CAL-MAINE FOODS INC (CALM)

RESULTS OF OPERATIONS

The following table sets

forth, for the fiscal

years indicated, certain items

from our Consolidated Statements

of Income expressed

as a percentage of net sales.

Fiscal Year Ended

May 31, 2025

June 1, 2024

Net sales

100.0

%

100.0

%

Cost of sales

56.6

%

76.7

%

Gross profit

43.4

%

23.3

%

Selling, general and administrative

7.4

%

10.9

%

Gain on involuntary conversions

—

%

(1.0)

%

Operating income

36.0

%

13.4

%

Total other income

1.6

%

2.0

%

Income before income taxes

37.6

%

15.4

%

Income tax expense

9.0

%

3.6

%

Net income

28.6

%

11.8

%

Less:

Net loss attributable to noncontrolling interest

—

%

(0.1)

%

Net income attributable to Cal-Maine Foods, Inc.

28.6

%

11.9

%

Fiscal Year

Ended May 31, 2025 Compared to Fiscal Year Ended June 1, 2024

NET SALES

Total net sales for fiscal 2025 were $4.3 billion compared to $2.3 billion for the prior fiscal year.

Shell egg sales represented

94.3% and 95.3% of

total net sales in

fiscal 2025 and 2024,

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

egg products

and prepared

foods offerings

include liquid and

frozen egg products

and prepared foods

such as hard-cooked

eggs, egg wraps,

protein pancakes, crepes

and

wrap-ups. Other sales represent feed sales, miscellaneous byproducts and resale products.

The table below presents net sales in key categories (in thousands, except percentage data):

Fiscal Year Ended

May 31,

2025

June 1, 2024

% Change

Shell Eggs

$

4,019,910

$

2,217,408

81.3

%

Egg products and prepared foods

198,833

89,009

123.4

Other

43,142

20,026

115.4

Total net sales

$

4,261,885

$

2,326,443

83.2

%

31

The table below presents an analysis of our shell egg sales (in thousands, except percentage data):

May 31, 2025

June 1, 2024

Shell egg sales

Conventional

$

2,835,423

70.5

%

$

1,291,743

58.3

%

Specialty

1,184,487

29.5

%

925,665

41.7

%

Total shell egg sales

4,019,910

100.0

%

2,217,408

100.0

%

Dozens sold

Conventional

812,396

63.3

%

746,687

65.1

%

Specialty

470,215

36.7

%

400,946

34.9

%

Total dozens sold

1,282,611

100.0

%

1,147,633

100.0

%

Net average selling price per dozen

Conventional

$

3.490

$

1.730

Specialty

$

2.519

$

2.309

All shell eggs

$

3.134

$

1.932

Shell egg sales

-

For

fiscal

2025,

shell

egg

sales

increased

$1.8

billion

compared

to

fiscal

2024,

primarily

due

to

the

increase

in

net

average selling prices for conventional eggs, and to a lesser extent the increase in dozens sold.

-

For fiscal 2025, conventional egg sales increased $1.5 billion, or 119.5%, compared to fiscal 2024, primarily due to the

increase

in

conventional

egg

prices.

Changes in

price resulted

in

a $1.4

billion

increase in

net

sales and

changes

in

volume resulted

in a

$114

million increase

in net

sales. Conventional

egg prices

increased significantly

during fiscal

2025 due to a resurgence of HPAI outbreaks, which decreased the supply.

-

Specialty egg

sales increased

$258.8 million,

or 28.0%,

for fiscal

2025 compared

to fiscal

2024, primarily

due to a

17.3%

increase in

the volume

of specialty

dozens sold,

and to

a lesser

extent a

9.1% increase

in price.

Changes in

volume

resulted in a $159.9 million increase in net sales and changes in price resulted in a $98.7 million increase in net sales.

-

Our dozens sold

for fiscal 2025

increased 11.8%

compared to fiscal

2024. We

had an

increase in production

capacity

with the acquisition

of the commercial

shell egg production

and processing business

of ISE during

the first quarter

of

fiscal 2025 as well as the resumption of full operations at our facilities in Chase, KS, and Farwell, TX, which were shut

down in the third and fourth quarters of fiscal 2024 due to HPAI outbreaks.

Egg products and prepared foods sales

-

Egg products and prepared foods sales increased $109.8 million, or 123.4% compared to fiscal 2024, primarily due to a

138.7% increase in sales of liquid eggs, which had a $54.9

million positive impact on net sales, and a 41.4% increase in

volume of liquid egg products sold.

The increase in volume, which had a

$23.3 million positive impact on net

sales, is

primarily related to the acquisition of ISE, which included a breaking facility.

-

Our egg products net average selling price increased in fiscal 2025, compared to fiscal 2024 as the supply of shell eggs

used to produce egg products decreased due to the resurgence of HPAI outbreaks.

-

Sales from hard-cooked eggs increased

$22.7 million or 137.3% to 39.1

million in fiscal 2025, compared to

fiscal 2024,

as more processing capabilities came online throughout fiscal 2025 from our investments in MeadowCreek.

Other

-

Other sales increased compared to

the prior year period primarily

due to higher feed sales

related to our ISE acquisition.

32

COST OF SALES

Cost of

sales consists

of costs

directly related

to producing,

processing and

packing shell

eggs, purchases

of shell

eggs from

outside sources, processing and packing of egg products and other non-egg costs. Farm production costs are those costs

incurred

at the egg production facility, including feed, facility

(including labor), hen amortization and

other related farm production costs.

The following table presents the key variables affecting our cost of sales (in thousands, except cost per dozen data):

Fiscal Year Ended

May 31, 2025

June 1, 2024

% Change

Cost of Sales

Farm production

$

1,035,638

$

987,861

4.8

%

Processing, packaging, and warehouse

396,116

335,949

17.9

Egg purchases and other cost of sales

819,619

380,200

115.6

Egg products and prepared foods

159,627

80,862

97.4

Total cost of sales

$

2,411,000

$

1,784,872

35.1

%

Farm production costs (per dozen produced)

Feed

$

0.490

$

0.550

(10.9)

%

Other

$

0.428

$

0.433

(1.2)

%

Total farm production cost

$

0.918

$

0.983

(6.6)

%

Outside egg purchases (average cost per dozen)

$

3.67

$

2.16

69.9

%

Dozens produced

1,135,955

1,018,835

11.5

%

Percent produced to sold

88.6%

88.8%

(0.2)

%

Farm Production

-

Feed costs

per dozen

produced decreased

10.9% in

fiscal 2025

compared to

fiscal 2024,

primarily due

to lower

feed

ingredient prices. The decrease in feed cost per dozen

resulted in a decrease in cost of sales of

$68.2 million compared

to the prior year.

-

For fiscal 2025, the average daily CBOT market price was $4.38 per bushel for corn and $311 per ton of soybean meal,

representing decreases of 8.1% and 20.1%, respectively, as compared to the average daily CBOT prices for fiscal 2024.

-

Other farm production costs per dozen produced decreased primarily due to lower flock amortization. Feed costs

reached their peak in the second quarter of fiscal 2023 and have since trended downward. Lower costs resulted in

lower capitalized values of the flocks during the grow out phase, which reduced amortization cost over time.

Current indications for corn

and soybean project

a neutral stocks-to-use ratio

in the near term

compared with the levels

prevailing

today; however,

as long

as outside

factors remain

uncertain (including

weather patterns

and global

supply chain

disruptions),

volatility could remain.

Processing, packaging, and warehouse

-

Processing, packaging, and

warehouse costs increased

primarily due to

an 11.7%

increase in the

volume of processed

dozens as well as an increase in costs of packaging materials.

Egg purchases and other cost of sales

-

Costs in

this category

increased primarily due

to higher

shell egg

prices as

the average

cost per

dozen of

outside egg

purchases increased 69.9%

compared to fiscal

2024, as well

as due to an

increase of 27.6%

in dozens purchased.

Dozens

purchased increased due

to purchasing more

eggs to supply

our customers while

the nation experienced

lower supply

due to HPAI.

33

GROSS PROFIT

Gross

profit,

as

a

percentage

of

net

sales,

was

43.4%

for

fiscal

2025,

compared

to

23.3%

for

fiscal

2024.

The

increase

was

primarily due to higher net average selling

prices, particularly for conventional eggs, and higher volumes,

as well as lower feed

ingredient prices, partially offset by the increase in volume and price of outside egg purchases.

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):

Fiscal Year Ended

May 31, 2025

June 1, 2024

$ Change

% Change

Delivery expense

$

93,460

$

72,742

$

20,718

28.5

%

Marketing expense

53,861

52,285

1,576

3.0

%

Litigation loss contingency accrual

—

19,648

(19,648)

N.M.

%

Other general and administrative expenses

167,128

107,950

59,178

54.8

%

Total

$

314,449

$

252,625

$

61,824

24.5

%

N.M. - Not Meaningful

Delivery expense

-

The increased delivery expense is primarily due to an increase

in our sales volumes of egg and egg products

compared

to fiscal 2024.

Contract trucking

expenses increased

in connection

with our

acquisition of

ISE and our

facilities in

Chase,

KS and Farwell, TX being fully operational in fiscal year 2025.

Marketing expense

-

Marketing expense increased

slightly in fiscal

2025 compared to

fiscal 2024 primarily

due to an

increase in franchise

fees as specialty sales increased.

Litigation loss contingency accrual

-

In the second quarter of fiscal 2024, we accrued a $19.6 million loss contingency relating to a jury decision returned in

pending anti-trust

litigation. See

further discussion

in

Note 16 – Commitments and Contingencies

of Part

II. Item

8.

Notes to Consolidated Financial Statements.

Other general and administrative expenses

-

The increase

in other

general and

administrative expense

is primarily

due both

to an

increase in

the accrual

for anticipated

employee bonuses

and to

a $15

million increased

adjustment to

the fair

value of

contingent consideration

associated

with the

Fassio acquisition.

See further

discussion in

Note 4 – Fair Value Measurements

of Part

II. Item

8. Notes

to

Consolidated Financial Statements.

(GAIN) LOSS ON INVOLUNTARY

CONVERSIONS

For fiscal 2025

and 2024, we

recorded a loss

of $156 thousand

and gain of

$23.5 million, respectively. The gain

recorded in fiscal

2024 was due

to recoveries

under indemnity

and insurance

programs that exceeded

the amortized

book value

of the covered

assets

and our direct costs, primarily related to the HPAI outbreaks

at our Kansas and Texas facilities.

34

OPERATING

INCOME

As a result of the above, our operating income was $1.5 billion for fiscal 2025, compared to $312.5 million for fiscal 2024.

