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VITAL FARMS, INC. (NASDAQ: VITL) February 2025 Corporate Presentation
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REPORTING DISCLAIMER 2 This presentation contains, in addition to historical information, certain forward-looking statements, as defined in Private Securities Litigation Reform Act of 1995, that are based on our current assumptions, expectations and projections about future performance and events and relate to, among other matters, our future financial performance, our business strategy, industry and market trends, futu re expectations concerning our market position, future operations and capital expenditures. Statements in this presentation that are forward-looking include, but are not limited to, statements related to the company’s ability to acquire new customers and successfully retain existing customers, the Company’s ability to effectively manage long-term growth, market opportunity, specifications and timing around our potential planned egg washing and packing facility in Indiana, the effect of such facility on our future revenue, future growth and development of our farm network, anticipated growth, and future financial performance, including management's outlook for fiscal year 2025 and management's long-term outlook. Forward-looking statements generally contain words such as “anticipates,” “approximately,” “believes,” “estimates,” “expects,” “ may,” “plans,” “should,” “will,” and similar expressions. These forward-looking statements are only predictions, not historical fact. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this presentation. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause actual results to differ materially from expectations include, among others: Vital Farms’ expectations regarding its revenue, expenses, and other operating results; Vital Farms’ ability to attract new customers, to successfully retain existing customers, to attract and retain its suppliers, distributors, and co-manufacturers, and to maintain its relationships with members of its existing farm network and further expand its farm network and development of its accelerator farms; Vital Farms’ ability to sustain or increase its profitability; Vital Farms’ expectations regarding its future growth in the foodservice channel; Vital Farms’ ability to procure sufficient high-quality eggs, cream for its butter, and other raw materials; real or perceived quality or food safety issues 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 avian influenza and egg drop syndrome; 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; specifications and timing regarding Vital Farms’ potential planned egg washing and packing facility in Seymour, Indiana, the impact of such facility on Vital Farms’ future revenue, 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 or enter into new product categories; 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, elevated 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; the sufficiency of Vital Farms’ cash, cash equivalents, marketable securities and availability of credit under its credit facility to meet liquidity needs; seasonality; and the growth rates of the markets in which Vital Farms competes; and other risks and uncertainties detailed in Vital Farms’ Annual Report on Form 10-K for the fiscal year ended December 29, 2024, which Vital Farms anticipates filing on February 27, 2025, and in its other filings made from time to time with the Securities and Exchange Commission. We are under no duty to update any of these forward- looking statements after the date of this presentation except as otherwise required by law. This presentation also contains estimates and other statistical data obtained from independent parties and by us relating to market size and growth and other data about our industry, customers and consumers. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates and data. In addition, projections, assumptions and estimates of our future performance and the future performance of the geographic and other markets in which we operate are necessarily subject to a high degree of uncertainty and risk. Our historical results are not necessarily indicative of the results to be expected for any future periods and our operating results for the 13-week and 52-week periods ended December 29, 2024, are not necessarily indicative of the results that may be expected for any other interim periods or any future year or period. The trademarks included in this presentation are the property of the owners thereof and are used for reference purposes only. Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin are financial measures that are not required by or presented in accordance with generally accepted accounting principles in the United States (“GAAP”). We believe that these measures, when taken together with our financial results presented in accordance with GAAP, provide meaningful supplemental information regarding our operating performance and facilitates 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. Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as an alternative to net income (loss) income, net (loss) income per share, net cash provided by operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance, operating cash flows or liquidity. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by these items. See the appendix to this presentation for a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to net (loss) income, the most directly comparable financial measure presented in accordance with GAAP. “Adjusted EBITDA” is defined as net income, adjusted to exclude: (1) depreciation and amortization; (2) stock-based compensation expense; (3) (benefit) or provision for income taxes as applicable; (4) interest expense; and (5) interest income. “Adjusted EBITDA Margin” is defined 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 reflect other non-operating expenses, including interest expense; and (5) 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. 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, net cash provided by operating activities and other results stated in accordance with GAAP.
