Item 2. Management’s Discussion and Analysis
ITEM
2.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
The following
“Management’s
Discussion
and Analysis
of Financial
Condition
and Results of Operations”
is provided to assist
readers
in understanding
the
Company’s
financial
performance
during the
periods
presented
and
significant
trends
that
may
impact
the
Company’s
future
performance.
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
30, 2026
(the “2026
Annual
Report”), and
the accompanying
financial
statements
and
notes
included
in Part
II
Item
8 of
the
2026
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) changes
in
wholesale
shell egg
market
prices,
(ii) changes
in
the
demand
for
shell eggs
and
our
prepared
foods
offerings,
(iii) increases in
feed
costs
for our shell egg operations
as well as increases in input
costs for
prepared
foods,
(iv) our
ability
to
predict
and
meet
demand
for
cage-free
and
other
specialty
eggs, (v)
the risks and
hazards
inherent in
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,
(vi) 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
,
(vii)
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,
(viii) our ability
to
produce,
supply
and
distribute shell eggs and prepared
foods
efficiently
and reliably,
(ix) 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, (x) the impacts
of
government,
customer
and
consumer
reactions
to
high market
prices for
eggs, including, without
limitation,
potential
new or
expanded
government
regulations, (xi) risks relating to potential
changes
in inflation, interest
rates and
trade
and
tariff
policies,
(xii) the loss
or expiration
of
any
registered trademarks
or other
intellectual
property
that
we use in our business, (xiii) adverse
results
in
pending
litigation
and
other
legal
matters,
and
(xiv) global instability,
including as
a
result of
geopolitical
conflicts
and
other
uncertainties
and
(xv) the
risk factors
set forth
in Part I Item
1A Risk Factors of
our 202
6
Annual
Report, as
well
as
those
included
in other
reports
we file from
time
to
time
with the Securities and
Exchange
Commission
(the “SEC”) (including
our
Quarterly
Reports
on
Form
10-Q
and
Current
Reports
on
Form
8-K). 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.
Index
20
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,
headquartered
in Ridgeland,
Mississippi. With a
strong national
footprint,
Cal-
Maine
Foods provides
nutritious, affordable,
and
sustainable
protein to
millions of households
every day.
The
Company’s
shell
egg
portfolio
spans
the
full
egg
value
ladder
—from
conventional
to
specialty,
including
cage-free,
nutritionally
enhanced,
organic,
brown,
pasture
-raised
and
free-range
eggs—serving
retail,
foodservice
,
and
industrial
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®,
Van’s®,
MeadowCreek
Foods®, and
Crepini®.
We
sell
our
products
to
a
diverse
group
of
customers
located
throughout
the
majority
of
the
U.S., including
national
and
regional
grocery
store
chains,
club
stores, companies
servicing independent
supermarkets
in the
U.S., foodservice
distributors
serving
restaurants,
convenience
stores,
healthcare
and
education
facilities,
and
hotels
and
food
manufacturers
and
other
customers
that
use
our products
as ingredients or inputs
in further processing,
and
we aim to
maintain
efficient,
state
-of-the-art
operations
located
close to our customers.
Our fiscal year
ends on the
Saturday
closest to May 31.
Each
of the
three-month
periods ended
on August 29,
2026
and
August
30,
2025
included 13
weeks. All
references
herein to a
fiscal year
or quarter
means
our fiscal year
or quarter,
as applicable,
and
all references
to a
year
mean
a calendar
year.
Our
strategy
includes
three
primary
priorities: expanding
specialty
shell 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.
We
sell our shell eggs under
market
-based,
hybrid,
and
cost-plus
pricing arrangements.
Hybrid arrangements
incorporate
both
wholesale
market
prices and
production
costs.
Cost-plus
arrangements
are
based
on production
costs and
include grain-based
pricing. Approximately
half
of
our
conventional
shell egg sales
are
priced based
on
wholesale
market
prices. The
remaining
approximately
half
are priced under
hybrid and
cost-plus arrangements,
with grain-based pricing representing one
form
of cost-
plus pricing.
Most
of
our
specialty
shell egg sales
are
priced based
on
production
costs,
although
some cage
-free eggs are sold
under
market
-based
arrangements.
