VITL - Earnings call transcript Q1 2024

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Operator

Good day and thank you for standing by. Welcome to the Vital Farms' First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand it over to the first speaker today, Anthony Bucalo.

Anthony Bucalo

Thank you. Good morning and welcome to Vital Farms first quarter 2024 earnings conference call and webcast. with Vice today President speak earnings my to as call of pleased you on all first I'm Investor Relations. today's Thilo this Officer; first quarter on Chief morning. should have Sales joined call earnings the Diez-Canseco, everyone Russell I'm company's to President Officer.By Executive now, Officer; Pete press Wrede, and Financial XXXX access Chief Pappas, Chief by and release issued make the website this available on laws. Investor statements may at call, the is of securities Farms Relations meaning This Vital the of investors.vitalfarms.com.Throughout course management federal of forward-looking within section the These and forward-looking materially these statements are based from could on uncertainties differ management's in current described statements. expectations do and risks cause beliefs those to involve actual results that and to XX-Q with that expressed results the risks fiscal XXXX, the for call, from in March are EBITDA XX, on refer that Please filings today.Please management cause SEC our detailed the ended discussion implied and forward-looking the today's of will company's those measures. to margin, refer press Form to or could statements release, quarter filed today's as non-GAAP which for a EBITDA with the note adjusted other well made today, SEC actual differ adjusted as on materially quarterly report financial any

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

Russell Diez-Canseco

Good again Vital and time welcome today. Tony, to for And thanks your morning, Farms.

impressive gross We well big expansion, double, any XXX the and in-depth quarter first call the hand share. nearly information for first to Farms. our be Tony at you're Foods. Sales relations continued leading Nomad from Wrede, the who those to with over headlines led will strong Suisse, as cover We've to our an us results and then Officer, here, he April will provide I'll HSBC, Vital haven't He's Investor background then For joined start big got with analyst investor relationships today, in results revenue year. the record Credit had our the first we first we've to to Thilo it be in most Pete great contributing grateful at Tony.I'll Chief of some year Relations met quarter let's customers but today's news period. piece the a Pappas, delivered quarter. as over demand. our revenue XX% XXXX, is net prior margin $XX.X XX% and gross which particularly on fiscal would growth as start of $XXX.X adjusted million we quarter, well as that of points year had double of EBITDA, basis margin.Those in net which a is as XXXX.So quarter they're with impressive CFO, and how recently more are We're as numbers which updated at built Tony million guidance Bucalo, at is get Santander this

our strongest the I'm at here the and at our quarter headwinds projected remarkable these belief our quarters Egg biggest due in that of over the results.One that Springfield, we Station very quarter In of influenza. the Missouri. is is part one result first our as this XXXX Farms. avian of Growing in building we of in disruptions category some drivers encouraged remember, in our Central you'll team call, momentum reinforces quarter. lap history we XX% grew incredible XX% quarter As results growth fourth year-over-year to from this Vital the by

Over big and flat I effectively secured efforts out recognition enable eggs and customer recruit at at and ECS and the We're operational packed a our us better phenomenal high-quality made improvements workforce, year, that getting good that with.Our crew were out. to has ECS call to to they've meet retain to want past just shipped, pretty already redoubled we the start of its X just team more demand. pieces

our manager, entire a validating crew we you'll visibly running operation, It landfill Quality the ECS Robert's ECS with along in us the when design awards of further sustainable food. Leadership processing commitment we in of to remarkable and and and and health building choices promoting rising is demand became with our gold solar parking a just we've came see a from safe, member the an panels help lot, It profitable is products. we've different food facility other made than ECS strong Safe leadership facilities that a Robert certified It's expertise recognizes industry delivering investments run Practitioner Excellence a help food most natural the to thoughtful facility. design. at building also surrounding zero Food facility.So of in there and grassland food team support growth through.Our as inspiring leaders. cash to for Springfield, have the reflects of expansion have state-of-the-art waste SQF the the safety position, Institute. safety continued behalf This generation prestigious demonstrated assurance quality and Robert's next the our news the Clark, Award this one LEED our role was honor in in First, received on high-quality XXXX ECS incredible celebrate most

will be an and billion in to we purchase washing brings agreement able result, we And planned revenue Indiana. to help facility as is signed We've crew As anticipate Southern Central net farms make additional which to land principles major to that that new support This big it for the state-of-the-art packing which incorporate propel Missouri. a second will next XXX have of us piece news to egg investment in today. and $X our the in beyond, confidence new me next initially XXX high-quality members. Springfield, be will similar to employ Station family and design our Egg facility, our facility

