Vital Farms Inc at Oppenheimer Consumer Growth and E-Commerce Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : The format of today's session will be a fireside chat. So let's get started. So I wanted to kick off today's discussion with a few macro industry questions and themes we are really asking a lot of our companies in attendance at this year's conference. So first, looking back over the past year, how do you say the pandemic has impacted your Company, both externally and internally?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And another question I've really asked really a number of players out there, so as the US has continued to reopen and as you lapped last year's pandemic-driven grocery boom, what have you seen in the egg and butter markets in recent months now that we have begun to lap the full comparisons? And has anything surprised you in terms of where you are seeing, whether from a channel, consumer behavior perspective, et cetera?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And then clearly, everyone out there is seeing cost pressures. Can you talk to us a little bit about the nature of cost pressures that you are seeing in your business right now, and what are your plans to offset these pressures going forward?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. And then I guess on the pricing front, your team, I think -- I believe has chosen to maintain prices as many competitors out there are trying to -- are focused on trying to raise them, just given inflation in many categories. Would you consider adjusting prices at any point?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And then one more industry question. Are you seeing anything notable out there right now on the competitor promotional front?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And then just staying on that topic, this shift to online, how do you think the continued shift to online grocery impacts your brand? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. So now shifting to some more Company-specific questions, for those of you that may not be as familiar with the Vital story, can you provide an overview on a stakeholder model and the decision of becoming a B Corp?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. That's a really helpful overview. So shifting to growth opportunities, you have quite a few avenues for top-line growth, including increasing the breadth of distribution, adding more SKUs at existing customers, and also innovation. How do you think about balancing your growth opportunities and what are you prioritizing?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, that is a good segue into just a few more questions on innovation. So you launched Egg Whites (sic - see presentation, "Egg Bites"), your first multi-ingredient breakfast product. And now this summer, you are launching the Breakfast Bars. Can you talk about the performance of your new innovation so far, and then maybe you can walk us through how you develop your new innovations?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And as we look for -- oh, sorry, go ahead.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. That's helpful color. And then can you discuss your unique marketing approach and how it has driven the brand's advancement and how you think about marketing investment spend in 2021?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : That's great. And then maybe shifting gears to another topic, can you talk about your network of farmers and how you got farmers to your network to support growth? What are the biggest challenges with this process?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And how is the ECS expansion coming along? Are you comfortable with your capacity levels heading into 2021? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : And can you talk about how your new learning farm is set up and what benefits you believe it will provide over time?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Great. So then now I'd like to drop -- over with a few financial questions. So first, how does a near-term -- so starting with margins first. How does a near-term outlook for commodities and distribution expenses impact your guidance for FY21?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And how should we think about the long-term development of your business model? What are the levers that will drive your long-term EBITDA margins to low-double digits? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. Now on capital allocation, you are well-capitalized post the IPO last summer. How do you think about the prioritization of capital over the next few years?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay, great. And then my last question before we wrap up today's discussion. We have seen some recent insider sales at Vital Farms. Can you explain the rationale behind these and provide a little more color for investors?

Question: Rupesh Parikh - Oppenheimer & Co. Inc. - Analyst : Okay. That makes a lot of sense. Well, thank you, Russell and Bo, for joining us today.