Q4 2025 Vital Farms Inc Earnings Call

February 26, 2026

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand it over to your host, Brian Shipman, Vice President of Investor Relations, please go ahead.

Speaker #2: Good morning and welcome to Vital Farms fourth quarter and full year 2025 earnings conference call and webcast. Joining me today are Russell Diez Canseco, Vital Farms Executive Chairperson, President, and Chief Executive Officer; and Thilo Wrede, the Company's Chief Financial Officer.

Brian Shipman: Good morning, and welcome to Vital Farms' Q4 and full year 2025 Earnings Conference Call and Webcast. Joining me today are Russell Diaz-Canseco, Vital Farms' Executive Chairperson, President, and Chief Executive Officer, and Tilo Wrede, the company's Chief Financial Officer. By now, everyone should have access to the company's Q4 and full year 2025 earnings press release issued this morning. During today's call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and do involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Speaker #2: By now, everyone should have access to the Company's fourth quarter and full year 2025 earnings press release issued this morning. During today's call, management may make forward-looking statements within the meaning of the Federal Securities Laws.

Speaker #2: These statements are based on management's current expectations and beliefs and do involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Speaker #2: Please refer to today's press release, the Company's annual report on Form 10-K for the fiscal year ended December 28th, 2025, that was filed with the SEC today.

Brian Shipman: Please refer to today's press release, the company's annual report on Form 10-K for the fiscal year ended 28 December 2025, that was filed with the SEC today, as well as the company's other SEC filings, for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please refer to today's press release and presentation, each available on the investor relations section of our website, for a reconciliation of non-GAAP measures referenced in today's call, including Adjusted EBITDA and Adjusted EBITDA Margin, to their most directly comparable GAAP measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Speaker #2: As well as the Company's other SEC filings for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Speaker #2: Please refer to today's press release and presentation, each available on the Investor Relations section of our website. For a reconciliation of non-GAAP measures referenced in today's call, including adjusted EBITDA and adjusted EBITDA margin, to their most directly comparable GAAP measures.

Speaker #2: While the Company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Speaker #2: After our prepared remarks, we'll open the line for questions. As a reminder, please limit yourself to one question plus one follow-up so that we can hear from as many participants as possible.

Brian Shipman: After our prepared remarks, we'll open the line for questions. As a reminder, please limit yourself to one question plus one follow-up, so that we can hear from as many participants as possible. Now I'll turn the call over to Russell.

Speaker #2: Now, I'll turn the call over to Russell.

Speaker #3: Thank you, Brian, and good morning, everyone. Before we walk through our record 2025 results, I want to share an important leadership update. After nearly 20 years of visionary leadership, our founder, Matt O'Hare, has decided to retire as Executive Chairperson and as a member of our Board of Directors.

Russell Diaz-Canseco: Thank you, Brian, good morning, everyone. Before we walk through our record 2025 results, I want to share an important leadership update. After nearly 20 years of visionary leadership, our founder, Matt O'Hare, has decided to retire as Executive Chairperson and as a member of our board of directors. Matt founded Vital Farms in 2007 with just 20 hens. Beyond building a brand, he pioneered an entirely new category in the grocery aisle based on the belief that we could scale the humane treatment of animals. Equally important, he was determined to operate Vital Farms as a truly different company, one galvanized by a common purpose of improving the lives of people, animals, and the planet through food, and with a focus on positive long-term outcomes for all stakeholders.

Russell Diez-Canseco: Thank you, Brian, good morning, everyone. Before we walk through our record 2025 results, I want to share an important leadership update. After nearly 20 years of visionary leadership, our founder, Matt O'Hare, has decided to retire as Executive Chairperson and as a member of our board of directors. Matt founded Vital Farms in 2007 with just 20 hens. Beyond building a brand, he pioneered an entirely new category in the grocery aisle based on the belief that we could scale the humane treatment of animals. Equally important, he was determined to operate Vital Farms as a truly different company, one galvanized by a common purpose of improving the lives of people, animals, and the planet through food, and with a focus on positive long-term outcomes for all stakeholders.

Speaker #3: Matt, founded Vital Farms in 2007 with just 20 hens, beyond building a brand, he pioneered an entirely new category in the grocery aisle based on the belief that we could scale the humane treatment of animals.

Speaker #3: Equally important, he was determined to operate Vital Farms as a truly different Company, one galvanized by a common purpose of improving the lives of people, animals, and the planet through food, and with a focus on positive long-term outcomes for all stakeholders.

Speaker #3: It is an honor for me to build on his legacy of vision and leadership over the last 20 years and continue our journey toward becoming America's most trusted food Company.

Russell Diaz-Canseco: It is an honor for me to build on his legacy of vision and leadership over the last 20 years and continue our journey toward becoming America's most trusted food company. Matt remains our strongest advocate and our single largest shareholder. I'm thankful to continue to partner with him as an advisor to me and the rest of our board. Effective 24 February, the board appointed me to serve as Executive Chairperson and CEO. This unified leadership structure is the most effective way to maintain our strong momentum, drive our 2026 strategic initiatives, and continue progressing toward the targets we set at the Investor Day in December. I'm also pleased to share that Denny Marie Post will continue to serve as our Lead Independent Director.

Russell Diez-Canseco: It is an honor for me to build on his legacy of vision and leadership over the last 20 years and continue our journey toward becoming America's most trusted food company. Matt remains our strongest advocate and our single largest shareholder. I'm thankful to continue to partner with him as an advisor to me and the rest of our board. Effective 24 February, the board appointed me to serve as Executive Chairperson and CEO. This unified leadership structure is the most effective way to maintain our strong momentum, drive our 2026 strategic initiatives, and continue progressing toward the targets we set at the Investor Day in December. I'm also pleased to share that Denny Marie Post will continue to serve as our Lead Independent Director.

Speaker #3: Matt remains our strongest advocate and our single largest shareholder. And I'm thankful to continue to partner with him as an advisor to me and the rest of our Board.

Speaker #3: Effective February 24th, the Board appointed me to serve as Executive Chairperson and CEO. This unified leadership structure is the most effective way to maintain our strong momentum, drive our 2026 strategic initiatives, and continue progressing toward the targets we set at the Investor Day in December.

Speaker #3: I'm also pleased to share that Denny Marie Post will continue to serve as our lead independent director. Denny's extensive experience as a public Company CEO and her deep commitment to our stakeholder model provide the oversight and strategic perspective that our Vital to our governance structure.

Russell Diaz-Canseco: Denny's extensive experience as a public company CEO and her deep commitment to our stakeholder model provide the oversight and strategic perspective that are vital to our governance structure. Our board remains committed to robust, independent oversight and will continue to maintain high standards of corporate governance as we enter our next phase of growth. I'm grateful to be able to partner with Denny as we look to the future. I want to start our update where I always do, which is by acknowledging our crew. In 2025, we meaningfully fortified our operational capabilities. It was the resilience and commitment of our team that made that possible. As I reflect on 2025, it's clear that Vital Farms has built greater organizational strength while also delivering strong financial results. We didn't just grow, we scaled while staying true to our mission.

Russell Diez-Canseco: Denny's extensive experience as a public company CEO and her deep commitment to our stakeholder model provide the oversight and strategic perspective that are vital to our governance structure. Our board remains committed to robust, independent oversight and will continue to maintain high standards of corporate governance as we enter our next phase of growth. I'm grateful to be able to partner with Denny as we look to the future. I want to start our update where I always do, which is by acknowledging our crew. In 2025, we meaningfully fortified our operational capabilities. It was the resilience and commitment of our team that made that possible. As I reflect on 2025, it's clear that Vital Farms has built greater organizational strength while also delivering strong financial results. We didn't just grow, we scaled while staying true to our mission.

Speaker #3: Our Board remains committed to robust, independent oversight and will continue to maintain high standards of corporate governance as we enter our next phase of growth.

Speaker #3: I'm grateful to be able to partner with Denny as we look to the future. I want to start our update where I always do, which is by acknowledging our crew.

Speaker #3: In 2025, we meaningfully fortified our operational capabilities and it our team that made that possible. As I reflect on 2025, it's clear that Vital Farms has built greater organizational strength while also delivering strong financial results.

Speaker #3: We didn't just grow; we scaled while staying true to our mission. We're proud to have successfully completed our major 2025 initiatives. We added a third production line at ECS, implemented a robust new ERP system, and transitioned to a new dedicated cold storage facility less than one mile from ECS.

Russell Diaz-Canseco: We're proud to have successfully completed our major 2025 initiatives. We added a third production line at ECS, implemented a robust new ERP system, and transitioned to a new dedicated cold storage facility less than one mile from ECS. We've also rebuilt our inventory and remediated the previous material weakness in our internal controls, which Tila will discuss shortly. For the full year 2025, net revenue grew more than 25% to $759.4 million, which was the midpoint of the revised revenue outlook we shared at our Investor Day in December. Adjusted EBITDA exceeded $100 million for the first time in company history, growing 31.6% to $114 million.

Russell Diez-Canseco: We're proud to have successfully completed our major 2025 initiatives. We added a third production line at ECS, implemented a robust new ERP system, and transitioned to a new dedicated cold storage facility less than one mile from ECS. We've also rebuilt our inventory and remediated the previous material weakness in our internal controls, which Tila will discuss shortly. For the full year 2025, net revenue grew more than 25% to $759.4 million, which was the midpoint of the revised revenue outlook we shared at our Investor Day in December. Adjusted EBITDA exceeded $100 million for the first time in company history, growing 31.6% to $114 million.

Speaker #3: We've also rebuilt our inventory and remediated the previous material weakness in our internal controls which Thilo will discuss shortly. For the full year 2025, net revenue grew more than 25% to $759.4 million.

Speaker #3: Which was the midpoint of the revised revenue outlook we shared at our Investor Day in December. Adjusted EBITDA exceeded $100 million for the first time in Company history growing 31.6% to $114 million.

Speaker #3: Now let me walk you through several of the milestones that I'm incredibly pleased our team accomplished last year laying the foundation for our future growth.

Russell Diaz-Canseco: Now, let me walk you through several of the milestones that I'm incredibly pleased our team accomplished last year, laying the foundation for our future growth. First, on the operations side, we successfully rebuilt our egg inventory throughout the year and brought our third ECS production line online in October. We can now dedicate the first two lines to longer production runs of our top four SKUs, while using the third line for specialty SKUs with lower volumes. This change increases our efficiency, and we're excited to see productivity improve over time with all three lines up and running. We're also building both lines at our Seymour facility concurrently to stay ahead of demand. We believe by building concurrently, we will accomplish better construction economies as we build toward our $2 billion revenue target.

Russell Diez-Canseco: Now, let me walk you through several of the milestones that I'm incredibly pleased our team accomplished last year, laying the foundation for our future growth. First, on the operations side, we successfully rebuilt our egg inventory throughout the year and brought our third ECS production line online in October. We can now dedicate the first two lines to longer production runs of our top four SKUs, while using the third line for specialty SKUs with lower volumes. This change increases our efficiency, and we're excited to see productivity improve over time with all three lines up and running. We're also building both lines at our Seymour facility concurrently to stay ahead of demand. We believe by building concurrently, we will accomplish better construction economies as we build toward our $2 billion revenue target.

Speaker #3: First, on the operations side, we successfully rebuilt our egg inventory throughout the year and brought our third ECS production line online in October. We can now dedicate the first two lines to longer production runs of our top four SKUs, while using the third line for specialty SKUs with lower volumes.

Speaker #3: This change increases our efficiency and we're excited to see productivity improve over time with all three lines up and running. We're also building both lines at our Seymour facility concurrently to stay ahead of demand.

Speaker #3: We believe by building concurrently, we will accomplish better construction economies as we build toward our $2 billion revenue target. This reflects our confidence in future demand and our commitment to staying ahead of growth opportunities rather than chasing them.

Russell Diaz-Canseco: This reflects our confidence in future demand and our commitment to staying ahead of growth opportunities rather than chasing them. Second, on the commercial side, this was a record revenue year. As I mentioned, delivering $759.4 million in revenue and $114 million in Adjusted EBITDA is a significant accomplishment for us. Furthermore, our growth consistently outpaced the broader market. In 2025, we gained 25 basis points of volume share within all outlets of MULO+, according to Circana, making us the top share gainer in premium shell egg brands. According to the same data source, year to date through February 15th, we gained 35 basis points of volume share, again positioning us as one of the top share gainers in premium shell egg brands.

