VITL - Earnings call 4 2023 | Vital Farms, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Vital Farms Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anna Kate Heller, Investor Relations. Please go ahead.

Anna Kate Heller

you. Thank welcome Conference Fourth Call and Year and Vital Earnings XXXX and to morning, Quarter Farms Fiscal Good Webcast. and Wrede, I'm Russell joined Financial Thilo Diez-Canseco, by Chief Officer; Chief President and Officer. on Chief Executive today's Kathryn McKeon, call Marketing Officer; access should release and press the company's this morning. By fiscal have fourth XXXX year now, to everyone earnings issued quarter of at investors.vitalfarms.com. website is on This Farms available the Vital Investor Relations section the make Through the forward-looking may federal course securities meaning the management laws. of statements of this within call, and expectations to current and management's those on based are could results statements and risks actual described statements. that differ beliefs uncertainties forward-looking These involve from in cause these materially today refer to the SEC other a on year from report the results filings detailed Please annual for fiscal or risks materially the statements differ discussion actual press those SEC made today's in ended cause December the expressed filed that implied and company's XX-K today. forward-looking to XXXX, could for and with Form XX, of release the any with on adjusted EBITDA Please note are and adjusted which measures. today's to refer that financial non-GAAP margin, EBITDA will management call,

I Farms. respective release Officer Russell for now Executive a non-GAAP substitute to call comparable believes like measures information most EBITDA in information be the our to their not President in reconciliation accordance and prepared with in of Diez-Canseco, GAAP. to to for as this information financial presentation EBITDA Chief financial these measures is over intended provide of And would adjusted company considered or Please refer isolation investors, for While turn margin the the a and useful accordance GAAP. Vital adjusted of with presented to earnings the

Russell Diez-Canseco

Farms CFO, and to start how we continues it made build thanks, on morning, Catherine our your is results guidance quarter in grow our strongest as everyone, information and more to we Good in-depth XXXX. to headline time to that stakeholders, today our had billion and Wrede, as Thilo provide Vital Day. today. Kate. cover $X net for multiyear commitments our by we we're I'll I'll our revenue, our brand by Farms fourth will Vital our fiscal purpose-driven full to to for with consumers. The shareholders for our quarter to over September that then XXXX the ever the commitments Analyst our Anna how hand growth deliver year year including Analyst Then revenue net ambitious and well track out including meet on to sharing trusted XXXX. laid our continues relationships goals CMO, Day, at at McKeon, Thanks, of on

reach significant to for also made progress XXXX our map and adjusted and XX% XX% margin. a We momentum gross well-defined to toward road entered XXXX XXXX targets XX% strong with We margin targets. EBITDA these

of details, fourth growth in XXX.X% XXX SKUs quarter the XX.X% supply $XXX.X versus revenue. some fourth and the customers into existing by of This of at quarter demand, driven net We record the achieved diversified net single million was a consumer of a ever XXXX. the highest starting with with or expanded combination farms. distribution, million of $XX.X strong EBITDA chain increased a quarter over delivered adjusted XXXX. a with increase That's of revenue get we've We had net and quarter over Let's record quarter a fourth revenue. family

the of quarter, of fourth We X.X% contributed benefited the of quarter. growth adjusted from about and revenue growth a operations XXrd EBITDA during in which also week net XX.X%

the fourth to quarter. expanding continue off focus we Day, Analyst on increasing paid both to efforts retailers our at new distribution at existing discussed and SKUs we As retailers, in

States XX,XXX to compared retail meaning that available XXXX, X,XXX United We our were were XXXX to Our the distribution approximately added the products during of considerable. the close end in stores end the new locations and of as across were and existing retailers XXXX. distribution as chains from mass in South. our of California well majority channel regional in our expansion gains The Northeast, in XXXX the at gains

