Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to Vital Farms Incorporated Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Siler, conference Relations. Vice like speaker to now Matt today, President would hand over the your I of Investor go ahead. Please,

Matt Siler

quarter Chief am Kathryn Marketing joined Thank Vital today’s Officer; call earnings And and morning. Diez-Canseco, on Bo call and President Officer. Meissner, Russell fourth Financial and conference I you. Chief XXXX Officer; fiscal McKeon, webcast. welcome and our by year Executive Good Farms to Chief

fiscal the By on earnings year now of and should website fourth everyone morning. the available investors.vitalfarms.com. Farms at section XXXX to release is company’s this accessed Relations issued the press Vital quarter have This Investor

management’s management meaning involve and expectations and During these the securities from and uncertainties statements federal risks call, actual cause in that described materially forward-looking forward-looking on statements These differ may statements. of this results current the those within to the course beliefs laws. of could based make are

SEC forward-looking report the refer to XX-K the press with from actual to fiscal expressed of release earlier for filed and Please company’s materially detailed today’s in to a ended and could XX, today today. was cause XXXX, on filings other the SEC the the risks results with implied which Form year December annual or those statements differ discussion made any that for the

EBITDA and Please non-GAAP note that on adjusted will margin, which adjusted are refer today’s EBITDA call, management measures. to financial

in measure information reconciliation Please EBITDA provide for earnings not company accordance substitute isolation a its investors, of the information as GAAP. intended in in While GAAP. considered refer with release useful most presentation to financial for be or of the with our these measures financial comparable adjusted information for presented to prepared non-GAAP the to this is believes accordance a

to President like Diez-Canseco, now, Chief the of Officer Farms. turn Russell and Executive Vital call over And I’d to

Russell Diez-Canseco

your everyone, morning Good Matt. thanks, and time for today. Thanks,

how brand business consumers. updates and it and our our your we our on then by makes Kathryn before with our why As on what I'm going go to start all resonate results to continues financial will of take the call, expect to we across annual unique commitments questions. you'd into to quarter and sharing stakeholders. more quarterly depth delivered speak our Bo fourth will on

First, increase me our results. result turn In is the fourth net It financial This $XXX.X to we from the million year let prior achieved in quarter fourth the period. history. a our revenue. XX.X% quarterly reflects highest company's quarter, in

was million expanded margin gross XXX EBITDA from to up million, points adjusted year. almost Our last $X and $X.X basis our XX.X%

high over Our reached households, household new penetration a which is at year. prior XX% XX.X million the up

pricing growth. at in XX, XX%, I more the believe, over given overall the changes makes weeks significant of due retail egg to conventional past when focus over underlying growth volume backdrop, trends. unit six months inflation eggs. this sense XX the on XXXX, December masked the Significant dollar mostly judging ended of it price experienced to industry category Looking And

ended we which same December egg period. Despite retail XXXX, ahead time over the shell weeks XX, grew volume over at increase significantly flat our category, of our XX% portfolio-wide well XX May, the the over growth of X.X% volume in experienced

prices volume has growth, We maintained the in rate volume average. over level on Vital point. various category over by through four of growth egg all timeframe, maintaining across our changes retail back past premium years, category the Looking XX% same the Farms at the price over this while outpaced of

continues on supply. macro supply challenges by caused to negative into Vital egg the of chain impact execute. the While the issues certain others Farms run factors more and during influenza pandemic may including recently, Avian U.S.

the during performance these to industry, strong in XXXX. volume our confident we're plan steady to growth maintain relative dynamic our Given situations, again economic in

focus of sustainable, dating our over forces to basis, CAGR We've to model, consistent the the business that, several on intentional like way results impacts made the all XXXX. driving is quarters back on been navigate growth choices net annual global past our to an Now, revenue the overtime. our is operating we've inflation. about remains long-term testament way of this A XX%,

Another in our of proof strategy point profitability. improvement is our

To reiterate, the more relative about margin our performance was XXXX, gross XX% in recent range. to in low-to-mid-XXs

from adjusted this single moved over digits digits EBITDA single timeframe. our margin mid-to-high to Additionally, flat-to-low

experienced focused have there over from on to growth While as pressures are remain profitable time, the short-term time recently, long-term. we we

to our supply robust going to I'm turn Next, chain.

