer market-based pricing for cage-free eggs. As a result, specialty egg prices typically do not fluctuate as much as conventional pricing. We do not sell eggs directly to consumers or set the prices at which eggs are sold to consumers. Retail sales of shell eggs historically have been highest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during the spring and early summer. Historically, shell egg prices tend to increase with the start of the school year and tend to be highest prior to holiday periods, particularly Thanksgiving, Christmas and Easter. As a result, we have historically experienced, and may experience in the future, lower shell egg selling prices, sales volumes and shell egg sales (and have incurred, and may incur in the future, net losses) in our first and fourth fiscal quarters ending in August/September and May/June, respectively. Because of the seasonal and quarterly fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful comparisons. We routinely fill our storage bins during harvest season when prices for feed ingredients are generally lower. To ensure continued availability of feed ingredients, we may enter into contracts for future purchases of corn and soybean meal, and as part of these contracts, we may lock-in the basis portion of our grain purchases several months in advance. Basis is the difference between the local cash price for grain and the applicable futures price. A basis contract is a common transaction in the grain market that allows us to lock-in a basis level for a specific delivery period and wait to set the futures price at a later date. Furthermore, due to the more limited supply for organic ingredients, we may commit to purchase organic ingredients in advance to help ensure supply. Ordinarily, we do not enter into long-term contracts beyond a year to purchase corn and soybean meal or hedge against increases in the prices of corn and soybean meal. Corn and soybean meal are commodities and are subject to volatile price changes due to weather, various supply and demand factors, transportation and storage costs, speculators, agricultural, energy and trade policies in the U.S. and internationally, and global instability that could disrupt the supply chain. An important competitive advantage for Cal-Maine Foods is our ability to meet our customers’ evolving needs with a favorable mix of branded and private-label products of conventional and specialty eggs, including cage-free, organic, brown, free-range, pasture-raised and nutritionally-enhanced eggs, as well as prepared foods and egg products. Index 22 HPAI Outbreaks of HPAI have continued to occur in U.S. poultry flocks. From the HPAI outbreaks in 2015, there were no reported significant outbreaks of HPAI in the commercial table egg layer flocks until the February to December 2022 time period. Thereafter, there were no HPAI cases affecting commercial layers until November 2023. In calendar year 2024 and 2025, 40.2 million and 45.2 million commercial layer hens and pullets were depopulated due to HPAI, respectively. In the current calendar year 2026, 17.6 million layer hens and pullets were depopulated due to HPAI through March 30, 2026. On March 14, 2026, subsequent to the third quarter of fiscal 2026, we experienced an HPAI outbreak within our pullet facility in Maryland resulting in the depopulation of approximately 350,000 pullets. We are following the protocols prescribed by the United States Department of Agriculture (the “USDA”) and will continue to closely monitor our operations to mitigate further spread or disruption. HPAI is currently widespread in the wild bird population worldwide. Further, according to the U.S. Centers for Disease Control and Prevention (“CDC”), as of March 13, 2026, there have been outbreaks of HPAI in 1,088 herds of dairy cows in 19 states, and 71 human cases in the U.S., almost entirely among poultry and dairy workers, since the latest outbreak began. Two of the human cases resulted in severe illness after the patient was exposed to sick and dead birds in backyard flocks. Both patients were reported to have underlying health conditions and died in 2025. There have been no reported cases of person-to-person spread. According to the CDC, the human health risk to the U.S. public from the HPAI virus is considered to be low. We remain dedicated to robust biosecurity programs across our locations and have invested more than $88 million in biosecurity technology, equipment, supplies, procedures, and training across our locations since the last major HPAI outbreak in calendar year 2015. However, no farm is immune from HPAI. The extent of possible future outbreaks among U.S. commercial egg layer flocks, with heightened risk during migration seasons, cannot be predicted. According to the USDA, HPAI cannot be transmitted through safely handled and properly cooked eggs. There is no known risk related to HPAI associated with eggs that are currently in the market and no eggs have been recalled. For additional information, see the 2025 Annual Report, Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – HPAI.” We have taken proactive steps to help mitigate the tight egg supply situation across the country. Our efforts resulted in a 2.0% and 13.0% increase in our average number of layer hens and breeder flocks, respectively, during