Russell Diez-Canseco: This reflects our confidence in future demand and our commitment to staying ahead of growth opportunities rather than chasing them. Second, on the commercial side, this was a record revenue year. As I mentioned, delivering $759.4 million in revenue and $114 million in Adjusted EBITDA is a significant accomplishment for us. Furthermore, our growth consistently outpaced the broader market. In 2025, we gained 25 basis points of volume share within all outlets of MULO+, according to Circana, making us the top share gainer in premium shell egg brands. According to the same data source, year to date through February 15th, we gained 35 basis points of volume share, again positioning us as one of the top share gainers in premium shell egg brands.

Speaker #3: Second, on the commercial side, this was a record revenue year. As I mentioned, delivering $759.4 million in revenue and $114 million in adjusted EBITDA is a significant accomplishment for us.

Speaker #3: Furthermore, our growth consistently outpaced the broader market. In 2025, we gained 25 basis points of volume share with an all-outlets of Mulo Plus, according to Circona, making us the top share gainer in premium shell egg brands.

Speaker #3: According to the same data source, year to date through February 15th, we gained 35 basis points of volume share, again positioning us as one of the top share gainers in premium shell egg brands.

Speaker #3: These share gains provide further evidence that we have created a strong and growing business built on improving the lives of people, animals, and the planet while at the same time delivering world-class financial results.

Russell Diaz-Canseco: These share gains provide further evidence that we have created a strong and growing business built on improving the lives of people, animals, and the planet, while at the same time delivering world-class financial results. Third, our farm network expanded to more than 600 small farms committed to our pasture-raised standards, where hens roam freely on open pastures with year-round outdoor access. Adding approximately 175 farms in a single year is a testament to the trust we've built in the agricultural community around our unwavering commitment to humane animal care. Farmers want to be a part of what we're building because we offer a path to a sustainable livelihood while being stewards of the land and champions of animal welfare. Fourth, we successfully completed our ERP implementation with zero unplanned shipment interruptions, returning to and then exceeding pre-implementation production levels within a month.

Russell Diez-Canseco: These share gains provide further evidence that we have created a strong and growing business built on improving the lives of people, animals, and the planet, while at the same time delivering world-class financial results. Third, our farm network expanded to more than 600 small farms committed to our pasture-raised standards, where hens roam freely on open pastures with year-round outdoor access. Adding approximately 175 farms in a single year is a testament to the trust we've built in the agricultural community around our unwavering commitment to humane animal care. Farmers want to be a part of what we're building because we offer a path to a sustainable livelihood while being stewards of the land and champions of animal welfare. Fourth, we successfully completed our ERP implementation with zero unplanned shipment interruptions, returning to and then exceeding pre-implementation production levels within a month.

Speaker #3: Third, our farm network expanded to more than 600 small farms committed to our pasture-raised standards. We're hens roam freely on open pastures with year-round outdoor access.

Speaker #3: Adding approximately 175 farms in a single year is a testament to the trust we've built in the agricultural community around our unwavering commitment to humane animal care.

Speaker #3: Farmers want to be a part of what we're building because we offer a path to a sustainable livelihood while being stewards of the land and champions of animal welfare.

Speaker #3: Fourth, we successfully completed our ERP implementation with zero unplanned shipment interruptions, returning to and then exceeding pre-implementation production levels within a month. And finally, our recent marketing campaigns have driven brand awareness to 34%.

Russell Diaz-Canseco: Finally, our recent marketing campaigns have driven brand awareness to 34%, an increase of 8 percentage points in 2025, widening the gap between us and our closest competitors. We are now working closely with our retail partners to convert that brand interest into actual purchases through an expanded shelf footprint and optimized promotional cadence. As we move into 2026, we are seeing a dynamic consumer environment, and our focus is on driving high-quality household penetration, resulting in profitable velocity, so that our brand maintains its premium position in the market as we march toward our 2030 targets. While we've successfully transitioned from a state of supply allocation to unconstrained capacity, we're managing this pivot with discipline. We're not interested in buying market share through aggressive discounting just because the commodity market is in a glut.

Russell Diez-Canseco: Finally, our recent marketing campaigns have driven brand awareness to 34%, an increase of 8 percentage points in 2025, widening the gap between us and our closest competitors. We are now working closely with our retail partners to convert that brand interest into actual purchases through an expanded shelf footprint and optimized promotional cadence. As we move into 2026, we are seeing a dynamic consumer environment, and our focus is on driving high-quality household penetration, resulting in profitable velocity, so that our brand maintains its premium position in the market as we march toward our 2030 targets. While we've successfully transitioned from a state of supply allocation to unconstrained capacity, we're managing this pivot with discipline. We're not interested in buying market share through aggressive discounting just because the commodity market is in a glut.

Speaker #3: An increase of 8 percentage points in 2025. Widening the gap between us and our closest competitors. We are now working closely with our retail partners to convert that brand interest into actual footprint and optimized promotional cadence.

Speaker #3: As we move into 2026, we are seeing a dynamic consumer environment, and our focus is on driving high-quality household penetration, resulting in profitable velocity so that our brand maintains its premium position in the market as we march toward our 2030 targets.

Speaker #3: While we've successfully transitioned from a state of supply allocation to unconstrained capacity, we're managing this pivot with discipline. We're not interested in buying market share through aggressive discounting just because the commodity market is in a glut.

Speaker #3: Our current volume pace reflects a deliberate focus on high-quality shelf placements ensuring that as we fill our expanded capacity, we're doing so with stakeholders that support our long-term goals and uphold our premium brand promise.

Russell Diaz-Canseco: Our current volume pace reflects a deliberate focus on high-quality shelf placements, ensuring that as we fill our expanded capacity, we're doing so with stakeholders that support our long-term goals and uphold our premium brand promise. At our Investor Day in December, we shared our updated long-term target of $2 billion in net revenue by 2030, with Adjusted EBITDA Margin between 15% and 17%. These goals are grounded in the operational capabilities we're building and the market opportunity we see ahead of us. Our brand still represents only a fraction of the total shell egg market, giving us substantial runway for growth. We serve nearly 16 million households through approximately 24,000 retail locations. There's so much more opportunity ahead. The capacity investments we're making, the operational excellence we're demonstrating, and the brand strength we're building create a powerful combination for sustainable growth.

Russell Diez-Canseco: Our current volume pace reflects a deliberate focus on high-quality shelf placements, ensuring that as we fill our expanded capacity, we're doing so with stakeholders that support our long-term goals and uphold our premium brand promise. At our Investor Day in December, we shared our updated long-term target of $2 billion in net revenue by 2030, with Adjusted EBITDA Margin between 15% and 17%. These goals are grounded in the operational capabilities we're building and the market opportunity we see ahead of us. Our brand still represents only a fraction of the total shell egg market, giving us substantial runway for growth. We serve nearly 16 million households through approximately 24,000 retail locations. There's so much more opportunity ahead. The capacity investments we're making, the operational excellence we're demonstrating, and the brand strength we're building create a powerful combination for sustainable growth.

Speaker #3: At our Investor Day in December, we shared our updated long-term target of $2 billion in net revenue by 2030 with adjusted EBITDA margin between 15 and 17%.

Speaker #3: These goals are grounded in the operational capabilities we're building and the market opportunity we see ahead of us. Our brand still represents only a fraction of the total shell egg market, giving us substantial runway for growth.

Speaker #3: We serve nearly 16 million households through approximately 24,000 retail locations, but there's so much more opportunity ahead. The capacity investments we're making, the operational excellence we're demonstrating, and the brand strength we're building create a powerful combination for sustainable growth.

Speaker #3: The progress we made in 2025 represents meaningful steps toward that goal and I'm genuinely excited about what lies ahead. With that, I'll turn it over to Thilo to walk through the financials.

Russell Diaz-Canseco: The progress we made in 2025 represents meaningful steps toward that goal, and I'm genuinely excited about what lies ahead.... With that, I'll turn it over to Thilo to walk through the financials.

Russell Diez-Canseco: The progress we made in 2025 represents meaningful steps toward that goal, and I'm genuinely excited about what lies ahead.... With that, I'll turn it over to Thilo to walk through the financials.

Speaker #2: Thanks, Russell. And hello, everyone. I would also like to share my personal gratitude to Matt, his vision was the catalyst for everything we've built and I've enjoyed his partnership and constant push to improve in my almost three years at Vital Farms.

Thilo Wrede: Thanks, Russell, and hello, everyone. I would also like to share my personal gratitude to Matt. His vision was the catalyst for everything we've built, and I've enjoyed his partnership and constant push to improve in my almost 3 years at Vital Farms. Russell, congratulations to you on your new expanded leadership role. I'll now turn to a review of our Q4 and full year 2025 performance, and then I will walk through our outlook and cadence for 2026. Net revenue for the full year 2025 was $759.4 million, up 25.3% year-over-year, and $213.6 million in the Q4. This growth was driven by a balanced contribution from volume and price mix.

Speaker #2: And Russell, congratulations to you on your new expanded leadership role. I'll now turn to a review of our fourth quarter and full year 2025 performance and then I will walk through our outlook and cadence for 2026.

Speaker #2: Net revenue for the full year 2025 was $759.4 million, up 25.3% year over year, and $213.6 million in the fourth quarter. This growth was driven by a balanced contribution from volume and price mix.

Speaker #2: Benefits from our May price increase and ongoing shift to the organic portfolio were partially offset by increased promotional activity to drive consumer trial. Gross profit rose to $285.7 million or 37.6% of net revenue.

Thilo Wrede: Benefits from our May price increase and ongoing shift to the organic portfolio were partially offset by increased promotional activity to drive consumer trial. Gross profit rose to $285.7 million, or 37.6% of net revenue. The modest margin contraction from 37.9% last year was primarily due to higher labor and overhead costs as we scaled our operations. SG&A expenses were $159.4 million, or 21% of net revenue. We demonstrated significant operating leverage here, reducing SG&A as a percentage of sales by over 110 basis points, while still increasing marketing investment by $10.4 million. This discipline, alongside improved shipping efficiencies, which helped offset higher line haul rates, helped to deliver our record profit.

Speaker #2: The modest margin contraction from 37.9% last year was primarily due to higher labor and overhead costs as we scaled our operations. SG&A expenses were $159.4 million, or 21% of net revenue.

Speaker #2: We demonstrated significant operating leverage here reducing SG&A as a percentage of sales by over 110 basis points, while still increasing marketing investment by 10.4 million.

Speaker #2: This discipline alongside improved shipping efficiencies which helped offset higher line haul rates helped to deliver our record profit. Adjusted EBITDA surpassed $100 million for the first time in our history reaching $114 million for the full year and $29.2 million for the fourth quarter.

Thilo Wrede: Adjusted EBITDA surpassed $100 million for the first time in our history, reaching $114 million for the full year and $29.2 million for Q4. Net income was $66.3 million, or $1.44 per diluted share. Finally, CapEx for the year was $82 million, which aligns with the outlook we shared at our December Investor Day. We ended 2025 with a strong balance sheet. Our cash equivalent, and marketable securities on 28 December 2025, stood at $113.4 million, a decrease of $46.9 million from the end of 2024, reflecting the investments we are making to expand our production capacity. We have no debt outstanding.

Speaker #2: Net income was $66.3 million or $1.44 per diluted share. Finally, CapEx for the year was $82 million which aligns with the outlook we shared at our December Investor Day.

Speaker #2: We ended 2025 with a strong balance sheet, our cash equivalent and marketable securities on December 28th, 2025 so that $113.4 million a decrease of 46.9 million from the end of 2024 reflecting the investments we are making to expand our production capacity.

Speaker #2: We had no debt outstanding. Finally, before discussing our outlook, I want to highlight that we have successfully remediated our previously disclosed material weakness in our internal controls.

Thilo Wrede: Finally, before discussing our outlook, I want to highlight that we have successfully remediated our previously disclosed material weakness in our internal controls. We're glad to have this important work behind us as we move into the next fiscal year. Just to remind everybody, the material weakness had not resulted in any restatement of our financials. Now, looking ahead to fiscal year 2026, we're introducing a new net revenue guidance range of $900 to $920 million, representing more than 20% growth, mainly volume driven, at the midpoint of the range. The revenue growth has us on track towards our 2030 targets. While this is a more measured start than our December outlook, we are building a rock-solid foundation in 2026 with stable retail inventory, rather than chasing short-term targets that could compromise the quality of our 21% long-term CAGR.

Speaker #2: We're glad to have this important work behind us as we move into the next fiscal year. And just a reminder, everybody, the material weakness had not resulted in any restatement of our financials.

Speaker #2: Now, looking ahead to fiscal year 2026, we're introducing a new net revenue guidance range of $900 to $920 million representing more than 20% growth, many volume driven at the midpoint of the range.

Speaker #2: The revenue growth has us on track towards our 2030 target. While this is a more measured start than our December outlook, we're building a rock-solid foundation in 2026 with stable retail inventory, rather than chasing short-term targets that could compromise the quality of our 21% long-term care.