SKUs existing number at retailers. We also increased average the of

in year, existing egg food continuing for more January beyond, X.X% we the we additional year. channel wins and SKUs for SKUs was key in XXXX. wins have growth expansion to add compared X.X leading us in our per these up store XXXX even will set with average XXXX of Our believe some already the retailers. in grocery several We're throughout these February expect and at wins stores throughout including the incremental as at in retailers continued We and XXXX that

sustainable sales We eggs. growth count organic that category The food organic continue demand choices. SKUs, strong to and the foundation reputation in positive and by Vital premium make show for also the consumers strong fueled are faster particularly demonstrates to XX ethical the Farms point and of trends a packs in see pay willing brain. of price to higher They our increasingly

the at existing and in price sales point to flat enabled while of increased volume, SKUs distribution, stores either was the down. expanded or Our growth category unit rest SKUs grow us higher and

As XXXX, of sales. Vital in on #X the SKU based XX food the weeks has the branded dollar Farms ended now channel December XX,

Looking track at data the in specifically channels. the

retail the XX, XX% XX%, time December dollar retail in category the of Vitor During same egg XX grew decline period. the while a ended dollar XXXX, Farms by sales weeks experienced

X%. volumes underreported. Farms stay Additionally, worth noting to Vital category due volumes volume mix flat [indiscernible] the to about shift by unit that unit during saw our channels the to tracked same time It while growth is in XX be grew the frame, tends

of X% category. Our dollar share egg over the total is

Our washing growing Central and we to able Egg big are world-class are and XXX Station resilient customer our continually farms reasons at with facility meet why family supply packing demand. over chain

another to enabled $X disruptions important for XXXX. to up like and Our company our a execute We close significantly supply consumers. strong We're XXXX sets believe commitments on billion greater to by to and making our will avian digital year to and automate system, chain impacting progress to ERP growth new streamline is potential ability is processes, believe food. and of model our our a and has us also investments influenza to control navigate transformation number successfully to that our a crucial this as enable us us without us leader customers which in transformation, step support live The of summer a important the will achieve ethical efficiency XXXX of an in costs. we digital and centerpiece one go enable which take next being

in well it Chief a right going future. billion XXXX. this close comprehensive next I'm the the advisers close XXXX, started continue Kathryn to have with really over for our to and brand I ERP by a and our in our team, set deepening us delivering net into where revenue and Vital XXXX, able XXXX. to McKeon, strong growth Farms our I'll We multiyear and continue on to how track we're over internal plan now in including external relationships great consumers. with growing We section. year help and to which stakeholders had Marketing big hand to will for ambitious project some $X the discuss year another were Officer, we goals

Kathryn McKeon

XXXX. family brand continued on our changing podcast plans on We brand, YouTube, Thank while to over streaming impressions fueled marketing growth focused and and and HBO, earned in-store consumers were wallet, platforms, by billion XX% to like awareness relationships social the even dynamics. free as brand through build and across capitalize investment always We our XXXX our to which this able free brand campaign we have, XXXX, extending the like and a Peacock. consumer, you, leader we out the at Paramount buy we're Vital holiday the trusted farms throughout year by drove consumers share a continued of bull we in that and rate and in ship Farms deepen shifting in television media, market billboards. buy purchase even continue drove increased brand campaign, of surprised frequency, year-over-year do the frequency, our X simultaneously in brand We Russell. our wallet. but our brand and to reinforced long-term awareness, with and on our on the lift ended campaign that of thrilled, services share deepened target key and Plus with already reinforced category, of activations metric. overall purchase our We year also uniquely like loyalty category our XX% awareness we loyal position more as with streaming [Indiscernible], loyalty in timely more rate with not and context the In last stands improving This and spent increase were loyal year. awareness. relationships

year consumers. our as for have store Vital awareness target We and the in brand of increasing big Farms building continue we another deepening with loyalty by group XXXX

connect continue that our breakthrough We lives the food. brand planet evolving marketing will engagement to Tapping connecting our high-touch our through animals campaign. to consumers business, that the of and our people, into grounding in conversations our through with stories in consumer and program, share our and continue authentic improve come we from commitment will the model shopper cultural brand investing

that bold brand also accelerate our shifts are awareness X We toward making us help will schools. progress

Thilo. will time will our and reach insights our which and your recalibrating help that, promotion media in it are your us target We and and pass the Thank and right confidence strategy Vital we're expertise, messaging. I With consumers, better to over for with pricing consumer for consumers Farms continued new deepening you trial to drive today.