the third quarter of fiscal 2026 compared to the same prior-year period. Total chicks hatched increased 41.7% during the third quarter of fiscal 2026, compared to the prior-year quarter. CAGE-FREE EGGS Ten states have passed legislation or regulations mandating minimum space or cage-free requirements for egg production or mandated the sale of only cage-free eggs and egg products in their states, with implementation of these laws ranging from January 2022 to January 2030. These states represent approximately 27% of the U.S. total population according to the 2020 U.S. Census. California, Massachusetts, Colorado, Michigan, Oregon, Washington, and Nevada, which collectively represent approximately 23% of the total estimated U.S. population, have cage-free legislation currently in effect. A significant number of our customers have announced goals to either exclusively offer cage-free eggs or significantly increase the volume of cage-free egg sales in the future, subject in most cases to availability of supply, affordability and consumer demand, among other contingencies. Our customers’ sales initiatives and product mix are constantly changing making it difficult to accurately predict customer requirements for cage-free eggs. We are focused on adjusting our cage-free production capacity with a goal of meeting the future needs of our customers in light of changing state requirements and our customers’ goals. As always, we strive to offer a product mix that aligns with current and anticipated customer purchase decisions. We are engaging with our customers to help them meet their announced goals and needs. We have invested significant capital in recent years to acquire and construct cage-free facilities, and we expect our focus for future expansion will continue to include cage- free facilities. Our volume of cage-free egg sales has continued to increase and account for a larger share of our product mix. At the same time, we understand the importance of our continued ability to provide conventional eggs in order to provide our customers with a variety of egg choices and to address hunger in our communities. For additional information, see the 2025 Annual Report, Part I Item 1, “Business – Specialty Eggs,” “Business – Growth Strategy” and “Business – Government Regulation,” and the first risk factor in Part I Item 1A, “Risk Factors” under the sub- heading “Legal and Regulatory Risk Factors.” ACQUISITIONS Subsequent to our third quarter of fiscal 2026, effective March 2, 2026, we acquired the shell egg, egg products, and prepared foods assets of Creighton Brothers LLC, including Crystal Lake LLC, for a total purchase price of approximately $128.5 Index 23 million, subject to customary post-closing adjustments. See further discussion in Note 11 - Subsequent Events of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. Effective October 10, 2025, the Company acquired certain assets of Clean Egg, LLC (“Clean Egg”) based in Langwood, Texas, for approximately $23.7 million. The assets acquired included 677 thousand brown cage-free and free-range layers and pullets and other inventory, machinery and equipment related to its processing facility and contract production. See further discussion in Note 2 – Acquisitions of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. Effective June 2, 2025, the Company acquired Echo Lake Foods, LLC (formerly Echo Lake Foods, Inc.) and certain related companies (collectively “Echo Lake Foods”). Echo Lake Foods is based in Burlington, Wisconsin and produces, packages, markets and distributes prepared foods, including waffles, pancakes, scrambled eggs, frozen cooked omelets, egg patties, toast and diced eggs. The acquisition has expanded our prepared foods product line and customer base. See further discussion in Note 2 – Acquisitions of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. Our previously announced projects to increase efficiency and expand production capacity are ongoing and expected to be completed in fiscal 2027. While these initiatives are underway and are expected to drive higher output, improve efficiency and provide greater operational flexibility once complete, Echo Lake Foods has and will experience a temporary reduction in production volumes and higher costs, which began late in the second quarter of fiscal 2026 and are expected to continue through the remainder of fiscal 2026. During the third quarter of fiscal 2025, we acquired certain assets of Deal-Rite Foods, Inc. and certain of its affiliates (“Deal- Rite”). The assets acquired included two feed mills, storage facilities, usable grain, vehicles, related equipment and a retail feed sales business located in North Carolina. The acquired assets will produce and deliver feed to our nearby shell egg production operations. During the second quarter of fiscal 2025, we completed a strategic investment with Crepini LLC, establishing a new egg products and prepared foods venture. Crepini LLC, founded in 2007, grew its brand throughout the U.S. and Mexico featuring egg wraps, protein pancakes, crepes, and wrap-ups, which are sold online and in over 3,500 retail stores. The combined entity, located in Hopewell Junction, New York, operates as Crepini Foods LLC (“Crepini”). We capitalized Crepini with approximately $6.75 million in cash to purchase