Vital Farms, Inc. · NASDAQ:VITL
Vital Farms — Investor Day (September 2021)
52 slides from Vital Farms's investor day presentation, Sep 28, 2021
Slide 1: Welcome to Our Investor Day
WELCOME TO OUR INVESTOR DAY SEPTEMBER 28, 2021 OUR PRESENTATION WILL BEGIN AT APPROXIMATELY 8:30 AM CT
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: Investor Day Agenda
INVESTOR DAY AGENDA WELCOME TO SPRINGFIELD BRINGING ETHICAL FOOD TO THE TABLE OUR MISSION IS REFLECTED IN OUR SUPPLY CHAIN FINANCIAL UPDATE: FOCUSED ON GROWTH Q&A SESSION TOURS OF EGG CENTRAL STATION MEET & GREET WITH VITAL FARMS MANAGEMENT 3
Slide 4: Today's Speakers
TODAY’S SPEAKERS MATT RUSSELL JASON BO O’HAYER DIEZ-CANSECO DALE MEISSNER FOUNDER, PRESIDENT, CHIEF OPERATING OFFICER CHIEF FINANCIAL OFFICER EXECUTIVE CHAIRMAN CHIEF EXECUTIVE OFFICER
Slide 5: Bringing Ethical Food to the Table
BRINGING ETHICAL FOOD TO THE TABLE
Slide 6: Vital Farms at a Glance
VITAL FARMS AT A GLANCE ~60% 8.5% 36.4% 4.5% 5.5M+ NET REVENUE Q2 ‘21 ADJ. Q2 ‘21 GROSS HOUSEHOLD HOUSEHOLDS CAGR SINCE 2010 EBITDA MARGIN MARGIN PENETRATION1 PURCHASING #1 5.6% #2 17,250+ 24 U.S. PASTURE- U.S. RETAIL EGG U.S. OVERALL STORES SELLING3 TOTAL RETAIL SKUs4 RAISED EGG SHARE3 EGG BRAND2 B
Slide 7: Vital Farms Began with an Observation and a Question
VITAL FARMS BEGAN WITH AN OBSERVATION AND A QUESTION IS IT POSSIBLE TO PRODUCE AMAZING FOOD IN AN SMALLER FLOCKS ENVIRONMENTALLY RESPONSIBLE, FREE ROAMING HUMANE MANNER ON A SUPERIOR COMMERCIAL SCALE? VARIED DIET EGGS ENGAGED FARMERS 7
Slide 8: We Knew There Was a Better Way
WE KNEW THERE WAS A BETTER WAY CAGED CAGE-FREE FREE RANGE PASTURE RAISED 8
Slide 9: Our Values Are Rooted in Conscious Capitalism
OUR VALUES ARE ROOTED IN CONSCIOUS CAPITALISM 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
Slide 10: We Have Developed an Ethical Alternative to Factory Farming Practices
WE HAVE DEVELOPED AN ETHICAL 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 PRACTICES MANAGEMENT SNOW… BRR! SPICY-HOT IN THE SUMMER DIRECT RELATIONSHIP
Slide 11: Improving the Lives of People, Animals, and the Planet Through Food
WE ARE WORKING TO IMPROVE THE LIVES OF PEOPLE, ANIMALS, AND THE PLANET THROUGH FOOD CHAMPIONING INNOVATING BUILDING ANIMAL WELFARE THE SUPPLY CHAIN A TRUSTED BRAND EACH DAY WE BRING ETHICAL FOOD TO THE TABLE BY SOURCING AND MARKETING PASTURE-RAISED FOOD FROM SMALL FAMILY FARMS 11
Slide 12: Our Model Allows Us to Deliver Quality at Scale
OUR MODEL ALLOWS US TO DELIVER QUALITY AT SCALE CURRENT NETWORK OF PRODUCTS AVAILABLE MORE THAN 225 SMALL IN MORE THAN 17,250 FAMILY FARMS STORES GROCERY RETAIL WE DELIVER WE DIRECT TO ECS AGGREGATE
Slide 13: Consistent Store Growth Across the Retail Channel
CONSISTENT STORE GROWTH ACROSS THE RETAIL CHANNEL UPWARD TRAJECTORY CONTINUES TOTAL STORES SELLING (THOUSANDS)1 IPO 1 MULO, Natural Channel and Whole Foods Source: SPINS and Whole Foods Nielsen data, latest QUAD Ending 13-Jun-2021 13