Thilo Wrede

Hello, XXXX. guidance fiscal fourth you, you and on Kathryn. then I results and year review our quarter will ended the everyone, thank December today. I year XXXX. will Thank financial us joining details provide for fiscal for for our XX,

our XXXX in fourth XX-week XXrd XXXX, to a in in quarter 'XX. and results compared fiscal benefited from operations the week reminder, a As standard of the year

a higher and was compared quarter by or net increase call, you driven That of to period. volume of in week extra both the million is already was heard growth. existing growth driven XX.X% revenue This record to on to contributed the of the XXXX price an The an strong quarter and new customers. was net in increase As XX.X% $X.X fourth have The with by revenue million. shipment volume $XXX.X prior X.X% retail of this year fourth growth mix.

extra of quarter higher from The in dollars fourth marketing net quarter fourth our of growth. Net the were to X.X% million driven XXXX, rates headcount mainly quarter the $X.XX for gross per labor for fourth profit for was $X.X environment and of the by were continue was Shipping decline million portfolio was per or of or added XX.X% in million extra was costs. revenue the expenses grow quarter internal distribution $XXX,XXX. or which higher we offset partially of The revenue XX.X% $XX.X compared of $X.XX margin higher SG&A fourth shipment or XXXX. revenue was expenses XXXX increased point The to X.X% revenue net share XXXX. XXXX quarter million contributed support January fourth or revenue quarter The XXXX by the million or commodity by year. we Excluding net profit revenue distribution net and our or increased XX.X% the net basis compared the in expansion and the XXXX week as XXXX. to fourth XX.X%. quarter compared entire XXX expense decrease across net price were sales. fourth line expenses haul the the $XX.X increase and fourth in revenue Gross revenue increases $XX.X in net of XXXX, by efficiencies in Adjusted week Gross or or employee-related by $XX.X in of as logistics million $X.X costs, in for XXXX. Charlotte $X.X to the a to million benefited driven quarter of volume. accompanied for quarter of a EBITDA $X.X XXXX and income was fourth the compared XX.X% in the $XX.X costs revenue moderating million to X.X% million to shipping our continued of for quarter moderate of SG&A of compared of packaging promotional last quarter fourth or diluted diluted and net fourth of of million quarter XX.X% share fourth for driven $X.X net

existing Shellac XXXX mix by and gains volume prices in driven XXXX, to increases revenue new fiscal the growth at for our higher $XXX.X was and That driven customers. compared XX.X% primarily Now revenue is a million to and increase contributed was XXXX to year Net million. fiscal or of The XX.X% across portfolio. net volume better fiscal X.X% $X.X the by turning of store The both growth. results. year

increased revenue net in the XXXX. Excluding week, XX.X% extra fiscal

year Excluding to of of $XXX.X XX.X% the by fiscal Avian net both The revenue of of fiscal revenue for driven in the 'XX million the extra week Gross or and 'XX, the million quarter gross profit in XX.X% $XXX.X in primarily 'XX. in higher increased impact 'XX. net compared fiscal in first profit or influenza net revenue change XX.X% was sales. was

pricing or XX.X% Our well revenue increased impacts ago. SG&A fiscal offset increased higher packaging gross full margin partially XX.X% minute across as as from XXXX. by $XXX.X the were higher support or in million increase marketing talked year $XX.X spending including headwinds a compared in was to included commodity portfolio, about SG&A of Shellac to costs. the driven business costs, initiatives the input net net million The the revenue of by Kathryn benefited company's that expenses year for across

growing compared we share SG&A more Shipping spend, expenses point, to and decrease $XX.X scale Net million of compared or us our EBITDA with X.X% The extra week were we efficiencies, are the year demonstrating as offset for and scale the of million This XXXX. $X.X in of structure. fiscal to XXXX. for the diluted XXXX. sales fiscal year double-digit is demonstrating full the net X.X% a operating a was in adjusted in this fiscal meaningful $XX.X benefits million path percent net net declined and for X.X% or was year partially year fiscal fiscal on scale, to higher net achievement distribution right revenue XX.X% XXXX The EBITDA long-term targets. share year internal believe $XX.X quick The income or reflects diluted proud revenue EBITDA margin, our $XX.X of and EBITDA. our volumes. of $X.X than adjusted revenue in marks of million our on we're in driven per net or since revenue the sales very rates improvement $XX.X capital update or IPO million an in by and achieving. EBITDA $X.XX first marketing million adjusted to the puts year to was growth leverage in contributed adjusted of the Excluding of. favorable million freight costs or our by $X.XX the A growing deliver year Adjusted by business, per our margin compared