additional equipment and other assets and fund working capital in exchange for a 51% interest in the new venture. Crepini LLC contributed its existing assets and business in exchange for a 49% interest in the new venture. In fiscal 2022, we announced a strategic investment in MeadowCreek Foods, LLC (“MeadowCreek”), which became a majority-owned subsidiary of the Company. During the fourth quarter of fiscal 2023, MeadowCreek began operations with a focus on being a leading provider of hard-cooked eggs. During the second quarter of fiscal 2025, we acquired the remaining ownership interests in MeadowCreek and it became a wholly-owned subsidiary of the Company. During the first quarter of fiscal 2025, we acquired substantially all the commercial shell egg production, processing and egg products breaking assets of ISE America, Inc. and certain of its affiliates (“ISE”). The assets acquired included commercial shell egg production and processing facilities with a capacity at the time of acquisition of approximately 4.7 million laying hens, including 1.0 million cage-free, and 1.2 million pullets, feed mills, approximately 4,000 acres of land, inventories and an egg products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and Mid-Atlantic states, and production operations in Maryland, New Jersey, Delaware and South Carolina. These production assets were our first in Maryland, New Jersey and Delaware. We believe this acquisition provides us with an opportunity to significantly enhance our market reach in the Northeast and Mid-Atlantic states. EXECUTIVE OVERVIEW For the third quarter and the first thirty-nine weeks of fiscal 2026, we recorded a gross profit of $119.3 million and $638.0 million, respectively, compared to $716.1 million and $1.3 billion, respectively, for the same periods of fiscal 2025, primarily driven by a decrease in the net average selling price of shell eggs, particularly conventional eggs. Our net average selling price per dozen for shell eggs for the third quarter of fiscal 2026 declined 56.5% to $1.766 from $4.060 in the prior-year period. Average conventional egg prices per dozen declined 70.1% to $1.423 from $4.766 in the prior-year period. Average specialty egg prices per dozen declined 16.9% to $2.313 from $2.784 in the prior-year period. Our dozens sold for the third quarter of fiscal 2026 decreased 2.2% compared to the third quarter of fiscal 2025. 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., outbreaks of agricultural diseases such as HPAI, severe weather patterns and retailers go-to-market strategies and how they manage their inventories. We believe the recent decline in Index 24 wholesale egg prices primarily reflects improved egg supply, following disruptions associated with HPAI in the prior fiscal year. Compared to the same period last year, panic-driven purchasing activity appears to have subsided, and improved pipeline availability relative to the prior fiscal year period appears to have reduced the need for accelerated purchasing or inventory builds by retailers and foodservice operators. As a result, wholesale shell egg prices have declined, while retail shell egg prices have adjusted more gradually. The daily average price for the Urner Barry Southeast Large Index in the third quarter of fiscal 2026 fell 78.6%, while the USDA daily average price for large shell eggs dropped 78.9%, compared to the same period last year. According to the USDA, the monthly average size of the layer hen flock from December 2025 through February 2026 (which most closely aligns with our third fiscal quarter) was approximately 310.8 million hens, an increase of 6.7 million hens, or 2.2%, compared to the same period in the previous year. During the third quarter of fiscal 2026, 13.2 million hens were depopulated due to HPAI, compared with 45.0 million during the same period of fiscal 2025, representing a 70.6% reduction in depopulations. For more information about historical shell egg prices, see Part I, Item 1. “Business – Price for Shell Eggs” of our 2025 Annual Report. Prepared food sales for the third quarter of fiscal 2026 increased $51.9 million, compared to the third quarter of fiscal 2025, primarily due to our acquisition of Echo Lake Foods in the first quarter of fiscal 2026. Our farm production costs per dozen produced for the third quarter of fiscal 2026 increased 4.4%, or $0.04 compared to the prior year period, primarily due to higher other farm production costs. Other farm production costs increased 9.1% primarily due to high facility costs compared to the comparable period in the prior year. Feed costs per dozen produced remained relatively flat in the third quarter of fiscal 2026, compared to the third quarter of fiscal 2025. For information about historical corn and soybean meal prices, see Part I, Item 1. “Business – Feed Costs for Shell Egg Production” of our 2025 Annual Report. Our prepared foods cost of sales increased $44.8 million for the third quarter of fiscal 2026, compared to the prior-year period, primarily due to the acquisition of Echo Lake Foods. 