Financial Data and Key Metrics Changes - Net revenue for the first quarter was $162 million, up 10% from last year, marking the twentieth consecutive quarter of year-over-year growth since the IPO in 2020 [8][20] - Gross profit for the first quarter rose to $62.5 million, or 38.5% of net revenue, compared to 39.8% of net revenue last year [21] - Net income decreased 11.2% to $16.9 million, or $0.37 per diluted share, compared to $19 million, or $0.43 per diluted share for the same period last year [23] - Adjusted EBITDA for the first quarter was $27.5 million, or 16.9% of net revenue, down from 19.7% in the prior year [23] Business Line Data and Key Metrics Changes - The Butter business saw robust growth, with first-quarter net revenue up 41% year-over-year [9] - Volume-related growth for egg products was below trend due to supply constraints, but demand remains strong [10][18] - The company added approximately 25 new family farms to its network in the first quarter, increasing the total to over 450 farms [14] Market Data and Key Metrics Changes - Brand awareness reached 31% by the end of the first quarter, a five-point increase since the beginning of the year [10] - The company is currently in only 11.3% of U.S. households, indicating significant growth potential [12] Company Strategy and Development Direction - The company aims to achieve $1 billion in net revenue by 2027, with a gross margin target of about 35% and an adjusted EBITDA margin of 12% to 14% [14][30] - Investments are being made in supply chain infrastructure and new facilities to increase capacity and support innovation [15][30] - The company plans to implement a modest low double-digit price increase for shell egg products to offset anticipated cost impacts from tariffs [17] Management's Comments on Operating Environment and Future Outlook - Management expects volume growth to improve beginning in the second quarter as new farms ramp up production [18] - The company remains confident in its ability to deliver on financial targets despite macroeconomic uncertainties and tariff impacts [27][28] - Management believes that consumer loyalty and brand strength will insulate the company from potential negative impacts of tariffs [28][87] Other Important Information - The company is on track to remediate a material weakness in internal controls related to revenue recognition, with no revenue inconsistencies found [26] - Capital expenditures for fiscal year 2025 are projected to be in the range of $50 million to $60 million, primarily for new facilities and digital transformation projects [28][29] Q&A Session Summary Question: Impact of price increase on retailer pricing - Management indicated that pricing is primarily focused on protecting gross margins and ensuring strong relationships with retail partners [39][40] Question: Current egg supply and retailer orders - Management noted that the category is still not fully servicing demand, with elevated orders from retailers [41][42] Question: Volume growth expectations for the year - Management expects volume growth to accelerate as new farms come online, with Q2 serving as a transition point [48] Question: Impact of tariffs on costs - Management confirmed that while there will be some cost pressures due to tariffs, the price increase is expected to cover these impacts [60][63] Question: Retail distribution increase - The increase in reported distribution from 24,000 to 26,000 stores is attributed to a change in data providers rather than a significant increase in new retailers [67][68] Question: Consumer behavior amidst macro uncertainty - Management observed that brand loyalty remains strong, with consumers less willing to trade down even in challenging economic conditions [76][87] Question: Dynamics of the butter business supply chain - Management discussed the transition in the butter supply chain and the expectation of consistent growth without bottlenecks [79]
Vital Farms(VITL) - 2025 Q1 - Earnings Call Transcript