As a
result,
specialty
shell egg prices
generally
fluctuate
less than
conventional
shell egg
prices.
We do
not sell eggs
directly to
consumers
or set retail egg prices.
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.
For example,
we incurred a
net loss in the
fourth quarter
of fiscal 2026 and
first quarter
of fiscal
2027
.
Additionally,
demand
for
specialty
shell eggs
may
increase
when
conventional
shell egg prices are
significantly
higher, resulting in
higher sales
volume
for
specialty
shell eggs.
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.
Our industry
has
been
greatly
impacted
by
several
outbreaks
of
HPAI
in recent years.
Following
the HPAI
outbreaks
in 2015,
there were no
reported
significant outbreaks
of HPAI
in the commercial
table
egg layer flocks until
February through
December
2022.
Thereafter,
there were no HPAI
cases affecting
commercial
layers until November
2023.
Since 2023,
outbreaks
of HPAI
have
continued
to
occur
in U.S. poultry
flocks.
In
2024
and
2025,
40.2
million and
45.2
million commercial
layer
hens
and
pullets were
depopu
lated
due
to
HPAI,
respectively.
To date
in 2026, through
September
28, 2026,
19.2 million layer hens
and
pullets have
been depopulated
due to
HPAI.
However,
the recent
recovery of
the layer
hen population
in the U.S. appears
to be
outweighing
the impact
of depopulation.
Index
21
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
shell eggs,
including cage-free, nutritionally
enhanced,
organic,
brown, pasture
-raised and
free-range eggs, as well as
prepared
foods
and
egg products.
The
Company
previously
operated
as one
operating
and
reportable
segment. Effective
in the fourth
quarter
of fiscal
2026,
the
Company
determined
its operations
are
organized
into
three
reportable
operating
segments:
(1) Conventional
Shell Eggs; (2)
Specialty
Shell Eggs; and
(3) Prepared
Foods.
As we expanded
our
prepared
foods
product
offerings
throughout
fiscal
2026,
these
operating
segments
align
with
how
the
Company’s
management
reviews operating
results and
makes
decisions
about
resource
allocation
and
strategic initiatives. All prior
fiscal year
periods have
been recast
to reflect the
new reportable
segments.
For
further
information
on
our
reportable
segments,
see
Note 9 – Segment Reporting
in Part
I, Item
1. Notes
to
Condensed
Consolidated
Financial
Statements.
ACQUISITIONS
Throughout
our history,
we have
acquired
other businesses
in our industry.
Since 1989,
we have
acquired
and
integrated
28
businesses.
During
the
last
completed
fiscal
year
and
to
date
in
fiscal
2027,
we
have
made
the
following
significant
acquisitions.
Effective
July 10,
2026,
the
Company
acquired
the
Eggland’s
Best®
franchise
territory in
the
Northeast
for
$25 million. The
acquisition
gives the
Company
the
exclusive
right to
distribute
and
sell
Egg-Land’s
Best®
and
Land
O’ Lakes®
branded
eggs
in Maine,
Massachusetts,
New Hampshire,
Rhode
Island,
and
select key areas
in Vermont,
New York, and
Connecticut.
Effective
May
12, 2026,
we acquired
certain
assets
of the
Van’s
Foods (“Van’s”)
business of
Sara
Lee Frozen Bakery,
LLC for
approximately
$24.8
million. The
assets
acquired
are
expected
to
help
support
our
strategy
to
diversify
our
business
model,
grow in prepared
foods
business-to-retail, and
deliver greater value
across the
supply chain.
Effective
March
2, 2026,
we acquired
the shell egg, egg
products,
and
prepared
foods
assets
of Creighton
Brothers LLC
and
its
affiliate
Crystal
Lake
LLC
(collectively,
“Creighton”),
for
approximately
$129.3
million.
The
acquired
assets
include
commercial
shell egg production
and
grading with
capacity
of
approximately
3.2 million layers, including 500 thousand
cage-
free
layers,
and
865
thousand
pullets, a
feed
mill, and
1,007
acres
of
land,
as
well as an
egg products
and
hard
-cooked
egg
processing facility
located
near
Warsaw,
Indiana.
The transaction
expands
the geographic
scale of
our shell egg
platform
while
also adding
nearby
liquid egg capacity
that
we believe will
strengthen
our integrated
value
chain.
