CAL-MAINE FOODS INC

ITEM

MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

OF

CONDITION

AND

RESULTS

OF

OPERATIONS

FORWARD-LOOKING

For

to

important

risks

and

that

could

affect

our

,

results,

or

cash

flow,

reference

is

made

to

the

under

Part I. Item 1A. Risk

Factors

. In

because

the

following discussion

forward

-looking

our

cash flow,

reference is made

to the disclosure set forth

under

Part I. Item 1A.

and

to

the

in

the

section

of

Part

I

preceding

Item

1 above

under

the

caption

“

Forward-Looking Statements

.”

COMPANY

OVERVIEW

Cal

Inc. (“Cal

-Maine

Foods,”

the

“Company,”

“we,” “us,”

“our”)

is the

largest

egg company

in the

U.S.

and a

leading

player in

the

food

headquartered

With

a strong

footprint,

Cal-

Maine Foods

provides nutritious,

affordable,

and sustainable

protein to millions of households

every day.

In fiscal 2026, we sold

1.2 billion

dozen

shell

eggs.

Our

total

flock

as

of

May

30,

of

50.0

million

layers

and

14.5 million

pullets and

breeders is the

largest in the

U.S.

The

shell

egg

spans

the

full

egg

value

ladder

—from

to

brown,

pasture

-raised

and

eggs—serving

both

retail

and

nationwide.

Cal

-Maine

Foods

also

participates

in

the

growing

foods

sector,

with

such

as

egg

folded

and

egg

hard

-cooked

eggs,

and

wraps.

Our

branded

Best®,

Land O’Lakes®,

Eggs®,

4Grain®,

Van’s

®, MeadowCreek

and

We sell

our products to a diverse group

of customers, including

and regional grocery store chains, club stores,

servicing independent

in the

U.S.,

and foodservice

distributors

serving restaurants,

stores,

healthcare

and education

facilities, and

hotels

the majority

of the

aim to

efficient,

state

located

close to our customers.

Our

three

primary

priorities:

expanding

and

foods,

pursuing disciplined

growth

through acquisitions

and leveraging

our scale, vertical

integration,

excellence and financial

strength.

Throughout

our

history, we

have acquired

other businesses in our industry. Since

1989, we have acquired

and integrated

28 businesses, and within

the last

2 fiscal

years, we

have made

various acquisitions

aimed

at furthering

our

growth strategy.

of

our

Part I. Item 1. Business – Acquisitions

.

Our fiscal year end is

the Saturday

closest to May 31. The fiscal years

2026, 2025 and

2024 each included 52 weeks. All

references

herein to

a fiscal

year

means

and

all references to

a year

mean

a calendar

year.

Our operating results are materially

by market

eggs and feed grains (corn and soybean

meal), which

are highly

volatile, independent

of each other, and

out of our control. Generally,

higher market

prices for eggs have

a positive impact

on our

financial results

while higher

market

feed grains

have a

negative impact

on our financial

results. Our

pricing for

shell

eggs

is

negotiated

with

our

on

individual

terms.

We

sell

our

at

prices

based

on

that

take

into

account,

in

varying ways, one of the independently

quoted regional wholesale market prices for shell eggs, our costs of production,

such as grain-based and

variations

of cost-plus arrangements, or hybrid models including cost of production

and wholesale market

prices.

Almost

all

of

our

shell

eggs

are

priced

and

sold

under

market

-based

or

the

hybrid

models

described above,

split almost evenly between such frameworks.

of our specialty shell eggs are

priced and sold under

that are based

on cost of production, although

we do have

some customers

that prefer market

-based pricing for

cage-

free

eggs. As

prices

typically do

not fluctuate

as much

as conventional

shell egg prices.

We

do not

sell eggs

directly to

or set the

prices at which eggs

are sold to

Retail sales of

shell eggs historically

highest during

the fall and winter

months

and lowest during

the summer

months.

Prices for

in response to

demand

factors and

a natural

spring

and early

summer.

Historically,

prices tend

start of the

school

year and

tend

to be highest

prior

to

holiday

periods,

Thanksgiving,

Christmas

and

Easter.