growth a Last and continue position world-class component packing access. from puts for to Egg $XXX significantly in to and objectives. in our chain, us of Central expansion critical We strengthen Station, increased over our revenue which support annual egg facility, is year's million meeting our washing a supply our capacity egg

egg We business site Station our Central beyond which Egg on remain million. confident trajectory, growth in our facility, of we $XXX are capacity believe and next finalizing the can take revenue selection the we

across eliminate continue States. support bottlenecks United growth plans goal, our our service Vital proactively grow we household always, to in Farms As will penetration the further in of primary of long-term to

We that we of farms achieve XXX, to long-term over add new can so our continue family to network growth our objectives.

long-term want Our we to Farms. create new with working of to farmers pipeline farm in who which work mutually farmers, Vital by the beneficial strong outcomes, directly reputation with a built community toward our continues

our your how values improving our call are related announcements capabilities business, how and to with country. foodservice across who attention believe partner to we like to share distribution our two we I recent that brands the I'd illustrate Next,

important our see continue this partnerships on and potential business, We our strong to segment in journey. represent of new these milestones

lifestyle up shares of to and They're their animals our intentionally ingredients. States, in pasture-raised wellness-driven our teamed menus, lives the alongside other with restaurant United award-winning dining, of and with improving sourced serve the a brand through across eggs values that restaurant XX Kitchen, locations people, on recently the an planet pioneer brand True for We Food food.

Foods, will to We're and industry the distributors restaurants. food help spot ever most pasture in redistribution sustainable than are between brand us. the farmers the two eggs relationship first this our national of available suppliers. a ship time states. redistribution X,XXX and to bridge stocked foodservice raised Foods food every for to Dot Food We've distributors big and reach and from and smaller quantities a world's with from egg us make sources has Dot high-volume family-owned like is to provide operators largest eggs all responsible suppliers some less chains us company accessible the service intentionally This Foods more and even producers. begun North regional also XX True enables Kitchen week, nationally, distributors model redistributed the distribution. its Dot in America firsts first Foods our of for to they and network across truckload marks new Dot brunch

an I'll share ESG Next, update.

business the business. to improve planet we of of see an embedding to have progress may our impact the some into We the and process recognizes that and we've animals just food. the been as define As has our the medium-term reporting we published lives seen, our you report in do goals through way are the opportunity made always year's central annual people, short- impact impact XXXX This and report. illustrate grounded purpose that to

We're aiming next five to over years. hit three goals the notable

to landfill waste end planning Ag the achieve Station Central to at of by zero we're First, XXXX.

in And agriculture reduce working farmers operations intensity to finally, in we're XX% all XXXX. practices network Next, by aiming to we're carbon regenerative XXXX. by our our scale to by

to of Our some ESG stakeholders. grown I'll to the report of commitment out sustainable like while year's read calls important for things all out Vital our a all we've report, highlights has positive And strategy, call at out here. few the This our progress made. everyone Farms, encourage outcomes creating I of

increase reporting to equity and the community With advanced disclosures other outlined through been inclusion task farmers the with inclusive marginalized taken Farms open-house. on that We've aligned climate-related And in the our diversity, agriculture. report steps recoup from have in to financial in Vital communities framework prospective first historically force we've farmer transparency. to farming

recyclable the our XX-count Year work. PET. hybrid We the carton, Processing our adding Green XX% Magazine's impact capabilities this products at for Egg lower Central our of increasing this economy water XXXX and Egg Station a Station, panels. coming processing Plant was advancing from capacity Central away transitioning packaging year circular with thoughtfully doubled in responsibly Food We're awarded of recycling and introduce and solar our

committees fostered Board of gender-balanced invested balanced gender a in board with our female more we on organization. We perspectives, value and help strong effective Directors, voices team. standing diverse believe women We each drive a of which leadership our chairing senior

in thoughtful for of across time. to remain financially remain each ESG stakeholder We desired impact while driving ensure the over discussions beneficial, our each will they

goals as made this brand the discuss to I'll the of against to of our year. one now key as call some over unique, turn we've progress well what past makes our Kathryn

