Risk Factors - CALM

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Item 1A. Item I. Risk Factors

and

Part II. Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - HPAI

.

Given

historical

consumption

trends,

we believe

that general

demand

for

eggs in

the U.S.

increases basically

in line

with the

overall

U.S.

population

growth;

however,

specific

events

can

impact

egg

supply

and

consumption

in

a

particular

period,

as

occurred with the 2015 HPAI outbreak, the COVID-19 pandemic (particularly during

2020), and the most recent

HPAI outbreaks

starting in early 2022 and

again in late 2023. For fiscal

2024, shell egg household penetration

is approximately 97%. According

to the

USDA’s

Economic

Research Service,

estimated annual

per capita

consumption

in the

United

States between

2019

and

2023

varied,

ranging

from

279

to

292

eggs

which

is

directly

impacted

by

available

supply.

The

USDA

calculates

per

capita

consumption by dividing total shell egg disappearance in the U.S. by

the U.S. population.

The most significant

shift in demand

in recent years

has been among

specialty eggs, particularly

cage-free eggs.

For additional

information, see “Specialty Eggs.”

Prices for Shell Eggs

Wholesale shell egg sales prices

are a critical component

of revenue for the Company.

We sell the

majority of our conventional

shell eggs at prices

based on formulas

that take into

account, in varying

ways, independently quoted

regional wholesale market

prices for shell eggs or formulas

related to our costs of production,

which include the cost of corn

and soybean meal. We

do not

sell eggs directly to consumers or set the prices at which eggs are sold to consumers.

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.

and outbreaks

of agricultural

diseases such

as HPAI.

We

believe the majority of

conventional shell eggs sold in

the U.S. in the retail

and foodservice channels are

sold at prices that take

into

account,

in

varying

ways,

independently

quoted

wholesale

market

prices,

such

as

those

published

by

Urner

Barry

Publications,

Inc.

(“UB”)

or the

USDA

for

shell

eggs;

however,

grain-based

or variations

of

cost

plus arrangements

are

also

commonly utilized.

The weekly

average price for

the southeast region

for large white

conventional shell

eggs as quoted

by UB is

shown below for

the past three

fiscal years along with

the five-year average

price. The actual prices

that we realize on

any given transaction

will

6

not necessarily equal quoted market

prices because of the individualized terms

that we negotiate with

individual customers which

are

influenced

by many

factors.

As further

discussed

in

Part II. Item 7. Management’s Discussion and Analysis – Results of

Operations

, egg prices in fiscal 2022 through fiscal 2024 were significantly impacted by HPAI.

Wholesale prices for cage-free eggs are quoted by independent

sources such as UB and USDA.

There is no independently quoted

wholesale

market

price

for

other

specialty

eggs

such

as

nutritionally

enhanced,

organic,

pasture-raise

and

free-range

eggs.

Specialty eggs are typically sold at

prices and terms negotiated directly with

customers and in the case of cage-free

eggs, can be

sold at

prices that

take into

account independently

quoted markets.

Historically,

prices for

specialty eggs

have generally

been

higher due to

customer and consumer willingness

to pay more

for specialty eggs. We utilize several

different pricing mechanisms;

however, the majority of our specialty eggs are typically sold at prices

and terms negotiated directly with customers.

As a result,

specialty egg prices do not fluctuate as much as conventional pricing.

Depending on market conditions, input costs and individualized contract terms, the price we receive per dozen eggs in any given

transaction may be more than or less than our farm production and other costs per

dozen.

Feed Costs for Shell Egg Production

Feed is a primary cost component in

the production of shell eggs and

represented 56.0% of our fiscal 2024 farm

production costs.

We

routinely fill

our storage

bins during

harvest season

when prices

for feed

ingredients, primarily

corn and

to a

lesser extent

soybean meal,

are generally

lower.

To

ensure continued

availability of

feed ingredients,

we may

enter into

contracts for

future

purchases

of

corn

and

soybean meal,

and

as part

of these

contracts,

we

may

lock-in

the basis

portion

of our

grain

purchases

several months

in advance.

Basis is

the difference

between the

local cash

price for

grain and

the applicable

futures price.

The

difference can be

due to transportation

costs, storage costs,

supply and demand,

local conditions and

other factors. A

basis contract

is a common

transaction in the

grain market

that allows us

to lock-in a

basis level for

a specific delivery

period and

wait to set

the futures price at a later date. Furthermore, due to the more limited supply for organic ingredients, we may commit to purchase

organic

ingredients

in

advance

to

help

assure

supply.

Ordinarily,

we

do

not

enter

into

long-term

contracts

beyond

a

year

to

purchase corn and

soybean meal or

hedge against increases

in the prices

of corn and

soybean meal. As

the quality and

composition

of feed

is a

critical factor

in the

nutritional value

of shell

eggs and

health of

our chickens,

we formulate

and produce

the vast

majority of our own feed at our feed mills located near our production plants. Our annual feed requirements for fiscal

2024 were

1.9 million tons of

finished feed,

of which we

manufactured 1.8 million tons.

We currently have the

capacity to store

210 thousand

tons of corn and soybean meal, and we replenish these stores as needed

throughout the year.

7

Our primary feed ingredients, corn

and soybean meal, are commodities that

are subject to volatile price changes due

to weather,

various supply

and demand

factors, transportation

and storage

costs, speculators,

agricultural, energy

and trade

policies in

the

U.S. and internationally, and global instability that could disrupt the supply chain. We purchase the vast majority of our corn and

soybean meal from U.S sources but may be forced to purchase internationally when U.S. supplies are not readily available. Feed

grains are currently

available from an

adequate number of

sources in the

U.S. As a

point of reference,

a multi-year comparison

of the average of daily closing prices

per Chicago Board of Trade for each quarter in our fiscal

years 2020-2024 are shown below

for corn and soybean meal:

Shell Egg Production

Our percentage of dozens produced to sold was 88.8%

of our total shell eggs sold in fiscal 2024.

We supplement

our production

through purchases of eggs from others

when needed. The quantity of eggs purchased will vary based on many factors

such as

our own production capabilities and current market conditions. In

fiscal 2024, 91.2% of our production came from company-

owned facilities, and 8.8% from contract producers. The majority

of our contract production is with family-owned farms for

organic, pasture-raised and free-range eggs. Under a typical arrangement

with a contract producer, we own the flock, furnish

all

feed and critical supplies, own the shell eggs produced and assume market risks. The

contract producers own and operate their

facilities and are paid a fee based on production with incentives for performance.

The commercial production

of shell eggs requires a source

of baby chicks for laying

flock replacement. We

supply the majority

of

our

chicks

from

our

breeder

farms

and

hatch

them

in our

hatcheries

in

a

computer-controlled

environment

and

obtain the

balance from commercial

sources. The chicks

are grown in

our own pullet

farms and are

placed into the

laying flock once

they

reach maturity.

After eggs are

produced, they are

cleaned, graded and

packaged. Substantially all

our farms have

modern “in-line” facilities

which

mechanically

gather,

clean,

grade

and

package

the

eggs

at

the

location

where

they

are

laid.

The

in-line

facilities

generate

significant efficiencies

and cost

savings compared

to the

cost of

eggs produced

from non-in-line

facilities, which

process eggs

that

have

been

laid

at

another

location

and

transported

to the

processing

facility.

The

in-line

facilities

also

produce

a

higher

percentage of USDA Grade A eggs, which sell at higher prices. Eggs

produced on farms owned by contractors are brought to our

8

processing plants to be graded

and packaged. We maintain a Safe Quality Food

(“SQF”) Management Program which is

overseen

by our

Food Safety

Department and

senior management

team. As

of June

1, 2024,

every Company-owned

processing plant

is

SQF certified. Because shell eggs are perishable, we do not maintain large

egg inventories. Our egg inventory averaged

six days

of

sales during

fiscal

2024. We

believe

our constant

focus

on production

efficiencies

and

automation

throughout

our vertical

integrated operations enable us to be a low-cost supplier in our markets.

We

are proud

to have

created and

upheld

what we

believe is

a leading

poultry

Animal Welfare

Program

(“AWP”).

We

have

aligned our AWP

with regulatory,

veterinary and our third-party certifying

bodies’ guidance to govern the welfare

of animals in

our direct care,

our contract farmers’

care. We

continually review our

program to monitor

and evolve standards

that guide how

we hatch chicks,

rear pullets and nurture

breeder and layer hens.

At each stage

of our animals’ lives,

we are dedicated to

providing

welfare

conditions

aligned

to

our

commitment

to

the

principles

of

the

internationally

recognized

Five

Freedoms

of

Animal

Welfare

.

We

do not

use artificial

hormones in

the production

of our

eggs. Hormone

use in

the poultry

and egg

production industry

has

been

effectively

banned

in

the U.S.

since

the

1950s.