Effective
October
10,
2025,
we
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 contract
production
and
egg processing business.
Effective
June 2, 2025,
we acquired
Echo Lake
Foods, LLC and
certain
related companies
(collectively
“Echo Lake Foods”)
for
approximately
$289.5
million.
Echo
Lake
Foods
is based
in
Burlington,
Wisconsin
and
produces,
packages,
markets
and
distributes
prepared foods,
including
pre-cooked egg
patties, omelets,
folded and
scrambled egg formats,
pancakes
and
waffles.
The
acquisition
has
expanded
our
prepared
foods
product
line and
customer
base.
Our
previously
announced
projects
to
increase efficiency
and
expand
production
capacity
are ongoing and
expected
to continue
throughout
mid to late
fiscal 2027.
EXECUTIVE
OVERVIEW
For
the
first quarter
of
fiscal
2027,
we recognized
net
sales
of
$539.6
million and
a
net
loss of
$56.2
million. We
recorded
a
gross profit of
$403
thousand
compared
to $311.3
million for the first quarter
of fiscal
2026.
The decrease
in gross profit was a
result of
a
decrease
in the
net
average
selling price of
shell eggs, primarily conventional
shell egg
prices, and
to a
lesser extent,
a decrease
in volumes
of specialty
eggs sold and prepared
food
sales.
Our
average
conventional
shell egg
price
per dozen
for
the
first quarter
of
fiscal
2027
declined
59.3%
compared
to
the
first
quarter
of
fiscal
2026.
Average
specialty
shell egg price per dozen declined
10.7%
compared
to the
first quarter
of fiscal
2026.
Egg prices
have
declined
with the
repopulation
of
the
egg layer
flock
during fiscal
2026.
According to
the
USDA, the size
of
the
layer
hen
flock
was
318.7
million hens
at
September
1, 2026,
compared
to
the
five-year
average
of
312.1
million hens.
American
Egg Board
estimates
the
U.S. laying flock
as
of
June
2026
at
336–343
million hens, based
on producer
assessment
data
collected
across
the
commercial
egg industry,
materially
above
USDA’s
published
estimate
and
further
indicative
of
abundant
egg supplies.
According
to
the
USDA, egg-type
chicks
hatched
during August
2026
totaled
50.8
million, down
12
percent
from
August 2025.
Index
22
In
the first
quarter of
fiscal 202
7, prepared
foods
accounted
for $63.0
million or 11.7% of
our net sales.
Prepared
food
sales for
the
first quarter
of
fiscal
2027
decreased
$9.4
million, compared to
the first quarter
of fiscal
2026, primarily
due to
temporary
reductions
in production
volumes
as
we continue
our
production
expansion
and
optimization
efforts
that
began
in mid-fiscal
2026.
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
wholesale
egg prices
primarily
reflects
improved
egg supply,
following disruptions
associated
with HPAI
in fiscal
year
2025.
Compared
to
the
first
quarter
of
the
prior
fiscal
year,
improved
pipeline
availability
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.
RESULTS
OF OPERATIONS
CONSOLIDATED
RESULTS
Thirteen
Weeks
Ended
2027 Compared
to
2026 Compared
to
August 29,
2026
August 30,
2025
August 31,
2024
2026
% Change
2025
% Change
Net sales
$
539,607
$
922,602
$
785,871
(41.5)
%
17.4
%
Operating
income
(loss)
(82,165)
249,184
186,957
(133.0)
33.3
Total
other income
7,969
14,081
10,996
(43.4)
28.1
Income
tax
expense
(benefit)
(17,992)
64,158
48,363
(128.0)
32.7
Less:
Net income
(loss)
attributable
to noncontrolling
interest
2,411
(233)
(386)
(1,134.8)
(39.6)
Net income
(loss) attributable
to Cal
-Maine Foods,
Inc.
$
(58,615)
$
199,340
$
149,976
(129.4)
%
32.9
%
Net Sales
Net sales
for
the
first quarter
of
fiscal
year
2027
was
$539.6
million compared
to
$922.6
million in the
first quarter
of
fiscal
2026,
a
decrease
of
$383.0
million or 41.5%.
