Vital Farms Reports Second Quarter 2023 Financial Results

Aug 03, 2023

Second Quarter Net Revenue $106.4 million, up 28.4% versus Prior Year Period
Raises 2023 Net Revenue and Adjusted EBITDA Forecast

AUSTIN, Texas, Aug. 03, 2023 (GLOBE NEWSWIRE) -- Vital Farms (Nasdaq: VITL), a Certified B Corporation that offers a range of ethically produced foods nationwide, today reported financial results for its second quarter ended June 25, 2023.

Financial highlights for the second quarter include:

  • Second Quarter 2023 Net Revenue increase of 28.4% to $106.4 million
  • Second Quarter 2023 Net Income of $6.7 million
  • Second Quarter 2023 Adjusted EBITDA of $11.3 million1

“Our progress as a brand and as a business thus far in 2023 continues to reinforce my excitement in the long-term potential of our company. Our brand continues to gain new consumers and the business produced another quarter of impressive top-line growth, over 28% with double-digit Adjusted EBITDA Margin again this quarter.  Given the strong year-to-date results, we now feel confident increasing our full year Net Revenue and Adjusted EBITDA guidance,” said Russell Diez-Canseco, Vital Farms’ President and CEO.

Diez-Canseco continued, “Vital Farms’ continued strong performance is made possible by our consistent focus on working with our stakeholder community to generate sustained, positive outcomes. The commitment demonstrated by our crew members, farmers, and other external partners to deliver above and beyond the needs of our customers and consumers sets Vital Farms apart. The effort illustrates the passion of our people and the potential of our organization to further improve the lives of people, animals, and the planet through food.”

1 Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures defined in the section titled “Non-GAAP Financial Measures” below and are reconciled to net income and net income margin, respectively, their closest comparable GAAP measures, at the end of this release.

For the 13 Weeks Ended June 25, 2023

Net revenue increased 28.4% to $106.4 million in the second quarter of 2023, compared to $82.9 million in the second quarter of 2022. Net revenue growth in the second quarter of 2023 was driven by higher prices and volume gains of 6%. The volume growth was driven by increases at both new and existing retail customers.

Gross profit was $37.8 million, or 35.5% of net revenue, in the second quarter of 2023, compared to $24.9 million, or 30.1% of net revenue, in the prior year quarter. The gross profit growth was primarily driven by higher sales. Gross margin benefited from increased pricing across our portfolio, partially offset by headwinds that included higher input costs (inclusive of commodity impacts) across our shell egg and butter businesses as well as higher packaging costs.

Income from operations in the second quarter of 2023 was $8.0 million, compared to income from operations of $0.7 million in the second quarter of 2022. The change in income from operations was primarily attributable to higher sales and gross profit, partially offset by higher marketing costs and increased employee-related expenses as we grew headcount to support our growth.

Net income was $6.7 million in the second quarter of 2023, compared to net income of $0.2 million in the prior year quarter.

Net income per diluted share was $0.15 for the second quarter of 2023, compared to net income per diluted share of $0.00 in the prior year quarter.

Adjusted EBITDA was $11.3 million, or 10.7% of net revenue, in the second quarter of 2023, compared to $3.7 million, or 4.4% of net revenue, in the second quarter of 2022. The change in Adjusted EBITDA was primarily due to higher sales and improved gross profit performance, partially offset by increased marketing spend and higher employee-related expenses. Our Adjusted EBITDA excludes certain non-cash items. Adjusted EBITDA is a non-GAAP financial measure defined in the section titled “Non-GAAP Financial Measures” below and is reconciled to net income, its closest comparable GAAP measure, at the end of this release.

Balance Sheet and Cash Flow Highlights

Cash, cash equivalents and marketable securities were $93.5 million as of June 25, 2023, and we had no outstanding debt. Net cash provided by operating activities was $18.9 million for the 26-week period ended June 25, 2023, compared to net cash used in operating activities of $3.0 million for the 26-week period ended June 26, 2022.

Capital expenditures totaled $4.3 million in the 26-week period ended June 25, 2023, compared to $4.4 million in the prior year period.

Update on Fiscal 2023 Outlook

Thilo Wrede, Vital Farms’ Chief Financial Officer, commented: “We are pleased with our outstanding financial performance so far this year. We believe the underlying trajectory of our business remains strong and the company is set up well to deliver our updated guidance for fiscal year 2023.”

