AUSTIN, Texas--(BUSINESS WIRE)--Vital Farms (Nasdaq: VITL), a Certified B Corporation that offers a range of ethically produced foods nationwide, will report financial results for the third quarter ended September 28, 2025, on Tuesday, November 4, 2025, before market open. Vital Farms will host a conference call and webcast at 8:30 a.m. ET on the same day to discuss the results. To participate on the live call, listeners in North America may dial +1-800-715-9871 and international listeners may. ...

Core Insights - Vital Farms (VITL) is positioned to potentially continue its earnings-beat streak in the upcoming report, having a history of surpassing earnings estimates with an average surprise of 37.82% over the last two quarters [1][2]. Earnings Performance - In the last reported quarter, Vital Farms achieved earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, resulting in a surprise of 33.33% [2]. - For the previous quarter, the company was expected to report earnings of $0.26 per share but delivered $0.37 per share, leading to a surprise of 42.31% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Vital Farms, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [5][8]. - The current Earnings ESP for Vital Farms is +8.84%, suggesting that analysts have recently become more optimistic about the company's earnings prospects [8]. Zacks Rank and Success Rate - Vital Farms holds a Zacks Rank of 1 (Strong Buy), which, when combined with a positive Earnings ESP, indicates a high probability of another earnings beat [8]. - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% success rate in beating consensus estimates [6].

Core Insights - Vital Farms (NASDAQ: VITL) specializes in selling premium pasture-raised eggs, targeting consumers who prioritize health, animal welfare, and environmental sustainability [1] Company Overview - Vital Farms caters to a market segment that is increasingly concerned about the ethical implications of food production, specifically avoiding mass-produced eggs from factory farms [1] Market Position - The company positions itself as a leader in the premium egg market, appealing to health-conscious consumers who are willing to pay a premium for higher quality and ethically sourced products [1]

Summary of Vital Farms Conference Call Company Overview - **Company**: Vital Farms (NasdaqGM: VITL) - **Industry**: Egg production, specifically pasture-raised eggs - **2025 Revenue Projection**: Expected growth of at least 27% to approximately $770 million with an EBITDA of at least $110 million [1][3][11] Industry Insights - **Current State of the Egg Industry**: - The U.S. laying flock population is currently around 290-300 million birds, down from the typical 330 million due to past avian flu outbreaks [5][6] - The industry is in the process of rebuilding, with no impact from avian flu since early 2024 [5][6] - Prices for eggs remain elevated but are lower than in the first quarter of the year [5][6] Company-Specific Initiatives - **Supply Chain and Farm Relationships**: - Vital Farms sources eggs from over 500 family farms, up from over 300 at the end of 2023, with a recruitment rate of about 30-35 farms per quarter [9][10] - The company has one processing facility in Springfield, Missouri, with plans to increase capacity to $1.2 billion with a third production line and a new facility in Seymour, Indiana, expected to be operational by early 2027 [10][11] - **Distribution Strategy**: - Currently in about 23,500 stores, with a potential market of 32,000 stores selling specialty eggs [12][13] - Focus on increasing SKUs in existing stores to enhance shelf velocity and consumer buy rates [15][16] - **Product Mix and Growth**: - Shift towards organic eggs, which now represent over a third of total volume, providing a price mix benefit [18] - Butter segment accounts for about 5% of revenue, with a focus on Irish butter to enhance product claims and supply certainty [20][21] Financial Performance and Challenges - **Tariff Exposure**: - Minimal impact on egg production, but some exposure due to imported packaging and feed [24] - Price increases implemented to offset tariff impacts, with healthy gross margins around 39% [25] - **Margin Management**: - Commodity costs are mixed, with conventional feed prices decreasing while organic feed remains high [26] - Promotions are being reintroduced to drive trial and increase brand awareness [27][28] Future Outlook - **2026 Expectations**: - Excitement about improved supply and production capacity, with a focus on harmonizing egg supply, processing capacity, and demand [35] - Concerns remain about balancing growth across these areas [35] Additional Insights - **Consumer Behavior**: - Vital Farms' consumers are perceived to be more recession-resistant, with strong demand continuing despite economic uncertainties [34] - **Accelerator Farms**: - The company is testing new farm configurations and technologies to improve efficiency and reduce costs, with long-term goals for better outcomes for partner farmers [30][31]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7][8] Investment Landscape - Wall Street is investing hundreds of billions into AI, but there is a looming question regarding the energy supply needed to sustain this growth [2] - AI data centers, such