The
decrease
was
primarily
due
to
the
decrease
in prices
for conventional
shell
eggs, as
the
layer
population
recovered
from
the HPAI
outbreaks.
For further discussion,
refer to “Segment
Results” within this
section.
Net sales
for
the
first quarter
of
fiscal
year
2026
was
$922.6
million compared
to
$785.9
million in the
first quarter
of
fiscal
2025,
an
increase
of
$136.7
million
or
17.4%.
The
increase
was
primarily
due
to
acquisitions
within
our
Prepared
Foods
segment
as well as
an
increase in specialty
volumes
and
increases in prices for conventional
and
specialty
shell eggs.
Operating
Income
(Loss)
For the
first quarter
of fiscal
2027, operating
loss was $82.2
million compared
to operating
income
of $249.2
million in the first
quarter
of
fiscal
2026,
a
decrease
of
$331.3
million, or 133.0%.
The
decrease
was primarily attributable
to the
loss within our
Conventional
Shell Eggs segment as
the sales
price declined
from
the comparable
prior year period.
For the first
quarter of
fiscal 202
6, operating income
was $249.2
million compared
to operating
income
of $187.0
million in the
first quarter
of
fiscal
2025,
an
increase
of
$62.2
million, or 33.3
%. The
increase
was
primarily
attributable
to
the
increase
of
sales prices for
conventional
and
specialty
shell eggs
and
contributions
from
our prepared
foods
segment.
Index
23
Other Income
(Expense)
Total
other
income
(expense)
consists
of
items
not
directly charged
to,
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.
We
recorded
interest
income
of
$8.3
million in the
first quarter
of fiscal
2027, compared
to $13.0
million in the first quarter
of
fiscal 202
6, primarily
due to lower
average
cash and
cash equivalents
and
investment
securities available
-for-sale balances
.
We
recorded
interest
expense
of
$247
thousand
and
$150
thousand
in
the
first
quarter
of
fiscal
2027
and
2026,
respectively,
primarily
related
to commitment
fees under
our Credit Facility (defined
below).
For the
first quarter
of
fiscal 2026,
we earned
$13.0
million of interest income
compared
to $9.9
million for the same
period
of
fiscal 2025
,
primarily
due to higher average
cash and
cash equivalents
and investment
securities available
-for-sale balances
and
higher yields.
We
recorded interest
expense
of $150 thousand
and $160
thousand
for the
first quarters
of fiscal
2026
and
2025,
respectively,
primarily
related
to commitment
fees under
our Credit Facility.
Income
Taxes
For the first
quarter of
fiscal 202
7, we recognized a pre
-tax
loss of $74.
2
million, compared
to pre-tax
income
of $263.3
million
in
the
first
quarter
of
fiscal
2026.
We
recorded
an
income
tax
benefit
of
$18.0
million for
the
first quarter
of
fiscal
2027,
reflecting an
effective
tax
rate
of
24.2%. For the
first quarter
of fiscal
2026, we recorded
income
tax
expense
of $64.2
million,
reflecting an
effective
tax
rate
of
24.4%. For the
first quarter
of fiscal
2025,
we recorded income
tax
expense
of
$48.4
million,
reflecting an
effective
tax
rate of
24.4%.
Items
causing
our
effective
tax
rate to
differ from
the federal
statutory
income
tax
rate of
21% are
state
income
taxes,
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
(Loss) Attributable
to Noncontrolling
Interest
Net income
attributable
to
noncontrolling
interest
was
$2.4
million for
the
first quarter
of
fiscal
2027
compared
to net
loss
of
$233
thousand
and
$386
thousand
for
the
first
quarter
of
fiscal
2026
and
2025,
respectively.
The
increase
in net
income
attributable
to
noncontrolling
interest
compared
to
the
first quarter
of fiscal
2026
was due
to a
547%
increase in sales
volume
from
our joint
venture
Crepini Foods in
connection
with our ongoing expansion
project
.
Net Income
(Loss) Attributable
to Cal
-Maine Foods,
Inc.