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 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales 82.1 % 49.5 % 73.0 % 58.2 % Gross profit 17.9 % 50.5 % 27.0 % 41.8 % Selling, general and administrative 12.5 % 5.6 % 10.0 % 7.0 % (Gain) loss on involuntary conversions (0.1) % — % (0.3) % — % (Gain) loss on disposal of fixed assets 0.1 % — % 0.1 % — % Operating income 5.4 % 44.9 % 17.2 % 34.8 % Total other income, net 3.3 % 1.9 % 2.1 % 1.6 % Income before income taxes 8.7 % 46.8 % 19.3 % 36.4 % Income tax expense 1.1 % 10.9 % 4.4 % 8.7 % Net income 7.6 % 35.9 % 14.9 % 27.7 % Less: Income (loss) attributable to noncontrolling interest 0.1 % — % — % — % Net income attributable to Cal-Maine Foods, Inc. 7.5 % 35.9 % 14.9 % 27.7 % NET SALES Total net sales for the third quarter of fiscal 2026 were $667.0 million, compared to $1.4 billion for the same period of fiscal 2025. Index 25 Shell egg sales represented 85.8% and 94.9% of total net sales for the third quarters of fiscal 2026 and 2025, respectively. The Company’s shell egg offerings, for both branded and private-label products, include specialty and conventional shell eggs. Specialty shell eggs include cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced shell eggs. Conventional shell eggs sales represent all other shell egg sales not sold as specialty shell eggs. The Company’s prepared food offerings include items such as pre-cooked egg patties, omelets, folded and scrambled egg formats, hard-cooked eggs, pancakes, waffles, and specialty wraps. Egg product offerings include liquid and frozen egg products. Other sales represent feed sales, miscellaneous byproducts and resale products. Total net sales for both the thirty-nine weeks ended February 28, 2026 and March 1, 2025 was $2.4 billion and $3.2 billion, respectively. Shell egg sales represented 85.3% and 94.7% of total net sales for the thirty-nine weeks ended February 28, 2026 and March 1, 2025, respectively. The table below presents net sales in key categories (in thousands, except percentage data): Thirteen Weeks Ended Thirty-nine Weeks Ended February 28, 2026 March 1, 2025 % Change February 28, 2026 March 1, 2025 % Change Shell Eggs $ 572,314 $ 1,345,382 (57.5) % $ 2,011,278 $ 2,990,756 (32.8) % Prepared foods 63,626 11,757 441.2 219,212 31,134 604.1 Egg products 18,360 49,267 (62.7) 89,998 105,716 (14.9) Other 12,651 11,279 12.2 38,563 30,621 25.9 Total net sales $ 666,951 $ 1,417,685 (53.0) % $ 2,359,051 $ 3,158,227 (25.3) % The table below presents an analysis of our shell egg sales (in thousands, except percentage data): Thirteen Weeks Ended Thirty-nine Weeks Ended February 28, 2026 March 1, 2025 February 28, 2026 March 1, 2025 Shell egg sales Conventional $ 283,173 49.5 % $ 1,016,438 75.6 % $ 1,152,979 57.3 % $ 2,118,065 70.8 % Specialty 289,141 50.5 328,944 24.4 % 858,299 42.7 872,691 29.2 Total shell egg sales $ 572,314 100.0 % $ 1,345,382 100.0 % $ 2,011,278 100.0 % $ 2,990,756 100.0 % Dozens sold Conventional 199,035 61.4 % 213,247 64.3 % 600,291 62.3 % 622,833 64.1 % Specialty 125,024 38.6 118,148 35.7 363,941 37.7 348,385 35.9 Total dozens sold 324,059 100.0 % 331,395 100.0 % 964,232 100.0 % 971,218 100.0 % Net average selling price per dozen Conventional $ 1.423 $ 4.766 $ 1.921 $ 3.401 Specialty $ 2.313 $ 2.784 $ 2.358 $ 2.505 All shell eggs $ 1.766 $ 4.060 $ 2.086 $ 3.079 Shell egg sales Third Quarter – Fiscal 2026 vs. Fiscal 2025 - In the third quarter of fiscal 2026, conventional egg sales decreased $733.3 million, or 72.1%, compared to the third quarter of fiscal 2025, primarily due to a 70.1% decrease in the prices for conventional eggs, which resulted in a $665.4 million decrease in net sales, and a 6.7% decrease in the volume of conventional dozens sold, which resulted in a $67.7 million decrease in net sales. - In the third quarter of fiscal 2026, specialty egg sales decreased $39.8 million, or 12.1%, compared to the third quarter of fiscal 2025, primarily due to a 16.9% decrease in prices for specialty eggs, which resulted in a $58.9 million decrease in net sales, partially offset by a 5.8% increase in the volume of specialty eggs sold, which resulted in a $19.1 million increase in net sales. Index 26 - See “Executive Overview” above for additional discussion of factors impacting shell egg sales for the third quarters of fiscal 2026 and 2025. Thirty-nine weeks – Fiscal 2026 vs. Fiscal 2025 - For the thirty-nine weeks ended February 28, 2026, conventional egg sales decreased $965.1 million, or 45.6%, compared to the same period of fiscal 2025, primarily due to a 43.5% decrease in the prices for conventional shell eggs, which resulted in an $888.4 million decrease in net sales, and a 3.6% decrease in the volume of conventional eggs sold, which resulted in a $76.7 million decrease in net sales. - For the thirty-nine weeks ended February 28, 2026, specialty egg sales decreased $14.4 million, or 1.6%, compared to the same period of fiscal 2025, primarily due to a 5.9% decrease in the prices for specialty eggs, which resulted in a $53.5 million decrease in net sales, partially offset by a 4.5% increase in the volume of specialty eggs sold, which resulted in a $39.0 million increase in net sales. During the first three quarters of fiscal 2026, a higher proportion of our conventional eggs were sold on a hybrid pricing model that takes into account both our cost of production as well as wholesale market prices, instead of solely market-based pricing, in response to customer demand. We believe the hybrid pricing arrangement may help some