Vital Farms, Inc. · NASDAQ:VITL
Vital Farms — Furey Research Partners Hidden Gems Conference 2024
32 slides from Vital Farms's conference presentation, Nov 25, 2024
Slide 1: Vital Farms, Inc.
Vital Farms, Inc. Furey Research Partners Hidden Gems Conference November 25, 2024
Slide 2: Reporting Disclaimer
Reporting Disclaimer 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
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow 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 Adjusted EBITDA, Adjusted EBITDA Margin and F
Slide 4: Thilo Wrede, Chief Financial Officer
Thilo Wrede Chief Financial Officer
Slide 5: Vital Farms Overview
VITAL FARMS OVERVIEW
Slide 6: Vital Farms at a glance
Vital Farms at a glance • Our Story: o Founded in 2007 and based in Austin, Vital Farms is a Certified B Corporation on a mission to bring ethically produced food to the table. We are driven by our purpose to improve the lives of people, animals and the planet through food • Our Products: o Eggs: Th
Slide 7: Our strength comes from our great products, our powerful brand, and our dedicated people
Our strength comes from our great products, our powerful brand, and our dedicated people Consumers trust our ethically produced premium products; we are connecting 1 meaningfully with consumers with a powerful brand Our stakeholder model builds trust across our system; people and culture are 2 our k
Slide 8: We have built a strong and growing business on solid foundations
We have built a strong and growing business on solid foundations TRUSTED BY DEMANDED BY A PREMIUM BRAND CONSUMERS RETAILERS >11 Million >24,000 Households1 Retailers A RESILIENT & GROWING FARMER NETWORK WORLD-CLASS PROCESSING FACILITIES Egg Central Station (Missouri) >375 Family Farms Seymour, India
Slide 9: We have developed an alternative to factory farming practices
We have developed an alternative to factory farming practices Year-Round Production Our Framework LIVING OPEN AIR, 108 SQUARE CONDITIONS FEET PER HEN OMNIVOROUS, FEED INCLUDING GRAIN, PLANTS, INSECTS LAND SUSTAINABLE MANAGEMENT PRACTICES DIRECT RELATIONSHIPS NETWORK WITH FAMILY FARMS 9
Slide 10: Our operations deliver quality at scale
Our operations deliver quality at scale FARM COLD STORAGE EGG CENTRAL STATION (ECS) Supply eggs Store eggs Wash and pack eggs CUSTOMERS & DISTRIBUTORS RETAILERS & CONSUMERS Store eggs, distribute to retailers & RESTAURANTS restaurants Sell to consumers 10
Slide 11: Current 2024 guidance anticipates delivering nearly 30% Net Revenue and 47% adj. EBITDA CAGRs
Current 2024 guidance anticipates delivering nearly 30% Net Revenue and 47% adj. EBITDA CAGRs since 2020 CAGR: Net Revenue & Adj. EBITDA (millions) $600 +29% $472 $362 $261 $214 CAGR: $80 $48 +47% $17 $8 $16 2020 2021 2022 2023 2024e Adj. EBITDA 7.8% 3.1% 4.5% 10.2% 13.3% margin Net Revenue Adj. EBI
Slide 12: More than 2/3 of our revenue growth since our IPO has been driven by volume gains
More than 2/3 of our revenue growth since our IPO has been driven by volume gains Net Revenue Growth ($m), Volume v. Price/Mix 12 Source: Vital Farms public filings with the SEC
Slide 13: Vital Farms gross margin stability reflects a branded business and not a commodity producer
Vital Farms gross margin stability reflects a branded business and not a commodity producer Gross Margin Vital Farms vs. Largest Publicly Listed Egg Producer 13 Source: Vital Farms public filings with the SEC and competitor public filings with the SEC
Slide 14: In the channels where we are selling, eggs are being decommoditized
In the channels where we are selling, eggs are being decommoditized E v sha f p vat ab and b and d ggs … … in channels where Vital Farms is selling1 … in channels where Vital Farms is not selling1 81.0% 77.9% 76.0% 69.2% 30.8% 24.0% 22.1% 19.0% Private label eggs Branded eggs Private label eggs Bran
Slide 15: Since the completion of the ECS expansion in 2022, we have had strong cash generation
Since the completion of the ECS expansion in 2022, we have had strong cash generation Adj. EBITDA, OCF, and FCF ($M) $81 $74 $61 $48 $51 $40 $17 $16 $16 $12 $8 $1 $0 -$8 2020 2021 2022 -$18 2023 LTM Q3 2024 Adj. EBITDA Operating Cash Flow Free Cash Flow ECS: Egg Central Station, our central egg proc
Slide 16: Since our IPO, we have a strong history of beating our expectations
Since our IPO, we have a strong history of beating our expectations Guidance As Of Reported FY20 Q2 20 Q3 20 Actual v. Initial Net revenue ($M) $205-210 $210-214 $ 214.3 Better Adj. EBITDA ($M) $14-16 $16-18 $ 16.8 Better FY21 Q4 20 Q1 21 Q2 21 Q3 21 Actual v. Initial Net revenue ($M) $246-253 $246-
Slide 17: Vital Farms Outlook
VITAL FARMS OUTLOOK
Slide 18: We have attractive long-term financial goals
We have attractive long-term financial goals By 2027 … ADJUSTED 2022 retailNET sales (in billions) GROSS REVENUE EBITDA MARGIN MARGIN $1B 35% 12%-14% Note: These metrics are management goals only, are subject to a number of risks and uncertainties, including risks described in the "Risk Factors" in
Slide 19: In key metrics we are pulling away from major competitors, pointing to future growth potential
In key metrics we are pulling away from major competitors, pointing to future growth potential Shell Egg Brand Aided Awareness Shell Egg Household Penetration Shell Egg Buy Rate (Millions of Households) 87% 44.5 82% 38.6 Comp B not to scale Comp B not to scale $37.60 23% 25% 11.4 21% 17% 17% 15% 16%
Slide 20: Consumer loyalty is growing: We are increasing household penetration while growing buy rate
Consumer loyalty is growing: We are increasing household penetration while growing buy rate Vital Farms eggs buy rate is growing in tandem As Vital Farms is acquiring new households, the units with household penetration; newly acquired bought per year and purchase frequency are both households are n
Slide 21: Variability in price gap to conventional and premium eggs is not impacting volume share or revenue growth
Variability in price gap to conventional and premium eggs is not impacting volume share or revenue growth Vital Farms Price Gap v. Conventional Eggs Vital Farms Price Gap v. Premium Eggs 38.8% 38.8% $4.93 $4.82 $4.09 30.3% 31.0% 30.3% 31.0% $3.59 21.8% 21.8% $2.18 $1.98 $1.24 $1.36 3.0% 3.2% 4.0% 3.