We

have

an

extensive

written

protocol

that

allows

the

use

of

medically

important

antibiotics

only

when

animal

health

is

at

risk,

consistent

with

guidance

from

the

United

States

Food

and

Drug

Administration

(“FDA”)

and

the

Guidance

for

Judicious

Therapeutic

Use

of

Antimicrobials

in

Poultry,

developed

by

the

American Association of Avian Pathologists. When antibiotics are medically necessary, a licensed veterinary

doctor will approve

and

administer

approved

doses

for

a

restricted

period.

We

do

not

use

antibiotics

for

growth

promotion

or

performance

enhancement.

Specialty Eggs

We

are

one

of

the

largest

producers

and

marketers

of

value-added

specialty

shell

eggs

in

the

U.S.,

which

continues

to

be

a

significant and growing segment

of the market.

We classify cage-free, organic, brown, free-range, pasture-raised and

nutritionally

enhanced as specialty eggs for accounting and

reporting purposes. Specialty eggs are intended to

meet the demands of consumers

sensitive to environmental, health and/or animal welfare issues and

to comply with state requirements for cage-free eggs.

Ten

states

have

passed

legislation

or

regulations

mandating

minimum

space

or

cage-free

requirements

for

egg

production

or

mandated the sale of

only cage-free eggs and

egg products 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 2020 U.S. Census.

California,

Massachusetts, Colorado, Oregon,

Washington,

and Nevada, which collectively

represent approximately 20% of

the

total estimated U.S. population have cage-free legislation in effect

currently.

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 typically do not commit to long-term purchases of specific quantities or types of eggs

with us, and as a result, it

is 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 customer’s 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 cage-free facilities, and we expect our focus for future

expansion will continue to

include cage-free

facilities. Our

volume of

cage-free egg

sales has

continued to

increase and

account for

a larger

share of

our

product mix. Cage-free egg revenue represented approximately 29.5% of our total net shell egg

sales for fiscal year 2024. At the

same time, we understand the importance of our continued

ability to provide affordable conventional eggs in order to

provide our

customers with a variety of egg choices and to address hunger in our communities.

Branded Eggs

We are a member of the Eggland’s

Best, Inc. cooperative (“EB”) and produce, market, distribute and sell

Egg-Land’s

Best®

and

Land O’

Lakes®

branded eggs

under license

from EB

at our

facilities under

EB guidelines.

EB hens

are fed

a proprietary

diet

and offerings

include nutritionally

enhanced, cage-free,

organic, pasture

-raised and

free-range eggs.

Land O’

Lakes®

branded

eggs are produced by hens that are fed a whole-grain vegetarian diet and

include brown, organic and cage-free eggs.

In 2023, EB was the third best-selling dairy brand in the U.S. The top two best-selling branded specialty egg SKUs in 2023 were

EB branded eggs

and seven

out of

10 best-selling SKUs

are EB

branded eggs. In

2023, our

sales (including sales

through affiliates)

represented approximately 50% of EB branded eggs and 45% of

Land O’ Lakes®

branded eggs nationwide.

9

Our

Farmhouse Eggs

® brand eggs are

produced at our

facilities by hens that

are provided with a

vegetarian diet. Our

offerings

of

Farmhouse Eggs

® include cage-free, organic and pasture raised eggs.

We market organic, vegetarian and omega-3 eggs under

our

4-Grain®

brand, which consists of

conventional and cage-free

eggs. Our

Sunups®

and

Sunny Meadow®

brands are sold

as

conventional eggs.

We also produce,

market and distribute private label specialty and conventional shell eggs to

several customers.

Egg Products

Egg products are shell eggs broken

and sold in liquid, frozen, or

dried form. We

sell liquid and frozen egg products

primarily to

the institutional, foodservice and food manufacturing sectors in the U.S. Our egg products are primarily sold

through our wholly

owned subsidiaries

American Egg

Products, LLC

located in

Georgia and

Texas

Egg Products,

LLC located

in Texas.

In fiscal

2024, egg product sales constituted approximately 3.8% of our revenue.

During March 2023,

MeadowCreek Food,

LLC (“Meadowcreek”),

a majority-owned subsidiary,

began operations with

a focus

on

being

a

leading

provider

of hard

-cooked

eggs.

We

serve

as the

preferred

supplier

of specialty

and

conventional

eggs that

MeadowCreek

needs

to

manufacture

egg

products.

MeadowCreek’s

marketing

plan

is

designed

to

extend

our

reach

in

the

foodservice and retail marketplace and bring

new opportunities in the restaurant,

institutional and industrial food products arenas.

Summary of Conventional and Specialty Shell Egg and Egg Product

Sales

The

following

table

sets

forth

the

contribution

as

a

percentage

of

revenue

and

volumes

of

dozens

sold

of

conventional

and

specialty shell egg and egg product sales for the following fiscal years:

2024

2023

2022

Revenue

Volume

Revenue

Volume

Revenue

Volume

Conventional Eggs

Branded

4.3

%

4.9

%

6.6

%

6.4

%

6.5

%

7.1

%

Private-label

46.8

54.4

52.9

52.6

48.3

54.9

Other

4.4

5.8

5.7

6.3

5.0

7.0

Total Conventional

Eggs

55.5

%

65.1

%

65.2

%

65.3

%

59.8

%

69.0

%

Specialty Eggs

Branded

20.3

%

17.4

%

18.0

%

20.4

%

24.2

20.0

%

Private-label

18.5

16.3

11.3

12.9

11.3

9.5

Other

1.0

1.2

1.1

1.4

1.0

1.5

Total Specialty Eggs

39.8

%

34.9

%

30.4

%

34.7

%

36.5

%

31.0

%

Egg Products

3.8

%

3.9

%

3.4

%

Marketing and Distribution

In fiscal

2024, we

sold our

shell eggs

and egg products

in 39 states

through the

southwestern, southeastern,

mid-western, mid-

Atlantic and northeastern regions of the U.S. as

well as Puerto Rico through our

extensive distribution network to a diverse group

of customers, including national and regional grocery store chains,

club stores, companies servicing independent supermarkets in

the U.S., foodservice distributors

and egg product consumers.

Some of our sales are

completed through co-pack

agreements – a

common practice in the industry whereby production and processing of

certain products are outsourced to another producer.

The majority of eggs sold are based on the daily

or short-term needs of our customers. Most sales to established

accounts are on

payment terms ranging from

seven to 30

days. Although we

have established long-term relationships

with many of

our customers,

most of them are free to acquire shell eggs from other sources.

The shell eggs we

sell are either delivered to

our customers’ warehouse or retail

stores, by our own

fleet or contracted refrigerated

delivery trucks, or are picked up by our customers at our processing facilities.

10

We

are a member

of the Eggland’s

Best, Inc. cooperative

and produce, market,

distribute and

sell

Egg-Land’s

Best®

and

Land

O’ Lakes®

branded eggs directly and through

our joint ventures, Specialty

Eggs, LLC and Southwest

Specialty Eggs, LLC, under

exclusive

license

agreements

in

Alabama,

Arizona,

Florida,

Georgia,

Louisiana,

Mississippi

and

Texas,

and

in

portions

of

Arkansas, California,

Nevada, North

Carolina,

Oklahoma and

South Carolina.

We

also have

an exclusive

license in New

York

City in addition

to exclusivity in

select New York

metropolitan areas, including

areas within New

Jersey and Pennsylvania.

As

discussed above under “Branded Eggs,” we also sell our own

Farmhouse Eggs

® and

4-Grain

® branded eggs.

In 2022, we

joined as a member

during the formation

of ProEgg, Inc. (“ProEgg”),

a new egg farmer

cooperative in the

western

United

States.

During

2024,

after

careful

review

and

full

analysis

we

decided

to

withdraw

our

membership

in

ProEgg.

The

withdrawal from ProEgg did not affect any of our existing customer

relationships.

Customers

Our top

three customers

accounted for

an aggregate of

49.0%, 50.1%

and 45.9%

of net sales

dollars for

fiscal 2024,

2023, and

2022,

respectively.

Our largest

customer,

Walmart

Inc. (including

Sam's Club),

accounted for

34.0%, 34.2%

and 29.5%

of net

sales dollars for fiscal 2024, 2023 and 2022, respectively.

For shell

egg

sales in

fiscal 2024

,

approximately

89% of

our revenue

related

to sales

to retail

customers

and

11%

to sales

to

foodservice providers. Retail customers include primarily national and regional

grocery store chains, club stores, and companies

servicing independent

supermarkets in the U.S.

Foodservice customers include

primarily companies that

sell food products

and

related items to restaurants, healthcare and education facilities and hotels.

Competition

The production, processing,

and distribution of shell

eggs is an intensely

competitive business, which

has traditionally attracted

large numbers of

producers in the U.S. Shell

egg competition is generally

based on price, service and

product quality.

The shell

egg

production

industry

remains

highly

fragmented.

According

to

Egg

Industry

Magazine

,

the

ten

largest

producers

owned

approximately 54% and 53% of industry table egg layer hens at calendar

year-end 2023

and 2022, respectively.

