CALM 10-Q: Smart Summary
Notes to Financials
Note 1: Summary of Significant Accounting Policies
- Fiscal year and periods: The Company's fiscal year ends on the Saturday closest to May 31; each of the three-month periods ended August 30, 2025 and August 31, 2024 included 13 weeks.
- Dividend policy: The Company pays a quarterly cash dividend equal to one-third (1/3) of quarterly net income attributable to Cal-Maine Foods, Inc., to stockholders of record as of the 60th day following quarter-end (65th day for the fourth fiscal quarter), payable on the 15th day following the record date; no dividend is paid for a subsequent profitable quarter until the Company is profitable on a cumulative basis from the most recent quarter for which a dividend was paid. Class A Common Stock was converted to Common Stock on April 14, 2025.
- Revenue recognition: Revenue is recognized upon delivery and acceptance of product; sales incentives such as rebates, discounts, coupons, volume-based incentives, guaranteed sales, and other programs are recorded as a reduction in revenue at the time of sale using historical trends and projected redemption rates.
- Pending ASUs: ASU 2023-09 (Income Taxes, Topic 740) is effective for annual periods beginning after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures, Subtopic 220-40, as clarified by ASU 2025-01) is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027; the Company is currently evaluating the impact of both on its financial statement disclosures. No other new accounting pronouncements issued or effective during the fiscal year had or are expected to have a material impact on the consolidated financial statements.
Note 2: Acquisition
- Company acquired Echo Lake Foods, LLC (completed June 2, 2025): The Company acquired Echo Lake Foods, LLC and certain related companies (collectively 'Echo Lake Foods'), based in Burlington, Wisconsin, a producer, packager, marketer, and distributor of prepared foods including waffles, pancakes, scrambled eggs, frozen cooked omelets, egg patties, toast, and diced eggs; total cash consideration paid was $275.4M, accounted for as a business combination with valuation pending finalization.
- Purchase price allocation — goodwill and intangibles: Goodwill of $29M ($29M) was recognized, primarily attributable to projected synergies from integrating Echo Lake Foods' operations with those of the Company, and is fully deductible for tax purposes; intangible assets of $36.8M consisted primarily of customer relationships (valued using the multi-period excess earnings method) and a trade name (valued using the relief-from-royalty method).
- Transaction costs: The Company recorded transaction costs of $594,000 in the first quarter of fiscal 2026 and $6.6M in fiscal year 2025 in connection with the acquisition.
in thousands
| Line item | June 2, 2025 |
|---|---|
| Cash consideration paid | 275,406 |
| Cash | 115 |
| Investment securities available-for-sale | 14,147 |
| Accounts receivable | 31,923 |
| Inventories | 21,601 |
| Prepaid expenses and other current assets | 3,131 |
| Property, plant & equipment | 151,697 |
| Intangible assets | 36,800 |
| Accounts payable and other current liabilities | (13,047) |
| Goodwill | 29,039 |
Note 3: Investment
- Portfolio size: Total current investment securities had an amortized cost of $999.1M and estimated fair value of $1B as of August 30, 2025, up from $892.9M amortized cost and $892.7M fair value as of May 31, 2025.
- Composition as of August 30, 2025: The portfolio comprised corporate bonds ($538.4M fair value), US government and agency obligations ($245.1M), treasury bills ($109.4M), commercial paper ($81.5M), municipal bonds ($22.1M), and certificates of deposits ($5M); unrealized gains were $2.4M and unrealized losses were $23,000.
- Unrealized position improvement: Net unrealized position improved significantly from a net loss of $219,000 (gains of $133,000, losses of $352,000) at May 31, 2025 to a net gain of $2.3M at August 30, 2025.
- Contractual maturities: Of the $1B estimated fair value at August 30, 2025, $472.8M matures within one year and $528.7M matures in 1–5 years; actual maturities may differ from contractual maturities as some borrowers have the right to call or prepay obligations with or without penalties.
Note 4: Fair Value
- Fair value hierarchy: All investment securities (available-for-sale) are classified as Level 2; all are securities with maturities of three months or longer when purchased and are classified as current. Observable inputs include yields, credit risks, default rates, and volatility. Total assets measured at fair value were $1B as of August 30, 2025, up from $892.7M as of May 31, 2025, with corporate bonds ($538.4M) and US government and agency obligations ($245.1M) as the largest components.