Kathryn McKeon

doing Thank the to privilege opportunity you, Farms the the the to you Farms incredible and to story thank team. genuine on Vital talk we're a marketing grow people Vital the the I alongside brand. to Russell, tell of for group consider it work

meaningful As an truly honored source for and stakeholders and our content, story. organization, is tell rich thoughtful of I'm the to care the

an Vital lives up choose the Consumers improve of animals brand because of us, planet a extension and Our the foot. people, backing through to commitment is purpose. our they Farms we're believe

campaign Vital it investing advertising further XXXX we major number Bullshit-Free or awareness Farms touch forward XX% consumer XXXX. points brand of in drive integrated journey, marketing expand and dollars to brand was increased the in across keeping our the drove our and of in plan aware increase Our awareness a robust focus to consumers throughout moving

to For consideration leads us, to purchase. increased awareness leads and consideration increased

the expansion Amplifying direct year. awareness saw penetration role a in last household played in we

growth The saw our message, trust. ability brand consumers US the in in reach households. improvement household speaks is year-over-year it's to metrics, our our to million in including we over Farms brand awareness, well fact, XXXX. as penetration key now XX.X compelling brand as uniquely In and This with XX% in in reflected Vital

our long-term relevant are the We relationships and brand to awareness. to brand creative we do to ahead, As to key through culturally stay with potential recently grow did household and look efforts, because free with joining which connect our continue forward lasting we we believe growth. them are creating to more not keeping them. we We We points. market look Day many marketing with Valentine's brand campaign. consumers. our touch by opportunity our our penetration with energized and to our we attracted sales A just core conversations, achieving moments Consumers continued to Bullshit-Free build like contributes us, involves it by

to for I'll over call your turn the today. now everyone, Thanks, back time Russell.

Russell Diez-Canseco

Kathryn. Thanks,

our to continue us coming in approach value of investor leadership and ability As and treasury, weeks. and month or stakeholders. information for to to sell-side consumer announced Thilo new arrival forward a his forward as joining deliver long-term many His a will the Farms us will the of companies financial Thilo goods proven across well. former that of with relations Chief looking aware, analysis, will speak be our I'm having analyst as many disciplined the technology lead Financial planning and He a world-class you will call on packaged accounting, Officer. create them help experience And a are Wrede to about opportunity you brings meet all us functions. I ago, look serve to soon. Vital that we

style As traveling I'll and lead its his call ways, golf time over accounting, Farms like in Bo difference growth as to Vital our creation leading success again some for post-IPO Bo is Farms. made the discuss thanks here. Vital leadership him quarter Bo turn And Relations through Investor founded. and everything contributed results Farms our you've year led Bo I'd a than role, public an has Farms. IT an he playing period us to setting I for lasting fiscal the compassionate the family. of you incredible to helped he with to wonderful a time enjoy thank greater Vital company. finance, contributions important to several take your Vital organizations. In has up fourth hope detail, to Bo, for and better played and

Bo Meissner

for will everyone, our review for kind Thanks I December financial I the us results guidance you words, then year the XX, Russell. fiscal our ended fourth thank joining quarter year XXXX. and Hello, will for for and fiscal XXXX. today. provide

growth with As XX.X% net as million, Russell period, and due to new XX%. by fourth increase in an volume year in strong to at of prior driven another sales, was the of net mentioned, our revenue existing quarter Growth record in $XXX.X of we revenue partners. egg-related customers, increases compared quarter continued distribution by retail the gains driven volume had as growth at well both

compared was profit of higher $XX.X of quarter sales. by to net $XX.X Gross net fourth profit for gross quarter revenue, XXXX. for XXXX change million of in of was primarily or fourth The revenue XX.X% million the driven or XX.X% the

change eggs offset increase costs the increased elevated As increased costs an across pricing input and headwinds, to margin, portfolio, in farmers. in packaging butter, our payments including to our entire some gross and in both

