Vital Farms Inc

Previous wording

We source our eggs from a network of over 300 family farms. The cream for our butter is sourced from a network of family farms contracted by our butter supplier. We have strategically designed our supply chain to ensure high production standards and optimal year-round operation. We are motivated by the positive impact we have on rural communities and enjoy a strong relationship and reputation with our network of farmers.

Current wording

We source our eggs from a network of over 350 family farms. The cream for our butter is sourced from a network of family farms contracted by our butter supplier. We have strategically designed our supply chain to ensure high production standards and optimal year-round operation. We are motivated by the positive impact we have on rural communities and enjoy a strong relationship and reputation with our network of farmers.

Previous wording

We primarily work with our egg farms pursuant to buy-sell contracts. Under these arrangements, the farmer is responsible for all of the working capital and investments required to produce the eggs and manage the farm, including purchasing the birds and feed supply. During the last quarter of fiscal 2023, as a result of increasing construction costs associated with our new egg farms, we incurred incremental farm recruitment costs that will be required to be paid in advance of these farms beginning to produce eggs, and we expect such incremental costs to continue through fiscal 2024. These costs are expected to be recognized over the term of the related buy-sell contracts with the new farms, which are generally four to five years in length. We believe the unfavorable impact to our working capital resulting from these upfront costs could range from $10.0 million to $12.0 million during fiscal 2024. The impact to fiscal year 2023 working capital was immaterial, and the impact to our gross margin is also expected to be immaterial during the term of these agreements. We are contractually obligated to purchase all of the eggs produced by the farmer during the term of the contract at an agreed-upon price that depends upon pallet weight and is adjusted quarterly for changes in feed cost.

Current wording

We primarily work with our contracted egg farms pursuant to buy-sell contracts. Under these arrangements, the farmer is responsible for all of the working capital and investments required to produce the eggs and manage the farm, including purchasing the birds and feed supply. During the last quarter of fiscal 2023, as a result of increasing construction costs associated with our new egg farms, we incurred incremental farm recruitment costs that will be required to be paid in advance of these farms beginning to produce eggs, and we expect such incremental costs to continue through fiscal 2024. These costs are expected to be recognized over the term of the related buy-sell contracts with the new farms, which are generally four to five years in length. We believe the unfavorable impact to our working capital resulting from these upfront costs could range from $10.0 million to $12.0 million during fiscal 2024. The impact to fiscal year 2023 working capital was immaterial, and the impact to our gross margin is also expected to be immaterial during the term of these agreements. We are contractually obligated to purchase all of the eggs produced by the farmer during the term of the contract at an agreed-upon price that depends upon pallet weight and is adjusted quarterly for changes in feed cost.

Previous wording

Our shell eggs are collected from farmers by a third-party freight carrier and placed in cold storage until we pack them for shipping to our customers at our state-of-the-art shell egg processing facility, Egg Central Station. Egg Central Station is approximately 153,000 square feet and utilizes highly automated equipment to grade and package our shell egg products. Egg Central Station is capable of packing approximately six million eggs per day and has an SQF Excellent rating, the highest level of such certification from the Global Food Safety Initiative.

Current wording

Our shell eggs are collected from farmers by a third-party freight carrier and placed in cold storage until we pack them for shipping to our customers at our state-of-the-art shell egg processing facility, Egg Central Station, in Springfield, Missouri. This facility is approximately 153,000 square feet and utilizes highly automated equipment to grade and package our shell egg products. This facility is capable of packing approximately six million eggs per day and has an SQF Excellent rating, the highest level of such certification from the Global Food Safety Initiative. Additionally, in June 2024, we announced that we are planning to locate a second egg washing and packing facility in Seymour, Indiana, which we anticipate will be fully operational in 2027. We intend to build upon the foundational key learnings and successes from our Egg Central Station facility in Missouri with this second facility and further expand our already resilient supply chain.