guidance of XXXX, marketable had flow. As which cash came outstanding near in year range securities of the for free our This facility cash, to we $XX the and ensure also for adjusted total transformation we timing bottom expenditures the year. our mentioned of our generated the below in the up delayed the million CapEx that expected guided December initial cash been fourth for for we previously I for had previously the million. $XX.X previously CapEx we equivalents initial that We is quarter, XXXX. success. are And digital in we QX. egg at set guidance $XXX.X new XX, will debt no fully processing In spend and the our to million, Compared to note fiscal well lastly, of of our spend was that shifted capital has year, XXXX,

and growth net Now million of growth guiding for a Avian growth. in fiscal least A volume XX revenue couple It will $XXX year benefit net at at at of XXXX, first noting callouts least or our XXXX, least revenue in or least growth. of to adjusted the quarter points net full points X lapping million influenza, at XX% volume revenue of worth of a $XX XXXX looking are we is on we XX% ahead, of from of quarter and headwind the first benefit of be that had cadence. the this EBITDA

points tailwind second growth On XXXX. quarter the of which revenue the lower for a second quarter other patents as be the X in from were was of retailers of XXXX, we net of will demand order expect out hand, in sync,

now point lap, of XXXX. to due industry-wide half in need eggs reduced revenue of trade headwind first the another addition, to an in creating of which first growth spending, XXXX, we In the our shortage net of we half

face in the fourth XX-week are from year. Additionally, we a of quarter expect a headwind this operating XXXX will extra the Note a XXXX, as week promotional cadence. in we standard XXXX, calendar in we that normalized

butter XXXX. discontinue focus add me $X.X increased and sales Let revenue top guidance. than the in butter we SKUs that XXXX. on X our and the to anticipate end growth rationalization, us at will regularly generated one order more the and stick to in the expect compared housekeeping to these butter. offset concentrate decided process item stick our of sales review to of million portfolio We more We our category XXXX in in the in Combined, for product net SKUs butter XXXX in

Next, our let media as Within increasing guidance, EBITDA focused guidance. are spend be up to spend dollars XXXX marketing me and expect touch we on on our compared few adjusted adjusted million EBITDA tactics. a to we awareness

of We the year. the second the in in marketing half of expect the year of spend first higher adjusted the and EBITDA half occur to more margin

contribution produce years Additionally, near it to the term. and remains price/mix and spend. fee previously low the We benefits will price to shipping rates. by the increased offset them while a keeping don't the costs, higher lower remain January trade few prices ago, digits for than anticipate We the mentioned ex-content cost of shell trade butter from eggs the packaging and at conventional mostly operating supporting plan case spend, XXXX, We costs, cost while just growth double in and higher this with beginning of labor assumes was costs, higher our net improvements. expect organic eggs sales any

million CapEx the $XX fiscal $XX of timing planned capital expenditures expect from million. XXXX Note the that in we XXXX. $XX in includes guidance, spend on was million of initially range that this to year shipped Lastly

evaluate priorities strong industry capital on future and earnings record dynamics as for and allocation calls. XXXX the Overall, some necessary, and we Vital Farms business for healthy We to profitability. our delivered challenging growth if year a continue with was provide updates we'll a year navigated still

your into carry and to double-digit we our XXXX, We brand to raise and to for that, with Farms. momentum place awareness you our on more we are on that this households. with focused investment. And your in in EBITDA confidence Vital gladly and interest appreciate eggs deliver and you are excited your built Thank will increasing retail time the us We penetration margin, take more questions.

Operator

Instructions]. [Operator

Our comes the from Brian D.A. first question line Holland of with Davidson.