as those powering large language models, consume energy equivalent to that of a small city, indicating a significant strain on global power grids [2] - The company in focus is positioned to benefit from the anticipated surge in electricity demand driven by AI advancements [3][6] Company Profile - The company is described as a "toll booth" operator in the AI energy boom, collecting fees from energy exports and playing a crucial role in U.S. LNG exportation [5][7] - It is noted for its debt-free status and substantial cash reserves, which amount to nearly one-third of its market capitalization, providing a strong financial foundation [8][10] - The company also holds a significant equity stake in another AI-related venture, offering investors indirect exposure to multiple growth opportunities in the AI sector [9][10] Market Positioning - The company is recognized for its capability to execute large-scale engineering, procurement, and construction projects across various energy sectors, including nuclear energy [7][8] - It is suggested that the company is undervalued, trading at less than seven times earnings, which presents a compelling investment opportunity [10][11] - The ongoing influx of talent into the AI sector is expected to drive continuous innovation and advancements, further solidifying the company's market position [12][13] Future Outlook - The article emphasizes the importance of investing in AI and energy infrastructure as the future of technology and economic growth [11][12][13] - The combination of AI infrastructure, onshoring trends, and a focus on nuclear energy is presented as a unique opportunity for investors [14]

Group 1 - There is a significant trend in the US towards healthier, natural, and organic products, particularly in the food industry [1] - This movement is gaining momentum across various industries, indicating a broader shift in consumer preferences [1]

Industry Overview - The natural foods industry has transitioned from a niche market to a mainstream sector due to increased health awareness and environmental concerns among consumers [2] - There is a rising emphasis on clean eating, sustainability, and ethical sourcing, leading to the popularity of natural and organic food products [2] - Consumers are increasingly seeking transparency in sourcing and minimal processing, preferring organic, non-GMO, and preservative-free options [3] Market Growth Drivers - Governments worldwide are encouraging clean eating and implementing stricter food labeling regulations, which further boost market growth [3] - Natural food companies are experiencing increased brand loyalty and the ability to charge premium prices due to these trends [3] - The global healthy foods market is projected to reach $2.26 trillion by 2035, indicating significant growth potential [5] Company Responses - Companies like General Mills and Beyond Meat are responding to the demand for organic, clean-label, and ethically sourced foods [4] - Firms are investing in plant-based alternatives, functional foods, and sustainable farming technologies to meet consumer preferences [5] Key Players - Hain Celestial is a pioneer in the natural and organic food space, focusing on high-growth segments like infant nutrition and snacks [7] - Vital Farms emphasizes transparency and ethical farming practices, with a strong position in pasture-raised eggs and a goal of $1 billion in net revenues by 2027 [10][12] - Sprouts Farmers Market is recognized for its unique leadership in the natural and organic grocery segment, focusing on fresh, local, and innovative products [13] - United Natural Foods is advancing the natural and organic food movement through its wholesale distribution network, achieving 12% sales growth in its Wholesale Natural Products segment [16] Innovation and Infrastructure - Companies are investing in infrastructure and supply chain improvements to meet surging consumer demand while maintaining quality [11][15] - Hain Celestial is focusing on innovation and operational productivity to enhance competitiveness in the natural and organic category [9] - Vital Farms is scaling its supply chain by partnering with over 500 family farms and investing in production capacity [11] - Sprouts Farmers is launching over 350 new products in 2025, emphasizing organic certification and high-protein formulations [14] - United Natural Foods is streamlining processes through Lean Daily Management to improve service levels and ensure efficient delivery of products [17][18]

Company Performance - Vital Farms reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, with an earnings surprise of +33.33% [1] - The company achieved revenues of $184.77 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 9.10%, compared to $147.39 million in the same quarter last year [2] - Over the last four quarters, Vital Farms has consistently surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Market Position - Vital Farms shares have underperformed the market, losing about 1% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The current Zacks Rank for Vital Farms is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $186.38 million, and for the current fiscal year, it is $1.26 on revenues of $743.6 million [7] - The outlook for the industry, specifically the Food - Miscellaneous sector, is currently in the bottom 23% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Performance & Goals - Vital Farms aims to achieve $1 billion in net sales by 2027[27], with an adjusted EBITDA margin of 12% to 14% and a gross margin of approximately 35%[28] - In Q2 2025, net revenue increased by 25.4% to $184.8 million compared to Q2 2024[53], driven by both price/mix benefits ($15.7 million) and volume-related revenue growth ($21.7 million)[55] - Gross profit for Q2 2025 was $71.8 million, representing 38.9% of net revenue[53], while adjusted EBITDA was $29.9 million, or 16.2% of net revenue[53] - Vital Farms updates its 2025 guidance with net revenue projected to be at least $770 million, adjusted EBITDA at least $110 million, and capital expenditures between $90 million and $110 million[61] Supply Chain & Distribution - Vital Farms works with a network of over 500 family farms[20] and is expanding its distribution to meet growing consumer demand[40], with products in over 23,500 retail stores[23] - The company has a strong pipeline of farmers interested in working with them, with 8 times more interested farmers than farms needed in the next four quarters[35] Market Position & Consumer Behavior - Consumer metrics are improving, with household penetration increasing to 31% in Q2 2025[38] - Vital Farms' shell egg buy rate is on an upward trend, reaching $37.80 in Q2 2025[38] - Private label expansion in the pasture-raised category is not significantly impacting Vital Farms' market share, with brand shifting accounting for only approximately 1% of private label growth[45]

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary note regarding forward-looking statements, highlighting inherent risks and uncertainties [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section discloses that the report contains forward-looking statements subject to risks and uncertainties, advising against undue reliance - The report contains **forward-looking statements** regarding future operations, **financial condition**, **business strategy**, and management objectives, which are subject to substantial **risks and uncertainties**[8](index=8&type=chunk) - Investors should not rely on **forward-looking statements** as predictions of future events, as actual results may differ materially due to **risks** outlined in the "**Risk Factors**" section[9](index=9&type=chunk) - The company does not undertake to update any **forward-looking statements** to reflect events or circumstances after the report date, except as required by law[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides the unaudited condensed consolidated financial statements for Vital Farms, Inc., including the balance sheets, statements of income, comprehensive income, stockholders' equity, and cash flows, along with accompanying notes. These statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial reporting [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Table: Metric | Metric | June 29, 2025 (in thousands) | December 29, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :--------- | | Total assets | $430,752 | $359,332 | $71,420 | 19.88% | | Total liabilities | $120,974 | $90,030 | $30,944 | 34.37% | | Total stockholders' equity | $309,778 | $269,302 | $40,476 | 15.03% | | Cash and cash equivalents | $108,224 | $150,601 | $(42,377) | -28.14% | | Investment securities, available-for-sale | $46,773 | $9,692 | $37,081 | 382.59% | | Inventories | $42,710 | $23,666 | $19,044 | 80.47% | | Property, plant and equipment, net | $111,155 | $84,521 | $26,634 | 31.51% | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section outlines the company's financial performance, including net revenue, gross profit, and net income over specified periods Table: Metric - 13-Weeks Ended | Metric (13-Weeks Ended) | June 29, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------------- | :--------------------------- | :-------------------- | :--------- | | Net revenue | $184,767 | $147,388 | $37,379 | 25.36% | | Gross profit | $71,782 | $57,678 | $14,104 | 24.45% | | Income from operations | $23,795 | $17,139 | $6,656 | 38.84% | | Net income | $16,638 | $16,339 | $299 | 1.83% | | Basic EPS | $0.37 | $0.38 | $(0.01) | -2.63% | | Diluted EPS | $0.36 | $0.36 | $0.00 | 0.00% | Table: Metric - 26-Weeks Ended | Metric (26-Weeks Ended) | June 29, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------------- | :--------------------------- | :-------------------- | :--------- | | Net revenue | $346,956 | $295,316 | $51,640 | 17.49% | | Gross profit | $134,295 | $116,574 | $17,721 | 15.20% | | Income from operations | $45,563 | $41,308 | $4,255 | 10.30% | | Net income | $33,539 | $35,362 | $(1,823) | -5.16% | | Basic EPS | $0.76 | $0.84 | $(0.08) | -9.52% | | Diluted EPS | $0.73 | $0.79 | $(0.06) | -7.59% | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details net income and other comprehensive income components, reflecting total comprehensive income Table: Metric - 13-Weeks Ended | Metric (13-Weeks Ended) | June 29, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------------- | :--------------------------- | :-------------------- | :--------- |\n| Net income | $16,638 | $16,339 | $299 | 1.83% | | Other comprehensive (loss) income, net of tax | $(16) | $101 | $(117) | -115.84% | | Comprehensive income | $16,622 | $16,440 | $182 | 1.11% | Table: Metric - 26-Weeks Ended | Metric (26-Weeks Ended) | June 29, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :--------------------------- | :--------------------------- | :-------------------- | :--------- |\n| Net income | $33,539 | $35,362 | $(1,823) | -5.16% | | Other comprehensive (loss) income, net of tax | $0 | $209 | $(209) | -100.00% | | Comprehensive income | $33,539 | $35,571 | $(2,032) | -5.71% | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section tracks changes in stockholders' equity, including net income, stock-based compensation, and other adjustments - **Total stockholders' equity** increased from **$269,302 thousand** as of **December 29, 2024**, to **$309,778 thousand** as of **June 29, 2025**[20](index=20&type=chunk) - **Retained earnings** increased by **$33,539 thousand** during the **26-week** period ended **June 29, 2025**, primarily due to **net income**[20](index=20&type=chunk) - **Stock-based compensation expense** contributed **$5,887 thousand** to additional paid-in capital for the **26-week** period ended **June 29, 2025**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section analyzes cash flows from operating, investing, and financing activities over specified periods Table: Metric - 26-Weeks Ended | Metric (26-Weeks Ended) | June 29, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :--------- | | Net cash provided by operating activities | $4,513 | $40,082 | $(35,569) | -88.74% | | Net cash (used in) provided by investing activities | $(45,907) | $5,753 | $(51,660) | -897.97% | | Net cash (used in) provided by financing activities | $(983) | $3,189 | $(4,172) | -130.82% | | Net (decrease) increase in cash and cash equivalents | $(42,377) | $49,024 | $(91,401) | -186.44% | - The decrease in **net cash** from **operating activities** was primarily due to a **$40.3 million net cash** impact from changes in **operating assets and liabilities** and a **$1.8 million** decrease in **net income**[175](index=175&type=chunk) - **Investing activities** shifted from providing cash to using cash, mainly due to increased purchases of **available-for-sale U.S. Treasury Bills** and **property, plant, and equipment**[176](index=176&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. Nature of the Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) This note describes the company's business operations and the accounting principles used for financial statement presentation - **Vital Farms, Inc.** packages, markets, and distributes shell eggs, butter, and other products primarily under the **Vital Farms** name to retail and foodservice channels in the **United States**[25](index=25&type=chunk) - The company's **fiscal year** ends on the last Sunday in December and typically consists of **52 weeks**, with quarters having **13 weeks**[28](index=28&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies applied, including recent and upcoming accounting pronouncements - **No material changes to significant accounting policies** occurred during the **26-week** period ended **June 29, 2025**, beyond those described in the Annual Report[29](index=29&type=chunk) - The company expects to adopt **ASU 2023-09** (Improvements to Income Tax Disclosures) for the **fiscal year** beginning **December 30, 2024**, and is currently evaluating its impact[31](index=31&type=chunk) - The company is evaluating the impact of **ASU 2024-03** (Disaggregation of Income Statement Expenses), effective for annual periods beginning after **December 15, 2026**[32](index=32&type=chunk) [Note 3. Investment Securities](index=13&type=section&id=Note%203.%20Investment%20Securities) This note details the company's investment securities, including fair value measurements and changes in portfolio composition Table: Note 3. Investment Securities | Investment Securities (Fair Value, in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :----------------------------------------------- | :------------ | :---------------- | :----- | :------- | | U.S. corporate bonds and U.S. dollar denominated foreign bonds | $1,369 | $9,692 | $(8,323) | -85.87% | | U.S. Treasury Bills | $45,404 | $0 | $45,404 | N/A | | Total | $46,773 | $9,692 | $37,081 | 382.59% | - As of **June 29, 2025**, all **available-for-sale securities** (**$46,773 thousand**) are due within **one year**[34](index=34&type=chunk) - The company does not believe there has been any significant decline in the creditworthiness of issuers and has not recorded an allowance for credit losses on **investment securities**[36](index=36&type=chunk) [Note 4. Derivative Financial Instruments](index=15&type=section&id=Note%204.%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative instruments to manage commodity price volatility and their financial impact - The company uses **derivative instruments**, primarily call options on commodity price contracts for corn and soybean meal, to mitigate commodity price volatility[38](index=38&type=chunk) Table: Commodity Notional Amounts | Commodity Notional Amounts | June 29, 2025 | December 29, 2024 | Change | % Change | | :------------------------- | :------------ | :---------------- | :----- | :------- | | Corn (Bushels in thousands) | 1,215 | 3,593 | (2,378) | -66.18% | | Soybean Meal (Tons) | 13 | 37 | (24) | -64.86% | - **Pre-tax commodity contract derivative losses** recognized in **other expense, net**, increased to **$822 thousand** for the **26-week** period ended **June 29, 2025**, from **$387 thousand** in the prior year[39](index=39&type=chunk) [Note 5. Fair Value Measurements](index=15&type=section&id=Note%205.