Previous wording

We have experienced consistent sales growth. We had net revenue of $147.9 million and $119.2 million, net income of $19.0 million and $7.2 million, and Adjusted EBITDA of $29.1 million and $13.9 million in the 13-week periods ended March 31, 2024 and March 26, 2023, respectively. Adjusted EBITDA is a non-GAAP financial measure. See the section titled “—Non-GAAP Financial Measure—Adjusted EBITDA” below for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure stated in accordance with GAAP.

Current wording

We have experienced consistent sales growth. We had net revenue of $147.4 million and $106.4 million, net income of $16.3 million and $6.7 million, and Adjusted EBITDA of $23.3 million and $11.3 million in the 13-week periods ended June 30, 2024 and June 25, 2023, respectively. We had net revenue of $295.3 million and $225.6 million, net income of $35.4 million and $13.8 million, and Adjusted EBITDA of $52.3 million and $25.2 million in the 26-week periods ended June 30, 2024 and June 25, 2023, respectively. Adjusted EBITDA is a non-GAAP financial measure. See the section titled “—Non-GAAP Financial Measure—Adjusted EBITDA” below for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure stated in accordance with GAAP.

Previous wording

The current inflationary environment may affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs, may adversely affect our operating results. Elevated interest rates also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Additionally, some economic observers suggest that we should expect a higher recession risk over the next year, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Furthermore, such economic conditions have at times produced downward pressure on share prices. We have experienced and may continue to experience increases in our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with global health pandemics, geopolitical tensions, and employee availability and wage increases, all of which may result in additional stress on our working capital resources. We work closely with our farmers, suppliers and third-party manufacturers to manage our supply chain activities and mitigate potential disruptions to our product supplies as a result of supply chain disruptions associated with such uncertainties. We currently expect to have an adequate supply of our products, packaging, and freight through fiscal year 2024.

Current wording

The current inflationary environment may affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs, may adversely affect our operating results. Elevated interest rates also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. Additionally, some economic observers suggest that we should expect a higher recession risk over the next year, which, together with the foregoing, could result in further economic uncertainty and volatility in the capital markets in the near term, and which could negatively affect our operations. Furthermore, such economic conditions have at times produced downward pressure on share prices. We have experienced and may continue to experience increases in our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with global health pandemics, geopolitical tensions, and employee availability and wage increases, all of which may result in additional stress on our working capital resources. We work closely with our farmers, suppliers and third-party manufacturers to manage our supply chain activities and mitigate potential disruptions to our product supplies as a result of supply chain disruptions associated with such uncertainties. We currently expect to have an adequate supply of our products, packaging, and freight through fiscal year 2024.

Previous wording

With cash, cash equivalents and marketable securities of $137.5 million as of March 31, 2024 and $60.0 million available under our syndicated revolving credit facility agreement with JPMorgan Chase Bank, N.A. and the others lenders party thereto, or the JPMorgan Credit Facility, we anticipate having sufficient liquidity to make investments in our business to support our long-term growth strategy. We expect that our cash, cash equivalents and marketable securities as of March 31, 2024, together with cash provided by our operating activities and availability of borrowings under our JPMorgan Credit Facility, will be sufficient to fund our operating expenses for at least the next 12 months and to make investments in our business in support of our long-term growth strategy. For additional information regarding our JPMorgan Credit Facility, see “Long-Term Debt” at Note 12 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Current wording

With cash, cash equivalents and marketable securities of $152.7 million as of June 30, 2024 and $60.0 million available under our syndicated revolving credit facility agreement with JPMorgan Chase Bank, N.A. and the others lenders party thereto, or the JPMorgan Credit Facility, we anticipate having sufficient liquidity to make investments in our business to support our long-term growth strategy. We expect that our cash, cash equivalents and marketable securities as of June 30, 2024, together with cash provided by our operating activities and availability of borrowings under our JPMorgan Credit Facility, will be sufficient to fund our operating expenses for at least the next 12 months. For additional information regarding our JPMorgan Credit Facility, see “Long-Term Debt” at Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