mentoring bringing workforce are begin to by the to for capacity expect our over in begin provide in land as last ground our way scale of important our location share and note targets. will established stakeholders we in the which begin facility for before We hand also now XXXX, formal in it revenue near in new in and we've executional the from the in revenue flexibility hiring Indiana.We our future.One and additional new goal We break XXXX beginning significant the a that in to believe capacity to of the rigorous to this net crew beyond We're Springfield. also this not XXXX will to members training This XXXX, $X precise an to shortly XXXX, annual of Indiana generating XXXX. billion life. knowledge new allow add will lead expect from future in going facility achieving and only the deep the will They in thereafter.Our in but facility announcement, summer working of local on create will our operations to link I excellence we'll standards, meaningfully Pete. help with institutional facility contribute in ECS

that butter out As products new to want we we announced in call our investments line the talk about of future, in April. I

butter best family our team is delicious, We've for commitment Our a We're unwavering animal we farms maintained conducted working and find. to product and that's search, global quality, the to now supplier Ireland deliver an a XX% not welfare family support could farms. in for product that grassfed. exaggeration, great-looking with

great while this hay long-term really confident achieve what We our smart, brand to brand reinforces also at we're in hand Vital remain and a our I ability give This out good I keep infrastructure, now and the capable of packaging momentum us Farms premium encourage allows a our to to my people, over We Sales sustain and loves is a on make stocked cylinders, investments bold It's this shelf. news off long-term start. shining. it our and all a financial ambitious this Chief try.There's that strong sun's to lot We're our and to butter in and making house on Pete taste it. it stands of our targets. Officer, of.I'll introduced you to hit everyone here. the see business new family Pappas. gives it identity

Peter Pappas

with driver relationships record the the period. for QX to dollar growth sales existing sales category-first customers. Farms work reinforces XX decline March this customers. with to It is expand higher with channels importantly, premium customers in and results existing first in increased experienced We across our the point Thanks, building Last competition.Looking success at I Russell. unit we be team as quarter. increase to grow with pleased tracked talk above we've November, the brand. egg it's the egg This category a performance critical rest category Farms. say category volume had about we're our weeks this outsized delivered data at of That trusted sales to contributing how growing a The margin XX% appreciate to share our category. number performance. I retail our us position represent comparison faster sales XX%, and continue by about we retail to means the category to I'm quarter. we Russell in we thought where the the the the Vital the the expanded XX, than customers.As of category some role believe retail of performance of our SKUs ended entire in approach, We price differentiator a and and talked stores incredible I in new while Farms our a retail and marketplace real had leader grew well enabled same as believe availability for to chance deliver and overall mentioned, dollar the Vital in XXXX, strong call, is in the deeper first And earnings in our of SKUs. Vital distribution, during

Vital while unit about period, XX%. same Farms the X% the unit volumes category saw XX-week by Additionally, grew volume during up

conventional the dollar based count Our sales. black food the in #X XX is in branded carton SKU category on the

volume with us strategic distributors. As and the in we're conventional mix we're resets entire I'll be strategy sourcing ethical, next to our pleased has The Many collaboration during privilege tends spring we our come are Vital we chain our customers progress in business representing our weeks.Last partners wins we as few of with a we with completed last now to that supports restaurants continue to our channels cadence that of count which XXXX QX provides an pass that foodservice Farms the position, in where our of will as QX a We're gains due egg locked normalized quarter, grocers in by would to more in have branded said in best-selling seen tracked promotional XX many and these underreported.Much the natural are shelf consumers. helped #X drive so also has we've focus the we're shift to particularly a and growth as working QX premium shelves from supply or reminder, work butter We've trial achieve a footprint premium for every their of strategy to lends advantage, a packs, the is this the has new had that to and eggs the The growth farmers year. year, on business.Our the larger independent our built conversations approach #X growth through reach that the We'll Farms through maintains concepts disciplined with and it approach Thilo. desired dollars. and cadence our brand far key our seen national the expanding retail is front. deeply goes delivering strength align impact on to Vital committed execute onto ingredients.I with to strong sales partnership a incredible we with want making product. the team have Vital that with itself operators. close category-first and of premium it quarter, Farms opportunities to the team, team and week.With thanks brand our unique My Farms over Vital into and we restaurant to getting appreciate each all with customers, that, and and be