%20Fair%20Value%20Measurements) This note provides information on assets measured at fair value, categorized by input levels used in valuation techniques - **Fair value measurements** are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than **Level 1**), and **Level 3** (unobservable inputs)[41](index=41&type=chunk) Table: Assets Measured at Fair Value (June 29, 2025, in thousands) | Assets Measured at Fair Value (June 29, 2025, in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------------ | :------ | :------ | :------ | :---- | | Money market | $19,990 | $0 | $0 | $19,990 | | U.S. Treasury Bills | $0 | $15,886 | $0 | $15,886 | | Investment securities, available-for-sale (U.S. corporate bonds and U.S. dollar denominated foreign bonds) | $0 | $1,369 | $0 | $1,369 | | Investment securities, available-for-sale (U.S. Treasury Bills) | $0 | $45,404 | $0 | $45,404 | | Derivative financial instruments | $0 | $59 | $0 | $59 | | Total assets measured at fair value | $19,990 | $62,718 | $0 | $82,708 | - There were **no transfers** between **fair value measurement levels** during the **26-week** period ended **June 29, 2025**[43](index=43&type=chunk) [Note 6. Revenue Recognition](index=18&type=section&id=Note%206.%20Revenue%20Recognition) This note explains the company's revenue recognition policies and disaggregates net revenue by product categories and significant customers Table: Net Revenue by Product - 13-Weeks Ended | Net Revenue by Product (13-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :------------------------------------ | :------------ | :------------ | :----- | :------- | | Eggs and egg-related products | $178,418 | $142,941 | $35,477 | 24.82% | | Butter and butter-related products | $6,349 | $4,447 | $1,902 | 42.77% | | Total Net Revenue | $184,767 | $147,388 | $37,379 | 25.36% | Table: Net Revenue by Product - 26-Weeks Ended | Net Revenue by Product (26-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :------------------------------------ | :------------ | :------------ | :----- | :------- | | Eggs and egg-related products | $334,723 | $286,701 | $48,022 | 16.75% | | Butter and butter-related products | $12,233 | $8,615 | $3,618 | 42.00% | | Total Net Revenue | $346,956 | $295,316 | $51,640 | 17.49% | Table: Significant Customer Net Revenue | Significant Customer Net Revenue | 13-Weeks Ended June 29, 2025 | 13-Weeks Ended June 30, 2024 | 26-Weeks Ended June 29, 2025 | 26-Weeks Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Customer A | 21% | 23% | 22% | 24% | [Note 7. Allowance for Credit Losses](index=18&type=section&id=Note%207.%20Allowance%20for%20Credit%20Losses) This note details the allowance for credit losses, reflecting changes in expected credit losses on financial assets - The **total allowance for credit losses** increased by **$448 thousand**, from **$931 thousand** as of **December 29, 2024**, to **$1,379 thousand** as of **June 29, 2025**[48](index=48&type=chunk)[50](index=50&type=chunk) - Provisions charged to operating results for credit losses were **$76 thousand** in the first quarter of **2025**, followed by reductions of **$541 thousand** in the second quarter[50](index=50&type=chunk) [Note 8. Inventories](index=20&type=section&id=Note%208.%20Inventories) This note provides a breakdown of inventory components and the company's policy for inventory obsolescence reserves Table: Inventory (in thousands) | Inventory (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :----------------------- | :------------ | :---------------- | :----- | :------- | | Eggs and egg-related products | $12,601 | $7,384 | $5,217 | 70.65% | | Butter and butter-related products | $16,223 | $8,691 | $7,532 | 86.66% | | Packaging | $9,048 | $4,296 | $4,752 | 110.62% | | Pullets | $3,508 | $1,657 | $1,851 | 111.71% | | Other | $2,095 | $1,860 | $235 | 12.63% | | Reserve for inventory obsolescence | $(765) | $(222) | $(543) | 244.59% | | Total Inventories | $42,710 | $23,666 | $19,044 | 80.47% | - The company periodically compares **inventory** on hand with forecasted requirements to determine charges for excess or obsolete **inventory** reserves[51](index=51&type=chunk) [Note 9. Property, Plant and Equipment](index=20&type=section&id=Note%209.%20Property,%20Plant%20and%20Equipment) This note details the composition of property, plant, and equipment, including additions, disposals, and depreciation Table: Property, Plant and Equipment (in thousands) | Property, Plant and Equipment (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :----------------------------------------- | :------------ | :---------------- | :----- | :------- | | Land | $10,011 | $11,200 | $(1,189) | -10.62% | | Buildings and improvements | $30,607 | $30,607 | $0 | 0.00% | | Machinery and equipment | $60,535 | $58,847 | $1,688 | 2.87% | | Construction in progress | $46,482 | $14,456 | $32,026 | 221.54% | | Total Property, Plant and Equipment, net | $111,155 | $84,521 | $26,634 | 31.51% | - The company elected to sell approximately **408 acres** of land in Indiana, previously intended for "**accelerator farms**," with a carrying amount of **$2.7 million** classified as assets held for sale as of **June 29, 2025**[53](index=53&type=chunk) - **Depreciation of property, plant and equipment** for the **26-week** period ended **June 29, 2025**, was approximately **$4,620 thousand**[52](index=52&type=chunk) [Note 10. Leases](index=22&type=section&id=Note%2010.