We have positioned our brand to capitalize on growing consumer interest in natural, clean-label, traceable, ethical, great-tasting and nutritious foods. We believe there is substantial opportunity to grow our consumer base and increase the velocity at which households purchase our products. U.S. household penetration for the shell egg category is approximately 96.8%, while the household penetration for our shell eggs is approximately 7.9%. We intend to increase household penetration by continuing to invest significantly in sales and marketing to educate consumers about our brand, our values and the premium quality of our products. We believe these efforts will educate consumers on the attractive attributes of our products, generate further demand for our products and ultimately expand our consumer base. Our ability to attract new consumers will depend, among other things, on the perceived value and quality of our products, the offerings of our competitors and the effectiveness of our marketing efforts. Our performance depends significantly on factors that may affect the level and pattern of consumer spending in the U.S. natural food market in which we operate. Such factors include consumer preference, consumer confidence, consumer income, consumer perception of the safety and quality of our products and shifts in the perceived value for our products relative to alternatives.

Current wording

We have positioned our brand to capitalize on growing consumer interest in natural, clean-label, traceable, ethical, great-tasting and nutritious foods. We believe there is substantial opportunity to grow our consumer base and increase the velocity at which households purchase our products. U.S. household penetration for the shell egg category is approximately 96.8%, while the household penetration for our shell eggs is approximately 8.2%. We intend to increase household penetration by continuing to invest significantly in sales and marketing to educate consumers about our brand, our values and the premium quality of our products. We believe these efforts will educate consumers on the attractive attributes of our products, generate further demand for our products and ultimately expand our consumer base. Our ability to attract new consumers will depend, among other things, on the perceived value and quality of our products, the offerings of our competitors and the effectiveness of our marketing efforts. Our performance depends significantly on factors that may affect the level and pattern of consumer spending in the U.S. natural food market in which we operate. Such factors include consumer preference, consumer confidence, consumer income, consumer perception of the safety and quality of our products and shifts in the perceived value for our products relative to alternatives.

Previous wording

We believe that our ability to increase the number of customers that sell our products to consumers is an indicator of our market penetration and our future business opportunities. We define our customers as the entities that sell our products to consumers. With certain of our retail customers, like Whole Foods, we sell our products through distributors. We are not able to precisely attribute our net revenue to a specific retailer for products sold through such channels. We rely on third-party data to calculate the portion of retail sales attributable to such retailers, but this data is inherently imprecise because it is based on gross sales generated by our products sold at retailers, without accounting for price concessions, promotional activities or chargebacks, and because it measures retail sales for only the portion of our retailers serviced through distributors. Based on this third-party data and internal analysis, Whole Foods accounted for approximately 21% and 24% of our retail sales for the 13-week periods ended March 31, 2024 and March 26, 2023, respectively.

Current wording

We believe that our ability to increase the number of customers that sell our products to consumers is an indicator of our market penetration and our future business opportunities. We define our customers as the entities that sell our products to consumers. With certain of our retail customers, like Whole Foods, we sell our products through distributors. We are not able to precisely attribute our net revenue to a specific retailer for products sold through such channels. We rely on third-party data to calculate the portion of retail sales attributable to such retailers, but this data is inherently imprecise because it is based on gross sales generated by our products sold at retailers, without accounting for price concessions, promotional activities or chargebacks, and because it measures retail sales for only the portion of our retailers serviced through distributors. Based on this third-party data and internal analysis, Whole Foods accounted for approximately 23% and 22% of our retail sales for the 13-week periods ended June 30, 2024 and June 25, 2023, respectively and 22% and 23% for the 26-week periods ended June 30, 2024 and June 25, 2023, respectively.

