Q3 2025 Vital Farms Inc Earnings Call
Good day and thank you for standing by. Welcome to vital Farms, third quarter 2025 earnings conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded, I would now, like to hand it over to your host Brian Shipman, vice president of investor relations, please go ahead.
Good morning and welcome to Vital Farms' third quarter 2025 earnings conference call on webcast.
Joining me today are Russell Diaz Kenco, vital Farms, President Chief Executive Officer and tilo. Read the company's Chief Financial Officer.
By now, everyone should have access to the company's third quarter. 2025 earnings press release issued this morning.
During today's call management, may make forward-looking statements within the meaning of the Federal Security 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 4 looking statements,
please refer to today's press release the company's quarterly report on form 10q for the fiscal quarter ended September 28th 2025 that was filed with the SEC today, as well as the company's other SDC filings for a detailed discussion of the risk that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.
Note that on today's call management will refer to certain non-gaap Financial measures.
Comparable, gaap measures.
That presentation and today's press release are both available on the Investor Relations section of our website.
After our prepared remarks, we'll open the line for questions as a reminder. Please limit yourself to 1 question plus 1, follow-up, so that we can hear from as many participants as possible.
Now, I'll turn the call over to Russell.
Thank you, Brian, and good morning everyone. Before we get into results, I want to officially welcome you as our new vice president of investor relations.
We're excited to have you on the team.
For those of you joining us today, I know you will all enjoy working with Brian.
I'd also like to thank the entire vital Farms Crewe.
Over the past 3 months, we've delivered a very strong quarter with a record Financial results. Advanced our supply chain and set the company up for continued growth in 2026 and Beyond.
All of these Great accomplishments. Took every 1 of our crew to make happen from the team at egg Central Station in Springfield to our farm support and remote Workforce.
I just came back from an all hands meeting with our Remote Crew and the energy and commitment in that room, was truly inspirational.
Our crew is energized to drive strong growth into the future, in service of our purpose, to improve the lives of people animals and the planet through food. And I'm honored to have the opportunity to lead this great organization.
As we entered the back half of 2025, we told you. Our Focus would be on rebuilding Supply meeting strong, retail demand, and positioning the business for sustainable growth into 2026. We've delivered on all 3.
Let's start with this quarter's results.
Net revenue was 198.9 million, a new record for any quarter and was up 37.2% from the prior year, period on the back of the incredible. Ramp up in the supply of eggs, our crew has been able to deliver
Gross margin came in at 37.7%, which remains above our long-term Target of 35%.
and adjusted Evita was 27.4 million and increased 81.3% compared to the prior year period as we benefited from Price, mix and scale efficiencies
Next, we made meaningful progress expanding Supply. Adding processing capacity at egg Central Station and completing a major systems upgrade.
We added approximately 75 new Family Farms. During the last quarter, bringing our total to 575 Family Farms.
That's approximately 150 new Farms year to date.
We now have more than 10 million hens under contract, which is a reflection of the trust and partnership, we've built with farmers and the pasture belt.
Our third production line at egg Central Station in Springfield came online in October, expanding capacity, to about 1.2 billion. Dollars in annual egg revenue, and positioning us to meet growing consumer demand.
our Seymour facility remains on track to open in early 2027, with 2 production lines, we estimate the Seymour facility will add 900 million in annual revenue capacity,
Also, at the beginning of the fourth quarter, we went live with our digital transformation project.
The critical Milestone that enhances our operational capabilities and underpins our ability to scale efficiently, more on that from kilo in a few minutes.
Finally, we continue building our trusted brand and making progress on our long-term aspiration to grow vital Farms. Into America's most trusted food company,
This increases our confidence that we have positioned the business well for long-term growth.
We added another 2 percentage points of aided brand awareness, which now stands at 33%.
Brand awareness is now up 8 percentage points since the third quarter of last year demonstrating that our message is clearly winning with consumers.