Speaker #2: It also is acknowledgment of the current macro environment and recent volatile scanner results we've observed so far in January and February. Even though we have already gained healthy volume share year to date, as Russell had mentioned earlier, volume growth so far is lagging our initial expectations.

Thilo Wrede: It also is acknowledgment of the current macro environment and recent volatile scanner results we've observed so far in January and February. Even though we have already gained healthy volume share year-to-date, as Russell had mentioned earlier, volume growth so far is lagging our initial expectations. After the previously discussed several weeks of slow shipments following our ERP implementation last year during the lead up to the peak holiday period, we are still recapturing shelf space. At the same time, we're having fruitful conversations with our retail partners about expanding our shelf space over the course of the year, and retailers are excited about our improved supply this year and the role that we continue to play in the egg set. In addition, the two severe winter storms over the last four weeks make retailer orders additionally challenging to calibrate against what we would consider normal demand.

Speaker #2: After the previously discussed several weeks of slow shipments following our ERP implementation last year during the lead-up to the peak holiday period, we are still recapturing shelf space.

Speaker #2: At the same time, we're having fruitful conversations with our retail partners about expanding our shelf space over the course of the year and retailers are excited about our improved supply this year and the role that we continue to play in the exec.

Speaker #2: In addition, the two severe winter storms over the last four weeks make retailer orders additionally challenging to calibrate against what we would consider normal demand.

Speaker #2: We believe all these fluctuations are more reflective of short-term market disruptions and we see continued healthy consumer demand which is supported by our consumer survey data.

Thilo Wrede: We believe all these fluctuations are more reflective of short-term market disruptions, and we see continued healthy consumer demand, which is supported by our consumer survey data. We continue to prioritize profitable velocity over simply chasing raw volume growth. Consequently, we are setting Adjusted EBITDA guidance to be within a range of $105 to $115 million this year. This reflects a margin of 12.0% at the midpoint, which is within the range of our previous 2027 long-term targets and puts us strongly on the path to the new 2030 long-term targets we committed to at the Investor Day. With the improved supply dynamics also talked about, I want to spend a moment on how to think about cadence for the year.

Speaker #2: We continue to prioritize profitable velocity over simply chasing raw volume growth. Consequently, we are setting adjusted EBITDA guidance to be within a range of $105 to $115 million this year.

Speaker #2: This reflects a margin of 12.0% at the midpoint which is within the range of our previous 2027 long-term targets and puts us strongly on the path to the new 2030 long-term targets we committed to at the Investor Day.

Speaker #2: With the improved supply dynamics Russell talked about, I want to spend a moment on how to think about cadence for the year. In the first half of 2026, we anticipate some short-term noise in order patterns from recent winter weather events and as our retail partners normalize the inventory levels following our move out of supply allocation.

Thilo Wrede: In the first half of 2026, we anticipate some short-term noise in order patterns from recent winter weather events and as our retail partners normalize the inventory levels following our move out of supply allocation. We view this as healthy stabilization that allows us to enter the back half of the year with a clean runway and high-quality shelf presence. With that, Q1 of 2026 will likely reflect a more measured growth rate than previously assumed as the retail inventory channel normalizes. From there, we expect growth to reflect the lapping of last year's quarterly performance. As we operate in a more stable supply environment, we anticipate normal promotional spending this year with a heavier concentration in the middle quarters. We are intentionally utilizing the tailwinds from our May 2025 price increase to fund a return to a trial and conversion program.

Speaker #2: We view this as healthy stabilization that allows us to enter the back half of the year with a clean runway and high-quality shelf presence.

Speaker #2: With that, the first quarter of 2026 will likely reflect a more measured growth rate than previously assumed as the retail inventory channel normalizes. From there, we expect growth to reflect the lapping of last year's quarterly performance.

Speaker #2: As we operate in a more stable supply environment, we anticipate normal promotional spending this year with a heavier concentration in the middle quarters. We're intentionally utilizing the tailwinds from our May 2025 price increase to fund the return to a trial and conversion program.

Speaker #2: This is not defensive price matching. It is an offensive investment in household acquisition and reinvestment of price into penetration. Consequently, our margins reflect the strategic promotional activity our continued investment in ECF staffing and the impact of the volatile Q1 ordering environment.

Thilo Wrede: This is not defensive price matching. It is an offensive investment in household acquisition and reinvestment of price into penetration. Consequently, our margins reflect the strategic promotional activity, our continued investment in ECS staffing, and the impact of the volatile Q1 ordering environment. Finally, we expect CapEx of $140 to $150 million in 2026. Our CapEx guidance reflects continued investment in long-term capacity and infrastructure, including progress at Vital Crossroads. At the same time, we've remained focused on disciplined capital deployment and free cash flow generation, consistent with our long-term, owner-oriented mindset. While we expect to fund our 2026 projects primarily through existing cash and operating cash flow, we're evaluating the most efficient capital structures for our expansion, including the potential use of our revolver or other ways to optimize our balance sheet.

Speaker #2: Finally, we expect CapEx of $140 to $150 million in 2026. Our CapEx guidance reflects continued investment in long-term capacity and infrastructure, including progress at Vital Crossroads.

Speaker #2: At the same time, we remain focused on disciplined capital deployment and free cash flow generation consistent with our long-term owner-oriented mindset. While we expect to fund our 2026 projects primarily through existing cash and operating cash flow, we're evaluating the most efficient capital structures for our expansion.

Speaker #2: Including the potential use of our revolver or other ways to optimize our balance sheet. To be clear on our capital allocation priorities, our primary commitment is to completion of CMOR.

Thilo Wrede: To be clear on our capital allocation priorities, our primary commitment is the completion of Seymour. That leaves us with untapped debt capacity, and our board of directors authorized a $100 million 2-year share repurchase program. We're in the unique position of being able to fund our largest ever growth cycle while simultaneously having the balance sheet flexibility to defend our intrinsic value if market dislocations occur. Looking forward, we anticipate a meaningful pivot to strong, sustainable, free cash flow generation in 2027 and beyond, once the heavy spending on VXR is completed. As mentioned before, we expect each CapEx dollar dedicated to our new facility to generate more than $5 of annual revenue capacity. As these assets come online, we expect to see significant cash flow accretion as we leverage the infrastructure we are building today. Our long-term guidance remains unchanged.

Speaker #2: But that leaves us with untapped debt capacity and our board of directors authorized a $100 million two-year share repurchase program. We're in the unique position of being able to fund our largest ever growth cycle while simultaneously having the balance sheet flexibility to defend our intrinsic value if market dislocations occur.

Speaker #2: Looking forward, we anticipate a meaningful pivot to strong, sustainable free cash flow generation in 2027 and beyond once the heavy spending on VXR is completed.

Speaker #2: As mentioned before, we expect each CapEx dollar dedicated to our new facility to generate more than $5 of annual revenue capacity. As these assets come online, we expect to see significant cash flow accretion as we leverage the infrastructure we are building today.

Speaker #2: Our long-term guidance remains unchanged. We're targeting $2 billion of net revenue by 2030 with a gross margin of 35% or better and an EBITDA margin of 15 to 17%.

Thilo Wrede: We're targeting $2 billion of net revenue by 2030, with a gross margin of 35% or better and an EBITDA margin of 15% to 17%. This is an exciting time at Vital Farms. We have highly loyal consumers. We continue to expand and deepen our relationships within our network of more than 600 small farms. We remain focused on driving greater retail penetration and raising brand awareness to deliver our eggs and butter to more and more households with each passing year. Once again, we thank you for the time and interest in Vital Farms today and for the confidence that you have placed in us with your investment. Now let me turn it back over to Russell.

Speaker #2: This is an exciting time at Vital Farms. We have highly loyal consumers. We continue to expand and deepen our relationships with our within our network of more than 600 small farms and we remain focused on driving greater retail penetration and raising brand awareness to deliver our eggs and butter to more and more households with each passing year.

Speaker #2: Once again, we thank you for the time and interest in Vital Farms today and for the confidence that you have placed in us with your investment.

Speaker #2: Now let me turn it back over to Russell.

Speaker #1: Thank you, Thilo. Before we open the call for questions, I want to circle back to where I started. With gratitude. To Matt for his vision and his leadership.

Russell Diaz-Canseco: Thank you, Thilo. Before we open the call for questions, I want to circle back to where I started, with gratitude. To Matt for his vision and his leadership, to our crew, who executed through our ERP transition and brought our third line at ECS online seamlessly, to our farmers, who expanded their capacity alongside us while maintaining the highest standards of animal welfare, and to our retail partners, who continue to believe in our mission. Thank you. This foundation of trust and collaboration is what gives us such confidence in the growth potential in the years ahead. The capacity investments we're making are about ensuring that when a consumer reaches for Vital Farms, we're there every time at full strength. The organization's values are as strong as ever, and our crew continues to raise the standards for the Vital Farms brand and to drive the organization forward.

Russell Diez-Canseco: Thank you, Thilo. Before we open the call for questions, I want to circle back to where I started, with gratitude. To Matt for his vision and his leadership, to our crew, who executed through our ERP transition and brought our third line at ECS online seamlessly, to our farmers, who expanded their capacity alongside us while maintaining the highest standards of animal welfare, and to our retail partners, who continue to believe in our mission. Thank you. This foundation of trust and collaboration is what gives us such confidence in the growth potential in the years ahead. The capacity investments we're making are about ensuring that when a consumer reaches for Vital Farms, we're there every time at full strength. The organization's values are as strong as ever, and our crew continues to raise the standards for the Vital Farms brand and to drive the organization forward.

Speaker #1: To our crew who executed through our ERP transition and brought our third line at ECS online seamlessly. To our farmers who expanded their capacity alongside us while maintaining the highest standards of animal welfare.

Speaker #1: And to our retail partners who continue to believe in our mission. Thank you. This foundation of trust and collaboration is what gives us such confidence in the growth potential in the years ahead.

Speaker #1: The capacity investments we're making are about ensuring that when a consumer reaches for Vital Farms, we're there every time at full strength. The organization's values are as strong as ever and our crew continues to raise the standards for the Vital Farms brand and to drive the organization forward.

Speaker #1: Looking ahead, we believe we remain structurally advantaged with significant long-term opportunity. Our brand still represents only a fraction of the total egg market. And we enter 2026 with unconstrained supply giving us substantial runway for growth.

Russell Diaz-Canseco: Looking ahead, we believe we remain structurally advantaged with significant long-term opportunity. Our brand still represents only a fraction of the total egg market, and we enter 2026 with unconstrained supply, giving us substantial runway for growth. Consumer awareness of animal welfare and food sourcing continues to increase, and Vital Farms has established itself as the trusted leader in this space. Once again, we thank you for your time and your interest in Vital Farms. With that, we're happy to take your questions.

Russell Diez-Canseco: Looking ahead, we believe we remain structurally advantaged with significant long-term opportunity. Our brand still represents only a fraction of the total egg market, and we enter 2026 with unconstrained supply, giving us substantial runway for growth. Consumer awareness of animal welfare and food sourcing continues to increase, and Vital Farms has established itself as the trusted leader in this space. Once again, we thank you for your time and your interest in Vital Farms. With that, we're happy to take your questions.

Speaker #1: Consumer awareness of animal welfare and food sourcing continues to increase and Vital Farms has established itself as the trusted leader in this space. Once again, we thank you for your time and your interest in Vital Farms and with that, we're happy to take your questions.

Speaker #2: At this time, I'd like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Please limit your comments to one question and one follow-up.

Brian Shipman: At this time, I'd like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Please limit your comments to one question and one follow-up. Your first question comes from the line of Robert Dickerson with Jefferies. Your line is open.

Operator: At this time, I'd like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Please limit your comments to one question and one follow-up. Your first question comes from the line of Robert Dickerson with Jefferies. Your line is open.

Speaker #2: Your first question comes from the line of Scott Marks with Jefferies. Your line is open.

Speaker #3: Hey, good morning all. Thanks so much for taking your questions.

[Analyst] (Jefferies): Hey, good morning, all. Thanks so much for taking our questions.

Scott Marks: Hey, good morning, all. Thanks so much for taking our questions.

Speaker #4: Good morning.

Russell Diaz-Canseco: Morning.

Russell Diez-Canseco: Morning.

Speaker #3: You know, obviously, just wanted to ask a little bit about expectations for the year relative to what was laid out at Investor Day. Obviously, there's been some volatility with winter storms, and some of the order patterns you mentioned.

[Analyst] (Jefferies): You know, obviously, just wanted to ask a little bit about expectations for the year relative to what was laid out at Investor Day. Obviously, been some volatility with winter storms, some of the order patterns you mentioned. Maybe what was it that gave you the, I guess, confidence to change the outlook now, as opposed to maybe waiting a little bit, you know, until later in the year to see if some of this volatility normalizes?