Previous wording

We are also leveraging foodservice as a critical consumer touchpoint to drive brand awareness, and we are investing in co-marketing to reach new households. We believe co-branding is mutually beneficial to foodservice operators because it helps to differentiate their brands, enhances their perceived customer value and drives loyalty.

Current wording

We are also leveraging foodservice as a critical consumer touchpoint to drive brand awareness, and we are investing in co-marketing to reach new households. We believe co-branding is mutually beneficial to foodservice operators because it helps to differentiate their brands, enhances their perceived customer value and drives loyalty. A multi-unit example from our successful foodservice program is True Food Kitchen, an award-winning restaurant brand and a pioneer of wellness-driven dining with locations across the United States that shares our values for improving the lives of people, animals, and the planet through ethically produced food.

Previous wording

We intend to continue to strengthen our product offerings by investing in innovation in new and existing categories. We have a history of product introductions and intend to continue to innovate by introducing new products from time to time. Eggs and egg-related products generated $143.8 million, or approximately 97%, of net revenue in the 13-week period ended March 31, 2024. We expect eggs and egg-related products to be our largest source of net revenue for the foreseeable future. We believe that investments in innovation will contribute to our long-term growth, including by reinforcing our efforts to increase household penetration. Our ability to successfully develop, market and sell new products will depend on a variety of factors, including the availability of capital to invest in innovation, as well as changing consumer preferences and demand for food products.

Current wording

We intend to continue to strengthen our product offerings by investing in innovation in new and existing categories. We have a history of product introductions and intend to continue to innovate by introducing new products from time to time. Eggs and egg-related products generated $142.9 million, or approximately 97%, of net revenue in the 13-week period ended June 30, 2024. Eggs and egg-related products generated $286.7 million, or approximately 97%, of net revenue in the 26-week period ended June 30, 2024. We expect eggs and egg-related products to be our largest source of net revenue for the foreseeable future. We believe that investments in innovation will contribute to our long-term growth, including by reinforcing our efforts to increase household penetration. Our ability to successfully develop, market and sell new products will depend on a variety of factors, including the availability of capital to invest in innovation, as well as changing consumer preferences and demand for food products.

Previous wording

The results of operations data for the 13-week periods ended March 31, 2024 and March 26, 2023 have been derived from the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Current wording

The results of operations data for the 13-week and 26-week periods ended June 30, 2024 and June 25, 2023 have been derived from the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

Includes stock-based compensation expense of $1,935 and $2,188 in selling, general and administrative for the 13-week periods ended March 31, 2024 and March 26, 2023, respectively, and $47 and $53 in cost of goods sold for the 13-week periods then ended, respectively.

Current wording

Includes stock-based compensation expense of $107 and $80 in cost of goods sold for the 13-week periods ended June 30, 2024 and June 25, 2023, respectively, and $2,809 and $1,366 in selling, general and administrative for the 13-week periods then ended, respectively.

Previous wording

The increase in net revenue of $28.8 million, or 24%, was primarily driven by volume-related increases of $21.9 million and price-related increases of $6.9 million. The volume favorability was driven by accelerated demand for existing products, expanded item offerings and store distribution at existing customers. Net revenue from sales through our retail channel was $142.2 million and $108.6 million for the 13-week periods ended March 31, 2024 and March 26, 2023, respectively.

Current wording

The increase in net revenue of $40.9 million, or 38%, was primarily driven by volume-related increases of $38.1 million and price-related increases of $2.8 million. The volume favorability was driven by accelerated demand for existing products, expanded item offerings, and store distribution at existing customers. Net revenue from sales through our retail channel was $141.9 million and $99.1 million for the 13-week periods ended June 30, 2024 and June 25, 2023, respectively.

Previous wording

The increase in selling, general and administrative expenses of $3.2 million, or 13%, was primarily driven by:

Current wording

The increase in selling, general and administrative expenses of $9.4 million, or 39%, was primarily driven by:

Previous wording

an increase of $0.4 million in marketing-related expenses; and

Current wording

an increase of $1.7 million in marketing-related expenses;

Previous wording

an increase of $1.0 million in professional service expenses to support operational expansion;

Current wording

an increase of $1.2 million in professional service expenses to support operational expansion;

Previous wording

an increase of $0.3 million in technology and software-related expenses to support increased operations and employee headcount.

