Vital Farms, Inc.

Q2 net revenue declined 10.1% to $166 million, driven by a volume-driven decline of $19.8 million in retail channel sales, partially offset by a $1.1 million price-mix benefit. Gross profit was $10.9 million, or 6.6% of net revenue, and adjusted EBITDA was a loss of $26.6 million. Gross profit included $19.5 million from excess breaker sales, $0.8 million from amortization of farmer contract amendments, and $7.8 million of butter wind-down exit costs, for $28.1 million of supply-management and other discrete expenses. SG&A was $40.4 million, including $6.3 million of discrete expenses, and shipping and distribution expenses rose to 6.4% of net revenue from 4.9% a year ago. Cash at quarter end was $21.2 million, and the company had drawn $30 million on its prior revolver. Full-year guidance was reaffirmed for net revenue of $775 million to $800 million, adjusted EBITDA of $0 to $10 million, and CapEx of $70 million to $75 million; management also said it expects to exit Q4 at roughly a 30% gross margin run rate and expects supply-management costs for the full year in the mid-$30 million range.

Russell Diez-Canseco emphasized that the company’s operational calibration plan is taking hold after an unexpectedly difficult first half marked by industry oversupply and price gaps. He repeatedly pointed to three pillars of the turnaround: narrower price gaps, faster distribution expansion, and supply reduction via farmer contract amendments rather than breaker sales. His tone was constructive and confident, saying the company believes it has clear line of sight to improved operating results in the second half of 2026 and into 2027.

Thilo Wrede focused on the numbers behind the trough quarter and the steps being taken to protect liquidity and margins. He cited Q2 net revenue of $166 million, gross profit of $10.9 million, adjusted EBITDA loss of $26.6 million, and discrete supply-management/exit items totaling $24.8 million not added back to EBITDA. He also said the company ended the quarter with $21.2 million in cash, then added a new $125 million term loan and a new $60 million ABL facility with 3-year tenors, replacing the prior revolver and giving the company $185 million in debt capacity. Wrede said annualized SG&A has been reduced by about $6 million to $7 million, full-year supply-management costs are now modeled in the mid-$30 million range, and CapEx guidance remains $70 million to $75 million as construction on Vital Crossroads is paused.

Analysts pressed management on how far and how fast price gaps need to move, with Russell saying the company is being judicious and may not reach the exact market-wide target this year, but is balancing speed, cost, and a return to positive volume growth. Questions also focused on where distribution gains are coming from; management said the biggest opportunity is in mass, while gains are also coming from core items in existing doors and a newly launched 24-count SKU. On supply, management explained that breaker expenses should fall materially in the second half because the company is reducing eggs at the farm level rather than routing excess product to breaker plants, though some breaker expense may remain in Q3 and possibly Q4 for flexibility. Analysts also asked about the new credit facilities and capital allocation; management said the larger debt capacity provides an “insurance policy” and that share repurchases are now constrained by the new loan agreements.