Brian Holland

ask to wanted in drivers about the seeing we're the acceleration fundamental quarter-to-date. scanner data of the I

think I XX% I about year-on-year. have

if with the set availability fundamental of peer wondering versus sort the category? So commoditized again, drivers to, respect you for comment in could maybe on-shelf

Russell Diez-Canseco

you things I yes, think seeing We've that noticed just there I'd Brian, are point of one thing. a that that. And certainly to trend. point couple I enjoyed to. wouldn't

I to But didn't shelf is think, made year all and cadence, is, growth those be The period promotional can we when other be variety saw well, typical more needle, year. first think of seeing that guidance for the the a things. created points versus consumer worth promotions fundamentally, of of managed supply brands. January, how we yet we and really and occasionally had the of to gotten basis have plans. read returned that of to sort past on we've troubled just what our a the we're perhaps have we a last we combined a I of our that would fact I thread the and think a hundred we've with couple We successful reaction at inflation some which that weather initial disruptions might chain given been last really execution time, great in

look half of we in timing in seen ago January bit that of little impact that what than thing strong smaller is part one year the a cautionary had a of the saw first because call weeks spike influenza, of But do we've that's then couple the a and I I avian into at February. back January note you So when XXXX the from would know, growth. out, had a we as we of the of

may be also of it So we're a lapping. question what

Brian Holland

X% service I about the then And also, looking think, of million, at now. it. about, Got food XXX% $XX than more K grew year-on-year. your It's I business

that margin And runway just of business, update for ahead, that Just considerations the there's looking is? how the kind an any understanding on sustainable whether trajectory then alongside of that.

Russell Diez-Canseco

Thanks that, for Brian. Yes.

for overlap. and are We few to that have partner of sourcing of whom team. have is continue our same we right elevated a to The restaurant not in on accelerate And years ethical that want on in source food, to frankly, are we sales path kind with thought right We leads committed under compromise process there growth. going to leadership terrific grow had Pete steady now we're the be trajectory choosing and want premium ingredients menu foodservice Pappas, brands order have growth. that And the that for of for a who to partners strategic an the the the right continues concepts with consumer likely places. to we

for hit it that of to of the were expect will few We we've be, wouldn't continue the my more to to I running be way through in gas for our expect So all a grow margins, a that plan as of as last kind execution headline been that the steady but to to It's see it business. growth. dilutive don't we years.

Brian Holland

Congrats.

Operator

Sachs. the of next Goldman Adam question line from Our Samuelson with comes

Adam Samuelson

question, guess better margin to first I the So love just outlook. cost get a on would and color

in have spend the laid do reinvestment As scope how your there of bit are trade But rent that. and operating forward? their just a contract you a adjusted on think we rising the inflation our the business we cash K, flat moving part rates I out, know -- EBITDA for how growers little construction in may the year-on-year. to is leverage starting high-teens costs. along about kind up in of for And Can revenue and versus for growth, margins? you've the mean, as I for elaborate and growth think were similarly, an about contract sales the contractor of that was the margins implications what that stepped EBITDA allusion EBITDA increase up payments essentially they for And -- outlook increase and

Russell Diez-Canseco

Great. Adam. as questions Thanks, Great always.

about rest. take Let farmers then the and will conversation Thilo me start with the

you considered know, long-term we've the pipeline to always changed. our be hasn't steady strategy, farmers a As of to right and that growth critical

We of haven't is they forces more we the years, having to so continue we've to few The effect the related excellent chain. piece to enjoy prospects the our many of to that immune number to with at if other inflationary over relationships last and the lingering observed construction right that of farmers the one we been experience strong continue to have as continue attract is of affected costs. reality grow. a farmers supply parts But that the look

costs and loan part So farmers the construction. of cost builds new elevated we take in continue to they continued on construction by driven interest see elevated in part to for that driven for construction that by new rates do barn

as So the continue of that we the that the make end it to And order to great to contract can attract what elevations made to long-term wins our to those and sort of we at help they be so costs in farmers, this We decision financial arrangement we be short-term a terms continue sure to and to end attractive interest-related the as on in make want thought offset farmer the to the see of continues game. construction believe some was about that way they have. sure for always continue front farmer. we the strong

process So that's thought the there.