As

a

result,

we

have

experienced,

and

may

in the

future,

lower shell

egg selling

prices,

sales

volumes

and

sales (and

have

incurred, and

may

incur in

the future, net

losses)

in our first

and fourth

ending in August/September

and May/June,

Becaus

e

of

the seasonal

and quarterly

comparisons

of our sales and

results between different

within a single

are not

necessarily meaningful

Our

has

been greatly

by several

of HPAI

in recent

years.

HPAI

in 2015,

there were no

significant outbreaks

of HPAI

in the commercial

table

egg layer flocks

until February

through December

Thereafter,

there

were no HPAI

cases affecting

layers

until November

Since 2023,

of HPAI

have continued

to occur in

U.S. poultry flocks.

In 2024 and

2025, 40.2 million and 45.2 million commercial layer hens

were

depopu

lated

due to

HPAI,

To

date

in 2026,

through July

20,

2026,

19.2

million layer

hens and

pullets have

been depopulated

due to

HPAI.

An important

advantage

for Cal

-Maine Foods

is our ability to

meet

our customers’

evolving needs

with

a favorable

mix of

branded

and

private

-label products

and

cage-free, nutritionally

brown, pasture

-raised and

free-range eggs,

foods

and

description of

Part I. Item I. Business

.

The

Company

previously operated

as one

and

one reportable

segment. Effective

in the

fourth

quarter

2026,

determined its operations

are organized

into three reportable

segments:

(1) Conventional

Shell Eggs;

(2)

Shell Eggs; and (3) Prepared Foods.

As we have expanded

our prepared foods product

offerings throughout

these

align

with

how

the

reviews operating

results

and

makes

decisions

about

and strategic

initiatives. All

prior

fiscal year periods

recast to

reflect

the new reportable

on our

reportable segments,

see

Note 15 – Segment Reporting

in Part

II. Item

OVERVIEW

For fiscal

2026, we

of $2.9

billion and

of $316.7

We

recorded a

gross profit

of $672.0

million compared

to $1.9 billion

2025. The

decrease was

of a decrease

in the net

average

selling price

of

shell

eggs, primarily

shell egg prices, partially

offset

by an

of our

Foods segment.

Our

average

shell egg price

for

declined

50.9% compared

Average

shell egg price

per dozen declined

9.5% compared

to fiscal year 2025. Egg

prices declined

repopulation

of the egg layer

flock during fiscal

2026. According to the USDA, the size

of the layer hen flock was 312.0 million

hens at July 1, 2026, compared

to the five-year

average

of 308.0 million hens

.

American

Egg Board estimates

laying flock

as

of May

2026 at 340

–347

million

hens,

based

on

producer

data

collected

across

the

egg

above

USDA’s

published estimate

and

indicative

of abundant

egg supplies.

In fiscal 2026, prepared

foods accounted

for $244.8 million or 8.4% of our net sales. Prepared food sales for

fiscal 2026 increased

$240.8

million, compared

to our acquisition

of Echo

Lake

Foods in the

first quarter

prices

are

volatile,

cyclical,

and

by a

number

of

demand,

the

number

and

productivity

of

laying

hens

in

the

U.S.,

such

as HPAI,

severe

weathe

r

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,

with HPAI

in

fiscal

year

to the prior fiscal

year,

panic

-driven purchasing

activity appears

to have subsided,

and improved

pipeline availability

relative

to the

prior

appears

to have

reduced

the need

for accelerated

purchasing

or inventory

builds by

retailers

and

operators.

As

wholesale

shell

egg

prices

have

declined,

while

retail

shell

egg

prices

have

more

gradually.

RESULTS

OF OPERATIONS

CONSOLIDATED

RESULTS

Ended

2026 Compared

to

2025 Compared

to

May

May

$

$

$

(31.7)

%

83.2

%

income

350,186

312,452

(77.2)

391.8

Total

other income

60,818

66,603

47,519

(8.7)

40.2

Income

tax

expense

92,892

384,910

83,689

(75.9)

359.9

Less:

1,430

(1,816)

(1,606)

(178.7)

13.1

to

Cal

Inc.

