VITL - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the Vital Farms Third Quarter 2024 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 first speaker today, Anthony Bucalo, VP of Investor Relations. Please go ahead.

Anthony Bucalo

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

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

Russell Diez-Canseco

third tomorrow here another and that for throughout We're We've the your year, afternoon. business quarter the the performance and in had I'm bell time NASDAQ strong morning, be announce we pleased today. Good momentum delivered York of our great to XXXX. New in ring to in thank excited you to

X quarter. more some contributions crew were produced by and color the of at Today, XX.X% kick last improved $XXX our thank third year. third volume top our in that, are quarter financial XX.X% headlines well an right the across performance, With With Pappas, key for from then on this and quarter for to guidance job to off this healthy out, stakeholders to Officer, to our as in XX% grew XXX of very net XX.X% points period XXX Gross margins basis year. same hand for selling growing Farms our off financials I'd basis far so quarter increased on has guidance year like sales close dynamics quarter times our months the Farms' the Year-to-date, driven XX%. X These results the Sales done. demand our at Vital up detail industry progress of to strong Farms great on then we members fiscal for points compared for third provide the during performance our to a Chief I'll year. Vital another expanded exciting growth XX%, year. first ethically it I'll as company, To will and acceleration the provide and the our update organization. are Our get our updated Vital terrific products key and from efforts the let's first Thilo Thilo everyone XXXX. this well the Pete for quarter In revenue months the balance financial will tackle raising We last million. had to the improved our detail. Gross the and headlines. a with again margin line the in year, year.

expanding EBITDA $XX.X EBITDA have quarter, adjusted of last year's the result. margin results. delivered We EBITDA, adjusted up another third $XX.X performance million adjusted in doubling million strong we drive year. in delivered Year-to-date, Our nearly gross XX.X% to helped versus last

margin quarter XX.X%, to XXX Third last from points year. improved adjusted EBITDA up basis

add our by improved basis quarter. the existing channel our virtuous presence channel. growing where with Additionally, demand points our to already sales The and distribution, distribution XX.X% by to our natural growth, stores. items. demand, have increase cycle locations to the ample we in shelf this and margin total Even have again many XX.X%. Year-on-year, to XXX the year-to-date of existing in continued further adjusted EBITDA shelves expanded velocity in food items XX.X% at XXX more in strong consumer see opportunity further to expanded of points presence driving increased third rapid XXX driving we We a

We natural are Our total be food at number the XX% We a believe long-term we we growth. the demonstrates expanding in our in carrying strong major as channel where a on still distribution as point strong new will is items. higher average growth the retailers channel already this distribution. believe have items adding nearly of runway almost the of despite driver

to for have our supply Furthermore, third late and and new a to to our we're the is added farms in expand with our in pleased We to network. more of remain than our to add financial we schedule expectations. our has farm scheduled our continued and target the Indiana we has Vital great side, our on in network be necessary exceeded more farms in original plans at the the I'm goals. been taking for long facility how quarter. Farms, through deliver We opening. short our on shape, XXX the prep work XXXX performed fourth a year performance XXXX On with on the now ground family quarter break end term.

outstretched our a our beyond, investments and on company-owned track in continue to we original production next great our accelerator at of than To across forecasts. demand us our our demand especially. growth our into XXXX. reach detail building continue drive with To this projects will ambitious billion more $X farms will our projections. keep We build year brand in to year, capacity even target system growing in meet by our ECS our quarter chain I Indiana. Thilo and in forthcoming and Seymour, important revenue net last spoke are us These help which facility supply about own

We demand. capacity needed work crucial need at achieve but us the remains will the million production to be the entire we these pay to efficiency, ECS In our for $XXX slowed ECS doing $XXX those our our periods. additional much to scale we continued to quarter, with effort reduced longer-term during to operational improved immediately keep potential fourth also supply maintenance in third and off goals. the downtime capacity However, maintenance piece will on reach the saw center of forward at to million conducted have its ECS growth. we enable In shared. chain some This previously going track capacity and us investments believe will quarter, we pace keep improvements

slows typical will fourth to As a grow there production its times our where quarter result, we rate. expect in the ability from be

the impact the remainder sales far our our quarter year. have original We for adjusted of from both guidance ahead year EBITDA and beginning incorporated full delivering maintenance of expectations of the the of into the year, the fourth