customers better plan and manage their businesses and reinforces our role as a trusted supplier as well as reduce volatility in our financial results compared to historical time periods when wholesale market prices were volatile. Prepared foods sales Third Quarter – Fiscal 2026 vs. Fiscal 2025 - In the third quarter of fiscal 2026, prepared food sales increased $51.9 million, compared to the third quarter of fiscal 2025, primarily due to an 834.3% increase in pounds sold which resulted in a $49.3 million increase in net sales. The increase in sales volume is primarily due to the acquisition of Echo Lake Foods, which was completed in the first quarter of fiscal 2026 as well as a nine-fold increase in sales volume at Crepini. Thirty-nine weeks – Fiscal 2026 vs. Fiscal 2025 - Prepared foods net sales increased $188.1 million, compared to fiscal 2025, primarily due to the same reasons discussed above. Egg products sales Third Quarter – Fiscal 2026 vs. Fiscal 2025 - In the third quarter of fiscal 2026, egg products sales decreased $30.9 million, or 62.7%, compared to the third quarter of fiscal 2025, primarily due to a 60.7% decrease in the net average selling price, resulting in a $31.0 million decrease in net sales, partially offset by a 3.6% increase in the volume of egg products sales, resulting in a $706 thousand increase in net sales. Thirty-nine weeks – Fiscal 2026 vs. Fiscal 2025 - For the thirty-nine weeks ended February 28, 2026, egg products sales decreased $15.7 million, or 14.9%, compared to the same period of fiscal 2025, primarily due to a 16.4% decrease in the net average selling price, resulting in an $18.6 million decrease in net sales, partially offset by a 6.8% increase in the volume of egg products sales, resulting in a $6.0 million increase in net sales. Index 27 COST OF SALES Cost of sales consists of costs directly related to producing, processing and packaging shell eggs, purchases of shell eggs from outside sources, processing and packing of prepared foods and egg products, and other non-egg costs. Farm production costs are those costs incurred at our egg production facilities, including feed, facility (including labor), hen amortization and other related farm production costs. The following table presents our cost of sales (in thousands): Thirteen Weeks Ended Thirty-nine Weeks Ended February 28, 2026 March 1, 2025 % Change February 28, 2026 March 1, 2025 % Change Cost of sales Farm production $ 279,331 $ 266,056 5.0 % $ 803,052 $ 766,003 4.8 % Processing, packaging, and warehouse - shell eggs 107,788 101,631 6.1 312,851 292,165 7.1 Egg purchases and other cost of sales 79,517 291,703 (72.7) 355,220 658,182 (46.0) Prepared foods 57,084 12,313 363.6 179,881 34,054 428.2 Egg products 23,948 29,867 (19.8) 70,064 88,448 (20.8) Total cost of sales $ 547,668 $ 701,570 (21.9) % $ 1,721,068 $ 1,838,852 (6.4) % Farm production costs (per dozen produced) Feed $ 0.494 $ 0.492 0.4 % $ 0.482 $ 0.489 (1.4) % Other $ 0.456 $ 0.418 9.1 % $ 0.454 $ 0.420 8.1 % Total farm production cost $ 0.950 $ 0.910 4.4 % $ 0.936 $ 0.909 3.0 % Dozens produced 296,455 293,088 1.1 % 868,715 847,962 2.4 % Percent produced to sold 91.5% 88.4% 3.5 % 90.1% 87.3% 3.2 % Third Quarter – Fiscal 2026 vs. Fiscal 2025 - Farm production costs increased 5.0%, compared to the third quarter of fiscal 2025, primarily due to an increase in production costs to run our facilities, specifically within labor and repairs and maintenance, as well as an 8.7% increase in our specialty egg production compared to the same period in the prior fiscal year. - Processing, packaging and warehouse costs increased $6.2 million, compared to the third quarter of fiscal 2025, as our processing costs and packing materials cost per dozen increased 6.4% resulting in a $6.1 million increase in cost of sales. - Egg purchases and other cost of sales decreased $212.2 million, primarily due to a 62.7% decrease in the price of outside egg purchases compared to the third quarter of fiscal 2025, which resulted in a $180.7 million decrease in cost of sales, and a 12.8% decrease in the volume of outside egg purchases, compared to the third quarter of fiscal 2025, which resulted in a $42.2 million decrease in cost of sales. - Prepared foods costs increased primarily due to the increased sales volume which is primarily due to the acquisition of Echo Lake Foods as well as increased production at Crepini. Thirty-nine weeks – Fiscal 2026 vs. Fiscal 2025 - Farm production costs increased 4.8% primarily due to a 3.0% increase in production costs, which resulted in $23.5 million increase in cost of sales, and a 2.4% increase in egg production, resulting in an $18.9 million increase in cost of sales. This increase was primarily due to the same reasons as described above. Index 28 - Processing, packaging and warehouse increased $20.7 million, as our processing costs and packing materials cost per dozen increased 5.5% which resulted in a $15.3 million increase in cost of sales, as well as an increase in the volume of eggs processed, which resulted in $3.6 million increase in cost of sales. - Egg purchases and other cost of sales decreased $303.0 million, compared to the same prior-year period, primarily due to a 35.8% decrease in the price of outside egg purchases, resulting in a $240.8 million decrease in cost of