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.

The Company recorded interest income of $48.7 million

in fiscal 2025, compared to $32.3 million in

fiscal 2024, primarily due

to significantly higher

cash and cash

equivalents and investment

securities available-for-sale balances

and yields. We

recorded

interest expense of $612

thousand and $549 thousand

in fiscal 2025 and

2024, respectively, primarily related to commitment

fees

on our Credit Facility described below.

INCOME TAXES

For the fiscal year ended

May 31, 2025, our pre-tax

income was $1.6 billion, compared

to $360.0 million for fiscal

2024. Income

tax expense

of $384.9

million was

recorded for

fiscal 2025

with an

effective tax

rate of

24.0%.

For fiscal

2024, income

tax

expense was $83.7 million with an effective tax rate of 23.2%.

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 LOSS ATTRIBUTABLE

TO NONCONTROLLING INTEREST

Net loss attributable

to noncontrolling interest

was $1.8 million

for fiscal 2025

compared to a

$1.6 million net

loss for fiscal

2024.

NET INCOME ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

As a result

of the above,

net income attributable

to Cal-Maine Foods,

Inc. for fiscal

2025 was $1.2

billion, or $25.04

per basic

and $24.95 per diluted share, compared to $277.9 million, or $5.70 per basic and $5.69 per diluted share for fiscal 2024.

Fiscal Year

Ended June 1, 2024 Compared to Fiscal Year Ended June 3, 2023

The discussion of our results of operations for the fiscal year ended June 1, 2024 compared to the fiscal year ended June 3, 2023

can be found in Part II.

Item 7. Management's Discussion and Analysis of

Financial Condition and Results of Operations in

the

Company’s fiscal 2024 Annual Report on Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

We aim to maintain

a strong balance

sheet and liquidity, particularly

given the cyclical

nature of our

business. We believe a

strong

balance sheet supports our growth opportunities and stockholder returns. Our priorities for the use of cash in

recent periods have

included the payment of

dividends pursuant to our

variable dividend policy, inorganic growth through acquisitions

of businesses,

organic

growth

including

construction

and

conversion

of

cage-free

facilities

and

investment

in

value-added

products,

and

maintenance capital expenditures.

Working Capital and Current Ratio

Our working

capital at

May 31,

2025 was

$1.7 billion, compared

to $1.0

billion at

June 1,

2024. The

calculation of

working

capital is defined as

current assets less current

liabilities. Our current ratio was

6.4 at May 31,

2025 compared to 5.5

at June 1,

2024. The current ratio is calculated by dividing

current assets by current liabilities. The increase

in our current ratio is primarily

due to the increase in total current assets, which increased by $726.3 million to $2.0 billion at May 31, 2025, due to increases in

cash

and

cash

equivalents

and

investment

securities

available-for-sale.

Due

to

seasonal

factors

described

in

Part I. Item I.

Business – Seasonality

, we generally

expect our

need for working

capital to be

highest in

the fourth and

first fiscal

quarters ending

in May/June and August/September, respectively.

35

Cash Flows from Operating Activities

Net cash

provided by

operating activities

was $1.2

billion for

fiscal 2025,

compared to

$451.4 million for

fiscal 2024.

The increase

in

cash

flow

from

operating

activities

resulted

primarily

from

higher

net

average

selling

prices

per

dozen,

particularly

for

conventional eggs, increased volume of sales and

a decrease in feed ingredient costs compared

to the prior year,

partially offset

by the increase in volume and price of outside egg purchases.

Cash Flows from Investing Activities

For fiscal 2025, $575.5 million was

used in investing activities, primarily due

to purchases of investment securities,

purchases of

property, plant and equipment

and the acquisition

of assets of

ISE compared to

$412.6 million used

in investing activities

in fiscal

2024, primarily due to purchases

of investment securities, purchases of

property, plant and equipment and the Fassio acquisition.

Purchases of investment

securities were $1.2

billion in fiscal

2025 compared to

$573.6 million in

fiscal 2024. Sales

and maturities

of investment securities were

$907.6 million in fiscal

2025, compared to $358.9 million

for fiscal 2024. The increase

in sales and

maturities of investment securities is primarily due to the maturities of

short-term investments during fiscal 2025. Cash paid for

business acquisitions was $116.2 million in

fiscal 2025, primarily related to

the ISE acquisition, and

$53.7 million in fiscal 2024,

related to

the Fassio

acquisition. Purchases

of property,

plant and

equipment were

$161.3 million

and $147.1

million in

fiscal

2025 and 2024, respectively, primarily reflecting progress on our construction projects.

Cash Flows from Financing Activities

We

paid

dividends

totaling

$330.3

million

and

$91.9

million

in

fiscal

2025

and

2024,

respectively.

During

fiscal

2025,

we

repurchased $54.0 million

in shares of

Common Stock, primarily

under our share

repurchase program. See

“Share Repurchase

Program,” below.

Increase (decrease) in Cash and Cash Equivalents

As of May 31, 2025, cash increased $261.5 million since June 1, 2024, compared to a $54.9 million decrease

during fiscal 2024.

The increase is primarily due to the increase in net sales during fiscal 2025.

Acquisition of Echo Lake Foods

Subsequent to our fiscal 2025 year-end, we acquired Echo Lake Foods. The purchase price was approximately $258 million and

was funded with available cash on hand. For additional information, refer to Part II. Item 8. Notes to the Consolidated Financial

Statements,

Note 17 – Subsequent Events

.

Credit Facility

On November 15,

2021, we entered

into an Amended

and Restated Credit

Agreement (as amended,

the “Credit Agreement”)

with

a five-year term. The Credit Agreement provides

for a senior secured revolving credit facility

(the “Credit Facility”), in an initial

aggregate principal amount of up to $250 million. As of May 31, 2025, no amounts were borrowed under the Credit Facility. As

of May 31, 2025, we

had $4.7 million in outstanding

standby letters of credit, which

were issued under our Credit

Facility for the

benefit of

certain insurance

companies. On

March 25,

2025, we

entered into

the Second

Amendment to

the Credit

Facility to

amend the definition

of Change of

Control to exclude

the conversion of

all outstanding shares

of Class A

Common Stock into

Common Stock.

Refer to

Part II.

RESULTS

OF OPERATIONS

The following table sets forth, for the

fiscal years indicated, certain items from our Consolidated

Statements of Income expressed

as a percentage of net sales.

Fiscal Year

Ended

June 1, 2024

June 3, 2023

Net sales

100.0

%

100.0

%

Cost of sales

76.7

%

62.0

%

Gross profit

23.3

%

38.0

%

Selling, general and administrative

10.9

%

7.4

%

Gain on involuntary conversions

(1.0)

%

(0.1)

%

(Gain) loss on disposal of fixed assets

—

%

—

%

Operating income

13.4

%

30.7

%

Total other income

2.0

%

1.0

%

Income before income taxes

15.4

%

31.7

%

Income tax expense

3.6

%

7.7

%

Net income

11.8

%

24.0

%

Less:

Net loss attributable to noncontrolling interest

(0.1)

%

—

%

Net income attributable to Cal-Maine Foods, Inc.

11.9

%

24.0

%

29

Fiscal Year

Ended June 1, 2024 Compared to Fiscal Year

Ended June 3, 2023

NET SALES

Net revenue is primarily generated

through sales of shell

eggs and egg products. Net

shell egg sales represented 96.2%

and 96.1%

of total

net sales

in fiscal

2024 and

2023, respectively.

The Company’s

shell egg

offerings include

specialty and

conventional

shell

eggs.

Specialty

shell

eggs

include

cage-free,

organic,

brown,

free-range,

pasture-raised

and

nutritionally

enhanced.

Conventional

shell

eggs sales

represent

all other

shell

egg sales

not

sold

as specialty

shell

eggs.

Shell

egg

sales classified

as

“Other” represent sales of miscellaneous byproducts and resale products included

with our shell egg operations.

The Company’s egg products

offering include liquid and frozen egg products and hard

-cooked eggs.

The table below presents an analysis of our conventional and specialty shell egg

sales (in thousands, except percentage data):

June 1, 2024

June 3, 2023

Total net sales

$

2,326,443

$

3,146,217

Conventional

$

1,291,743

57.7

%

$

2,051,961

67.9

%

Specialty

925,665

41.4

%

956,993

31.6

%

Egg sales, net

2,217,408

99.1

%

3,008,954

99.5

%

Other

20,026

0.9

%

14,993

0.5

%

Net shell egg sales

$

2,237,434

100.0

%

$

3,023,947

100.0

%

Dozens sold:

Conventional

746,687

65.1

%

749,076

65.3

%

Specialty

400,946

34.9

%

398,297

34.7

%

Total dozens sold

1,147,633

100.0

%

1,147,373

100.0

%

Net average selling price per dozen:

Conventional

$

1.730

$

2.739

Specialty

$

2.309

$

2.403

All shell eggs

$

1.932

$

2.622

Egg products sales:

Egg products net sales

$

89,009

$

122,270

Pounds sold

74,849

70,035

Net average selling price per pound

$

1.189

$

1.746

Shell egg net sales

-

For fiscal 2024,

shell egg net

sales decreased $786.5

million compared to

fiscal 2023,

primarily due to

the decrease in

net average selling prices

for conventional eggs, and

to a lesser extent the decrease

in the net average

selling prices for

specialty eggs.

-

For fiscal 2024,

conventional egg sales

decreased $760.2 million,

or 37.0%, compared

to fiscal 2023,

primarily due to

the decrease in conventional egg prices. Changes in price resulted in a $753.4 million

decrease in net sales and changes

in volume resulted in a $6.5 million decrease in net sales.

-

Conventional egg

prices reached

record highs

in fiscal

2023 due

to HPAI

outbreaks experienced

throughout calendar

year 2022 as

well seasonal demand during

the winter holidays.

Prices were lower

in the first

half of fiscal

2024 compared

to the

same period of

fiscal 2023

as the

U.S. egg supply

started to

recover from

outbreaks of

HPAI.

There has

been a

resurgence of

HPAI

starting in November

2023, and continuing

through the remainder

of fiscal 2024, which

increased

prices due to supply constraints. However, prices

in fiscal 2024 remained lower on average than fiscal 2023.

-

Specialty egg sales

decreased $31.3 million,

or 3.3%, for fiscal

2024

compared to fiscal 2023,

primarily due to

a 3.9%

decrease in specialty

egg prices partially

offset by

a 0.7% increase

in the volume

of specialty dozens

sold. Changes in

price resulted

in a $37.7

million decrease in

net sales and

changes in volume

resulted in a

$6.4 million

increase in net

sales.