$

316,682

$

$

277,888

(74.0)

%

339.0

%

Net Sales

for fiscal year

2026 was

$2.9 billion

to $4.3

billion in

fiscal

2025,

of $1.3

billion or

31.7%.

The

was primarily

due to

the decrease

in

prices for conventional

as the

layer

recovered

in 2025

fro

m

the recent

HPAI

,

offset

by sales growth

due to

made

during fiscal

2026, particularly

Foods.

discussion, refer

to “Segment

Results” within this

for fiscal year

2025 were $4.3

billion compared

to $2.3 billion in fiscal

2024, an increase

of $1.9 billion

or 83.2%.

The

increase was

due

to the

prices

due

to a resurgence

of HPAI

in 2024

and

2025,

which decreased

supply.

regarding the HPAI

outbreaks,

.

Income

For fiscal 2026, operating

income was $350.2 million

to $1.5 billion

in fiscal 2025, a decrease

of $1.2 billion, or 77.2%.

The

was

due

to

in

prices

for

offset

by

a

in

price

and

volume

of outside

egg purchases. For further

discussion, refer

to “Segment

Results” within this

Operating income was $1.5 billion

in fiscal 2025 compared

to $312.5 million

in fiscal 2024, an increase

of $1.2 billion,

or 391.8%.

The increase

was primarily

due to higher net average

selling prices,

shell eggs, and higher

volumes,

lower feed

ingredient prices,

offset

by an

increase in volume

and

price of outside

egg purchase

s.

regarding shell egg and

feed prices, refer

to

Part I. Item 1. Business – Prices for Shell Eggs and Feed Costs

for Shell Egg Production.

Other Income

(Expense)

Total

other

income

(expense)

of

items

not

charged

to,

or

related

to,

such

as

income

and

expense,

equity in

income

or loss

of unconsolidated

entities, and

patronage

dividends, among

other items. Patronage

to us from

our membership

in the EB cooperative.

We

recorded interest

income

of $46.7

fiscal

2026, compared

to $48.7

fiscal

,

due to slightly

lower cash and

cash equivalents

-for-sale balances

as the Company

used these investments

for

.

We recorded

interest expense

of $556

and $612

in

and 2025,

related

fees under

our Credit Facility described

below.

We

recorded interest

income

of $48.7 million

in fiscal 2025,

of $16.4

million compared

to fiscal 2024, primarily

due

to significantly

higher

cash

and

cash

-for-sale balances

and yields. We

expense

of $612

in fiscal 2025

primarily related

fees under

our Credit Facility.

Income

Taxes

For fiscal 2026,

our pre-tax income

was $41

1.0 million, compared

to $1.6 billion

for fiscal 2025.

We

a tax provision

of $92.9

million for

fiscal

2026 compared

to $384.9

million

For

the primary

between

the

U.S.

rate

of

21%

and

the

rate

of

22.6%

was

related

to

state

income

taxes.

For

fiscal

2025,

the

primary

between

rate of 21%

and the

of 24.0%

related

to state

income

taxes, federal

tax

credits, and

certain non

-taxable and non-deduc

tible

items. For

fiscal 2024, income

tax expense

was $83.7 million

with an effective

tax

rate of

23.2%.

Items

causing

our

tax

rate to

differ

from

the

federal

income

tax

rate of

21% are

state

income

taxes,

certain

federal

tax

credits and

certain

items included

in income

or loss

for financial

that

are not

included in

taxable

income

or loss

for income

tax

purposes, including

tax

exempt

interest income,

certain

nondeductible

and

or loss

interest.

was

$1.4

million for

fiscal

2026 compared

to a

net loss

of $1.8

million and a

net loss $1.6 million for fiscal 2025 and

fiscal 2024, respectively. The increase in net income attributable

to noncontrolling interest

for fiscal 2026

as compared

was due

sales volume

of our

Crepini Foods of

406%.