sales, and a 10.6% decrease in the volume of outside egg purchases, resulting in a $80.4 million decrease in cost of sales. - Prepared foods costs increased primarily due to the same reasons described above.. Current indications for corn and soybean project a favorable stocks-to-use ratio for us near the levels prevailing today for the remainder of fiscal 2026; however, as long as outside factors remain uncertain (including trade and tariff negotiations, weather patterns and global supply chain disruptions), volatility could remain. GROSS PROFIT Gross profit for the third quarter of fiscal 2026 was $119.3 million, compared to $716.1 million for the same period of 2025. The decrease was primarily driven by 56.5% lower net average selling prices for shell eggs partially offset by a decrease in the price and volume of outside egg purchases, as our percent produced to sold increased 3.5% to 91.5%. Gross profit for the thirty-nine weeks ended February 28, 2026 was $638.0 million, compared to $1.3 billion for the same period of 2025. The decrease was primarily driven by 32.3% lower net average selling prices for shell eggs, offset partially by a decrease in the price and volume of outside egg purchases, as dozens produced increased 2.4%, as well as contributions from prepared foods. SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES Selling, general, and administrative (“SGA”) expenses include costs of delivery, marketing, and other general and administrative expenses. Delivery expense includes contract trucking expense and all costs to maintain and operate our fleet of trucks to deliver products to customers, including the related payroll expenses. Marketing expense includes franchise fees that are submitted to Eggland’s Best, Inc. (“EB”) to support the EB brand, brokerage and commission fees, and other general marketing expenses, such as payroll expenses for our in-house sales team. Other general and administrative expenses include corporate payroll related expenses and other general corporate overhead costs. The following table presents an analysis of our SGA expenses (in thousands): Thirteen Weeks Ended February 28, 2026 March 1, 2025 $ Change % Change Delivery expense $ 27,749 $ 23,476 $ 4,273 18.2 % Marketing expense 15,424 11,240 4,184 37.2 % Other general and administrative expenses 40,131 45,251 (5,120) (11.3) % Total $ 83,304 $ 79,967 $ 3,337 4.2 % Third Quarter – Fiscal 2026 vs. Fiscal 2025 - Delivery expense increased 18.2%, compared to the third quarter of fiscal 2025, primarily due to the acquisition of Echo Lake Foods and increased contract trucking costs. - Marketing expense increased 37.2%, compared to the prior fiscal year period, primarily due a 54.8% increase in franchise fees. Franchise fees increased as specialty dozens sold increased 5.8%. In the prior fiscal year period the higher prices for conventional eggs compared to specialty eggs diminished the need to promote specialty eggs; during which time, EB temporarily reduced the related franchise fees for certain specialty egg brands to encourage continued production of these branded eggs. - In the third quarter of fiscal 2026, other general and administrative expenses decreased 11.3%, compared to the prior year period, primarily due to a reduction in the accrual for anticipated employee bonuses compared to the prior year period. In addition, there was an increase in the adjustment to the earnout liability recorded in the prior fiscal year period. This was partially offset by increased professional and legal fees as well as increased amortization of intangible assets acquired related to acquisitions during the current fiscal year. Index 29 Thirty-nine Weeks Ended February 28, 2026 March 1, 2025 $ Change % Change Delivery expense $ 80,194 $ 68,206 $ 11,988 17.6 % Marketing expense 44,572 40,666 3,906 9.6 % Other general and administrative expenses 110,939 110,660 279 0.3 % Total $ 235,705 $ 219,532 $ 16,173 7.4 % Thirty-nine weeks – Fiscal 2026 vs. Fiscal 2025 - Delivery expense increased 17.6% in fiscal 2026, compared to fiscal 2025, primarily due to the same reasons as described above - In fiscal 2026, marketing expense increased 9.6%, compared to fiscal 2025, primarily due to the same reasons as described above. - Other general and administrative expenses were relatively flat, compared to fiscal 2025. During fiscal 2026, we incurred higher professional and legal fees primarily related to our acquisitions made during the current fiscal year as well as increased amortization of intangible assets acquired which was offset by a reduced charge in the change in earnout liability recorded in the prior fiscal year period and a reduction in the accrual for anticipated employee bonuses compared to the prior fiscal year period. GAIN ON INVOLUNTARY CONVERSION In the first quarter of fiscal 2026, we recorded a gain of $7.5 million due to business interruption insurance recoveries related to a weather-related event that occurred in fiscal 2021. OPERATING INCOME For the third quarter of fiscal 2026, we recorded operating income of $35.9 million, compared to operating income of $635.7 million for the same period of fiscal 2025. For the thirty-nine weeks ended February 28, 2026, we recorded operating income of $409.0 million, compared to operating income of $1.1 billion for the same