Thilo Wrede

more are by picture, the But on hope below I corn And cost gross normal Adam, rates. I reinvestment one. leverage, to of on it on that's remarks, alluded and some from do get in some decreasing We meal and perspective, soybean increase is freight get a anticipating are we prepared by that a is benefit right? there out Jury costs marketing then year-over-year, the SG&A margin gross in We trade to return spending profit but broader from we the offset then, so think spend. the line, in some inflation. labor And seeing a that.

is the giving being. that giving so why And the for that we're guidance time we're

You also cash flow. about asked

started in CapEx into giving had CapEx, operating have prior CapEx, We're years, million money will new million now also compared starting So mentioned as to start getting generation. transformation beginning flow the Russell past. But spending. $XX putting digital we're year. anticipating of we And cash the we're in CapEx facility with we'll this that talked continued it of $XX guidance strong so more this we're the require the that to

Adam Samuelson

And [indiscernible] at just this how helpful. that into $XX very slipping all much on budgeted that's That's of so Okay. the is just rest X point, 'XX the CapEx point? much 'XX. for ERP you kind was spending? you spend said million of Can delineate how And be would

Thilo Wrede

ERP are and there's spend into the want we half of budgeting that CapEx automation is and CapEx plus ongoing some for ECS. regular we Yes. new what then facility about to put The additional

Operator

line comes of question the from Stifel. next Our with Matt Smith

Matthew Smith

promotional Could question. a and you promotional in to is a that a expand events Is the how recalibration indicating viewed a is cadence that? the you normal recalibration. There spending? ask me the to a getting Let prepared promotional pricing in of consideration remarks that back recalibration have about XXXX, past? on Or your in that was comment more

Thilo Wrede

It's really latter. the

about If last high meaningfully to at we year, were repeatedly of because that that and from we the of our year, really therefore, demand -- the year, talked in AI reduce it saw, trade first especially the you the we year beginning able last recall half half of empty spend. first shops the of the

were we supposed the remarks was into promotional new about an done year, outlier XX% we we brand. to it the regular year, We're back on recalibration getting -- spend remarks us. for It's focus promotional think a are households generating more It's how have how were not And this prepared otherwise. throughout of a overall. to so back would about trial, getting indicate to the spend that

Matthew Smith

significant decline a week. relating revenue in XXrd was And of over There down XX%, to was a the including benefit the the sales. follow-up I believe butter even business.

sales that are there. expected that fourth though related to are grow to you You can rationalization Was something it SKUs. indicated better there leave weighed I quarter unique even top in some And line? the the rationalizing on

Russell Diez-Canseco

Yes, little has about Thank you. a bit business talk evolved. how that I'll

grow in that years calls size talk business the about the at ago prior how to $XX was me business. the we heard to with of butter time, million egg about that started You've aspirations it

million, the what that expanded butter we is to our increasingly have we right standards. hard find beyond farms $XX that high business very As is it meet found that

And so is unwilling that The don't we're our procure love. with we there, has grow affected business. co-packers butter to that ability to that but and work demand

so complete butter and what But And started really product it. that limited supply is to we shortages transition, and we've strong actually our end that chain And in in fill QX. do transformation to QX, the transform by essence, be in rethink should some faced orders. real we've have of had ability our for the

But back of the the strong now, for we're side. supply a we're to year. So the see bit right expecting on half in challenged growth

Operator

TD question Moskow Rob comes Cowen. next Our of from with the line

Jacob Henry

laws eggs? changes in any basically more I on saw a just greater eggs. This shelf noticing on presentation retailers maybe you conversations space Rob to Henry source curious, in for I'm Moskow. a around states slide in to willingness legislation caged is Jacob your are in states, on allocate with change these several

Russell Diez-Canseco

for Yes. that Thanks question.

one. great a it's think I

meets whose can but anybody their these or seen temporary into is of go to we've to forecasts and a as within that sometimes sometimes there adjust their what see effect, we retailers think for kinds dislocation create those legislations various historically is disruption benefit sets. short-term for what market need when that product continue egg a the new items in temporary standards. probably I And

in in So to we're pricing products new to not for elevated is seeing I perspective from retailers of what some to cage-free seeing transition are smooth generally add regulation. eggs a potentially or commodity a substantial change the will that interest short-term that occasionally months we shelves. the out the think retail after our their And

