Freshpet, Inc. · NASDAQ:FRPT
Freshpet — Shareholder Meeting (August 2020)
52 slides from Freshpet's shareholder meeting presentation, Aug 14, 2020
Slide 1: Freshpet, Inc. Launches Multi-Year Corporate Governance Plan
Freshpet, Inc. Launches Multi-Year Corporate Governance Plan Secaucus, N.J., August 14, 2020 – Freshpet, Inc. (“Freshpet” or the “Company”) (NASDAQ: FRPT) today launched a multi-year plan to enhance its corporate governance practices, as described in detail in the definitive proxy statem
Slide 2: Planned Future Proposals and Board Actions
Planned Future Proposals and Board Actions Director Resignation Policy After this year’s Annual Meeting and contingent upon the shareholders’ approval of the Supermajority Voting Removal Proposal, the Board plans to adopt a policy that any incumben
Slide 3: About Freshpet
About Freshpet Freshpet’s mission is to improve the lives of dogs and cats through the power of fresh, real food. Freshpet foods are blends of fresh meats, vegetables and fruits farmed locally and made at our Kitchens in Bethlehem PA. We thoughtfully prepare our foods using natural ingredients, cook
Slide 4: ESG Evolution Report
freshpet ESG Evolution Report
Slide 5: Our goal is to change the way people feed their pets forever
OUR GOAL IS TO CHANGE THE WAY PEOPLE FEED THEIR PETS FOREVERWe’re a team of dog-obsessed, cat-crazy pet parents who live and work alongside our four-legged best friends. We’re united by a passion for pets and a mission to give them the best pet food possible for a happy, healthy, and long life. Doin
Slide 6: Table of Contents
TABLE OF CONTENTS 1. OVERVIEWForward Looking Statements& Non-GAAP MeasuresLetter from Our BoDLetter from Our CEOCompany MilestonesBusiness PillarsOperating PrinciplesLong-Term Strategy:Path to 20252. Pets | Our Food & Giving BackProduct OfferingsEvolution of Pet FoodFreshpet DifferenceWhat Customers
Slide 7: Overview
Overview 1
Slide 8: Non-GAAP Measures
Non-GAAP MeasuresFreshpet uses certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDA as a % of net sales, Adjusted Gross Profit, Adjusted Gross Profit as a % of net sales (Adjusted Gross Margin), Adjusted SG&A and Adjusted SG&A as a % of net sales. These non-GAAP fi
Slide 9: Our Governance of Sustainability Is Part of Board's Oversight of Long-Term Strategy
Our Governance of Sustainability Is a Part of Board’s Oversight of Long-Term StrategyWe believe good governance at all levels is necessary to drive corporate responsibility, which in turn enhances the long-term interests of our shareholders and strengthens Board and management accountability. As a p
Slide 10: Letter from Our CEO
At Freshpet, we strive to provide fresh, real foods that pets love and help them live healthier lives. We are a young company. Freshpet was started in 2006 and went public in 2014. Our net sales in our most recently completed fiscal year were only $246 million in a $30 billion category. But we are o
Slide 11: Letter from Our Board
plan and the equity offering were well-received by the market and the stock has traded at a significant premium as a result. Ethics & Integrity: Our core values of integrity and accountability guide us in our day-to-day business activities. Freshpet’s goal is to maintain and strengthen its reputatio
Slide 12: Freshpet Milestones
FRESHPET MILESTONES ‘06 ‘10 ‘13 ‘14 ‘15 ‘19 • Freshpet founded withcommitment to re-inventingpet nutrition and enrichingthe lives of all involved. • 5,000 stores• Launched first TV campaign• Partnership with Mid Ocean • 10,000+ Chillers• New kitchen constructionand production begins IPO • 15,000+ Ch
Slide 13: Business Pillars: A Difficult Business to Replicate
A DIFFICULT BUSINESS TO REPLICATE HIGH BRAND LOYALTYAlignment with deep petparent emotional motivations DIFFERENTIATEDInnovative forms, technologies, and appearance MANUFACTURINGProprietary technology, processes, and infrastructure FRESHPET FRIDGEBranded, company-ownedreal estate SUPPLY CHAINOnly re
Slide 14: Operating Principles: Pets. People. Planet.