- Contingent consideration (Level 3): The sole Level 3 liability is a $21.5M contingent consideration — an earnout obligation to Fassio Egg Farms, Inc. (Fassio) tied to return-on-profitability milestones over a three-year period commencing on the acquisition date in the second quarter of fiscal 2024; fair value is estimated via a discounted cash flow model using weighted average cost of capital, egg prices, and projected revenue and expenses. There were no adjustments to the fair value of contingent consideration recorded in the thirteen weeks ended August 30, 2025.
- Short-maturity instruments: The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short maturity of these instruments.
Note 6: Equity
- Equity balance: Total equity grew from $2.6B at May 31, 2025 to $2.7B at August 30, 2025, driven by net income of $199.1M (of which ($233,000) was attributable to noncontrolling interest), partially offset by dividends of $66.5M ($1.371 per share).
- Prior-year comparison: Total equity was $1.9B at August 31, 2024, up from $1.8B at June 1, 2024; that quarter's net income was $149.6M and dividends paid were $45.1M on common shares ($1.019 per share) and $4.9M on Class A common shares.
- Capital structure change: The prior-year period (thirteen weeks ended August 31, 2024) reflected a two-class share structure with separate common and Class A common amounts, whereas the current period (thirteen weeks ended August 30, 2025) shows a single common stock amount with no Class A balance outstanding.
- Other comprehensive income: Other comprehensive income, net of tax, was $2M for the thirteen weeks ended August 30, 2025, compared to $1.3M for the thirteen weeks ended August 31, 2024, moving accumulated other comprehensive income (loss) from ($1M) to $954,000 in the current period.
Note 7: Net Income per Common Share
- Share class conversion: All shares of Class A Common Stock were converted into Common Stock on April 14, 2025; basic EPS is based on weighted-average shares of Common Stock (and, when outstanding, Class A Common Stock) outstanding, while diluted EPS adjusts for the dilutive effect of share-based awards.
- Dilutive securities: The effect of dilutive restricted shares added 143 thousand shares for the thirteen weeks ended August 30, 2025, versus 171 thousand shares for the thirteen weeks ended August 31, 2024.
in thousands
| Line item | Thirteen Weeks Ended August 30, 2025 | Thirteen Weeks Ended August 31, 2024 | YoY |
|---|---|---|---|
| Net income | 199,107 | 149,590 | +33.1% |
| Less: Loss attributable to noncontrolling interest | (233) | (386) | -39.6% |
| Net income attributable to Cal-Maine Foods, Inc. | 199,340 | 149,976 | +32.9% |
| Weighted-average common shares outstanding, basic | 48,281 | 48,761 | -1.0% |
| Effect of dilutive restricted shares | 143 | 171 | -16.4% |
| Weighted-average common shares outstanding, diluted | 48,424 | 48,932 | -1.0% |
| Basic net income per common share (per share) | 4.13 | 3.08 | +34.1% |
| Diluted net income per common share (per share) | 4.12 | 3.06 | +34.6% |
Note 8: Stock Based Compensation
- Stock-based compensation expense: Total expense was $1.3M for the thirteen weeks ended August 30, 2025, compared to $1.1M for the thirteen weeks ended August 31, 2024.
- Unrecognized compensation: Unrecognized compensation expense related to non-vested equity-based awards outstanding under the Amended and Restated 2012 Omnibus Long-Term Incentive Plan was $8M as of August 30, 2025, to be recognized over a weighted average period of 2.0 years.
Note 13: Stock-Based Compensation in our 2025 Annual Report for further
- Award activity (thirteen weeks ended August 30, 2025): Shares outstanding increased from 212,717 to 224,913, with a weighted average grant date fair value rising from $66.93 to $68.99; 13,518 shares were granted at a weighted average grant date fair value of $101.14, 529 shares vested at $54.10, and 793 shares were forfeited at $73.93.
Note 15: U.S.C.
- Egg Products antitrust — judgment and accrual: A jury returned a $17.8M damages verdict on December 1, 2023; on November 6, 2024, the court entered final judgment of $43.6M (after trebling) against the Company and other defendants jointly and severally. The Company posted a bond of approximately $23.9M in December 2024 and filed post-judgment motions. During the second fiscal quarter of 2024, the Company recorded an accrued expense of $19.6M in selling, general and administrative expenses, classified as other noncurrent liabilities, representing management's estimate of the Company's proportional share of reasonably possible ultimate damages, excluding attorneys' fees (which management believes would be approximately offset by settlement credits). If the verdict is ultimately upheld, the Company would be jointly and severally liable for $43.6M, subject to credits for prior settlements, plus the Egg Products Plaintiffs' reasonable attorneys' fees.
