Vital Farms, Inc. Q2 FY2025 earnings call

• Milestones: Worked with over 500 family farms (an increase of about 50 since Q1), broke ground on the Seymour facility, and placed birds on the first accelerator farm.
• Board Appointment: Billy Ser joined the Board of Directors, bringing expertise in brand building, retail partnerships, and scaling operations in CPG.
• Second Quarter Performance: Exceeded initial top and bottom line expectations; net revenue up 25.4% YOY, adjusted EBITDA at a new quarterly record; volume growth constraints eased, inventory rebuilding, and strong consumer demand.
• Supply Initiatives: Expanded farmer network to 9 million hens under contract; ECS Springfield third production line on track for Q4, expanding capacity by 30%; Seymour facility revised to install 2 production lines simultaneously, expecting over $900 million in annual revenue capacity by early 2027.
• Brand and Marketing: High aided brand awareness (31%); new advertising campaign tied to The Bear; upcoming limited time promotional campaign to boost brand awareness.

Vital Farms reported net revenue of $184.8 million for the second quarter of 2025, representing a 25.4% year-over-year increase. Adjusted EBITDA was $29.9 million, a new quarterly record. The revenue growth was driven by both volume growth and strategic pricing actions. There are no distinct product segments detailed, but the overall financial performance shows strong growth in net revenue and adjusted EBITDA.

• Raised full-year 2025 net revenue guidance to at least $770 million (up from $740 million) and adjusted EBITDA guidance to at least $110 million (up from $100 million).
• CapEx for 2025 expected to be in the range of $90 million to $110 million, accelerating the Seymour facility build-out.
• Anticipate margin pressure in the second half of 2025 from U.S. tariffs, increased promotions, and higher marketing spend as a percent of net sales.

• Macro environment uncertainties that could cause actual results to differ from forward-looking statements.
• Tariffs on imported items, with uncertain timing and magnitude of impact, particularly affecting the fourth quarter.
• Risk of compromising quality if accelerating family farm additions too quickly, needing to ensure proper training and onboarding of new farmers.

Q: Maybe we could start with the volume performance and then maybe what's changing in the guide.

A: Thilo Wrede discussed that volume growth played out as expected, with acceleration throughout the quarter, and the price increase's positive reaction is factored into the revised guidance.

Q: Your next question comes from the line of Jon Anderson with William Blair. Asked about revenue cadence and Seymour facility decision.

A: Russell Diez-Canseco and Thilo Wrede discussed the decision to accelerate the Seymour facility build-out to catch up with demand, and it doesn't affect self-funding due to strong balance sheet and cash flow.

Q: Robert Moskow with TD Cowen asked about tariffs and promotions.

A: Thilo Wrede explained that tariffs are a moving target, and clarity on tariffs will help determine promotional spending to protect gross margin.

Q: Eric Des Lauriers with Craig-Hallum asked about cold storage and family farm pipeline.

A: Russell Diez-Canseco talked about cold storage being critical to supply chain, and careful management of family farm additions to ensure quality and proper onboarding.

Q: Brian Holland with D.A. Davidson asked about guidance confidence.

A: Russell Diez-Canseco and Thilo Wrede discussed conservative forecasting and seeing execution align with plans, giving confidence in second half guidance.

Q: Scott Marks with Jefferies asked about inventory and CapEx funding.

A: Thilo Wrede said they're rebuilding inventory to support growth and using existing cash and cash flow to fund CapEx.

Q: Ben Cleve with Lake Street Capital Markets asked about accelerator farms.

A: Russell Diez-Canseco explained accelerator farms are for testing technologies to improve existing farms, not for substantial supply.

Q: Sarang Vora with Telsey Group asked about Seymour farm ramp.

A: Russell Diez-Canseco stated they're continuing current pace of adding family farms but wouldn't preview long-term farm ramp details.

Q: John Baumgartner with Mizuho Securities asked about buyer frequency.

A: Russell Diez-Canseco said focusing on new households is priority as there's natural progression to heavy use from trial.