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Vital Farms, Inc. (VITL)·Q1 2025 Earnings Summary

Executive Summary

  • EPS and EBITDA beat with a slight revenue miss: Q1 revenue was $162.2M vs $163.0M consensus (slight miss), diluted EPS $0.37 vs $0.26 consensus (beat), and Adjusted EBITDA ~$27.5M vs ~$21.3M consensus (beat). Drivers: price/mix +$12.4M, early-year supply constraints limited volume; margin held strong despite higher crew investments (consensus values from S&P Global)*.
  • Reaffirmed FY25 outlook: at least $740M net revenue and at least $100M Adjusted EBITDA; capex $50–$60M (ECS line in MO, Seymour, IN facility, accelerator farms, Digital Transformation going live in 2H25) .
  • Supply unlock on track: >450 family farms, 8.2M hens under contract; ECS capacity expansion targeted for 4Q25 to lift revenue capacity to >$1B; Seymour, IN facility on schedule for early 2027 .
  • Pricing action offsets tariffs: announced low double-digit price increase on shell eggs effective May to cover cost impacts (butter imported from Ireland, some packaging from Canada, equipment from Europe); management views exposure as limited and well covered by pricing .

What Went Well and What Went Wrong

  • What Went Well

    • Strong margin/earnings quality: Gross margin 38.5% (up sequentially from 36.1% in Q4) supported by price/mix and lower conventional commodities; Adjusted EBITDA margin 16.9% vs 11.5% in Q4 .
    • Brand and category momentum: aided brand awareness reached 31%; butter net sales grew 41% YoY; management reiterated path to $1B revenue by 2027. “We demonstrated solid execution… consumer awareness of Vital Farms continues to increase… butter business… 41% net sales growth” .
    • Supply expansion executing: >450 family farms (+~25 in Q1), 8.2M hens under contract; ECS additional grading system to expand capacity ~30% by year-end 2025; Seymour facility progressing .

  • What Went Wrong

    • Slight revenue miss vs consensus and softer YoY profitability: revenue $162.2M vs $163.0M consensus (miss); YoY EPS $0.37 vs $0.43; Adjusted EBITDA $27.5M vs $29.1M in Q1’24, reflecting higher personnel investments amid supply constraints (consensus from S&P Global)*.
    • YoY margin compression: GM 38.5% vs 39.8% in Q1’24 due to crew member investments and less efficient operations with tight egg supply .
    • Cash conversion dip: Operating cash flow $5.3M vs $23.9M in Q1’24, driven by working capital outflows (net change in operating assets and liabilities: -$19.9M) .

Financial Results

Quarterly trend (sequential) – older to newer

MetricQ3 2024Q4 2024Q1 2025
Net Revenue ($M)$145.0 $166.0 $162.2
Diluted EPS ($)$0.16 $0.23 $0.37
Gross Margin (%)36.9% 36.1% 38.5%
Adjusted EBITDA ($M)$15.2 $19.1 $27.5
Operating Income ($M)$9.24 $13.01 $21.77

Year-over-year comparison for the quarter

MetricQ1 2024Q1 2025
Net Revenue ($M)$147.9 $162.2
Diluted EPS ($)$0.43 $0.37
Gross Margin (%)39.8% 38.5%
Adjusted EBITDA ($M)$29.1 $27.5
Operating Income ($M)$24.17 $21.77

Actual vs Wall Street consensus (S&P Global)

MetricConsensus*ActualResult vs Consensus
Net Revenue ($M)$163.0*$162.2 Miss
Diluted EPS ($)$0.26*$0.37 Beat
Adjusted EBITDA ($M)$21.3*$27.5 Beat

KPIs (Q1 2025 unless noted)

KPIQ3 2024Q4 2024Q1 2025
Family farms (approx.)>375 >425 >450
Hens under contract (M)——8.2
Retail doors (approx.)~24,000 ~24,000 ~26,000
Butter net sales growth YoY——41%
Cash & marketable securities ($M)—$160.3 $161.3
Debt—None None
Operating cash flow ($M)——$5.3
Capex ($M)——$3.1

Notes: * Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (2/27/25)Current Guidance (5/8/25)Change
Net RevenueFY 2025≥ $740M ≥ $740M Maintained
Adjusted EBITDAFY 2025≥ $100M ≥ $100M Maintained
Capital ExpendituresFY 2025$50–$60M $50–$60M Maintained

Management also announced a low double-digit price increase on shell eggs effective in May to offset tariff-driven costs; this was not contemplated in the initial outlook .