pets. people. planet. Deliver fresh healthy food and nourish the human animal bond — we live longer healthier lives together consistent quality generating industry leading consumer satisfaction Ensure that all the people that touch our company are better in some way Build a great team and culture Wo
Slide 15: Long-Term Strategy: Path to 2025
Long-Term Strategy: Path to 2025 5 Million more Freshpet households by 2025$1 billion in net sales — and still growing 20+% (target)~25% Adj. EBITDA margins (target) OVERVIEWLONG TERM STRATEGY
Slide 16: Pets | Our Food & Giving Back
Pets | Our Food & Giving Back 2
Slide 17: Freshpet Strives to Strengthen the Human-Pet Bond
We fundamentally believe that Freshpet has the potential to change the way people feed their pets . . . forever.We do this by satisfying the human desire to nurture our pets to the best of our ability — providing the freshest, most wholesome foods that are appreciated by pets and enhance their well
Slide 18: Product Offerings
Consumer attitudinal segmentation studyhas lead us to multiple brands with distinct consumer appeal and recipes FreshpetSelEct Nature’sFresh We make our pet food using only fresh, whole, high-quality ingredients delivered to our kitchen daily.Cat + Dog offerings FreshpetVITAL A fresh approach to hol
Slide 19: Evolution of Pet Food
PETSEVOLUTION OF PET FOOD The HUMANIZATION of petS drives 85 years of pet food evolution PET FOOD = WHAT WE EAT DAWN OF COMMERCIAL PET FOOD BIRTH OF SUPER PREMIUM ULTRA PREMIUM SIMPLE REAL FOODS
Slide 20: Freshpet Difference: Nutrition and Palatability
Average Amino Acid Bioavailability* *Average bioavailability after processing across 11 amino acids Arginine, Histidine, Isoleucine, Leucine, Lysine, Methionine, Cysteine, Phenylalanine, Threonine, Tryptophan, Valine.University of Illinois protein bioavailability analysis of various cooking methods:
Slide 21: Freshpet Delivers a Noticeable Difference in Pets' Well-Being
PETSFRESHPET DIFFERENCE Freshpet Delivers a Noticeable Difference in Pets’ Well-Being 82% of consumers report that Freshpet makes a difference in their pet’s health. Source: Freshpet Visible Difference Study 2018 n= 202 18% 82%
Slide 22: Pet Parents Provide Powerful Testimonials
Freshpet’s Impact on Pet Health is Real:Pet Parents Provide Powerful Testimonials PETSWHAT CUSTOMERS THINK “Our 11 year old boxer was diagnosed with Cushing disease 2 years ago. In May of 2019 Amber stopped eating - she didn’t even want water. I saw your commercial and we decided on Freshpet Select
Slide 23: Giving Back: Living Better. Together.