Net loss
attributable
to
Cal
-Maine
Foods,
Inc.
for
the
first quarter
of
fiscal
2027
was
$58.6
million, or $1.26
per basic
share,
compared
to Net income attributable
to Cal
-Maine Foods,
Inc. of
$199.3
million, or $4.13 per basic
and
$4.12
per diluted share
for
the
first quarter
of fiscal
2026, and
net income
attributable
to Cal
-Maine Foods,
Inc. for
the first quarter
of fiscal
2025
was
$150.0
million, or $3.08
per basic and
$3.06
per diluted share
.
SEGMENT
RESULTS
Conventional
Shell Eggs
Thirteen
Weeks
Ended
2027 Compared
to
2026 Compared
to
August 29,
2026
August 30,
2025
August 31,
2024
2026
% Change
2025
% Change
Net sales
$
201,683
$
498,433
$
472,350
(59.5)
%
5.5
%
Cost of
sales
250,481
312,205
308,879
(19.8)
1.1
Selling, general
and
administrative
22,247
17,992
17,956
23.6
0.2
Segment income
(loss)
$
(71,045)
$
168,236
$
145,515
(142.2)
%
15.6
%
Index
24
First Quarter
- Fiscal 202
7
compared
to fiscal 202
6
-
Net sales
decreased
$296.8
million, or 59.5
%
compared
to the
first quarter
of fiscal
2026, primarily
due to
a decrease
of
59.3%
in
prices
for
conventional
shell
eggs,
resulting
in
a
$293.3
million
decrease
in
net
sales.
Volumes
for
conventional
shell eggs were relatively
flat
compared
to the
first quarter
of fiscal
2026.
-
Cost
of
sales
decreased
$61.7
million, or 19.8%
compared
to the
first quarter
of fiscal
2026, primarily
due to
a 19.2%
decrease in
the cost per
dozen sold.
Cost per dozen
sold decreased
primarily
due to a 53.9%
decrease
in the price and
a
30.6% decrease
in volume
of outside
egg purchases
compared
to the
prior period.
-
Selling,
general, and
administrative
expenses
increased
$4.3
million, or 23.6
%
compared
to
the
first quarter
of fiscal
2026,
due to
a $
3.2
million increase
in delivery
expenses
primarily
due
to
rising fuel costs
as
well as the
addition
of
Creighton.
First Quarter
- Fiscal 202
6
compared
to fiscal 202
5
-
Net sales
increased
$26.1
million, or 5.5%
compared
to the
first quarter
of fiscal
2025, primarily
due to
an
increase of
2.8%
in prices
for
conventional
shell eggs, resulting in a
$13.7
million increase
in net
sales, as
well as an
increase
of
2.6% in
conventional
shell egg dozens sold, resulting
in a
$12.4
million increase
in net sales.
-
Cost
of
sales
increased
$3.3
million, or
1.1%
compared
to
the
first quarter
of
fiscal
2025,
primarily
due
to
a
2.6%
increase in
dozen
s
sold,
partially
offset
by a
1.5% decrease
in cost per dozen
sold.
Specialty
Shell Eggs
Thirteen
Weeks
Ended
2027 Compared
to
2026 Compared
to
August 29,
2026
August 30,
2025
August 31,
2024
2026
% Change
2025
% Change
Net sales
$
236,932
$
275,590
$
247,706
(14.0)
%
11.3
%
Cost of
sales
197,623
184,575
168,890
7.1
9.3
Selling, general
and
administrative
24,372
26,819
24,923
(9.1)
7.6
Segment income
$
14,937
$
64,196
$
53,893
(76.7)
%
19.1
%
First Quarter
- Fiscal 202
7
compared
to fiscal 202
6
-
Net sales
decreased
$38.7 million,
or 14.0
%
compared
to the first quarter
of fiscal
2026, primarily
due to
a decrease
of
10.7%
in prices
of
specialty
shell eggs, resulting in a
$28.3
million decrease
in net
sales
as
well
as
a
3.8%
decrease
in
specialty
dozens
sold, resulting in
a
$10.4
million decrease
in net
sales. The prior-year
period benefited
from
atypical
pricing relationships
between
conventional
and
specialty
shell eggs that
temporarily
accelerated
demand
for
certain
specialty
shell
egg
categories.
During
the
first
quarter
of
fiscal
2027,
lower volumes
reflected
a
more
historically
typical
demand
relationship
across the
conventional
and
shell egg
categories.