Net Income

Attributable

to Cal

Inc.

to Cal

Inc.

was

$316.7

or $6.65

per basic

and

$6.63

per diluted

share, compared

to $1.2

billion,

or $25.04

per basic and

$24.95

per diluted share

for fiscal 2025.

to Cal

Inc.

for

fiscal

was $277.9

or

$5.70

per basic

and

$5.69

per diluted

share.

SEGMENT

RESULTS

Ended

to

to

May

May

$

1,348,076

$

2,755,859

$

1,247,292

(51.1)

%

120.9

%

Cost of

sales

1,059,179

1,393,212

970,031

(24.0)

%

43.6

and

72,256

72,644

63,560

(0.5)

%

14.3

$

216,641

$

1,290,003

$

213,701

(83.2)

%

503.6

%

$1.4 billion,

or 51.1%

due to

of 50.9%

for

shell

eggs,

in

a

$1.4

billion

in

net

sales.

Volumes

for

shell

eggs

were

relatively

flat

Cost of sales decreased

$334.0 million, or

24.0% compared

to fiscal 2025, primarily due

to a 23.8% decrease

in the cost

sold as total

volume sold

was relatively flat.

sold decreased

due to a decrease

in the

price and

volume

of outside

egg purchases

to the

prior fiscal year.

Net sales increased

$1.5 billion, or

120.9% in fiscal 2025

to an increase of

99.7

%

in

prices

for

which

in

a

$1.4

billion

in

net

sales,

and

a 10.6%

in

volume

dozens

sold, which resulted in a $132

.5 million increase in net sales

.

$423.2 million,

or 43.6% in

to fiscal 2024, primarily due a 29.8%

in the

cost per dozen

sold as well

as an increase

of 10.6%

in sales volume.

sold increased

due

to the increase

in the

average

price and volume

of outside egg

purchases, which

was partially

offset

by a 5.6% decrease

cost primarily driven

by lower feed

ingredient prices

as our

9.1%.

general, and

$9.1 million,

or 14.3%

2025 compared

to fiscal 2024,

primarily due to increased

delivery and employee

related costs. The increase in delivery costs related

to a 10.6% increase

in volume of conventional

shell eggs sold due to our acquisition of ISE America,

Inc. (“ISE”) and

our facilities in Chase,

KS and Farwell, TX returning

to full operations

in fiscal 2025 following

HPAI

in

the third and fourth

of

fiscal

Employee

related

costs

due

to

an

in

bonuses

to

fiscal

For

more

regarding our acquisitions,

in Part II. Item 8. Notes

regarding HPAI,

.

Ended

to

to

May

May

$

1,070,458

$

1,154,951

$

873,619

(7.3)

%

32.2

%

Cost of

sales

777,920

717,411

648,236

8.4

%

10.7

and

110,994

103,938

89,188

6.8

%

16.5

$

181,544

$

333,602

$

136,195

(45.6)

%

144.9

%

$84.5

or

7.3%

2025, primarily

due to

a

of 9.5%

of

a $112.6

million decrease

in net

sales, partially

offset

by a

2.4% increase

in specialty

dozens

sold, resulting in

a $28.

million increase

in net sales.

$60.5

million, or 8.4%

due to

a 5.9% increase

in the cost per

dozen sold

as well as an

increase of

2.4% in sales

volume.

sold increased

as our

specialty shell

egg mix

shifted

to higher cost

types.

Selling, general,

expenses increased

$7.1 million,

or 6.8% compared

due to

a

$4.7

million

in

fees.

In

fiscal

2025,

the

higher

prices

for

shell

eggs

to

specialty shell

eggs diminished the

need to promote specialty

shell eggs, during

which time,

EB temporarily reduced

the

related

fees

for

certain

shell

egg brands

to encourage

branded

eggs.

delivery charges

$2.3 million as

dozens sold

increased 2.4

%

Net

sales

$281.3

or 32.

2%

in

fiscal

due

to

an

of

20.7%

in volume of specialty shell eggs sold,

which resulted in a $180.9

million increase in net sales, and a 9.5% increase

of specialty

shell eggs, which

resulted in a

$100.5

million increase in net

sales.

