Slide 1: 2021 Sustainability Report: Nourishing Pets, People and Planet
2021 Sustainability ReportNourishing Pets, People and Planet 1
Slide 2: Our goal is to change the way people nourish their pets forever
OUR GOAL IS TO CHANGE THE WAY PEOPLE NOURISH THEIR PETS FOREVER Real, fresh food that nourishes our pets as much as they nourish us. S C O T T M O R R I S CO - F O UN D E R P RE SI DE N T 2 C A T H A L W A L S HCO - F O UN D E RM A N A G I N G DI RE C T O R E U RO P E We are a team of dog-obsessed,
Slide 3: Table of Contents
TABLE OF CONTENTS 2 1. OVERVIEW Forward Looking Statements & Non-GAAP MeasuresLetter from Our BoardLetter from Our CEOCompany Milestones Long-Term Strategy: Path to 2025Business PillarsOur Operating PrinciplesESG Matrix2. PETS | OUR FOOD & GIVING BACKHuman-Pet BondHumanization of PetsInnovative R&D
Slide 4: Overview
Overview
Slide 5: Non-GAAP Measures
NON-GAAP MEASURESIn this presentation, we use certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted EBITDA as a percentage of net sales (Adjusted EBITDA Margin). These non-GAAP financial measures should be considered as supplements to GAAP reported measures, should not be consi
Slide 6: 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 7: A Letter from Our CEO
A LETTER FROM OUR CEO At Freshpet, we strive to strengthen the bond between people and our pets so that we both live longer, healthier, and happier lives while being kind to the planet. We believe that if we can create fresh, real foods that help pets live healthier lives, their pet parents will als
Slide 8: Letter from Our Board: Strategic Planning and Compensation
Strategic Planning/Goal Setting: The Board revised upward its long-term goals this year to reflect the rapid rate of growth of the company and the need to accelerate the construction of new capacity. We raised our 2025 household penetration target to 11 million households (from 8 million previously)
Slide 9: Freshpet Milestones
FRESHPET MILESTONES Freshpet founded with commitment to re-inventing pet nutrition and enriching the lives of all involved. 5,000 chillersLaunched first TV campaignPartnership with MidOcean 10,000+ ChillersNew kitchen construction and production begins IPO Launched Feed Growth strategyBilly Cyrjoins
Slide 10: Long-Term Strategy: Path to 2025
LONG-TERM STRATEGY: PATH TO 2025 11 Million Freshpet hous-ehold’s by 2025 $1.25 billion in net sales — and still growin-g 20+% (target) ~25% Adj. EBITDA margins(target) OVERVIEWLONG-TERM STRATEGY: PATH TO 2025 10
Slide 11: Freshpet Is a Difficult Business to Replicate
FRESHPET IS A DIFFICULT BUSINESS TO REPLICATE HIGH BRAND LOYALTY Alignment with deep pet parent emotional motivations DIFFERENTIATEDInnovative forms, technologies, and appearance MANUFACTURING Proprietary technology, processes, and infrastructure FRESHPET FRIDGE Branded, company-owned real estate SU
Slide 12: Our Operating Principles
pets.Deliver fresh healthy food and nourish the human-pet bond — we live longer, healthier lives together. Provide consistent quality, generating industry leading consumer satisfaction. people.Ensure that all the people that touch our company are made better in some way. Build a great team and cultu
Slide 13: Freshpet ESG Matrix
FRESHPET ESG MATRIX Energy UseClimate Change & EmissionsWater Use & ManagementProduct Packaging & PlasticResource Efficiency & WasteBiodiversityTransport & DistributionSustainable & Responsible Sourcing including Animal WelfareEmployee Experience & Well-BeingCommunity RelationsProduct Safety & Quali
Slide 14: Pets | Our Food & Giving Back
Pets | Our Food & Giving Back Delivering fresh healthy food and nourish thehuman animal bond.