during $XX.X of The increase We by higher fourth last net revenues, saw quarter expense growth and million driven headcount shipping as higher or in support and year. SG&A was XX% million quarter of fourth were revenues continued the employee-related to leverage $XX the the on period. compared to distribution grew in expenses costs and our both net SG&A we for marketing expenses. primarily or XX.X% SG&A

quarter efficiency. the line of revenue the fourth compared fourth to in net by distribution was of and $X.X or XXXX. of of million This or revenue or fourth driven fourth the was XX.X% for a in EBITDA X.X% net $X.X loss in quarter relative million rates were Shipping Adjusted operational to expenses decline XXXX. quarter of revenue, million $X the for quarter internal X.X% of and $X.X million a haul net

to to $XXX.X volume at was from in growth driven year XX.X% revenue almost some partners. existing an year growth by million, turning of both distribution as in ag-related growth revenue fiscal and continued compared our due gains new by was our of for XXXX, increases sales, volume pricing. fiscal XXXX retail strong XX% driven Now The to at well customers, results. net benefit the and as year Net increase

was XX.X% of or $XX.X for or revenue fiscal $XXX.X of million year revenue, year in primarily million sales. change driven by XXXX. net Gross net the The to was profit compared for profit XX.X% gross higher

gross margin, some costs. costs pricing entire change transportation As input packaging both higher and including eggs for an increase portfolio increased offset our increased to in costs across and the butter, in headwinds,

XXXX. XX.X% million SG&A SG&A as net marketing headcount grew as in driven fiscal expenses by for revenues primarily was related or to compared were our The $XX.X support net $XX.X costs in of we well growth, or year to of spend. the million year revenue continued XX.X% employee higher higher increase as

$XX revenue Shipping for and to million year net was revenue the X.X% relative and year million $XX.X of by partially net sales X.X% fiscal volumes freight or expenses XXXX, distribution in or This higher were or operational was driven of XXXX fiscal million a in for rates $X line-haul revenue, EBITDA revenue of fiscal X.X% compared efficiency. the net of decline internal or X.X% to by Adjusted year offset net year and $XX.X million for XXXX. rates.

on an update our Next, capital structure.

a cash As total debt of no had of XXXX, investment we and and and XX, December outstanding. million, balance of equivalents we have securities cash $XX.X

and comments on few A inventory accounts receivable. both

continued levels inventory grew on to inventory particularly our support hand, as year eggs. past Our growth this normalized our in we

result of growth As for the a of in business. accounts majority increase the our the is receivable, significant

began in was balance increased farmers, Finally, the which quarter. fourth our cash impacted by earnest to payments our during

of adjusted On in adjusted than of more we than guidance providing we more for are ahead XXXX, EBITDA guidance $XXX million $XX we of are XXXX. EBITDA, revenue net fiscal look year to providing As fiscal million.

cadence the primarily of in growth stronger year-over-year net XXXX our pricing of due for in half the revenue expect the increase. the As impact we carryover first year, to XXXX, May

due we expect in first fewer promotions Additionally, elevated to our second to the shortages. breakthrough half expectation prices margins supply be of stronger and gross than will year due of the half the industry

year XXXX between million, million the to are on delayed next fiscal this previously our constraints about the some capital XXXX in expenditures was planned to egg of facility. last We figure costs chain XXXX of due as work our million. relative To for spend planning well as includes $XX $XX year initial some packing on vendor expenditures about figure, of supply context provide our million $XX $X and that

to the As I navigate through look what bring CFO I'm him working this period to we forward and I he Farms. it as excited conclude, Vital reiterate has Thilo's transition And pleasure about I the with a to want experience smoothly. organization. of July been serving as what will

pursuit that household as expanding across meet financial continues objectives well-positioned of its the Vital confident penetration all the Farm I'm company to is its US.

to your questions. for now your interest with today. time And Thanks that, take happy be we'll and

Operator

question. One Thank Instructions] you. first moment [Operator for our

line Our Robert comes of with the Credit question from Moskow first Suisse.

line is open. Your

Robert Moskow

you congrats Thank year. great on a and Hi.