Scott Marks: You know, obviously, just wanted to ask a little bit about expectations for the year relative to what was laid out at Investor Day. Obviously, been some volatility with winter storms, some of the order patterns you mentioned. Maybe what was it that gave you the, I guess, confidence to change the outlook now, as opposed to maybe waiting a little bit, you know, until later in the year to see if some of this volatility normalizes?

Speaker #3: But maybe what was it that gave you the, I guess, confidence to change the outlook now as opposed to maybe waiting a little bit until later in the year to see if some of the volatility normalizes?

Speaker #4: Thanks, Scott. Hey, it's Russell. So I'll kick us off and then we'll ask Thilo to chime in as well. We've run this place with a lot of intentionality for a lot of years and this isn't the first time that we've seen some kind of volatility in the broader category and we've seen some noise from things like winter storms.

Russell Diaz-Canseco: Thanks, Scott. Hey, it's Russell. I'll kick us off, and then we'll ask Thilo to chime in as well. You know, we've run this place with a lot of intentionality for a lot of years, and this isn't the first time that we've seen some kind of volatility in the broader category, and we've seen some noise from things like winter storms. We always want to make sure that we're setting ourselves up for success, and that we're setting ourselves up to meet and exceed the expectations we line out for ourselves and that you all have for us. I think this guide gives us the right amount of room and flexibility to, again, build on all the strengths we're coming into the year with, while still acknowledging that there's a broader macro environment in which we're operating.

Russell Diez-Canseco: Thanks, Scott. Hey, it's Russell. I'll kick us off, and then we'll ask Thilo to chime in as well. You know, we've run this place with a lot of intentionality for a lot of years, and this isn't the first time that we've seen some kind of volatility in the broader category, and we've seen some noise from things like winter storms. We always want to make sure that we're setting ourselves up for success, and that we're setting ourselves up to meet and exceed the expectations we line out for ourselves and that you all have for us. I think this guide gives us the right amount of room and flexibility to, again, build on all the strengths we're coming into the year with, while still acknowledging that there's a broader macro environment in which we're operating.

Speaker #4: We always want to make sure that we're setting ourselves up for success and that we're setting ourselves up to meet and exceed the expectations we line out for ourselves and that you all have for us.

Speaker #4: And I think this guide gives us the right amount of room and flexibility to, again, build on all the strengths we're coming into the year with while still acknowledging that there's a broader macro environment in which we're operating and there's a lot of short-term noise in sort of what all the various players are doing to make sure that they can sell all the eggs they're producing.

Russell Diaz-Canseco: There's a lot of short-term noise in sort of what all the various players are doing to make sure that they can sell all the eggs they're producing.

Russell Diez-Canseco: There's a lot of short-term noise in sort of what all the various players are doing to make sure that they can sell all the eggs they're producing.

Speaker #3: Yeah, Scott, I would just add to that. We called it out in the prepared remarks. It is a bit of a volatile environment right now.

Thilo Wrede: Yeah, Scott.

Thilo Wrede: add to that the, you know, we called it out in the prepared remarks. It is a bit of a volatile environment right now. We are clearly gaining share in the category, so we are outperforming the category. It is a bit of a noisy environment right now, and I think we've built a track record of beating our initial expectations that we set at the beginning of the year, every year since IPO. We figured rather than going into the year and, you know, clawing our way to the initial outlook that we gave, we just set expectations very clearly at the beginning and then we keep our pattern of beating expectations that we set at the beginning of the year.

Speaker #3: We are clearly gaining share in the category. So we're outperforming the category. But it is a bit of a noisy environment right now. And I think we've built a track record of beating our initial expectations that we said at the beginning of the year every year since IPO.

Speaker #3: We figured rather than going into the year and clawing our way to the initial outlook that we gave, we just said expectations very clearly at the beginning and then we keep our pattern of beating expectations that we said at the beginning of the year.

[Analyst] (Jefferies): Appreciate the color on that. next one for me, just relating to the ERP. You know, I think as we think back to, you know, maybe ahead of ERP implementation, you had spoken about shifting some inventory in, you know, ahead of the cutover. I think Thilo made a comment in the prepared remarks today about regaining some shelf space that may have been lost during that period. Wondering if you can just kind of help us spur away, you know, what was the actual impact from ERP, you know, whether it was, you know, shelf space or changes in order patterns or anything that can just help us get clarity around what the actual impact was and how we should think about, you know, magnitude of recovery from that.

Scott Marks: Appreciate the color on that. next one for me, just relating to the ERP. You know, I think as we think back to, you know, maybe ahead of ERP implementation, you had spoken about shifting some inventory in, you know, ahead of the cutover. I think Thilo made a comment in the prepared remarks today about regaining some shelf space that may have been lost during that period. Wondering if you can just kind of help us spur away, you know, what was the actual impact from ERP, you know, whether it was, you know, shelf space or changes in order patterns or anything that can just help us get clarity around what the actual impact was and how we should think about, you know, magnitude of recovery from that.

Speaker #4: Appreciate the color on that. Next one for me, just relating to the ERP. I think as we think back to maybe ahead of ERP implementation, you had spoken about shipping some inventory in ahead of the cutover.

Speaker #4: And then I think Thilo made a comment in the prepared remarks today about regaining some shelf space that may have been lost during that period.

Speaker #4: So wondering if you can just kind of help us square away, what was the actual impact from ERP? Whether it was shelf space or changes in order patterns or anything I could just help us get clarity around what the actual impact was and how we should think about magnitude of recovery from that.

Speaker #3: Yeah. So we've talked quite a bit about that short-term dislocation. And as we've come back into a very I think advantageous supply situation with rebuilt inventories, the conversations with retailers have been frankly terrific.

Russell Diaz-Canseco: Yeah, you know, we've talked quite a bit about that short-term dislocation. As we've come back into a very, I think, advantageous supply situation with rebuilt inventories, the conversations with retailers have been, frankly, terrific. We've shifted from, Hey, can you ship what you're talking about? To, How can we grow together? I'm looking forward to reset cycles this year based on those early conversations. We're really talking about making those long-term plans to grow together. We are clearly a category leader. We're seen as playing that role for our retail partners, I think we're well on our way to kind of recovering and putting that process past us.

Russell Diez-Canseco: Yeah, you know, we've talked quite a bit about that short-term dislocation. As we've come back into a very, I think, advantageous supply situation with rebuilt inventories, the conversations with retailers have been, frankly, terrific. We've shifted from, Hey, can you ship what you're talking about? To, How can we grow together? I'm looking forward to reset cycles this year based on those early conversations. We're really talking about making those long-term plans to grow together. We are clearly a category leader. We're seen as playing that role for our retail partners, I think we're well on our way to kind of recovering and putting that process past us.

Speaker #3: We've shifted from, "Hey, can you ship what you're talking about?" to, "How can we grow together?" And so I'm looking forward to reset cycles this year based on those early conversations.

Speaker #3: And we're really talking about making those long-term plans to grow together. We are clearly a category leader. We're seeing us playing that role for our retail partners.

Speaker #3: And I think we're well on our way to kind of recovering and putting that process past us.

Speaker #4: Thanks very much. I'll pass it on.

[Analyst] (Jefferies): Thanks very much. I'll pass it on.

Scott Marks: Thanks very much. I'll pass it on.

Speaker #3: Thanks, Scott.

Russell Diaz-Canseco: Thanks, Scott.

Russell Diez-Canseco: Thanks, Scott.

Speaker #2: And your next question comes from the line of Brian Holland with DA Davidson, your line is open.

Brian Shipman: Your next question comes from the line of Brian Holland with D.A. Davidson. Your line is open.

Operator: Your next question comes from the line of Brian Holland with D.A. Davidson. Your line is open.

Speaker #5: Thanks. Good morning. I wanted to ask about some of the comments that you made around the challenging sort of macro environment and squaring that with your core consumer.

Brian Holland: Thanks. Good morning.

Russell Diaz-Canseco: Hey, Brian.

Brian Holland: - you know, some of the comments that you made around the challenging sort of macro environment and squaring that with, you know, your core consumer, and some of the behavioral metrics that you described. Just squaring how or why you would be incrementally concerned over the next, whatever, several months or year, about the impact of the macro on your core consumer, just given everything that you've said, and I think historically, sort of, you know, been less concerned about competitive dynamics in the category, widening price gaps, et cetera. How do we kind of square those two things?

Russell Diez-Canseco: Hey, Brian.

Speaker #5: And some of the behavioral metrics that you described just squaring how or why you would be incrementally concerned over the next whatever several months or year about the impact of the macro on your core consumer to just given everything that you've said.

Speaker #5: And I think, historically, we've sort of been less concerned about competitive dynamics in the category, widening price gaps, etc. So how do we kind of square those two things?

Speaker #4: Sure. So first of all, we're not seeing evidence of a big change in the sort of the confidence or sort of economic reality of our core consumers.

Russell Diaz-Canseco: Sure. First of all, we're not seeing evidence of a big change in the, in sort of the confidence or, sort of economic reality of our core consumers. That's not, that's not a primary source of concern or a change in how we view that. That said, I think we've all seen and continue to see, a category that's going through some disruption, as we've got plenty of players out there with maybe more eggs than they planned to produce or collectively planned to produce. We're seeing some, you know, more intense action on the shelf as other players, I think, look to move their inventory.

Russell Diez-Canseco: Sure. First of all, we're not seeing evidence of a big change in the, in sort of the confidence or, sort of economic reality of our core consumers. That's not, that's not a primary source of concern or a change in how we view that. That said, I think we've all seen and continue to see, a category that's going through some disruption, as we've got plenty of players out there with maybe more eggs than they planned to produce or collectively planned to produce. We're seeing some, you know, more intense action on the shelf as other players, I think, look to move their inventory.

Speaker #4: That's not a primary source of concern or a change in how we view that. That said, I think we've all seen and continue to see a category that's going through some disruption as we've got plenty of players out there with maybe more eggs than they planned to produce or collectively planned to produce.

Speaker #4: And we're seeing some more intense action on the shelf as other players I think look to move their inventory. While that doesn't mean that we're losing consumers or volume to them, it's certainly competing for attention with retailers and with consumers for ad space and for mind share.

Russell Diaz-Canseco: While that doesn't mean that we're losing consumers or volume to them, it's certainly competing for attention with retailers and with consumers for ad space and for mind share. In that situation, it doesn't prompt us to change our value equation. It doesn't prompt us to rethink our value proposition to consumers, but it might mean that we have to be a little more patient as we continue to add consumers over the course of the year and convert all that great awareness to trial. Because we don't wanna, you know, frankly, waste a bunch of our time and money trying to compete in the short run for the attention of consumers who are looking for a hot price in an ad.

Russell Diez-Canseco: While that doesn't mean that we're losing consumers or volume to them, it's certainly competing for attention with retailers and with consumers for ad space and for mind share. In that situation, it doesn't prompt us to change our value equation. It doesn't prompt us to rethink our value proposition to consumers, but it might mean that we have to be a little more patient as we continue to add consumers over the course of the year and convert all that great awareness to trial. Because we don't wanna, you know, frankly, waste a bunch of our time and money trying to compete in the short run for the attention of consumers who are looking for a hot price in an ad.

Speaker #4: And so in that situation, it doesn't prompt us to change our value equation. It doesn't prompt us to rethink our value proposition to consumers.

Speaker #4: But it might mean that we have to be a little more patient as we continue to add consumers over the course of the year and convert all that great awareness to trial.

Speaker #4: Because we don't want to frankly waste a bunch of our time and money trying to compete in the short run for the attention of consumers who are looking for a hot price in an ad.

Speaker #4: And so we just have to, I think, set ourselves up to continue to take a really measured approach to adding high-quality households and high-quality new placements.

Russell Diaz-Canseco: We just have to, I think, set ourselves up to continue to take a really measured approach to adding high-quality households and high-quality, new placements, and let some of this other noise kind of play itself out.

Russell Diez-Canseco: We just have to, I think, set ourselves up to continue to take a really measured approach to adding high-quality households and high-quality, new placements, and let some of this other noise kind of play itself out.

Speaker #4: And let some of this other noise kind of play itself out.

Speaker #5: Okay. And then kind of playing this forward, Outlook this year, I think, is low 20% range on the top line. That's an algorithm that you would have to hold from here through 2030, I think, to hit that $2 billion of revenue if I'm not mistaken.

