Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vital Farms Inc (VITL, Financial) exceeded $600 million in net revenue for 2024, surpassing initial expectations and setting a path towards a $1 billion sales target by 2027.
- The company added over 125 new family farms, increasing egg sourcing capacity by more than 40%, demonstrating strong recruitment and appeal of their model.
- Vital Farms Inc (VITL) achieved a 79.2% growth in adjusted EBITDA to $86.7 million, with an adjusted EBITDA margin increase of 405 basis points.
- The butter segment showed significant growth, with sales up 11% for the year and nearly doubling quarterly sales in Q4.
- Brand awareness and household penetration increased, with a 20% rise in consumer base and a 12% increase in buy rate year over year.
Negative Points
- The egg industry faces supply issues due to avian influenza, with nearly 40 million egg layers lost in 2024, impacting supply and creating constraints.
- Vital Farms Inc (VITL) expects a modest step down in growth rate in the first half of 2025 due to supply constraints and lower inventory levels.
- SG&A expenses increased to $133.9 million, driven by marketing, stock-based compensation, and higher employee headcount, impacting net revenue percentage.
- The company anticipates a decline in adjusted EBITDA margin for 2025 compared to the high margins experienced in the first half of 2024.
- Weather-related disruptions and supply constraints have already impacted operations at Egg Central Station, affecting efficiency and gross margins.
Q & A Highlights
Q: Can you provide more details on the cadence of farm additions and the expected growth for Q1 2025?
A: Of the roughly 50 farms signed in the first half of last year, more than half are now operational. We expect volume growth year-over-year, but note that last year we had high egg inventory, which we don't have this year. Thus, Q1 growth will be modest compared to the past two years, where we saw significant growth rates of 55% and 24% in Q1 2023 and Q1 2024, respectively. (Russell Diez-Canseco, CEO)
Q: How do you view the price/mix dynamics for 2025, given the high egg prices impacting consumers?
A: Our reported price/mix increase was about 7% in Q4, not 14% as some data suggests. We don't plan for price to be a significant growth contributor this year. Our pricing strategy is part of our marketing mix, balancing margin structure and growth rate. (Thilo Wrede, CFO; Russell Diez-Canseco, CEO)
Q: How is the avian influenza outbreak affecting your operations and supply chain?
A: We've had zero outbreaks in 2025, and only four incidents since 2022, affecting less than 0.2% of our production. Our farms seem to maintain better biosecurity, possibly due to more vigilant infrastructure maintenance. (Russell Diez-Canseco, CEO)
Q: What are the expectations for the new grading machinery at Egg Central Station (ECS)?
A: We anticipate a smooth transition with the new grading line, thanks to proactive planning and leadership at ECS. The expansion is expected to be seamless without significant downtime. (Russell Diez-Canseco, CEO)
Q: Can you elaborate on the role and impact of accelerator farms?
A: Accelerator farms are our R&D labs for testing new equipment and practices to improve farm productivity and animal welfare. They will not significantly increase volume but will help us innovate without imposing risks on existing farmers. (Russell Diez-Canseco, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