-
Cost
of
sales
increased
$13.0
million, or 7.1%
compared
to the
first quarter
of fiscal
2026, primarily
due to
an
11.3%
increase
in the
cost
per dozen
sold attributable
to increase
feed
and
production
costs, partially
offset
by
a
decrease
of
3.8%
in sales volume.
-
Selling, general,
and
administrative
expenses
decreased
$2.4
million, or 9.1%
compared
to
the
first quarter
of
fiscal
2026,
primarily
due
to
a
$3.2
million marketing
expense
reimbursement
,
partially
offset
by higher delivery costs
due
to rising fuel
.
First Quarter
- Fiscal 202
6
compared
to fiscal 202
5
-
Net sales
increased
$27.9 million,
or 11.3
%
compared
to the first quarter
of fiscal 202
5, primarily
due to an increase
of
8.5%
in specialty
dozens
sold, resulting in
a
$21.1
million increase
in net
sales
as
well as a
2.5% increase
in prices of
specialty
shell eggs, resulting
in a
$6.8 million
increase in
net sales.
Index
25
-
Cost
of
sales
increased
$15.7
million, or 9.3%
compared
to
the
first quarter
of
fiscal
2025, primarily
due to
an
8.5%
increase in
sales volume
.
-
Selling, general,
and
administrative
expenses
increased
$1.9
million, or 7.6%
compared
to
the
first quarter
of
fiscal
2026,
primarily due
to a
$1.3 million increase
in delivery
charges as
specialty dozens
sold increased
8.5% compared
to
fiscal 2025
.
Prepared
Foods
Thirteen
Weeks
Ended
2027 Compared
to
2026 Compared
to
August 29,
2026
August 30,
2025
August 31,
2024
2026
% Change
2025
% Change
Net sales
$
62,995
$
72,368
$
—
(13.0)
%
N.M.
%
Cost of
sales
48,346
53,471
—
(9.6)
N.M.
Selling, general
and
administrative
6,807
5,676
—
19.9
N.M.
Segment income
$
7,842
$
13,221
$
—
(40.7)
%
N.M.
%
N.M. –
Not Meaningful
First Quarter
- Fiscal 202
7
compared
to fiscal 202
6
-
Net
sales
decreased
$9.4
million, or
13.0%
compared
to
the
first
quarter
of
fiscal
2026,
primarily
due
to
a
19.3%
decrease
in pounds
sold, which
had
a
$14.0
million impact
on
net
sales, partially
offset
by
a
7.9%
increase
in price,
which
had
a
$4.6
million impact
on
net
sales.
The
decrease
in volumes
is primarily
due
to
temporary
reductions
in
production
volumes
as we continue
our production
expansion
projects
and
production
optimization
efforts
that
began
in mid-fiscal 2026.
-
Cost
of
sales
decreased
$5.1
million,
or 9.6%
compared
to
the first quarter
of fiscal
2026, primarily
due to
decreased
sales volume
of 19.3%,
partially
offset
by a
12.1% increase
in the cost per
pound
sold, due to
higher operating costs
to
support
our production
capacity
expansion
projects
and
lower sales volumes
.
-
Selling, general,
and
administrative
expenses
increased
$1.1
million, compared
to
the
first
quarter
of
fiscal
2026,
primarily
due to
increased
delivery charges
due to
rising fuel costs
.
Unallocated
Income
(Expenses)
Thirteen
Weeks
Ended
2027 Compared
to
2026 Compared
to
August 29,
2026
August 30,
2025
August 31,
2024
2026
% Change
2025
% Change
Other - segment
income
(loss)
$
(8,374)
$
12,219
$
2,874
(168.5)
%
325.2
%
Unallocated
corporate
SG&A
(a)
(24,609)
(16,072)
(16,996)
53.1
(5.4)
Gain (loss)
on involuntary
conversions
—
7,488
(146)
(100.0)
(5,228.8)
Gain (loss)
on disposal
of
fixed assets
(916)
(104)
1,817
780.8
(105.7)
(a)
Unallocated
corporate
selling,
general
and
administrative
(“SG&A”)
expenses
primarily
consists
of
unallocated
corporate
overhead
costs,
administrative
expenses,
and
amortization
that
are
not
directly related
or allocated
to the
operating
segments.