Russell Diez-Canseco

Thank Rob. Thanks, you.

Robert Moskow

half. next forward business all thanks Russell it related It you're or the I'd maybe there. your the how thinking latest impact first I'll like your your industry on in like your start not. of work eggs and conventional Bo, for half first couldn't was on quite that and second chapter. loaded. and half to and the what broader supply just it's to if versus what's tell look And to broader sounds know And on the going thoughts shortages I influences

Russell Diez-Canseco

of us and it sure for top about Rob. of as appreciate a as folks Thanks, the lot think the very much, I'm I question for ahead. year mind is we

volumes big growth so there been impact been bottom saying have I'd in has to brand, pricing eggs historically or we deserves, there's marketplace that, So that terms bottom to as ability velocities, start big or nor kind at our strong a of of at maintain the what price believe, the of impact our in in big changes premium our the there we historically when the very comparison speak. that in commodity in -- the there ours, we've of our of by to in are changes correlation not a rates shelf, found is looked the the pricing

last And the where period, but seen there back I'd the full shortage throughout some of we've an really a prices that go six to months. bottom bit promotional Influenza the strong oversupply in boom. supply of at There XXXX activity saw industry many some not there very a low little the back of out was And then shelves, you the in was example, coming as over market. Avian eight to very when only regards, of the almost a was drove is

end found it in consumer that by one it's a market the the the force didn't we didn't us, at our promote was product attracted we on that like different ours an It to that's more for heavily affect It or growth the selecting response. pricing. didn't What available on high ones the affect shelf. primarily think because cheapest our versus rates. egg are focused that's example, a And of

let have year. that as an saying the me we going that by underlying into So assumption start

why shortage the fourth reason quarter that was, might part, all in the the we're first believe, what's particularly half versus of shortages in of Now lapping our sales quarter some XXXX. believe on the seen I XXXX. And do on with an we half the impact market shelf, happening has is be by part being simply The rates the to a more going in producers. some fourth broader that on that there in the year-on-year there reality have have second of that growth we to in impact everybody's

of year. it's like the ability in us, true We in eliminated to will to that's promotional very all don't on back for project have activity is predictable. little confident promotional the normal in promotions year, our activity. the in half but impact a activity less my look you're of And return I a bigger virtually see full now, that part. necessarily going of and the see right to The all back think though, I this year, we'll that we've first half think limited less the what half

will in projecting I the year-on-year second And so those think half. than stronger the two half reasons, growth first we're for be that

and a and and I'd acceleration consistent three two versus this at things more rates half; year is two growth an of first actually One or stack, point two, look out. growth second three year, between you If two XXXX. year much

overall. it's not still weakness back projecting the in So I'm a to great be clear. a story half,

Robert Moskow

provide project minimum a big of do deal? sense. that how kind does And Foods volume makes this it incremental That you distributors much right. will this is part work? volume on And is any there like the how the All sounds Dot how number. deal, X,XXX of My But follow-up,

Russell Diez-Canseco

Thanks.

is, more exciting every in bringing up other a from of turn, believe to however, pasture foodservice, model the in service Foods of what's to Dot opportunity like what's food apparently is products right of then not distributors accounts. sense, this they're a distribution and us producers So in opened kind egg who it essence, the wide distribute the the that we've about great serve variety about consolidating the a distribution, of to them variety in producers that opens I channel foodservice up like accounts.

minimum story, nor don't serve opportunity so as to then becomes per want end. much opens a we more become the se, in And the customer of so customers does the the -- believe does up a nor it this volume it I become get to of it key kinds to

So amazing to it's look terrific they're amazing business to excited our and to a working be to an future really could facilities with co-create like. distribution a foodservice what got end, work with. the means We're partner They've actually. them values of

Robert Moskow

Okay. Thank you.

Russell Diez-Canseco

you. Thank

Operator

next our for moment One you. question. Thank

Our Stanley. next Morgan the Kaufman question Pamela line from with of comes

Pamela Kaufman

Hi. Good year. a strong Congrats on morning.

Russell Diez-Canseco

morning. Good

Pamela Kaufman

Good and to luck Bo steps. your in next morning good

Bo Meissner

Thank you.