Cost of sales increased $69.2

million, or 10.7% in fiscal 2025

to fiscal 2024, primarily due to a 20.7% increase

in sales volume,

partially offset

by an 8.3% decrease

in the cost per dozen sold.

sold decreased

due to a 8.3%

decrease in our production

costs primarily

driven by lower

feed ingredient

prices in

to fiscal 2024.

general, and

expenses increased

$14.8 million,

or 16.5%

in fiscal 2025 compared

to fiscal 2024,

due to

an

$11.1

million increase in delivery expense

resulting from

higher contract

trucking expenses

.

Foods

Ended

to

to

May

May

$

244,802

$

4,050

$

—

5,944.5

%

100.0

%

Cost of

sales

185,370

4,511

—

4,009.3

100.0

and

25,550

1,658

—

1,441.0

100.0

$

33,882

$

(2,119)

$

—

(1,699.0)

%

100.0

%

$240.8 million,

due to

the significant

of our

foods segment following

our acquisition

of Echo Lake Foods.

regarding our

in Part

II. Item

8. Notes to Consolidated

$180.8 million compared

to fiscal 2025, primarily due to increased

resulting from the

of Echo

Lake

Foods.

general,

and

$24.1

to

fiscal

2025,

due

to

costs and

delivery charges

resulting from

of Echo

Lake

Foods.

$4.1

due to

of

Crepini during

fiscal

For

more

our

refer

to

in

Part

II.

Item

Notes

to

Cost of

sales increased

$4.5 million in fiscal

due to

of Crepini.

Sales,

general,

and

$1.7

million

in

fiscal

due

to

the

of Crepini.

Income

(Expenses)

Ended

to

to

May

May

income

$

19,044

$

42,091

$

33,566

(54.8)

%

25.4

%

SG&A

(a)

(108,353)

(127,141)

(94,516)

(14.8)

34.5

Gain (loss)

on involuntary

8,819

(156)

23,532

(5,753.2)

(100.7)

Gain (loss)

on disposal

assets

(1,391)

(26)

(637.1)

(1,096.2)

(a)

SG&A

of unallocated

costs, administrative

and

that

are not

directly related

or allocated

to the

Other –

segment

income

$23.0 million,

or 54.8

%

due to

a

decrease in

the

average

selling price of

our co-pack

egg sales as well as liquid and

frozen

SG&A

$18.8

million, or

14.8%, compared

due to

in

the accrual

for

bonuses

to the

prior

fiscal

year

as

well

as a

$15.0

million

adjustment

to

the

fair

value

of

with

the Fassio

Egg

Farms,

Inc.

(“Fassio”)

These

were

offset

by

of intangibles

that

were

from

our

during

fiscal 2026.

regarding our acquisitions,

in Part

II. Item 8. Notes

to

In fiscal

2026,

we recognized

$8.8

million of

gains from

conversions,

driven

by a

$7.5

million

gain recorded

in the first quarter

related to business

recoveries

with a weather

-related

event

that

occur

red in fiscal 2021.

Other –

segment

income

$8.5 million,

or 25.4%

due to

an

in volume

of liquid

egg

sold, primarily

related

to

of ISE,

which

a breaking

SG&A

increased $32.6 million

or 34.5% compared

to fiscal 2024, primarily

due employee related

costs which

due to

in employee

bonuses

and a $15.0

million adjustment

in

to a $5.5 million

adjustment

to increase the fair value of contingent

with the Fassio acquisition

and

professional

fees mainly

with $6.6 million

costs recorded

in the

fourth

quarter of

fiscal

2025 for

Foods acquisition.

These were

offset

by a

$19.6 million

in litigation

loss

accrual.

In

fiscal

2025,

loss

on

was

$156

to

a

$23.5

million gain

on

in fiscal 2024. The de

crease of $23.7

million was

to recoveries in

fiscal 2024

under indemnity

and

that

exceeded

the amortized

book

value

of the

covered

assets

and

our

direct costs,

related

to the

HPAI

at

our Kansas

and

Texas

facilities that

occurred in fiscal

.

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 acquisition

s

of businesses,

organic

growth

and

of

and

in

value

-added

,

and

capital

expenditures.