Through compelling authentic work like our good eggs, no shortcuts brand campaign, and our ads, that aired alongside fx's award-winning series The Bear. Our stories continue to attract strong interests from the media and the public
We also launched limited edition dog, treats made with vital Farms eggs in August.
This fun brand moment was featured in top tier media Outlets like Good Morning America and generated over 550 million impressions, across press paid media, and social media.
In summary, this was another great quarter for Vital Farms. We're executing well in the near term while laying the foundation for long-term growth.
The Investments we're making will continue to set vital Farms up for long-term success.
We're raising fully your guidance for fiscal 2025, which kilo will cover in detail.
Kilo over to you.
Thanks Charles and hello everyone. I'll review our third quarter Financial results and then discuss our updated full year outlook. Let me start though. By also welcoming Brian to vital Farms, Ryan. It's great to have you here and I'm excited about what you're bringing to the company.
Now for the results, net revenue for the third quarter of 2025 rows to 10098.9 million, an increase of more than 37% compared to the prior year period.
Revenue growth was driven by continued volume growth and favorable price mix.
Gross profit Rose to 75.0 million or 37.7% of net revenue from 53.5 million or 36.9% of net revenue. Last year, the increase in gross profit dollars was primarily driven by Revenue growth from higher volume and increased pricing across our Sherlock portfolio and favorable mix benefits.
Gross profit margin increased year-over-year primarily due to favorable price. Mix partially offset by increased overhead costs.
Sgna increased to 44.4 million or 22.3% of net revenue, compared with 36.1 million or 24.9% of net revenue, last year.
Shipping and distribution expenses, were 9.2 million or 4.6% of net revenue compared to 8.1 million or 5.6% of net revenue last year.
The dollar increase was driven by higher ship volume.
Net income for the third quarter of 2025 increased 121% to 16.4 million or 36 cents per diluted share compared to 7.4 million or 16 cents per diluted. Share for the third quarter of 2024. The increase in net income was driven by operating profit growth. Partially offset by year-over-year increases in tax provisions.
Adjusted ibida for the third quarter of 2025 was 27.4 million or 13.8% of net revenue compared to 15.2 million or 10.5% of net revenue for the third quarter of 2024
turning now, to our balance sheet,
As of September 28th 2025 we are total Cash, Cash, equivalents and marketable securities of 145.1 million with no debt outstanding.
The sequential decline in Cache cache, equivalents and marketable securities, reflects ongoing growth Investments, including the new Erp system, the third production line at ECS in Springfield Missouri. The construction of our new act processing facility in Seymour Indiana. And our investment in accelerator Farms, this was partially offset by strong, operating cash flow of 27.9 million for the quarter, our balance sheet remains strong, and provides significant flexibility. As we execute our growth Investments.
Before discussing guidance, I'll provide a brief update on our internal control remediation. We continue to make good progress addressing the material. Weakness. In our Revenue, recognition process, identified in our 2024 annual report,
Importantly, this was a design deficiency only with no impact on our financial statements and we remain on track to complete remediation. By year, end subject to the ongoing enhancements of controls in the recently implemented Erp system
On to guidance given our strong performance on the third quarter. We are raising our full year. 2025 net revenue, guidance to at least 775 million dollars representing growth of at least 28% versus 2024. I would like to point out that we did see a small amount of Revenue pulled forward into the third quarter from the fourth quarter ahead of our planned, EOP go live date. We had announced the goal of data the trade so that they could plan ahead for it.
We're also raising our adjusted EBITDA guidance to at least $15 million for the full year 2025, an increase from our previous guidance of at least $10 million.
As we move into the fourth quarter and have good visibility for the remainder of the year. We now expect a bit less margin pressure in the second half of the Year from terrorists and promotions.
While the Tariff situation remains fluid, we're seeing more modest impacts and we had originally expected. Additionally, our increase promotional activity is going as planned now, that Supply constraints have largely been resolved.
On the digital transformation. Go live.