Seasonality

Retail sales of shell eggs historically have been highest during the fall and winter months and lowest during the summer months.

Prices for shell eggs fluctuate

in response to seasonal demand

factors and a natural

increase in egg production during

the spring

and early summer.

Historically,

shell egg prices tend

to increase with the

start of the school

year and tend

to be highest prior

to

holiday

periods,

particularly

Thanksgiving,

Christmas

and

Easter.

Consequently,

and

all

other

things

being

equal,

we

would

expect to experience

lower selling prices,

sales volumes and net

income (and may

incur net losses) in

our first and

fourth fiscal

quarters ending in August/September and May/June, respectively. Accordingly, we generally expect our need for

working capital

to be highest during those quarters.

Growth Strategy

Our

growth

strategy

is

centered

on

growth

through

strategic

acquisitions,

organic

growth,

and

expansion

of

our

value-added

products

business.

We

believe

that

we

can

continue

to

expand

our

market

reach

through

strategic

acquisitions

and

achieve

favorable

returns

through

our

proven

operating

model

emphasizing

synergies

and

efficient

operations.

Organic

growth

is

grounded in

our culture of

operational excellence

to optimize everything

we can control.

We

are committed

to investing in

our

existing operations

to increase sales,

profitability and

customer service.

We

have continued to

increase our production

of cage-

free shell eggs and

other higher value specialty

eggs such as pasture-raised,

free-range and organic

shell eggs. We

believe there

is long-term

growth potential

in value-added

products such

as hard-cooked

eggs, which

will enable

us to

leverage our

existing

distribution

channels,

expand

our

reach

in

foodservice

and

retail

marketplaces

and

bring

new

opportunities

in

the

restaurant,

institutional and industrial food products arenas.

Trademarks

and License Agreements

We own the trademarks

Farmhouse Eggs®

,

Sunups®

,

Sunny Meadow®

and

4Grain®

. We produce and

market

Egg-Land's Best

®

and

Land O’ Lakes

® branded eggs under

license agreements with

EB. We

believe these trademarks

and license agreements

are

important to our business.

11

Government Regulation

Our facilities and

operations are subject

to regulation by

various federal, state,

and local agencies,

including, but not

limited to,

the FDA,

USDA, Environmental

Protection

Agency (“EPA

”), Occupational

Safety and

Health Administration

("OSHA") and

corresponding state agencies. The applicable regulations relate to grading, quality control, labeling,

sanitary control and reuse or

disposal of waste. Our shell egg facilities are subject to periodic USDA, FDA, EPA and OSHA

inspections. Our feed production

facilities are subject to FDA, EPA

and OSHA regulation and inspections.

We maintain

inspection programs

and in certain cases

utilize

independent

third-party

certification

bodies

to

monitor

compliance

with

regulations,

our

own

standards

and

customer

specifications. It is possible that

we will be required to incur

significant costs for compliance with

such statutes and regulations.

In the future, additional rules could be proposed that, if adopted, could

increase our costs.

A number of

states have passed

legislation or regulations mandating

minimum space or

cage-free requirements for

egg production

or have

mandated the

sale of

only cage-free

eggs and

egg products

in their

states. For

further information

refer to

the heading

“Specialty Eggs” within this section.

Environmental Regulation

Our operations and facilities are subject to various federal, state, and local environmental, health and safety laws and regulations

governing,

among

other

things,

the

generation,

storage,

handling,

use,

transportation,

disposal,

and

remediation

of

hazardous

materials. Under these laws and regulations, we must obtain permits from governmental authorities,

including, but not limited to,

wastewater discharge

permits. We

have made, and

will continue to make,

capital and other expenditures

relating to compliance

with

existing

environmental,

health

and

safety

laws and

regulations

and

permits.

We

are not

currently

aware

of any

material

capital expenditures necessary to comply with such laws and regulations; however,

as environmental, health and safety laws and

regulations are becoming increasingly

more stringent, including

those relating to animal wastes

and wastewater discharges,

it is

possible that we will have to incur significant costs for compliance with such

laws and regulations in the future.

Human Capital Resources

As of June 1, 2024, we had 3,067 employees, of whom 2,370 worked in egg production, processing,

and marketing, 204 worked

in

feed

mill operations

and 493, including

our

executive officers,

were

administrative

employees. Approximately

4.5% of

our

personnel

are

part-time, and we

utilize

temporary

employment

agencies

and

independent

contractors

to

augment

our

staffing needs when necessary.

For fiscal 2024, we

had 1,962 average monthly

contingent workers. As of June

1, 2024, none of

our employees were covered by a collective bargaining agreement.

We consider our

relations with employees to be good.

Culture and Values

We

are

proud

to

be contributing corporate

citizens

where

we live

and

work and to

help create healthy,

prosperous

communities. Our

colleagues

help

us

continue

to

enhance our community

contributions,

which are driven

by

our longstanding culture that strives to promote an environment that upholds integrity and respect and provides opportunities for

each colleague to

realize full potential. These commitments

are encapsulated in

the

Cal-Maine Foods Code

of Ethics and

Business

Conduct

and in our

Human Rights Statement

.

Health and Safety

Our top priority is the

health and safety of our

employees, who continue to produce

high-quality,

affordable egg choices for

our

customers and contribute to a

stable food supply. Our enterprise safety committee is

comprised

of two corporate safety managers,

nine area compliance managers (three

specifically for worker health and

safety), and 55 local

site compliance managers, feed mill

managers

and

general

managers.

The

committee

that

oversees health

and

safety regularly

reviews

our

written policies

and

changes to OSHA regulation standards and shares information as it relates to outcomes from incidents in order to improve future

performance and

our health

and safety

practices.

The committee’s

goals include

working to

help ensure

that our

engagements

with our consumers, customers, and regulators evidence our strong

commitment to our workers’ health and safety.

Our commitment to our colleagues’ health includes a strong

commitment to on-site worker safety,

including a focus on accident

prevention and life safety.

Our Safety and Health Program

is designed to promote best

practices that help prevent

and minimize

workplace accidents and illnesses. The scope of our Safety and

Health Program applies to all enterprise colleagues. Additionally,

to

help

protect

the health

and well-being

of

our

colleagues and

people

in our

value

chain,

we

require

that any

contractors

or

vendors

acknowledge

and

agree

to

comply

with

the

guidelines

governed

by

our

Safety

and

Health

Program.

At

each

of

our

locations, our general managers are expected to

uphold and implement our Safety and Health Program in alignment

with OSHA

requirements. We

believe that

this program,

which is reviewed

annually by

our senior management

team, contributes

to strong

12

safety outcomes. As part of our

Safety and Health Program, we conduct multi-lingual training that

covers topics such as slip-and-

fall avoidance, respiratory protection, prevention of

hazardous communication of chemicals, the

proper use of personal

protective

equipment, hearing

conservation, emergency

response, lockout

and tagout

of equipment

and forklift

safety,

among others.

We

have

also

installed dry

hydrogen

peroxide biodefense

systems

in

our

processing

facilities

to

help

protect

our

colleagues’

respiratory health. To help drive

our focus on

colleague safety, we developed safety

committees at each

of our sites

with employee

representation from each department.

We

review

the success

of our

safety programs

on a

monthly basis

to monitor

their effectiveness

and

the development

of any

trends that need to

be addressed. During fiscal

year 2024

our recordable incident rates

decreased by 20% compared to

fiscal 2023.

People

Our

strength

as

a

company

comes

from

our

employees

at

all

levels

and

we

have

a

long-established

culture

that

values

each

individual’s

contributions

and

encourages

productivity

and

growth.

This

culture is driven

by

our

board

and

executive

management team. Our

board is comprised

of seven members, four

of whom are independent,

two of whom

are women, one of

whom is of

a racial

or ethnic minority. As of

June 1,

2024, our

total workforce was comprised

of 31% women and

56% individuals

who identify as

racial or ethnic

minorities. Our Policy against Harassment,

Discrimination, Unlawful

or Unethical Conduct

and

Retaliation; Reporting

Procedure affirms

our commitment

to supporting

our employees

regardless of race,

color, religion,

sex,

national origin or any other basis protected by applicable law.

We

are

an

Equal

Opportunity

Employer

that

prohibits

any

violation

of

applicable

federal,

state,

or

local

law

regarding

employment. Discrimination

on any

basis protected

by applicable

law is

prohibited.

We

maintain strong

protocols to

help our

colleagues perform their jobs

free from harassment

and discrimination. We are committed

to offering our

colleagues opportunities

commensurate with our operational needs and their experiences, goals

and contributions.

Recruitment, Development and Retention

We

believe

in compensating

our

colleagues

with

fair

and competitive wages, in

addition

to offering

competitive benefits. Approximately 76% of our employees

are paid at hourly rates, which are all paid at rates above

the federal

minimum

wage

requirement.