Working

Capital

and

Current Ratio

Our

working

capital

at

May

was $1.4

billion,

to $1.7

billion

at

May

The

calculation

of

working

capital is

defined as

current assets

less current liabilities.

Our current

ratio was

7.7 at May

to 6.4 at

May 31,

2025. The current

ratio is calculated

by dividing current assets

by current liabilities.

The increase

in our current

ratio is primarily

due

to the

in

total

current

specifically

payable

,

which decreased

by $114.1

million

to

May

31,

.

Due

to

factors

described

in

Part I. Item I. Business – Seasonality

, we

expect

our

need

for

working

capital

to be highest in the

fourth

and

first fiscal quarters

ending in May/

June and

August/September,

Cash

Flows from

Operating Activities

Net

cash

by

was

$479.8

million

for

fiscal

2026,

to

$1.2

billion

for

fiscal

The

decrease in

cash flow from

operating activities

resulted primarily

from lower

net average

egg sales prices per

dozen,

shell eggs, partially offset

by the increase

in volume and

higher price of outside

egg purchases

in the prior fiscal

year

.

Cash

Flows Used in Investing

Activities

For fiscal 2026, $503.8

million was used in investing activities, primarily due to the acquisition

of assets of Echo Lake, Creighton,

and

other

as

well

as

sales

and

of

to

$575.5

million used

in

investing

in fiscal 2025,

due to

of investment

of property,

plant and

and the

of ISE

.

of investment

were

$648.9

fiscal

to $1.2

billion in

fiscal

Sales and

of

were

$745.2

million

in

fiscal

2026,

to $907.6

million

for

fiscal

Cash

paid

for

was

$427.8

million

in

fiscal

2026,

related

to

the

Echo

Lake

and

s,

and

$116.2

million

in

fiscal

2025,

related

to

the

ISE

of

property,

plant

and

were

$151.2

$161.3

million

and

2025, respectively,

reflecting

progress

on

our

projects.

Cash

Flows Used in Financing

Activities

We

paid

totaling

$231.6

million

and

$330.3

million

in

fiscal

and

2025, respectively.

We

$131.1

million in shares of Common

Stock in fiscal 2026, compared

to $54.0 million in fiscal 2025, primarily under our

See “Share

Program,” below.

in Cash

and

Cash

Equivalents

As of

May

30,

2026, cash

and

cash

$386.9

million

since

May

31,

2025, compared

to

a

$262.5

million

during

fiscal

2025. The

is primarily

due

to

the acquisitions

of

Echo

Lake

Foods,

Brothers,

LLC,

Clean

Egg, LLC,

and Van’s

Foods, totaling

$452.6 million.

Refer to

to the

Note 2 –

for further

regarding our recent

acquisitions.

On

15,

2021,

we

entered

into

an

Amended

and

Restated

(as

amended,

the “Credit

Agreement”),

expiring November

21, 2026. The Credit Agreement

provides for

a senior secured

revolving credit facility (the

“Credit Facility”),

up to $250 million.

As of May 30,

2026, no amounts

were borrowed under

the Credit Facility.

As of May 30,

2026, we had

$5.9

standby

letters of credit,

which were

issued under

our

for the

benefit

Refer to Part II. Item 8. Notes

to the Financial Statements,

Note 10 – Credit Facility

for further information

our long-term

debt.

Share Repurchase

Program

In February

2025,

Board

of Directors (“Board”)

a $500

million share repurchase

program

authorizes the

in management’s

discretion, to repurchase

shares of our

common

stock from

time

to time for

an aggregate

price up

to $500

million

(exclusive of

any fees,

taxes,

commissions

or other

related

to such

repurchases),

subject to

market

actual

timing, number

and value

under the program

will be determined

by management

in

its discretion and

will depend

on a number of factors,

including, but not

limited

to,

the

market

price

of

our

common

stock

and

general

market

and

The

Company

1,571,950

and 551,876

shares during fiscal 2026

and 2025,

under the program.