As previously indicated, we will have elevated cap expand in 2025 and 2026 because of construction of our new facility and Seema Indiana. The newly installed production line at ECS Springfield, the construction of accelerator farms and our digital transformation project.
We expect to fund our current plans with existing cash and operating cash flow and continue to project that every dollar of capex investment in the SEMO facility will generate, 5 dollars of annual revenue capacity.
There may also touch a bit more on the Erp implementation. We turned on our new Erp system, at the beginning of the fourth quarter on September 29th as planned. The new system is working very well. We put a great internal team in place at a realistic timeline with multiple test iterations and partnered with the right implementation. Vendor as is common with any system implementation of this complexity. We are now in a planned hypercare period in the fourth quarter.
During this hyper care period we budgeted additional resources to support operations at ECS and address any issues as they arise. That said, given that ECS had to learn to operate using new processes and software tools. The Erp startup slowed down production for the first 2 weeks of the fourth quarter, but there was always part of our plan and therefore has had no impact on our guidance, for the full year. However, you can see the impact in the most recent scan of data.
Following is expected temporary slowdown. The business has quickly bounced back. And we are now operating at pre go live shipment levels.
Before I end the call back to Russell, I would like to mention that we will hold an investor day on December 16th in Springfield. Missouri. In addition to an update for management, we will tour ECS including the third production line and showcase the new cold storage facility. We hope that you can join us and if you're interested in attending, please reach out to Brian Shipman.
Now, let me turn the call back to Russell.
Thank you, too.
With strong fundamentals, a resilient supply chain and expanding brand reach, worked confident in our trajectory into 2026. As I mentioned at the start of the call, I just returned from an all hands meeting and I'm always so energized by being with the entire crew in person.
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.
Looking ahead, We believe We remain structurally advantaged, with significant long-term opportunities, our brand of eggs, still represent a small fraction of the total egg Market. Giving us substantial runway for growth consumer awareness of animal welfare and food sourcing continues to increase and vital Farms have established itself as The Trusted leader in this space.
The capacity Investments, we're making the operational excellence. We're demonstrating and the brand strength. We're building, create a powerful combination.
We're building a durable, scalable business model that can deliver consistent results for the long term.
Every decision we make. And every investment we prioritize is in service of our mission to become America's most trusted food company.
Progress, we're making in 2025 represents meaningful steps toward that goal.
Once again, we thank you for your time and your interest in vital farms and for the confidence you've placed in us with your investment.
We look forward to seeing many of you at our investor day in December with that. We're happy to take your questions.
As a reminder, in order to ask a question.
Please press star 1 on your telephone keypad, just a moment while we compile the Q&A roster.
Your first question comes from the line of Robert Moscow from TD College, your line is live.
Thanks for the question. And uh, and and welcome to Brian.
um,
I I, I wanted to know, if you could get dive a little deeper tilo, into the volume, in the quarter of 19 percentage.
How much of that is from like, uh, low filling up inventory at customers?
And how much of that would you consider like sustainable demand growth from a consumer standpoint?
And then then also on the price mix was, which was a lot higher than than I thought. Um, is there a mix component to that? That's unusual. Um, that that you might want to dig into? Thanks.
But keep in mind that first half of the Year, our volume growth was constrained just by our limited supply of eggs and uh the demand was always there. Now we're in a much better position to fill the demand. And um, you know, the the way we've talked about um growth progression sequentially throughout the year that every quarter we would have higher growth in the previous quarter higher volume than the previous quarter. We continue to see that. And so with that um this is all um sustainable growth and and driven by demand and not feeling retailer channels.
Um, on the on the price. Mixed question. Yeah, it it was slightly better than than what we had initially planned for the quarter. Um it was really a function of Channel mix um SKU mix for us.
Um, we dialed back promotions a bit in September. We didn't want to, um, have a lot of promotions out in the market. As we went into the Erp implementation at the end of September, we knew ECS would start up slowly afterwards and so we were we were dialing back promotions that helped a bit. Um and so for you know, looking forward, next quarter. Um price. Mix should probably play a slightly smaller role than this this quarter but volume goes um will continue to improve.