We

offer

our

full-time

eligible

employees

a

range

of

benefits,

including

company-paid

life

insurance. The Company provides a comprehensive self-insured health plan and pays approximately 82% of the costs of the plan

for

participating

employees

and

their

families

as

of

December

31,

2023. Recent

benchmarking

of

our health

plan

indicates comparable

benefits, at

lower

employee contributions, when compared

to an applicable

Agriculture

and

Food Manufacturing sector grouping, as well as peer group data.

In addition, we offer employees the opportunity to purchase an

extensive range of other group

plan benefits, such as dental, vision,

accident, critical illness, disability

and voluntary life.

After

one

year

of

employment, full-time employees

who

meet

eligibility

requirements may

elect

to participate

in

our

KSOP retirement plan,

which

offers

a

range

of

investment

alternatives

and

includes

many positive features,

such

as

automatic enrollment with scheduled

automatic contribution

increases and loan

provisions. Regardless of

the

employees’ elections

to contribute

to

the

KSOP,

the

Company contributes shares

of Company

stock or

cash

equivalent

to 3%

of participants’ eligible compensation for each pay period that hours

are worked.

We

provide

extensive

training

and

development related

to

safety,

regulatory

compliance,

and

task

training.

We

invest

in

developing our future leaders through our Management Intern, Management

Trainee and informal mentoring programs.

Sustainability

We understand that climate, and the potential

consequences of climate change, freshwater availability and preservation of global

biodiversity, in addition to

responsible management of

our flocks, are

vital to

the production of

high-quality eggs and

egg products

and to the success of our

Company. We have engaged in agricultural production for

more than 60

years. Our agricultural practices

continue to evolve as we continue to strive to meet the need for nutritious, affordable foods to feed a growing population

even as

we

exercise responsible

natural

resource

stewardship

and

conservation.

We

published our

most

recent sustainability report

for

our fiscal 2023 in July

2024, which is available on

our website. Information

contained on our website is not

a part of this report

on Form 10-K.

Our Corporate Information

We

maintain

a

website

at

www.calmainefoods.com

where

general

information

about

our

business

and

corporate

governance

matters is

available. The

information contained

in our

website is

not a

part of

this report.

Our Annual

Reports on

Form 10-K,

Quarterly Reports on

Form 10-Q, Current Reports

on Form 8-K, proxy

statements, and all amendments

to those reports filed

or

13

furnished pursuant

to Section

13(a) or

15(d) of

the Exchange

Act are

available, free

of charge,

through our

website as

soon as

reasonably

practicable

after

we

file

them

with,

or

furnish

them

to,

the

SEC.

In

addition,

the

SEC

maintains

a

website

at

www.sec.gov

that

contains

reports,

proxy

and

information

statements,

and

other

information

regarding

issuers

that

file

electronically with the SEC. Cal-Maine Foods, Inc. is a Delaware corporation,

incorporated in 1969.

ITEM 1A.

RISK FACTORS

Our

business

and

results

of

operations

are

subject

to

numerous

risks

and

uncertainties,

many

of

which

are

beyond

our

control. The following is a description of the known factors that may materially affect

our business, financial condition or results

of operations. They

should be considered

carefully,

in addition

to the information

set forth

elsewhere in

this Annual

Report on

Form

10-K,

including

under

Part

II.

Item 7.

Management’s

Discussion

and

Analysis

of

Financial

Condition

and

Results

of

Operations,

in

making

any

investment

decisions

with

respect

to

our

securities. Additional

risks

or

uncertainties

that

are

not

currently known

to us,

or that we

are aware

of but

currently deem

to be

immaterial or

that could

apply to

any company

could

also materially adversely affect our business, financial condition or results

of operations.

INDUSTRY RISK FACTORS

Market prices

of wholesale

shell eggs

are volatile,

and decreases

in these

prices can

adversely impact

our revenues

and

profits.

Our operating results are significantly

affected by wholesale shell egg

market prices, which fluctuate widely and

are outside our

control. As

a result,

our prior

performance

should not

be presumed

to be

an accurate

indication of

future performance.

Under

certain circumstances, small increases

in production, or small

decreases in demand, within

the industry might

have a large adverse

effect on shell egg prices. Low shell egg prices adversely affect

our revenues and profits.

Market prices for

wholesale shell eggs

have been volatile

and cyclical. Shell

egg prices have

risen in the

past during periods

of

high demand such as the initial outbreak of

the COVID-19 pandemic and periods when high protein

diets are popular. Shell egg

prices

have

also

risen

during

periods

of

constrained

supply,

such

as

the

latest

highly

pathogenic

avian

influenza

(“HPAI”)

outbreak

that was

first detected

in domestic

commercial flocks

in February

2022. During

times when

prices are

high, the

egg

industry

has

typically

geared

up

to

produce

more

eggs,

primarily

by

increasing

the

number

of

layers,

which

historically

has

ultimately resulted in an oversupply of eggs, leading to a period of lower prices.

As discussed

above in

Part I. Item 1. Business – Seasonality

, seasonal fluctuations

impact shell

egg prices. Therefore,

comparisons

of

our

sales

and

operating

results

between

different

quarters

within

a

single

fiscal

year

are

not

necessarily

meaningful

comparisons.

A decline in consumer demand for shell eggs can negatively impact our business.

We believe high

-protein diet trends, industry advertising campaigns,

the improved nutritional reputation of eggs and an increase

in at-home consumption

of eggs during

the COVID-19 pandemic,

have all contributed

at one time or

another to increased

shell

egg demand. However, it is possible that the demand for shell eggs will decline in the future. Adverse publicity relating to health

or safety

concerns and

changes in

the perception

of the

nutritional

value

of shell

eggs,

changes in

consumer

views regarding

consumption of

animal-based products,

as well

as movement

away from

high protein

diets, could

adversely affect

demand for

shell eggs, which could have a material adverse effect on our future

results of operations and financial condition.

Feed costs are volatile and increases in these costs can

adversely impact our results of operations.

Feed costs are the largest element of our shell

egg (farm) production cost, ranging from 55%

to 63% of total farm production cost

in the last five fiscal years.

Although feed ingredients, primarily corn and soybean

meal, are available from a

number of sources, we do

not have control over

the prices

of the

ingredients we

purchase, which

are affected

by weather,

various global

and U.S.

supply and

demand factors,

transportation

and

storage

costs,

speculators,

and

agricultural,

energy

and

trade

policies

in

the

U.S.

and

internationally.

For

example, while feed

costs declined during fiscal

2024, we saw higher

prices for corn and soybean

meal in fiscal 2022

and 2023

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. Our costs for corn and soybean meal

are also affected by local basis prices.

Increases in feed

costs unaccompanied by increases

in the selling price

of eggs can have

a material adverse effect

on the results

of our operations

and cash flow.

Alternatively,

low feed costs

can encourage

egg industry overproduction,

possibly resulting in

lower egg prices and lower revenue.

14

Agricultural risks,

including outbreaks

of avian

diseases such as

HPAI,

have harmed

and in

the future

could harm

our

business.

Our shell egg

production activities are

subject to a variety

of agricultural risks.

Unusual or extreme

weather conditions, disease

and pests can materially and adversely affect the quality and quantity of shell eggs

we produce and distribute. Outbreaks of avian

influenza among poultry

occur periodically worldwide

and have occurred

sporadically in the

U.S. Since the

HPAI

outbreaks in

2015, there were no reported

significant outbreaks of HPAI in the commercial table egg

layer flocks in the

U.S. until the February

– December

2022 time

period and

then again

beginning in

November 2023.

During the

third and

fourth quarters

of our

fiscal

2024, we

experienced HPAI

outbreaks within

our facilities

located in

Kansas and

Texas,

resulting in

total depopulation

of 3.1

million laying hens

and 577,000 pullets.

Both locations have

been cleared by

the USDA to resume

operations and repopulation

is expected to

be completed

before calendar

year end. As

of July 5,

2024, the

U.S. Centers for

Disease Control

and Prevention

(“CDC”) reported

outbreaks in 138

dairy herds in

12 states and

five cases in

the U.S. in

persons who were

exposed to infected

cows or poultry.

The CDC has not

reported any case of

human-to-human transmission. The

CDC considers that the

overall risk

to the general U.S. public

posed by the virus remains

low; however,

as a precautionary measure,

the U.S. Department of

Health

and

Human

Services

has

awarded

funding

to

Moderna

to

develop

a

human

vaccine

against

avian

influenza.

For

additional

information, refer to

Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations –

HPAI

.

We

maintain

controls

and

procedures

designed

to reduce

the risk

of

exposing

our

flocks and

employees

to harmful

diseases;

however,

despite these

efforts, outbreaks

of avian

diseases can

and do

still occur

and have

adversely impacted,

and may

in the

future adversely impact, the health of our flocks and could in the future adversely impact the health of our employees. Continued

or intensified spread of HPAI could have a material adverse impact on our financial results

by increasing government restrictions

on the sale and

distribution of our products

and requiring us to

euthanize the affected

layers. Negative publicity

from outbreaks

within our industry

can negatively impact

customer perception. If

a substantial portion

of our layers

or production facilities

are

affected by any of these factors in any given quarter or year,

our business, financial condition, and results of operations could

be

materially and adversely affected.