Operator

Our Dickerson the from next of question comes Jefferies. line with Robert

Robert Dickerson

of go-forward CapEx. kind sales on and one Great. X on I growth just guess questions, long-term other

growth like mean, about you 'XX in but of revenues the in given the $X at get not billion in we as first rate. growth naturally it, X call grow it least when not get basically You're saying that bit could reaching this it's in one, the net of a be of you're does kind get some For I what like just revenue, we of could I that kind as we of and decelerate, high have years, a long-term year puts at sometimes would think monumental, right? goal you're past is next, that still kind but decelerate implied maybe 'XX tick-up takes. little kind companies bigger. really happens sales if XX% and that grow that once still saying be an that But that there it's some that, bigger implying the you not least over your seem mean that fiscal

in growth just kind like you drivers of be core Westford that like I'm of is the are But I years. spoke looked your distribution market curious, I'm and it's a expansion? of increased sure sit -- And what will X Investor now, just we rate if through you about that really those seeing essentially So we're know how update out store. give about where Day, now if strategy feel consistent. not kind curious conviction piece of as that the Investor post that Day you the Russell, Because kind just SKUs we kind to of

Russell Diez-Canseco

convicted as I the and households. right have at as certainly of to more potential September least more brand trajectory I feel a about our Thanks, the did Rob. growth sales to in win for today strongly and our last

maintain, can right sense. continue reaching she of sales good the do the develop to front create identify confidence always going our a to to be news think said, you in ability Kathryn bring retail households to to is capacity, partners. a value retailers. I continued the meaningful strategies to well given them, growth, ability fashion and plus and -- get and continue more ability a take, very our I in chain XX% give or our puts and out right the the think given expand to as consumers for here, to our And of in so detail in our needed bottleneck. analysis rooted that supply that's year And for growth in is McKeon The conversation. our is takes needs, invest so So that Kathryn? and We to resources in compelling that's even to to story never tell our fact-based any

Kathryn McKeon

same do continue Look, an time, is have loyalty at certainly which and accomplishment. the to we We're that. health tools growing grown year-over-year

how about. grow thinking to As we right the asking the brand, long-term of the at how in bring you're key a and will driver penetration the and household long-term we're household to be the look growth that to growth about

X marketing, promotions. hand, and cylinders as So we and and distribution all of than to together the them make firing things that, individually you and to on go households. to, accomplish path strong right further bringing very and work those alluded our messaging, X not This they were right see right They there much harmony there's our in know in are all together. as to hand need the how look it's we the drivers grow that those year,

I'm hit numbers. really both households, feeling in loyalty new sales ability those to with [indiscernible] our confident households to and grow So grow

Robert Dickerson

then CapEx ERP. All right. question kind around a Great. on And the go-forward and of just commentary

that. on of ERP you're program that does first kind clarification working off I just didn't just Or that 'XX implementation process and you quick through get Just start I part I to thought hear 'XX? such 'XX 'XX. a be of is kick heard, that finished in program in would is that as

Russell Diez-Canseco

with the right of time and wanted the starts, line. expansion support the of because time can And together X having more do years you flows. internally, the lot invested it right when my outside speak everything excellently about the this share process so let the know substantially business proposal bit a I as ago. of we I'll and across management execute Thilo to that and critical intentionally so enabling came a transformation is background. I mentioned to right and we of to we've our Yes. eggs. we beyond investment about The team very do the and and But putting -- just do almost to plan desk little to timing answer timing sure Thilo digital cash a make

Thilo Wrede

Yes.

we off next On summer the is Rob, of have the the kicked go-live year. timing, digital transformation. The timing

ourselves there is much there. and with to or valleys just any year, it. So ongoing we're do pretty Majority giving the CapEx happening it's this of work peaks correlated XX months spend

the And And doing for this CapEx on the year, summer switch. availability. spend digital year. additional our And transformation our is of majority throwing improving next next we're while we're improving we're spend some the were processes, we're so year then We're data that, live.

that there of So this. get lot of benefits a to out are anticipate we

Robert Dickerson

sound spend. because -- All I then you calling process. And super. right, see there through out that if mean you're as from SG&A I it impact CapEx. any do we the normally, asked all P&L And just doesn't It's impact get as some