Brian Holland: Okay, kind of playing this forward, outlook this year, I think is, you know, low 20% range on the top line. That's an algorithm that you would have to hold from here through 2030, I think, to hit that $2 billion of revenue, if I'm not mistaken. The thought coming into this year was, you know, you'd be lapping capacity constraints in Q1 and a little less so in Q2. Q4, you would then have the ERP disruption. You know, quote-unquote, easier compares. Now, we've obviously introduced some volatility, as you referenced, whether that's weather, or some other things in the category. How do we think about the level of confidence, the sources of confidence behind maintaining this level of growth, which really demands almost no deceleration from here through 2030?

Speaker #5: The thought coming into this year was you'd be lapping capacity constraints in one queue and a little less so in two queue. Four queue, you would then have the ERP disruption.

Speaker #5: So quote-unquote, "easier compares." Now we've obviously introduced some volatility as you referenced, whether that's weather, or some other things in the category. So how do we think about the level of confidence, the sources of confidence behind maintaining this level of growth, which really demands almost no deceleration from here through 2030?

Brian Holland: The, what are the sources of confidence behind that? Then maybe if I could just ask, what flexibility would you have from a capacity standpoint and a build-out standpoint as it pertains to Seymour, if the sales decelerated at a greater rate than what you're projecting?

Speaker #5: What are the sources of confidence behind that? And then maybe if I could just ask, what flexibility would you have from a capacity standpoint and a build-out standpoint as it pertains to Seymour if the sales decelerated at a greater rate than what you're projecting?

Speaker #4: Sure. So again, the consumer value proposition is still very much there. And I start with all the work we did last year to make sure that we took supply chain and supply chain constraint off the table in terms of being a constraint to our continued growth.

Russell Diaz-Canseco: Sure. Again, the consumer value proposition is still very much there. You know, I start with all the work we did last year to make sure that we took supply chain and supply chain constraint off the tables in terms of being a constraint to our continued growth. We've got the capacity at ECS. We've got our third line, which gives us the opportunity to lean in both to capacity expansion and efficiency, because we can allocate space to the various lines more efficiently. We're gaining volume share, that's the thing I would point to as a continued proof point that what we're doing is working. As we head into 2026, the setup is we've got a massive gain in awareness, which is the leading indicator for us of trial and ultimately to loyalty.

Russell Diez-Canseco: Sure. Again, the consumer value proposition is still very much there. You know, I start with all the work we did last year to make sure that we took supply chain and supply chain constraint off the tables in terms of being a constraint to our continued growth. We've got the capacity at ECS. We've got our third line, which gives us the opportunity to lean in both to capacity expansion and efficiency, because we can allocate space to the various lines more efficiently. We're gaining volume share, that's the thing I would point to as a continued proof point that what we're doing is working. As we head into 2026, the setup is we've got a massive gain in awareness, which is the leading indicator for us of trial and ultimately to loyalty.

Speaker #4: So we've got the capacity at ECS. We've got our third line, which gives us the opportunity to lean in both to capacity expansion and efficiency because we can allocate space to the various lines more efficiently.

Speaker #4: We're gaining volume share. And that's the thing I would point to as a continued proof point that what we're doing is working. And so as we head into 2026, the setup is we've got a massive gain in awareness, which is the leading indicator for us of trial and ultimately to loyalty.

Speaker #4: That's there in spades. And we're very judiciously, as always, using our marketing and commercial resources to convert that awareness into trial. So the capacity's there.

Russell Diaz-Canseco: That's there in spades, and we're very judiciously, as always, using our marketing and commercial resources to convert that awareness into trial. The capacity's there, the brand awareness is there, the consumer sentiment is there, and it's a question of, I think, operating and executing at a very high level. The thing is, we're built for this environment. We are, I believe we've got the best team in the business, the best brand in the business, the best supply chain in the business, and this is a year in which our ability to execute at a high level will continue to drive our growth.

Russell Diez-Canseco: That's there in spades, and we're very judiciously, as always, using our marketing and commercial resources to convert that awareness into trial. The capacity's there, the brand awareness is there, the consumer sentiment is there, and it's a question of, I think, operating and executing at a very high level. The thing is, we're built for this environment. We are, I believe we've got the best team in the business, the best brand in the business, the best supply chain in the business, and this is a year in which our ability to execute at a high level will continue to drive our growth.

Speaker #4: The brand awareness is there. The consumer sentiment is there. And it's a question of, I think, operating and executing at a very high level.

Speaker #4: And the thing is, we're built for this environment. We are I believe we've got the best team in the business, the best brand in the business, the best supply chain in the business.

Speaker #4: And this is a year in which our ability to execute at a high level will continue to drive our growth.

Speaker #3: And Brian, I would add to that that, unlike in the previous last few years, growth this year is going to be pretty much all volume growth.

Thilo Wrede: Brian, I would add to that, unlike in the previous last few years, growth this year is gonna be pretty much all volume growth. Our volume growth is actually, at this guidance, is actually accelerating year-over-year. I think that's an important piece to keep in mind. It's a bit more expensive growth, because obviously, volume comes with cost associated with it, but it's higher quality growth, right?

Speaker #3: Our volume growth is actually at this guidance, it's actually accelerating year over year. And I think that's an important piece to keep in mind.

Speaker #3: It's a bit more expensive growth. Because the obviously volume comes with costs associated with it. But it's not a quality growth, right?

Speaker #5: Great. Thanks. I'll leave it there.

Brian Holland: Great, thanks. I'll leave it there.

Speaker #6: And your next question comes from the line of Matt Smith with Stifel. Your line is open.

Brian Shipman: Your next question comes from the line of Matt Smith with Stifel. Your line is open.

Operator: Your next question comes from the line of Matt Smith with Stifel. Your line is open.

Speaker #7: Hi. Good morning. Thanks for taking the question. A couple of questions on the EBITDA guidance range. So the midpoint suggests a couple hundred basis points of margin contraction.

Matt Smith: Hi, good morning. Thanks for taking the question. 2 questions on the EBITDA guidance range. The midpoint suggests 200 basis points of margin contraction. Within that, can you talk about gross margin versus middle of the P&L investment? I believe the expectation for revenue growth, Thilo, you just mentioned, is mostly volume led. Would you expect price mix to be positive for the year with carry and pricing funding the promotion normalization, or is that part of the margin bridge as well?

Speaker #7: Within that, can you talk about gross margin versus middle of the P&L investments? I believe the expectation for revenue growth, Thilo, you just mentioned, is mostly volume-led.

Speaker #7: So would you expect price mix to be positive for the year with carry-in pricing funding the promotion normalization? Or is that part of the margin bridge as well?

Speaker #3: Yeah. Price mix I think we said in the prepared remarks that we are reinvesting the price increase from last year back into promotions. I want to be very clear with that.

Thilo Wrede: Yeah, price mix, I think we said in the prepared remarks that we are reinvesting the price increase from last year back into promotions. I wanna be very clear with that. The promotional comparison, if you look at it year-over-year, even compared to the last few years, we're actually planning for a different environment this time around than the last few years. In the last years, when you had the Avian Flu, where we had our own supply constraints, there were times in every year, last year, well, in the last few years, there were times every year where promoting didn't make a whole lot of sense for us because we didn't have the supply to support it. This year it's a different story. This is not a step up in promotions to drive volume.

Speaker #3: The promotional comparison, if you look at it year over year, even compared to the last few years, we're actually planning for a different environment this time around than the last few years.

Speaker #3: Because in the last years, when you had avian flu, where we had our own supply constraints, there were times in every year last year in the last few years there were times every year where promoting didn't make a whole lot of sense for us.

Speaker #3: Because we didn't have the supply to support it. This year, it's a different story. So, this is not a step-up in promotions to drive volume.

Speaker #3: It's really a return to where we should have been promoting for quite a while and weren't able to. And as Russell said before, this is to convert the awareness that we have generated into trial and ultimately into household demonstrating to our retail partners that we're a good partner for them.

Thilo Wrede: It's really a return to where we should have been promoting for quite a while and weren't able to. As Russell said before, this is to convert the awareness that we have generated into trial and ultimately into household penetration, and to keep demonstrating to our retail partners that we're a good partner for them. We want to move the category forward. Obviously, this has an impact on gross margin. We still expect operating expense leverage, and we expect positive price mix benefits, but certainly not to the same degree as in previous years. We keep benefiting from a shift towards organic, but it's not going to be the same price mix benefit that we had in prior years.

Speaker #3: We want to move the category forward. So obviously, this has an impact on gross margin. We still expect operating expense leverage. And we expect positive price mix benefit.

Speaker #3: But certainly not to the same degree as in previous years. We keep benefiting from a shift towards organic. But it's not going to be the same price mix benefit that we had in prior years.

Speaker #7: Thank you. And just as a follow-up for clarity, around first quarter expectations, there were some shipment noise, both in the fourth quarter and then you mentioned a couple of factors in the first quarter.

Matt Smith: Thank you. Just as a follow-up for clarity around Q1 expectations, there was some shipment noise both in Q4, and then you mentioned, you know, a couple of factors in Q1. Within Q1, do you have a view on if you expect your shipments to be in line with consumption? Just some clarity there would be helpful. Thank you, and I'll pass it on.

Speaker #7: From within the first quarter, do you have a view on if you expect your shipments to be in line with consumption? Just some clarity there would be helpful.

Speaker #7: Thank you. And I'll pass it on.

Speaker #3: Yeah. I mean, in general, our shipments are roughly in line with consumption. There's always timing differences. There are differences in how scanner data extrapolates contribution from different channels.

Thilo Wrede: I mean, in general, our shipments are roughly in line with consumption. There's always timing differences. There are differences in how Circana data extrapolates, you know, contribution from different channels. We've always talked about that we have some unmeasured channels, food service and the wholesale channel in particular. There's always going to be a bit of a difference between our reported shipments and what you see in consumption, directionally, they usually align.

Speaker #3: We've always talked about that we have some unmeasured channels: food service and the wholesale channel, in particular. So there's always going to be a bit of a difference between our reporter shipments and what you see in consumption.

Speaker #3: But directionally, they usually align.

Speaker #6: And your next question comes from the line of Robert Moscow with TD Cohen. Your line is open.

Brian Shipman: Your next question comes from the line of Robert Moskow with TD Cowen. Your line is open.

Operator: Your next question comes from the line of Robert Moskow with TD Cowen. Your line is open.

Speaker #7: Hey there. This is Jacob Henry on for Rob. Thanks for the question. I think just one from me. I know you've talked before about building confidence with retailers before getting more shelf space.

Jon Andersen: Hey there, this is Jacob Henry on for Rob. Thanks for the question. I think just one from me. I know you've talked before about building confidence with retailers before getting more shelf space. On that topic, I'm just curious if you can provide an update on where you feel you stand in that process. Like, do you have any visibility into any green shoots with retailers where maybe there are plans in place to get that third or fourth SKU, whatever it may be, or is this kind of more of a long-term conversation?

Jacob Henry: Hey there, this is Jacob Henry on for Rob. Thanks for the question. I think just one from me. I know you've talked before about building confidence with retailers before getting more shelf space. On that topic, I'm just curious if you can provide an update on where you feel you stand in that process. Like, do you have any visibility into any green shoots with retailers where maybe there are plans in place to get that third or fourth SKU, whatever it may be, or is this kind of more of a long-term conversation?

Speaker #7: So on that topic, I'm just curious if you can provide an update on where you feel you stand in that process. Do you have any visibility into any green shoots with retailers where maybe there are plans in place to get that third or fourth skew?

Speaker #7: Whatever it may be. Or is this kind of more of a long-term conversation?

Speaker #5: Yeah. So without being specific, the conversations are going very well. We are operating at a very high level. Our service levels have really recovered from a year of being much more constrained in supply as we've talked about over the last four quarters.

Russell Diaz-Canseco: Yeah. Without being specific, the conversations are going very well. We are operating at a very high level. Our service levels have really recovered from a year of being much more constrained in supply, as we've talked about over the last 4 quarters. Those are very fruitful retail conversations. We're a powerful tool for a retail category manager to grow their category profitably with our partnership. These are welcome conversations, they're fruitful ones, and we're excited to share more as those resets occur.

Russell Diez-Canseco: Yeah. Without being specific, the conversations are going very well. We are operating at a very high level. Our service levels have really recovered from a year of being much more constrained in supply, as we've talked about over the last 4 quarters. Those are very fruitful retail conversations. We're a powerful tool for a retail category manager to grow their category profitably with our partnership. These are welcome conversations, they're fruitful ones, and we're excited to share more as those resets occur.

Speaker #5: And so those are very fruitful retail conversations. We're a powerful tool for a retail category manager to grow their category profitably, with our partnership.

Speaker #5: And so these are welcome conversations. They're fruitful ones, and we're excited to share more as those resets occur.

Speaker #6: And your next question comes from the line of Megan Clapp with Morgan Stanley. Your line is open.