LIVING BETTER. TOGETHER. We’ve donated more than 8 million fresh meals. Bringing joy through our nourishing food to orphaned or abandoned dogs and cats until they are adopted. We partner with shelters and rescues to increase their visibility and provide the pets in their care with the food and resou
Slide 24: People | The Freshpet Family
3 People | The Freshpet Family
Slide 25: Cultural Values
Passion & Tenacity Pursue our missionwith vigor Operate from truth Think, act, and speakfrom truth Make sureeveryone Wins In our daily work and witha focus on sustainability/ triple bottom CULTURAL VALUES Do the Right Things Make decisions &interact with a solidmoral compass Innovative &Entrepreneur
Slide 26: Employee Benefits
Employee Net Promoter Score: 8.390th percentile & improving each year POPULAR PERKS WEALTH CREATION - Industry leading compensation- Stock compensation for everyone- 401k matching for everyone- New in 2020: 401k plan now includes ESG fund offering broad exposure to companies that meet the Calvert Pr
Slide 27: Employee Motivation and Incentivization
Employee motivation and incentivization Peer Group Selection Significant Portion as Equity Long-Term Goal Setting Encouraging Teamwork Incenting Sales Growth Demanding Quality Recognizing theValue of Our PeopleSafety is engrained in our culturePet ownership is celebrated. Corporate employees take do
Slide 28: Diversity and Inclusion
At Freshpet, we believe that a diverse workforce is essential to our continued success, and we strive to maintain a diverse and inclusive workforce at all levels. By building an inclusive workplace environment, we seek to leverage the talent, diversity of insights, and ideas of our employees. To dem
Slide 29: Adapting to COVID-19: Protecting Our Team
#1 Priority: protecting our team and the communities we serve while delivering food to our pet parents Wellness check: Third-party nurseDeep cleaning: Expert “deep cleaning”of Kitchens’ break/meeting areasSocial distancing: Tripled size of break / meeting areasMasks Required: Required use by allteam
Slide 30: Adapting to COVID-19: Business Resilience
PEOPLEADAPTING TO COVID-19 Growth model is less dependent on retailer activity than most: While retailers are struggling to keep pace with challenging conditions, Freshpet does not rely on trade promotion or discounting to generate trial or repeat. Installed fridge base can support a much larger bus
Slide 31: Planet | Sustainability Initiatives
4 Planet | Sustainability Initiatives
Slide 32: Minimizing Our Manufacturing Impact
MINIMIZING OUR MANUFACTURING IMPACT We’re taking big steps to reduce the impact we have on the planet, starting with the Freshpet Kitchens. Key protein ingredients are sourced from within 200 miles of our land-fill free, wind-powered kitchens*, and food leaving the kitchen is sent using SmartWay tru
Slide 33: Reducing Chiller CO2 Footprint
FRESHPET CHILLERS HAVE BECOME 7.5x more efficient than in 2014 With 22,000+ installations around the world, reducing the environmental impact of Freshpet’s chillers is a top priority.Our partnership with True Manufacturing has allowed us to field chillers that are 7.5x more efficient than just 5 yea
Slide 34: Supply Chain Integrity
INTEGRITY IN SUPPLY CHAIN IMPACT ON ENVIRONMENT Freshpet products are made with natural and fresh ingredients including meat, vegetables, fruits, whole grains, vitamins and minerals. Over 60% of our raw ingredients are sourced locally from within a 200 mile radius of the Freshpet kitchens, and 96% a
Slide 35: Freshpet Kitchens Wastewater Treatment Facility
FRESHPET KITCHENS WASTEWATER TREATMENT FACILITY We consider water to be one or our most valuable natural resources and are committed to minimizing our impact on the local water supply. The newly constructed Freshpet Kitchens wastewater treatment facility will be operational in Q3 2020. This 6,600 sq
Slide 36: Freshpet Kitchens 2.0 Rainwater Harvesting System
FRESHPET KITCHENS 2.0RAINWATER HARVESTING SYSTEM Freshpet Kitchens 2.0 features a new rainwater harvesting system for landscape irrigation. The underground reservoirs hold 427,541 gallons of rainwater that is used to irrigate 62,000 sq ft of landscaping including 123 trees planted in May 2020.In add
Slide 37: Nature's Fresh Carbon Neutral Brand
Nature’s fresh will become FRESHPET’SFIRST carbon neutral pet food brand Nature’s Fresh is the Natural Channel’s best selling pet food thanks to its uncompromising quality, superior palatability, and Animal Welfare Certified recipes. Recent consumer research proved consumers are looking for Nature’s