Thilo Wrede

quarter review with details will updated today. Hello, year the on for another XXXX.We record Pete. for and quarter. ended then off results you, you kicked provide first Thank for I March the XX, everyone, year our joining fiscal and guidance our thank financial us XXXX,

a $XXX.X retail The growth to This efficiencies and of of or of compared revenue the gross rates, net line-haul both and quarter was share profit increase $X.XX lower $X.X quarter diluted first operational Our for XXXX.Adjusted enhanced XX.X% The first a new in in costs to of The XXXX. capital XX.X% million, XXXX costs was as of scale. quarter and costs by XX.X% period. the at the XXXX for volume-driven to million, and or quarter in partially driven higher Central revenue, rose of a benefit, our margin existing benefits at prior an primarily in to scale compared as we marketing of first million, to were Conventional $XX.X were members gross as expense and distribution million, diesel normal rate year. quarter or of $X.X the crew in for mostly contributed expenses growth $XX.X the revenue Egg was XX.X% the line million, XXXX. The net of customers the the net $XX.X crew price/mix driven driven price/mix by gains. expenses our decrease increased or XX.X% was volume of the by year net by net to first a or EBITDA return the net was commodities increased and plans quick of is compared compared compared of quarter revenue investment growth net or offset XX.X% was primarily for our million, to our promotional was the per share, the well year.Gross $XX.X the increase in revenue SG&A overhead operational with in in first organization.SG&A to the world-class of in was XX.X% profit structure. scale.Shipping decline first first of X.X%. increased driven for XXXX.Finally, on investment of upside by margin driven quarter as or million, Station as investment revenue, and X.X% net as diesel of XXXX million, strong by efficiencies.Net XXXX first volume $X.X increases $X.XX XX.X% for or revenue, and or $XX.X X.X% for increase update distribution of members net to shipping revenue, of quarter or a The in well million, quarter internal compared first first of $XX.X million, was last lower we $XX.X income million, and revenue quarter diluted of per for

cash, As marketable of cash ahead. with looking of XXXX, debt had securities XX, total $XXX.X March equivalents we million and no outstanding.Now

least of expectation We $XXX expanding drive to net of XXXX. our in on awareness, consumers at in we million, retail deepen year growth.This our guidance million, performance XX or revenue the more million, For households household marketing penetration the on $XXX $XX reflects full at favorable to our remain ultimately updated XX% to expected now reinvesting compared growth, increased growth. we guiding commodity for of million stronger outlook. path presence And and and least with XX% our drive remainder previous to quarter, least are conviction the growth, fiscal higher a at the are EBITDA loyalty our and to order previous in at by confidence and least at first than focused of adjusted or least or million, least of $XX year XXXX, at compared expectation XX% least at at to guiding XX% or least

second higher We half in continue to first margin expect versus EBITDA the of adjusted the half XXXX.

every of spend expenditures $XX previously next $XX CapEx in the new capital be this CapEx the shift Given to XXXX investment more funds CapEx XXXX. the annual Note build and planned net highlighted initially on relatively for to we the over that the anticipate timing this the in half the million. the was range between expected revenue from necessary to strong spending facility first million of really of facility growth and project split XXXX. dollar expect we the the return. expect better and $XX will includes of because now a capacity, we we QX, guidance, than generate second that still which of the in year We evenly have fiscal that $X having new than believe revenue consider years growth majority few We elevated of spending with occurring million year.Lastly in of the facility, the XXXX

build We for households.Before priorities, for working Vital close, questions. updates the be if out to now benefiting I'm welcome to on and very we from quarter on interest plans your new Vital me future raise time investor confidence Farms, relations our investment. this have momentum, experience first placed looking earnings your Vital necessary, us allocation also year today next him team. we the We excited and in for I Thank to facility very remain the you will to more evaluate and function. and was that, once your continue build our very Farms we Bucalo that as and let Farms happy and With more his again with a in penetration take to strong capital eggs we'll you and to our with to to much forward Tony to our especially awareness to brand building on deliver the continue are greater provide building year. as start retail on we focused are break ground calls.Overall,

Operator

Davidson. Brian comes [Operator you. Instructions] question first Holland from D.A. Our of Thank