Slide 14: Demonstrating Placement Momentum Across Categories
DEMONSTRATING PLACEMENT MOMENTUM ACROSS CATEGORIES POSITIVE TREND MAINTAINED THROUGHOUT 2021 TOTAL PLACEMENTS (THOUSANDS) 69.3 65.3 60.4 61.6 52.4 53.2 49.8 51.1 IPO 37.4 37.4 40.4 33.0 33.8 34.4 28.3 26.9 28.9 26.7 19.1 17.6 24.3 24.1 25.0 27.4 27.8 28.0 28.6 21.8 23.1 16.9 Butter Related Egg Relat
Slide 15: We Have Delivered Strong Growth and Share Positions
WE HAVE DELIVERED STRONG GROWTH AND SHARE POSITIONS 2017 - 2020 MULO AND NATURAL CHANNEL EGG DOLLAR SALES CAGR1 88% #1 #2 5.6% VITAL FARMS SHARE PASTURE-RAISED EGG BRAND2 VITAL FARMS SHARE OF PASTURE-RAISED2 BRAND2 OF ALL SHELL EGGS2 Note: Specialty eggs defined as cage free, free range and pasture-
Slide 16: We Still Have So Much Room to Grow
AND WE STILL HAVE SO MUCH ROOM TO GROW EXPAND HOUSEHOLD EXPAND RETAIL SHELL EGG PENETRATION SHELL EGG PENETRATION TODAY 17,250+ STORES vs. vs. POTENTIAL ~31,700 STORES All Shell Eggs Source: SPINS and Whole Foods Nielsen data, last 52-week period ending 27-Jun-2021 Note: Specialty eggs defined as ca
Slide 17: Consumers Are More Informed and Discerning
CONSUMERS ARE MORE INFORMED AND DISCERNING 88% 41% 63% OF CONSUMERS WILL BE MORE OF CONSUMERS ACTIVELY OF CONSUMERS TRY TO EAT LOYAL TO A COMPANY THAT SEEK CLEAN LABELS2 HEALTHY MOST OR ALL OF SUPPORTS SOCIAL OR THE TIME3 ENVIRONMENTAL ISSUES¹ 62% 55% 71% OF CONSUMERS SAY OF CONSUMERS CARE ABOUT O
Slide 18: Our Food Delivers Taste While Our Brand Delivers Trust
OUR FOOD DELIVERS TASTE WHILE OUR BRAND DELIVERS TRUST HIGH QUALITY, WITH ETHICAL BUILDING TRUST THROUGH DELICIOUS, FOODS SOURCING STANDARDS VALUES & TRANSPARENCY 18
Slide 19: Our Marketing Strategy Encompasses the Entire Consumer Journey
OUR MARKETING STRATEGY ENCOMPASSES THE ENTIRE CONSUMER JOURNEY PRE-PURCHASE POST-PURCHASE DIGITAL WEBSITE ON-SHELF SOCIAL MEDIA NEWSLETTERS ATTRACT EDUCATE CONVERT ENGAGE1 RETAIN 76,600+ LIKES 5,400+ FOLLOWERS 116,600+ FOLLOWERS 1Social Media Followers as of September 2021 19
Slide 20: Increasing Household Penetration
WHICH MANIFESTS IN INCREASING HOUSEHOLD PENETRATION % OF HOUSEHOLDS PURCHASING VITAL FARMS EGGS IN PRIOR 52 WEEK PERIOD IPO Source: Numerator Household Panel, Last 52-week period ending 30-June-2021 20
Slide 21: Adjacent Categories Our Brand Could Extend To
EXAMPLES OF ADJACENT CATEGORIES OUR BRAND COULD EXTEND TO UTILIZING A SMALL FAMILY FARM NETWORK REFRIGERATED VALUE-ADDED DAIRY1 BEEF2 CHICKEN2 PORK2 $33.2B $25.5B $12.5B $6.4B OVER $4B OF REVENUE POTENTIAL IN THESE CATEGORIES IF WE ACHIEVED OUR CURRENT EGG MARKET SHARE IN EACH 1 SPINS as of last 52-
Slide 22: Seasoned Management Team Focused on Growth