period of fiscal 2025. OTHER INCOME (EXPENSE) Total other income (expense) consists of items not directly charged or related to operations, such as interest income and expense, equity in income or loss of unconsolidated entities, and patronage dividends, among other items. Patronage dividends are paid to us from our membership in the EB cooperative. For the third quarter of fiscal 2026, we earned $11.4 million of interest income compared to $12.8 million for the same period of fiscal 2025, primarily due to lower average cash and cash equivalents and investment securities available-for-sale balances. The Company recorded interest expense of $156 thousand and $146 thousand for the third quarters ended February 28, 2026 and March 1, 2025, respectively. For the thirty-nine weeks ended February 28, 2026, we earned $36.9 million of interest income compared to $32.6 million for the same period of fiscal 2025, primarily due to higher average cash and cash equivalents and investment securities available- for-sale balances. The Company recorded interest expense of $507 thousand and $457 thousand for the thirty-nine weeks ended February 28, 2026 and March 1, 2025, respectively. INCOME TAXES For the third quarter of fiscal 2026, our pre-tax income was $58.2 million, compared to $663.0 million for the third quarter of fiscal 2025. Income tax expense of $7.1 million was recorded for the third quarter 2026 with an effective tax rate of 12.1%. This includes the discrete tax benefit of $8.2 million associated with the fiscal 2025 provision-to-return adjustments. Excluding Index 30 the discrete tax benefit, income tax expense was $15.3 million with an adjusted effective tax rate of 26.2%. For the third quarter 2025, income tax expense was $154.9 million with an effective tax rate of 23.4%. For the thirty-nine weeks ended February 28, 2026, pre-tax income was $457.5 million, compared to $1.1 billion for the same period of fiscal 2025. Income tax expense of $104.4 million was recorded for the thirty-nine weeks ended February 28, 2026 with an effective tax rate of 22.8%. This includes the discrete tax benefit of $8.2 million associated with the fiscal 2025 provision-to-return adjustments. Excluding the discrete tax benefit, income tax expense was $112.6 million with an adjusted effective tax rate of 24.6%. For the same period fiscal 2025, income tax expense was $273.9 million with an effective tax rate of 23.8%. Items causing our effective tax rate to differ from the federal statutory income tax rate of 21% are state income taxes, offset by certain federal tax credits and certain items included in income or loss for financial reporting purposes that are not included in taxable income or loss for income tax purposes, including tax exempt interest income, certain nondeductible expenses, and net income or loss attributable to noncontrolling interest. NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC. Net income attributable to Cal-Maine Foods, Inc. for the third quarter ended February 28, 2026 was $50.5 million, or $1.07 per basic and $1.06 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $508.5 million, or $10.42 per basic and $10.38 per diluted common share, for the same period of fiscal 2025. Net income attributable to Cal-Maine Foods, Inc. for the thirty-nine weeks ended February 28, 2026, was $352.6 million, or $7.37 per basic and $7.34 per diluted common share, compared to net income attributable to Cal-Maine Foods, Inc. of $877.6 million or $17.99 per basic and $17.92 per diluted common share, for the same period of fiscal 2025. LIQUIDITY AND CAPITAL RESOURCES Working Capital and Current Ratio Our working capital was $1.5 billion at February 28, 2026, compared to $1.7 billion at May 31, 2025. The calculation of working capital is defined as current assets less current liabilities. Our current ratio was 8.2 at February 28, 2026 compared to 6.4 at May 31, 2025. The increase in our current ratio is primarily due to a decrease in dividends payable with respect to our third quarter 2026. The current ratio is calculated by dividing current assets by current liabilities. Cash Flows from Operating Activities For the thirty-nine weeks ended February 28, 2026, $476.9 million in net cash was provided by operating activities, compared to $811.7 million provided by operating activities for the comparable period in fiscal 2025. The decrease in cash flow from operating activities resulted primarily from a decrease in cash collections from customers as a result of decreased prices of shell eggs compared to the prior fiscal year period. Cash Flows Used in Investing Activities For the thirty-nine weeks ended February 28, 2026, $266.5 million was used in investing activities, primarily relating to the acquisitions of Echo Lake Foods and Clean Egg and purchases of investment securities, compared to $385.1 million used in investing activities in the same period of fiscal 2025. Purchases of investment securities were $503.7 million during the thirty- nine weeks ended February 28, 2026, and sales and maturities of investment securities were $659.7 million. Sales and maturities of investment securities were $654.4 million in the prior fiscal year period while purchases of investment securities were $813.1 million during the period. Cash paid for business acquisitions, net