Brian Holland

to start. just May

of point, the previous growth, the avian your first strong influenza really context Russell, quarter cycle. to in lapping So

to also of growth in benefits increased focus velocity impressive what velocity just of business. SKU can If frame on base all you at the the is to closer I stores? think X. know of continues I a moved distribution the balance off the I you've at be and side, placements

out the about happen thinking shelves. you're that So when can represented stock that issues of lightly on

And so productivity. it's greater your actually business, actually adding SKUs, rather cannibalizing than driving

maybe seeing that what there. and comment just you're a So on

Russell Diez-Canseco

appreciate I Thanks, Brian. the question.

an and us our point I phenomenon. one in for it's growth, important interesting at it's really a this think

new are little the all, of first we early got sometimes SKU seen hard to it So on a that first a in was what when partner egg we've a is days out the SKUs There with is, was And of shelf pretty our an retail awful shelf. all stand and on lot egg with it's it in set crammed this variety. the tight set. as

hard to really facing attention us, to find look us. hard of might knew of Even to it it's one get if so And with be you little carton anybody's our eggs. for

item. The was And if facing, second be would cannibalization SKU, second we our was that velocities the first of often what even first of zero another the the with justify facing typically found there second.

and fourth. have there, that in that the whether as versus product, we of value from product. an consumers out more exactly And many need, on the In we're often, is, one even the and addressing strong shelf? or about very daily replenishment.And sometimes conveying we holding organic with which the is additional we and worth cases, loyalty. so third or we simply interesting power maybe waited One and demand's impacts. sold see to weekly the can meaning brand second our case this and brand. it's building slot for So on household shelf larger was then of was terms were example, X supporting support pack for and brand, organic a But the that question size, our it's The we revenue an the for a fact, saw in different on a pattern, also SKUs the the it when add we potentially shelf visibility not basically

SKUs leaning consumer leaning into into demand, growing it's happens supplying existing So shelf, to also a there's powerful but add and when we a demand both combination. the that

Brian Holland

focusing below And all maybe line Appreciate the Russell. color, now. then just top that

scale EBITDA moving also commodity XX% closer this guys have margin. a You and gross term, gross XX% XX% understand there's such. to Obviously, margin. looking I But we're a parts, margin highlighted tailwinds you've targeted long XX% benefits, et to operational and efficiency, XX% at cetera. morning margin EBITDA

we a sort extent lead to So what as I results does higher forward, too about wonder, here term? first Or longer just maybe on look this to it quarter thinking is business of margin profile early?

Russell Diez-Canseco

going, you're a all Yes. business and different we dream against like fundamentally Thanks, Brian. thinking profile I appreciate I'd here. think about to little. a where caution I

that intentional we've guidance long-term some think with very important for I been reasons.

think the having households, around a households lot of a time here a saying a And frank.Another got couple we're job we're that loyal many is cylinders. a distribution a some true been in And a is, wonderful imagine immune a supporting not that of big built from in to helping bit profile that's really admirable hope not best We've what things firing who right. things we've but for be been of I'm a commodity swings. right may I of likes could someone -- as and benefits of to profit seeing, more sort costs, nice the And tailwind. the we really our great now, some all we're -- lot You are that lot I of now done, to commodity we've changes plan worst. got future. we're costs, temporary, have lot may the transitory think, right are example. us, got that on are little an going profitability, insulated of that's be in had for for -- last We've we've at nice or changes of think conversion you we've very that potentially our and of when in although added making is from moment a in tailwind I high-quality sure to One year

reason have don't we're year. results say the have so strong love And results a similarly to won't the seeing, and I throughout we I

appropriate I guidance place long-term targets is for to given an we've think the anchored. be our

Operator

And our comes Smith Stifel. next Matt with question from

Matthew Smith

the a growth. revenue ask to about phasing wanted of I question

You mentioned second first a and more equal half. phasing between the

quarter first a second a started You half. the quarter second in bit a strongly, slowdown reacceleration which of very the in suggests before the

make the I understanding the dynamics the was you of And quarter. of a Just in AI talk of the of category. I correctly. returned second a wanted healthily to benefits tailwind sure off believe very you some if have on-shelf that could bit where availability for rest about coming

Thilo Wrede

Matt. Yes. Good question,

we think when expect the we I started didn't year, QX to be this strong.

