CAL-MAINE FOODS INC

Discussion

and Analysis

of Financial

Condition

and Results

of Operations

–

HPAI.”

We have taken

proactive steps to

help mitigate the tight

egg supply situation across the country.

Our efforts resulted in a

2.6%

and 12.7%

our average

number of

layer hens

and breeder

flocks, respectively,

during the

2026 compared to

the same prior-year

period. Total

chicks hatched increased 65.1%

during the second

quarter of fiscal

2026,

the

quarter.

We

also

to

invest

in

expansion projects

within

our

current operations

that

are

expected to add approximately 1.1 million

cage-free layer hens

and 250,000 pullets in fiscal 2026.

CAGE-FREE EGGS

Ten

states

have passed

legislation or

regulations mandating

minimum space

or cage-free

requirements for

or

mandated

the

sale

of

only

cage-free eggs

and

egg

in

their

states,

with

implementation of

these laws

ranging

from

January 2022

to

January 2030.

These states

represent approximately

27% of

the

U.S. total

population according

to

the

U.S.

Census. California,

Massachusetts, Colorado, Michigan,

Oregon, Washington,

and Nevada,

which collectively

represent

approximately 23% of the total estimated U.S.

population,

have cage-free

legislation currently in effect.

A significant number of our customers have announced goals to either exclusively offer cage-free eggs or significantly increase

the

volume

of

cage-free egg

sales

in

the

future,

subject

in

most

cases

to

availability

of supply,

affordability

and

consumer

demand, among other contingencies. Our customers sell

initiatives and product mix are constantly

changing making it difficult

to accurately predict customer requirements for cage-free

eggs. We

are focused on

adjusting our cage-free production capacity

with a

goal of meeting the

future needs of

our customers in light

of changing state requirements

and our customers’

goals. As

always, we strive to offer a

product mix that aligns with current and anticipated customer purchase decisions. We

are engaging

with our customers to

help them meet their announced goals and

needs. We have

invested significant capital in

recent years to

acquire

and

construct

facilities,

and

we

expect

our

focus

for

future

expansion

will

to

include

facilities. Our volume of cage-free egg sales has continued to increase and account for

a larger share of our product mix.

In the

second

fiscal

year

2026,

egg

revenue

represented

approximately

33.3%

of

our

total

shell

egg

revenue,

compared to 23.4% in the second quarter of fiscal year 2025. At the

same time, we understand the importance of our continued

ability to

provide conventional

eggs in

order to

provide our

customers with a

variety of

egg choices and

to address

hunger in

our communities.

For

information,

see

the

Annual

Report,

Part

I

Item

1,

“Business

–

Eggs,”

“Business

–

Growth

Strategy” and

“Business –

Government Regulation,” and

the first

risk factor in

Item 1A,

“Risk Factors” under

the sub-

heading “Legal and Regulatory Risk

Factors.”

Index

ACQUISITIONS

Effective October 10, 2025, the Company acquired certain

assets of Clean Egg, LLC (“Clean Egg”) based

in Langwood, Texas,

for approximately $23.7 million. The

assets acquired included 677 thousand

brown cage-free and free-range layers and

pullets

and other inventory,

machinery and equipment related to its

processing facility and contract production.

See further discussion

in

Note 2 – Acquisitions

of the Notes to Condensed Consolidated

Financial Statements included

in this Quarterly Report.

Effective June

2,

2025,

acquired Echo

Lake Foods,

LLC (formerly

Foods,

Inc.) and

certain related

companies

(collectively

“Echo

Lake

Foods”).

Echo

Lake

Foods

is

based

in

Burlington, Wisconsin

and

produces,

packages,

markets and distributes prepared foods, including

waffles, pancakes, scrambled eggs, frozen

cooked omelets, egg patties, toast

and diced

eggs.

The

acquisition

has expanded

our prepared

foods

product line

and

customer base.

See

further discussion

in

Note 2 – Acquisitions

of the

Notes to

Financial Statements

included in

this

Quarterly Report.

Our

previously announced projects to increase

efficiency and expand production capacity are ongoing and expected

to be completed

in

fiscal 2027.

While these

initiatives are

underway and

are expected

to

drive higher

output, improve

efficiency and

provide

greater operational

flexibility once

complete, Echo

has and

will experience

a temporary

reduction in

production

volumes

and

higher

costs,

which

began

late

in

the

second

fiscal

and

are

expected to

through

the

remainder of fiscal 2026.

During the

third quarter of

fiscal 2025, we

acquired certain assets

of Deal-Rite Foods,

Inc. and certain of

its affiliates

(“Deal-

Rite”). The assets acquired included two feed mills, storage facilities, usable grain, vehicles,

related equipment and a retail feed

sales business located in

North Carolina. The acquired assets

will produce and

deliver feed

to our nearby shell

operations.

During

the

second

quarter

of

fiscal

2025,

we

completed

a

strategic

with

Crepini

LLC,

establishing

a

new

egg

products and prepared foods venture. Crepini

LLC, founded in 2007,

grew its brand throughout the U.S.

and Mexico featuring

egg

wraps,

protein

pancakes,

crepes,

and

wrap-ups,

which

are

sold

online

and

in

over

3,500

retail

stores.

The

new

entity,

located

in

Hopewell

Junction,

New

York,

operates

as

Crepini

Foods

LLC

(“Crepini”).

We

capitalized

Crepini

with

approximately $6.75

cash to

purchase additional equipment

fund working

capital in

exchange

for a 51% interest in the new venture.