Index
26
First Quarter
- Fiscal 202
7
compared
to fiscal 202
6
-
Other –
segment
loss was
$8.4
million,
a
decrease
of
$20.6
million, or 168.5
%
compared
to the
first quarter
of fiscal
2026.
The
decrease
was
primarily
due
to
a
65.3%
decrease
in egg products
sales
prices, partially
offset
by
a
56.2%
increase in
egg products
volumes
.
-
Unallocated
corporate
SG&A increased
$8.5
million, or 53.1
%, compared
to the
first quarter
of fiscal
2026, primarily
due
to
an
increase
in
insurance
expenses
and
an
increase
in
legal
and
professional
fees,
partially
offset
by
a
$2.5
million reduction
in contingent
liability earn
-out for
Fassio.
-
In
the
first
quarter
of
fiscal
2026,
we recognized
a
$7.5
million gain
on
involuntary
conversions
related
to
business
interruption
insurance
recoveries
associated
with a weather
-related event
that
occurred in fiscal
2021.
First Quarter
- Fiscal 2026
compared
to fiscal 2025
-
Other –
segment
income
increased
$9.3
million, or 325.2%
compared
to
the
first quarter
of fiscal
2025.
The increase
was primarily
due to
a 35.9%
increase in egg products
sales price and
an
8.3% increase
in egg
products
sales volume.
-
Unallocated
corporate
SG&A decreased
$924 thousand,
or 5.4%, compared
to the
first quarter
of fiscal
2025,
due to
a
decrease
in insurance
expense,
slightly offset
by
higher legal and
professional
fees as
well
as additional
amortization
of intangibles
that
were acquired
from
our acquisition
in the first quarter
of fiscal
2026.
LIQUIDITY AND
CAPITAL
RESOURCES
Working
Capital
and
Current Ratio
Our working capital
was $1.3
billion at August 29, 2026
,
compared
to $1.4
billion at May
30, 2026.
The calculation
of working
capital
is defined
as
current
assets
less current
liabilities. Our current
ratio
was
7.7
at
August 29,
2026
and
at
May
30,
2026
.
The current
ratio is calculated
by dividing current assets
by current
liabilities.
Cash
Flows Provided by
(Used In)
Operating
Activities
For the
thirteen
weeks ended
August 29,
2026,
$101.4
million in net cash
was used
in operating
activities, compared
to $278.6
million provided
by
operating
activities
for
the
comparable
period
in fiscal
2026.
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 Provided by
(Used in)
Investing
Activities
For
the
thirteen
weeks
ended
August
29,
2026,
$110.7
million in
net
cash
was
provided
by
investing
activities,
primarily
relating
to
sales
of
investment
securities, compare
d
to
$409.7
million used
in investing
activities
in the
same
period
of
fiscal
2026,
primarily
related
to
the
Echo
Lake
acquisition
.
Purchases
of
investment
securities were $49.6 million during the thirteen
weeks ended
August 29,
2026,
and
sales
and
maturities
of
investment
securities were $211.8
million. Sales and
maturities
of
investment
securities
were $181.1
million in the
prior fiscal
year
period
while purchases
of
investment
securities were $270.3
million during
the
period.
Cash
paid
for
the
EB
franchise
territory
acquisition
was
$25
million in
the
thirteen
weeks ended
August 29
,
2026.
Cash
paid
for
business
acquisitions,
net was
$275.3
million in the prior-year period, related
to the
Echo Lake
acquisition.
Purchases
of
property,
plant
and
equipment
were $26.6
million and $45.3
million in the first quarter
of fiscal
2027
and
2026, respectively,
primarily reflecting progress
on our construction
projects.
Cash
Flows Used in Financing
Activities
For
the
thirteen
weeks ended
August 29,
2026,
$5.1
million in net
cash
was
used
in financing
activities,
compared
to
$114.2
million used
in financing
activities
in the
same
prior fiscal
year
period,
primarily
relating to
payment
of
dividends
in the
first
quarter
of
fiscal
2026
.
Purchases
of
common
stock
by
treasury
were $5.1
million during the
thirteen weeks
ended
August 29,
2026,
primarily
due
to
the
repurchase
of
common
stock
under
the
Company’s
share
repurchase
program.