Okay. But uh just to to clarify, you know, volume up 19% uh the the retail tracking data doesn't show it quite so High. Um, so you know as as we look forward to to 2026, is that that's the reason I'm asking is like is High Teens volume growth?
Still, you know, conceivable, uh, in 26, based on what you see.
Yeah, I I don't want to get into um guiding 26 update. Um, but the the growth algorithm that we have built for ourselves it it assumes continued healthy volume growth. Keep in mind, we are less than 3% of the of the volume of the entire egg industry in the US.
Um, I think we have we have plenty of, of room to to continue to grow. We are putting the capacity in place. We also talked about the number of farms that we recruited, um, in the quarter, approximately 75 Farms that we added and
So with that um um we're we're putting all the pieces in place to continued, volume growth at a very healthy level. I I don't want to commit yet to a number um but I would argue a third quarter was was not an outlier.
Great. Okay. Thank you.
The next question comes from the line of John Anderson, William Blair, your line is live.
You. Good morning, everybody. Congratulations, and welcome, Brian. Um,
I, I guess I wanted to ask about the, um,
uh,
You know, the additions in in the uh farmer editions in the quarter, you you kind of stepped up.
Uh farmer ads, sequentially through the year. Um, from 25 to 50 last quarter to 75. And, um, I'm just trying to kind of get a sense for to what extent, you know, that?
That is just kind of sarin Serendipity in terms of, you know, farmer availability versus, you know, deliberate as you kind of now have the the third line installed in in ECS and are looking to kind of enter 26 uh, with with increased increased Supply capabilities. Thanks.
Hey, good morning John. Um, great question. So, uh, yeah, we had a really strong quarter in terms of adding New farmers, and I think it speaks to, uh, the success that our network of farmers is having working with us the strong, uh, reputation we have in the marketplace. And as we described uh, earlier this year, uh, sort of our increased uh, capacity
To vet and add great New farmers. Uh, the number is going to, uh, the number of farms, we had each quarter will see some fluctuation quarter to quarter based on, you know, timing, uh, various, uh, inputs to timing. But, uh, in general, we continue to scale over a long period of time, relative to the to the growth that we anticipate in the months and years to come.
Okay. And as a follow-up, I you know, we noticed
that, um,
but,
Um you know it still looks like there's a long way for you to go to. Let's say, you know, establish um an assortment at your big retail customers that it's maybe comparable to to some other, um, some other brands in the category could, could you just talk a little bit about your selling efforts? Uh, what you experience, you know, with resets this fall, and how you're thinking about, um, distribution opportunities in 26, as well, given the the better Supply situation. Thanks.
Thanks John. Yeah, I think very consistent with our approach to so many things. We're really intentional and transparent in our relationship with our Retail Partners. And so, as you as you mentioned, um, we have for the last year or so planned on this expanded, uh, uh, level of egg production and processing capacity that we're now seeing uh, uh, uh, come to fruition. And so that's enabled us to um, to work with our Retail Partners about uh, expanding distribution, where it makes sense for them, based on, uh, our increased availability of of the products that they that they want for their sets. So it is a gratifying to see that show up in expanding points of distribution and we'll continue to be, I think very measured uh, in our approach so that um, we continue to uh, do our best to match growing Supply with growing placements and growing velocities. Um, and uh, you know, as we continue to
To invest in the brand. There's strong pull through as you can see in our velocities, which continues to um ensure that this is a an important part of of a retail exit.
Very good. Thank you.
Your next question comes from the line of Megan. Please go ahead, Morgan Stanley.
Hi, good morning. Thanks for taking your question. Um, wanted to follow up on on Rob's question, um, on the fourth quarter. So, based on the guide in your comments, it does seem to imply that you're expecting just a bit of an underlying acceleration in volumes. If we account for that, that pull forward to you mentioned and and your comments that price mixed maybe decelerate a bit. Um, obviously the scanner data that was helpful commentary in terms of what we've seen more recently. But could you just help us frame your expectations for volumes and and what's driving that underlying acceleration implied in the fourth quarter? Thank you.