30

-

Our

dozens

sold for

fiscal

2024 remained

relatively

flat

compared

to fiscal

2023.

We

had

an

increase

in production

capacity with the acquisition of the commercial shell egg production and processing business of Fassio Egg Farms, Inc.

during fiscal 2024, which was

offset by the temporary decrease

in production due to the

HPAI outbreaks at our facilities.

Egg products net sales

-

Egg products net sales decreased

$33.3 million, or 27.2%, primarily

due to a 31.9% selling price

decrease compared to

fiscal 2023, which had a $41.7 million negative impact on net sales.

-

Our egg products net average selling price decreased in fiscal 2024, compared to fiscal 2023 as the supply of shell

eggs

used to produce egg products increased.

COST OF SALES

Cost of

sales consists

of

costs directly

related

to producing,

processing

and

packing

shell eggs,

purchases

of

shell

eggs from

outside sources,

processing and

packing of

liquid and

frozen egg

products and

other non-egg

costs. Farm production

costs are

those costs

incurred at

the egg production

facility,

including feed,

facility (including

labor), hen

amortization and

other related

farm production costs.

The following table presents the key variables affecting our cost of

sales (in thousands,

except cost per dozen data):

Fiscal Year

Ended

June 1, 2024

June 3, 2023

% Change

Cost of Sales:

Farm production

$

987,861

$

1,118,741

(11.7)

%

Processing, packaging, and warehouse

335,949

342,836

(2.0)

Egg purchases and other (including change in inventory)

380,200

379,777

0.1

Total shell eggs

1,704,010

1,841,354

(7.5)

Egg products

80,862

108,406

(25.4)

Total

$

1,784,872

$

1,949,760

(8.5)

%

Farm production costs (per dozen produced)

Feed

$

0.550

$

0.676

(18.6)

%

Other

$

0.433

$

0.396

9.3

%

Total

$

0.983

$

1.072

(8.3)

%

Outside egg purchases (average cost per dozen)

$

2.16

$

3.02

(28.5)

%

Dozens produced

1,018,835

1,058,540

(3.8)

%

Percent produced to sold

88.8%

92.3%

(3.8)

%

Farm Production

-

Feed costs

per dozen

produced decreased

18.6% in

fiscal 2024

compared to

fiscal 2023,

primarily

due to

lower feed

ingredient prices.

Basis levels

for corn

and soybean

meal were

lower in

our areas

of operation

compared to

our prior

fiscal year.

-

For fiscal 2024, the average daily CBOT market price was $4.76 per bushel for corn and $390 per ton of soybean meal,

representing decreases of 27.6% and

13.4%, respectively, as compared to the average

daily CBOT prices for

fiscal 2023.

-

Other farm production costs increased

due to higher flock amortization

and increased

facility costs. Flock amortization

increased primarily due

to the increased

capitalized value of

our flocks. This

is primarily due

to the higher

feeds costs

in earlier periods incurred during the growing phase of the flocks.

31

-

Facility

costs

increased

due

primarily

to

increased

contract

labor

in

response

to

labor

shortages

as

well

as

higher

depreciation expense primarily due to the completion of several large

construction projects during fiscal 2024.

Current

indications

for

corn

project

an

overall

better

stocks-to-use

ratio

implying

potentially

lower

prices

in

the

near

term;

however, as long

as outside factors remain uncertain

(including weather patterns and

global supply chain disruptions), volatility

could remain.

Processing, packaging, and warehouse

-

Processing, packaging,

and warehouse

costs decreased

primarily due

to a

3.5% reduction

in the

volume of

processed

dozens,

partially offset by higher processing costs.

Egg purchases and other (including change in inventory)

-

Costs in this category remained relatively flat as the average cost per dozen of outside

egg purchases decreased 28.5%

compared to fiscal 2023, offset by an increase of 29.2% in dozens purchased

due to the loss of production primarily

caused by HPAI

outbreaks

at our facilities.

GROSS PROFIT

Gross profit, as

a percentage of

net sales, was

23.3%

for fiscal 2024,

compared to 38.0%

for fiscal 2023.

The decrease resulted

primarily from lower selling prices for conventional eggs,

partially offset by the lower feed ingredients prices.

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.

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):

Fiscal Year

Ended

June 1, 2024

June 3, 2023

$ Change

% Change

Delivery expense

$

72,742

$

77,548

$

(4,806)

(6.2)

%

Marketing expense

52,285

57,198

(4,913)

(8.6)

%

Litigation loss contingency accrual

19,648

-

19,648

N.M.

%

Other general and administrative expenses

107,950

97,461

10,489

10.8

%

Total

$

252,625

$

232,207

$

20,418

8.8

%

N.M. - Not Meaningful

Delivery expense

-

The decreased delivery expense is primarily due to a decrease in contract

trucking expense and fuel costs.

Marketing expense

-

The decrease in marketing expense is primarily due to a decrease in franchise

fees.

Litigation loss contingency accrual

-

The litigation loss contingency accrual in fiscal 2024 is discussed in

Note 16 – Commitments and Contingencies

of Part

II. Item 8. Notes to Consolidated Financial Statements in this Annual Report.

32

Other general and administrative expenses

-

The increase in other general and administrative expenses

is primarily due to an increase of

$5.5 million in the fair value

of the contingent consideration associated with the Fassio asset acquisition, and increased legal costs, partially offset by

a decrease in accrued bonuses compared to the prior year.

GAIN ON INVOLUNTARY

CONVERSIONS

For fiscal 2024 and 2023,

we recorded a gain of $23.5 million and

$3.3 million, respectively,

due to recoveries under indemnity

and insurance programs that exceeded the amortized book value of

the covered assets and our direct costs.

OPERATING

INCOME

As a result of the above, our operating income was $312.5 million for fiscal 2024

,

compared to $967.7 million for fiscal 2023.

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.

The Company recorded

interest income of $32.3

million in fiscal 2024,

compared to $18.6 million

in fiscal 2023, primarily

due

to significantly

higher cash

and cash

equivalents and

investment securities

available-for-sale balances

and yields.

We

recorded

interest expense of $549 thousand and $583 thousand

in fiscal 2024 and 2023, respectively, primarily related to commitment fees

on our Credit Facility described below.

INCOME TAXES

For

the

fiscal

year

ended

June

1,

2024,

our

pre-tax

income

was

$360.0

million,

compared

to

$998.6

million

for

fiscal

2023.

Income tax expense

of $83.7 million

was recorded for

fiscal 2024 with

an effective

tax rate of 23.

2%.

For fiscal 2023,

income

tax expense was $241.8 million with an effective tax rate of 24.2%.

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 LOSS ATTRIBUTABLE

TO NONCONTROLLING INTEREST

Net loss attributable to

noncontrolling interest was $1.6 million

for fiscal 2024 compared

to a $1.3 million

net loss for fiscal

2023.

NET INCOME ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

As a result of the above, net

income attributable to Cal-Maine Foods, Inc.

for fiscal 2024 was $277.9 million, or $5.70

per basic

and $5.69 per diluted share, compared to $758.0 million, or $15.58

per basic and $15.52 per diluted share for fiscal 2023.

Fiscal Year

Ended June 3, 2023 Compared to Fiscal Year

Ended May 28, 2022

The discussion of our results of operations for the fiscal

year ended June 3, 2023 compared to the fiscal

year ended May 28, 2022

can be found

in Part II. Item

7. Management's Discussion

and Analysis of

Financial Condition and

Results of Operations in

the

Company’s fiscal 2023 Annual Report

on Form 10-K.

33

LIQUIDITY AND CAPITAL

RESOURCES

We aim to maintain a

strong balance sheet and

liquidity, particularly given the cyclical nature

of our business.

We believe a strong

balance sheet supports our growth opportunities and stockholder returns. Our priorities for the use of cash in recent periods have

included the payment of dividends pursuant to our variable dividend policy, inorganic growth through acquisitions of businesses,

organic

growth

including

construction

and

conversion

of

cage-free

facilities

and

investment

in

value-added

products,

and

maintenance capital expenditures.

Working

Capital and Current Ratio

Our working

capital at

June 1,

2024 was

$1.0 billion, compared

to $942.2 million

at June

3, 2023.

The calculation

of working

capital is

defined as

current assets

less current

liabilities. Our current

ratio was

5.5 at

June 1,

2024 compared

to 6.2

at June

3,

2023.

The current ratio is calculated by dividing current assets by current liabilities. The decrease

in our current ratio is primarily

due to the increase in total current liabilities,

which increased by $45.0 million to $227.7 million at

June 1, 2024, due to increases

in

income

tax

payable

and

accrued

expenses

and

other

liabilities

primarily

resulting

from

the

$19.6

million

litigation

loss

contingency

accrual

recorded in

fiscal 2024

.

Due to

seasonal factors

described

in

Part I. Item I. Business – Seasonality

, we

generally

expect

our

need

for

working

capital

to

be

highest

in

the

fourth

and

first

fiscal

quarters

ending

in

May/June and

August/September, respectively.

Cash Flows from Operating Activities

Net cash provided

by operating activities was

$451.4 million for

fiscal 2024 compared with

$863.0 million for fiscal

2023. The

decrease in cash

flow from operations

resulted primarily from

lower selling prices

for conventional eggs,

partially offset by

the

lower cost of feed ingredients.

Cash Flows from Investing Activities

For

fiscal

2024,

$412.6

million

was

used

in

investing

activities,

primarily

due

to

the

purchases

of

investment

securities,

the

acquisition of the assets

of Fassio Egg Farms,

Inc., and purchases of

property,

plant and equipment compared

to $375.1 million

used in investing activities in the same

period of fiscal 2023. Purchases of investment securities were

573.6 million in fiscal 2024

compared

to

530.8

million

in

fiscal

2023.

Sales

and

maturities

of

investment

securities

were

$358.9

million

in

fiscal

2024,

compared to $291.8 million for fiscal 2023. Purchases of property,

plant and equipment were $147.1 million and $136.6 million

in fiscal 2024 and 2023, respectively,

primarily reflecting progress on our construction projects.

Cash Flows from Financing Activities

We paid dividends

totaling $91.9 million and $252.3 million in fiscal 2024

and 2023, respectively.

As of June 1, 2024, cash decreased

$54.9 million since June 3, 2023.

Acquisition of ISE America, Inc. Assets

Subsequent to our

fiscal 2024 year-end,

we acquired substantially

all the assets of

ISE America, Inc.

and certain of its

affiliates

related to

their commercial

shell egg

production and

processing facilities.

The purchase

price was

approximately $112

million

and

was

funded

with

available

cash

on

hand.