  • For the full fiscal year 2023, management now expects net revenue of more than $465 million, which still anticipates higher net revenue growth rates and gross margin in the first half of year than in the second half of the year.
  • Management now expects Adjusted EBITDA of more than $35 million for the full fiscal year 2023.
  • Finally, management now expects fiscal year 2023 capital expenditures in the range of $16 to $21 million.

Vital Farms’ guidance continues to assume that there are no additional significant disruptions to the supply chain or its customers or consumers, including any issues from adverse macroeconomic factors. Vital Farms cannot provide a reconciliation between its forecasted Adjusted EBITDA and net income (loss), its most directly comparable GAAP measure, without unreasonable effort due to the unavailability of reliable estimates for income taxes, among other items. These items are not within our control and may vary greatly between periods and could significantly impact future financial results.

Conference Call and Webcast Details

Vital Farms will host a conference call and webcast at 8:30 a.m. ET today to discuss the results. To participate in the call and receive dial in information, please register here: Vital Farms Q2 2023 Conference Call. Alternatively, participants may access the live webcast on the Vital Farms Investor Relations website at under “Events.” The webcast will be archived in 30 days.

About Vital Farms

Vital Farms (Nasdaq: VITL) is a Certified B Corporation that offers a range of ethically produced foods nationwide. Started on a single farm in Austin, Texas in 2007, Vital Farms has become a national consumer brand that works with over 300 family farms and is the leading U.S. brand of pasture-raised eggs by retail dollar sales. Vital Farms' ethics are exemplified by its focus on the humane treatment of farm animals and sustainable farming practices. In addition, as a Delaware public benefit corporation, Vital Farms prioritizes the long-term benefits of each of its stakeholders, including farmers and suppliers, customers and consumers, communities and the environment, crew members, and stockholders. Vital Farms' products, including shell eggs, butter, hard-boiled eggs, and liquid whole eggs, are sold in approximately  24,000 stores nationwide. For more information, please visit

Forward-Looking Statements

This press release and the earnings call referencing this press release contain “forward-looking” statements, as that term is defined under the federal securities laws, including but not limited to statements regarding Vital Farms’ market opportunity, anticipated growth, and future financial performance, including management’s outlook for fiscal year 2023 and management’s long-term outlook. These forward-looking statements are based on Vital Farms’ current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause Vital Farms’ actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to: Vital Farms’ expectations regarding its revenue, expenses, and other operating results; Vital Farms’ ability to acquire new customers, to successfully retain existing customers, and to attract and retain its personnel, farmers, suppliers, distributors, and co-manufacturers; Vital Farms’ ability to sustain or increase its profitability; Vital Farms’ ability to procure sufficient high-quality eggs, cream for its butter, and other raw materials; Vital Farms' ability to successfully enter into new product categories; real or perceived quality with Vital Farms’ products or other issues that adversely affect Vital Farms’ brand and reputation; changes in the tastes and preferences of consumers; the financial condition of, and Vital Farms’ relationships with, its farmers, suppliers, co-manufacturers, distributors, retailers, and foodservice customers, as well as the health of the foodservice industry generally; the impact of agricultural risks, including diseases such as avian influenza; the ability of Vital Farms, its farmers, suppliers, and its co-manufacturers to comply with food safety, environmental or other laws or regulations; the effects of a public health pandemic or contagious disease on Vital Farms' supply chain, the demand for its products, and on overall economic conditions and consumer confidence and spending levels; future investments in its business, anticipated capital expenditures and estimates regarding capital requirements; anticipated changes in Vital Farms’ product offerings and Vital Farms’ ability to innovate to offer successful new products; the costs and success of marketing efforts; Vital Farms’ ability to effectively manage its growth and to compete effectively with existing competitors and new market entrants; the impact of adverse economic conditions, increased interest rates, and inflation; the potential negative impact of Vital Farms’ focus on a specific public benefit purpose and producing a positive effect for society on its financial performance; seasonality; and the growth rates of the markets in which Vital Farms competes.

These risks and uncertainties are more fully described in Vital Farms’ filings with the Securities and Exchange Commission (SEC), including in the sections entitled “Risk Factors” in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2023, which Vital Farms filed on May 4, 2023, and other filings and reports that Vital Farms may file from time to time with the SEC. Moreover, Vital Farms operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for management to predict all risks, nor can Vital Farms assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Vital Farms may make. In light of these risks, uncertainties, and assumptions, Vital Farms cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Forward-looking statements represent management’s beliefs and assumptions only as of the date of this press release. Vital Farms disclaims any obligation to update forward-looking statements except as required by law.

