Vital Farms — Second Quarter 2026 Earnings Summary

Financial Performance

• Net revenue decreased 10.1% year-over-year to $166.0 million for the 13 weeks ended June 28, 2026, compared to $184.8 million in the prior-year period.
• Gross margin declined to 6.6% from 38.9% year-over-year, driven by higher input/production costs and unfavorable sales mix due to oversupply.
• Net loss was $31.1 million, compared to net income of $16.6 million in the prior-year quarter.
• Net loss per diluted share was $0.72, compared to net income per diluted share of $0.36.
• Adjusted EBITDA loss was $26.6 million, compared to Adjusted EBITDA of $29.9 million in the prior-year quarter.
• Adjusted net loss was $20.0 million, compared to adjusted net income of $16.6 million in the prior-year quarter.
• Adjusted net loss per diluted share was $0.47, compared to adjusted net income per diluted share of $0.36.
• Net cash used in operating activities was $45.9 million for the 26-week period ended June 28, 2026, compared to net cash provided of $4.5 million in the prior-year period.
• Cash, cash equivalents, and marketable securities were $21.2 million as of June 28, 2026.
• Outstanding debt was $30.0 million as of June 28, 2026.

Guidance and Future Outlook

• Reiterated fiscal year 2026 net revenue outlook of $775 million to $800 million, representing at least 5% growth versus fiscal year 2025.
• Reiterated fiscal year 2026 Adjusted EBITDA outlook of $0 million to $10 million.
• Capital expenditures for fiscal year 2026 are expected to range from $70 million to $75 million.
• Outlook assumes no further material disruptions to supply chain or customers and that competitive activity does not intensify further.
• Management expects a margin recovery in the second half of the year driven by lower fixed overhead and right-sized supply.

Business Segments and Product Lines

• Retail channel net revenue was $158.0 million for the 13 weeks ended June 28, 2026, compared to $176.1 million in the prior-year period.
• Vital Farms grew its retail dollar share of the shell egg category by more than 200 basis points year-over-year despite a 35% year-over-year decline in retail egg prices.
• The company executed voluntary contract amendments with farmer partners to right-size supply.
• The company exited its butter business, incurring $7.8 million in exit costs and $0.8 million in farmer contract amendment amortization.
• The company slowed the pace of capital spending at Vital Crossroads (VXR) and new accelerator farms to align capacity with demand.

Market and Competitive Landscape

• The industry faced historic oversupply, causing retail egg prices across the total shell egg category to fall more than 35% year-over-year.
• Vital Farms maintains its position as the nation's leading pasture-raised egg brand by retail dollar sales.
• Management noted that sales mix shifted decisively back toward retail channels with meaningful distribution gains building.

Risks and Challenges

• Industry-wide oversupply and price gap pressures significantly impacted gross profit and margins.
• Higher input and production costs contributed to the decline in profitability.
• Unfavorable sales mix resulted from increased sales to breaker and wholesale channels at lower prices, reducing gross profit by $19.5 million.
• The company faces risks related to supply chain disruptions, food safety issues, avian influenza, and regulatory changes.

Management Commentary and Tone

• CEO Russell Diez-Canseco stated results reflect industry-wide oversupply and price gap pressure but emphasized the team is executing a recovery plan with "urgency and discipline."
• Management highlighted that results are showing in the marketplace, specifically in growing dollar share despite falling prices.
• CFO Thilo Wrede expressed confidence in reaffirming the full-year outlook following the disciplined execution of the plan since the first quarter.
• Management noted that sales mix is shifting back to retail and that the balance sheet has been significantly strengthened.

Other Key Points

• Announced new aggregate $185 million credit facilities, consisting of a $125 million 3-year term loan and a $60 million 3-year asset-based lending facility.
• Terminated the stock repurchase program on August 3, 2026, consistent with terms of the new lending facilities.
• Stock repurchased early in the quarter totaled 1,129,104 shares at an average price of $13.29, for an aggregate cost of $15.0 million.
• Capital expenditures for the 26-week period ended June 28, 2026, totaled $37.5 million, compared to $10.0 million in the prior-year period.
• Adjusted EBITDA includes addbacks of $3.3 million in restructuring/severance costs and $7.8 million in exit costs associated with the butter business wind-down.