SEASONED MANAGEMENT TEAM FOCUSED ON GROWTH RUSSELL JOANNE STEPHANIE JASON KATHRYN BO MATT PETE NAME DIEZ- BAL COON DALE MCKEON MEISSNER O’HAYER PAPPAS CANSECO GENERAL FOUNDER, SVP PRESIDENT, VP CHIEF SALES POSITION COUNSEL COO CFO EXECUTIVE STRATEGY CEO MARKETING OFFICER HEAD OF ESG CHAIRMAN YEARS A
Slide 23: Our Mission Is Reflected in Our Supply Chain
OUR MISSION IS REFLECTED IN OUR SUPPLY CHAIN
Slide 24: Process of Becoming a Farmer
PROCESS OF BECOMING A FARMER • WORD OF MOUTH AND REFERRALS • ORGANIZE POTENTIAL GROWER MEETING SELECTION • LAND REVIEW BY VITAL FARMS’ SELECTION TEAM • POTENTIAL GROWER MEETS WITH LENDERS FINANCE • LETTER OF INTENT ACCOMPANIED BY DRAFT AGREEMENTS ARRANGEMENT • LENDING APPROVAL DOCUMENT SENT TO VITAL
Slide 25: How We Select Small Family Farms
HOW WE SELECT SMALL FAMILY FARMS PROBLEM VITAL FARMS SOLUTION EXAMPLE GALBRAITH POULTRY FARM CREATE SELECTION TEAM • HEARD ABOUT VITAL FARMS THROUGH FAMILY MEMBER • FAMILY HAD PREVIOUS EXPERIENCE IN AGRICULTURE SOLICIT REFERRALS • ATTENDED GROWER MEETING AS HOW TO SUCCESSFULLY AN INTRODUCTION IDENTI
Slide 26: We Structure Meaningful Economics for Farmers
WE STRUCTURE MEANINGFUL ECONOMICS FOR FARMERS EXAMPLE: PROBLEM VITAL FARMS SOLUTION FARM CONTRACTS EXCLUSIVE, 3 FLOCKS, WITH 1 REASONABLE LENGTH FLOCK EXTENSION¹ ONGOING OVERSIGHT & CLEAR EXPECTATIONS SUPPORT HOW TO OVERCOME THE FOOD INDUSTRY REPUTATION INDEXED, PURCHASE ALL OF UNFRIENDLY, PREDICTAB
Slide 27: How We Ensure Compliance and Productivity
HOW WE ENSURE COMPLIANCE AND PRODUCTIVITY EXAMPLE: WORKING WITH FARMERS PROBLEM VITAL FARMS SOLUTION TO MAINTAIN STANDARDS BOUGH & CLEAR CREEK FARMS OUTSOURCED INSPECTIONS • EXPERIENCED A HIGHER AMOUNT OF CRACKED EGGS • EGGS BEING LAID ON TOP OF NEST EARLY DETECTION BOXES, FALLING AND BREAKING HOW T
Slide 28: ECS Focused on Environment, Food Quality and Crew Safety
DESIGNED WITH OUR MISSION IN MIND: ECS IS FOCUSED ON THE ENVIRONMENT, FOOD QUALITY AND CREW SAFETY CREATE A POSITIVE ENVIRONMENTAL IMPACT FOOD QUALITY PARAMOUNT THROUGHOUT ECS EXTRA EMPHASIS ON CREW SAFETY AND COLLABORATION 28
Slide 29: Environmental Impact: Rainwater Absorption and Groundwater Protection
ENVIRONMENTAL IMPACT: FOCUS ON RAINWATER ABSORPTION AND PROTECTION OF SPRINGFIELD GROUNDWATER USING PERMEABLE NATIVE VEGETATION THAT PAVERS ELIMINATES ANY IS INDIGENOUS TO THE STANDING WATER ON THE AREA NEGATES THE NEED HARDSCAPE FOR IRRIGATION AND FERTILIZER 29
Slide 30: Food Quality & Safety: Production Area Cleanliness
FOOD QUALITY & SAFETY: GOING ABOVE AND BEYOND AS TECHNOLOGY ENHANCES PRODUCTION AREA CLEANLINESS OUR HOSPITAL GRADE HAND WASH TECHNOLOGY IS BETTER THAN WHAT EXISTS IN MOST FOOD FACILITIES POWDER COVERING THE FLOOR SANITIZES THE BOTTOM OF FOOTWEAR UPON ENTRY 30
Slide 31: Food Quality & Safety: Machines Wash and Inspect Eggs