Brian Shipman: Your next question comes from the line of Pamela Kaufman with Morgan Stanley. Your line is open.

Operator: Your next question comes from the line of Pamela Kaufman with Morgan Stanley. Your line is open.

Speaker #8: Hi, good morning. Thanks. Maybe just a follow-up on the first quarter on Matt's question, just to put a finer point on it. I think you said relatively in-line shipments versus scanner.

Pamela Kaufman: Hi, good morning. Thanks. Maybe just to follow up on the Q1 on Matt's question, just to put a finer point on it. You know, I think you said relatively in line shipments for scanner. I think Tilo, in your prepared remarks, you also said just a more measured start versus what you had previously expected. I think you had previously expected the first half would be stronger than the second half, just given some of the easier laps. Is it still fair to assume in Q1 you would expect, and Q2 for that matter, you would expect the revenue growth to be above the full year guide?

Speaker #8: I think, Thilo, in your prepared remarks, you also said just a more measured start versus what you had previously expected. I think you had previously expected the first half would be stronger than the second half, just given some of the easier laps.

Speaker #8: So is it still fair to assume in one Q you would expect and two Q for that matter, you would expect the revenue growth to be above the full year guide?

Thilo Wrede: I think at this point, Q1, we're a bit more cautious on it than we were before. I think when we look at Q2 and Q3, there's no change in how we think about them compared to how we thought about them, let's say, 2 months ago. Q4, you know, expectations for Q4 compared to what we had at the investor day back in December, haven't changed. Q4, I think we have, if you want, relatively easy lapping because Q4, post the ERP implementation, with a few weeks of slow shipping, there's just a easy lapping that we can catch up on. With that, maybe the second half might be a bit stronger than the first half.

Speaker #3: I think at this point, one Q, we are a bit more cautious on it than we were before. I think when we look at two Q and three Q, there's no change in how we think about them compared to how we thought about them let's say two months ago.

Speaker #3: And then Q4, expectations for Q4 compared to what we have at the investor day back in December haven't changed. And so Q4, I think we have if you want relatively easy lapping because Q4 post the ERP implementation with a few weeks of slow shipping.

Speaker #3: There's just a easy lapping that we can catch up on. And so with that, maybe the second half might be a bit stronger than the first half.

Thilo Wrede: That's how I would look at it right now.

Speaker #3: That's how I would look at it right now.

Thilo Wrede: That's how I would look at it right now.

Speaker #8: Okay. And then I guess just a follow-up there, just trying to square why the first quarter is changing and the rest of the year is not if shipments will be in line with scanner because that would imply that demand is running a bit weaker than you had expected.

Pamela Kaufman: Okay. Then I guess just to follow up there, just trying to square, you know, why Q1 is changing and the rest of the year is not, if shipments will be in line with scanner, because that would imply that demand is running a bit weaker than you had expected. As we get into the remainder of the year, are you embedding some sort of recovery in the shelf, in the shelf space? Are you assuming kind of that demand doesn't change in the rest of the year, or the promotional environment from others that you're seeing gets better? Just trying to kind of understand what changes as we get out of Q1, understanding there has been a lot of volatility.

Speaker #8: So as we get into the remainder of the year, are you embedding some sort of recovery in the shelf space? Are you assuming kind of a that demand doesn't change in the rest of the year?

Speaker #8: The promotional environment from others that you're seeing gets better? Just trying to kind of understand what changes as we get out of one Q, understanding there has been a lot of volatility.

Speaker #5: Yeah. I think there are two kind of underlying or maybe spring-loaded drivers of that consistency and that growth. One is the continued benefit of the consistency with which we're showing up on shelf, regaining that space, some of which is a conversation with the retailer and some of which is simply operational at the store level when you've now got the product back in your back door and you need to cut it back in or make sure you're giving it the space that was allocated to it.

Russell Diaz-Canseco: Yeah. I think there are two kind of underlying or maybe spring-loaded drivers of that consistency and that growth. One is the continued benefit of the consistency with which we're showing up on shelf, regaining that space, some of which is a conversation with a retailer, and some of which is simply operational at the store level when you've now got the product back in your back door, and you need to cut it back in or make sure you're giving it the space that was allocated to it. Then having consumers see us back on the shelf. That's an important part of the process.

Russell Diez-Canseco: Yeah. I think there are two kind of underlying or maybe spring-loaded drivers of that consistency and that growth. One is the continued benefit of the consistency with which we're showing up on shelf, regaining that space, some of which is a conversation with a retailer, and some of which is simply operational at the store level when you've now got the product back in your back door, and you need to cut it back in or make sure you're giving it the space that was allocated to it. Then having consumers see us back on the shelf. That's an important part of the process.

Speaker #5: And then having consumers see us back on the shelf. That's an important part of the process. And then the other part is that we're, again, we're having very fruitful conversations with retailers about continuing to expand distribution, expand placements as part of our ongoing long-term strategy for growing with the best retailers in the country.

Russell Diaz-Canseco: You know, the other part is that we're again, we're having very fruitful conversations with retailers about continuing to expand distribution, expand placements as part of our ongoing long-term strategy for growing with the best retailers in the country. A lot of that has to do with kind of the consistent strategy of expanding those top four SKUs and demonstrating the performance that they deliver for our retail partners. We've got the product and that makes for a great conversation, and that will unfold over the course of the year.

Russell Diez-Canseco: You know, the other part is that we're again, we're having very fruitful conversations with retailers about continuing to expand distribution, expand placements as part of our ongoing long-term strategy for growing with the best retailers in the country. A lot of that has to do with kind of the consistent strategy of expanding those top four SKUs and demonstrating the performance that they deliver for our retail partners. We've got the product and that makes for a great conversation, and that will unfold over the course of the year.

Speaker #5: And so a lot of that has to do with kind of the consistent strategy of expanding those top four SKUs and demonstrating the performance that they deliver for our retail partners.

Speaker #5: We've got the product, and that makes for a great conversation. And that will unfold over the course of the year.

Speaker #8: Okay. Thank you.

Pamela Kaufman: Okay, thank you.

Speaker #6: And your next question comes from the line of John Anderson with William Blair. Your line is open.

Brian Shipman: Your next question comes from the line of Jon Andersen with William Blair. Your line is open.

Speaker #9: Hey, good morning. Thanks for the questions. You mentioned in the prepared comments awareness, brand awareness levels are up. I think 800 basis points year over year, which is a significant leap.

Jon Andersen: Hey, good morning. Thanks for the questions. You mentioned in the prepared comments, awareness, brand awareness levels are up, I think 800 basis points year-over-year, which is a significant leap. I'm wondering if you could talk a little bit about the, you know, what you see as, you know, the key drivers there and that kind of acceleration in brand awareness over the past 12 months? I guess peeling the onion a little bit, you know, there's kind of really positive awareness and maybe more kind of awareness that might come into being for more mixed reasons.

Speaker #9: I'm wondering if you could talk a little bit about the what you see as the key drivers there in that kind of acceleration in brand awareness over the past 12 months.

Speaker #9: And I guess peeling the onion a little bit, there's kind of really positive awareness and maybe more kind of awareness that might come into being for more mixed reasons.

Speaker #9: And I'm just wondering if you could talk a little bit about the equity of the brand and what you're seeing and maybe some of the panel data in terms of loyalty and repeat at present and if there are any levers or adjustments you think you need to make from a value proposition standpoint.

Jon Andersen: I'm just wondering if you could talk a little bit about the equity of the brand and what you're seeing and maybe some of the panel data in terms of loyalty and repeat at present, and if there are any levers or adjustments you think you need to make from a value proposition standpoint. If I could just follow up with a second one. You've announced a $100 million share repurchase. I'm not sure if you've had an authorization, share repurchase authorization historically, but maybe you could talk about, you know, the reason for that now, and how you might think about utilizing that, you know, going forward, the criteria. Thank you.

Speaker #9: And then if I could just follow up with a second one, you've announced a $100 million share of purchase. I'm not sure if you've had an authorization share of purchase authorization historically, but maybe you could talk about the reason for that now.

Speaker #9: And how you might think about utilizing that going forward, the criteria. Thank you.

Speaker #5: Thanks, John. I'll take the part about kind of brand equity and household awareness. I'll let Thilo talk about share repurchase. A key message here, and a key reason why I think we saw such substantial increase in household awareness, is that we're pretty consistent in our approach to how we go to market.

Russell Diaz-Canseco: Thanks, John. I'll take the part about kind of brand equity and household awareness. I'll let Tilo talk about share repurchase. You know, a key message here and a key reason why I think we saw such substantial increase in household awareness is that we're pretty consistent in our approach to how we go to market. At a time when, you know, we were constrained on supply last year, we didn't go dark with our marketing because we think about marketing as a way to drive brand awareness over the long term, 12, 18, 24 months out, converting that to demand. This business is designed and built around the consistency of expanding households, expanding trial, expanding production, and expanding farm count, all very much in line.

Russell Diez-Canseco: Thanks, John. I'll take the part about kind of brand equity and household awareness. I'll let Tilo talk about share repurchase. You know, a key message here and a key reason why I think we saw such substantial increase in household awareness is that we're pretty consistent in our approach to how we go to market. At a time when, you know, we were constrained on supply last year, we didn't go dark with our marketing because we think about marketing as a way to drive brand awareness over the long term, 12, 18, 24 months out, converting that to demand. This business is designed and built around the consistency of expanding households, expanding trial, expanding production, and expanding farm count, all very much in line.

Speaker #5: At a time when we were constrained on supply last year, we didn't go dark with our marketing because we think about marketing as a way to drive brand awareness over the long term, 12, 18, 24 months out, converting that to demand.

Speaker #5: And this business is designed and built around the consistency of expanding households, expanding trial, and expanding production, and expanding farm count. All very much in line.

Speaker #5: And the net result of which is that we didn't go dark when we might have simply because we didn't have as many eggs as we would have liked to sell or as much production capacity as we might have liked.

Russell Diaz-Canseco: The net result of which is that we didn't go dark when we might have, simply because we didn't, you know, we didn't have as many eggs as we would have liked to sell or as much production capacity as we might have liked. That also means that we're not, you know, hitting the gas or wasting money on unproductive marketing efforts in a year when we've got more upside. We're very consistent in our marketing approach. It's really a, you know, a playbook and an approach that we've owned over a lot of years to convert that awareness into trial and repeat, and that's what we're setting about to do this year.

Russell Diez-Canseco: The net result of which is that we didn't go dark when we might have, simply because we didn't, you know, we didn't have as many eggs as we would have liked to sell or as much production capacity as we might have liked. That also means that we're not, you know, hitting the gas or wasting money on unproductive marketing efforts in a year when we've got more upside. We're very consistent in our marketing approach. It's really a, you know, a playbook and an approach that we've owned over a lot of years to convert that awareness into trial and repeat, and that's what we're setting about to do this year.

Speaker #5: That also means that we're not hitting the gas or wasting money on unproductive marketing efforts in a year when we've got more upside. We're very consistent in our marketing approach.

Speaker #5: And so it's really a playbook and an approach that we've honed over a lot of years to convert that awareness into trial and repeat.

Speaker #5: And that's what we're setting about to do this year.

Speaker #3: Yeah. And then, John, on the share repurchases, we did not have a share repurchase authorization before. This is the first buyback program that the board has authorized since the IPO.

Thilo Wrede: Yeah. Then John, on the share repurchases, we did not have a share repurchase authorization before. This is the first buyback program that the board has authorized since the IPO. I would say there are two factors at play here. One is, look, we're listening to shareholders. We're listening to the buy side, the sell side, and we've gotten a lot of questions over the last 12 months in particular, about how we use our balance sheet. We have this unused debt capacity, as you know, we are debt-free. We have over $100 million in cash, and we are investing this cash in building out the Seymour facility this year.

Speaker #3: And I would say there are two factors at play here. One is, look, we're listening to shareholders. We're listening to the buy side, the sell side.

Speaker #3: And we've gotten a lot of questions over the last 12 months in particular about how we use our balance sheet. We have this unused debt capacity as you know.

Speaker #3: We are debt-free. We have over $100 million in cash. And we are investing this cash in building out the SEMA facility, but that still leaves a lot of balance sheet potential there that we've been holding as dry powder.

Thilo Wrede: That still leaves a lot of balance sheet potential there that we've been holding as dry powder, and now is a good time for us to think about what can we do with that dry powder to create shareholder value. That is where this decision to create the share repurchase authorization, so that when there is an opportunity in the market to buy back our stock at attractive levels that we're able to step into that. That is really the reason behind it. I would look at it as a sign that we're maturing as a company a bit. We're doing the things that we think are the right things for creating long-term shareholder value.