For

additional

information,

refer

to

Part

II.

OVERVIEW

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packaging, marketing and distribution of

fresh shell eggs.

Our

fiscal

year

end

is

the

Saturday

closest

to

May 31.

The

fiscal

year

2023

and

2022

included

53

weeks

and

52

weeks,

respectively.

The Company,

which

is headquartered

in Ridgeland,

Mississippi, is

the largest

producer and

distributor

of fresh

shell eggs in the United States

(“U.S”). In fiscal 2023, we sold approximately 1,147.4 million dozen shell

eggs, which we believe

represented

approximately

21% of

domestic shell

egg consumptio

n. Our

total flock

as of

June 3,

2023

of approximately

41.2

million layers and 10.8 million pullets and breeders is the largest in the

U.S. We sell most of

our shell eggs to a diverse group of

customers, including

national and

regional grocery

store chains,

club stores,

companies servicing

independent supermarkets

in

the U.S., food

service distributors, and

egg product consumers

in states across

the southwestern, southeastern,

mid-western and

mid-Atlantic regions of the U.S.

The Company has one reportable

operating segment, which is the production,

grading, packaging, marketing and distribution

of

shell eggs. Many of our customers rely on us to provide most of their shell egg needs, including specialty and conventional eggs.

Specialty

eggs

represent

a

broad

range

of

products. We

classify

cage-free,

organic,

brown,

free-range,

pasture-raised

and

nutritionally enhanced

as specialty eggs for

accounting and reporting

purposes. We

classify all other

shell eggs as conventional

eggs.

While

we

report

separate

sales

information

for

these

types

of

eggs,

there

are

a

number

of

cost

factors

which

are

not

specifically

available

for

conventional

or

specialty

eggs due

to

the

nature

of egg

production.

We

manage

our

operations

and

allocate resources to these

types of eggs on a consolidated

basis based on the demands

of our customers. For further

description

of our business, refer to

Part I. Item I. Business

.

HPAI

Since the first detection in

a U.S. commercial flock in

February 2022, outbreaks of highly

pathogenic avian influenza

(“HPAI”)

continued

to occur

in U.S.

poultry flocks

throughout calendar

year 2022

and, less

frequently,

in calendar

year 2023,

which is

more than twice the length of time

of the last HPAI outbreak in 2014-2015. HPAI affected more than 58 million birds in 47 states

and

resulted

in

the

depopulation

of

43.3

million

commercial

layer

hens

and

1.0

million

pullets

leading

to

higher

prices

for

conventional

shell eggs

beginning in

the fourth

quarter of

fiscal 2022

and continuing

through the

third quarter

of fiscal

2023.

Though the virus is still present, due to seasonal migratory patterns of wild birds (which serve as carriers for the disease) the rate

of outbreaks has substantially

decreased and the last

occurrence in a commercial

egg laying flock was in

December 2022.

The

USDA

attributes

this,

in

large

part,

to

improved

biosecurity

measures

by

the

commercial

poultry

industry.

The

industry

and

USDA have devoted

significant resources to

attempt to prevent

future outbreaks. With

the spring wild

bird migration complete

in the U.S., focus is on the fall migration season.

We

believe the

HPAI

outbreak will

continue to

impact the overall

supply of

eggs until the

layer hen

flock is

fully replenished.

The egg industry typically experiences lower sales during the

summer. The layer hen flock five-year average from 2020-2022 for

the month of June is 321.5 million hens. According to the USDA the U.S.

flock consisted of 317.4 million layers producing table

or

market

type

eggs as

of

July

1,

2023,

which

is 0.9%

below

the

five-year

average

and

reflects

efforts

by

U.S.

producers

to

repopulate their flocks. As the layer flock began to recover in the fourth quarter of fiscal 2023, prices for conventional shell eggs

decreased

from

previous

highs.

There

have

been

no

positive

tests

for

HPAI

at

any

Cal-Maine

Foods’

owned

or

contracted

production facility as of July

25, 2023. While no farm

is immune from HPAI,

we believe we have implemented

and continue to

maintain robust biosecurity programs across our locations. We

are also working closely with federal, state and local government

officials

and focused

industry groups

to mitigate

the risk

of this

and future

outbreaks and

effectively

manage our

response, if

needed.

24

Executive Overview of Results – Fiscal Years

Ended June 3, 2023, May 28, 2022 and May 29, 2021

Fiscal Years

Ended

June 3, 2023

May 28, 2022

May 29, 2021

Net sales (in thousands)

$

3,146,217

$

1,777,159

$

1,348,987

Gross profit (in thousands)

$

1,196,457

$

337,059

$

160,661

Net income attributable to Cal-Maine Foods, Inc.

$

758,024

$

132,650

$

2,060

Net income per share attributable to Cal-Maine Foods, Inc.

Basic

$

15.58

$

2.73

$

0.04

Diluted

$

15.52

$

2.72

$

0.04

Net average shell egg price

(a)

$

2.622

$

1.579

$

1.217

Average UB Southeast

Region - Shell Eggs - White Large

$

3.115

$

1.712

$

1.155

Feed costs per dozen produced

$

0.676

$

0.571

$

0.446

(a) The net average

shell egg selling price

is the blended price

for all sizes and

grades of shell eggs,

including non-graded

shell egg sales, breaking stock and undergrades.

For fiscal

2022, net

sales increased

to $1.8

billion, gross

profit to

$337.1 million

and net income

to $132.7

million from

fiscal

2021 net sales of

$1.3 billion, gross profit

of $160.7 million and

net income of $2.1

million. The increases resulted primarily

from

higher selling prices for

conventional eggs as well as an

increased volume of specialty

eggs sold, partially offset

by a decline in

the

volume

of

conventional

eggs

sold.

Gross

profit

and

net

income

increases

were

partially

offset

by

increased

cost

of

feed

ingredients and increased processing

costs. Consumer demand maintained

a steady growth throughout our

first three quarters of

fiscal

2021

but

began

trending

down

during

our

fourth

quarter

of

fiscal

2021

as

consumers

started

to

resume

pre-pandemic

activities.

We

believe

the

decreased

demand

in

foodservice

seen

throughout

the

first

three

quarters

of

fiscal

2021

due

to

the

pandemic contributed to the depressed price of shell

eggs for fiscal 2021 in the retail market due to the extra

supply entering the

retail channel from the foodservice channel.

For

fiscal

2022,

we

believe

prices

for

conventional

eggs

were

positively

impacted

by

a

better

alignment

of

the

size

of

the

conventional

production

layer

hen

flock

and

customer

and

consumer

demand

through

the

first

three

fiscal

quarters

of

2022.

Conventional egg

prices further

increased in

the fourth

quarter of

fiscal 2022

primarily due

to decreased

supply caused

by the

HPAI

outbreak

compounded

with

good

customer

demand.

Throughout

fiscal

2022

the

hen

numbers

reported

by

the

USDA

remained below the five-year average.

For fiscal

2023, net

sales increased

to $3.1

billion, gross

profit to

$1.2 billion

and net

income to

$758.0 million.

The increases

primarily resulted

from significantly

higher average

egg selling

prices, primarily

due to

the reduction

in egg

supply caused

by

HPAI

and

higher

grain

and

other

input

costs,

as

some

of

our

egg

sales

prices

are

based

on

formulas

related

to

our

costs

of

production. Gross

profit and

net income

increases were

partially offset

by the

increased cost

of feed

ingredients and

increased

processing, packaging

and warehouse costs.

The impact of

HPAI

continued throughout

the first three

quarters of fiscal

2023 as

prices continued to increase. For the

first three quarters of fiscal

2023, the average UB southeastern large index

price was 138.8%

higher

than

the

average

price

of

the

first

three

quarters

in

fiscal

2022.

For

the

fourth

quarter

of

fiscal

2023

the

average

UB

southeastern large index price decreased 13.8% to $2.163

from the same period in the

prior year as the egg supply

improved from

the effects

of HPAI.

Conventional egg

selling prices

declined significantly

during the

latter part

of the

fourth quarter

of fiscal

2023.

Our dozens sold

increased by 5.9%

for fiscal 2023

compared to fiscal

2022, primarily due

to an increase

in specialty egg

sales.

According to

Information Resources,

Inc. (“IRI”),

for the

52 weeks

ended June

4, 2023,

which approximately

aligns with

our

fiscal year 2023, conventional egg dozens sold in the U.S. at multi-retail outlets decreased 9.3%, while specialty egg dozens sold

increased 9.9%

versus the

prior-year comparable

period. Our

conventional eggs

dozens sold

increased 0.2%

and specialty

egg

dozens sold increased 18.6% as compared to fiscal 2022, with most of the increase

due to an increase in cage-free eggs sold.

Our feed costs

per dozen produced

increased to $0.676

in fiscal 2023,

compared to $0.571

in fiscal 2022.

For fiscal year

2023,

the average Chicago

Board of Trade

(“CBOT”) daily market

price was $6.57

per bushel for

corn and $450

per ton for

soybean

meal,

representing

increases

of

4.1%

and

14.7%,

respectively,

compared

to

the

daily

average

CBOT

prices

for

fiscal

2022.

Supplies

of corn and soybean meal remained tight

relative to demand in throughout fiscal 2023,

as evidenced by a low stock-to-

use ratio

for corn,

as a

result of

weather-related

shortfalls in

production

and yields,

ongoing supply

chain disruptions

and

the

Russia-Ukraine War

and its

impact on

the export

markets. Basis

levels for

corn and

soybean meal,

which impact

our costs for

25

these feed ingredients, ran significantly higher in fiscal 2023 in our areas of operation compared to our prior year fiscal year as a

result of higher transportation and storage costs, adding to our expense.

RESULTS

OF OPERATIONS

The following table sets forth, for the

fiscal years indicated, certain items from our Consolidated

Statements of Income expressed

as a percentage of net sales.

Fiscal Year

Ended

June 3, 2023

May 28, 2022

Net sales

100.0

%

100.0

%

Cost of sales

62.0

%

81.0

%

Gross profit

38.0

%

19.0

%

Selling, general and administrative

7.4

%

11.2

%

Gain on insurance recoveries

(0.1)

%

(0.3)

%

(Gain) loss on disposal of fixed assets

—

%

—

%

Operating income

30.7

%

8.1

%

Total other income

1.0

%

1.3

%

Income before income taxes

31.7

%

9.4

%

Income tax expense

7.7

%

1.9

%

Net income

24.0

%

7.5

%

Less:

Net loss attributable to noncontrolling interest

—

%

—

%

Net income attributable to Cal-Maine Foods, Inc.