Pamela Kaufman

how on growth making growth? question growth versus distribution the to price guidance. year And of you a It in points household the line are about assumptions another strong are What you for from XXXX contribution thinking and volumes? XX%. penetration about top Just

Russell Diez-Canseco

price talk bit a Bo, bit you can about growth. maybe do drivers little then versus the volume? to Catherine And a want talk about of

Bo Meissner

Thanks, Pam.

the carryover from across the pricing have still in we of increase last So is portfolio some of in price May what took XXXX year. we the

price increase have took January. that And announced not first coming we carryover into the the we're in this double-digit that then that plan But the in back half. we have half as So low of well, we year.

low results. is The components XXXX volume double-digits in to in between mid two somewhere those included growth. are balance pricing double-digits So our

Pamela Kaufman

That's helpful.

Kathryn McKeon

household penetration. Pam, on And

retained the that underlying over saw households. total last One is think households. X ways. We added households. year, about new we household is number that million two You The in

proportion to done about in awareness which and year-over-year. long-term in retention over also last year, looking build households, So at those of ability well but other, new year, this those the to the the year. both expect our numbers really grow term, which continue the a we those our we strong importantly, really household each we've but balance grow And got in we're seeing more that to me to across short tells are both across thinking of penetration. in both bring And we've -- groups

Pamela Kaufman

Great. there Thank strategy? guess, question think for because And my this then should prices pricing where you. into influence how you And feed margin I the second expected would think impact of be on lower And a that? about about just from costs could outlook? then in your is your moderation the we to translating year. how How scenario does that gross that

Russell Diez-Canseco

Thanks, going the still there's P&L. I in Yeah. lot things on think mean a I of Pam.

Although the that still of prices different. feed are that forward-looking what pricing now as January account that they're on prices costs as have the actually are levels projection that seen. moderated, the things have and we feed saw historical The influencing as packaging were at we above time we into other took going in well announced with

low that right we gross see for we can of to the inflation best us our mid-XXs. accurately project for pricing outlook market long-term targets for now, to margin again the as So reflects what margin to back have the we in get as

Pamela Kaufman

you Thank

Kathryn McKeon

Thank you

Russell Diez-Canseco

Thank you. you. Thank

Operator

line next with Ross our comes question of from UBS. Cody And the

Your line is now open.

Cody Ross

a bit. your just steps. talk to on next Thank I for margin question, and wanted gross morning. Good you little our congratulations about taking

points shortfall your XXX guidance the drove quarter? margin for the in Your basis below roughly in quarter. the came gross What

Bo Meissner

as quarter on we difference in the of had shortages Well, the on lift what came would a going the see and it of that But expected, was the the in with we shelf. the have quarter flu versus expected fourth had on on expense what majority we the in what is we promotions items. some did Avian

were we in some lift on versus trade some going higher of the drove that which had promotions, the expectations into the those investment quarter. we seeing So up

Cody Ross

dig bit and it your bit just in to to understand it. And Got little comments I then CapEx wanted more. helpful. on a a That's just little

driven CapEx facility. I into this by egg think costs the early in moving detail new to Can said just related XXXX chain you you supply costs is then growth there? and year a provide more some

And last that a then details on thought be into. expanding provide you call would heard would earnings guys category I also, more new that I you

So does in guidance your you. Thank it? include that CapEx this year

Bo Meissner

$X a as that guidance, that last ECS opportunities. didn't for million of completed things flowed year things couple as was cost get So for we're planned the about that this to CapEx some well planning do was savings Cody, that some into that there there year

are We ECS to III this year. start planning

CapEx the the grow maintenance. back we was the flown balance the year. plans, that's complete two that just would So to million balance continue we the shift start we the had And ECS really CapEx. and general into of $X of from forth year is I'll is this within as we to fiscal building for plans acquisition thought development Russell acres buy address of III growth just and just what land The ECS site III last the to the the facility. That's more is. pigs for let plans facilities and