Yeah. But um, fair question, I guess it. It really is a function of of also just talked about, right, right. So with great partnership with retailers continued, strong demand from consumers. And then on top of, um, on top of that, uh, we just have better Supply. Uh, the farm recruiting that we did last year, beginning of this year that is now, um, those X are now available to us to sell, uh, the third line that came online at the beginning of October.
Um, that increases the capacity that we have at ECS. And so, we are now getting to a point where, um, we have the X Supply we have the processing capacity and the demand is there. So now we can fulfill more of that demand. And um, those other conversations that we have with our Retail Partners that we see demand out there that we want to uh fulfill that demand. And that allows us to then have very constructive conversations about selling.
Awesome helpful, thank you. And then just a follow-up on pricing. I wondered. If if you could comment on, you know what you're seeing in terms of price gaps and elasticity I think you know, last quarter you
Said the price Gap said widened but we're within an acceptable range. It does seem like there's been some reports of avian flu though seems more contained and and maybe gaps are widening a bit as as that's you know, kind of playing out. Um but as we look at the scanner data your volume share gains are also accelerating. So just wondered. If you could just talk about that Dynamic and kind of what it's telling you about elasticity and and consumer Behavior. Thanks
Yeah we we keep watching the price gaps and and this answer won't be very different from what we've said in the past, right? We we keep watching price gaps. Uh we want to make sure that uh we know where where other players in the industry are but ultimately consumers who buy our products. They probably don't make much of a price decision. It's about the the values that the brand stands for and that those consumers have
Identify with.
um,
I think a big part of it is that hotel rooms with consumers are caring more about where their food comes from and how it's being produced.
And um and that ultimately is is to tell when the benefits are and and it's not really driven by Price gaps, widening or or narrowing.
Awesome. Thank you.
Thanks Mike.
Your next question comes from the line of Scott Marks from Jeffrey's your line is live.
Hey, good morning. Thanks so much for taking our questions and congrats on a nice quarter. Um, wanted to just come back to the question of, um, uh, distribution that's been discussed already. I know in the past, you've talked about how the business is already in so many doors and you kind of see more of the the growth from here coming from getting that extra item that extra ski 1 shelf. So just wondering if you can give us an update on how you're thinking about that. Um you know, as we head into 26th in terms of the split between new doors, versus new new items on shelf, thanks.
Thanks. Uh, great to be with you today. Um, you know, I think our, our stance is is very consistent with where we've been, uh, throughout the year, which is, uh, we're in, uh, you know, about 24,000 doors and, um, and, and
Are largely in, you know, um, some of the highest performing retailers in the US and, uh, our path to Growing is largely with them partnering with them, and continuing to help them meet their, uh, goals for their consumers and for their brands. Um, and you're right, there's still a lot of room to continue to add products to their doors, which we do at a, at a judicious Pace based on our expectations for the ability to service that business. So I wouldn't expect, um,
Uh, new doors to be the primary driver. I think it's additional items in each door that will be our growth opportunity, as well as just general pull-through of the velocity from existing items.
Appreciate that, thanks and then um next question um, would be the your shipping and distribution expense. Although it came in a little bit higher year-over-year. Things still came in below what some folks were looking for. So just wondering if you can help us understand maybe what was the driver of that. Um and and how we should be thinking about that that expense uh item moving forward. Thanks.
Yeah I I think the biggest driver there is rates so you know as as we are all watching the macro environment and backdrop and we're seeing some slowdown in some parts of the economy that is creating a surplus of of trucking availability which is working to our benefit at least for the moment.