%20Leases) This note outlines the company's lease arrangements, including lease costs and right-of-use assets Table: Lease Cost - 13-Weeks Ended | Lease Cost (13-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :-------------------------------------- | :------------ | :------------ | :----- | :------- | | Operating lease cost | $2,082 | $1,062 | $1,020 | 96.05% | | Variable lease cost | $4,531 | $2,595 | $1,936 | 74.61% | | Variable lease cost – long-term supply contracts | $61,176 | $54,429 | $6,747 | 12.39% | | Total lease cost | $69,473 | $59,299 | $10,174 | 17.16% | Table: Lease Cost - 26-Weeks Ended | Lease Cost (26-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :-------------------------------------- | :------------ | :------------ | :----- | :------- | | Operating lease cost | $3,890 | $1,984 | $1,906 | 96.07% | | Variable lease cost | $8,020 | $5,102 | $2,918 | 57.19% | | Variable lease cost – long-term supply contracts | $116,244 | $110,432 | $5,812 | 5.26% | | Total lease cost | $131,128 | $119,924 | $11,204 | 9.34% | - **ROU assets obtained in exchange for new operating lease obligations** were **$15,965 thousand** for the **26-week** period ended **June 29, 2025**, a significant increase from **$5,228 thousand** in the prior year[54](index=54&type=chunk) [Note 11. Goodwill and Other Assets](index=22&type=section&id=Note%2011.%20Goodwill%20and%20Other%20Assets) This note provides information on goodwill and other non-current assets, including cloud computing implementation costs Table: Goodwill and Other Assets (in thousands) | Goodwill and Other Assets (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :------------------------------------- | :------------ | :---------------- | :----- | :------- | | Goodwill | $3,858 | $3,858 | $0 | 0.00% | | Cloud computing implementation costs | $7,837 | $3,834 | $4,003 | 104.40% | | Deferred tax asset | $1,437 | $1,399 | $38 | 2.72% | | Other non-current assets | $62 | $62 | $0 | 0.00% | | Total Goodwill and other assets | $13,194 | $9,153 | $4,041 | 44.15% | - **Capitalized cloud computing arrangement implementation costs** increased from **$3,834 thousand** to **$9,299 thousand** (including current and non-current portions) during the **26-week** period ended **June 29, 2025**[56](index=56&type=chunk) [Note 12. Accrued Liabilities](index=24&type=section&id=Note%2012.%20Accrued%20Liabilities) This note details the components of accrued liabilities, including employee-related costs and taxes Table: Accrued Liabilities (in thousands) | Accrued Liabilities (in thousands) | June 29, 2025 | December 29, 2024 | Change | % Change | | :------------------------------- | :------------ | :---------------- | :----- | :------- | | Employee-related costs | $8,229 | $15,074 | $(6,845) | -45.41% | | Trade promotions and chargebacks | $9,419 | $8,204 | $1,215 | 14.81% | | Property, plant and equipment | $4,220 | $380 | $3,840 | 1010.53% | | Taxes | $2,859 | $31 | $2,828 | 9122.58% | | Total Accrued Liabilities | $34,037 | $31,328 | $2,709 | 8.65% | [Note 13. Long-Term Debt](index=24&type=section&id=Note%2013.%20Long-Term%20Debt) This note describes the company's long-term debt arrangements, including credit facilities and compliance with covenants - The **PNC Credit Facility** was terminated on **April 9, 2024**, and replaced by the **JPMorgan Credit Facility**[58](index=58&type=chunk) - The **JPMorgan Credit Facility** provides a **five-year**, **$60.0 million** revolving credit facility with a **$5.0 million** letter of credit sub-limit and an accordion option for additional capacity[61](index=61&type=chunk)[62](index=62&type=chunk) - As of **June 29, 2025**, there were **no outstanding amounts** under the **JPMorgan Credit Facility**, and the company was in compliance with all covenants[66](index=66&type=chunk)[65](index=65&type=chunk) [Note 14. Common Stock](index=26&type=section&id=Note%2014.%20Common%20Stock) This note provides information on common stock, including issued shares, dividends, and shares reserved for equity plans - As of **June 29, 2025**, **44,661,608 shares** of **common stock** were issued and outstanding[67](index=67&type=chunk) - **No cash dividends** were declared or paid during the periods presented[68](index=68&type=chunk) Table: Reserved Shares of Common Stock | Reserved Shares of Common Stock | June 29, 2025 | December 29, 2024 | Change | % Change | | :------------------------------ | :------------ | :---------------- | :----- | :------- | | Options to purchase common stock | 1,282,400 | 1,703,287 | (420,887) | -24.71% | | Restricted stock units ("RSUs") | 627,073 | 644,141 | (17,068) | -2.65% | | Performance stock units ("PSUs") | 361,816 | 238,764 | 123,052 | 51.54% | | Shares available for grant under 2020 Incentive Plan and 2020 ESPP | 16,782,529 | 14,887,764 | 1,894,765 | 12.73% | | Total | 19,053,818 | 17,473,956 | 1,579,862 | 9.04% | [Note 15. Stock-Based Compensation](index=26&type=section&id=Note%2015.