Crepini LLC contributed its existing assets and business

in exchange for a 49%

interest in

the new venture.

In

fiscal

2022,

we

announced a

strategic

in

a

new

entity,

MeadowCreek

Food,

LLC

(“MeadowCreek”), which

became a majority-owned subsidiary of

the Company. During the fourth quarter of fiscal 2023, MeadowCreek

began operations

with

a

focus

on

being

a

leading

provider

of

hard-cooked

eggs.

During

the

second

fiscal

2025,

we

acquired

the

remaining ownership interests in MeadowCreek

and it became a wholly-owned subsidiary

of the Company.

During the

first quarter of

we acquired substantially

all the

commercial shell egg

production, processing

and egg

products breaking

assets of

ISE

America, Inc.

and certain

of its

affiliates (“ISE”).

The assets

acquired included

shell

and processing

facilities

with

a capacity

at

the

time

of acquisition

of approximately

4.7

million

laying

hens, including 1.0 million cage-free, and 1.2

million pullets, feed mills,

approximately 4,000 acres of land, inventories and an

egg products breaking facility. The acquired assets also include

an extensive customer distribution network across

the Northeast

and Mid-Atlantic states,

and production operations in

Maryland, New Jersey,

Delaware and South Carolina.

These production

assets

are

our

first

in

Maryland,

New

Jersey

and

Delaware. We

believe

this

acquisition provides

us

with

an

opportunity to

significantly enhance our market reach

in the Northeast and Mid-Atlantic states.

EXECUTIVE OVERVIEW

For the

second quarter and

the first

twenty-six weeks of

fiscal 2026,

we recorded a

gross profit

of $207.4

$518.7

to

$356.0

million

and

$603.3

for

the

same

periods

of

fiscal

2025,

primarily driven by a decrease

in the net average selling price

of shell eggs, particularly conventional eggs.

Our net

price per

dozen

for shell

eggs for

the

of

fiscal 2026

declined 26.5%

to

$2.014

from

$2.740 in the prior-year period. Average

conventional egg prices per dozen declined 38.8% to $1.802 from $2.943 in the prior-

year period. Average specialty

egg prices per dozen declined

0.8% to $2.369

from $2.387 in the prior-year

period. Our dozens

sold for the second quarter of

fiscal 2026 decreased

2.2% compared to the second quarter of fiscal 2025.

Wholesale shell

egg prices are

volatile, cyclical,

and impacted by

a number

of factors, including

consumer demand, seasonal

fluctuations, the

number and

productivity of

laying hens

in the

U.S., outbreaks

of agricultural

diseases such

as HPAI,

severe

weather patterns and

retailers go-to-market strategies and how

they manage their inventories.

We

believe the

recent decline in

wholesale

egg

prices

reflects

improved

egg

supply

and

more

normalized

demand

patterns,

disruptions

Index

associated with HPAI in the prior year. Compared to the same period last year, panic-driven purchasing activity appears to have

subsided, and improved

pipeline availability relative

to the

prior-year period appears

to have reduced the

need for accelerated

purchasing or

inventory builds by

retailers and foodservice

operators. As a

result, wholesale prices have

declined, while

retail

prices have adjusted more gradually.

The daily

average price for

the Urner

Barry Southeast

Large Index

in the

2026 fell

38.3%, while

the

USDA daily average price

for large shell eggs dropped 40.8% compared to the same

period last year.

Following the end of the quarter, the

Urner Barry Southeast Large Index continued to decline, falling from $2.69 on November

28, 2025, to $1.21 on December

30, 2025, a decrease

of 55.0%.

According to the USDA, the monthly average size of the layer hen flock from September through November 2025 (which

most

closely aligns

with our

second fiscal quarter)

was approximately

303.6 million

hens, a decrease of

5.5 million

hens, or

1.8%,

compared to the same period in

the previous year.

During the second quarter of fiscal 2026, 2.7

million hens were depopulated

due

to

HPAI,

with

7.4

million

during

the

same

period

of

fiscal

2025,

representing

a

63.5%

reduction

in

depopulations.

For more information about historical shell egg prices, see

Part I, Item 1. “Business – Price for Shell Eggs” of our 2025 Annual

Report.

Prepared food sales for

the second quarter of fiscal 2026 increased

$61.2 million, compared to the second fiscal quarter

2025,

due to

our acquisition

of Echo

Lake

Foods in

the

first

fiscal 2026.

See

above

for

discussion of

temporary reduction in production volumes

which contributed to the $22.7

million decrease in prepared foods sales, compared

to first fiscal quarter of 2026.

Our farm production costs per

dozen produced for the

second quarter of

fiscal 2026 increased 2.8%,

or $0.03 compared to

the

prior year

period, primarily

due to

higher other

farm production

costs. Other

farm production

costs increased 7.4%

due to high

facility costs compared to the comparable period in

the prior year.

Feed costs per dozen produced decreased 1.2%,

or

$0.01

in

the

second

quarter

of

fiscal

2026,

the

second

quarter

of

fiscal

2025,

due

to

lower

feed

ingredient prices. For information about historical corn and soybean meal

prices, see Part I, Item 1.

“Business – Feed Costs for

Shell

Egg

Production” of

our 2025

Our prepared

foods

cost

of sales

increased $46.0

million

for the

second

quarter of fiscal 2026 compared

to the prior-year period,

primarily due to the acquisition of

Echo Lake Foods.