And second we came We're in and in thought so second be given more evenly bigger half, that, first with the growth first going half. be the the now half is between than split in. the growth would first how to quarter much thinking

You're patterns right the last that by AI. demand first a from patterns. retailers, bit quarter out after new tailwinds than year, they probably took we quarter weaker had second catch a expected order up The to point to to

what than second And had expected. slower bit were a last quarter year so we orders

and to in we year a second It our growth. lap so now creates similar us half thinking out Matt, overall that So year where of first need that quarter.And for now the be this the that. in will second headwind relatively comes is,

last despite the lapping given had growth Second that quarter, simply headwinds the from would better this quarter first than being just talked I massive first that I assume about, year. quarter we

healthy very but there's lot So coming is at seeing we're a clip. so keep that far of the a what in orders play,

look you sell-through. data, scanner see I you think the when at

is so shape in And right good now. very business the

Matthew Smith

above confident the you me. to your through the continue additions volume talk volume farm ability with about elevated follow-up Can stays one it level you strongly, started and demand just to And if keep in pace to ability demand? your obviously very this for expectations. demand the year The Have year? service to been your at new the able meet

Russell Diez-Canseco

Yes.

unexpectedly then of always or, operate. -- question. we the meet in meet consumers deliver some. think supply cushion, is have And seeing question. side supply I our to and yes. absolutely the from that's this It's retailers. frankly, answer it's We some demand terrific eggs try and generally we're and We our demand on The growing we to have demand to order and year maybe additional short some of plan capacity how guidance other the that to have another and capacity high the

of ability, be that of source So continues farm relations Great I strength, new to for think, pipeline a wonderful growers. us. think, excited this I to and a in industry a build

-- a packing I it's think it's sure part news of try any that land I intentional to are and It's of an important very growth to in our our today we're that we though reminder a how won't our buying plant, years and because eliminating packing planning, think why our a for is make proactively. there it's site reminder it, we make there choosing we need for when even next reliably. egg few we start actually eggs to we want sure bottlenecks

Thilo Wrede

point some remarks. -- reiterating one basically of add the me the prepared Matt, And just from let just

eggs. supply We of have the

make to can put changes over process cartons, we can we door. We online XX eggs of a them, in lot supply have the made to the farms at we out last I the months, But of over the can think, that sure cartons of come also time. get pipeline them we the ECS

of that seen have So these we big are this way. at operational are ECS why to grow improvements a part able volume we

Operator

And Street Capital comes question Markets. from Ben with our next Lake

Benjamin Klieve

here, success growth in facility? of your accelerating your is kind make really strategy? vision recent over quarters. -- new what you recent it your kind impact seen Does Or kind that's your your it does the to high-level adjacent question the that And to pursue inclined the kind Just here, unchanged Does last few strategic scope markets? you to new given less of make extent me guys of expand context long-term especially of the success for one of you of results? want have

Russell Diez-Canseco

add. that could and short in if our most food The brand to And answer brand well, in, confidence to affect us in be our is this anything already I'll likely. think ball this take The such Thilo we're ability phase what the instead place we're often world-class we our the Thanks, I can see systems of to take categories Ben. Russell. to country. has in on risk scaling country. is mean this and maybe I in a explore is households and, to trusted It's incredible Enter the of cracks consumers our this support the doesn't get from growth in to is even eyes this driving.And get even growth and it that at at new its that ones finds being starting interest grow off foundation think the the focus in country And in this not retailers the that and this face that momentum bring helped and to beyond so their intentionality categories in more demand to of perhaps that capabilities as lot they a to distracted. companies and place reality from solutions farmers. have is this retailers organization, more see frankly, place and #X incredible scaling to and job intense

do either/or. that It's my not And things, do as we an both sure those on and. both focus really it's is them well. so And we an making of

business affect I Vital a of bit Not can this which found all. take confident our and to it is, at and does that for expands our a to a limit answer eggs, little there will The full egg windy timing? primarily we when at the this point. well affect of, we question its that there's a it focus? that's Does real quite we we answer get do beyond really So haven't that are future potential, believe Farms to

Benjamin Klieve

but on in helpful. quarter, great, jump back I'll queue. it Plenty great more Congratulations I'll Very it. Got leave there. and about, talk a to

Russell Diez-Canseco

Thank you.