24.0

%

7.5

%

26

Fiscal Year

Ended June 3, 2023 Compared to Fiscal Year

Ended May 28, 2022

NET SALES

Total net sales for fiscal

2023

were $3.1 billion compared to $1.8 billion for fiscal 2022.

Net shell egg sales represented 96.1% and 96.6% of total net

sales for the fiscal year 2023

and 2022, respectively. Shell egg sales

classified as “Other” represent sales of miscellaneous byproducts and resale products included with our shell

egg operations. The

table below presents an analysis of our conventional and specialty shell egg

sales (in thousands, except percentage data):

June 03, 2023

May 28, 2022

Total net sales

$

3,146,217

$

1,777,159

Conventional

$

2,051,961

67.9

%

$

1,061,995

61.8

%

Specialty

956,993

31.6

%

648,838

37.8

%

Egg sales, net

3,008,954

99.5

%

1,710,833

99.6

%

Other

14,993

0.5

%

6,322

0.4

%

Net shell egg sales

$

3,023,947

100.0

%

$

1,717,155

100.0

%

Dozens sold:

Conventional

749,076

65.3

%

747,914

69.0

%

Specialty

398,297

34.7

%

335,875

31.0

%

Total dozens sold

1,147,373

100.0

%

1,083,789

100.0

%

Net average selling price per dozen:

Conventional

$

2.739

$

1.420

Specialty

$

2.403

$

1.932

All shell eggs

$

2.622

$

1.579

Egg products sales:

Egg products net sales

$

122,270

$

60,004

Pounds sold

70,035

63,968

Net average selling price per pound

$

1.746

$

0.938

Shell egg net sales

-

For

fiscal

2023,

shell

egg

net

sales

increased

$1.3

billion,

primarily

due

to

higher

net

average

selling

prices

for

conventional eggs, and to a lesser extent specialty eggs.

-

For fiscal 202

3, conventional

egg sales increased

$990.0 million,

or 93.2%, compared

to fiscal 2022,

primarily due

to

the increase in

conventional egg

prices. Changes

in price resulted

in a $988.0

million increase and

changes

in volume

resulted in a $1.7 million increase in net sales.

-

Conventional egg prices increased in the first three quarters

of fiscal 2023 primarily due to decreased supply

caused by

the HPAI outbreak, discussed above. Conventional egg prices decreased

substantially in the fourth

quarter of fiscal 2023

compared to average

fiscal 2023 levels, due

to an increased supply

of conventional eggs

caused by the repopulating

of

layer

flocks

in

response

to

the

impact

of

HPAI

and

typical

seasonal

decreases

in

demand.

Conventional

egg

prices

exceeded

specialty

egg

prices

during

fiscal

2022

and

for

the

first

three

quarters

of

fiscal

2023,

which

is

atypical

historically. Conventional

egg prices generally respond more quickly to market conditions because we sell the majority

of

our

conventional

shell

eggs

based

on

formulas

that

adjust

periodically

and

take

into

account,

in

varying

ways,

independently quoted regional wholesale market prices for shell

eggs or formulas related to our

costs of production. The

majority of our specialty eggs are typically sold at prices and terms negotiated

directly with customers and therefore do

not fluctuate as much as conventional pricing.

-

Specialty egg sales

increased $308.2 million, or

47.5%, for fiscal

2023

compared to fiscal

2022, primarily due

to a 24.4%

increase in specialty egg

prices and a 18.6% increase

in the volume of

specialty dozens sold. Changes

in price resulted

in a $187.6

million increase and

change in volume

resulted in a

$120.6 million increase

in net sales,

respectively.

Our

27

specialty egg sales also benefitted from our additional

cage-free production capacity.

Cage-free revenue for fiscal 2023

was 20.2% of total revenue, compared to 22.3% for fiscal 2022.

-

Net average selling

prices of specialty eggs

increased by agreements with

our customers in response

to rising feed and

other input costs as well as lower supply availability due to HPAI.

-

Demand for specialty

eggs increased during

the first three

quarters of fiscal

2023 as conventional

egg prices rose.

Our

sales volume benefited versus the prior-year period, through use of

our higher cage-free production capacity.

Egg products net sales

-

Egg products net sales increased $62.3 million or 103.8%, primarily due to an 86.1% selling price increase compared to

fiscal 2022, which had a $56.6 million positive impact on net sales.

-

Our egg products net average selling

price increased in fiscal 2023, compared

to fiscal 2022 as the supply of shell

eggs

used to produce egg products decreased due to the HPAI

outbreak that started in February 2022.

COST OF SALES

Cost of sales for fiscal 2023

were $1.9 billion compared to $1.4 billion for fiscal 2022.

Cost of

sales consists

of

costs directly

related

to producing,

processing

and

packing

shell eggs,

purchases

of

shell

eggs from

outside sources,

processing and

packing of

liquid and

frozen egg

products and

other non-egg

costs. Farm production

costs are

those

costs incurred

at the

egg production

facility,

including feed,

facility,

hen amortization

and other

related farm

production

costs.

The following table presents the key variables affecting our cost of

sales (in thousands,

except cost per dozen data):

Fiscal Year

Ended

June 03, 2023

May 28, 2022

% Change

Cost of Sales:

Farm production

$

1,118,741

$

927,806

20.6

%

Processing, packaging, and warehouse

342,836

289,056

18.6

Egg purchases and other (including change in inventory)

379,777

172,034

120.8

Total shell eggs

1,841,354

1,388,896

32.6

Egg products

108,406

51,204

111.7

Total

$

1,949,760

$

1,440,100

35.4

%

Farm production costs (per dozen produced)

Feed

$

0.676

$

0.571

18.4

%

Other

$

0.396

$

0.352

12.5

%

Total

$

1.072

$

0.923

16.1

%

Outside egg purchases (average cost per dozen)

$

3.02

$

1.72

75.6

%

Dozens produced

1,058,540

1,022,327

3.5

%

Percent produced to sold

92.3%

94.3%

(2.1)

%

Farm Production

-

Feed costs

per dozen

produced increased

18.4% in

fiscal 2023

compared to

fiscal 2022,

primarily due

to higher

feed

ingredient prices. Basis levels for corn and soybean meal

ran significantly higher in our areas of operation

compared to

our prior fiscal year due to higher transportation and storage costs, adding

to our expense.

-

For fiscal 2023, the average daily CBOT market price was $6.57 per bushel for corn and $450 per ton of soybean meal,

representing increases of 4.1% and 14.7%, respectively,

as compared to the average daily CBOT prices for fiscal 2022.

28

-

Other farm production

costs increased due

to higher

facility and

flock amortization.

Facility costs

increased due primarily

to increased labor costs. Labor costs increased 29.6%

due to increased use of contract labor and increased wages

raised

in response to labor shortages.

-

Flock amortization increased

primarily from higher

capitalized feed costs

as well as higher

amortization costs from

an

increase in our cage-free production.

Supplies of corn and soybean remained tight relative to demand throughout fiscal 2023, as evidenced by a low stock-to-use

ratio

for

corn,

as

a

result

of

weather-related

shortfalls

in

production

and

yields,

ongoing

supply

chain

disruptions

and

the

Russia-

Ukraine

War

and

its

impact

on

the

export

markets.

For

fiscal

2024,

we

expect

continued

corn

and

soybean

upward

pricing

pressures and further market volatility to affect feed costs.

Processing, packaging, and warehouse

-

Cost of packaging materials increased 18.6% compared to

fiscal 2022

as costs increased due to rising

inflation and labor

costs.

-

Labor costs increased 13.6% due to wage increases instituted in response

to labor shortages and rising inflation.

-

Dozens processed increased 3.6% compared to fiscal 2022, which

resulted in an $11.2 million increase in costs.

Egg purchases and other (including change in inventory)

-

Costs in this category increased

120.8% compared to fiscal 2022

primarily due to the

increase in egg prices. The

average

price

of outside

egg

purchases

increased

75.6%

per

dozen compared

to

fiscal

2022.

Additionally,

our

percentage

of

produced to

sold decreased

to 92.3%

in fiscal

2023 from

94.3% in

fiscal 2022

as we

increased our

volume of

outside

egg purchases in order to meet customer demand.

GROSS PROFIT

Gross profit,

as a percentage

of net sales,

was 38.0%

for fiscal 2023

,

compared to 19.0%

for fiscal 2022.

The increase resulted

primarily from higher selling prices for conventional eggs as well as the increased volume

of specialty eggs sold, partially offset

by the increased cost of feed ingredients and processing, packaging

and warehouse costs.

SELLING, GENERAL, AND ADMINISTRATIVE

EXPENSES

Selling,

general,

and

administrative

(“SGA”)

expenses

include

costs

of

marketing,

distribution,

accounting,

and

corporate

overhead. SG&A expenses increased

$33.6 million to $232.2

million in fiscal 2023.

The following table presents

an analysis of

our SGA expenses (in thousands):

Fiscal Year

Ended

June 03, 2023

May 28, 2022

$ Change

% Change

Specialty egg expense

$

57,758

$

59,830

$

(2,072)

(3.5)

%

Delivery expense

77,548

62,677

14,871

23.7

%

Payroll, taxes and benefits

57,830

43,954

13,876

31.6

%

Stock compensation expense

4,205

4,063

142

3.5

%

Other expenses

34,866

28,107

6,759

24.0

%

Total

$

232,207

$

198,631

$

33,576

16.9

%

Specialty egg expense

-

Specialty egg

expense, which

includes franchise

fees, advertising

and promotion

costs generally

tracks with

specialty

egg

volumes,

which

were

up

18.6%

for

fiscal

2023

compared

to

fiscal

2022.

However,

our

specialty

egg

expense

decreased 3.5%,

primarily due

to a

significant reduction

in advertising

costs. The

higher prices

for conventional

eggs

and

the

comparatively

lower prices

for

specialty eggs

diminished

the need

to promote

specialty eggs

in fiscal

2023.

However, we anticipate that the need to promote specialty eggs will increase

in fiscal 2024 as the market recovers from

the effects of HPAI.

29

Delivery expense

-

The increased

delivery expense

is primarily

due to

the increase

in fuel

and labor

costs for

both our

fleet and

contract

trucking. Compared to fiscal

2022, contract trucking and

labor expenses increased

approximately $10.2 million for

fiscal

2023.

Payroll, taxes and benefits expense

-

The

increase

in

payroll,

taxes

and

benefits

expense

is

primarily

due

to

an

increase

in

the

accrual

for

anticipated

performance-based bonuses.

Other expenses

-

The increase in other

expenses is due to

increased legal expenses of

approximately $3.6 million

as well as inflationary

pressure increasing costs.