Slide 15: Strengthening the Bond Between Humans and Our Pets
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 bestof our ability — providing the freshest, most wholesome food that is appreciated by pets and enhances their wellbei
Slide 16: The Humanization of Pets
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 PETSHUMANIZATION OF PETS 16
Slide 17: Freshpet's In-House R&D Team Leads Development of Breakthrough Products
FRESHPET’S IN-HOUSE R&D TEAM LEADS DEVELOPMENT OF BREAKTHROUGH PRODUCTS Freshpet prides itself in being an innovator and driver of significant growth in the pet industry. Thanks to this culture of innovation, Freshpet is now growing total retail dollar sales faster than any other wet or dry dog food
Slide 18: Food Safety and Quality Programs
FRESHPET’S EXTENSIVE FOOD SAFETY AND QUALITY PROGRAMS ENSURE EVERY MEAL MEETS OUR EXACTING STANDARDS Nothing is more important than the safety and quality of the products we produce for our pet parents. The more than 50 members of Freshpet’s world class Food Safety Quality Assurance team monitor pro
Slide 19: Freshpet Nutritional Philosophy
Freshpet has HigherAverage Amino Acid Bioavailability89.2% *A 30 Lb. dog needs approximately 30 fluid ounces of water per day. Freshpet provides 9 fl oz while a leading dry food provides .8 fl oz. *Average bioavailability after processing across 11 amino acids Arginine, Histidine, Isoleucine, Leucin
Slide 20: Freshpet Delivers a Noticeable Difference in Pets' Well-Being
FRESHPET DELIVERS A NOTICEABLE DIFFERENCE IN PETS’ WELL-BEING82% of consumers report that Freshpet makes a difference in their pet’s health. Source: Freshpet Visible Difference Study 2018 n= 202 82% PETSFRESHPET DIFFERENCE 20 18%
Slide 21: Freshpet's Impact on Pet Health
FRESHPET’S IMPACT ON PET HEALTH :Pet Parents Love to Tell Us How Freshpet Changed Their Lives “Today is our Corgi-poo Tanner's 15th birthday. He's happy, healthy and still going strong. We had serious problems with his health and eating habits before switching to your product 8 years ago. I truly be
Slide 22: Living Better. Together.
LIVING BETTER. TOGETHER.Saving Lives & Celebrating the Human Animal Bond 4 Paws for Ability believes every child & veteran should be included in all aspects of their community, regardless of disability. Freshpet is proud to sponsor 4 Paws for Ability as they enrich the lives of children and veterans
Slide 23: Donated 11.5 Million Fresh Meals to Animals in Need
We’ve donated 11.5 million fresh meals to animals in need 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 resources they need
Slide 24: People | The Freshpet Family
People | The Freshpet FamilyEnsuring that all people touching the company are made better in some way
Slide 25: Cultural Values
PASSION & TENACITY Pursue our mission with vigor OPERATE FROM TRUTH Think, act, and speak from truth MAKE SURE EVERYONE WINSIn our daily work and with a focus on sustainability/ triple bottom CULTURAL VALUES DO THE RIGHT THINGS Make decisions & interact with a solid moral compass INNOVATIVE & ENTREP
Slide 26: Employee Motivation: Engagement and Teamwork
PEOPLEEMPLOYEE MOTIVATION Putting our people first is at the heart of everything we doOur commitment to this is evident in how we celebrate our successes and support one another through challenging times. Our incentive programs aim to reward employees for their commitment to making our quality produ
Slide 27: Employee Motivation: Benefits and Perks
PEOPLEEMPLOYEE MOTIVATION 27 We believe that the best teams are built by engaged, inspired and driven employees. Freshpet’s competitive benefits reward the people that fuel our success and help drive employee engagement and loyalty. Benefits have evolved with needs of our workforce and now include:
Slide 28: Creating Careers Over Jobs
Wage + LEVEL 100 LEVEL 200 LEVEL 300 LEVEL 500 LEVEL 600 Wage + Wage + LEVEL 400Wage + Wage + Wage + Production / Sanitation Career Progression Example Equity Equity Equity Equity Equity Equity Comfortably support family CREATING CAREERS OVER JOBS Significantly competitive + Freshpet is extremely pr
Slide 29: Workforce Diversity, Equity and Inclusion
WORKFORCE DIVERSITY, EQUITY AND INCLUSION PEOPLEDIVERSITY & 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
Slide 30: Adapting to COVID-19
#1 PRIORITY: PROTECTING OUR TEAM AND THE COMMUNITIES WE SERVE WHILE DELIVERING FOOD TO OUR PET PARENTS Freshpet responded to the COVID-19 pandemic threat with education and action focused on the safety of our team members and our communities.Many policies implemented in 2020 remain in place while ot
Slide 31: Strong Results Despite COVID-19 Challenges
FRESHPET DELIVERED STRONG RESULTS DESPITE THE EXTERNAL CHALLENGES PRESENTED BY COVID-19Growth accelerated during COVID: Freshpet generated 29.7% net sales growth during 2020 despite significant capacity limitations imposed by the testing and quarantine protocols. We also increased Adj. EBITDA by 60.