of cash acquired, was $299.0 million in the thirty-nine weeks ended February 28, 2026, related to the Echo Lake Foods and Clean Egg acquisitions, and $116.2 million in the prior-year period, related to the ISE acquisition. Purchases of property, plant and equipment were $123.7 million and $115.4 million in fiscal 2026 and 2025, respectively, primarily reflecting progress on our construction projects. Cash Flows Used in Financing Activities For the thirty-nine weeks ended February 28, 2026, $315.8 million was used in financing activities, primarily due to dividends paid of $214.8 million in fiscal 2026, compared to $167.2 million used in financing activities in the same prior fiscal year period. Purchases of common stock by treasury were $101.0 million during the thirty-nine weeks ended February 28, 2026, primarily due to the repurchase of common stock under the Company’s share repurchase program. Index 31 Net Change in Cash and Cash Equivalents As of February 28, 2026, cash, cash equivalents and restricted cash decreased $105.3 million since May 31, 2025, compared to an increase of $259.4 million during the same period of fiscal 2025. The decrease is primarily due to decreased cash collections from customers as a result of decreased prices of shell eggs compared to the prior year as well as the use of cash for the Echo Lake Foods and Clean Egg acquisitions completed during fiscal 2026. Credit Facility On November 15, 2021, we entered into a credit agreement that provides for a senior secured revolving credit facility (the “Credit Facility”), in an initial aggregate principal amount of up to $250 million with a five-year term. As of February 28, 2026, no amounts were borrowed under the Credit Facility and we had $4.7 million in outstanding standby letters of credit issued under our Credit Facility for the benefit of certain insurance companies. Share Repurchase Program In February 2025, the Company’s Board of Directors (“Board”) approved a $500 million share repurchase program. The share repurchase program authorizes the Company, in management’s discretion, to repurchase shares of our common stock from time to time for an aggregate purchase price up to $500 million (exclusive of any fees, taxes, commissions or other expenses related to such repurchases), subject to market conditions and other factors. The actual timing, number and value of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including, but not limited to, the market price of our common stock and general market and economic conditions. During the thirty-nine weeks ended February 28, 2026, the Company repurchased 1,175,867 shares or approximately $99.2 million under the program. As of the end of the third quarter of fiscal 2026, we had remaining authorization to purchase up to $350.8 million under the repurchase program. See Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for further information. The Company expects to strategically and opportunistically repurchase shares from time to time through solicited or unsolicited transactions in the open market, in privately negotiated transactions or by other means in accordance with securities laws. The Company expects that share repurchases under the program will be funded from existing cash balances and future free cash flow. The share repurchase program does not obligate the Company to repurchase any specific amount of shares, does not have an expiration date, and may be suspended, modified or discontinued at any time without prior notice. Dividends In accordance with our variable dividend policy, we will pay a cash dividend totaling approximately $16.8 million, or approximately $0.355 per share, to holders of our common stock with respect to our third quarter of fiscal 2026. The amount paid per share will vary based on the number of outstanding shares on the record date. The dividend is payable on May 14, 2026, to holders of record on April 29, 2026. Material Cash Requirements Material cash requirements for operating activities primarily consist of feed ingredients, processing, packaging and warehouse costs, employee related costs, maintenance capital expenditures and other general operating expenses. Our material cash requirements for growth capital expenditures consist primarily of our construction projects to increase our production capacity of prepared foods and cage-free shell egg production. We believe our current cash balances, investments, projected cash flows from operations, and available borrowings under our Credit Facility will be sufficient to fund our cash needs for at least the next 12 months and to fund our capital commitments currently in place thereafter. Future acquisitions of businesses may require additional financing. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS For information on changes in accounting principles and new accounting principles, see “ New Accounting Pronouncements and Policies” in Note 1 - Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report. Index 32 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 2025 Annual Report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in our exposure to market risk during the thirty-nine weeks ended February 28, 2026 from the information provided in Part II Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2025 Annual Report.