Vital Farms, Inc. Q1 FY2025 earnings call

• First quarter performance was in line with expectations, hitting new record levels for volume and net sales. - Consumer awareness and demand for Vital Farms products continue to grow, with aided brand awareness reaching 31% by the end of the first quarter. - Added approximately 25 additional farms to the network during Q1 2025, now working with over 450 family farms. - Work on new facility in Indiana and egg grading system in Springfield, Missouri is progressing as planned. - First company-owned accelerator farms are progressing, intended to accelerate innovation. - Announced a modest, low double-digit percentage price increase for shell egg products to offset anticipated tariff impacts.

First quarter net revenue was $162 million, up 10% from the previous year. The growth was driven primarily by price mix benefits and volume-related growth, though volume-related growth was below trend due to egg supply constraints and depleted inventory levels. The butter business saw strong growth with first quarter net revenue up 41% year-over-year. Net revenue contribution from various segments: egg products and butter, with butter showing robust growth.

• Reaffirmed 2025 financial outlook with net revenue expected to be at least $740 million (22%+ growth vs 2024) and adjusted EBITDA at least $100 million (15%+ growth vs 2024). - Fiscal year 2025 capital expenditures expected to be in the range of $50 to $60 million. - Digital transformation project (ERP system implementation) launch date adjusted from summer to early fall 2025. - Long-term guidance remains unchanged targeting $1 billion of net revenue by 2027 with gross margin of about 35% and EBITDA margin of 12 to 14%.

• Anticipated cost impacts on the business due to recently announced tariffs. The company expects to be affected by tariffs, which could impact the cost structure and purchasing behavior of consumers.

Q: Robert Moskow asked about the price increase described as low single digit and how retailers have already raised prices more, and the balance between pricing and retailer reactions.

A: Russell Diez-Canseco said pricing is to protect gross margins and drive long-term growth, and retailer pricing is up to individual retailers.

Q: Jon Andersen asked about volume growth, low single digit year-on-year, and step-up in growth from quarter to quarter.

A: Russell Diez-Canseco explained volume growth was lighter due to waste eggs and yields, and Thilo Wrede talked about farm growth pace.

Q: Matt Smith asked about the impact of pricing on outlook and visibility of farms coming online.

A: Russell Diez-Canseco said pricing increase was to ensure delivering commitments, and Thilo Wrede said farms are coming online at anticipated pace.

Q: Ben Klieve asked about retail distribution change and impact of tariffs on Seymour project.

A: Thilo Wrede said distribution change was due to data source switch, and Seymour project has tariff impacts within budget.

Q: Eric Des Lauriers asked about consumer behavior changes and butter business supply dynamics.

A: Russell Diez-Canseco talked about consumer behavior and butter supply chain transition.

Q: Megan Klap asked about guidance and gross margin phasing.

A: Thilo Wrede said gross margin was as expected, with factors like normal operations and staffing affecting it.