Slide 38: Carbon Offset Plan: Air Travel
Travel to meet with customers and suppliers is an integral part of our business. For air travel that we can not replace with video conferencing, we are partnering with Conservation International to purchase carbon offsets to absorb all CO2e emissions from Freshpet’s 2020 air travel.Conservation Inte
Slide 39: Governance and Leadership
Governance and Leadership 5
Slide 40: Our Leaders
SCOTT MORRISCO-FOUNDER / PRESIDENT BILLY CYRCEO HEATHER POMERANTZEVP FINANCE. | CFO eff. 10/1/20 Management Team Capable of Driving Through Growth Phases GOVERNANCE AND LEADERSHIPOUR LEADERS Dick KASSARCFO | VICE-CHAIRMAN eff. 10/1/20
Slide 41: Leadership Growth
INNOVATIONFINANCEMANUFACTURINGMARKETINGFRIDGE TEAMSYSTEMSSALESINTERNATIONALLEADERSHIP ‘06 - ‘10 ‘10 - ‘15 ‘15 - ‘19 –––––––––––Dick KassarSteveMacchiavernaMichael HiegerScott MorrisCathal WalshExcelTom Farina–––––––––––Scott MorrisCharlie Norris Lisa BarretteIvan GarciaSteve WeiseLisa BarretteJohn S
Slide 42: Our Board
GOVERNANCE AND LEADERSHIPOUR BOARD Meet Our Board of Directors Our board has a strong foundation and has evolved with our growth.The board is well-structured to support our long-term strategic goals. Committees: C – Compensation Committee G – Nominating & Governance Committee. A – Audit Committee 20
Slide 43: Non-Executive Board of Directors
Freshpet Non-Executive Board of Directors* - helping to Shape Our future Member and Chairman of our board since October 2006Serves as member of the board of Primo WaterPreviously served as Chairman of Glacier Water Services from 2001 to 2016 Charles Norris Member of our board since September 2018Has
Slide 44: Board Oversight: Risks, Sustainability & Ethics
GOVERNANCE AND LEADERSHIPBoard Oversight: Risks, Sustainability & Ethics As a part of its responsibility to oversee the strategic risks of Freshpet, the Board regularly reviews the Company’s significant risk exposures and how those exposures are managed. To effectively discharge these oversight resp
Slide 45: Executive Compensation Tied to Long-Term Strategy
Sustainable Shareholder value creation:COMPENSATION directly TIED TO LONG-TERM STRATEGY GOVERNANCE AND LEADERSHIPExecutive Compensation Freshpet’s Compensation Committee of the Board designed the executive compensation program to incentivize our management team to achieve or exceed our strategic obj
Slide 46: Long-Term Compensation Strategy and Dilution
With an increase in the share-based compensation pool of 700,000 shares, our dilution % is expected to increase slightly, but still well below the levels that we experienced in 2016. Our Long-Term Compensation StrategyContributes to Growth and Value Creation Pool Expansion #1 Equity Offering Project
Slide 47: Board Oversight of Long-Term Strategy
Our Board focuses on long-term growth through oversight of strategic initiatives, long-term focus for executive compensation, and support of investments in our growth. Board oversight of long-term strategy 2006-2016 2016-2020 2020-2025+ In 2016, aligned on long term goals (for 2020) and the strategy
Slide 48: Decentralization of Stock Ownership
Since our IPO, the number of shareholders together owning 50% of Freshpet stock has increased 4x Decentralization of stock ownership GOVERNANCE AND LEADERSHIPDecentralization of Stock Ownership 3 # of Shareholders TogetherOwning 50% at end of fiscal year Ownership % of MidOcean + Freshpet Executive
Slide 49: Our Journey from a Young Company to Corporate Maturity
Our Journey from a Young Companyto Corporate Maturity Challenges we face as a young companyMore volatile results (less profitable)Much larger, entrenched competitorsNeed to rapidly expand organization and upgrade systemsNeed to protect yet evolve the cultureManagement engaged in long-term value crea
Slide 50: The Role of Our Board in Our Evolution
The Role of our Board in our Evolution:Guidance to Governance Our Board Structure Enables Strong Guidance as a Young CompanyAt our early corporate life stage, our board is structured to protect and enhance our long-term value. As a young company, we require greater stability and support from our Boa
Slide 51: Governance Transformation Roadmap
YOUNG Today 2020 2021 2022 2023 to 2025 MATURE Independent chairman Yes Yes Separate CEO & chair Yes Yes No poison pill Yes Yes Eliminate supermajority voting rights 75% * 50% Director resignation policy No Yes Majority voting in uncontested elections No (plurality) * Yes Director retireme
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