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2 0 2 4 E a r n i n g s R e p o r t Our Values Are Rooted in Conscious Capitalism These principles guide our day-to-day operations and, we believe, deliver a more SUSTAINABLE AND SUCCESSFUL business We operate a STAKEHOLDER MODEL that prioritizes the long-term benefits of each of our stakeholders Our approach has been validated by our designation as a CERTIFIED B CORPORATION, a certification reserved for businesses that balance profit and purpose to meeting the highest verified standards of social and environmental performance, public transparency, and legal accountability 4
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2 0 2 4 E a r n i n g s R e p o r t We have developed an alternative to factory farming practices LIVING CONDITIONS OPEN AIR, 108 SQUARE FEET PER HEN FEED OMNIVOROUS, INCLUDING GRAIN, PLANTS, INSECTS LAND MANAGEMENT SUSTAINABLE PRACTICES NETWORK DIRECT RELATIONSHIPS WITH FAMILY FARMS Our Framework Year - Round Production 5
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2 0 2 4 E a r n i n g s R e p o r t Our model allows us to deliver quality at scale ECS Wash Grade Pack Ship Quality control HQ Branding Selling Supporting Network of more than 425 Family Farms RETAIL FOODSERVICE National Distribution (Products in 24,000+ Retail Stores) EGG CENTRAL STATION Springfield, MO WASH, GRADE, PACK, SHIP , QUALITY CONTROL REMOTE WORKFORCE Across the United States BRANDING, SELLING, SUPPORTING WE DELIVER DIRECTLY TO CUSTOMERS AND THROUGH DISTRIBUTORS WE AGGREGATE PRODUCTS FROM FARM NETWORK 6
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PERFORMANCE CHARTS
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Growing Consumer Awareness Source: Vital Farms Proprietary Brand Health Tracker Vital Farms’ aided brand awareness is pulling away from competitors Aided Brand Awareness 8
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Retail Expansion Source: Circana Unify+ Total US – Multioutlet+; All time periods are 13-week-ended Market = Total US – Multioutlet+ Total Vital Farms TDPs rebounded throughout 2024, nearing all-time highs • Tub butter discontinuation • Butter supplier changeoverEgg Bites discontinuation 9
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Retail Expansion Source: Circana Unify+ Total US – Multioutlet+; All time periods are 13-week-ended Market = Total US – Multioutlet+ Vital Farms Total Distribution Points (TDPs) in 2024 grew strongly in shell eggs, and butter recovered quickly after our tub butter discontinuation and supplier changeover in late 2023 • Tub butter discontinuation • Butter supplier changeover 10
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Increasing Sales Velocity Vital Farms’ sales velocity ($ per week per store) increased sharply in 2024, reaching an all-time high Source: Circana Total US - Multi Outlet+ Source: Circana Unify+ Total US – Multioutlet+; All time periods are 13-week-ended Market = Total US – Multioutlet+ 11
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Market Share Gains Source: Egg Price Gaps from Circana Unify+ Total US – Multioutlet+ | Price Per Volume | Calendar Years 2021-2024 Market = Total US – Multioutlet+ Vital Farms’ shell egg dollar and volume share has trended higher despite varying price gaps with conventional eggs $4.08 $3.57 $5.08 $4.77 3.0% 2.9% 3.7% 4.3% 1.4% 1.8% 1.9% 2.5% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 0 1 2 3 4 5 6 2021 2022 2023 2024 Conventional Price Gap Market Share (Dollars) Market Share (Units) 12
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2 0 2 4 E a r n i n g s R e p o r t Benefits of a Brand: Gross Margin Stability Source: Vital Farms and Cal-Maine Company Filings Gross margin has remained stable across another Avian Influenza cycle 13
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FINANCIAL UPDATE
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2024 KEY FINANCIAL METRICS Net Revenue Gross Margin Adj. EBITDA Diluted EPS $606M 37.9% $87M $1.18 +28.5% +352 bps +79.2% +100.4% 15
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2 0 2 4 E a r n i n g s R e p o r t Financial Summary Highlights: Q4 2024 Update (1) See appendix for reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin 16 • Net Revenue increased 22.2% to $166.0 million on a reported basis and grew 30% like-for-like when accounting for one fewer week in Q4 2024 (13 weeks) versus Q4 2023 (14 weeks); the extra week in Q4 23 contributed $8.5 million in net revenue • Volume favorability was driven by strong demand for existing Vital Farms products, a growing number of offerings, and new store distribution at existing customers. • Gross profit was $59.9 million, or 36.1% of net revenue, in Q4 2024; Gross profit growth was primarily driven by price / mix benefits, operational efficiencies and greater scale. • Conventional commodities and lower diesel costs contributed to margin improvement; this was partially offset by an increase in promotions and an increase in labor and overhead costs. • Adj. EBITDA was $19.1 million, or 11.5% of net revenue, in Q4 2024; Adj. EBITDA expanded due to higher sales and gross profit, partially offset by investments in brand marketing and other costs.(1) Highlights Financial Performance ($ thousands) % Change $ Change Net Revenue $ 165,989 $ 135,811 22.2% 30,178 Gross Profit 59,876 45,194 32.5% 14,682 Gross Margin % 36.1% 33.3% 280 bps Income from Operations 13,005 9,091 43.1% 3,914 Net Income 10,582 7,210 46.8% 3,372 Adjusted EBITDA(1) $ 19,086 $ 13,894 37.4% 5,192 Adjusted EBITDA Margin(1) 11.5% 10.2% 127 bps Q4 '24 Q4 '23