Current wording

an increase of $0.5 million in technology and software-related expenses to support increased operations and employee headcount; and

Previous wording

an increase of $0.5 million in brokerage-related expenses due to the expansion of the business;

Current wording

an increase of $0.3 million in brokerage-related expenses due to the expansion of the business.

Previous wording

The decrease in shipping and distribution costs of $230,000, or 3%, was driven by favorable linehaul and fuel, partially offset by higher sales volumes.

Current wording

The increase in shipping and distribution costs of $1.4 million, or 23%, was driven by higher sales volumes, partially offset by favorable linehaul and fuel rates.

Previous wording

The increase in interest expense of $116,000, or 83%, was primarily driven by an increase in finance leases, which generated an increase in interest expense related to those leases.

Current wording

The increase in interest expense of $0.1 million, or 89%, was primarily driven by an increase in finance leases, which generated an increase in interest expense related to those leases.

Previous wording

The increase of $748,000 in interest income, or 220%, was primarily driven by higher interest income on our available-for-sale securities and marketable securities portfolios resulting from a higher balance and higher interest rates.

Current wording

The increase in interest income of $0.9 million, or 192%, was primarily driven by higher interest income on our available-for-sale securities and marketable securities portfolios resulting from a higher balance and higher interest rates.

Previous wording

The decrease in other expense, net of $1.1 million was primarily driven by a reduction in losses on our commodity derivative instruments during the 13-week period ended March 31, 2024 as compared to those in the 13-week period ended March 26, 2023.

Current wording

The decrease in other expense, net of $0.4 million was primarily driven by a reduction in losses on our commodity derivative instruments during the 13-week period ended June 30, 2024 as compared to the 13-week period ended June 25, 2023.

Previous wording

The increase in the income tax provision of $3.2 million, or 126%, was related to an increase in net income for the 13-week period ended March 31, 2024 as compared to the same period in the prior year, partially offset by the tax benefit of a non-qualified stock option exercises and RSU releases that occurred during the 13-week period ended March 31, 2024.

Current wording

The increase in the income tax provision of $0.5 million, or 44%, was related to an increase in net income for the 13-week period ended June 30, 2024 as compared to the same period in the prior year, partially offset by the tax benefit of a non-qualified stock option exercises and RSU releases that occurred during the 13-week period ended June 30, 2024.

Previous wording

The increase in gross profit of $16.2 million, or 38%, was driven by higher net revenue generated during the period. The increase in gross margin during the 13-week period ended March 31, 2024 compared to the corresponding period in the prior year was primarily driven by price increases on our organic egg portfolio in January 2024 as well as fully realizing our February 2023 price increase across the entire shell egg portfolio. Conventional commodities and lower diesel costs also contributed to margin favorability. This was partially offset by an increase in promotional rate as well as an increase in labor and overhead costs.

Current wording

The increase in gross profit of $36.1 million, or 45%, was driven by higher net revenue generated during the period, as well as benefits of scale and enhanced operational efficiencies. The increase in gross margin during the 26-week period ended June 30, 2024 compared to the corresponding period in the prior year was primarily driven by price/mix benefits, including price increases on our organic egg portfolio in January 2024 and fully realizing our February 2023 price increase across the entire shell egg portfolio, as well as benefits of scale, operational efficiencies and more favorable commodity and diesel costs. This was partially offset by an increase in promotional rate as well as an increase in labor and overhead costs.