Slide 22: Growth in average items carried has room for further upside
Growth in average items carried has room for further upside Vital Farms Total Average Items Carried (AIC) Vital Farms Eggs Average Items Carried (AIC) Food & Natural Channel Food & Natural Channel Convenient breakfast introduction and TDPs: discontinuation 8.0 655 TDPs: 7.5 7.3 464 7.0 5.2 5.0 TDPs:
Slide 23: While we are increasing our distribution on shelf, we are also increasing sales velocity
While we are increasing our distribution on shelf, we are also increasing sales velocity: Retailers want new items Vital Farms Eggs $ per Average Items Carried (AIC) Food Channel AIC: +88% 3.0 $/AIC: +13% $174 $/AIC: $154 AIC: 1.6 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23
Slide 24: Our marketing investments drive brand awareness, a leading revenue growth indicator
Our marketing investments drive brand awareness, a leading revenue growth indicator Rolling 12-Month Marketing Spend vs. Quarterly Aided Brand Awareness vs. Quarterly Aided Brand Awareness (No Lag) Rolling 12-month Net Sales (4 Quarter Lag) $30.1M 25% $576M 25% $11.4M $237M 14% R2 between year over
Slide 25: The number of laying hens on contracted farms is another indicator of future growth
The number of laying hens on contracted farms is another indicator of future growth Contracted Laying Hens v. Vital Farms Reported Volume (EQ Units) 5 Quarter Lag 6.7M 32.1M 1.1M R2 between quarter over quarter growth of contracted 13.1M laying hens and year over year volume growth = 0.57 Contracted
Slide 26: To supply future demand and drive growth, we are expanding our farming, washing, and packing footprint
To supply future demand and drive growth, we are expanding our farming, washing, and packing footprint We have a growing network of more than 375 family farms across the Pasture Belt We are launching a small number of “accelerator”1 farms that will allow us to test and learn new ideas and improve fa
Slide 27: In summary
In summary We are disrupting the food system (for good), and we are living our 1 purpose (to improve the lives of people, animals and the planet through food) 2 We have a strong and growing connection with our consumers We are on the right path to meet our ambitious financial targets for 2027 3 ($1b
Slide 28: Question & Answer Session
QUESTION & ANSWER SESSION
Slide 29: Appendix
APPENDIX
Slide 30: EV/EBITDA
With a branded business and strong topline outlook, we believe our valuation is attractive relative to US food peers Forward revenue consensus vs. NTM EV/EBITDA 45 40 35 30 EV/EBITDA 25 20 US FOOD 15 PEERS* 10 5 0 -5% 0% 5% 10% 15% 20% 25% Consensus one year forward sales growth Peers include FRPT (
Slide 31: Historical Adjusted EBITDA Reconciliation
Historical Adjusted EBITDA Reconciliation Ended Ended Ended Ended Ended Ended ($ thousands) 29-Dec-19 27-Dec-20 26-Dec-21 25-Dec-22 31-Dec-23 29-Sep-24 Net income $ 3,312 $ 8,884 $ 2,382 $ 1,230 $ 25,566 $ 42,808 Depreciation and amortization (1) 1,921 2,550 3,540 5,761 10,490 9,829 Stock-based comp
Slide 32: Historical Free Cash Flow Reconciliation
Historical Free Cash Flow Reconciliation 52-Weeks 52-Weeks 52-Weeks 53-Weeks 39-Weeks Ended Ended Ended Ended Ended ($ thousands) 27-Dec-20 26-Dec-21 25-Dec-22 31-Dec-23 29-Sep-24 Net Cash Provided by Operating Activities $ 11,702 $ 17,682 $ (8,098) $ 50,906 $ 50,043 Capital Expenditures (10,300) (1
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