Egg and butter company Vital Farms (NASDAQ:VITL) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 24.1% year on year to $147.9 million. The company's full-year revenue guidance of $575 million at the midpoint also came in 2.6% above analysts' estimates. It made a GAAP profit of $0.43 per share, improving from its profit of $0.16 per share in the same quarter last year.
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Vital Farms (VITL) Q1 CY2024 Highlights:
- Revenue: $147.9 million vs analyst estimates of $136.9 million (8.1% beat)
- EPS: $0.43 vs analyst estimates of $0.20 ($0.23 beat)
- The company lifted its guidance for the full year: revenue of at least $575 million (previously $552 million) and adjusted EBITDA of at least $70 million (previously $57 million)
- Gross Margin (GAAP): 39.8%, up from 35.8% in the same quarter last year
- Free Cash Flow of $22.63 million, similar to the previous quarter
- Sales Volumes were up 18.4% year on year
- Market Capitalization: $1.26 billion
With an emphasis on ethically produced products, Vital Farms (NASDAQ:NATR) specializes in pasture-raised eggs and butter.
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Sales GrowthVital Farms is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.
As you can see below, the company's annualized revenue growth rate of 30.5% over the last three years was incredible for a consumer staples business.
This quarter, Vital Farms reported remarkable year-on-year revenue growth of 24.1%, and its $147.9 million in revenue topped Wall Street estimates by 8.1%. Looking ahead, Wall Street expects sales to grow 16.7% over the next 12 months, a deceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Vital Farms's average quarterly volume growth of 18.6% over the last two years has beaten the competition by a long shot. This is great because companies with significant volume growth are needles in a haystack in the stable consumer staples sector.
In Vital Farms's Q1 2024, sales volumes jumped 18.4% year on year. This result was a deceleration from the 26% year-on-year increase it posted 12 months ago, showing the business is on track but demand might be slowing.
Key Takeaways from Vital Farms's Q1 Results We were impressed by how significantly Vital Farms blew past analysts' revenue and EPS expectations this quarter. We were also excited that it raised its full year guidance, showing that things are going better for the company than just three months ago when it previously gave financial guidance. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The stock is up 7.2% after reporting and currently trades at $32.05 per share.