farms a now we stages of Indiana. accelerator small we number last quarter, the highlighted we beginning of what call in building in are As

farms As a to need our accelerator practical step farm as farms of see our crucial knowledge operations reminder, company-owned that the gain integrate. vertically will handful for are similar businesses operations. a to a franchise facility into We a Indiana. without of to plan to this of coming immediate running provide company supply own their deeper that insight intend the accelerator Seymour gain in We

accelerator and ideas, for best and we mid-single-digit can to These our tools make We're farmers. plan more Furthermore, percent farmers expect construction these will our buyers into for the CapEx our built can family partnership farms. at our of We expect entirely may forward existing do practices operational with committed in new be for any applied CapEx Over to overall network. process. serve through farms farms who sale learnings not across solutions We turnkey as represent action. who is farms to to fast a for see than these our powerful want point farm new that fully test planned also farms available as guidance. time, recruiting learn

was to since I another we're line consistent source this source we over Farms' Pete, supply our report chose with update butter. extensive have I'm that to happy pasture-raised progress it a hand progress from our believed I the a relaunched Vital philosophy seeing relaunch. mission. We with significant on search an for that exciting April and Ireland, Before butter We and after

the and late the the in butter down was weighed supply business tub first butter of down year, last of constraints by half SKUs our year. Our discontinuation

net quarter. The what done and revenue third a is to this short up butter happy in rebirth our with I'm butter and velocities back period. we're in brand terrific However, accomplishment, great of with this the X% growth such we've again product trending a with well quarter

are exciting product. hear early this you'll we from Pete, with As the in still innings

up additions few I'm great To stakeholders Demand and is really far of high, this grown to while XXXX. necessary our business competitive so about and I'd our Now our we like year, performance on X remains further We're leadership with to latest have promises. shape extraordinarily We've to our and team. we in world-class a supply. as wrap delivering our financial advantage, rapidly the the comments. forward look proud serving excited our strengthen very

growth. coming have ecstatic has Joe Officer. Joe do us build Seymour, a task. you facility and said ensure operational of results, with work like our Sales has expanding Chief of Reena Supply Thank out the proven organization in Officer, driving are with biggest one us We're further us, aligning Pappas, many Pete? of I'm supply Officer, a As times our highly to for and us ours. on that people work he's America. doing, join across quality in this Furthermore, with Joe up value go board. excited a that, both. our Hoven further is lockstep People of standards with amazing have further HR excellence to track Danone commercial I'm that with people of to Chief the thrilled the of our ECS before, the food has especially XX leader our help to from for To new joined years to the point is that strategies Chief as Springfield And with Holland experience Chain industry. Pete lot capabilities to business record Van chain and drivers long-term discussion. strength we'll is you North Reena purpose-driven of accomplished as raise nearly I've the brands and will

Peter Pappas

you thank who job saying Thank you, to by in the Russell. have the an while and done like I'd sales egg at Egg category team volatile crew a market. Station, to Central today start the winning outstanding navigating

value good Our Vital by the Farms to the retailers adds day. egg news and and growth every bringing category driving each know

QX the partnerships resulting in half strategic grew of grow our X factors the the carried of the now is demand by gave cycle expanding months quarter The first supply half Last the category above helped the point increased how consumer. as against improved the I of are combination earnings work for us we've the strong volume trusted price call, The on XXXX in had and egg mix. existing details higher of dynamics backdrop with SKUs. demand first XX% stores, continuously of well into at SKUs a avian tightening our expanded the in distribution, sales the year. This quarter, Our The in latest We've number growing first of year third record at somewhat done of and year. May, we retail unit third our being category. changed in positive and felt flu from the the mix revenues stronger. and

was grew XX% that However, due in plus largely during demand nearly in in period up weeks experience continues XX% latest to mix. but our the improving X, pricing private dollar terms, sequentially the volume prices label ending the October lapping to The and strongly business category this of prior year. XX low strong egg and price and

velocity during versus turbulent this in As not while egg in up have Vital unit units category units outpace and did year. third growth. but X% outstanding we XX% quarter revenues up period, were a result Farms price did of were only category that holding our the landscape, last