Operator

Our of question Robert Dickerson from Jefferies. next comes

Robert Dickerson

gross of the on jumped gross couple Maybe core on down Apologies, seems steps given a is a one late. margin, I like Had get questions. you implied that Clearly, question impressive margin. the just margin maybe guided of EBITDA. just very how call year, through QX. kind we as little in what's It to

to like kind seems just a outlook target. to maybe speak new why like in context to one, gross you goal Russell, kind also But margin not speaking guess, what longer-term we're a the sustainable. kind of could spend because too, there, like I you it of the I might if So could because maybe mid-XXs potential get So that like like and be minute the right? hit of maybe, of be just feel the to

Thilo Wrede

Yes, one. this is let me This Rob, Thilo. take

gross clearly, our margin, we quarter. of were this ahead So long-term target

had we disruptions. quarter weather after think There repeat commodities. We so were on from quarter we crew where no few ECS. the the impact that an incredible job had right. of and I We everything had to a that price This we did We organic after a necessarily expected events. quarter don't portfolio was on There no wasn't quarter. talking quarter, expect a benefit see one at were -- on. that the beginning elasticity at went were benefits any didn't

when case And be to necessarily so the bit better don't every happening XXXX. out. the We expect quarter don't here that what a that, margin expected. get with that foresee We was we on from than to we

into that that a bit is of we target mid-XXs allows hiring are the for had for of this the laid out world-class to maybe in us. to still to us a capabilities, build marketing algorithm of is previously some to money planned, scale that's do business, the part do reinvestment than been Russ's for.What this and aiming to answer, accelerating now the growth quarter work earlier -- we we putting what more XXXX, this build organization bit So

we implied pretty is year. expect And long plan from for quarter reinvestments. these But for why the don't A EBITDA how the it We term. through right? couple the of the we the very rest business, the about line that's of invest We for are think guidance, the carry much before first are long the term. them. in much the with the so we that to margin reinvestments these EBITDA need in margin make We investments

And we EBITDA the to what for grow by that necessary year maybe so faster, that allow we why now so to to ultimately we that marketing implies in a household speed ensure revenue do. the hiring where And us guidance get and come this that margin billion the in $X up when crew need for earlier get allows to in expect that it. number we can the quarter bit investing than penetration so that is that we to us we can XXXX, is

Robert Dickerson

And If a you, very the said. I Okay. have what Look, grow just the nicely. read or of on maybe Well volumes pressure, you especially guess consumer. low-end kind demand. to broader of lot a to around then continue question there's clearly news, we food listen ongoing different companies

are great basis eggs per eggs at alternative kind a would serving an say, wow, that those same protein. people of the time, of expensive. form on expensive as But aren't Some

what given of fit the curious eggs and broader is just of around and own your I'm that. your of of landscape So consumer demographic kind kind focus feel of kind into vis-a-vis how kind like demand kind

a lot but there, important in question. So

Peter Pappas

Yes.

I think you're right.

to volume. pleased from the very a continue our because maintain value within in to very positioned. premium. been bifurcation a able consumers promotional We're to migrate obviously well standpoint. strong we've base our see our that as as discipline We see well We're category as performance We

So disproportionate We're we're not year. promotion. of. strong which seeing at of a I the I'm of in extremely performance really all changing balance this base velocity, that anticipate getting growth in proud don't And our throughout amount our

we've talked very So about past. in we've as been disciplined the

to continue will disciplined that. be about We very

for I we something, that.Despite what the think we're within Fortunately, the brand grow stands seeing to recognize households. and market, consumers continue

continue distribution. to our We expand

respective a shelf. significant to of have on to expand amount areas. continue to We presence those grow to we in continue continue opportunity And our

significant you. be opportunity with honest have excited So quite despite of really front that about, us, amount I'm a our I think which still to sits gains, we of in

Thilo Wrede

to one that. just let Rob, add me thing

talked the quarter. I portfolio about previously at is fact me, the think about we organic on the took for that low-double quarter have of we what's the beginning that pricing digits this

really haven't demand We seen any impact orders. on on

we is consumer getting So segment very that but I of weaker, consumer consumer. the that a selling still to, much the our that to there that selling not believe pay is that's the truly willing to, quality and and for. think trust for stand power we're consumer that we're core the for I they're is not

And to demand. with show confident strong feel that, -- to very in consumer I to so we be a think continue our

