Vital Farms hiked full-year earnings and revenue guidance early Thursday after beating estimates for the second quarter on strong demand and pricing for its premium-branded eggs. Vital Farms stock plunged amid a warning on capital expenditures.
'Ethically Produced' Eggs And Butter
In the Vital Farms earnings release, management said it continues to target net revenue of $1 billion by 2027. That would be more than double the $471.9 million in revenue generated in 2023.
The Austin-based company touted efforts to meet consumer demand for what it describes as its "ethically produced" and "pasture-raised" eggs and butter, which sell for premium prices.
"Beyond 2024, we plan to continue to invest in the long-term health of our business," Vital Farms CEO Russell Diez-Canseco said in the release. "We have now passed a milestone of 350 family farms in our network, well on track to meet future demand."
"Additionally, with our plans for an additional state-of-the-art egg washing and packing facility in Seymour, Indiana, we are in the process of adding another cornerstone piece to our supply chain's growing capacity to meet our $1 billion net revenue target by 2027," he added.
However, management said Thursday that Vital Farms expects "elevated" capital spending over the next two years tied to the new Seymour plant.
Vital Farms Earnings Surge, Sales Accelerate
Early Thursday, the company reported a 140% surge in earnings per share to 36 cents. But that marked a third consecutive quarter of decelerating earnings growth. Revenue jumped 38.5% to $147.39 million. Sales accelerated for a third straight quarter and showed a sharp increase from Q1's 24% gain.
The company cited "volume gains of 35.8% and price/mix benefits" for revenue gains. It tied volume growth to "accelerated demand for existing products, expanded item offerings, and store distribution gains across new and existing retail customers."
Analysts, on average, had expected Vital Farms EPS of 20 cents on revenue of $138.4 million.
Gross margin expanded 362 basis points to 39.1%, vs. 35.5% a year ago.
For the full year, the egg producer on Thursday guided to revenue of at least $590 million, up from a prior target of $575 million and a 25% increase from 2023. That was above analyst consensus views for $585.8 million.
Vital Farms guided full-year adjusted EBITDA of at least $75 million, a 55% increase vs. 2023, and up from a previous view for $70 million. It was also above analyst expectations for $73.7 million.
The company kept capital expenditure guidance for 2024 steady at $35 million-$45 million. But CFO Thilo Wrede said on an earnings call: "With the construction of the Seymour facility, we anticipate elevated capex spending for the next few years with the bulk of the spending in 2025 and 2026."
Vital Farms Stock
Shares tanked 9.3% to 31.50 in Thursday's stock market action. In premarket trade, Vital Farms stock jumped almost 6%.
Vital Farms stock fell further below the 50-day moving average. However, it still holds a roughly 75% gain from a cup-with-handle breakout at the end of February.
Cal-Maine edged up 0.2% on Thursday. On July 24, the nation's largest egg producer missed earnings and sales estimates.
'Eggflation' Winner
Vital Farms rocketed to record highs in 2024 along with the price of eggs. Avian flu and inflation sent egg prices to record levels early in 2023.
Egg prices have since come well off those highs, but have climbed 8% so far this year, according to the U.S. Bureau of Labor Statistics.
In the past year, VITL stock easily outpaced gains for Nvidia, soaring 159%. After Thursday's plunge for Vital Farms stock, the AI chip leader has elbowed ahead in 2024, up 112%.
Vital Farms earnings per share exploded 1,867% in 2023 as sales climbed 30%, FactSet shows.
"Vital Farms presents a compelling and robust growth opportunity for investors through its participation in the fast-growing specialty egg category," Stifel analyst Matthew Smith said in May.
Basic food producers like Vital Farms and Cal-Maine may offer some shelter in tougher or recessionary markets.