Shell

eggs

and

shell

egg

products

are

susceptible

to

microbial

contamination,

and

we

may

be

required

to,

or we

may

voluntarily, recall

contaminated products.

Shell eggs

and shell

egg products

are vulnerable

to contamination

by pathogens

such as

Salmonella. The

Company maintains

policies and procedures designed to comply with the complex rules and regulations governing egg production, such as The Final

Egg

Rule

issued

by

the

FDA

“Prevention

of

Salmonella

Enteritidis

in

Shell

Eggs

During

Production,

Storage,

and

Transportation,” and

the FDA’s

Food Safety Modernization Act. Shipment

of contaminated products, even

if inadvertent, could

result in a

violation of law and

lead to increased

risk of exposure

to product liability

claims, product recalls

and scrutiny by

federal

and

state

regulatory

agencies.

We

have

little,

if

any,

control

over

proper

handling

once

the

product

has

been

shipped

or

delivered. In

addition,

products

purchased

from

other

producers

could

contain

contaminants

that

might

be

inadvertently

redistributed by us. As such, we might decide or be required

to recall a product if we, our customers

or regulators believe it poses

a potential

health risk.

Any product

recall could

result in

a loss

of consumer

confidence in

our products,

adversely affect

our

reputation

with existing

and potential

customers and

have a

material adverse

effect

on our

business, results

of operations

and

financial condition. We

currently maintain insurance

with respect to certain of

these risks, including product

liability insurance,

business

interruption

insurance,

product

recall

insurance

and

general

liability

insurance,

but

in

many

cases

such

insurance

is

expensive, difficult

to obtain

and no

assurance can

be given

that such

insurance can

be maintained

in the

future on

acceptable

terms, or in sufficient amounts to protect us against losses due

to any such events, or at all.

Our profitability

may be adversely

impacted by

increases in other

input costs such

as packaging materials

and delivery

expenses, including as a result of inflation.

In addition to feed ingredient costs, other significant input costs include costs of packaging materials and delivery expenses. Our

costs of

packing materials

increased during

the past

three fiscal

years due

to inflation

and higher

labor costs,

and during

2022

also as a

result of supply

chain constraints initially

caused by

the pandemic,

and these costs

may continue

to increase. We

also

experienced increases in delivery expenses during fiscal 2023 and 2022 due to increases in fuel and labor costs for both our fleet

and contract

trucking, and

these costs

may continue

to increase.

Increases in

these costs

are largely

outside of

our control

and

have an adverse effect on our profitability and cash flow.

15

BUSINESS AND OPERATIONAL

RISK FACTORS

Our acquisition growth strategy subjects us to various risks.

As discussed in

Part I. Item I. Business – Growth Strategy

, we plan to continue to pursue a growth strategy that includes,

in part,

selective

acquisitions

of

other

businesses

engaged

in

the

production

and

sale of

shell

eggs,

with

a

priority

on

those

that

will

facilitate our ability to

expand our cage-free shell

egg production capabilities in

key locations and markets.

We may over-estimate

or under-estimate the demand for cage-free

eggs, which could cause

our acquisition strategy to be

less-than-optimal for our future

growth and profitability.

The number of

existing businesses with

cage-free capacity

that we may be

able to purchase

is limited,

as

most

production

of

shell

eggs

by

other

companies

in

our

markets

currently

does

not

meet

customer

demands

or

legal

requirements to be designated as cage-free. Conversely,

if we acquire cage-free production capacity,

which is more expensive to

purchase

and

operate,

and

customer

demands

or

legal

requirements

for

cage-free

eggs

were

to

change,

the

resulting

lack

of

demand for cage-free eggs may result in higher costs and lower profitability

.

Acquisitions require capital resources and can divert management’s attention from our existing business. Acquisitions also entail

an inherent risk that we

could become subject to contingent or

other liabilities, including liabilities arising from

events or conduct

prior to

our acquisition

of a

business that

were unknown

to us

at the

time of

acquisition. We

could incur

significantly greater

expenditures in integrating an acquired business than we anticipated at the

time of its purchase.

We cannot assure

you that we:

●

will identify suitable acquisition candidates;

●

can consummate acquisitions on acceptable terms;

●

can successfully integrate an acquired business into our operations; or

●

can successfully manage the operations of an acquired business.

No

assurance

can

be

given

that

businesses

we

acquire

in

the

future

will

contribute

positively

to

our

results

of

operations

or

financial condition.

In addition,

federal antitrust

laws require

regulatory approval

of acquisitions

that exceed

certain threshold

levels of significance, and we cannot guarantee that such approvals

would be obtained.

The consideration

we pay in

connection with any

acquisition affects

our financial results.

If we pay

cash, we could

be required

to

use

a

portion

of

our

available

cash

or

credit

facility

to

consummate

the

acquisition.

To

the

extent

we

issue

shares

of

our

Common Stock, existing stockholders may

be diluted. In addition,

acquisitions may result in

additional debt. Our ability to

access

any additional

capital that

may be

needed for

an acquisition

may be

adversely impacted

by higher

interest rates

and economic

uncertainty.

Global

or

regional

health

crises including

pandemics

or

epidemics

could

have

an

adverse impact

on

our

business and

operations.

The

effects

of

global

or

regional

pandemics

or

epidemics

can

significantly

impact

our

operations.

Although

demand

for

our

products could

increase as

a result

of restrictions

such as

travel bans

and restrictions,

quarantines, shelter-in-place

orders, and

business and government shutdowns, which can

prompt more consumers to eat

at home, these restrictions

could also significantly

increase our cost of doing business due to labor shortages, supply-chain disruptions, increased costs

and decreased availability of

packaging supplies or

feed, and increased

medical and other

costs.

We

experienced these impacts

as a result of

the COVID-19

pandemic,

primarily

during

our

fiscal

years

2020

and

2021.

The

pandemic

recovery

also

contributed

to

higher

inflation

and

interest

rates,

which

persist

and

may

continue

to

persist.

The

impacts

of

health

crises

are

difficult

to

predict

and

depend

on

numerous factors

including the

severity,

length and

geographic scope

of the

outbreak, resurgences

of the

disease and

variants,

availability

and

acceptance

of vaccines,

and governmental,

business

and

individuals’

responses.

A resurgence

of

COVID-19

and/or variants, or

any future major public

health crisis, would disrupt

our business and could

have a material adverse

effect on

our financial results.

Our largest customers have accounted for a significant portion of our net sales volume. Accordingly, our business may be

adversely affected by the loss of, or reduced purchases by,

one or more of our large customers.

Our customers, such as supermarkets, warehouse clubs

and food distributors, have continued to consolidate and consolidation

is

expected to continue. These consolidations have

produced larger customers and potential customers with

increased buying power

that are more

capable of operating

with reduced

inventories, opposing

price increases,

and demanding

lower pricing,

increased

promotional programs and specifically tailored products. Because of these trends,

our volume growth could slow or

we may need

to lower prices or increase promotional spending for our products, any of

which could adversely affect our financial results.

16

Our top

three customers

accounted for

an aggregate of

49.0%, 50.1%

and 45.9%

of net sales

dollars for

fiscal 2024,

2023, and

2022, respectively.

Our largest

customer,

Walmart

Inc. (including

Sam's Club),

accounted for

33.8%, 34.2%

and 29.5%

of net

sales dollars for fiscal 2024, 2023 and

2022, respectively. Although we have established long-term relationships with most of our

customers who

continue to purchase

from us based

on our ability

to service their

needs, they are

generally free to

acquire shell

eggs from

other sources. If,

for any

reason, one

or more

of our

large customers

were to

purchase significantly

less of

our shell

eggs in the

future or terminate their

purchases from us, and

we were not

able to sell

our shell eggs to

new customers at comparable

levels, it would have a material adverse effect on our business, financial

condition, and results of operations.

Our business is highly competitive.

The production and sale of fresh shell eggs, which accounted for 96.1% to 96.6% of our net sales in our

last three fiscal years, is

intensely

competitive.

We

compete

with

a large

number

of competitors

that may

prove to

be more

successful

than

we are

in

producing, marketing and selling shell eggs. We

cannot provide assurance that we will be able to compete successfully with any

or all of these companies. Increased competition could result in price reductions, greater cyclicality,

reduced margins and loss of

market share, which would negatively affect our business, results

of operations, and financial condition.

We

are

dependent

on

our

management

team,

and

the

loss

of

any

key

member

of

this

team

may

adversely

affect

the

implementation of our business plan in a timely manner.

Our success

depends largely

upon the

continued service

of our

senior management

team. The

loss or interruption

of service

of

one or more

of our key

executive officers

could adversely affect

our ability to

manage our operations

effectively and/or

pursue

our growth strategy.

We

have not entered

into any employment

or non-compete agreements

with any of

our executive officers.

