Vital Farms, Inc. Q3 FY2025 earnings call

• Russell welcomed Brian and thanked the Vital Farms crew for a strong quarter with record financial results, supply chain advancements, and brand building.
• They added approximately 75 new family farms, bringing total to 575, with over 10 million hens under contract. The third production line at Egg Central Station came online in October, expanding capacity. The Seymour facility is on track to open in early 2027. A digital transformation project went live in the fourth quarter.
• Thilo discussed financial results, balance sheet strength, internal control remediation progress, and ERP implementation update.

Net revenue for the third quarter of 2025 was $198.9 million, a new record, up 37.2% from the prior-year period. Gross margin came in at 37.7%, above the long-term target of 35%. Adjusted EBITDA was $27.4 million, increasing 81.3% compared to the prior-year period. Revenue contribution is primarily from egg sales.

• Raised full year 2025 net revenue guidance to at least $775 million, representing at least 28% growth vs 2024.
• Raised adjusted EBITDA guidance to at least $115 million for 2025.
• Expect fiscal 2025 capital expenditures of $80 million to $100 million, with CapEx spend to continue elevated in 2025 and 2026 due to various projects.

• Material weakness in revenue recognition process identified in 2024 annual report, but it's a design efficiency only with no impact on financial statements, and on track to complete remediation by year-end subject to ERP system enhancements.

Q: Dive deeper into volume growth, price/mix.

A: Volume growth is sustainable, not from filling retailer inventory. Price/mix was better than planned due to channel and SKU mix, with promotions dialed back in September.

Q: Farmer additions.

A: Strong quarter in adding farmers due to reputation, with number of farms added fluctuating but scaling over time.

Q: Fourth quarter expectations, pricing, shipping expenses.

A: Fourth quarter volumes driven by better supply, processing capacity, and demand; shipping expenses affected by trucking rates and fourth quarter holiday freight; pricing gaps within acceptable range with consumer demand driven by brand values.

Q: CapEx, ECS production lines.

A: CapEx timing shift from 2025 to 2026 due to project delays; ECS third line allows dedication of first two lines to longer run time products and new line to specialty SKUs for efficiency.