As of the end of fiscal

2026, we had

remaining authorization

up to

$320.7

million under the repurchase

expects to strategically

and

opportunistically

shares from

time to time

through solicited or unsolicited

in the open

market,

in privately

negotiated

or by other

means

with securities laws.

The

Company

expects that share

repurchases

under the program will be funded

from existing cash balances

and future

free cash flow.

The

share

program

does not

obligate

the

Company

to repurchase

any

specific amount

of shares,

does

an

expirati

on

date,

and

may

at

any

time

without

See

Part II. Item 5. Issuer

Purchases of Equity Securities

and

Item

8. Notes to the

Note 11 – Equity

for further

.

with our variable

dividend policy,

we

will not

pay a cash

to holders

of our

Common

Stock with

respect

to our fourth

2026. The Company

will

not pay

a dividend for

is profitable

on a

basis

from

of the

last quarter

a

paid.

At the

end

of the

2026, the

amount

of cumulative

losses to be recovered

before

payment

of a

$35.9 million.

Material

Cash

Requirements

Material

cash

for operating

consist

of feed

and

costs,

related

costs,

capital

and

other

general

Our

cash

for growth capital

expenditures consist

of our construction

projects to increase

capacity of

and cage

-free shell egg production. We

believe our current

cash balances,

investments,

cash flows from

and

borrowings under

our

will be

sufficient

to fund

our

cash

needs for

at

least the

next

months

and to fund our capital commitments

currently in

place thereafter.

Future acquisitions of businesses may

require additional

financing.

IMPACT

OF RECENTLY

ISSUED ACCOUNTING

STANDARDS

For information

on changes

in accounting

and new accounting

principles, see

“

New Accounting

Pronouncements

and

Policies

” in Part II. Item

8. Notes to Consolidated

Note 1 - Summary of Significant Accounting Policies

.

CRITICAL

ACCOUNTING

ESTIMATES

The preparation

of financial statements

in

with

U.S. GAAP requires

to make estimates

that affect

the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of

revenues

and expenses

during the reporting period. Actual results could differ

materially from

these estimates. Critical accounting

are those estimates

made

with

GAAP that

involve a significant

level of estimation

uncertainty

had or are

impact

on the

or results of operations.

Our critical accounting

are described

below.

Combinations

applies the acquisition

method

of accounting,

which requires

that once

control is obtained,

all the

assumed,

amounts

interests,

at

their respective

fair values

at

the

date

of acquisition.

The

excess

of

the

price

over

fair

values

of

assets

and

liabilities is

as

goodwill.

We

use

various

models

and

methods

to

the

fair

values

of

assets

and

such

as

and

bottom-up

for inventory,

cost method

and

market

for property,

relief-from-royalty

and

excess

earnings to

value intangibles.

in valuing

certain intangible

assets include,

but are not limited

to, the amount

and

timing of future

cash

flows, growth rates, discount

useful lives.

The

fair

values

of

assets

and

are

internally

and

and

the

use

of

various

techniques.

When

a market

value

is

not readily

available,

our

methodology

the

life of

and

is required

as management

determines

market

value

for those

assets.

Due

to

volatile

egg

prices

and

feed

costs,

unanticipated

market

changes,

events,

or

may

occur that

could affect

the estimates

and

used,

which could result in subsequent

impairments.

of eggs,

feed, supplies

and flocks

are valued

at the lower

of

cost or net

realizable

value. If

market

prices

for

eggs

and

feed

grains move

lower,

we

record

to write

down

the

values

of eggs

and

feed

inventories to

fair market

value. The cost associated

with flock inventories,

consisting principally

of chick purchases

or hatching

costs,

feed,

labor,

contractor

and

costs,

are

during

the

hatching

and

growing

periods

of

weeks. Capitalized

flock

costs

are

then

over

the

flock’s

life,

one

to

two

years. Judgment

exists in

the flock’s

life including

factors

such as

laying rate

and egg

size, molt

cycles,

and customer

demand

.

other factors

such as hen

type

or weather

could affect

the productive

life. These

factors

could make

our estimates of productive

life

differ

materially from

actual results. Flock mortality

is charged to cost of sales

as

incurred. High

from

disease

or

extreme

temperatures

will

result

in

abnormal

write-downs

to

flock

inventories.

continually

monitors

each

flock

and

to

take

appropriate

actions

to

minimize

the

risk

of

loss.