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2 0 2 4 E a r n i n g s R e p o r t Financial Summary Highlights: FY 2024 Update (1) See appendix for reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin 17 Highlights Financial Performance • Net revenue increased 28.5% to $606.3 million in fiscal year 2024, compared to $471.9 million in fiscal year 2023. The increase in net revenue was driven by strong volume growth and price/mix benefits. • The gross profit growth was primarily driven by higher sales. Gross margin benefited from increased pricing across the Company’s portfolio, partially offset by an increase in trade as a percentage of gross revenue. • Adjusted EBITDA was $86.7 million, or 14.3% of net revenue, in fiscal year 2024, compared to $48.3 million, or 10.2% of net revenue, in the prior year period. The change in Adjusted EBITDA was primarily due to higher sales and improved gross profit performance, partially offset by increased marketing spend and higher employee-related expenses.(1) ($ thousands) % Change $ Change Net Revenue $ 606,307 $ 471,857 28.5% 134,450 Gross Profit 229,926 162,326 41.6% 67,600 Gross Margin % 37.9% 34.4% 352 bps Income from Operations 63,552 33,254 91.1% 30,298 Net Income 53,388 25,566 108.8% 27,822 Adjusted EBITDA(1) $ 86,663 $ 48,348 79.2% 38,315 Adjusted EBITDA Margin(1) 14.3% 10.2% 405 bps 2024 FY 2023 FY
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2 0 2 4 E a r n i n g s R e p o r t Financial Summary Highlights: Net Revenue Growth 18 Highlights • Net revenue for Q4 2024 was $166.0 million, compared to $135.8 million for Q4 2023, representing growth of 22.2%. • The increase was primarily driven by volume- related increases of $19.0 million and price- related increases of $11.3 million. • The increases in egg-related sales were driven by: o Accelerating product performance at new and existing customers o Moderate price/mix benefits • The increases in butter-related sales were driven by: o Rebound in distribution o Demand for the brand Net Revenue by Product Segment 2024 and Q4 ‘24 Net Revenue Growth Net Revenue Summary ($ Millions) ($ Millions) Product Segment Mix +22.2% YOY +28.5% YOY 2023 2024 Q4 '23 Q4 '24 Eggs 32% 29% 27% 20% Butter 0% 11% -28% 89% Consolidated 30% 28% 23% 22% Growth Rates
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2 0 2 4 E a r n i n g s R e p o r t Financial Summary Highlights: Margin Performance 19 Highlights • Gross profit increased $14.7 million in Q4 2024 versus Q4 2023, driven by greater operational scale and price/mix benefits. • Gross margin increased by 280 basis points in Q4 2024 versus Q4 2023, as favorable commodity and diesel costs contributed to margin improvement; this offset higher promotions and labor costs. • Selling, general, and administrative expenses increased by $8.6 million. As a percent of net revenue, SG&A grew ~130 basis points in Q4 2024 versus Q4 2023. • The increase in SG&A was driven by higher marketing expenses and labor costs in support of headcount to support our growth. • Shipping and distribution increased $2.2 million to $9.5 million, or 5.7% of net revenue, in Q4 2024, compared to 5.4% of net revenue in Q4 2023. • S&D increases were driven by a higher volume performance, partially offset by favorable linehaul and fuel rates. Gross Profit and Margin Operating Expenses 34.4% Gross Margins 37.9% 36.1% SG&A as a % of Net Revenue 21.6% 21.2%33.3% 22.1% 22.5% Shipping & Distribution as a % of Net Revenue 5.8% 5.4%5.3% 5.7% ($ Millions) ($ Millions) +32.5% YOY +41.6% YOY
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2 0 2 4 E a r n i n g s R e p o r t 2025 Guidance 20 Note: These metrics are management goals only and are subject to a number of risks and uncertainties, including risks described in the "Risk Factors" in our Annual Report on Form 10-K for the period ended December 29, 2024 and other filings and reports that the Company may file from time to time with the Securities and Exchange Commission At least $100 Million $50 to $60 Million At least $740 MillionNET REVENUE CAPTIAL EXPENDITURES ADJUSTED EBITDA
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2 0 2 4 E a r n i n g s R e p o r t Our Long-term Financial Goals 21 Note: These metrics are management goals only and are subject to a number of risks and uncertainties, including risks described in the "Risk Factors" in our Annual Report on Form 10-K for the period ended December 29, 2024 and other filings and reports that the Company may file from time to time with the Securities and Exchange Commission ~35% 12% to 14% of Net Revenue $1 Billion by 2027NET REVENUE ADJUSTED EBITDA MARGIN GROSS MARGIN
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APPENDIX
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2 0 2 4 E a r n i n g s R e p o r t Adjusted EBITDA reconciliation 23 ($ thousands) Net income $ 53,388 $ 25,566 $ 1,230 Depreciation and amortization 13,093 10,490 5,761 Stock-based compensation expense 10,268 7,417 6,040 Provision for income tax 14,150 6,635 1,601 Interest expense 1,010 782 114 Interest income (5,246) (2,542) (992) Adjusted EBITDA $ 86,663 $ 48,348 $ 16,236 Net Income as a % of Net Revenue 8.8% 5.4% 0.3% Adjusted EBITDA Margin 14.3% 10.2% 4.5% Net Revenue 606,307 471,857 362,050 52-Weeks52-Weeks Ended 53-Weeks 31-Dec-23 25-Dec-2229-Dec-24 Ended Ended