Russell Diez-Canseco

of bit Yes. it's -- I just And development we and business doing. that that answer what actually we're in be a is about would before to premature we're We decided further the There of need our part the to the given announce in little question, the love bit new work the competitive new just a nature category. not competitive little related plan second our a To CapEx in we're share category. no. more doing the around to

time. reality I'd it's not at perspective is from So the love stay but of thing to just this tuned. information, be sharing all interesting right a competitive kinds the

Cody Ross

last if And Understood. I here. sneak can one question in

the ECS now that given $XXX III, investments of you. guys your you a time growing on. I'll And put pass Just is rather million sales. making is more in it profitability related Why current up some capacity right the begin for over flow? than to to CapEx slide Thank then cash your and

Russell Diez-Canseco

the intentionality to long the That Cody. kind business we run for gets term. which Thanks, of Yes. with this back

of One think chain-related, cetera, that other -- bit and proactively. very that supply perhaps us work ensuring suspenders external of high-growth contrast et eliminate in labor served we a over have XXXX, resilience to make we as And weathered challenges hard supply in and that to a the little time stability plans to our really related, chain. all beyond, some the companies bottlenecks of XXXX, is XXXX things the I growth we well, of our to approach and to plan sure and we belt refine of we

case, this in right. you're So

can an that shows that this egg we've south infrastructure in a million guided our of at current business least analysis year. $XXX support Our to number And clearly revenue. of

So to grow, to a lot lead are times yes, staffing. grow. times of COVID. construction. lead There lead there long as companies to are And during lot There are long there's saw room long of times room to a

And an so have ensures we're the planning maximum executing and optionality taking process the approach of that throughout we plant. next that

said the actually step draw all what site shovel that's that We actually do yet. blueprints. putting look, case, can In do you project which We this is, is programming, total And a do work we've dirt the cost. of a can fraction we without can selection before work. in

to time we've front that next this do the Vital Farms so plant. the got in is to way. project to time minimum or right, So decide reality it we that of three-year two- optionality out quickly why wouldn't the it be the do right we a move when the could lead The to at get work, is build

stages prudent be this think -- of in now. we to that at so it's project early the right And

Cody Ross

Thank you. pass on. I'll it

Russell Diez-Canseco

you. Thank

Operator

Samuelson you. And next with Adam our question comes Sachs. Thank from Goldman

now open. is line Your

Unidentified Analyst

morning, questions It’s taking -- good for Thank you everyone. my

Russell Diez-Canseco

morning. Good

Unidentified Analyst

Adam. like most the already. been in covered Guillermo is actually for looks ground [ph] has This It stepping of

for on to I what So would a be on follow-up this that ask program capital expenditure And the your expected like would returns year? capital.

Bo Meissner

talk that as Well planning. capital we're a new portion -- that is for facility of the

So for Russell how terms that in way in the the business. we're prudent planning of described

somewhere is range capital. forth cost the that large us farms CapEx our significantly cost expectations the as that Another an new and shift allow we our planning, And to growth business we for we're like returns to in that volumes, that of things IRR above CapEx have the grows those add investments? return of back those for product capital looking farms. saving cost on egg portion trays and and any we on and of from projects, saving But buy double-digit is and but

Unidentified Analyst

just That's the another follow-up very on guidance. revenue And helpful.

mentioned being guys year, volume pricing half for somewhere the range the year? I of what the second the double-digit with in growth? if remaining first the You got that of that -- Pricing for correct was part the And

Bo Meissner

Yes.

pricing. May carryover of took have double-digit we in price low increase last So, We year. a

of increase in May, we've until a up be the So, double-digits. this of price January price increase taken that low cycling year, across similar portfolio we'll

And so XX we'll have that in effect of for year. months essentially the

Unidentified Analyst

very leave I'll Thanks. helpful. it That's there.