As a result

of acquiring

had $97.1

million of goodwill

as of

May 30,

2026, representing

3.1%

assets

and

3.7%

of

equity.

is

for

(or

more

frequently

if

arise) by first performing

a qualitative

to determine whether a quantitative

test is necessary

.

After

the totality

of events

or circumstances,

if we

it is

more likely

than

value

of a reporting

unit

is less

than

amount,

then

we perform

tests to determine

the

magnitude

of any

impairment.

During

our

annual

test,

which

was

the

first

day

of

the

fourth

we

that

passed

the

qualitative

and

no quantitative

of goodwill impairment

was necessary

in fiscal 2026.

As part

of the

change

to

our

2026,

the

of the

units were reallocated

to the new reporting units on a relative

fair value basis

as of the date of the reorganization.

of fair

value

involved the

use of

and

of goodwill,

performed

a

test, for

which

the

Company

fair

value

of

each

unit

exceeded

its

value

and

no

was

identified.

When

the

Company

acquires

a

new

location,

a

is made on how to

allocate

among

the reporting

units. See

Note 8 - Goodwill and Other Intangible Assets

for updated

disclosures regarding the

of goodwill.

Judgment exists

in management’s

of the qualitative

factors

which include macroeconomic

the current

egg

industry environment,

cost inputs such as feed ingredients

and overall financial

performance.

Furthermore, judgment

exists in the

of the

of

whether

it

is more

likely

than

the

fair

value

of

a

reporting unit

is less than

amount.

Uncertainty

exists due to

uncontrollable

events

that

could occur

that

could negatively

affect

our operating

Revenue

Recognition

Revenue

recognition

is

upon

satisfaction

of the

which

occurs

upon

shipment

or

delivery to

a customer

based

on terms

of the

sale.

Revenues

are

in

an

amount

that reflects

the net

we

expect

for

of the

products. The Company

periodically offers sales incentives

or other programs

such as rebates,

discounts,

coupons, volume

-based

incentives,

guaranteed

other programs.

The

Company

records an

for costs

which

as a reduction

in revenue

at the time

of sale

using

redemption

rates

of

each

The

Company

regularly

reviews

these

and

any

between

the

costs

and

actual

realization

would be recognized

in the

subsequent

period.

As the

noted

above

on historical information,

we do

not believe

that

there will

be a

change

in the

used to recognize revenue.

if actual

results varied significantly

from

our estimates,

it could

expose

us to material

gains or losses.

Loss Contingencies

evaluates

whether a loss

exists,

and if the

of a contingency

indicates

it is

probable that

a

material loss

has

been incurred

and the

amount

of the loss can

be reasonably

estimated,

loss would be accrued

in

the costs

of litigation as

they

are incurred.

accrued

$4.0 million in litigation

loss contingency

in fiscal 2026

and $19.6

fiscal 2024.

There

were no

loss contingency accruals

for fiscal 2025. Our evaluation

of whether loss

contingencies exist

primarily relates to litigation

matters.

The outcome

of litigation is uncertain due to,

among

other things, uncertainties

regarding the facts

that

will

be established

during

the

how

the

law

will

be

applied

to

the

facts

established,

and

the

calculation

of

any

damages

or the

costs

of

any

relief.

If

the

facts

discovered

or

the

change, future

accruals for

loss contingencies

may

be required. Results

may

be materially

by

losses or

a loss contingency

accrual

resulting from adverse

Income

Taxes

We

our

by estimating

our permanent

differences resulting

from

differing

treatment

of items

for tax

and accounting

purposes. Judgment

and uncertainty

exist with management’s

application

of tax regulations

and evaluation

of the

more-likely-than

-not recognition

and measurement

thresholds. We are periodically

audited

by taxing authorities.

An adverse

tax

a negative

impact

on our effective

tax

rate

and

our results of operations.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES

ABOUT

MARKET RISKS