Vital Farms — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net revenue for the 13 weeks ended September 27, 2026, was $182.2 million, a decrease of 8.4% year-over-year (YoY) and an increase of 9.7% sequentially from Q2 2026.
• Gross margin was 23.1% in Q3 2026, compared to 37.7% in Q3 2025; gross profit was $42.1 million versus $75.0 million in the prior-year period.
• Net loss was $6.5 million ($0.15 per diluted share) for Q3 2026, compared to net income of $16.4 million ($0.36 per diluted share) in Q3 2025.
• Adjusted EBITDA was $1.5 million for Q3 2026, a decrease from $27.4 million in Q3 2025, but an improvement of $28.1 million sequentially from Q2 2026.
• Operating loss was $7.7 million in Q3 2026, compared to operating income of $21.4 million in Q3 2025.
• For the 39 weeks ended September 27, 2026, net cash used in operating activities was $54.4 million, compared to net cash provided of $27.9 million in the prior-year period.
• Capital expenditures totaled $51.7 million for the 39 weeks ended September 27, 2026, compared to $44.0 million in the prior-year period.
• Cash and cash equivalents were $84.0 million as of September 27, 2026, with $117.6 million in outstanding debt.

Guidance and Future Outlook:

• Fiscal 2026 net revenue outlook updated to approximately $730 million, down from the previous range of $775 million to $800 million.
• Fiscal 2026 Adjusted EBITDA outlook updated to a loss of approximately $(15) million, revised from a previously expected gain of $0 to $10 million.
• Fiscal 2026 capital expenditure outlook reaffirmed at $70 million to $75 million.
• Management expects sequential improvement in Q4 2026 compared to Q3, driven by lower anticipated breaker and supply-management costs, benefits from recent distribution gains, and structural cost actions.
• The updated outlook reflects later-than-anticipated timing of new distribution placements, a more conservative assumption for their near-term velocity contribution, and no assumed seasonal uplift in demand or conventional egg pricing.
• Vital Farms withdrew its previously announced long-term financial targets for fiscal 2030 and expects to revisit them after making more progress expanding margins and improving profitability.

Business Segments and Product Lines:

• Vital Farms reached record dollar and volume share of the shell egg category.
• Retail channel net revenue was $175.1 million for the 13 weeks ended September 27, 2026, compared to $189.7 million in the prior-year period.
• Sales to breaker and wholesale channels contributed $0.3 million to the net revenue decline, as a large volume increase was almost entirely offset by a price decline.
• The company is focused on building velocity across its expanded distribution base and adding distribution where appropriate.
• The company is executing supply control initiatives to reduce excess supply and lower its cost structure.
• The company previously exited its butter business, with associated costs of $7.8 million recognized in the first 39 weeks of 2026.

Market and Competitive Landscape:

• The egg category has normalized following several years of disruption from avian influenza.
• Vital Farms is the leading U.S. brand of pasture-raised eggs by retail dollar sales.
• The company's products are sold in more than 24,500 stores nationwide and on menus at hundreds of foodservice operators.
• Management noted that some distribution gains came on shelf later than planned.

Risks and Challenges:

• Gross margin and profitability were negatively impacted by higher input and production costs and unfavorable sales mix driven by an oversupply of egg inventory.
• Unfavorable sales mix resulted in increased sales to breaker and wholesale channels at lower prices, reducing gross profit by $7.9 million.
• Risks include potential future disruptions to the supply chain, macroeconomic conditions, elevated interest rates, inflation, and agricultural disease outbreaks.
• The company faces risks related to its ability to attract and retain consumers, suppliers, and farmers, as well as manage food safety and regulatory compliance.
• The company cannot provide a reconciliation between forecasted Adjusted EBITDA and net loss without unreasonable effort due to the unavailability of reliable estimates for income taxes and stock-based compensation.

Management Commentary and Tone:

• Executive Chairperson, President, and CEO Russell Diez-Canseco stated that Q3 represented a meaningful sequential improvement consistent with expectations that Q2 was the trough in financial performance.
• Management expressed confidence in Vital Farms' long-term opportunity but emphasized a focus on demonstrating sustained progress through more consistent growth and improved profitability over time.
• CFO Thilo Wrede noted that the updated outlook reflects a more conservative view of near-term velocity contribution from new distribution.
• Management highlighted progress in reducing excess supply and lowering the cost structure.

Other Key Points:

• The company withdrew its previously issued fiscal 2030 financial targets.
• Proceeds from a Silver Point Term Loan of $120.6 million and a draw on a JPMorgan Credit Facility of $30.0 million were recorded in financing activities for the 39 weeks ended September 27, 2026.
• The company repurchased $35.0 million of common stock during the 39 weeks ended September 27, 2026.
• A conference call and webcast were scheduled for November 3, 2026, at 8:30 a.m. ET to discuss the results.
• The company is a Certified B Corporation and a Delaware public benefit corporation.