%20Stock-Based%20Compensation) This note details the company's stock-based compensation plans, including expense recognition and activity for options, RSUs, and PSUs - **Stock-based compensation expense** is recognized on a straight-line basis over the vesting period, with forfeitures recognized as they occur[70](index=70&type=chunk) Table: Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | 13-Weeks Ended June 29, 2025 | 13-Weeks Ended June 30, 2024 | 26-Weeks Ended June 29, 2025 | 26-Weeks Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of goods sold | $173 | $107 | $280 | $154 | | Selling, general and administrative expense | $2,861 | $2,809 | $5,607 | $4,744 | | Total | $3,034 | $2,916 | $5,887 | $4,898 | [Stock Option Activity](index=27&type=section&id=Stock%20Option%20Activity) This section summarizes the activity and outstanding balances of stock options Table: Stock Option Activity | Stock Option Activity | Outstanding as of Dec 29, 2024 | Exercised | Cancelled/Forfeited | Outstanding as of Jun 29, 2025 | | :-------------------- | :----------------------------- | :-------- | :------------------ | :----------------------------- | | Number of Options | 1,703,287 | (397,173) | (23,714) | 1,282,400 | | Weighted Average Exercise Price | $14.30 | $9.19 | $15.60 | $15.85 | - **Total unrecognized stock-based compensation expense** related to unvested stock options was **$543 thousand** as of **June 29, 2025**, with a weighted-average recognition period of **0.72 years**[72](index=72&type=chunk) [Restricted Stock Unit Activity](index=27&type=section&id=Restricted%20Stock%20Unit%20Activity) This section summarizes the activity and outstanding balances of restricted stock units Table: RSU Activity | RSU Activity | Unvested as of Dec 29, 2024 | Granted | Vested | Forfeited | Unvested as of Jun 29, 2025 | | :----------- | :-------------------------- | :------ | :----- | :-------- | :-------------------------- | | Number of RSUs | 644,141 | 311,077 | (305,463) | (22,682) | 627,073 | | Weighted Average Grant Date Fair Value | $19.28 | $31.59 | $18.02 | $25.78 | $25.77 | - **Total unrecognized stock-based compensation expense** related to unvested **RSUs** was **$13,909 thousand** as of **June 29, 2025**, with a weighted-average recognition period of **2.17 years**[75](index=75&type=chunk) [Performance Stock Unit Activity](index=29&type=section&id=Performance%20Stock%20Unit%20Activity) This section summarizes the activity and outstanding balances of performance stock units Table: PSU Activity | PSU Activity | Unvested as of Dec 29, 2024 | Granted | Forfeited | Unvested as of Jun 29, 2025 | | :----------- | :-------------------------- | :------ | :-------- | :-------------------------- | | Number of PSUs | 238,764 | 128,934 | (5,882) | 361,816 | | Weighted Average Grant Date Fair Value | $21.82 | $31.55 | $25.99 | $25.22 | - **Total unrecognized stock-based compensation expense** related to unvested **PSUs** was **$9,487 thousand** as of **June 29, 2025**, with a weighted-average recognition period of **2.09 years**[77](index=77&type=chunk) [Note 16. Income Taxes](index=29&type=section&id=Note%2016.%20Income%20Taxes) This note provides information on income tax provision, effective tax rates, and uncertain tax positions Table: Effective Tax Rate | Effective Tax Rate | 13-Weeks Ended June 29, 2025 | 13-Weeks Ended June 30, 2024 | 26-Weeks Ended June 29, 2025 | 26-Weeks Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective Tax Rate | 32% | 10% | 28% | 17% | - The increase in the **effective tax rate** for the **2025** periods was impacted by a discrete tax item primarily associated with an **uncertain tax position** related to state **income taxes**[80](index=80&type=chunk) - **Uncertain tax positions** increased from **$0.6 million** as of **December 29, 2024**, to **$2.3 million** as of **June 29, 2025**[80](index=80&type=chunk) [Note 17. Net Income Per Share](index=31&type=section&id=Note%2017.%20Net%20Income%20Per%20Share) This note details the calculation of basic and diluted net income per share Table: Net Income Per Share - 13-Weeks Ended | Net Income Per Share (13-Weeks Ended) | June 29, 2025 | June 30, 2024 | Change | | :------------------------------------ | :------------ | :------------ | :----- | | Basic EPS | $0.37 | $0.38 | $(0.01) | | Diluted EPS | $0.36 | $0.36 | $0.00 | Table: Net Income Per Share - 26-Weeks Ended | Net Income Per Share (26-Weeks Ended) | June 29, 2025 | June 30, 2024 | Change | | :------------------------------------ | :------------ | :------------ | :----- | | Basic EPS | $0.76 | $0.84 | $(0.08) | | Diluted EPS | $0.73 | $0.79 | $(0.06) | - Certain shares of **common stock** were excluded from diluted **EPS** computation due to their anti-dilutive effect, including **1,281 options** for the **13-week** period ended **June 29, 2025**[83](index=83&type=chunk) [Note 18. Accumulated Other Comprehensive Income](index=31&type=section&id=Note%2018.