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Vital Farms (VITL - Free Report) reported second-quarter 2023 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Also, both metrics improved from the year-ago period. Better-than-expected results prompted management to hike the full-year net revenues and adjusted EBITDA view.
Q2 Performance in Detail
Vital Farms posted earnings of 15 cents a share in the second quarter, beating the Zacks Consensus Estimate of 6 cents. This compares favorably with break-even earnings per share a year ago.
Net revenues were $106.4 million, up 28.4% year over year. The top line beat the Zacks Consensus Estimate of $105 million. The increase in net revenues was propelled by a combination of higher prices and a notable volume gain of 6%. This volume growth was achieved through expansions in sales to new and existing retail customers.
Vital Farms, Inc. Price, Consensus and EPS Surprise
The gross profit amounted to $37.8 million in second quarter of 2023, up from $24.9 million, driven by higher sales. Markedly, the gross margin expanded 540 basis points to 35.5%. The metric benefited from higher pricing across the portfolio, partly offset by headwinds that included higher input costs across shell egg and butter businesses, and rising packaging costs.
Selling and administrative expenses rose 40.6% to $23.9 million in second quarter of 2023. As a percentage of net revenues, selling and administrative expenses increased 200 basis points to 22.5%.
Adjusted EBITDA reached $11.3 million in the second quarter of 2023, up from $3.7 million in the second quarter of 2022, driven by higher sales and improved gross profit performance. Also, the adjusted EBITDA margin expanded 630 basis points to 10.7% in the quarter under review.
Other Financial Details
Vital Farms ended the quarter with cash, cash equivalents and marketable securities of $93.5 million as of Jun 25, 2023. The company has no outstanding debt. Net cash provided by operating activities was $18.9 million for the 26-week period ended Jun 25, 2023, compared with the net cash used in operating activities of $3 million for the 26-week period ended Jun 26, 2022.
Image Source: Zacks Investment Research
Guidance
For 2023, Vital Farms anticipates net revenue of more than $465 million. The company expects adjusted EBITDA to exceed $35 million for 2023.
Management anticipates a capital expenditure of $16-$21 million for 2023.
Shares of this Zacks Rank #4 (Sell) have declined 22.2% in the past six months against the industry's growth of 1.9%.
3 Red-Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely J&J Snack Foods Corporation (JJSF - Free Report) , Utz Brands Inc. (UTZ - Free Report) and Church & Dwight (CHD - Free Report) .
J&J Snack Foods, which is an American manufacturer, marketer and distributor of branded niche snack foods and frozen beverages, currently sports a Zacks Rank #1 (Strong Buy). JJSF has a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for J&J Snack Foods’ current fiscal-year sales and earnings suggests growth of 13.3% and 48.6%, respectively, from the year-ago reported numbers.
Utz Brands, which manufactures a diverse portfolio of salty snacks, currently has a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal-year sales suggests growth of 3.5% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 16.9%, on average.
Church & Dwight, which develops, manufactures and markets a broad range of household, personal care and specialty products, currently has a Zacks Rank #2. CHD’s expected EPS growth rate for three to five years is 7.9%.
The Zacks Consensus Estimate for Church & Dwight’s current fiscal-year sales and earnings suggests growth of 8.1% and 6.1%, respectively, from the year-ago reported numbers. CHD has a trailing four-quarter earnings surprise of 12.1%, on average.
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Vital Farms (VITL) Q2 Earnings Beat Estimates, Rise Y/Y
Vital Farms (VITL - Free Report) reported second-quarter 2023 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Also, both metrics improved from the year-ago period. Better-than-expected results prompted management to hike the full-year net revenues and adjusted EBITDA view.
Q2 Performance in Detail
Vital Farms posted earnings of 15 cents a share in the second quarter, beating the Zacks Consensus Estimate of 6 cents. This compares favorably with break-even earnings per share a year ago.
Net revenues were $106.4 million, up 28.4% year over year. The top line beat the Zacks Consensus Estimate of $105 million. The increase in net revenues was propelled by a combination of higher prices and a notable volume gain of 6%. This volume growth was achieved through expansions in sales to new and existing retail customers.
Vital Farms, Inc. Price, Consensus and EPS Surprise
Vital Farms, Inc. price-consensus-eps-surprise-chart | Vital Farms, Inc. Quote
The gross profit amounted to $37.8 million in second quarter of 2023, up from $24.9 million, driven by higher sales. Markedly, the gross margin expanded 540 basis points to 35.5%. The metric benefited from higher pricing across the portfolio, partly offset by headwinds that included higher input costs across shell egg and butter businesses, and rising packaging costs.
Selling and administrative expenses rose 40.6% to $23.9 million in second quarter of 2023. As a percentage of net revenues, selling and administrative expenses increased 200 basis points to 22.5%.
Adjusted EBITDA reached $11.3 million in the second quarter of 2023, up from $3.7 million in the second quarter of 2022, driven by higher sales and improved gross profit performance. Also, the adjusted EBITDA margin expanded 630 basis points to 10.7% in the quarter under review.
Other Financial Details
Vital Farms ended the quarter with cash, cash equivalents and marketable securities of $93.5 million as of Jun 25, 2023. The company has no outstanding debt. Net cash provided by operating activities was $18.9 million for the 26-week period ended Jun 25, 2023, compared with the net cash used in operating activities of $3 million for the 26-week period ended Jun 26, 2022.
Image Source: Zacks Investment Research
Guidance
For 2023, Vital Farms anticipates net revenue of more than $465 million. The company expects adjusted EBITDA to exceed $35 million for 2023.
Management anticipates a capital expenditure of $16-$21 million for 2023.
Shares of this Zacks Rank #4 (Sell) have declined 22.2% in the past six months against the industry's growth of 1.9%.
3 Red-Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely J&J Snack Foods Corporation (JJSF - Free Report) , Utz Brands Inc. (UTZ - Free Report) and Church & Dwight (CHD - Free Report) .
J&J Snack Foods, which is an American manufacturer, marketer and distributor of branded niche snack foods and frozen beverages, currently sports a Zacks Rank #1 (Strong Buy). JJSF has a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for J&J Snack Foods’ current fiscal-year sales and earnings suggests growth of 13.3% and 48.6%, respectively, from the year-ago reported numbers.
Utz Brands, which manufactures a diverse portfolio of salty snacks, currently has a Zacks Rank #2 (Buy). UTZ’s expected EPS growth rate for three to five years is 10.4%.
The Zacks Consensus Estimate for Utz Brands’ current fiscal-year sales suggests growth of 3.5% from the year-ago reported numbers. UTZ has a trailing four-quarter earnings surprise of 16.9%, on average.
Church & Dwight, which develops, manufactures and markets a broad range of household, personal care and specialty products, currently has a Zacks Rank #2. CHD’s expected EPS growth rate for three to five years is 7.9%.
The Zacks Consensus Estimate for Church & Dwight’s current fiscal-year sales and earnings suggests growth of 8.1% and 6.1%, respectively, from the year-ago reported numbers. CHD has a trailing four-quarter earnings surprise of 12.1%, on average.