FOOD QUALITY & SAFETY: MACHINES WASH AND INSPECT THE EGGS FOR CRACKS DUAL WASH SYSTEM CRACK DETECTOR SCANS ALLOWS US TO RUN EACH EGG 32 TIMES AND CONTINUOUSLY TAPS IT WITH MICROPHONE 16 TIMES EGGS ARE WASHED THEN DRIED 31
Slide 32: Food Quality & Safety: UV Lighting Sanitizes Eggs
FOOD QUALITY & SAFETY: UV LIGHTING SANITIZES EGGS WHICH ARE THEN TRANSFERRED TO THE PACK LANES UV LIGHT SANITIZES AND SENDS EGGS TO LOAD CELL WEIGHING EGGS ARE SENT ON TO TRANSFER TO THE PACK LANES GRADING - DETERMINING INTERIOR EGG QUALITY AND CONDITION OF SHELL 32
Slide 33: Food Quality & Safety: Quality Control on Every Pallet
FOOD QUALITY & SAFETY: WE PERFORM ADDITIONAL QUALITY CONTROL INSPECTIONS ON EVERY PALLET OF EGGS OUR QUALITY CHECK ON EACH PALLET GOES ABOVE AND BEYOND BOTH USDA GUIDELINES AND PEERS THIS INSPECTION LOOKS FOR: • SELL BY / USE BY DATE CODES • CARTON WEIGHT • DIRTY EGGS • LEAKERS / CRACKS • TOO MANY O
Slide 34: Crew Safety: Loading Dock
CREW SAFETY: OUR LOADING DOCK WAS BUILT TO KEEP CREW AND PRODUCT SAFE AND COMFORTABLE TEMPERATURE CONTROL SEALS HELP MAINTAIN COLD CHAIN AND ELIMINATE AIRBORNE INSECTS FROM ENTERING BUILDING HYDRAULIC SAFETY SYSTEM PROTECTS CREW BY PREVENTING ACCIDENTS WHEN LOADING PALLETS 34
Slide 35: Crew Safety: Automation Improves Speed and Efficiency
CREW SAFETY: AUTOMATION IMPROVES SPEED AND EFFICIENCY EIGHT OF OUR LANES HAVE AUTOMATED CASE PACKERS VITAL TIMES PLACEMENTS ARE NOW AUTOMATED 35
Slide 36: Crew Safety: Built with Daily Crew Experience in Mind
CREW SAFETY: BUILT WITH DAILY CREW EXPERIENCE IN MIND FREE SPAN STEEL BUILDING CLIMATE CONTROLLED FACILITY WINDOWS AND NATURAL LIGHT PREVELANT FRESH AIR IS BALANCED THROUGHOUT THE FACILITY 36
Slide 37: Crew Collaboration: Office Designed for Open, Healthy Environment
CREW COLLABORATION: OFFICE DESIGNED TO PROMOTE OPEN, HEALTHY WORKING ENVIRONMENT WIDE OPEN OFFICE FLOOR PLAN SOLAR SENSOR SHADES REGULATE AMBIENT LIGHT & TEMPERATURE HUMIDITY AND CO2 SENSORS ENSURE HEALTHY INDOOR ENVIRONMENT 37
Slide 38: Crew Care: Feedback, Equity and Bonuses
CREW CARE: FEEDBACK LEADS TO IDEA IMPLEMENTATION AND ENTIRE CREW ELIGIBLE FOR EQUITY AND BONUSES “IDEA WALL” WITH HUNDREDS OF IDEAS YTD; OVER 50% IMPLEMENTED ALL CREW PAID 25% ABOVE LIVING WAGE ALL CREW ELIGIBLE FOR QUARTERLY ‘GGOB’ BONUS AND EQUITY 38
Slide 39: Crew Care: Career Development and Wellness
CREW CARE: WE FOCUS ON BOTH CAREER DEVELOPMENT AND OVERALL WELLNESS “NEW WAYS OF WORKING” LEADERSHIP DEVELOPMENT PROGRAM EDUCATING AND PROTECTING CREW AGAINST COVID-19: • MINIMAL DISRUPTION AT ECS DUE TO COVID • HELD EDUCATIONAL HEALTH SESSIONS • ON-SITE VACCINATION AVAILABLE IN OCTOBER • 100% POSTI
Slide 40: Our Current Expansion Is on Schedule
OUR CURRENT EXPANSION IS ON SCHEDULE MID-2022 NEW JOBS OPERATIONAL ADDED TO LOCAL ECONOMY 3 MILLION $300 MILLION ADDITIONAL EGGS PER DAY ADDITIONAL REVENUE 153,000 ~$25 MILLION SQUARE FEET COST OF EXPANSION ECS EXPANSION WILL DOUBLE OUR PROCESSING CAPACITY TO SUPPORT GROWTH BEYOND 2022 40