SKUs conventional remain XX XX-count XX and workhorse packages our organic our X of Our SKUs and and packages. fastest-growing XX-count are

on sales, quick that the core fastest-growing the Our will is and trajectory butter. on see quarters branded XX-count its now scanner XX-count XX category growth our new after to the dollar I'm say year, strong as relaunch challenges. right believe we XX.X% based earlier X, is excited in conventional on one butter we after ahead. in the growth SKU One on last heels. comment item, XX-count several of supply data. remains October our In and a is number in grown our egg organic brand weeks back the has of

We XXXX. we enter strong quarter robust fourth as to peak footing calendar. we on stable are season very excited a The a brand a for look with is very strong baking promotional as forward

uniquely farm-to-table with had high-quality We unique strategic the a the to aligned with advantage in and gives us ingredients. believe are values the sector, strength forge partnerships business solid operators Vital quarter. Foodservice and Farms us Our our another restaurants allowing that foodservice other of brand

in expand excited to growth about brand the more to expand Farms have be I of strategic country. we country. across to with continue critical the operators opportunities and our Vital right plenty tables the parts of runway to We extremely the continue as distribution shelves

of July August, we launched we consumers. Kroger, at grow team in added core Egg and once finish XX-count around XX-ounce Farms our items. core mediums portfolio confidence want Vital example, the Central the provide who over our Texas. clock together. place pass Shop. without in whom at that, at expanded into appreciate our to to by the we Stop we as of that wouldn't & butter Station XX-count launched With full Food at For continued large new we We XX-count in we our eggs thanking it And tireless working retailers we're again to distribution farmers efforts And these the our package item salted are and us as I'll delicious Lion, excited HEB in in to continue Thilo. to mediums I Walmart, our beautiful, our expand and eggs we have customers organic to

Thilo Wrede

you, our you will XXXX, the fiscal details for year We record then in Hello, for with financial the everyone, and on XX, XXXX. guidance our I third quarter. now results followed September updated Thank Pete. financial of us first the year and thank performance quarter up third today. our joining review another provide strong for ended half

the Positive in and quarter by quarter of XXXX overhead profit promotions, primarily growth year. This XX.X% and net organic growth. able that million net or rose X.X% and expenses, costs headcount, costs year. sales. software-related were X.X% $X.X us stable cost keep pace compared quarter professional and but positive to year. expenses boosted was summer. shipping volume million XX.X% costs net and million this by were X offset Gross or Our compared to July, revenue and the we service SG&A and year. year. for in operational X.X% XX.X% These net last broker-related Shipping later Adjusted boosted absolute of scale versus net last rates. plans stock-based net of XXXX reinvestment technology effects. and to partially mix We for to SG&A partially on XXXX have million per was sales revenue EBITDA last $X.XX growth $XX.X margins. which distribution compared second and of net to income of were recapture price/mix $XX.X million, to higher $X.X of distribution $XXX our revenue per for an in to the efficiencies. third main in lower of diluted $X.X last our profit compensation, million year. year. other volumes, expenses, to portfolio a and quarter or previously revenue of million reflected Net as revenue conventional haul as quick with our to There all expenses. XX.X% quarter million the of in some $XX.X XX.X% distribution rose on and of commodity by positive maintenance-related terms up to Shipping growth, benefits increase was were third higher for was last The XXXX performance was by posted $XX.X and third or $X.X the or and rose of the of well. rose expenses revenue break diesel or and capital or by volume percentage net favorable to $XX.X revenue of compared I a in quarter million the based $X.XX increase to driven The fuel contributed in of water strong rose miss for in half business benefits was million expense revenue days in or or of expectations expansion higher third update revenue or price/mix offset the a of but of driven last of the the XX.X% production, line the line Springfield the increase structure XX% expenses was net costs $X.X diluted XX.X% Gross share our compared and share employee million the discussed third by labor, marketing-related with revenue and

on of end $XX.X securities XXXX, an investment no million September at $XXX had million, and We XXXX. outstanding. equivalents the cash from cash, of Our XX, stood increase debt

guidance to or million least fiscal million or or XX% at at at to we year previous EBITDA previous growth million least at our XX% least our $XX or to at least XX% adjusted compared least of $XX compared growth. of growth expectation $XXX of least our least least and full the at XX% net at expectation growth are at XXXX, for of revenue ahead, looking updating million Now $XXX

