Vital Farms, Inc. Q4 FY2024 earnings call

• Vital Farms finished 2024 with net revenue exceeding $600 million, well ahead of initial expectations, and on track to meet the $1 billion sales target by 2027.
• Added over 125 new family farms, reaching more than 425 by year-end, expanding egg sourcing capacity by over 40%.
• Invested in brand support and supply chain, with brand awareness rising to 26% in 2024 (up from 23% in 2023).
• Announced expansions to supply chain, including a new egg washing and packing facility in Missouri and a new egg grading line at Egg Central Station in Springfield, Missouri.
• Appointed Joe Holland as Chief Supply Chain Officer to strengthen supply chain leadership.

In 2024, Vital Farms achieved net revenue of $606.3 million. The gross profit for the year was $229.9 million, which is 37.9% of net revenue. Adjusted EBITDA grew 79.2% to $86.7 million, representing 14.3% of net revenue. The butter segment had sales up 11% in 2024, with Q4 showing nearly double quarterly sales. Eggs saw growth in shell egg distribution, with shell egg TDPs increasing 7% from 119 to 127, and velocity climbing nearly 40% from $124 in 2023 to $171 at the end of 2024.

• 2025 guidance: Net revenue expected to be at least $740 million, adjusted EBITDA at least $100 million. Q1 growth expected to be modest due to supply constraints, with acceleration in the second half as egg supply builds.
• Long-term target: Aim to reach $1 billion in net revenue by 2027 with a gross margin of at least 35% and an EBITDA margin of 12% to 14%.

• Avian influenza impact: Continued shortage of eggs due to avian influenza, with industry losing nearly 40 million egg layers in 2024 and over 27 million in early 2025.
• Data mismatches: Mismatch between retail sales and shipment results due to retailer price increases not benefiting Vital Farms, and some scanner data not fully capturing business trends.

Q: About the cadence for 2025, how many new farms added in 2024 are already producing eggs and the Q1 growth outlook?

A: Of the farms added in the first half of 2024, more than half are operating. Q1 growth expected to be a modest step down relative to prior performance due to supply constraints and lack of inventory drawdown like in prior years.

Q: Regarding price mix and consumer impact of egg shortages on Vital Farms brand?

A: Price/mix in Q4 was about 7%. Consumer brand loyalty remains strong, with consumers still buying Vital Farms when available, and brand trust expected to help endure through the shortage.

Q: On the grading machinery at ECS and accelerator farms?

A: Grading machinery introduction expected to be seamless with proactive planning. Accelerator farms are a first R&D lab for testing new equipment to improve farm productivity without risking existing farmers' investments, with first farm expected to come online this year and focus on animal welfare and productivity improvements.