Thilo Wrede

is practical on some the for into in will fall as call, we can accounting -- get Yes. CapEx. but vast that we majority the There as the count soon There get -- are this CapEx is purposes can this our into is details. OpEx, of

Operator

McGinley from Our the of Needham. Matthew line next question comes with

Matthew McGinley

on with Does is follow-up the along next to you takes know way to at we most at or anomaly kind I to margins more the do billion $X from come XX% XX% but were that margin. that margins expense? when where a all Or for you to more think leverage leverage being that I relatively one. few about targets where And are where on from you be that this year flat linear, leverage an this years. where have closer model as of the XXXX year $X It's that a path the outlined billion, in the get margin operating that So that of more you're should of XX% long-term your gross puts flat? do the see relatively to you see plan you of noted you'll mark? over versus and get the how

Thilo Wrede

a be might and U.S. don't on be think investments to still U.S. I some lighter. to exactly Yes. little quarters There's it's heavy be going bit linear. and going a

for transformation, the can we can we example, now even digital the getting, we are build, capabilities that live, can with example, business say, the once what about, think we better. invest data other where we for with I running all are think in

increases freight year, days. in rates. I guidance think the about anticipating this for early it's We talked

XX%, giving EBITDA the we're where path that about we from we're -- to are this we'll to to are to how out. our on to us, that sure year terms get guiding but think see will it's that For example, getting play we is as skis make we of that. get how not on clear a you ahead in XX% [Indiscernible] the for pretty want guidance to of modeling what

Matthew McGinley

at won't Okay. I profitability. a the driven your increase it dollars had of won't on had same margin the most have generation, and grow big was you the This by flow. with increase really operating year and cash that the profit appreciate flow that. And cash for obviously, implied you outstanding in same then year, obviously, rate, impact

be operating So sustain last may cash a did I'm same at the more level have investment capital? working you that if flow in to wondering you if difficult normal this year year

Thilo Wrede

Yes.

I and pricing, was about entirely be you way growth we was price year, it had cash very volume, from came flow. drive think that a half growth right? a much This pretty benefit, is to obviously will driven. revenue half Matt, growth mix year, price nice year, volume the about last our where what a lot was last think When the of drove

if bit from, expensive, want. it's growth so the you makeup And where a of more coming the is

very we with are entirely cash an than of cash And being we the did getting be cash to the flow business operating generating and a so benefit that, But bit to that probably operations continue last fund less with we generates. year. able

Operator

Klieve line next Street question Capital the of with Markets. from Ben comes Our Lake

Benjamin Klieve

end from guys of you broadliners. a great of that kind here. or the the are one those you the question million? from in restaurants on just your fit million is $XX much be if marketing. on restaurants of just follow-up seeing you of pull your success characterize here guys revenue million, some Do as pull just you that of aware just have how $XX Or I'm product -- as and wondering revenue of year sales that of and internal have your the because a majority of that versus business revenue that general out have of more may with brand of efforts I from foodservice. kind outside million foodservice Congratulations kind $XX really relationship the conversation. characterized uniquely X% of is of can vast comes your $XX the brand how

Russell Diez-Canseco

that, restaurants and I'm probably strategy partnering discussed some brands, great a households. really And understand although conversion unlike the an run a share a that's not and acceleration big I what have is should question. may to you opportunity with split from And confident I'm job see short would have in become with think the business you rate may is. over bit or that we research avian don't really on we What an not excited estimate. we that we little got better call, we've exact due of XXXX, helping great do did and with influenza. we can in I this unlike actually sales some come up trial there's not a and enduring of how the about I say that experience grocery probably some to that do

Benjamin Klieve

I No. I again. appreciate talk a good mean leave that it. helpful. place very to More Congratulations that's color, Russell. that's to about

Operator

to I'm questions like Anna I'd closing call Heller this And to currently no time. over hand showing the back Kate remarks. at for further

Anna Kate Heller

Vital and your Farms, day. a of everyone, for great support Thanks, have

Operator

you participation. for your This call. concludes today's Thank conference

disconnect. You may now

Vital Farms (VITL) 7 Mar 242023 Q4 Earnings call transcript