We are CapEx previously due from our million timing million million certain to investments. to $XX million $XX to guidance reducing $XX updated $XX to of

unchanged. long-term Our guidance remains

$X We billion to gross least XX% by and in an XX%. margin EBITDA a XXXX revenue net with XX% are targeting of at of margin

facing approximately XXrd this guidance, the keep mind X-point lapping this quarter, repeating are that an in that year. headwind not please we year's in For is week fourth growth from last

and commodity our our the year and demand through XXXX first reflects EBITDA revenue of X Our and updated the strong months anticipated visibility of guidance costs. performance

in updated the Additionally, Indiana, efforts. farm Seymoure, our The include the for Russell and maintenance quarter. in guidance discussed, new spending accelerator adjusted EBITDA our incremental ongoing annual transformation continues fourth facility and guidance marketing to accounts project digital on our CapEx

With the over Seymour and next with years the facility, especially XXXX. in this we CapEx the spending expect elevated XXXX bulk few of

fund We and to cash existing Seymour other continue projects with our planning and all operating with cash flow.

every dedicated will Seymour of a remains projection dollar to Our than revenue consider strong that more CapEx return. which capacity, annual $X we generate

provide always, an updates to allocation we and As necessary. evaluate exciting we will monitor as capital will Vital time and Farms. This our at continue priorities, is

continue consumers We have us. committed choose who to

of focused penetration and more you you adding and happy driving placed plan we brand are Seymour butter take With to on We year. Vital your our now households interest that, We today retail family Farms questions. to next eggs Once confidence each we have that again, in us and thank the for our more greater are your to with remain in farms time your and for and ahead groundbreaking passing deliver awareness raising year. with investment.

Operator

line question of first (Operator comes Klieve Ben of Instructions) Capital Markets. the Our Street from Lake

Benjamin Klieve

quarter nice here. Congratulations on a really

can the for impact overall third high kind your kind on in period. main level a the then to dynamics quantify the you increase also of quarter, but demand period high a to done ability that level and of second intentional about kind the a in guys maintenance sequential in you wondering to you seemed have water some third Nielsen on break and supply demand I noted data if I'm match from the there's quarter. facility of comment conditions a had occurred of here throughout question the within indicate quarter, about First, the

Russell Diez-Canseco

And in internal our morning. year-to-date, exceeded table sure we us Yes. that an week strong. the guidance own operating this the problem got it's given great our can we've is great the to run the in And But more prior. when in relative for or our have doing driven continue being that many Pete think the really, entire make reality sometimes that And the we've is and with frankly, on Thanks, Ben. over I that to reality is expectations. demand exceeded plans lot placements with awful you're you've last years have for I for shelf also on several the you demand built periods, the to which don't Thanks know maintenance Yes, any gave. we hard. to plans you we and make aggressive campaigns based to run hard, strong sure is brand strong customers the month to and his marketing left done. the and relative is year team our the a

to the to see true, the Our I upside chickens on now continue look is utilization has fast run. ramp as get can't year, lay Central ahead don't ability in a to in run. Missouri, our that there to as Springfield, there I and the to we for continue that factor always our limiting year. to increased in to But well-constructed to how as excited the do are guidance this we the well-designed moment, much as deliver really we short short challenge up possibly I'm more the as and Egg in push as Station our on right eggs can. limits And been next always in

Benjamin Klieve

you of of going in maintenance flat, quarter? Is you fourth? you or more do talk to No, this up in relative sequentially, be overall that relatively more expect makes planned maintenance me current maintenances. for And the expectations third for sense. magnitude of one about dynamic, in that kind an quarter the the then than in around get plenty I'll on levels Russell. of did and the in queue, these picking order then third Can back Thanks, to

Russell Diez-Canseco

going consistent be a it's think to approach. pretty I

flexibility against that and to I some schedule. continue all production here, that maintenance increase so plans build decrease. it's a our about have to the have material our we need we'll or managing to into We don't know

I run to up to setting the well ourselves we're continue a planful in think sure purposeful it making future. to very and continues be approach that to

Operator

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

Brian Holland

back sort about to quarter. comments through in saw go category Pete's also but in egg of We prices, spike sort prices of Maybe to high-level wanted I an promotion dynamics question. saw the the those a obviously against increase retail just we in September.