Previous wording

an increase of $0.9 million in employee-related costs, including stock-based compensation, driven by an overall increase in employee headcount to support our operations;

Current wording

an increase of $6.6 million in employee-related costs, including stock-based compensation, driven by an overall increase in employee headcount to support our operations;

Previous wording

Since inception, we have funded our operations with proceeds from sales of our capital stock, proceeds from borrowings and cash flows from the sale of our products. We had net income of $19.0 million in the 13-week period ended March 31, 2024, and retained earnings of $48.7 million as of March 31, 2024.

Current wording

Since inception, we have funded our operations with proceeds from sales of our capital stock, proceeds from borrowings and cash flows from the sale of our products. We had net income of $16.3 million and $35.4 million in the 13-week and 26-week periods ended June 30, 2024, and retained earnings of $65.1 million as of June 30, 2024.

Previous wording

Our future capital requirements will depend on many factors, including our pace of new and existing customer growth, our investments in innovation, our investments in acquisitions, partnerships and unexplored channels and the potential costs associated with future expansion of our production capacity. As of March 31, 2024, future minimum lease payments under non-cancelable operating leases totaled $10.5 million and future minimum lease payments under non-cancelable finance leases totaled $15.6 million. In addition, as a result of increasing construction costs associated with our new farms, we incurred incremental farm recruitment costs that will be required to be paid in advance of these farms being able to produce eggs, and we expect such incremental costs to continue through fiscal 2024. These costs are expected to be recognized over the term of the related buy-sell contracts with the new farms, which are generally four to five years in length.

Current wording

Our future capital requirements will depend on many factors, including our pace of new and existing customer growth, our investments in innovation, our investments in acquisitions, partnerships and unexplored channels and the potential costs associated with future expansion of our production capacity. As of June 30, 2024, future minimum lease payments under non-cancelable operating leases totaled $9.1 million and future minimum lease payments under non-cancelable finance leases totaled $14.8 million. In addition, as a result of increasing construction costs associated with our new farms, we incurred incremental farm recruitment costs that will be required to be paid in advance of these farms being able to produce eggs, and we expect such incremental costs to continue through fiscal 2024. These costs are expected to be recognized over the term of the related buy-sell contracts with the new farms, which are generally four to five years in length.

Previous wording

Additionally, in April 2024 we signed an agreement to acquire land for a planned additional egg washing and packing facility. We anticipate that we will incur approximately $20.0 million to $35.0 million in capital expenditures related to the new egg washing and packing facility in the next 12 months and will incur further expenditures in the years following. Finally, we anticipate increased expenditures in marketing during fiscal 2024 to support progress toward our long-term marketing goals.

Current wording

Additionally, in April 2024 we signed an agreement to acquire land in Seymour, Indiana for a planned additional egg washing and packing facility. We anticipate that we will incur approximately $8.0 million to $12.0 million in capital expenditures related to the new egg washing and packing facility in the next 12 months and will incur further expenditures in the years following. We also anticipate that we will incur approximately $20.0 million to $30.0 million in capital expenditures over the next 12 months related to the development of farms on previously acquired farmland in Indiana or the purchase and development of future parcels, with further expenditures incurred in the years following. Finally, we anticipate increased expenditures in marketing during fiscal 2024 to support progress toward our long-term marketing goals.

Previous wording

The JPMorgan Credit Facility is secured by liens on substantially all of our assets, including certain intellectual property assets and investment securities. It requires us to maintain (i) a net leverage ratio of no greater than 3.25 to 1.00, subject to two increases up to 4.00 to 1.00 for a certain period following material acquisitions, and (ii) a fixed charge coverage ratio of no less than 1.35 to 1.00.

Current wording

The JPMorgan Credit Facility is secured by liens on substantially all of our assets, including certain intellectual property assets and investment securities. It requires us to maintain (i) a net leverage ratio of no greater than 3.25 to 1.00, subject to two increases up to 4.00 to 1.00 for a certain period following material acquisitions, and (ii) a fixed charge coverage ratio of no less than 1.35 to 1.00. The JPMorgan Credit Facility contains other customary covenants, representations and events of default. As a result of the limitations contained in the JPMorgan Credit Facility, certain of the net assets on our consolidated balance sheet as of June 30, 2024 are restricted in use. As of June 30, 2024, there was no outstanding balance under the JPMorgan Credit Facility, and we were in compliance with all covenants under the JPMorgan Credit Facility.