OPERATING

INCOME (LOSS)

As a result of the above, our operating income was $967.7 million for fiscal 2023

,

compared to $143.5 million for fiscal 2022.

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.

The Company recorded interest income of $18.6 million in fiscal 2023,

compared to $988 thousand in fiscal 2022, primarily due

to significantly

higher cash

and cash

equivalents and

investment securities

available-for-sale balances

and yields.

We

recorded

interest expense of $583 thousand and $403 thousand

in fiscal 2023 and 2022, respectively, primarily related to commitment fees

on our Credit Facility described below.

Equity in income from unconsolidated entities for fiscal 2023 was $746

thousand compared to $1.9 million for fiscal 2022.

Other, net

for fiscal 2023

was income of

$1.9 million compared

to $9.8 million for

fiscal 2022.

The majority of

the decrease is

due

to

our

acquisition

in

fiscal

2022

of

the

remaining

50% membership

interest

in

Red

River

Valley

Egg

Farm,

LLC

(“Red

River”) as we recognized a $4.5 million gain in fiscal 2022 due to the remeasurement of our equity investment.

We also received

$1.4 million in fiscal 2022 related

to our review and adjustment

of our various marketing agreements. Additionally, the Company

recorded a $2 million impairment of an investment in an unconsolidated entity

in fiscal 2023.

INCOME TAXES

For

the

fiscal

year

ended

June

3,

2023,

our

pre-tax

income

was

$998.6

million,

compared

to

$166.0

million

for

fiscal

2022.

Income tax expense of $241.8 million

was recorded for fiscal 2023 with an effective

tax rate of 24.2%.

For fiscal 2022, income

tax expense was $33.6 million with an effective tax rate

of 20.2%. Included in fiscal 2022 income tax expense is the discrete tax

benefit of

$8.3 million

discussed in

Note 2 – Acquisition

of Part

II. Item

8. Notes

to Consolidated

Financial Statements

in this

Annual Report.

Excluding the discrete

tax benefit,

income tax expense

was $41.9

million with an

adjusted effective

tax rate of

25.2%.

At June 3, 2023, the Company had

an income tax receivable of $67.0 million compared to

$42.1 million at May 28, 2022. During

fiscal 2022,

the Company

filed federal

carryback tax

returns for

fiscal 2020

and 2021

taxable net

operating losses

to recover

a

portion of

taxes paid

in fiscal 2015

and fiscal

2016. Subsequent

to fiscal

2023, we

received $31.8

million of

the $34.9

million

fiscal 2021 refund and believe we will receive the remaining amount of the fiscal 2020 and 2021 refunds, totaling

$11.7 million,

during our second fiscal quarter of 2024.

An additional $23.5 million income tax receivable was recorded as of June 3, 2023 for

fiscal 2023 federal overpayments in excess of federal tax liability.

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.

30

NET LOSS ATTRIBUTABLE

TO NONCONTROLLING INTEREST

Net loss attributable

to noncontrolling

interest was $1.3

million for fiscal

2023

compared to a

$209 thousand

net loss for

fiscal

2022.

NET INCOME ATTRIBUTABLE

TO CAL-MAINE FOODS, INC.

As a result of the above, net income attributable to Cal-Maine Foods, Inc. for fiscal

2023 was $758.0 million, or $15.58 per basic

and $15.52 per diluted share, compared to $132.7 million, or $2.73 per basic

and $2.72 per diluted share for fiscal 2022.

Fiscal Year

Ended May 28, 2022 Compared to Fiscal Year

Ended May 29, 2021

The discussion

of our

results of

operations for

the fiscal

year ended

May 28,

2022 compared

to the

fiscal year

ended May

29,

2021 can be found in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results

of Operations in

the Company’s fiscal 2022

Annual Report on Form 10-K.

LIQUIDITY AND CAPITAL

RESOURCES

Working

Capital and Current Ratio

Our working capital at

June 3, 2023 was

$942.2 million, compared to $476.8 million at

May 28, 2022.

The calculation of working

capital is defined as current assets less current liabilities. Our current ratio was 6.16 at June 3, 2023 compared to 3.58 at May 28,

2022.

The current

ratio is

calculated

by dividing

current assets

by current

liabilities. The

increase

in our

working

capital and

current ratio

is primarily due

to the increase

in total current

assets, which increased

by $463.4 million

to $1.1 billion

at June 3,

2023,

due

to significant

increases in

cash and

cash equivalents

and

investment

securities available

-for-sale.

Due to

seasonal

factors described in

Part I. Item I. Business – Seasonality

, we generally expect

our need for working

capital to be highest in

the

fourth and first fiscal quarters ending in May/June and August/September,

respectively.

Cash Flows from Operating Activities

Net cash provided

by operating activities

was $863.0

million for fiscal

year 2023

compared with $126.2

million for fiscal

year

2022.

The increase in cash flow from operations

resulted primarily from higher selling prices for conventional eggs

as well as the

increased volume of specialty eggs

sold, partially offset by the increased

cost of feed ingredients and processing,

packaging and

warehouse costs.

Cash Flows from Investing Activities

We

continue

to

invest

in

our

facilities,

with

$136.6

million

used

to

purchase

property,

plant

and

equipment

for

fiscal

2023,

compared to $72.4

million in fiscal 2022.

These investments were primarily

made to expand our

cage-free production capacity.

We

have for many years

invested substantial amounts

to expand our cage-free

production capacity and

expect to continue to

do

so.

Purchases

of

investments

were

$530.8

million

in

fiscal

2023,

compared

to

$98.2

million

in

fiscal

2022.

The

increase

in

purchases of

investment securities

is primarily

due to

the utilization

of increased

liquidity resulting

from increased

cash flows

provided by operating

activities noted above.

Sales and maturities

of investment securities

were $291.8

million for fiscal

2023,

compared to $92.7 million

for fiscal 2022. During fiscal

2022, we also acquired the

remaining 50% membership interest

in Red

River for $44.8 million, net of cash acquired.

Cash Flows from Financing Activities

We paid dividends

totaling $252.3 million and $6.1 million in fiscal 2023

and 2022, respectively.

As of

June 3,

2023, cash

increased

$233.7 million

since May

28, 2022,

compared to

an increase

of $1.7

million during

fiscal

2022.

Credit Facility

We had no

long-term debt outstanding at the end of fiscal 2023

and 2022. On November 15, 2021, we entered

into an Amended

and Restated Credit Agreement (as amended the “Credit

Agreement”) with a five-year term. The Credit Agreement provides for

a senior

secured revolving

credit facility

(the “Credit

Facility”), in

an initial

aggregate principal

amount of

up to

$250 million.

As of June 3, 2023, no amounts were borrowed under

the Credit Facility. We

have $4.3

million in outstanding standby letters of

credit, which were issued under our Credit Facility for the

benefit of certain insurance companies. In May 2023,

we entered into

31

an amendment to

the Credit Agreement

to replace the

London Interbank Offered

Rate interest rate

benchmark. Refer

to Part II.

OVERVIEW

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packaging, marketing and distribution of

fresh shell eggs.

Our fiscal

year end

is the

Saturday closest

to May 31.

The Company,

which is

headquartered in

Ridgeland, Mississippi,

is the

largest

producer

and

distributor

of

fresh

shell

eggs

in

the

United

States

(“U.S”).

In

fiscal

2022,

we

sold

approximately

1,083.8 million dozen shell eggs, which we believe

represented approximately 20% of domestic shell egg consumption.

Our total

flock as of May 28, 2022 of approximately 42.2 million layers and 11.5 million pullets and breeders is the largest in the U.S. We

sell most

of our

shell eggs

to a

diverse

group of

customers, including

national

and regional

grocery

store chains,

club stores,

companies

servicing independent supermarkets in the U.S., food service distributors, and egg product consumers in states across

the southwestern, southeastern, mid-western and mid-Atlantic regions

of the U.S.

The

Company

has

one

operating

segment,

which

is

the

production,

grading,

packaging,

marketing

and

distribution

of

shell

eggs. Many

of our

customers

rely

on

us

to

provide

most

of their

shell

egg

needs,

including

specialty

and

conventional

eggs.

Specialty eggs

represent a

broad range

of products. We

classify nutritionally

enhanced, cage-free,

organic,

free-range, pasture-

raised and brown

eggs as specialty eggs

for accounting and reporting

purposes. We

classify all other shell

eggs as conventional

eggs.

While

we

report

separate

sales

information

for

these

types

of

eggs,

there

are

a

number

of

cost

factors

which

are

not

specifically

available

for

conventional

or

specialty

eggs due

to

the

nature

of egg

production.

We

manage

our

operations

and

allocate resources to these

types of eggs on a consolidated

basis based on the demands

of our customers. For further description

of our business, refer to

Part I. Item I. Business

.

HPAI

We

are

closely

monitoring

the outbreaks

of

highly

pathogenic

avian

influenza

(“HPAI”)

,

the

latest of

which

was

detected

in

commercial

flocks

in

the

U.S.

in

February

2022.

According

to

the

U.S.

Centers

for

Disease

Control

and

Prevention,

these

detections

do not

present

an immediate

public

health

concern.

There

have

been

no positive

tests for

HPAI

at

any

Cal-Maine

Foods’ owned or

contracted production facility

as of July 19,

2022. The USDA division

of Animal and

Plant Health Inspection

Service (“APHIS”), reported that approximately 30.7 million commercial layer hens have

been depopulated due to HPAI. Pullets

impacted

comprise

approximately

1.0

million.

According

to

APHIS,

the

most

recently

reported

outbreaks

of

HPAI

affecting

commercial

layer hens

and pullets

occurred

June 7,

2022 and

June 9,

2022,

respectively.

We

believe

the HPAI

outbreak

will

continue to impact the overall supply of eggs until the layer hen flock is fully replenished. While no farm is immune from HPAI,

we believe we have

implemented and continue to maintain

robust biosecurity programs across our

locations. We are also working

closely

with

federal,

state

and

local

government

officials

and

focused

industry

groups

to

mitigate

the

risk

of

this

and

future

outbreaks and effectively manage our response, if needed.

COVID-19

Since early

2020, the

coronavirus (“COVID-19”)

outbreak, characterized

as a

pandemic by

the World

Health Organization

on

March

11,

2020,

has

caused

significant

disruptions

in

international

and

U.S.

economies

and

markets.

We

understand

the

challenges and difficult economic

environment facing families

in the communities

where we live

and work, and

we are committed

to helping where we can. We have provided food assistance to

those in need by donating approximately 829 thousand

dozen eggs

in

fiscal

2022.