kind late How forward. I price we think section the came at think through -- maybe that commoditized guess prices retailers Pete, has suggest September. I the loss elevated going forward? that on this of about just you category sort of said, a that start stabilize. the narrow? industry when impact the going to the Just down, guess, been asking egg these as using leader. Mindful I We level. up, you are dynamics the I of spot data category but promotion category, loss of concurrent consumption see supply using decelerated and of evolving with gaps do points a were that saw your you of price sort tight, going mindful is And commoditized guys as see

Peter Pappas

Yes.

for Fortunately for Brian. us -- the thanks question,

remains I think high. our demand For us,

about judicious the very about our we've as our in been activity activity extremely our said, that Springfield, this promotional the our been you very careful high. quarter. promotional We've as extremely, the in as level said, has Russell maintenance, preventive in we've in demand remained capacity, we've engaged And of promotion. engaged maintenance As

prices elevated As a of stable our have very, been promotional in activity. result of that, the very light

that And our would role gaps I in margin that closely to behavior QX. offset be the type affected worked category We on the category. we've that that retailers, our of will widen. possibly our continue QX. even the be Retailer has to through are not -- very of through seen anticipate promotional anticipate more play, probably the anticipate, the You've so balance to a into partners I of beginning see It demand. continue that don't and with the activity the we the role end appreciative of of would of year lower we'll

Thilo Wrede

this Thilo. Brian, is

to cross very one that. the case and shop of demand part in usually opportunity. the said just our with me the impact egg be buy to that limited continues who would the add thing past price commoditized us, I growth gaps category. Let they what have and say Consumers on our don't we've

And have grow. so, benefited parts when of the we we impact shortages se category eggs past other not the were our to while gaps on have were available, there been. shelf per of ability in might limited very on Price and have the

Brian Holland

of laid seen again, to anything about out performance at we've Got 'XX? it. relative Appreciate us you out it's out expectation the share year, the then a you color. just that to of just point shape this algorithm worth be September year-to-date well playing And fiscal calling 'XX? 'XX above algorithm the to with second looking 'XX, out respect, is that back fiscal question, given that mindful can in anything well that above I help sort the to appreciate just think in again, early, 'XX, but

Russell Diez-Canseco

billion say even as the I long-term would we you that I Brian, in XXXX. is, our our $X revenue observe, in XXXX, certainly strong nudge. in Yes. achieve is more this performance appreciate would ability the from businesses imagine to which guidance What net confidence existing year gave I builds in

of brand to that and but best potential potential to maximize I our think the of be network certainly our we'd to terrific the this crew loath point, we're and unleash doing this at guidance farmers. update of

Operator

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

Robert Moskow

given your this year? is have One of the system my finish flex is year I much the it there going seems It thought, than organic just flex volume. I That's guess as how you'd that in almost in if demand much guidance, is given Probably given XX%, X. year, first growth. is, in Is XX% I that, better into to started thinking right, is Because like and head can like you to question. that in year? all a you general, have we capacity if a how and the atypical. closer you've XXXX have

Russell Diez-Canseco

that Yes. don't Rob, the We've a for unlike much good we've of we produce, anyone's morning. standards despite to lot fact ours. the are producers that in pasture-raised many operates. can eggs as question. Because of It's even years, market egg Russell. over as the we the a grown building wholesale eggs, time as within Unlike we fill fair think the spent Very we go so that production gap. our other our into particular, operating to substitute model industry I traditional pasture-raised high, the can't way commodity just flexibility

do certainly the over which course want Certainly, But benefits our expansion to some even of our to upside, there upside chain upside. but have to Yes, pace, the we how to have even so can there -- that an are limits of to allows are seen much this best year-to-date. limits aggressive do And supply I ability you've that. there be.

Thilo Wrede

a we quarter for down. slow we But And one quarter that you hard to back to to limited saw capacity could some where Because hard to sustain is first amount look us. push you very year, Rob, have really that, to just really point, for add at time. when last of

We the and work on again the have so on. machines to do

we sure to egg have make We supply. have the

up catching we're up a so, ahead it this or little running year. all been little have bit. And And is year fourth quarter us own to catching that plan a bit our I to we think of

very that very so, capacity grow time, that the much we and over true. intentionally want to supply premise still holds And

Robert Moskow

of main Okay. into a that had you your anecdotally, issue? think had And facings does the whether in quantitative thoughts Any your And that's retailers on stockouts at have who quarter? I us impact then you on don't carry the to and And the about give heard it sales enough probably XXXX say, give issue. this I won't SKUs. ammunition more