Rob Discher

Matt Siler

(Amounts in thousands, except share amounts)

  13-Weeks Ended  26-Weeks Ended 
  June 25,
  June 26,
  June 25,
  June 26,
Net revenue $106,445  $82,870  $225,616  $159,929 
Cost of goods sold  68,645   57,931   145,149   113,289 
Gross profit  37,800   24,939   80,467   46,640 
Operating expenses:            
Selling, general and administrative  23,908   17,007   47,853   34,632 
Shipping and distribution  5,853   7,211   13,679   15,373 
Total operating expenses  29,761   24,218   61,532   50,005 
Income (loss) from operations  8,039   721   18,935   (3,365)
Other (expense) income, net:            
Interest expense  (136)  (7)  (275)  (15)
Interest income  450   210   790   340 
Other expense, net  (441)  (52)  (1,866)  (3)
Total other (expense) income, net  (127)  151   (1,351)  322 
Net income (loss) before income taxes  7,912   872   17,584   (3,043)
Income tax provision (benefit)  1,229   680   3,751   (1,697)
Net income (loss)  6,683   192   13,833   (1,346)
Less: Net loss attributable to
   noncontrolling interests
     (7)     (8)
Net income (loss) attributable to Vital Farms, Inc.
   common stockholders
 $6,683  $199  $13,833  $(1,338)
Net income (loss) per share attributable to Vital
   Farms, Inc. stockholders:
Basic: $0.16  $0.00  $0.34  $(0.03)
Diluted: $0.15  $0.00  $0.32  $(0.03)
Weighted average common shares outstanding:            
Basic:  40,948,365   40,628,416   40,861,218   40,580,598 
Diluted:  43,292,261   42,694,767   43,359,993   40,580,598 

(Amounts in thousands, except share amounts)

  June 25,
  December 25,
Current assets:      
Cash and cash equivalents $47,673  $12,914 
Investment securities, available-for-sale  45,862   65,814 
Accounts receivable, net  30,045   38,895 
Inventories  42,105   26,849 
Prepaid expenses and other current assets  6,193   5,142 
Total current assets  171,878   149,614 
Property, plant and equipment, net  59,340   59,155 
Operating lease right-of-use assets  1,200   1,895 
Goodwill and other assets  3,904   4,002 
Total assets $236,322  $214,666 
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $21,840  $25,972 
Accrued liabilities  25,167   18,477 
Operating lease liabilities, current  731   1,208 
Finance lease liabilities, current  1,621   1,570 
Income taxes payable  2,345   425 
Total current liabilities  51,704   47,652 
Operating lease liabilities, non-current  647   892 
Finance lease liabilities, non-current  6,202   7,023 
Other liabilities  1,725   767 
Total liabilities $60,278  $56,334 
Commitments and contingencies (Note 19)      
Stockholders’ equity:      
Common stock, $0.0001 par value per share, 310,000,000 shares authorized as of June 25, 2023 and December 25, 2022; 41,232,667 and 40,746,990 shares issued
and outstanding as of June 25, 2023 and December 25, 2022, respectively
  4   4 
Additional paid-in capital  159,012   155,716 
Retained earnings  17,992   4,159 
Accumulated other comprehensive loss  (964)  (1,547)
Total stockholders’ equity $176,044  $158,332 
Total liabilities and stockholders’ equity $236,322  $214,666 

(Amounts in thousands)