Operator

question Our Sachs. comes Goldman from next Adam with

Adam Samuelson

obviously the more if the in supply more that side guess would growth strong is, and period, meaningful part the have commodity performance mass you unlocked divergence channels? items the that channel you. were might question can some more Wondering become a acceleration in associated on or opportunities that prices very and was distribution see growth new in and is how evident the quarter? think first data. I would placings of for and elevated across you Or natural that broad-based the the I seeing But in more story egg the the So potential scanner of issues versus that sales with mass. actually and this

Peter Pappas

question. Thanks for the

I think recently. impact The restricted and that thus with we're seen far has really that's driven most eggs, to significant seeing that. been impact really haven't we very And pleased AI balanced been growth. I'm organic regard. in a

strong. a Coast. quite of retailers, very performance talking has been our there West handful our isolated retailers. strong Again, impact of has in really been very, performance has you're that about the those been the Some to isolated And and to

position. been it not what talking have been I would has say outsized disproportionate -- about. as has that our of reinforced we've don't think I in you're We It a regard. result really

been Our very natural performance in consistent. has

all and in pleased. really as statement.So performance disproportionately away said quarter, continues about I'm really continues as and within opening strong. don't -- talked in Our we Russell I'm in mass share our be really about performance excited natural, to the that. think and I leader our on outset, quite We're and this to hit we've cylinders, first food grow the far

outside is us, experienced any high I starting high. capable can bit the those think have some what what interference we're influence, you're of because you're quarters, outside did of we've see of past seeing is we in how when for some really little without that not and forces. any a of we And to without execute

the holds. and front really that opportunities with establishing we excited of given partnerships some future that I'm in very what of these really, the world-class us the have about retailers, So we're

Adam Samuelson

channel, going the helpful. Q, looks Okay. the then you retail And your compare a like clarification year-on-year. through very revenue from just and That's in if you the actually your that it which disclosed channel were revenues, question, down total sales non-retail to the

core decline some food a so kind to is products just service clear, Or wanted that of bit. in And bridge actual of items? the be is and I and non egg that maybe that the little

Thilo Wrede

last first is really of It Adam. function observation, a great a That's Yes. quarter year.

times, hit, the At offering AI were eggs no food when expensive service for available. So channel. the we there were least

the really year a passed. from bit that demand channel -- to had in And last big down we back is AI outsized service so had came AI of impact Once this food earth.

basis, the last with overall to service And more business. of that now that's a went food the pattern, business rather part us a They're so still that, sales falling we the down. really multiples are on back And year-over-year quarter, percentages. It's for out. growing normal than behind by by year were first just up

Russell Diez-Canseco

the disruptions make in end that carton don't processing percentage, channel. non-retail And percentage price our small going sales, that which don't of one low-single which other take there's short-term piece and eggs wholesale it And digit of into into up advantage to market. Adam, past, in a is we've discussed quarters the of we the

However, wholesale on for prices. we the market eggs those are get price based

the were And so on a prices prices. and year spiking we ago, just spiked the shelf, those those they are of just as taker

for eggs So there kind the increase price was in a got we wholesale as non-branded well. of temporary our

Adam Samuelson

sense. makes on. I'll total That helpful. it Very pass

Operator

Our William next question with Andersen Jon comes Blair. from

Jon Andersen

point of of here that count, XX and any the your the to still around portfolio. of at little percent where get of relative wondering is seeing kind And quick a distribution at was demand-wise what then distribution And XXXX. higher ability price growth that points. to to gains Two to in the organics you're just seeing continue of are kind process. consumer you characterize kind could is that kind count of talk I about conventional higher What's across for complete? a perhaps and for come you're What second is maybe question, where price I'm sense kind SKUs, If from? spring kind bit blues, what ones. of coming if reset the some you XX resets way to just and in that there's attract to getting

Peter Pappas

in healthy business. portfolio very, very we're across question. the for core natural is This Thanks of Pete. our our segments growth and Sure. food And seeing both

count, within our migration see are large does probably portfolio. the into we size, food while and So XX as in you exist in segment, can egg the entire it the pack category value seeing proposition across

and in both business.And you. The Probably natural. still selling growth box March. of within within we item natural second Typically, for -- to little that of difficult portfolio on food natural I product of resets. just larger in whose in of then percentages organic. are mix a segment that. right the Primarily your question midst the core these across black we're say a the organic within such within around solid are have a item, is heart less We seeing in because bit a more XX answer count probably of disproportionate our and made so retailers the would are decisions the segment

actively to Those now. we'll of see the to probably next benefits cycles some next bump. those we see So a are very complete. flow some optimistic should when I of completed going start as And is we're of some of XX%, nice the X the very, sales group. we're resets done -- efforts reporting would in see being -- probably through result say and that results we're that XX% probably But