Appreciate it. Thanks, pass it on, and and Scott, let let me just answer that. Just, uh, you know, um, heads up that fourth quarter tends to be the highest unit cost for us for shipping and distribution. Um, simply because um, Freight rates go up in the fourth quarter around the holidays. Um, so sequentially, I would assume that there is an an increase in distribution expenses. Um, this year might be a bit of an outlier to what I just said that fourth quarter is the highest unit rate, uh, because of first quarter, um, volume being unusually low for us.
Um, shipping was a bit less, um, efficient back then. So fourth quarter might might come in higher than where we were Q3 on a per unit basis, uh, but still better than what we had first quarter.
Your next question comes from the line of Jon B mcgard team from mesio securities.
Good morning. Thank you for the question.
Good morning.
Good morning. Um, Russy you, you noted in the past, the very long conceivable runway for growth, from the pool of potential new Farmers that that's out there. And and I'm curious given the volatility and uncertainty in the farming Community year to date between tariffs exports, low prices for row, crops. I'm curious what you're seeing in terms of these conditions may be enhancing the interest among
Farmers are accelerating the adoption of pasture raised production given you know better visibility into a domestic Market. Higher Returns versus current operations. I mean, has that been a factor at all in the year to date farm pickups you're seeing or could it be a factor in 2026?
Uh, a farming seemed to be getting tougher every year. Um, so we, you know, we are really, uh, I think, um, centered on that value proposition. It's really important to us that our Farmers win when they work with us and they do their part.
Continues to be an important part of the value for them. I can't say that I'm seeing an acceleration of Interest. We've talked asked about, um, there being plenty of interest and a, and a strong pipeline of, of perspective, small family Farmers. Um, and that continues to be true. Um, and our job is just to make sure that, um, we have a pipeline of really great farmers in the right part of the country, uh, who uh, really believe in what we're doing, and want to be a part of it. And um and we continue to see strong interest.
Thanks for that. And then to follow up on the distribution growth and the velocities. The, the TDP growth is accelerated, nicely throughout the year with the increase in Supply. But I think more recently, the volume velocity has inflected positive since maybe, maybe like the middle of of the summer. And I'm wondering if you can delve into that a bit more this inflection in in velocity is that largely reflective of a shift, favoring more medium or heavy buyers. Is it more reflective of of a changing business, mix between retailers and channels? Just any thoughts there. Thank you.
Added a significant number of new farms and we added uh, and brought online the third production line at egg Central Station. And so, a lot of, uh, what you're seeing in the, in the data is our increased ability to to meet the existing needs of our consumers, and Retail Partners. Um, and that's, you know, that's an exciting. Um,
That's an exciting place to be.
Thank you.
Thank you.
Your next question comes from the line of Matt Smith from Steve. Your line is live.
Hi, good morning. Thanks for taking the question to the, the fourth quarter guy or the the implied fourth quarter guidance, suggests margin still nicely above, the 2027 targets, despite some hypercare spending, as you called it is the level of promotional support and marketing at appropriate levels as you exit this year. Is there an opportunity to flex that higher? As you see strong household penetration and, and awareness gains and 1 other consideration as you fill the new production line at Springfield. Should that be a headwind margin? Exiting? Your is that going to achieve a 3 a throughput that mitigates that
Yeah, great. Great questions, Matt. Um, so on On promotional and marketing spending, um, we had said, um, I think for for a few quarters now that promotional spend meaning trade spend, uh, would be highest in Q4, um, that continues to be the case as continue continue. So we how we plan the year and it simply function of, uh, fourth quarter, we don't, uh, worried about the Erp implementation anymore, the third line is online and so on, we have the supply to support promotions. And with that, um, we we really focusing promotions in Q4 marketing, spend. Um, we're probably, um, here today at a, at a very, um, appropriate level for us. Um, year to date marketing spend was about 5% of net sales. Maybe Q4 will will take it up a little bit, but we've talked about that marketing spend for the full year will be roughly comp.