Speaker #3: And now is a good time for us to think about what can we do with that dry powder to create shareholder value. And so that is where this decision to create the share repurchase authorizations that when there is an opportunity in the market to buy back our stock at attractive levels, that we're able to step into that.

Speaker #3: That is really the reason behind it. I would look at it as a sign that we're maturing as a company a bit.

Speaker #3: We're doing the things that we think are the right thing for creating long-term shareholder value. And it's a sign that we're listening to the shareholder conversations that we're having.

Thilo Wrede: It's a sign that, you know, we're listening to the shareholder conversations that we're having.

Speaker #9: Makes sense. Thank you, guys.

Jon Andersen: Makes sense. Thank you, guys.

Speaker #6: And your next question comes from the line of Ben Mayhew with BMO Capital Markets. Your line is open.

Brian Shipman: Your next question comes from the line of Ben Bienvenu with BMO Capital Markets. Your line is open.

Operator: Your next question comes from the line of Ben Bienvenu with BMO Capital Markets. Your line is open.

Ben Bienvenu: Hi, thank you for taking the questions. My first is on, related to the aggressive recovery in industry egg supplies. That seems to have coincided with, you know, more volatile order patterns. I'm just wondering, in the past, you have stated that you look forward to supplies recovering because that will give Vital the opportunity to outperform. I was just hoping if you could revisit this view and maybe reaffirm your conviction that this will play out if we were to assume the industry supplies will continue to recover.

Ben Mayhew: Hi, thank you for taking the questions. My first is on, related to the aggressive recovery in industry egg supplies. That seems to have coincided with, you know, more volatile order patterns. I'm just wondering, in the past, you have stated that you look forward to supplies recovering because that will give Vital the opportunity to outperform. I was just hoping if you could revisit this view and maybe reaffirm your conviction that this will play out if we were to assume the industry supplies will continue to recover.

Speaker #10: Hi. Thank you for taking the questions. So my first is related to the aggressive recovery in industry egg supplies. So that seems to have coincided with more volatile order patterns.

Speaker #10: So I'm just wondering in the past, you have stated that you look forward to supplies recovering. Because that will give Vital the opportunity to outperform.

Speaker #10: So I was just hoping if you could revisit this view and maybe reaffirm your conviction that this will play out if we were to assume the industry supplies will continue to recover.

Speaker #5: Yeah. Our conviction is as strong as ever. And the number one thing I'd point to is our continued gain in volume share. That's a great indicator of the health of our brand, the health of our supply chain, and the health of our consumer trust and consumer relationship.

Russell Diaz-Canseco: Yeah. Our conviction is as strong as ever. The number one thing I'd point to is our continued gain in volume share. That's a great indicator of the health of our brand, the health of our supply chain, and the health of our consumer trust and consumer relationship. We are absolutely built for a time and a place where the brand is what's gonna matter, we're being differentiated is what's gonna matter, and where a strong, trusted relationship with a retailer is what's gonna matter. This is a year in which it's not simply enough to have eggs in a market that will take any egg available. That's where I think our strengths will really come to bear.

Russell Diez-Canseco: Yeah. Our conviction is as strong as ever. The number one thing I'd point to is our continued gain in volume share. That's a great indicator of the health of our brand, the health of our supply chain, and the health of our consumer trust and consumer relationship. We are absolutely built for a time and a place where the brand is what's gonna matter, we're being differentiated is what's gonna matter, and where a strong, trusted relationship with a retailer is what's gonna matter. This is a year in which it's not simply enough to have eggs in a market that will take any egg available. That's where I think our strengths will really come to bear.

Speaker #5: So we are absolutely built for a time and a place where the brand is what's going to matter. We're being differentiated is what's going to matter.

Speaker #5: And we're a strong trusted relationship with a retailer is what's going to matter. It's this is a year in which it's not simply enough to have eggs.

Speaker #5: In a market that will take any egg available. And that's where I think our strengths will really come to bear.

Speaker #10: Great. Thank you. And then my final question is a bit of a segue. Can you just talk about Amazon's move to add roughly 100 additional whole foods units and what the incremental opportunity might be for Vital?

Ben Bienvenu: Great, thank you. Then my final question is a bit of a segue. Can you just talk about Amazon's move to add roughly 100 additional Whole Foods units and what the incremental opportunity might be for Vital? Thanks.

Ben Mayhew: Great, thank you. Then my final question is a bit of a segue. Can you just talk about Amazon's move to add roughly 100 additional Whole Foods units and what the incremental opportunity might be for Vital? Thanks.

Speaker #10: Thanks.

Russell Diaz-Canseco: You know, I think, first of all, it's certainly exciting for us. Amazon and Whole Foods continue to be our largest retail partner, and I don't think it's a coincidence that some of our largest customers are also the ones that are seeing the most success and the most opportunity to expand their footprints. We really look forward to continuing that partnership and to grow with them. There's an exciting opportunity to continue to grow with partners like Amazon and Whole Foods. That is all welcome, almost spring-loaded upside, for sure.

Russell Diez-Canseco: You know, I think, first of all, it's certainly exciting for us. Amazon and Whole Foods continue to be our largest retail partner, and I don't think it's a coincidence that some of our largest customers are also the ones that are seeing the most success and the most opportunity to expand their footprints. We really look forward to continuing that partnership and to grow with them. There's an exciting opportunity to continue to grow with partners like Amazon and Whole Foods. That is all welcome, almost spring-loaded upside, for sure.

Speaker #5: I think, first of all, it's certainly exciting for us. Amazon and Whole Foods continue to be our largest retail partner. And I don't think it's a coincidence that some of our largest customers are also the ones that are seeing the most success and the most opportunity to expand their footprints.

Speaker #5: And we really look forward to continuing that partnership and to grow with them. So there's an exciting opportunity to continue to grow with partners like Amazon and Whole Foods.

Speaker #5: And so that is all welcome almost spring-loaded upside for sure.

Speaker #6: And your next question comes from the line of Eric Deslours with Craig Holum. Your line is open.

Brian Shipman: Your next question comes from the line of Eric Des Lauriers with Craig-Hallum. Your line is open.

Speaker #10: Great. Thanks for taking my question. Just wondering if you could provide a bit more color on what you're seeing year to date in the past race category overall.

John Baumgartner: Great, thanks for taking my question. Just wondering if you could provide a bit more color on what you're seeing year to date in the pasture-raised category overall. In terms of the second half stabilization or perhaps even, I guess, Q2 stabilization, do you see category stabilization as sort of a prerequisite to your order pattern stabilizing? Or is there something in the conversations you're having with retailers that gives you confidence in that second half stabilization, sort of irrespective of what the category does? Thank you.

Eric Des Lauriers: Great, thanks for taking my question. Just wondering if you could provide a bit more color on what you're seeing year to date in the pasture-raised category overall. In terms of the second half stabilization or perhaps even, I guess, Q2 stabilization, do you see category stabilization as sort of a prerequisite to your order pattern stabilizing? Or is there something in the conversations you're having with retailers that gives you confidence in that second half stabilization, sort of irrespective of what the category does? Thank you.

Speaker #10: And then in terms of the second half, stabilization or perhaps even I guess Q2 stabilization, do you see category stabilization as sort of a prerequisite to your order pattern stabilizing?

Speaker #10: Or is there something in the conversations you're having with retailers that gives you confidence in that second half stabilization sort of irrespective of what the category does?

Speaker #10: Thank you.

Speaker #5: Yeah. Thanks for that. So the pasture raised and I would say more broadly the outdoor access category continues to be the strength in egg category overall.

Russell Diaz-Canseco: Yeah, thanks for that. The pasture raised, and I would say more broadly, the outdoor access category, continues to be the strength in egg category overall. Gaining volume share, gaining dollar share, against a backdrop of more muted volume growth for eggs overall. Historically, egg consumption has grown about with population growth in volumes. That's been very different for specialty, and branded products and offerings like ours, where we've driven a large share of overall category growth and much outsized relative to our share of the category. We're seeing that strength continue. It's pretty exciting because the ability of private label brands to trade up their purchasers of more commodity type eggs into outdoor access private label is also quite strong.

Russell Diez-Canseco: Yeah, thanks for that. The pasture raised, and I would say more broadly, the outdoor access category, continues to be the strength in egg category overall. Gaining volume share, gaining dollar share, against a backdrop of more muted volume growth for eggs overall. Historically, egg consumption has grown about with population growth in volumes. That's been very different for specialty, and branded products and offerings like ours, where we've driven a large share of overall category growth and much outsized relative to our share of the category. We're seeing that strength continue. It's pretty exciting because the ability of private label brands to trade up their purchasers of more commodity type eggs into outdoor access private label is also quite strong.

Speaker #5: Gaining volume share, gaining dollar share. Against a backdrop of more muted volume growth for eggs overall. Historically, egg consumption has grown about with population growth.

Speaker #5: In volumes. But that's been very different for specialty and branded products and offerings like ours. Where we've driven a large share of overall category growth and much outsized relative to our share of the category.

Speaker #5: And we're seeing that strength continue. It's pretty exciting. Because the ability of private label brands to trade up their purchasers of more commodity-type eggs into outdoor access private label is also quite strong.

Speaker #5: And so what we're seeing that is evidence of a much broader conversation and a much broader set of households in this country that are becoming conscious of their food choices.

Russell Diaz-Canseco: What we're seeing, that is evidence of a much broader conversation and a much broader set of households in this country that are becoming conscious of their food choices and are willing to vote with their dollars for something better. It's a real validation of what we've been doing for a lot of years, and we see it as a sign of strength.

Russell Diez-Canseco: What we're seeing, that is evidence of a much broader conversation and a much broader set of households in this country that are becoming conscious of their food choices and are willing to vote with their dollars for something better. It's a real validation of what we've been doing for a lot of years, and we see it as a sign of strength.

Speaker #5: And are willing to vote with their dollars for something better. So it's a real validation of what we've been doing for a lot of years.

Speaker #5: And we see it as a sign of strength.

Speaker #6: And your next question comes from the line of Ben Cleve with Stonex. Your line is open.

Brian Shipman: Your next question comes from the line of Ben Klieve with Stifel. Your line is open.

Operator: Your next question comes from the line of Ben Klieve with Stifel. Your line is open.

Speaker #10: All right. Thanks for taking my questions. I'm wondering if you guys can help us understand the magnitude of the promotional increase that you have talked about on the call today.

Ben Klieve: All right, thanks for taking my questions. I'm wondering if you guys can help us understand the magnitude of the promotional increase that you have talked about on the call today. We certainly knew there was gonna be an increase this year, but I'm wondering, first of all, if the magnitude of the promotional increase this year is kind of in line with what you had thought it would be historically. Also the degree to which the EBITDA margin compression this year is kind of in line with what your thoughts would have been around the Investor Day a couple months ago.

Speaker #10: We certainly knew there was going to be an increase this year. But I'm wondering first of all if the magnitude of the promotional increase this year is kind of in line with what you had thought it would be historically.

Speaker #10: And then also the degree to which the EBITDA margin compression this year is kind of in line with what your thoughts would have been around the investor day a couple of months ago.

Speaker #5: Sure. Thanks, Ben. I wouldn't characterize our promotional cadence or stance as stronger or deeper than we had originally projected. This is very much a return to a more normal cadence of promotional spend.

Russell Diaz-Canseco: Sure. Thanks, Ben. I wouldn't characterize our promotional cadence or stance as stronger or deeper than we had originally projected. This is very much a return to a more normal cadence of promotional spend, and that certainly hasn't changed. What's really different for us versus other players in the category, is that we're not creating promotions to drive volume in the short run, which we see as maybe a way to rent volume share, but not actually to substantially move the business forward. We're using promotions to drive trial and begin that process of converting a consumer to our brand. That continues to be the way we think about it.

Russell Diez-Canseco: Sure. Thanks, Ben. I wouldn't characterize our promotional cadence or stance as stronger or deeper than we had originally projected. This is very much a return to a more normal cadence of promotional spend, and that certainly hasn't changed. What's really different for us versus other players in the category, is that we're not creating promotions to drive volume in the short run, which we see as maybe a way to rent volume share, but not actually to substantially move the business forward. We're using promotions to drive trial and begin that process of converting a consumer to our brand. That continues to be the way we think about it.

Speaker #5: And that certainly hasn't changed. What's really different for us versus other players in the category is that we're not creating promotions to drive volume in the short run.

Speaker #5: Which we see as maybe a way to rent volume share, but not actually to substantially move the business forward. We're using promotions to drive trial and begin that process of converting a consumer to our brand.

Speaker #5: And that continues to be the way we think about it. Our focus is on building this thing for the long haul. And hitting that $2 billion goal that we set out for 2030, which we believe is still very much in our future.

