In a May 4^th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the first quarter of fiscal 2023. This specialty egg producer competes directly with producers and distributors of USDA certified organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company experienced the same pressures of increased costs for feed, contractor remuneration, labor and transport as competitors in a market that benefited from unprecedented high wholesale prices.

For the first quarter of FY 2023 ending March 26^th, net income was $7.2 million on revenue of $119.7 million.  Comparable figures for the first quarter of fiscal 2022 ending March 27^th 2022 were a net loss of $(1.5) million on revenue of $77.1 million. Diluted EPS increased from $(0.04) for the first quarter of fiscal 2022 to $0.16 for the most recent quarter. During the first quarter of 2021 the company received a tax benefit of $2.4 million.

Gross margin for the most recent quarter was 35.8 percent compared with 28.2 percent for the first quarter of 2022. Operating margin for the first quarter of 2023 was 9.1 percent compared with a negative 5.3 percent for the corresponding quarter of 2022.

In commenting on results, Russell Diez-Canseco, President and CEO stated “2023 is off to a tremendous start, as we achieved the highest net revenue and adjusted EBITDA in a single quarter in Vital Farms' history. This was driven by both strong internal execution and robust consumer demand for our products as our volumes grew 26 percent during the period,”

Guidance for FY 2023 included revenue of $450 million, an adjusted EBITDA of $30 million and capital expenditure of $30 million.

It is considered significant that in the statement of risks that included climatic factors, supply chain disruption and the war in Ukraine, management did not assign sufficient gravity to the possibility of HPAI affecting pasture-housed flocks that are more vulnerable compared to flocks confined to houses. There was no mention as to whether flocks were confined during the quarter. If not this would have been imprudent. In the event that some or all of the flocks were confined as a preventive measure eggs should have been sold as “cage-free” and not “pasture housed”

On March 26^th 2022, Vital Farms posted assets of $226.8 million of which $5.4 million comprised intangibles against lease obligations of $2.6 million. The Company had an intraday market capitalization of $629 million on May 11^th. VITL trades with a forward P/E of 47 and has ranged over a 52-week period from $7.89 to $18.18 with a 50-day moving average of $14.44.  Twelve-month trailing operating margin was 4.2 percent and profit margin 2.5 percent.  Return on assets over the past twelve months was 5.1 percent and 6.2 percent on equity. Thirtyfive percent of Vital Farms equity is held by insiders with 63 percent by institutions. As of April 28^th six percent of the float was short.