Comparable to last year where it was 5.3% for the full year. So, um, you know, that that would imply that maybe marketing spend Q4, is going to increase a bit compared to the the um, first 3 quarters of the year but not by any dramatic amount. Um,
And then um the the the question on S production line, is it going to put pressure on margins or not? Um, I would argue that, um, we we had been Staffing up for that line, um, throughout Q2 and Q3 we wanted to bring people in early in order to make sure that by the time the line comes online. They're trained and they know what they are doing.
So now we have the crew in place, um, and now we can actually get the volume off the line. Um, and so if anything the the surf production line should be margin, um, enhancing for us in the fourth quarter, compared to what we've seen in the third quarter.
Thank you for that. And as a follow up to your comments about incremental items, in existing doors, in the past, you've talked about some of these incremental items being a mixed Tailwind. Uh, as you, uh, get more premium items on the Shelf, is that still the case today or is the assortment changed. As we think about some of the, you know, 6 counts of medium eggs, and other items that you've introduced in the past
Yeah. I think um, the biggest Trend that continues to be true is that our organic products are growing faster.
Uh, and that's, I think largely driven by the fact that they are a more recent addition. And therefore, earlier in the growth curve in so many of our mainstream retail, uh, partner shelves. So that's a nice Tailwind. I think from a mix, uh, perspective. Uh, it also increases, um, you know, our average item price which is supportive of uh, the revenue capacity from our infrastructure.
Your next question comes from the line of Eric de Laurier from Craig Hallam. Your line is like
Great. Thank you for taking my questions and congrats on another very impressive quarter here.
Uh, thank you at this point know, although, uh, as we've said, we continue to bring on more capacity and more Supply. And so I think that only uh, enables uh, more trial and and enables us to kind of catch up to that continued. Increase in Awareness that we, uh, that we're driving with our marketing efforts. Um, but in general what we've learned is that consumers don't just buy our eggs, they buy into what we stand for and yes. Uh, there's some uncertainty in the broader environment and and maybe with price gaps on the Shelf but you know our our business is growing because people want to know where their food comes from and that trust and loyalty have kept our demand incredibly steady.
And Eric, I I would add to that, that, you know, we've always talked about that, we use marketing dollars to drive brand awareness, and, and we've obviously seen, um, some very great results there, over the last 12 months with brand awareness, improving my 8 points and then we use promotional dollars to drive trial, right? We, we like that promotion on the Shelf because we got that, you know, a big yellow sticker on the shelf. That then catches the consumer's. I
And um, that's often when a consumer tries us for the first time. So when I earlier talked about that, we will increase promotional spend um in the fourth quarter um that is really to drive trial. We now have the supply to Russell's point, we have a brand awareness and now we want to use promotions to drive, trial to get new households into the
Brand. So if, uh, over the next 3 months, you see an increase in our promotional spend, it's not a reaction to a price gaps, moving 1, way or the other, it really is a function of us having the supply and now the ability uh to get new consumers, to try the brand for the first time and then turn them into into a repeat customers.
It's all very helpful. Appreciate the caller. Thank you.
Your next question comes from the line of Ben Mayhew from BMO Capital markets. Your line is live.
Hey guys. Thanks for the questions and uh welcome Brian. Um I guess I'll start with
Can you talk about the impact of high competing protein prices and do you see that driving more demand into eggs, which are relatively more affordable on a per serving basis?
Yeah, I think that's, um, that's an open question. And we've certainly seen some reports that as consumers are looking for, um, to stretch their, their grocery dollar, they're looking at more affordable, uh, sources of, of nutritious food and eggs have always been a very affordable, uh, a whole whole food. That's, uh, packed with protein and, and the things that consumers want, um, that said, you know, we don't have, uh, any unique insights into into trade down and we're not seeing, uh, strong evidence of of that being, uh, an important Drive.
Driver of our growth at this moment.
Okay, that's fair. And then on slide 12 in your deck. Um your average items sold has once again, surpassed your average week weekly dollars,
Can you explain why this may be an important indicator of your volume ledge strategy and ability to manage supply versus demand over time?