  26-Weeks Ended 
  June 25,
  June 26,
Cash flows from operating activities:      
Net income (loss) $13,833  $(1,346)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization  3,543   2,287 
Amortization of right-of-use assets  1,588   829 
Amortization of available-for-sale debt securities  230   541 
Stock-based compensation expense  3,687   2,929 
Deferred taxes  767   (1,927)
Unrealized loss on derivative instruments  847    
Other  524   (260)
Net change in operating assets and liabilities  (6,108)  (6,058)
Net cash provided by (used in) operating activities $18,911  $(3,005)
Cash flows from investing activities:      
Purchases of property, plant and equipment  (4,292)  (4,417)
Purchases of available-for-sale debt securities     (29,944)
Purchases and settlements of derivative instruments  (662)   
Sales of available-for-sale debt securities  1,907    
Maturities and call redemptions of available-for-sale debt securities  18,453   28,334 
Proceeds from the sale of property, plant and equipment  1,054   50 
Return of investment in variable interest entity  552    
Net cash provided by (used in) investing activities $17,012  $(5,977)
Cash flows from financing activities:      
Proceeds from borrowing under revolving line of credit  7,500    
Proceeds from exercise of stock options  110   397 
Proceeds from issuance of common stock under employee stock purchase plan  135    
Repayment of revolving line of credit  (7,500)   
Payment of tax withholding obligation on vested RSU shares  (636)  (9)
Principal payments under finance lease obligations  (773)  (252)
Payment of contingent consideration     (38)
Net cash (used in) provided by financing activities $(1,164) $98 
Net increase (decrease) in cash and cash equivalents  34,759   (8,884)
Cash and cash equivalents at beginning of the period  12,914   30,966 
Cash and cash equivalents at end of the period $47,673  $22,082 
Supplemental disclosure of cash flow information:      
Cash paid for interest $268  $15 
Cash paid for income taxes $1,070  $68 
Supplemental disclosure of non-cash investing and financing
Purchases of property, plant and equipment included in accounts payable and accrued liabilities $1,266  $1,398 

Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA and Adjusted EBITDA Margin, non-GAAP financial measures, provide investors with additional useful information in evaluating our performance.

Adjusted EBITDA and Adjusted EBITDA Margin are financial measures that are not required by or presented in accordance with GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA Margin, when taken together with our financial results presented in accordance with GAAP, provide meaningful supplemental information regarding our operating performance and facilitate internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA and Adjusted EBITDA Margin are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

We calculate Adjusted EBITDA as net income, adjusted to exclude: (1) depreciation and amortization; (2) (benefit) or provision for income taxes as applicable; (3) stock-based compensation expense; (4) interest expense; (5) change in fair value of contingent consideration; (6) interest income; and (7) the costs related to the discontinuation of our convenient breakfast product line. We believe the costs directly related to the convenient breakfast exit should be excluded as they are unlikely to recur. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by Net Revenue.

Adjusted EBITDA and Adjusted EBITDA Margin are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of Adjusted EBITDA and Adjusted EBITDA Margin include that (1) they do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect these capital expenditures, (3) they do not consider the impact of stock-based compensation expense, (4) they do not include costs related to the discontinuation of our convenient breakfast product line; (5) they do not reflect other non-operating expenses, including interest expense; (6) they do not consider the impact of any contingent consideration liability valuation adjustments; and (7) they do not reflect tax payments that may represent a reduction in cash available to us. In addition, our use of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA and Adjusted EBITDA Margin in the same manner, limiting the usefulness as comparative measures. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial measures, including our net income and other results stated in accordance with GAAP.

The following table presents a reconciliation of Adjusted EBITDA to net income (loss) and a reconciliation of Adjusted EBITDA Margin to net income (loss) margin, the most directly comparable financial measures stated in accordance with GAAP, for the 13-week and 26-week periods presented.


(Amounts in thousands)

  13-Weeks Ended  26-Weeks Ended 
  June 25,
  June 26,
  June 25,
  June 26,
  (in thousands)  (in thousands) 
Net income (loss) $6,683  $192  $13,833  $(1,346)
Depreciation and amortization1  2,297   1,339   4,437   2,287 
Stock-based compensation expense  1,446   1,633   3,687   2,929 
Costs related to our exit of the convenient breakfast product line           2,341 
Income tax provision (benefit)  1,229   680   3,751   (1,697)
Interest expense  136   7   275   15 
Change in fair value of contingent consideration2  -   12      19 
Interest income  (450)  (210)  (790)  (340)
Adjusted EBITDA $11,341  $3,653  $25,193  $4,208 
Net revenue $106,445  $82,870  $225,616  $159,929 
Net income (loss) margin3  6.3%  0.2%  6.1%  (0.8)%
Adjusted EBITDA Margin4  10.7%  4.4%  11.2%  2.6%

1 Amount also includes finance lease amortization.
2 Amount reflects the change in fair value of a contingent consideration liability in connection with our 2014 acquisition of certain
  assets of Heartland Eggs.
3 Net income (loss) margin is calculated by dividing net income (loss) by net revenue.
4 Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by net revenue.