On November 2, 2023, Vital Farms Inc (VITL, Financial), a Certified B Corporation offering a range of ethically produced foods nationwide, reported its financial results for the third quarter ended September 24, 2023. The company saw a 20% increase in net revenue, reaching $110.4 million, and a net income of $4.5 million.
Financial Performance
Net revenue for Q3 2023 increased by 20.0% to $110.4 million, compared to $92.0 million in Q3 2022. This growth was driven by higher prices and volume gains of 13%. Gross profit was $36.7 million, or 33.2% of net revenue, in Q3 2023, compared to $29.5 million, or 32.0% of net revenue, in the prior year quarter. The growth in gross profit was primarily driven by higher sales.
Income Statement Highlights
Income from operations in Q3 2023 was $5.2 million, compared to income from operations of $2.0 million in Q3 2022. The change in income from operations was primarily attributable to higher sales and gross profit, partially offset by higher marketing costs and increased employee-related expenses. Net income was $4.5 million in Q3 2023, compared to net income of $0.7 million in the prior year quarter. The change in net income was primarily due to higher sales and improved gross profit performance, partially offset by increased marketing spend and higher employee-related expenses.
Balance Sheet and Cash Flow Highlights
As of September 24, 2023, the company had cash, cash equivalents, and marketable securities amounting to $96.1 million, with no outstanding debt. Net cash provided by operating activities was $27.2 million for the 39-week period ended September 24, 2023, compared to net cash used in operating activities of $3.4 million for the 39-week period ended September 25, 2022. Capital expenditures totaled $9.1 million in the 39-week period ended September 24, 2023, compared to $6.9 million in the prior year period.
Outlook for Fiscal 2023
For the full fiscal year 2023, management still expects net revenue of more than $465 million. Adjusted EBITDA is now expected to be more than $40 million for the full fiscal year 2023. The company also expects fiscal year 2023 capital expenditures to be in the range of $11 million to $16 million.
Long-Term Financial Targets
By the end of fiscal year 2027, management expects to generate annual net revenue of more than $1 billion in Vital Farms' current categories. Management also expects gross margin of at least 35% of net revenue by fiscal year 2027 and Adjusted EBITDA Margin in the range of 12% to 14% of net revenue by fiscal year 2027.
Explore the complete 8-K earnings release (here) from Vital Farms Inc for further details.
