Vital Farms, a Certified B Corporation that offers a range of ethically produced pasture-raised foods nationwide, reported financial results for its fourth quarter and fiscal year ended December 27, 2020.
“We entered 2020 with a strong track record of growth in net revenue, household penetration, and retail distribution. We saw each of these metrics grow significantly in 2020 as consumers increased at-home consumption, became even more conscious of their food choices, and voted with their dollars for brands like Vital Farms that prioritize and care for their stakeholders,” said Russell Diez-Canseco, President and CEO, Vital Farms. “Building on our longstanding position as the leading pasture-raised egg brand in the United States, Vital Farms now has an 82% share of retail dollar sales in the U.S. pasture-raised egg market, distribution in over 16,000 stores, and five million households have purchased our high-quality, ethically produced eggs. Additionally, in 2020, we were the largest contributor to the total retail egg category growth by retail dollar sales.”
“As we look ahead to the post-pandemic era, I want to be very clear in our belief that Vital Farms is uniquely positioned to address a substantial market opportunity,” Diez-Canseco continued. “We have demonstrated consistent growth in the years prior to and throughout 2020 and are investing significantly in our future—from growing our network of family farms, doubling capacity at Egg Central Station where we wash and pack eggs, launching a new marketing campaign, entering a national foodservice partnership with Acosta, and attracting top talent to join our team. We believe Vital Farms is well-positioned for success in 2021 and beyond.”
For the Three Months Ended December 27, 2020
Net revenue increased 30% to $54.0 million in the fourth quarter of 2020 compared to $41.4 million in the fourth quarter of 2019. Growth in net revenue in the fourth quarter of 2020 was driven primarily by volume increases to our distributors and retail partners, and distribution gains in new and existing customers. Those increases were partially offset by sales incentives offered to customers in connection with egg and butter sales, as well as general headwinds in the foodservice channel.
Gross profit was $17.6 million, or 32.6% of net revenue, in the fourth quarter of 2020, compared to $9.8 million, or 23.6% of net revenue, in the prior year period. The increases were primarily due to higher net sales, with a majority of the increase in gross margin attributable to better egg utilization, lower material costs for eggs and butter and volume leverage over direct labor and overhead costs.
Loss from operations in the fourth quarter of 2020 was $2.2 million compared to a loss of $6.0 million in the fourth quarter of the prior year.
Net loss was $0.8 million in the fourth quarter of 2020 compared to a loss of $4.3 million in the prior year period.
Net loss per diluted share was $0.02 compared to a loss of $0.17 per diluted share in the prior year quarter.
Adjusted EBITDA loss was $0.1 million in the fourth quarter of 2020 compared to a loss of $4.7 million in the fourth quarter of 2019, primarily driven by volume increases to Vital Farms’ distributors and retail customers, expanded gross margin, and leverage over fixed operating costs. The increase was partially offset by an increase in selling, general and administrative expenses due to increased overall headcount to support Vital Farms’ operations and increases in professional fees and commercial insurance costs due in part to being a newly public company. Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” and is reconciled to net income, its closest comparable GAAP measure, at the end of this release.
For the Fiscal Year Ended December 27, 2020
"We are pleased to report a 52% increase in net revenue and a 61% increase in adjusted EBITDA in fiscal year 2020 as compared to fiscal year 2019, marking a strong end to our first year as a public company," said Bo Meissner, Chief Financial Officer, Vital Farms. "Vital Farms is a beloved brand with a portfolio of high-quality, ethically produced products that are trusted by millions of households across the country. We believe this foundation and our strong financial performance in 2020 position us well for a successful 2021 and beyond."
Net revenue increased 52% to $214.3 million in fiscal year 2020 compared to $140.7 million in fiscal year 2019. Growth in net revenue in fiscal year 2020 was driven primarily by volume increases to Vital Farms’ distributors and retail partners, including as a result of stay-at-home trends associated with the COVID-19 pandemic, whereby consumers increased their purchases of eggs and butter, a higher turnover rate of sales to our retail customers and distribution gains in new and existing customers. Those increases were partially offset by sales incentives offered to customers in connection with egg and butter sales.
Gross profit was $74.5 million, or 34.8% of net revenue in fiscal year 2020, compared to $42.9 million, or 30.5% of net revenue, in the prior year period. The increases were primarily due to higher net sales, with a portion of the increase in gross margin also attributable to lower material costs for eggs and butter and volume leverage over direct labor and overhead costs.
Income from operations in fiscal year 2020 was $12.2 million compared to $3.3 million in the prior year period.
Net income was $8.8 million in fiscal year 2020 compared to $3.3 million in the prior year period.
Net income per diluted share was $0.27 compared to $0.07 per diluted share in the prior year period.
Adjusted EBITDA was $16.8 million in fiscal year 2020 compared to $6.4 million in fiscal year 2019, primarily driven by volume increases to Vital Farms’ distributors and retail customers expanded gross margin as well as leverage over fixed operating costs. The increase was partially offset by an increase in selling, general and administrative expenses due to increased overall headcount to support our operations and increases in professional fees and commercial insurance costs due in part to being a newly public company. Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” and is reconciled to net income, its closest comparable GAAP measure, at the end of this release.
Balance Sheet and Cash Flow Highlights
Cash, equivalents and investment securities were $97.9 million as of December 27, 2020, and Vital Farms had no current or long-term debt outstanding as of December 27, 2020. Net cash provided by operating activities was $11.7 million in the fiscal year ended December 27, 2020, compared to $5.4 million net cash used in operating activities during the prior year period.
Capital expenditures totaled $10.3 million for the fiscal year ended December 27, 2020 compared to $4.8 million in the prior year period.
Update on COVID-19 and Fiscal 2021 Outlook
Vital Farms’ guidance continues to assume that there are no additional, significant disruptions to the supply chain, its customers or consumers, including any issues from adverse macroeconomic factors.
- For the full fiscal year 2021, management expects net revenue between $246 to $253 million, an increase of 15 to 18% compared to 2020.
- Adjusted EBITDA is anticipated to be in the range of $6 to $8 million.
Vital Farms cannot provide a reconciliation between its forecasted Adjusted EBITDA and net revenue metrics without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within Vital Farms’ control and may vary greatly between periods and could significantly impact future financial results.
Conference Call and Webcast Details
Vital Farms will host a conference call and webcast at 8:30 a.m. ET today to discuss the results. The live conference call webcast can be accessed on the Vital Farms Investor Relations website at https://investors.vitalfarms.com under “Events.” The webcast will also be archived and available for replay.