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Supply chain capacityAdded farms; Seymour (IN) prep “well on track” Supply constrained early 2025; ECS new line operational in 4Q25 >450 farms; 8.2M hens; ECS capacity +30% by YE25; Seymour on schedule early 2027 Improving capacity through 2H25/2026
Pricing/tariffs/macroFavorable commodities aiding margins Expect supply constraints to ease in 2H25 Tariff exposure limited (butter from Ireland, packaging from Canada, equipment from Europe); low double-digit price increase covers impact New tariff headwind offset by pricing
Demand/brand healthStrong topline; raising FY24 guidance Continued high demand; FY25 guide introduced Aided brand awareness 31%; household penetration 11.3% Strengthening awareness; long runway
Digital/technology—Digital Transformation to go live 2H25 ERP launch shifted to early fall 2025 to de-risk; no added cost On track, minor timing shift
Product performance (Butter)——Butter net sales +41% YoY; supply chain moved to Ireland, alleviating bottlenecks Accelerating growth, better supply
Regulatory/avian influenzaHPAI risk noted HPAI causing early-2025 supply tightness Category still tight; recent industry HPAI flock loss; expect normalization back half Gradual improvement expected

Management Commentary

  • “We increased hens under contract as we added new family farms to our network, which I am thrilled to announce now exceeds 450 family farmers… our [ECS] additional egg washing and packing line… slated for completion during the fourth quarter of 2025” .
  • “We have announced… a modest, low double-digit percentage price increase for our shell egg products that will go into effect this month” to offset tariff impacts .
  • “Our aided brand awareness continues to improve, reaching 31% by the end of the first quarter… we are still in only 11.3% of U.S. households… We have also doubled the number of heavy and ultra-heavy buyers” .
  • CFO: “We continue to expect net revenue of at least $740 million… and adjusted EBITDA of at least $100 million… CapEx… $50 million to $60 million” .
  • Butter: “With [our supply chain] change [to Ireland], we do not anticipate bottlenecks to our continued growth for years to come” .

Q&A Highlights

  • Pricing magnitude and rationale: Clarified a low double-digit list price increase to retailers; implemented to protect gross margins and offset tariffs; retailer shelf pricing varies and is retailer-driven .
  • Volume cadence: Underlying branded volume +5.6% YoY ex-breaker; inventory scarcity and supply constraints weighed on reported volume in Q1; expect sequential capacity increases and accelerating YoY volume growth as the year progresses .
  • Tariff exposure: Butter imports (Ireland), some packaging (Canada), and equipment (Europe) face tariff risk; exposure deemed limited and fully covered by the price action .
  • Distribution metric: Increase from 24k to 26k stores largely a data-provider change (Nielsen to Circana), not a step-function distribution gain .
  • Gross margin phasing: Q1 gross margin aligned with expectations; staffing ahead of growth and supply tightness reduced efficiency vs last year; do not expect last year’s exceptionally strong Q2 GM to repeat .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $162.2M vs $163.0M consensus (miss); EPS $0.37 vs $0.26 consensus (beat); Adj. EBITDA ~$27.5M vs ~$21.3M consensus (beat). Revenue (# est.) 9; EPS (# est.) 8 (consensus from S&P Global)*.
  • Prior quarter context (Q4 2024): Revenue $166.0M vs $160.3M consensus (beat); EPS $0.23 vs $0.17 consensus (beat) (consensus from S&P Global)*.

Notes: * Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Despite a slight revenue miss, Vital delivered a notable EPS and EBITDA beat on strong gross margin and price/mix, underscoring pricing power and brand strength .
  • H2 acceleration setup: Management expects volume and net revenue growth to reaccelerate as farm adds ramp and ECS capacity expands into YE25; FY25 guide reaffirmed .
  • Mitigated macro risk: Tariff exposure exists but is limited and offset via low double-digit price action; premium consumer mix and resilient category reduce trade-down risk .
  • Strategic investments depress near-term margins vs last year but enhance durability: Crew investments and training ahead of growth plus digital/ERP upgrade position operations for scale .
  • Butter as a second engine: +41% YoY net sales growth, with supply bottlenecks addressed via Ireland sourcing, supports multi-product growth thesis .
  • Cash-rich, no debt: $161.3M in cash and marketable securities; capex $50–$60M is self-funded and targets high-return capacity expansion .
  • Near-term trading lens: Expect sentiment to focus on supply normalization evidence (scan trends), price realization post-increase, and any updates on tariffs and ECS/Seymour timelines; sustained margin resilience could be a positive catalyst .