Operator

Brian our Cowen. Holland And question you. with comes from next Thank

now line Your open. is

Brian Holland

I morning Yes, and If thanks. expecting of to a could wishes platform -- or today. product just were new investors I Bo. add by Good let something about think best me congratulations lot and my to a -- hear today

something or year-end teased sort on of the I by Russell, you maybe QX like that. call, think

we getting to been So, I'm there that that to issue or discern an from the anything there's with fact announce just if either supply curious together. that, is ready haven't

to to -- it. you're specifically shed of about the I going to timeline understand to ready Just want wanted here? why if I'm until launch a just you curious don't sort understand light you be little can behind what that's talk

Russell Diez-Canseco

morning hear you and this question. Yes, very from a fair good to

households like growth strong of things say household doors. households. not I'd a We're it's well, and strong lot the and high-quality high-quality new only rates thing that we're consumption like healthy our is -- that this but are doors is We're there, exceptionally are doors business addition really of first is households. performing new egg retaining new rate seeing growth. adding adding I new the believe. suggest households, is The buy The We're would

We're coming doing this a a the gotten morning. and of wonderful very strong in evidenced with far so the way consistently as lot by results comments are really so we've this through intentionality

rushing need something to baked, and one before slowing to thing or happen we mature announce perhaps So, that prematurely we're not that I so the want to to in say speak, a business. start to growth is next that compensate it's fully fast don't of reasons for there

not including around business we thing at growth. and We And it here, on accelerating everything believe that's accidental. I look basis, that's core is do how intentionally three-year then high next about a because you -- there the very stack if it a thinking or is its say planning fact, that our executing In first what's would for of two level.

And news so, about the the to on is frustrating existing know I exciting not while to the new how it's I have want news thing. don't exciting detract share to from thing,

anything's and okay, just to on for very That share on is and yet. we've we're not it's done, us not doing look, means that, yes, to much what got it's message always we're that that and ready quite think quite wrong. I news, beyond yet, news mean -- doesn't ready that's that share when brand news and just which we've we're we'll say, But

Brian Holland

the color, there. I'll I Russell. you. appreciate Thank leave it

Russell Diez-Canseco

you. Thank

Operator

from Stifel. our Thank Chris you. line next with the And of question comes Growe

is line open. Your now

Chris Growe

And morning. congratulations to Bo. I'll Good let my Hi.

Russell Diez-Canseco

Good morning.

Bo Meissner

Good morning.

Chris Growe

wish And you well.

Bo Meissner

Thank you.

Chris Growe

the of Could to of wanted cost you missed If couple just inflation estimate the then was give some cost And say I ask inflation? of inflation? Did just gave how could us in cost pricing kind it, for you XXXX I questions. sorry. a fourth kind quick you offset that quarter? much follow-up

Bo Meissner

Yes.

the cost packaging to did by the XX% referred the gross we inflation, it, we driven not in And majority offset earlier and decline increase. of projected so have increases time. which much some is some price in in particularly in majority increase XXXX, our coming that earlier on being For question, the other of QX some outages were the margin than by, pay, farmer the shelf competition. about but the commodities, was on offset promo QX, And farmer reason for the are is late-breaking an in the what an of just really another through lift we organic the given I January at stronger commodities in and in direction, driven same that in going of we all increases had, the increases

Chris Growe

have to And you. XXXX? gross Was about point I at terms added Thank through farmers Okay. continue do on those, have maybe come then margin, payments just to you farmers. you year then? a volume basis growth that assume higher because the in plan -- a drag more fourth in to related follow-up And on call do does XXX quarter the the that that it, just the that that, would

Russell Diez-Canseco

the Yes. guidance. into pricing We're for continually adding farmers, the factored and about basis they it's is for will all at come of our farms. assumption QX, that XXXX fair And points, XXX new in

Chris Growe

that continue that be the three from through to clear, quarter at just XXXX, roughly of And least the would first fourth rate correct? quarters

Russell Diez-Canseco

Correct.

Chris Growe

Okay. That's have. I I Thank all appreciate you. time. your

Operator

to I'd back Thank And currently conference remarks. showing Matt hand over closing for Siler you. no I'm like to this the at further Mr. questions time.

Matt Siler

everybody, Have your good interest for today. Thanks time day. a and

Operator

this gentlemen, call. your conference and for Ladies participation. Thank you concludes today's

now have may You Everyone disconnect. wonderful a day.

Vital Farms (VITL) 9 Mar 232022 Q4 Earnings call transcript