Slide 41: Financial Update: Focused on Growth
FINANCIAL UPDATE: FOCUSED ON GROWTH
Slide 42: Track Record of Growth
TRACK RECORD OF GROWTH DELIVERED HYPER ORGANIC SALES GROWTH NET REVENUE CAGR OF 43% (2017 – 2020) IMPRESSIVE GROSS MARGIN EXPANSION GROSS MARGIN HAS EXPANDED 1,000 BASIS POINTS (2017 – 2020) WHILE IMPROVING PROFITABILITY ADJ. EBITDA GREW FROM ($0.8 MILLION) IN 2017 TO $16.8 MILLION IN 2020 42
Slide 43: Runway for Further Growth at Retail
RUNWAY FOR FURTHER GROWTH AT RETAIL PLENTY OF UNTAPPED STORES AND POTENTIAL FOR SKU COUNT EXPANSION TOTAL STORES SELLING (THOUSANDS) AVERAGE ITEMS CARRIED VERSUS TOTAL VITAL FARMS SKUs TOTAL STORES WITH SPECIALTY EGGS 31.7 24 16.4 17.3 14.7 13 10.8 8.9 5.4 7 3 Source: SPINS and Whole Foods Nielsen d
Slide 44: Runway for Further Growth with Consumers
RUNWAY FOR FURTHER GROWTH WITH CONSUMERS MILLIONS OF HOUSEHOLDS PURCHASING VITAL FARMS EGGS TOTAL U.S. TOTAL HOUSEHOLDS (MILLIONS) 129.5 ABBY & ABE 14.0 3.2 3.4 5.0 5.5 Source: Numerator Household Panel Last 52-week period ending 30-June-2021, Vital Farms 44
Slide 45: Reaffirming 2021 Guidance
REAFFIRMING 2021 GUIDANCE NET REVENUE 15% - 18% GROWTH NET REVENUES $246 - $253 MILLION ADJUSTED $7 - $9 MILLION EBITDA 45
Slide 46: Our Long-Term Financial Goals
OUR LONG-TERM FINANCIAL GOALS NET REVENUE OVER 25% GROWTH GROSS MARGIN MID 30% EBITDA MARGIN LOW DOUBLE DIGIT % OF NET REVENUES Note: These metrics are management goals only, are subject to a number of risks and uncertainties, including risks described in the "Risk Factors" in its Quarterly Report o
Slide 47: Q&A Session
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Slide 48: Appendix
APPENDIX
Slide 49: Our Path to Building a Leading National Brand
OUR PATH TO BUILDING A LEADING NATIONAL BRAND 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2008 2009 2015 2020 First flock of 20 Scale family Direct Supply SUPPLY Rhode Island farm supplier partnerships with Network of Reds model via co- network of ~30 approximately manufacturer
Slide 50: ECS Exterior Grounds Map
ECS EXTERIOR GROUNDS MAP — ’ e ‘Karst Formation ion ars mporapty a unuegecoge fete o sour {Rain Garden) Section i preart co ae fre baer hfe om oan Shithoes gunesly prone dred chan or canis fem a ee tre ee (pours dosrealenbemuopprnayoferptertal | rtanhants cared by Serrmater nef, whch Makes ‘Atbooe e
Slide 51: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 13-Weeks Ended 26-Weeks Ended ($ thousands) 27-Jun-21 28-Jun-20 27-Jun-21 28-Jun-20 Net income $ 3,883 $ 5,936 $ 7,365 $ 7,870 Depreciation and amortization 835 498 1,620 954 (Benefit)/Provision for income tax (695) 2,848 (999) 3,679 Stock-based compensation expense 1,
Slide 52: Thank You!
THANK YOU! QUESTIONS? matt.siler@vitalfarms.com