Competition could cause us to lose talented employees, and unplanned turnover could deplete institutional knowledge

and result

in increased costs due to increased competition for employees.

Our

business

is

dependent

on

our

information

technology

systems

and

software,

and

failure

to

protect

against

or

effectively respond to

cyber-attacks, security

breaches, or other

incidents involving those systems,

could adversely affect

day-to-day operations

and decision making processes and have an adverse effect

on our performance and reputation.

The efficient operation of our business depends

on our information technology systems, which we rely

on to effectively manage

our

business

data,

communications,

logistics,

accounting,

regulatory

and

other

business

processes.

If

we

do

not

allocate

and

effectively manage the resources necessary to build and sustain an appropriate technology environment, our business, reputation,

or financial results could be negatively impacted.

In addition, our information technology systems may be vulnerable

to damage

or

interruption

from

circumstances

beyond

our

control,

including

systems

failures,

natural

disasters,

terrorist

attacks,

viruses, ransomware, security breaches

or cyber incidents. Cyber-attacks

are becoming more sophisticated

and are increasing in

the number of attempts and frequency by groups and individuals with a wide range of motives. We

have experienced and expect

to continue to experience attempted cyber-attacks of our information

technology systems or networks.

We regularly engage with

third-party service providers

as part

of our operations

to provide a

high level of

service to our

customers.

We have

implemented certain practices and policies

to minimize the potential risks associated with

the exchange of information

with contracted

vendors. Despite

these practices

and policies,

we cannot

guarantee that

information technology

systems of

our

third-party

service providers

will prevent

and detect

all cybersecurity

breaches and

incidents. Although

we require

third-party

service providers to notify us

upon a potential breach

or incident, there is

a potential risk that

our business, reputation,

or financial

results could be negatively impacted by cybersecurity incidents at their businesses

.

Additionally, future or past business

transactions (such as acquisitions

or integrations) could expose

us to additional

cybersecurity

risks and vulnerabilities, as our systems could be negatively affected

by vulnerabilities present in acquired or integrated systems

and technologies.

Furthermore, we

may discover

security issues

that were

not found

during due

diligence of

such acquired

or

integrated businesses,

and it

may be

difficult to

integrate businesses

into our

information technology

environment and security

program.

Our information technology systems also subject us to numerous data privacy obligations. We

may at times fail (or be perceived

to have failed)

in our efforts

to comply with

our data privacy obligations.

If we or the

third parties on which

we rely fail, or

are

perceived to have failed, to address or comply

with applicable data privacy obligations, we could face significant

consequences,

including but not

limited to government

enforcement actions and

litigation. A security breach of

sensitive information could

result

in damage

to our reputation

and our relations

with our customers

or employees.

Any such damage

or interruption

could have

a

material adverse effect on our business.

17

Technology

and

related

business and

regulatory

requirements

continue

to change

rapidly.

Failure to

update

or replace

legacy

systems

to

address

these

changes

could

result

in

increased

costs,

including

remediation

costs,

system

downtime,

third

party

litigation, regulatory actions or cyber security vulnerabilities which could

have a material adverse effect on our business.

Labor shortages or increases in labor costs could adversely

impact our business and results of operations.

Our

success

is

dependent

upon

recruiting,

motivating,

and

retaining

staff

to

operate

our

farms.

Approximately

76%

of

our

employees

are paid

at hourly

rates, often

in entry-level

positions. While

all our

employees are

paid at

rates above

the federal

minimum wage requirements,

any significant increase

in local, state or

federal minimum wage

requirements could increase

our

labor costs. In

addition, any

regulatory changes

requiring us to

provide additional

employee benefits

or mandating

increases in

other employee-related

costs, such as

unemployment insurance

or workers compensation,

would increase our

costs. A shortage

in

the

labor

pool,

which

may

be

caused

by

competition

from

other

employers,

the

remote

locations

of

many

of

our

farms,

decreased labor participation rates

or changes in government-provided support

or immigration laws, particularly

in times of lower

unemployment, could adversely affect our business and results of operations. A shortage of labor available to us could cause our

farms to operate

with reduced staff,

which could negatively impact

our production capacity

and efficiencies.

In fiscal 2022, our

labor

costs

increased

primarily

due

to

the

pandemic

and

its

effects,

which

caused

us

to

increase

wages

in

response

to

labor

shortages.

In

fiscal

2023

and

2024,

labor

wages

continued

to

rise

due

to

inflation

and

low

unemployment.

Accordingly,

any

significant labor shortages or increases in our labor costs could have

a material adverse effect on our results of operations.

We are controlled by the family of our late founder, Fred

R. Adams, Jr., and Adolphus B. Baker,

Chairman of our Board

of Directors,

controls the vote of 100% of our outstanding Class A Common Stock.

Fred R. Adams, Jr.,

our Founder and Chairman Emeritus

died on March 29, 2020. A

limited liability company (the

“Daughters’

LLC”), owned by

Mr. Adams’

son-in-law,

Adolphus B. Baker,

Chairman of our board

of directors, Mr.

Baker’s spouse and

her

three sisters

(Mr.

Adams’ four

daughters) (collectively,

the “Family”),

owns 100%

of our

outstanding Class

A Common

Stock

(which has

10 votes

per share),

controlling approximately

52.0% of

our total

voting power.

As sole

managing member

of the

Daughters’

LLC,

Mr.

Baker

controls

the

vote

of

100%

of

our

outstanding

Class

A

Common

Stock,

except

that

certain

extraordinary matters requiring the

vote of the

Company’s stockholders such as a

merger or amendment of

the Company’s Second

Amended

and Restated

Certificate of

Incorporation

require joint

approval

of Mr.

Baker and

members of

the Daughters’

LLC

holding a majority of its voting

interests. Family members also have

additional voting power due to beneficial

ownership of our

Common Stock (which has one vote per share), directly or indirectly

through the Daughter’s LLC and other entities, resulting in

family voting control of approximately 53.8% of our total voting power.

We understand that the Family

intends

to retain ownership

of a

sufficient amount of our

Common Stock and

our Class A

Common

Stock to assure continued ownership of more than 50% of the voting power of

our outstanding shares of capital stock. As a result

of

this ownership,

the

Family has

the

ability

to exert

substantial

influence

over

matters requiring

action

by our

stockholders,

including

amendments

to our

certificate

of incorporation

and by-laws,

the election

and removal

of directors,

and any

merger,

consolidation,

or

sale of

all or

substantially

all of

our

assets,

or

other

corporate

transactions.

Delaware

law

provides

that

the

holders of a majority of the voting power of shares entitled to vote must approve certain fundamental corporate transactions such

as a merger,

consolidation and sale of

all or substantially all

of a corporation’s

assets; accordingly,

such a transaction involving

us

and

requiring

stockholder

approval

cannot

be

effected

without

the

approval

of

the

Family.

Such

ownership

will

make

an

unsolicited acquisition of our Company more difficult and discourage

certain types of transactions involving a change of control

of our Company, including

transactions in which the holders of our Common Stock might otherwise receive a premium for their

shares over then current market prices.

The Family’s controlling

ownership of our capital stock may adversely

affect the market

price of our Common Stock.

For

additional

information,

refer

to

Exhibit

4.1

to

this

Annual

Report

on

Form

10-K,

“Description

of

Registrant’s

Securities

Registered Under Section 12 of the Exchange Act.”

The

price

of

our

Common

Stock

may

be

affected

by

the

availability

of

shares

for

sale

in

the

market,

and

you

may

experience significant dilution as a result of future issuances

of our securities, which could materially and

adversely affect

the market price of our Common Stock.

The sale or

availability for

sale of substantial

amounts of

our Common

Stock could adversely

impact its price.

The Daughters’

LLC holds approximately 1.1

million shares of

Common Stock (the “Subject

Shares”) that are

subject to an

Agreement Regarding

Common Stock (the “Agreement”) filed as an exhibit to this report. The Subject Shares remain subject to potential sale

under the

Agreement. The Agreement

generally provides that

if a holder of

Subject Shares intends

to sell any of

the Subject Shares,

such

party must give the

Company a right of first

refusal to purchase all or

any of such shares.

The price payable by

the Company to

purchase shares

pursuant to

the exercise

of the

right of

first refusal

will reflect

a 6%

discount to

the then-current

market price

based

on

the

20

business-day

volume-weighted

average

price.

If

the

Company

does

not exercise

its right

of

first

refusal

and

purchase the shares offered, such party will, subject to the approval of a special committee of independent directors of the

Board

18

of Directors, be

permitted to sell

the shares not

purchased by the

Company pursuant to

a Company registration

statement, Rule

144 under the Securities Act of 1933, or another manner of sale agreed to by the Company. Although pursuant

to the Agreement

the Company

will have a

right of first

refusal to purchase

all or any

of those shares,

the Company

may elect not

to exercise its

rights

of

first

refusal,

and

if so

such

shares

would

be

eligible for

sale pursuant

to

the registration

rights

in

the

Agreement

or

pursuant

to

Rule

144

under

the Securities

Act

of

1933.