%20Accumulated%20Other%20Comprehensive%20Income) This note provides a breakdown of accumulated other comprehensive income components and reclassifications to earnings Table: AOCI Component - 26-Weeks Ended | AOCI Component (26-Weeks Ended, in thousands) | June 29, 2025 (Before Tax) | June 29, 2025 (After Tax) | June 30, 2024 (Before Tax) | June 30, 2024 (After Tax) | | :-------------------------------------------- | :------------------------- | :------------------------ | :------------------------- | :------------------------ | | Unrealized net holding (loss) gain | $(26) | $(13) | $278 | $210 | | Amounts reclassified for realized losses to earnings | $13 | $13 | $(1) | $(1) | | Total other comprehensive (loss) income | $(13) | $0 | $277 | $209 | - **Realized gains** on **available-for-sale securities** reclassified from **AOCI** to earnings were **$13 thousand** for the **26-week** period ended **June 29, 2025**[85](index=85&type=chunk) [Note 19. Commitments and Contingencies](index=33&type=section&id=Note%2019.%20Commitments%20and%20Contingencies) This note describes the company's commitments, indemnification agreements, and potential litigation - The company provides indemnification of varying scope and terms to vendors, lessors, business partners, directors, and executive officers, with maximum potential future payments often unlimited[86](index=86&type=chunk) - As of **June 29, 2025**, the company has not incurred any material costs as a result of such indemnification agreements[86](index=86&type=chunk) - The company is subject to ordinary and routine litigation incidental to its business and assesses the likelihood and amount of potential losses to establish reserves as appropriate[87](index=87&type=chunk) [Note 20. Related Party Transactions](index=34&type=section&id=Note%2020.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including services rendered and amounts owed - The company paid **Sandpebble $1,283 thousand** for project management and related services during the **26-week** period ended **June 29, 2025**, an increase from **$540 thousand** in the prior year[89](index=89&type=chunk) - Amounts owed to **Sandpebble** were **$197 thousand** as of **June 29, 2025**, included in accounts payable and accrued liabilities[89](index=89&type=chunk) [Note 21. Segment Reporting](index=34&type=section&id=Note%2021.%20Segment%20Reporting) This note provides financial information for the company's reportable segment, "Eggs and Butter" - **Vital Farms, Inc.** has one reportable segment, "**Eggs and Butter**," which generates revenue primarily from sales of eggs and butter products in the **United States**[90](index=90&type=chunk) Table: Segment Net Income - 13-Weeks Ended | Segment Net Income (13-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :---------------------------------------------- | :------------ | :------------ | :----- | :------- | | Net revenue | $184,767 | $147,388 | $37,379 | 25.36% | | Segment net income | $16,638 | $16,339 | $299 | 1.83% | Table: Segment Net Income - 26-Weeks Ended | Segment Net Income (26-Weeks Ended, in thousands) | June 29, 2025 | June 30, 2024 | Change | % Change | | :---------------------------------------------- | :------------ | :------------ | :----- | :------- | | Net revenue | $346,956 | $295,316 | $51,640 | 17.49% | | Segment net income | $33,539 | $35,362 | $(1,823) | -5.16% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing key factors affecting the business, results of operations for the current and prior periods, liquidity, capital resources, and non-GAAP financial measures. It also highlights known trends, events, and uncertainties [Overview](index=36&type=section&id=Overview) This section provides a general overview of Vital Farms' mission, business model, and key financial highlights - **Vital Farms' mission** is to bring **ethical food** to the table, focusing on animal welfare and sustainable farming practices, making it a leading U.S. brand of pasture-raised eggs[99](index=99&type=chunk) - The company is a **Certified B Corporation** and a **Delaware public benefit corporation**, committed to **Conscious Capitalism** by balancing profit with positive long-term outcomes for all stakeholders[100](index=100&type=chunk) - The company sources eggs from over **500 family farms** and cream for butter from a network of farms, with plans to open a second egg washing and packing facility in Seymour, Indiana by **2027** and install an additional egg grading system at Egg Central Station by end of **fiscal 2025**[101](index=101&type=chunk)[105](index=105&type=chunk) Table: Financial Metric - 13-Weeks Ended | Financial Metric (13-Weeks Ended, in millions) | June 29, 2025 | June 30, 2024 | Change | % Change | | :--------------------------------------------- | :------------ | :------------ | :----- | :------- | | Net revenue | $184.8 | $147.4 | $37.4 | 25.37% | | Net income | $16.6 | $16.3 | $0.3 | 1.84% | | Adjusted EBITDA | $29.9 | $23.3 | $6.6 | 28.33% | Table: Financial Metric - 26-Weeks Ended | Financial Metric (26-Weeks Ended, in millions) | June 29, 2025 | June 30, 2024 | Change | % Change | | :--------------------------------------------- | :------------ | :------------ | :----- | :------- | | Net revenue | $347.0 | $295.3 | $51.7 | 17.51% | | Net income | $33.5 | $35.4 | $(1.9) | -5.37% | | Adjusted EBITDA | $57.4 | $52.3 | $5.1 | 9.75% | [Known Trends, Events and Uncertainties](index=38&type=section&id=Known%