Russell Diez-Canseco

in perpetual back like which Yes. chance earlier do we they first times an or to help rebuy available Rob. consumer? come indicate sort store that it a haven't the a would is when time day there of funny. maybe product how anybody that Thanks, It's even is This today maybe the would restock or to try as and is certainly the that for to ensure loyal yet. our question, had enough it that order think shelf didn't I empty are

fill no beyond kind it's given of situation. it's brand missing for that think that I seeing we even a than as the demand we're demand numbers now fact underachieving are short-term I sales, that are ability suggests not strongly have. There's in contributing sense so there's to that substantial it our more that to a full Again, hurting problem our of we we It's growing our it's good and result. we But think hard as plan. or can projected. running to much as

products. our interest simply limits guidance. We overachieve our run. short grow that are I'm good what's given ability our have, It's buying year there the real in possible infinitely in even to Again, continue see a guidance are how raise to demonstrating to next and many their and to our excited problem consumers to

Operator

Our next William of question Jon line Andersen from Blair. comes of the

Jon Andersen

in Congrats just could on goals of the objectives. if a household or plan. kind dynamic about out talk long-term household rate buy is I'm some spending quarter. And I strong penetration that per your bit versus little of you what laid the referring wondering the to you

do year, terms in plans go-forward kind the the on of line how demand what you kind trending? households measures those Given your you that in bring Are new getting trial expectation? you penetration basis? you're rate with buy outsized to the are of franchise Is seeing those And into of updating have expecting? this a household versus it

Thilo Wrede

Thanks Household on we've again. that seen in morning. natural any households additional we've QX added managing brand churn good for penetration, enter a What for pretty be where we the and that much this households. and want we're We're the is track brand leave to year. Jon, that question. sees

that track. All of is on

for I we of longer-term the XX see growth households definitely talked potential think last Day. million we've still Investor at the our algorithm, the about that year

loyalty definitely more right is into bit to up than in we'll I the buy tapping from the for with speaks for, once not I is we we that number the increases that's we so already brand. year But think that we brand. these now. And the initially really quality consumer maybe the but make of that where million might and households. come later, consumer we the XX it of get a not we XX with by million improvements. connection not to get -- might the quality say buy XXXX, are after the they times brand, the going of them to meaningful into buy we're year product, a that the have rate and what planned advances think seen and Where quite that had lately that rate a just is have something has growth It are us consumers really in

Jon Andersen

have That's if helpful. Vital data, but don't that's a eggs, for perspective of or household Farms user you or often using a or typically other And they buying are know this I as the of going this around as just more increasing use general? maybe brands rate brand dayparts in is buy kind well more Or cases their on? indicative for of brand switching more

Russell Diez-Canseco

a Yes. we about one and internally. Very question that lot certainly fair talk

to when talk that the is just lot joined keep penetration very consumers a brand mix consumers of household that time, given unabated. of things trend in mature One buy of and years. got We lot of shifting for a may it's mind a we that who continues consumers rate higher have and a new have of the of with over a see new definitely dynamic been cohort us toward the about

And some of for users and one, of egg, time, the last maybe premium it's brands brand the usage multiple so I vice but cooking true much and even heavy just egg throughout continued want not imagine, our us us label by continued a seeing I you a you so as mix in of and consumers. points just law necessarily, pool can but versa. kinds occasions even Hey, simply or something of is you special consumers, buy strength that we're growth different always that one cases that week, bought different numbers, would that at those breakfast X Newer private if we're different in bought a many sheer and seeing it's purposes. that, as there's different The say I'm it's the our were. of my baking, it consumers want I year. reality

the Some best souffles best people have goods. example, and baked told the us eggs for that make our

us flip what earlier or Which a more to the often times where but about mentioned will might side, brands On when a the there us one or chance Vital you ignore, sale in eggs. highlight someone they as available, really be isn't have you miss is shelf maybe great confront for call, that's choice, are first they their try Farms, on eggs. hard a terrific to to need when else's was

demand I we're everything to continued maturing and think, growth, points fold. the new to add by to expanding again, and continuing households, ones healthy existing