Sorry, Ben. I'm I'm processing processing. The question by now. Um, I think the the um the the short answer um there is
We we continue to drive distribution at retail by by getting more skus on the Shelf.
And as we do that, um,
We we continue to increase the velocity of the items on the shelf, right. So we are not at the point yet where we're adding a marginal skew that that um, that dilutes our velocity on the Shelf um that it's not a it's not a linear expansion on on both metrics. They're they're you know, you'll see some um some Peaks and bumps there. Um but over time I think the statement I just made um that we're driving both velocity and um average items uh distributed. Um I think that holds true. So if if you look at the at the chart in the deck, you know, the the page you
Statement of we can grow both at the same time. We we are not adding the marginal product yet. Um, I think that holds true
and what I might add to that, is that? Um, and we've talked about this on prior calls in many of our Retail Partners. Uh, we are what we would describe as underspace. We've got terrific. High-performing products and often the amount of space we've got in their set is, uh, smaller as uh, we have a smaller share of space than we do share of revenue from their from their uh, exit. And so, when we add an item, it is also an opportunity to provide more Supply and presence of product on the Shelf to meet the growing demand for our brand. Uh and there's there's a lot of runway in that regard.
Thanks. That's very helpful, guys. I'll leave it there.
Thank you.
Your next question comes from the line of sang. VA from Tulsa Advisory Group. Your line is live.
Yeah. Hi, good morning guys. It's actually Joe Feldman on for sarong today. Um, had a quick question about, um, capex. I I think Theo, you mentioned that you there would be a little bit of a, a, I guess, uh, because of timing, there'd be a little lower this year. And I'm wondering does that just get made up next year and how you guys are initially thinking about capex for 2026?
Yeah, John, uh, good to have you on the call? Yeah, it's it. It is just a timing shift, uh, from the senior next year. We we took the guidance down by by 10 million dollars. Um,
And what we talked about was that um, work in Seymour, um you know there's a bit of ground work that we had to do. That is is um slowing down the construction phase by a few weeks.
and then the other part is there is there is a project at ECS that we put on hold uh we didn't want to overtax ECS with changes around the
Um, the EOP go live and the third line coming online. So we wanted to, to reduce the the amount of change that we're doing at at, you know, a single point of time at ECS. And so with that, we delayed this project that ECS into next year, um,
In other words, the the capex spend that we have planned over a 2-year period for 25 and 26 is unchanged. We're just moving a little bit more into next year. Um,
But it's not any reflection other than that, it's it's no reflection on how we think about projects or or importance of project.
Got it, that's helpful. Thank you. And then this might be a little bit more of a technical question. But with with the ECS and I guess we we may see it at the uh, analyst event but I'm just curious. How does the division of the work or the labor happen among the 3 Lines like is 1 line dedicated to just
I don't know, regular eggs versus organic eggs or like how does
I guess how do you run the different lines and you know how how I understand how it increases capacity but how how does that all kind of happen? I guess in my question,
That that's, that's a great question. Uh, and we look forward to showing you it live in at our analyst day. Um, but the thing, uh, that's exciting about this third machine. It is a slightly smaller machine than the first 2, which is why, uh, our reported Revenue capacity, doesn't grow. Um, you know, by 50%. And what that means is that, that machine is great for a shorter. Run, time product. Essentially, it allows us to dedicate the first 2 machines to longer run time, uh, product lines are main, uh, top 4 skus. And then, uh, we can use the new machine to focus primarily on our specialty skus, which have a lower volumes, uh, that
Really increases our efficiency and uh and and we're excited to see that that sort of productivity improvement over time as we, as we work our way into, uh, having all 3 up and running.
That's great. Thank you very much and uh look forward to seeing you guys soon.
Thank you.
That concludes the question and answer session. I'd now like to turn the call back over to Brian Shipman for closing remarks.
Thank you. And thanks again, everyone for joining us today and for your continued support. Please reach out directly with any follow-ups, or if you'd like to attend attend our investor day in December. And with that, have a great day.