Jon Andersen

That's in. helpful. story seeing share also will food wondering one penetration algo growing know your super growth, today to your calls repeat around that which to relative can contribute be with gains. the the comment squeeze buy kind I'm rate. so would and households, activity is If color and on that And how can part more there's if of another you're the overall, household here brand stacks you I XXXX the I for loyalty, seeing helpful. of if of for that any you're to existing kind requirements up

Thilo Wrede

household out, -- increasing targets, as buy It depends you rate. us Jon, on on XXXX penetration. it the the pointed so our hitting depends also

from we quarter fourth that our at rate on think buy the $XX growth. our rates household. Analyst to in I September per deck Day showed XXXX, had call, buy In back $XX went pages in

more buying are $XX However, the eggs over a course households the whole year. lot of of than

still are of purchases fraction a we household only So eggs. for

to is XXXX. And certainly that of part consumers to loyalty in up, mass the$X getting billion by from our get revenue so that

a away I growth great that a think count, count just how for are The lower they not an consumers think is part we are on cost of looking path of of consumers, loyalty they XX we from when that normally have. there. the I we It's per XX expression take get loyalty. the egg. that purchase buy that But occasion

with locked them. And premium already are pay consumers the because they're are that lock to willing in we want. We deserve in, willing you to us if

we quality. we're the keep retailers. And selling keep part methods. focusing on so is after. our stock able being that on loyalty that I really marketing We think shelf of what big We with to And means consumer going focusing keep

they're these make, rate. all aiming penetration household increasing we intentions all buy to and that increasing So

Jon Andersen

sense. Makes

Operator

Our next with question Moskow Robert from TD comes Cowen.

Robert Moskow

awareness, certain like done amount the it sure And name, you where right do a brand any results. but kind there like you presence move direction? this Congratulations continues get around the if overall update awareness a awareness, on awareness certain is of shelf. of Vital mind -- that thinking annually, I'm have some great consumer does. do you of to top any have on you Maybe just and on points any to in tipping like of

effect where probably to this some because hit point the accelerates you growth the brands, parabolic -- that remember of in of awareness. some pickup And and because tipping talk I about of Freshpet kind used

So but ask. maybe far, that's wanted to jumping ahead too

Thilo Wrede

is think awareness. us track the think awareness. every be on to Rob, quarter, tracking don't It's a to Freshpet. awareness, are to year. a what distribution, want I more not I effect, and have it. So we we and making distribution this of want from that we we we copy metric talk on parabolic progress to we're but wouldn't we about We're get can that seen increased I get But I kind talk having where

we math, one the had should fridge or the have us, shelf know done you Even this refrigerated don't of I facings block. kicks we grow, don't facing block have to consumer and retailer, accelerate call haven't picks the portion brand that the But kind a that we the here if or with talked one And if the our carton, indication first on per we kind can over Farms. the the X then, maybe Russell if lost Vital SKU, fact that.And a X significant all shelf a think want, it we promise awareness that there. on shelf that When have stick want this effect more flywheel, to increasing brand sudden in self-reinforcing, becomes growth a so questions. When and I the of get off effect going time. SKUs consumer us you a we have I'm as when something is because of with on that's of before, or so realizes you of parabolic that. the the on I there's never in that we in certainly up to heard of shelf with not the the in at X is excess. consumer sea about black the the offerings X it of

Russell Diez-Canseco

add wonderful great really a of The We purchase it's shelf still that and being would is percentage at shelf. granted loyal community to on Rob, simply that like enough. -- be even the consumers, we still a I important can't the at and is ours We've question. a choice with is, it's big shelf, take thing think compelling shelf for to a get of the have brand happening the repeat the their attention. with on I to only got

so fight fight. got in a day. the people think we've And every street that's right I that And

Operator

concludes This to back would now I session. you. Anthony it the Bucalo. like Thank over question-and-answer to turn

Anthony Bucalo

Thank Have you day. of again, everyone, support Farms. Vital great for your a

Operator

Thank now This conference program. your does for call. you conclude today's participation in the

disconnect. may You

Vital Farms (VITL) 9 May 242024 Q1 Earnings call transcript