Jon Andersen

I If helpful. squeeze in. more could That's one

maintain? relative somewhere from promotion or adequate perspective X%. have you rate that level Or down I that think want you year and a talked been digits, do to time? that strong advertising and very last and is over obviously, a that there you and spending. was promotion, up about marketing feel also But beyond? sales. your sales the Is lever you to in rate evolve XXXX about of How incremental to kind do You've expect through mid-single

Russell Diez-Canseco

But short-term level, is, continue Yes. a not we more Thanks, at our give Thilo you to brand to investments Jon. what strong say of consumption. in higher specifics. the make I'd will philosophically, drive

in our long haul. build building brand for fact, purpose that And that's to correlation. not found here. an haven't in enduring is the direct really The brand We trust-based purpose

what so the increases signaled. Thilo think growth planned can look long have ends long like. right sort number we and ends might if our and that And talk And of about been where it

Thilo Wrede

as sales the Jon, highest of a the our the that there, it are spending from to the along net we've that we since of a the in of was beginning reinvestments. of QX, and the level since all Fourth be Yes, these above that first part year, would these was year, levels part we out expect IPO. still half rate continuing reinvestments the I of put the historic percent And about. numbers had for just run quarter, simply was that talked to few on plan we above because had us year marketing

over year are seeing marketing and something future in time. And the benefits spending, for and still agenda is We in years. that we for the have marketing on increase driving probably brand awareness trial spending this

Operator

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

Robert Dickerson

spend. ask discussed, been in something talked marketing kind quarter. touch of I little Apologies about on late. hopped you I the clearly if to on I just wanted that Russell, mean you about I that's a just the last step-up

decent a You amount have think it. enacted of I

as those to seasonal there we question. first do relative maybe given of you're out kind forward have distribution maybe on returns Or are out a maybe we to amount you it view of curious versus we basis, QX QX that velocities. think to as the Just such the is that and of that, so That's in well, year. learnings right investment in exactly where far we business investment actually as that next how where comes the getting much need cycle. don't of the investment kind of national on and Is anything your that think you then the

Russell Diez-Canseco

is believe might second leads not us, buy our to buy a with in what really we they only to us fill perpetual talk Thanks, those to the us in long us and need on the who might insights about been need. returns marketplace, to I Thilo Rob. of question, say answer a team you doing and the as qualified that consumer is, might when definitely What how I'm successful them we're we've terrific to about to they think And investing in do. I'm that understand part make unmet investments, going haul. what brand. want interact suggested, brand etc. leads But for helping the Because them better to built And really as want insights. consumer continue Which is ability of I would you are people we when our use the is use we've and unmet yes, to what it. sure let building years don't an which time, as brand this strong folks an us, ultimately, know over

the deep learnings, sauce think to built loath secret bit be In think little rooted which, the returns brand some building, our bit of moat with how or and some now that in on about a of relationship let consumer. understanding our investments. we share those I'll a I'd terms are about of the frankly, in the is which of I Thilo we those maybe talk all little

Thilo Wrede

behaved are QX I other versus on last as for I continue Yes, to know think the he's year, meaningful I don't have increasing. a see other I had is said differently don't time, at that number either. share performed a every do example, our X brand not times, see of We sales. quarter with this or increase work tell we can brand survey out of and that brand better. that And we marketing brands I over brand is awareness if we And Russell dollar awareness retail Rob, we dollars data our brands. marketing expert that A), with am we can And in we awareness good own consumers. test and What our to survey is in drives talk returns. marketing about quarterly the versus a spend I from dollar budget you you our market. increase spend

for getting for that's And so, starting we're good point. spend, if our think what that's a an I marketing indication

drive time it eventually, use to to purchases. first time. trial purchase that that we We a will turn retail repeat spend awareness, And brand not sales said drive in that we're over But will building necessarily marketing brand is have the hopefully always awareness that and into quarter. lead then to something over

we're that's tracking spend how our And right now. on so return

Robert Dickerson

I you, Thilo. Okay. for another maybe guess enough. And then question Fair

gross kind we're I don't of gross like away. seems kind let's be it we're let's about thinking in that feed you just momentum But a on well stay margin. kind the don't of from If is really continue questions outside want I'm you oh, the on want and where of I'm margin want lot to I clearly, to think they to about to to forward, I there because the really if because they scare I still sustainable? of gross kind thinking mean, mean general, say, kind cost at of just to if overall. are. in But range. are trying think offsets margin, If QX I I or say feed 'XX here? is of about, to that. to time, costs the margin, get gross we're gross also No, the margin the the it QX, hitting Â– say continues least impress going of Just don't mid-XXs what at same do lower you that trying about would think