Sales, or

the

availability

for

sale, of

a

large

number

of

shares of

our

Common Stock could result in a decline in the market price of our Common

Stock.

In addition,

our articles

of incorporation

authorize us

to issue

120,000,000 shares

of our

Common Stock.

As of

June 1,

2024,

there were

44,238,766 shares

of our

Common Stock

outstanding. Accordingly,

a substantial

number of

shares of

our Common

Stock

are

outstanding

and

are,

or

could

become,

available

for

sale

in

the

market.

In

addition,

we

may

be

obligated

to

issue

additional

shares of our Common Stock in connection with employee benefit plans (including

equity incentive plans).

In the

future, we

may decide

to raise

capital through

offerings of

our Common

Stock, additional

securities convertible

into or

exchangeable for Common

Stock, or rights to acquire

these securities or our Common

Stock. We

may also issue such securities

as consideration in an

acquisition. The issuance of

such securities could result

in dilution of

existing stockholders’ equity interests

in us. Issuances of substantial

amounts of our Common

Stock, or the perception that

such issuances could occur,

may adversely

affect prevailing market prices for our Common Stock, and we

cannot predict the effect this dilution may have on

the price of our

Common Stock.

LEGAL AND REGULATORY

RISK FACTORS

Pressure from animal rights groups regarding the treatment of animals may subject us to additional costs to conform our

practices

to

comply

with

developing

standards

or

subject

us

to

marketing

costs

to

defend

challenges

to

our

current

practices and protect our

image with our customers.

In particular,

changes in customer preferences

and state legislation

have accelerated an increase in demand for cage-free eggs, which increases uncertainty

in our business and increases our

costs.

We and many of our customers face pressure from animal rights groups, such

as People for the Ethical Treatment of Animals

and

the Humane

Society of

the United States,

to require

companies that supply

food products

to operate

their business in

a manner

that

treats

animals

in

conformity

with

certain

standards

developed

or

approved

by

these

groups.

In

general,

we

may

incur

additional costs to conform our practices to address

these standards or to defend our existing

practices and protect our image with

our customers.

The standards promoted

by these groups

change over time,

but typically

require minimum

cage space

for hens,

among other requirements, and some

of these groups have led successful

legislative efforts to ban

any form of caged housing

in

various states.

As

discussed

in

Part I. Item 1. Business - Government Regulation

,

ten

states

have

passed

minimum

space

and/or

cage-free

requirements

for hens,

and other

states are

considering such

requirements. In

addition, 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. While we

anticipate that our

retail and foodservice

customers will continue

to transition to

selling cage-free eggs

given publicly stated

goals,

there is

no assurance

that this

transition will

take place

or take

place according

to the

timeline of

current cage-free

goals. For

example, customers may accelerate their transition to stocking cage-free eggs, which may challenge our ability to meet the cage-

free volume

needs of

those customers

and result

in a loss

of shell

egg sales.

Similarly,

customers who

commit to

stock greater

proportional quantities of cage-free eggs are under no obligation to continue to do

so, which may result in an oversupply of

cage-

free eggs and result

in lower specialty

egg prices,

which could reduce the

return on our capital

investment in cage-free production.

Changing our

infrastructure and

operating procedures

to conform

to consumer

preferences, customer

demands and

recent laws

has resulted

and will

continue to

result in

additional costs,

including capital

and operating

cost increases.

The USDA

reported

that the

estimated U.S.

cage-free flock

was 122.0 million hens

as of

May 31,

2024, which

is approximately

39.9% of

the total

U.S. table

egg

layer hen

population.

According

to the

USDA Agricultural

Marketing

Service, as

of May

2024 approximately

220.1 million hens, or about

72% of the U.S.

non-organic laying flock would have to be

in cage-free production to meet

projected

cage-free commitments

from the

retailers, foodservice

providers and

food manufacturers

that have

stated goals

to transition

to

cage-free eggs.

In response

to our

customers’ announced

goals and

increased legal

requirements for

cage-free eggs,

we have

increased capital

expenditures

to

increase

our

cage-free

production

capacity.

We

are

also

enhancing

our

focus

on

cage-free

capacity

when

considering

acquisition opportunities.

Our customers

typically do

not commit

to long-term

purchases of

specific quantities

or

type of eggs

with us, and

as a result,

we cannot predict

with any certainty

which types of

eggs they will

require us to

supply in

future

periods.

The

production

of

cage-free

eggs

is

more

costly

than

the

production

of

conventional

eggs,

and

these

higher

production costs contribute

to the prices

of cage-free eggs,

which historically have

typically been higher

than conventional egg

prices. Many consumers prefer to buy less expensive conventional shell eggs. These consumer preferences may in turn influence

19

our customers’ future needs for

cage-free and conventional eggs. Due

to these uncertainties, we

may over-estimate future demand

for cage-free

eggs, which

could increase

our costs

unnecessarily,

or we

may under-estimate

future demand

for cage-free

eggs,

which could

harm us

competitively.

If our

competitors obtain

non-cancelable

long-term contracts

to provide

cage-free eggs

to

our existing or potential customers,

then there may be decreased demand

for our cage-free eggs due

to these lost potential sales.

If we and our

competitors increase cage-free egg production

and there is no

commensurate increase in demand for

cage-free eggs,

this overproduction

could lead to

an oversupply of

cage-free eggs, reducing

the sales price

for specialty eggs

and our return

on

capital investments in cage-free production.

Failure

to

comply

with

applicable

governmental

regulations,

including

environmental

regulations,

could

harm

our

operating results,

financial condition,

and reputation.

Further,

we may

incur significant

costs to

comply with

any such

regulations.

We are subject to federal, state and local

regulations relating to grading, quality

control, labeling, sanitary control, waste

disposal,

and other

areas of

our business.

As a

fully-integrated

shell egg

producer,

our shell

egg facilities

are subject

to regulation

and

inspection by the USDA, OSHA, EPA and

FDA, as well as state and local health and agricultural agencies, among others. All of

our shell egg production and

feed mill facilities are subject

to FDA, EPA and OSHA regulation and inspections. In addition, rules

are often proposed that, if adopted as proposed, could increase our costs.

Our operations and facilities are subject to various federal, state and local environmental, health, and safety laws and regulations

governing,

among

other

things,

the

generation,

storage,

handling,

use,

transportation,

disposal,

and

remediation

of

hazardous

materials. Under these laws and

regulations, we are required to obtain permits

from governmental authorities, including, but

not

limited to wastewater discharge permits and manure

and litter land applications.

If we

fail to

comply with

applicable laws

or regulations,

or fail

to obtain

necessary permits,

we could

be subject

to significant

fines and penalties or other sanctions, our reputation could be harmed, and our operating results and financial condition could be

materially

adversely

affected.

In

addition,

because

these

laws and

regulations

are

becoming

increasingly

more

stringent,

it is

possible that we will be required to incur significant costs for compliance

with such laws and regulations in the future.

Climate change and legal or regulatory responses

may have an adverse impact on our business and results of

operations.

Extreme

weather

events,

such

as derechos,

wildfires,

drought,

tornadoes,

hurricanes,

storms,

floods

or

other

natural

disasters

could materially and adversely affect our operating

results and financial condition. In fact, derechos, fires, floods,

tornadoes and

hurricanes have affected our facilities or the facilities of other egg producers in the past. Increased global temperatures

and more

frequent occurrences

of extreme

weather events,

which may

be exacerbated

by climate

change, may

cause crop

and livestock

areas to

become unsuitable,

including due

to water

scarcity or

high or

unpredictable

temperatures,

which may

result in

much

greater stress on food systems and more pronounced food

insecurity globally. Lower

global crop production, including corn and

soybean meal,

which are

the primary

feed ingredients

that support

the health of

our animals,

may result

in significantly

higher

prices for these commodity inputs, impact our ability to source the commodities we use to feed our flocks, and negatively impact

our ability

to maintain

or grow our

operations. Climate

change may

increasingly expose

workers and

animals to

high heat

and

humidity

stressors

that

adversely

impact

poultry

production

and

our

costs.

Increased

greenhouse

gas

emissions

may

also

negatively impact air quality, soil quality and water quality, which

may hamper our ability to support our operations, particularly

in higher water- and soil-stressed regions.

Increasing

frequency of

severe weather

events, whether

tied to

climate change

or any

other cause,

may negatively

impact our

ability to raise

poultry and

produce eggs profitably

or to

operate our transportation

and logistics

supply chains. Regulatory

controls

and

market

pricing may

continue

to drive

the costs

of fossil

-based

fuels higher,

which

could negatively

impact

our ability

to

source commodities

necessary to

operate our

farms or

plants and

our current

fleet of

vehicles. These

changes may

cause us

to

change, significantly, our day-to-day

business operations and our strategy. Climate change and extreme weather events may also

impact demand for our products

given evolution of consumer food preferences.