We

believe

we

are

taking

all

reasonable

precautions

in

the

management

of

our

operations

in

response

to

the

COVID-19 pandemic.

Our top priority

is the health

and safety

of our

employees, who

work hard

each day

to produce eggs

for

our customers. As part of the nation’s food supply, we work in a critical infrastructure industry, and we believe we have a special

responsibility to

maintain our

normal work

schedule. As

such, we

are in

regular communication

with our

managers across

our

operations

and continue

to closely

monitor the

situation in

our facilities

and in

the communities

where we

live and

work.

We

have implemented

procedures designed

to protect

our employees,

taking into

account guidelines

published

by the

Centers for

Disease Control and other government health agencies, and we have strict sanitation protocols and biosecurity measures in place

Table of Contents

24

throughout our operations

with restricted access

to visitors. There

are no known

indications that COVID-19

affects chickens

or

can be transferred through the food supply.

We

continue to

proactively monitor

and manage

operations during

the COVID-19 pandemic,

including additional

related costs

that we incurred or

may incur in the

future. The pandemic had

a negative impact on

our business through disruptions in

the supply

chain such as

increased costs and

limited availability of

packaging supplies, increased

labor costs, increased

medical costs and,

more recently, inflation.

In fiscal

2022 and

2021, we

spent $2.2

million and

$2.3 million

(excluding medical

insurance claims)

related to

the pandemic

and

its

effects,

respectively.

The

majority

of

these

expenses

resulted

from

additional

labor

and

increased

cost

of

packaging

materials, which are

primarily reflected in cost

of sales. Medical insurance

claims related to COVID-19

paid during fiscal 2022

and 2021 were an additional $2.4 million and $1.4 million, respectively.

Executive Overview of Results – Fiscal Years

Ended May 28, 2022, May 29, 2021 and May 30, 2020

Fiscal Years

Ended

May 28, 2022

May 29, 2021

May 30, 2020

Net sales (in thousands)

$

1,777,159

$

1,348,987

$

1,351,609

Gross profit (in thousands)

$

337,059

$

160,661

$

179,588

Net average shell egg price

(a)

$

1.579

$

1.217

$

1.231

Average UB Southeast

Region - Shell Eggs - White Large

$

1.712

$

1.155

$

1.220

Feed costs per dozen produced

$

0.571

$

0.446

$

0.409

(a) The net average

shell egg selling price

is the blended price

for all sizes and

grades of shell eggs,

including non-graded

shell egg sales, breaking stock and undergrades.

Throughout the

first three quarters

of our

fiscal year 2020,

an oversupply

of eggs negatively

affected the

price of

conventional

eggs and demand

for specialty eggs

was negatively impacted

by the low

conventional egg prices.

For the first

three quarters of

fiscal 2020,

the average UB

southeastern large

index price was

down 21.9%

compared with the

prior-year period.

However, in

the fourth quarter of fiscal 2020, the average UB southeastern large index price was 62.4% higher than the average price through

the first three quarters in fiscal 2020 due to increased demand related to the onset of

the pandemic, as consumers purchased more

eggs in anticipation of preparing more meals at home.

Consumer demand maintained a steady growth throughout our first three quarters of fiscal 2021 but began trending down during

our fourth quarter of fiscal 2021

as consumers started to resume pre-pandemic

activities. Our net sales for fiscal 2021 decreased

$2.6 million compared to fiscal 2020,

primarily due to the decrease

in the selling price and

volume of conventional eggs, partially

offset by the increased volume of specialty

eggs sold. We

believe the decreased demand in foodservice

seen throughout the first

three

quarters of

fiscal 2021

due

to the

pandemic

contributed to

the depressed

price

of shell

eggs for

fiscal 2021

in the

retail

market due to the extra supply entering the retail channel from the foodservice

channel.

For

fiscal

2022,

we

believe

prices

for

conventional

eggs

were

positively

impacted

by

a

better

alignment

of

the

size

of

the

conventional

production

layer

hen

flock

and

customer

and

consumer

demand

through

the

first

three

fiscal

quarters

of

2022.

Conventional egg

prices further

increased in

the fourth

quarter of

fiscal 2022

primarily due

to decreased

supply caused

by the

HPAI

outbreak

compounded

with

good

customer

demand.

Throughout

fiscal

2022

the

hen

numbers

reported

by

the

USDA

remained below

the five-year

average. As

of July 17,

2022, APHIS

reported that

approximately 30.7

million commercial

table

egg layer

hens, or

approximately 9.5%

of the

table egg

layer flock

based on

February 2022

reported layer

numbers, have

been

depopulated due

to HPAI.

Hen numbers

reported by

the USDA

as of

June 1,

2022, were

297.5 million,

which represents

18.3

million fewer hens than a year ago.

According to

Information Resources,

Inc. (“IRI”),

for the

52 weeks

ended June

5, 2022,

which approximately

aligns with

our

fiscal year

2022, conventional

egg dozens

sold in

the U.S.

at multi-retail

outlets decreased

14.3%, while

specialty egg

dozens

sold increased 13.2% versus the prior-year comparable period.

Our conventional eggs dozens sold decreased 3.4% and specialty

egg dozens sold increased 12.5% as compared to fiscal 2021.

Gross profit increased $176.4 million to $337.1 million in fiscal 2022. The increase resulted primarily from higher

selling prices

for

conventional

eggs

as

well

as

the

increased

volume

of

specialty

eggs

sold,

partially

offset

by

the

increased

cost

of

feed

ingredients, increased processing costs and the decline in the volume of conventional eggs

sold. For fiscal year 2022, the average

Chicago

Board

of Trade

(“CBOT”)

daily

market

price

was $6.31

per bushel

for

corn and

$392.06

per ton

for

soybean meal,

Table of Contents

25

representing increases of

38.3% and 6.1%, respectively,

compared to the daily

average CBOT prices for fiscal

2021. Feed costs

started trending

higher midway

through the

second quarter

of fiscal

2021 and

then again

near the

end of

the second

quarter of

fiscal

2022.

Beginning

in

August

2020,

the

grain

markets,

particularly

corn,

have

been

negatively

affected

by

many

factors,

including weather-related production and yield shortfalls, increased export demand and ongoing disruptions from the COVID-19

global pandemic.

These factors continued into our fiscal 2022 and

as other factors such as the

Russia-Ukraine war, increased fuel

costs, transportation and fertilizers prices

and strong export demand and restrictions

further compounded the existing issues that

contributed

to

near-historical

low

stocks-to-use

ratios

for

corn

worldwide

and

overall

higher

feed

ingredient

cost

and

price

volatility.

We continue

to execute our growth strategy of remaining a low-cost provider

of shell eggs and growth of our specialty eggs and

egg

products

through

additional

investments

in

cage-free

facilities and

selective

acquisitions.

In

fiscal

2022,

we

acquired

the

remaining 50%

membership interest

in Red

River Valley

Egg Farm,

LLC (“Red

River”), which

owns and

operates a

specialty

shell

egg

production

complex

with

approximately

1.7

million

cage-free

laying

hens,

cage-free

pullet

capacity,

a

feed

mill,

processing plant, related offices and outbuildings and related equipment located on approximately 400 acres near Bogata, Texa

s.

We

also

announced

new

capital

projects

with

estimated

costs of

$105

million

that

will

expand

our

cage-free

production

and

capacity by 2.2 million cage-free hens. For additional information,

see

Part I. Item 2. Properties.

RESULTS

OF OPERATIONS

The following table sets forth, for the fiscal years indicated, certain items from our consolidated

statements of income expressed

as a percentage of net sales.

Fiscal Year

Ended

May 28, 2022

May 29, 2021

Net sales

100.0

%

100.0

%

Cost of sales

81.0

%

88.1

%

Gross profit

19.0

%

11.9

%

Selling, general and administrative

11.2

%

13.6

%

(Gain) loss on disposal of fixed assets

(0.3)

%

0.2

%

Operating income (loss)

8.1

%

(1.9)

%

Total other income

1.3

%

1.2

%

Income (loss) before income taxes

9.4

%

(0.7)

%

Income tax expense (benefit)

1.9

%

(0.9)

%

Net income

7.5

%

0.2

%

Less:

Net loss attributable to noncontrolling interest

—

%

—

%

Net income attributable to Cal-Maine Foods, Inc.

7.5

%

0.2

%

Table of Contents

26

Fiscal Year

Ended May 28, 2022 Compared to Fiscal Year

Ended May 29, 2021

NET SALES

Total net sales for fiscal

2022 were $1,777.2 million compared to $1,349.0 million for fiscal 2021.

Net shell egg sales represented 96.6% and 97.3% of total net sales

for the fiscal year 2022

and 2021, respectively. Shell egg sales

classified as

“Other”

represent sales

of hard

-cooked

eggs, hatching

eggs, and

other miscellaneous

products

included with

our

shell egg operations. The table below presents an analysis of our conventional and specialty shell egg sales (in thousands, except

percentage data):

May 28, 2022

May 29, 2021

Total net sales

$

1,777,159

$

1,348,987

Conventional

$

1,061,995

61.8

%

$

766,284

58.4

%

Specialty

648,838

37.8

%

539,780

41.1

%

Egg sales, net

1,710,833

99.6

%

1,306,064

99.5

%

Other

6,322

0.4

%

6,190

0.5

%

Net shell egg sales

$

1,717,155

100.0

%

$

1,312,254

100.0

%

Dozens sold:

Conventional

747,914

69.0

%

785,446

73.2

%

Specialty

335,875

31.0

%

287,765

26.8

%

Total dozens sold

1,083,789

100.0

%

1,073,211

100.0

%

Net average selling price per dozen:

Conventional

$

1.420

$

0.976

Specialty

$

1.932

$

1.876

All shell eggs

$

1.579

$

1.217

Egg products sales:

Egg products net sales

$

60,004

$

36,733

Pounds sold

63,968

63,627

Net average selling price per pound

$

0.938

$

0.577

Shell egg net sales

-

For fiscal 2022,

conventional egg

sales increased $295.7

million, or 38.6%,

compared to

fiscal 2021, primarily

due to

the increase

in conventional

egg prices,

partially offset

by a

4.8% decrease

in the

volume of

conventional

eggs sold.

Changes in price resulted in a $332.1

million increase and change in volume resulted

in a $36.6 million decrease in net

sales, respectively.

-

We believe

prices for conventional eggs

were positively impacted by

a better alignment of the

size of the conventional

production

layer

hen

flock

and

customer

and

consumer

demand

throughout

the

first

three

quarters

of

fiscal

2022.