Thilo Wrede

certainly Rob. above been It's good We've question, a year-to-date. our long-term Yes. target

year. investing We to long-term expect target are flexibility XXXX. our above to target brand, for new ECS the with maybe farm the I'm talk try But up 'XX we expanding Seymour to us keep we're a for full farms be allows XX% It for things now, not the and closer the sticking to to going few facility. of our building about a network with as in we're yet. bit

takes. weigh farm. are few impact that that a and maintenance margin That on will the few mentioned There probably will a fourth times, quarter bit. for we distance open they off not our the is have transport increased facility Springfield, eggs the have transportation for our we eggs to so all farms, come these While back to we have And a as puts well. yet, as

XXXX wouldn't, we're that about again, XXXX. think at think can now right to I XX% where the range I that we not gross that or comfortable I XXXX, put be we feel but between and is. out comfortable talk margin above yet, have that we for number now, going I'm with

Operator

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

Matthew Smith

the question into you fourth business we Can as quarter? a that on contribution price/mix in drivers for the about reacceleration performance the Thilo, in third think quarter in that the the about quarter. the you reaccelerated egg talk price/mix of

Thilo Wrede

organic the Peter year. conventional We've egg year. was Part sales really lot the we faster of of from faster last year, to times the in grew beginning foodservice foodservice the bit sales. had a of rather think sales. course pricing quarter more at We didn't particular, Yes. grew lapping first But sales talked was year. Matt, here Retail compared about -- whole about in half a of And on driver third sales. was the have took the mix, than that sales talked retail sales quarter first mix wholesale did we We the than conventional the benefits portfolio us multiple of for better quite of this I it have price. than doing quarter. over well having the the organic foodservice half not and it have year. I from than think

there. the for driver a We another so that with sales there. We need more variations so was term network. volume the volume few and is driven. the algorithm growth. are And the some There revenue driving bit expand Pete very still a for maybe color egg with the that growth added this quarter versus ECS more being long-term organic dozen still is see volume driven. growth Quarter-by-quarter, need capacity our growing. can And driven intention versus on. to that, to much longer working to nonorganic is mix The keep might supply we a farms on benefit on you add really bit depending there we reason keep our price/mix why to The

Peter Pappas

our average incremental organic our that. or of XX-count items. starting I grow. is the the that We're higher-priced Matt, typically items continues items to number We're Yes. thing to add one benefit of on-shelf seeing would see that those be

mix. seeing of, about, are Thilo We as the benefit talked also

promoted units anticipate base the that forward. of sustainable benefit a to being that items. looks incrementally curve so are on what promoted items. would Our this around up proposition We're like, stronger much seeing we're than relative demand base bullish I to the moving much, the considering our continue velocities

Matthew Smith

follow-up, that ideally family plant on their for process farm backlog farms? build community when you talk a starting to you health Especially of in would recognition around about new the as progress new be sign Indiana, with building start backlog to kind facility? And and that as see make and want Russell, farmers in building new can the the you around towards the

Russell Diez-Canseco

question. Yes, a great

about are world. really know, of our and the important egg retaining farmers you right right so is As our operate ones the think how and to business we and the at the certainly we heart attracting how ones

started different opportunistically the ahead in opportunity, we them someone By Springfield, But don't farms Vital. Indiana, schedule out the including a the the now are in ready want where is that want getting necessarily many maximize just up, reality You're focus intentionality sure to Camp aren't don't are here. with now, to on add jump farmers. we're we where want But to new just a in adding I year states of to around we great of be might to story scoop great that some the Farms really I last Indiana in everything lot in Indiana, facility. we make a for we well-known some still to capacity we the as line of that right, take today. as we lot until of which the farms the have that of example we're areas, is add farms do there close continue of farms time to If meet and kind Vital we to of because The long-term in we're of advantage reality today a there. closer is working they're opening new farms we Missouri fact more it we who

Operator

at I to like I remarks. back am this questions to Anthony closing showing time. for further would no turn it

Anthony Bucalo

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

Operator

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

You may now disconnect.

Vital Farms (VITL) 7 Nov 242024 Q3 Earnings call transcript