Russell Diaz-Canseco: Our focus is on building this thing for the long haul and hitting that $2 billion goal that we set out for 2030, which we believe is still very much in our future. That hasn't changed. It's very consistent with what we had planned when we spoke to you at Investor Day. I'll let Tilo talk a little bit about the evolution of EBITDA over time.

Russell Diez-Canseco: Our focus is on building this thing for the long haul and hitting that $2 billion goal that we set out for 2030, which we believe is still very much in our future. That hasn't changed. It's very consistent with what we had planned when we spoke to you at Investor Day. I'll let Tilo talk a little bit about the evolution of EBITDA over time.

Speaker #5: And so that hasn't changed. It's very consistent with what we had planned when we spoke to you at Investor Day. I'll let Thilo talk a little bit about the evolution of EBITDA over time.

Speaker #10: Yeah. Ben, just to put what Russell just said differently, the way we are thinking about promotional spending this year is it won't be different from how we have spent on promotions in the past in specific quarters.

Thilo Wrede: Yeah, Ben, just to, you know, put what Russell just said differently, the way we are thinking about promotional spending this year is it won't be different from how we have spent on promotions in the past in specific quarters. The reason why I put it that way is, as I said before, over the last few years, I don't think there's been a single year where we ran promotions for the full year, because there was always some outside event, AI, our own supply constraints, that prevented us from running promotions for the full year. This is gonna be a year where currently we are planning to run promotions for the full year. The level of promotions for the full year will mirror what we've done in individual quarters in the past.

Speaker #10: And the reason why I put it that way is, as I said before, over the last few years, I don't think there's been a single year where we ran promotions for the full year.

Speaker #10: Because there was always some outside event, AI, our own supply constraints, that prevented us from running promotions for the full year. This is going to be a year where currently we're planning to run promotions for the full year.

Speaker #10: And so the level of promotions for the full year will mirror what we've done in individual quarters in the past. But unlike in prior years, where we've only hit it for specific quarters, we'll hit it for the full year.

Thilo Wrede: Unlike in prior years, where we've only hit it for specific quarters, we'll hit it for the full year. That will have an impact on gross margin and on EBITDA margin, and you see that in the guidance. That impact is not different from how we thought about it at the Investor Day.

Speaker #10: That will have an impact on gross margin and on EBITDA margin. And you see that in the guidance. But that impact is not different from how we thought about it at the investor day.

Speaker #10: Okay. Very good. Thanks for taking my question. I'll get back in queue.

Ben Klieve: Okay, very good. Thanks for taking my question. I'll get back in queue.

Speaker #6: And your next question comes from the line of John Bumgartner with Mizuho Securities. Your line is open.

Brian Shipman: Your next question comes from the line of John Baumgartner with Mizuho Securities. Your line is open.

Operator: Your next question comes from the line of John Baumgartner with Mizuho Securities. Your line is open.

Speaker #11: Good morning. Thanks for the question. I'd like to ask about the composition of vital buyers. I think at investor day, the buy rate for low incomes was up something like 50% over the past three years.

John Baumgartner: Good morning. Thanks for the question. I'd like to ask about the composition of Vital buyers. I think at Investor Day, the buy rate for low incomes was up something like 50% over the past three years, and that speaks to the breadth of appeal. I'm curious the extent that might now be a drag in 2026, given financial stress in that cohort. As you modeled this year, are there any specific pressure points you're building in, either from low incomes or others? Maybe not so much from trade down, but more just limiting the rate of building additional households this year.

Speaker #11: And that speaks to the breadth of appeal. But I'm curious, the extent that might now be a drag in 26, given financial stress in that cohort.

Speaker #11: As you modeled this year, are there any specific pressure points you're building in, either from low incomes or others—maybe not so much from trade down, but more just limiting the rate of building additional households this year?

Speaker #11: Yeah. I think that the process of adding additional households doesn't change. The kinds of households that we do attract may change with the benefit of hindsight.

Russell Diaz-Canseco: Yeah, I think that the process of adding additional households doesn't change. The kinds of households that we do attract may change with the benefit of hindsight, and we'll see how that plays out. We're seeing no, you know, we've got no reason to think that our ability to attract and retain new households this year is off algorithm or outside of our normal sort of growth formula.

Russell Diez-Canseco: Yeah, I think that the process of adding additional households doesn't change. The kinds of households that we do attract may change with the benefit of hindsight, and we'll see how that plays out. We're seeing no, you know, we've got no reason to think that our ability to attract and retain new households this year is off algorithm or outside of our normal sort of growth formula.

Speaker #11: And we'll see how that plays out. But we're seeing no we've got no reason to think that our ability to attract and retain new households this year is off algorithm or outside of our normal sort of growth formula.

Speaker #11: Okay. And then I apologize if I missed it. But if we think about aside from the promotion this year, how do we think about other marketing reinvestment, whether above the line, in the middle of the P&L, any thoughts on marketing either magnitude or shifts in delivery versus history?

[Analyst] (Mizuho Securities): Okay. Then, I apologize if I missed it, but if we think about, you know, aside from the promotion this year, how do we think about other marketing reinvestment, whether above the line, in the middle of the P&L? Any thoughts on marketing, either magnitude or shifts in delivery versus history?

John Baumgartner: Okay. Then, I apologize if I missed it, but if we think about, you know, aside from the promotion this year, how do we think about other marketing reinvestment, whether above the line, in the middle of the P&L? Any thoughts on marketing, either magnitude or shifts in delivery versus history?

Russell Diaz-Canseco: You know, I think in terms of magnitude, as we've consistently discussed, you know, we have a very measured approach to marketing. We continue to explore opportunities to find profitable ways to invest as we expand into the 5% to 6% range on marketing. I don't know that that changes a lot this year. I think that we've always used some portion of that budget on sort of baseline or more tried and true vehicles, and then we've always got some where we're experimenting and trying new things. Historically, we focused almost entirely on top of the funnel and adding households growing that awareness.

Russell Diez-Canseco: You know, I think in terms of magnitude, as we've consistently discussed, you know, we have a very measured approach to marketing. We continue to explore opportunities to find profitable ways to invest as we expand into the 5% to 6% range on marketing. I don't know that that changes a lot this year. I think that we've always used some portion of that budget on sort of baseline or more tried and true vehicles, and then we've always got some where we're experimenting and trying new things. Historically, we focused almost entirely on top of the funnel and adding households growing that awareness.

Speaker #5: I think, in terms of magnitude, as we've consistently discussed, we have a very measured approach to marketing. We continue to explore opportunities to find profitable ways to invest.

Speaker #5: As we expand into the five to six percent range on marketing, I don't know that that changes a lot this year. And I think that we've always used some portion of that budget on sort of baseline or more tried-and-true vehicles.

Speaker #5: And then we've always got some where we're experimenting and trying new things. Historically, we focused almost entirely on top of the funnel and adding households growing that awareness.

Speaker #5: We now have the benefit of a lot of awareness built. And so we'll have the opportunity to try some things perhaps we haven't focused on as much in the past around driving repeat and loyalty.

Russell Diaz-Canseco: We now have the benefit of a lot of awareness built. We'll have the opportunity to try some things perhaps we haven't focused on as much in the past around driving repeat and loyalty. We'll look forward to seeing how those play out as the year goes on.

Russell Diez-Canseco: We now have the benefit of a lot of awareness built. We'll have the opportunity to try some things perhaps we haven't focused on as much in the past around driving repeat and loyalty. We'll look forward to seeing how those play out as the year goes on.

Speaker #5: And we'll look forward to seeing how those play out as the year goes on.

Speaker #11: Great. Thanks, Russ.

[Analyst] (Mizuho Securities): Great. Thanks, Russell.

John Baumgartner: Great. Thanks, Russell.

Thilo Wrede: That plan is still to keep increasing our marketing spend in total dollars. We continue to build the brand. To Russell's point, we've built a lot of brand awareness. There's a lot more that we want to do there. This is also a year where we want to convert a lot of that brand awareness into trial, right? If marketing can play a role there, I think that's a push that we need to go after as well.

Speaker #10: That we're plan is still to keep increasing our marketing spend in total dollars. We continue to build the brand. To Russell's point, we've built a lot of brand awareness.

Speaker #10: There's a lot more that we want to do there. But this year is also a year where we want to convert a lot of that brand awareness into trial, right?

Speaker #10: So if marketing can play a role there, I think that's a push that we need to go after as well.

Speaker #11: Perfect. Thank you.

[Analyst] (Mizuho Securities): Perfect. Thank you.

John Baumgartner: Perfect. Thank you.

Speaker #6: And your next question comes from the line of Gerald Pascarelli with Needham & Company, your line is open.

Brian Shipman: Your next question comes from the line of Gerald Pascarelli with Needham & Company. Your line is open.

Speaker #11: Great. Thanks very much, for taking the question. I just have one. And I wanted to go back to one of Brian's previous questions just on the confidence of the long-term targets.

Gerald Pascarelli: Great. Thanks very much for taking the question. I just have one, and I wanted to go back to one of Brian's previous questions, just on the confidence of the long-term targets, but specifically related to EBITDA. At a 12% expected margin this year, you're 400 basis points below the mid point of your 2030 targets. I understand that pricing is muted right now, right? Like, given some of the compression we're seeing with private label. If the market remains volatile and gets increasingly competitive, and then, you know, you essentially need to invest more behind your brand, I'm curious if you could just lay out the levers you have to drive operating leverage to achieve those targets. If you could bridge that for us.

Speaker #11: But specifically related to EBITDA. So at a 12% expected margin this year, you're 400 basis points below the mid point of your 2030 targets.

Speaker #11: I understand that pricing is muted right now, right? Given some of the compression we're seeing with private label. But if the market remains volatile, and gets increasingly competitive, and then you essentially need to invest more behind your brand, I'm curious if you could just lay out the levers you have to drive operating leverage to achieve those targets.

Speaker #11: So if you could bridge that for us. And I guess specifically does your target embed a certain range of rate increases in a more normalized environment?

Gerald Pascarelli: I guess specifically, does your target embed a certain range of rate increases in a more normalized environment? Any color there would be great. Thank you.

Speaker #11: Any color there would be great. Thank you.

Thilo Wrede: Gerald, let me start with the 12% implied margin. When we gave targets, long-term targets back in 2023 at our Investor Day back then, we had said that by 2027, we want to get to a 12% to 14% EBITDA margin range. We were above that last year, we'll be in that range this year. Yes, it's a decline year-over-year in margin, but I would say we're still very much on track to where we thought we were a few years ago. We continue to be on track to the target that we set two months ago for 2030. I think as we continue to grow, we continue to get benefits of scale, especially in operating expenses.

Speaker #10: So Gerald, the let me start with the 12% implied margin. When we gave targets, long-term targets back in 2023 at our investor day back then, we had said that by 2027, we want to get to a 12 to 14% EBITDA margin range.

Speaker #10: We were above that last year. We'll be in that range this year. So yes, it's a decline year over year margin. But I would say we're still very much on track to where we thought we were a few years ago.

Speaker #10: And we continue to be on track to the target that we set two months ago for 2030. I think as we continue to grow, we continue to get benefits of scale, especially in operating expenses.

Speaker #10: We talked about, and you can see that in our numbers, how our SG&A scaled last year. It will continue to scale this year. This year, because the growth is so much more volume-driven than prior years, there's an impact on gross margin, which flows through.

Thilo Wrede: We talked about, and you can see that in our numbers, how our SG&A scaled last year. It will continue to scale this year. This year, because the growth is so much more volume-driven than prior years, there is an impact on gross margin, which flows through. Overall, in operating expenses, every year, we're getting scale benefits, just from the growth that we are generating on the top line and not having to grow operating expenses to the same degree.

Speaker #10: But overall, in operating expenses, every year, we're getting scale benefits just from the growth that we're generating on the top line. And not having to grow operating expenses to the same degree.

Speaker #11: Perfect. Thanks.

Gerald Pascarelli: Perfect. Thanks.

Speaker #6: There are no further questions at this time. I turn the call back over to Brian Shipman.

Brian Shipman: There are no further questions at this time. I turn the call back over to Brian Shipman.

Speaker #1: Great. Thank you for your time and interest today. Please feel free to contact us with any follow-up questions. Have a great day.

Russell Diaz-Canseco: Great. Thank you for your time and interest today. Please feel free to contact us with any follow-up questions. Have a great day.

Russell Diez-Canseco: Great. Thank you for your time and interest today. Please feel free to contact us with any follow-up questions. Have a great day.

Speaker #6: This concludes today's conference call. You may now

Brian Shipman: This concludes today's conference call. You may now disconnect.

Q4 2025 Vital Farms Inc Earnings Call

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