Conventional egg prices further

increased in the fourth quarter

of fiscal 2022 primarily due

to decreased supply caused

by the HPAI

outbreak,

discussed above.

-

We believe lower

conventional egg prices in the prior-year period were primarily

tied to a surplus of conventional eggs

entering the retail channel from the foodservice channel exceeding

retail demand during this phase of the pandemic.

-

The decrease

in volume of

conventional eggs

sold was primarily

due to elevated

retail demand

during the

first half

of

fiscal 2021 given consumers’ preferences

to purchase eggs for in-home meal

preparation due to the pandemic.

We saw

these consumer preferences begin to shift

in the fourth quarter of

fiscal 2021 as consumers began

to resume out-of-home

dining and prepared fewer meals at home.

-

Specialty egg sales

increased $109.1 million, or

20.2%, for fiscal

2022 compared to

fiscal 2021, primarily

due to a

16.7%

increase in the volume of specialty dozens sold and a 3.0% increase in specialty egg prices. Changes in price resulted in

a $18.8 million

increase and change

in volume

resulted in a

$90.3 million increase

in net

sales, respectively. Our specialty

egg sales

also benefitted

from our

additional cage-free

production capacity.

Cage-free egg

sales for

fiscal 2022

were

22.1% of our total net shell egg sales.

Table of Contents

27

Egg products net sales

-

Egg products

net sales increased

$23.3 million

or 63.4%, primarily

due to a

62.6% selling

price increase

compared to

fiscal 2021, which had a $23.1 million positive impact on net sales.

-

Our

egg products

net average

selling

price

increased

in fiscal

2022,

compared

to fiscal

2021

as foodservice

channel

demand has

begun to

shift more

towards pre-pandemic

levels. This

coincided

with the

HPAI

outbreak

that started

in

February 2022, in which

we believe 10.4 of

the 30.7 million culled birds

were located at facilities dedicated

to support

inline breaking facilities in Iowa.

-

Selling prices for

egg products in fiscal

2021 were negatively

impacted by a

decline in foodservice

demand during the

more restrictive phases of governmental and business shutdowns due to the pandemic.

COST OF SALES

Cost of sales for fiscal 2022 were $1,440.1 million compared to $1,188.3

million for fiscal 2021.

Cost of

sales consi

sts of

costs directly

related

to producing,

processing

and

packing

shell eggs,

purchases

of

shell

eggs from

outside producers, processing and packing of liquid

and frozen egg products and other non-egg costs. Farm

production costs are

those costs

incurred at

the egg

production facility,

including feed,

facility,

hen amortization

and other

related farm

production

costs.

The following table presents the key variables affecting our cost of

sales (in thousands,

except cost per dozen data):

Fiscal Year

Ended

May 28, 2022

May 29, 2021

% Change

Cost of Sales:

Farm production

$

927,806

$

730,902

26.9

%

Processing, packaging, and warehouse

289,056

250,058

15.6

Egg purchases and other (including change in inventory)

172,034

177,634

(3.2)

Total shell eggs

1,388,896

1,158,594

19.9

Egg products

51,204

29,536

73.4

Other

—

196

(100.0)

Total

$

1,440,100

$

1,188,326

21.2

%

Farm production costs (per dozen produced)

Feed

$

0.571

$

0.446

28.0

%

Other

$

0.352

$

0.320

10.0

%

Total

$

0.923

$

0.766

20.5

%

Outside egg purchases (average cost per dozen)

$

1.72

$

1.22

41.0

%

Dozens produced

1,022,327

970,837

5.3

%

Percent produced to sold

94.3%

90.5%

4.2

%

Farm Production

-

Feed costs

per dozen

produced increased

28.0% in

fiscal 2022

compared to

fiscal 2021,

primarily due

to higher

feed

ingredient prices,

discussed above.

-

Other

farm

production

costs increased

due

to higher

flock amortization,

primarily

from an

increase

in

our

cage-free

production, which has higher capitalized costs. Also, higher feed costs, which began to rise in our third quarter of fiscal

2021, are capitalized in our flocks during pullet production and increased our

amortization expense.

-

We had higher

facility expense as more cage-free facilities came into production.

Processing, packaging, and warehouse

-

Cost of packaging materials increased 11.9% compared to fiscal 2021 as supply chain constraints initially caused by the

pandemic

increased

costs

for

packaging

products

and

manufacturers

implemented

pandemic

surcharges.

Costs

also

increased due to rising inflation.

-

Labor costs increased 14.4% due to wage increases in response to

labor shortages, primarily due to the pandemic and its

effects.

-

Dozens processed increased 5.0% compared to fiscal 2021, which resulted

in an $11.4 million increase in costs.

Table of Contents

28

Egg purchases and other (including change in inventory)

-

Costs in this category decreased primarily due to the decrease in the volume of

outside egg purchases, as our percentage

of produced to sold increased to 94.3% in fiscal 2022 from 90.5% in fiscal 2021,

partially offset by higher egg prices.

Looking

forward

to

fiscal

2023,

market

indications

point

to

higher

corn

and

soybean

prices and

greater

volatility

tied

to

the

Russia-Ukraine war and higher export demand.

GROSS PROFIT

Gross profit,

as a percentage

of net sales,

was 19.0% for

fiscal 2022,

compared to 11.9%

for fiscal 2021.

The increase resulted

primarily from higher selling prices for conventional eggs as well as the increased volume of

specialty eggs sold, partially offset

by the increased cost of feed ingredients,

increased processing costs and the decline in the volume of conventional eggs sold.

SELLING, GENERAL, AND ADMINISTRATIVE

EXPENSES

Selling,

general,

and

administrative

expenses

("SGA")

include

costs

of

marketing,

distribution,

accounting,

and

corporate

overhead. SG&A increased $14.7

million to $198.6 million

in fiscal 2022. The following

table presents an analysis of

our SGA

expenses (in thousands):

Fiscal Year

Ended

May 28, 2022

May 29, 2021

$ Change

% Change

Specialty egg expense

$

59,830

$

59,294

$

536

0.9

%

Delivery expense

62,677

52,670

10,007

19.0

%

Payroll, taxes and benefits

43,954

43,327

627

1.4

%

Stock compensation expense

4,063

3,778

285

7.5

%

Other expenses

28,107

24,874

3,233

13.0

%

Total

$

198,631

$

183,943

$

14,688

8.0

%

Specialty egg expense

-

Specialty egg

expense which

includes franchise

fees, advertising

and promotion

costs generally

tracks with

specialty

egg

volumes,

which

were

up

16.7%

for

fiscal

2022

compared

to

fiscal

2021.

However,

our

specialty

egg

expense

increased

only

0.9%,

primarily

due

to

increased

sales

to

other

Eggland’s

Best,

Inc.

(“EB”)

franchisees,

including

unconsolidated

affiliates,

Specialty

Eggs,

LLC

and

Southwest

Specialty

Eggs,

LLC,

that

were

responsible

for

the

franchise fees,

advertising and

promotion costs

associated with

those sales

resulting in

reduced costs

for us.

Also, the

strong conventional market diminished

the need to promote specialty eggs;

and as a result, EB temporarily

reduced the

related franchise fees for certain specialty egg products to encourage

continued production of these products.

Delivery expense

-

The increased

delivery expense

is primarily

due to

the increase

in fuel

and labor

costs for

both our

fleet and

contract

trucking.

Other expenses

-

The increase

in other expenses

is primarily due

to property losses

incurred that

were not covered

by insurance

as well

as increased

premiums

for

property

and casualty

insurance programs.

We

also

accrued an

additional

$1.1 million

in

property taxes due to the Red River acquisition.

OPERATING

INCOME (LOSS)

As a result

of the above,

our operating

income was $143.5 million

for fiscal 2022,

compared to operating

loss of $26.3 million

for fiscal 2021.

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.

Table of Contents

29

The Company

recorded interest income

of $988 thousand

in fiscal 2022,

compared to $2.8

million in

fiscal 2021. We

recorded

interest expense of $403 thousand and $213 thousand

in fiscal 2022 and 2021, respectively, primarily related to commitment fees

on our Credit Facility described below.

Patronage

dividends,

which

represent

distributions

from

our

membership

in

EB,

increased

$1.1

million

or

12.5%.

Patronage

dividends are paid once a year based on EB’s

profits and its available cash.

Equity in income

from unconsolidated entities

for fiscal 2022 was

$1.9 million compared

to $622 thousand for

fiscal 2021, due

to increased specialty

egg prices

as well

as increased sales

volume resulting from

our additional investment

in Southwest

Specialty

to expand its operations.

Other,

net for fiscal

2022 was

income of

$9.8 million compared

to $4.1 million

for fiscal 2021.

The majority of

the increase is

due to our

acquisition of the

remaining 50% membership

interest in Red

River as we

recognized a

$4.5 million

gain due to

the

remeasurement of

our equity investment,

along with the

$1.6 million payments

related to review

and adjustment of

our various

marketing agreements.

INCOME TAXES

For the

fiscal year

ended May

28, 2022,

our pre-tax

income was

$166.0 million,

compared to

pre-tax loss

of $9.9

million for

fiscal 2021. Income

tax expense of

$33.6 million was

recorded for fiscal

2022 with an

effective tax rate

of 20.2%.

Included in

fiscal 2022

income tax

expense is

the discrete

tax benefit

of $8.3

million discussed

in

Note 2 – Acquisition

of Part

II. Item

8.

Notes to

Condensed

Consolidated

Financial

Statements in

this Annual

Report.

Excluding the

discrete tax

benefit,

income tax

expense was $41.9

million with an

adjusted effective

tax rate of

25.2%. For

fiscal 2021, income

tax benefit was

$12.0 million.

Excluding the impact

of discrete items

related to a

$12.4 million net

tax benefit recorded

during fiscal 2021

in connection with

the Coronavirus Aid,

Relief, and Economic Security

Act (the “CARES Act”),

our income tax benefit

for the comparable period

of fiscal 2021 was $2.2 million, which reflects an adjusted effective

tax rate of 22.7%.

At May 28, 2022, the

Company had an income tax

receivable of $42.1 million compared

to $42.5 million at May 29,

2021. The

income tax receivable is related

to the Company’s

decision to carryback fiscal 2020

and fiscal 2021 taxable net operating

losses

to recover a

portion of taxes paid

in fiscal 2015

and fiscal 2016.

During fiscal 2022,

the Company filed

both federal carryback

tax returns,

and we believe we will receive the refunds during our third fiscal quarter of 2023.

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 LOSS ATTRIBUTABLE

TO NONCONTROLLING INTEREST

Net loss attributable

to noncontrolling interest was