- Oklahoma Watershed litigation — no accrual, loss possible: The State of Oklahoma seeks over $100M in total fines from all defendants, including approximately $18.2M from the Company, plus attorneys' fees; on July 30, 2025, the Company filed its own proposed final judgment seeking no monetary fines or penalties. No accrual has been recorded as of August 30, 2025; based on information available as of September 30, 2025, management expects the ultimate resolution will result in a loss, if any, substantially less than the amount sought by the State of Oklahoma.
- Other matters: Management, upon advice of counsel, is of the opinion that the final outcome of other incidental claims and litigation should not have a material effect on consolidated results of operations or financial position.
Management Discussion & Analysis
Management's Discussion and Analysis
Boilerplate only. Nothing of substance to surface.
Overview
- Q1 fiscal 2026 results: Gross profit was $311.3M vs. $247.2M in Q1 fiscal 2025; operating income was $249.2M vs. $187M; net income attributable to Cal-Maine Foods was $199.3M, or $4.13 per basic and $4.12 per diluted share, vs. $150M, or $3.08 per basic and $3.06 per diluted share in the prior-year period; pre-tax income was $263.3M vs. $198M, both periods carrying a 24.4% effective tax rate.
- Shell egg pricing and volume: Net average selling price per dozen was $2.486 vs. $2.392 in the prior-year period; conventional average price was $2.539 vs. $2.424 and specialty was $2.396 vs. $2.335; total dozens sold increased 2.5% to 317,587 thousand, with specialty dozens up 7.5% to 118,294 thousand; the industry's monthly average layer hen flock from June–August 2025 was approximately 291.4 million, down 4.0% vs. the same prior-year period, reflecting ongoing HPAI supply impacts.
- Echo Lake Foods acquisition: Effective June 2, 2025, the Company acquired Echo Lake Foods, contributing $70.5M to prepared foods revenue and increasing cost of sales by $51.7M in Q1 fiscal 2026; prepared foods net sales rose 839.1% to $83.9M from $8.9M, while total net sales reached $922.6M vs. $785.9M (+17.4%).
- Feed costs and HPAI flock impact: Feed costs per dozen produced fell 4.3% ($0.02) primarily due to lower soybean meal prices (CBOT soybean meal averaged $281.75/ton, down 17.1%; corn averaged $4.23/bushel, up 4.9%); in calendar year 2025, an additional 42.4 million commercial layer hens and pullets were depopulated due to HPAI as of September 30, 2025, on top of 40.2 million in calendar 2024; the Company invested more than $80M in biosecurity since the 2015 outbreak.
- Liquidity and capital: Working capital was $1.6B at August 30, 2025 (current ratio 6.8); operating cash flow was $278.6M vs. $117.5M; $409.7M was used in investing activities including $275.3M net cash for Echo Lake Foods and $45.3M in capex; dividends paid were $114.2M; $450M remains under the $500M share repurchase program with no shares repurchased in Q1 fiscal 2026; a variable dividend of approximately $66.5M ($1.370 per share) is payable November 13, 2025 to holders of record October 29, 2025; material construction projects total $257.3M projected cost with $47.1M remaining, primarily cage-free layer and pullet houses ($26.1M remaining of $213.1M total).
Liquidity and Capital Resources
Boilerplate only. Nothing of substance to surface.
Critical Accounting Estimates
- Critical accounting estimates: No changes to critical accounting estimates identified in the 2025 Annual Report.
§ MORE SUMMARIES
More CALM Smart Summaries
Other filings for CAL-MAINE FOODS INC with a Smart Summary.
8-K$CALMCAL-MAINE FOODS INCSmart Summary
8-K Filing
Board expanded to 10 directors with two new independent appointments
8-K$CALMCAL-MAINE FOODS INCSmart Summary
8-K Filing
Appoints Dudley D. Wooley as independent director
8-K$CALMCAL-MAINE FOODS INCSmart Summary
8-K Filing
Acquires egg producer assets for $130M in cash
8-K$CALMCAL-MAINE FOODS INCSmart Summary
8-K Filing
Stockholders elect directors and ratify auditor at annual meeting
8-K$CALMCAL-MAINE FOODS INCSmart Summary
8-K Filing
Board expanded to eight directors, Melanie Boulden appointed
Never miss a CALM filing
Get real-time email alerts when CALM files with the SEC.