Previous wording

See “Long-Term Debt” at Note 12 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details related to the PNC Credit Facility and the JPMorgan Credit Facility.

Current wording

See “Long-Term Debt” at Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details related to the JPMorgan Credit Facility.

Previous wording

The following table summarizes our cash flows for the 13-week period indicated:

Current wording

The following table summarizes our cash flows for the 26-week period indicated:

Previous wording

The increase in net cash provided by operating activities during the 13-week period ended March 31, 2024 compared to the corresponding period in the prior year was due primarily to $11.9 million higher net income earned in the current period due to gross margin improvements and better leverage of selling, general and administrative costs. Additionally, we utilized $10.0 million less cash in inventory purchases and $3.6 million more due to accounts receivable during the 13-week period ended March 31, 2024 compared to the corresponding period in the prior year.

Current wording

The increase in net cash provided by operating activities during the 26-week period ended June 30, 2024 compared to the corresponding period in the prior year was due primarily to $21.5 million higher net income earned in the current period due to gross margin improvements and better leverage of selling, general and administrative costs.

Previous wording

The decrease in cash provided by investing activities is primarily due proceeds earned on the sale of property, plant and equipment during the 13-weeks ended March 26, 2023 whereas there were no similar sales in the 13-week period ended March 31, 2024.

Current wording

The decrease in cash provided by investing activities is primarily due to an increase in purchases of property, plant and equipment during the 26-week period ended June 30, 2024 and fewer proceeds received on the maturities of available-for-sale debt securities, compared to the corresponding period in the prior year.

Previous wording

The increase in cash used in financing activities during the 13-week period ended March 31, 2024 compared to the corresponding period in the prior year was due primarily to the payment of tax withholding obligations on restricted stock unit shares vested in the period and an increase of principal payments on finance lease obligations.

Current wording

The increase in cash provided by (used in) financing activities during the 26-week period ended June 30, 2024 compared to the corresponding period in the prior year was due primarily to an increase in the proceeds received from the exercise of stock options in the current period.

Previous wording

1 Amount also reflects finance lease amortization.

Current wording

(1) Amount also reflects finance lease amortization.

Previous wording

The significant accounting estimates used in preparation of the unaudited condensed consolidated financial statements are described in our audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, and the notes thereto, which are included in our Annual Report. Except as detailed in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, there have been no material changes to our significant accounting policies or critical accounting estimates during the 13-week period ended March 31, 2024.

Current wording

The significant accounting estimates used in preparation of the unaudited condensed consolidated financial statements are described in our audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, and the notes thereto, which are included in our Annual Report. Except as detailed in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, there have been no material changes to our significant accounting policies or critical accounting estimates during the 26-week period ended June 30, 2024.

Previous wording

In April 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Current wording

In April 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act until such time that we are no longer an emerging growth company. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Previous wording

We may take advantage of these exemptions until December 31, 2025, or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (2) December 31, 2025; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission. We may choose to take advantage of some but not all of these exemptions.

Current wording

We will cease to be an emerging growth company on the date that is the earliest of (1) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (2) December 31, 2025; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or the SEC. We may choose to take advantage of some but not all of these exemptions. Based on the market value of our common stock held by non-affiliates as of the last business day of our fiscal quarter ending June 30, 2024, our emerging growth company status will expire on December 29, 2024 because we will qualify as a large accelerated filer under the rules of the SEC and will be required to provide, among other items, an auditor’s attestation of management’s assessment of internal control over financial reporting required under Sarbanes-Oxley Act Section 404(b) beginning with our annual report for the year ending December 29, 2024.