There
were
no
dividends paid
in the first quarter
of fiscal
2027,
compared
to $114.2
million paid in the same
period of
fiscal 2026
.
Index
27
Net Change
in Cash
and
Cash
Equivalents
As of
August 29,
2026
,
cash
,
cash
equivalents
and
restricted
cash
increased
$4.2
million since May
30, 2026,
compared
to
a
decrease
of
$245.3
million
during
the
same
period
of
fiscal
2026.
The
increase
during
the
first
quarter
of
fiscal
2027
is
primarily
due to
sale and
maturities
of investment
securities, offset
by the
cash
used in operations.
The decrease
during the first
quarter
of fiscal
2026
was primarily due
to the
use of
cash
for the
Echo Lake
Foods.
Credit Facility
On
November
15,
2021,
we
entered
into
an
Amended
and
Restated
Credit
Agreement
that
provided
for
a
senior
secured
revolving credit
facility,
in an
initial aggregate principal amount
of up
to $250
million with a five-year
term expiring November
31, 2026.
On August
31,
2026,
we entered
into
a Second
Amended
and
Restated
Credit Agreement effective
as of
that
date
(the “Credit
Agreement”),
which amended
and restated
the Company’s
Amended and
Restated
Credit Agreement, dated
November 15,
2021
(as
amended
from
time
to
time). The
Credit Agreement
provides
us with
a
senior unsecured
revolving credit
facility
with an
initial aggregate
principal
amount
of
up
to
$250
million (the
“Revolver”),
including a
$25
million sublimit for
the issuance
of
standby
letters
of
credit
and
a
$25
million sublimit
for
swingline loans
(collectively,
the
“Credit
Facility”).
In
addition,
the
Credit Facility
includes
an
accordion
feature
permitting
us, with
the consent
of the
administrative
agent,
to increase
the Credit
Facility
by
up
to
$250
million in
the
aggregate
with
one
or
more
incremental
senior
term
loans
or an
increase
in revolving
commitments
under
the
Revolver.
The
Credit
Facility
has
a
term
of
five
years
and
will
mature
on
August 31,
2031.
As of
September
30,
2026,
no
amounts
were
borrowed
under
the
Credit
Facility
and
we had
$5.9
million in outstanding
standby
letters of
credit issued
under
our
Credit Facility for the
benefit
of certain
insurance
companies.
Refer to
Part I, Item
1. Notes to
Condensed
Consolidated
Financials,
Note 11 – Subsequent Events
, for further
information
regarding the Credit Facility and
the
Credit Agreement.
Share Repurchase
Program
In
February
2025,
the
Company’s
Board
of
Directors (the
“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.
The
Company
repurchased
66,601
during the
first quarter
of fiscal
2027
and
no shares
during the first quarter
of fiscal
2026
under
the
program.
As of
the
end of
the first quarter
of fiscal
2027, we had
remaining authorization
to purchase
up to
$315.7
million
under
the
repurchase
program.
See
Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
for
further
information.
Subsequent
to
the
first
quarter
of
fiscal
2027,
the
Company
repurchased
an
additional
$14.9
million in shares
under the
program
as of
September
24, 2026.
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
expirati
on date,
and
may
be suspended,
modified
or discontinued
at
any
time without
prior notice.
Dividends
In
accordance
with our variable
dividend policy,
we will
not pay
a cash
dividend to
holders of
our Common
Stock with respect
to
our first quarter
of fiscal
2027. The
Company
will
not pay
a dividend
for a
subsequent
profitable
quarter
until the Company
is profitable
on
a
cumulative
basis
computed
from
the
date
of the
last quarter
in which a dividend
was paid.
At the end
of the
first quarter
of
fiscal
2027,
the
amount
of
cumulative
losses to be recovered
before
payment
of a
dividend was
$94.5
million.
Refer
to
Part I, Item
1. Notes to Condensed
Consolidated
Financials,
Note 1 – Summary of Significant Accounting Policies
, for
further
information
regarding our variable
dividend policy.
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
Index
28
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.
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
2026
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 thirteen weeks ended
August 29, 2026
from
the
information
provided
in Part II
Item
7A, Quantitative
and
Qualitative
Disclosures About Market
Risk in our 2026
Annual
Report.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.