Even if we take

measures to position our business

in anticipation

of such

changes, future

compliance

with legal

or regulatory

requirements may

require significant

management

time, oversight and enterprise expense. We

may also incur significant expense tied to regulatory fines if laws and regulations are

interpreted and applied

in a manner that

is inconsistent with our

business practices. We

can make no

assurances that our efforts

to prepare

for these

adverse events

will be

in line

with future

market and

regulatory expectations

and our

access to

capital

to

support our business may also be adversely impacted.

Current and future litigation could expose us to significant

liabilities and adversely affect our business reputation.

We and certain of our subsidiaries are involved in various legal proceedings.

Litigation is inherently unpredictable, and although

we

believe

we

have

meaningful

defenses

in

these

matters,

we

may

incur

liabilities

due

to

adverse

judgments

or

enter

into

settlements of claims that

could have a material

adverse effect on our

results of operations, cash

flow and financial condition.

For

20

a

discussion

of

our

ongoing

legal

proceedings

see

Part I. Item 3. Legal Proceedings

below

and

Part

II.

Item

8.

Notes

to

the

Consolidated Financial

Statements,

Note 16 – Commitments and Contingencies

.

Such lawsuits are

expensive to

defend, divert

management’s

attention, and

may

result in

significant

adverse judgments

or settlements.

Legal proceedings

may expose

us to

negative publicity,

which could adversely affect our business reputation and customer

preference for our products and brands.

FINANCIAL AND ECONOMIC RISK FACTORS

Weak or unstable economic conditions, including continued high inflation and interest rates,

could negatively impact our

business.

Weak

or unstable economic

conditions, including

continued high inflation

and interest rates,

may adversely

affect our

business

by:

●

Limiting our access to capital markets or increasing the cost of capital we may

need to grow or operate our business;

●

Changing consumer spending and habits and demand for eggs, particularly

higher-priced eggs;

●

Restricting the supply of energy sources or increasing our cost to procure

energy; or

●

Reducing the availability of feed

ingredients, packaging material, and other raw

materials, or increasing the cost

of these

items.

Deterioration of economic conditions could also negatively

impact:

●

The financial condition of our suppliers, which may make it more

difficult for them to supply raw materials;

●

The financial condition of our customers, which may decrease demand

for eggs or increase our bad debt expense; or

●

The financial condition of our insurers, which could increase our cost to obtain insurance, and/or make it difficult for or

insurers to meet their obligations in the event we experience a loss due to an insured

peril.

According

to

the

U.S.

Bureau

of

Labor

Statistics,

from

May

2021

to

May

2022,

the

Consumer

Price Index for

All

Urban

Consumers (“CPI-U”) increased

8.5 percent, the largest

12-month increase since

the period ending December

1981. The CPI-U

increased 4.1% and

3.3% from May

2022 to May

2023 and May

2023 to May

2024, respectively. Inflationary costs have

increased

our input costs, and if we are unable to pass these costs through to the customer

it could have an adverse effect on our business.

We

hold

significant

cash balances

in deposit

accounts with

deposits in

excess of

the amounts

insured by

the Federal

Deposit

Insurance Corporation (“FDIC”). In

the event of

a bank failure

at an institution

where we maintain

deposits in excess

of the FDIC-

insured amount, we may lose such excess deposits.

The

loss

of

any

registered

trademark

or

other

intellectual

property

could

enable

other

companies

to

compete

more

effectively with us.

We

utilize intellectual

property in

our business. For

example, we

own the

trademarks

Farmhouse Eggs®

,

4Grain®, Sunups®

,

and

Sunny Meadow®

. We

produce and market

Egg-Land’s

Best®

and

Land O’ Lakes

® under license

agreements with EB. We

have invested a significant amount of

money in establishing and promoting

our trademarked brands. The loss or

expiration of any

intellectual property could

enable our competitors

to compete more

effectively with us

by allowing them

to make and

sell products

substantially

similar

to

those

we

offer. This

could

negatively

impact

our

ability

to

produce

and

sell

those

products,

thereby

adversely affecting our operations.

Impairment in the carrying value

of goodwill or other assets

could negatively affect our results of

operations or net worth.

Goodwill

represents

the

excess

of

the

cost

of

business

acquisitions

over

the

fair

value

of

the

identifiable

net

assets

acquired. Goodwill

is

reviewed

at

least

annually

for

impairment

by

assessing

qualitative

factors

to

determine

whether

the

existence of events or circumstances

leads to a determination that

it is more likely than not

that the fair value of

a reporting unit

is less

than its

carrying

amount. As of

June 1,

2024, we

had $45.8 million

of goodwill. While

we believe

the current

carrying

value of this goodwill is not impaired, future goodwill impairment charges could adversely affect our results of operations in any

particular period and our net worth.

Events beyond our control such as extreme

weather and natural disasters could negatively impact our business.

Fire,

bioterrorism,

pandemics,

extreme

weather

or natural

disasters, including

droughts,

floods,

excessive

cold

or

heat, water

rights restrictions, hurricanes or other storms, could impair the health or growth of our flocks, decrease production or availability

of feed ingredients, or interfere

with our operations due to

power outages, fuel shortages, discharges from

overtopped or breached

21

wastewater treatment lagoons, damage to our production and processing facilities, labor shortages or disruption of transportation

channels, among other things. Any of these factors could have a material adverse

effect on our financial results.

ITEM 1B.

UNRESOLVED

STAFF COMMENTS

None.

ITEM 1C.

CYBERSECURITY

Risk Management and Strategy

We

understand the importance

of cybersecurity and

its role in

the success of

our Company.

Our business operations

depend on

the effective use of

our information systems in order

to properly serve our

customers, manage our business and

track and report

our financial results. Our technology operations consider risks from cybersecurity threats in the implementation and execution of

our business processes.

We have considered and assessed

the risks from

cybersecurity threats as

part of our

overall risk assessment

process using the National Institute of Standards and Technology

(“NIST”) Cybersecurity Framework.

In order to

identify, assess and manage material

risks arising from

cybersecurity threats, we

maintain internal resources to

monitor

and quickly respond to such

threats. We

perform vulnerability scans and penetration

testing designed to test the effectiveness

of

our

security

practices.

We

engage

third-party

service

providers

to

assist

in

the

evaluation

of

our

internal

controls

over

our

information systems

through audit

and consulting

services to

test the

design and

operational effectiveness

of security

controls.

We continually monitor our systems to detect and identify cybersecurity threats. Prior to

contracting with third-party vendors, we

perform risk assessments of the vendors and require the vendors to manage cybersecurity risks to our business operations as well

as

notify

us

of

any

potential

or

known

cybersecurity

risks.

We

also

require

our

employees

to

complete

training

programs

to

increase their

awareness of

and sensitivity

to cybersecurity

threats. These

training programs

include the

identification of

such

threats and the proper responses to a potential breach of cybersecurity that

aligns with our adopted processes.

The Company has

implemented a response

process in the

event of a

cybersecurity incident through

its crisis management

plan.

The

process

includes

the

cooperation

of

the

information

technology

team

and

our

management

team

to

properly

detect

and

respond to these incidents. These

responses include determination of the

potential impact and materiality of

the incident, potential

disclosure

and

litigation

matters,

and

mitigation

of

actual

or

potential

damage

to

our

systems

or

reputation

arising

from

the

incident. An action plan is implemented to respond to any potential cybersecurity breach in order to continue to effectively serve

our customers and conduct our operations with as little interruption as practicable. The information technology team reviews the

response process

on a

regular basis

to ensure

that it

is designed

to be

effective and

to encompass

current or

new cybersecurity

threats.

As of July

23, 2024, we

are not aware

of any risks

from cybersecurity threats, including

as a

result of prior

cybersecurity incidents,

that have

materially affected

or that

we believe

are reasonably

likely to

materially affect

the Company,

including our

business

strategy,

results

of

operations

or

financial

condition.

See

“Item

1A.

Risk

Factors”

for

further

discussion

about

risks

from

cybersecurity threats.

Governance

The Board is responsible for

the oversight of management’s

process for identifying and mitigating

risks related to cybersecurity

threats. On a quarterly

basis, the Director of

Information Technology provides a report to the

Audit Committee regarding ongoing

processes to improve

and update our

current cybersecurity protocols,

new cybersecurity threats,

results of internal

assessments,

and any recent cybersecurity

incidents. The Audit Committee will make

the Board aware of any information

it deems necessary

or appropriate in order for the Board to effectively oversee the

Company’s cybersecurity risk management

and strategy.

The

Director

of

Information

Technology

and

the

team

he manages

are

responsible

for

the

operation

and

maintenance

of

our

information systems, including the assessment, identification and

management of risks from cybersecurity threats. Together,

the

Director of Information

Technology

and his team have over

150 years of experience

in the information technology

and security

environment.

Our Chief

Financial Officer, to whom

the Director

of Information Technology reports,

has served

as Chief

Financial

Officer and a Board member since 2018 and has over 40 years of risk

management experience.

22

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