Slide 32: Planet | Sustainability Initiatives
Planet | Sustainability InitiativesLeading the industry in environmental sustainability
Slide 33: Environmental Sustainability Timeline
Kitchens on-site wastewater treatment and rainwater capture systems become operational Highly Efficient TVM 48sl chiller launched. LED lighting, new compressor and refrigerant achieve efficiency gains up to 8.5x over previous models ‘20 ‘21 Freshpet Kitchens begins matching electric usage with wind
Slide 34: Freshpet Kitchens: Renewable Energy and Efficiency
combined heat and power rainwater capture for irrigation *All of the Kitchen’s electricity purchased from the grid is matched with Renewable Energy Credits (RECs) from a wind farms throughout the U.S. These Renewable Energy Credits support the development of wind farms as a viable business and help
Slide 35: Landfill-Free Manufacturing
Since 2016, Freshpet has committed to operating landfill free manufacturing facilities. We are proud to have been one of the first pet food manufacturers to make this commitment. Engagement across the entire organization was required to manage our waste streams without using a landfill. Below are th
Slide 36: Coming Soon: Kitchens 3.0 in Ennis, TX
Our latest manufacturing facility in Ennis, TX has been designed from the ground up to be our most efficient yet. It is being built with environmentally friendly construction techniques such as on-site dirt preparation, low carbon concrete made with fly ash, and recycled steel. Additionally, this fa
Slide 37: Reducing Packaging Footprint
One of Freshpet’s biggest challenges is to ensure that every meal remains fresh and healthy without artificial preservatives up to 24 weeks in a refrigerator (un-opened shelf life). Our R&D team engineers each package to reduce food waste by keeping the product fresh until consumption while using a
Slide 38: New Chillers Up to 8.5x More Efficient
NEW FRESHPET CHILLERS ARE UP TO8.5X MORE EFFICIENT THAN OLDER MODELS With 25,000+ installations around the world, reducing the environmental impact of Freshpet’s chillers is a top priority.The latest chillers by True Manufacturing and Minus 40 are up to 8.5x more efficient than earlier models thanks
Slide 39: Wastewater Treatment Facility and Water Stewardship
As one of our most valuable natural resources, Freshpet is committed to minimizing our impact to the planet’s water supply.Manufacturing fresh pet food requires water in the cooking and cleaning processes ensuring that every meal is safe and nutritious. Because water is such a critical resource, its
Slide 40: Rainwater Harvesting
Freshpet Kitchens 2.0 features a new rainwater harvestingsystem for landscape irrigation. The underground reservoirs hold up to 427,500 gallons of rainwater that is used to irrigate 62,000 sq ft of landscaping including more than 120 trees planted in May 2020.In addition to reducing our burden on th
Slide 41: Supply Chain Sustainability
Freshpet recipes are made with natural and fresh ingredients including meat, vegetables, fruits, and whole grains. We believe in building long-term supplier and farmer partnerships to source healthy and sustainable ingredients. Some highlights of our sourcing philosophy:COMMITMENT TO LOCAL SOURCING:
Slide 42: Supplier Code of Conduct
Freshpet is committed to sustainably sourcing the highest quality ingredients and leading the industry in the ethical treatment of workers, animals, and natural resources as part of our mission to nourish Pets, People, and Planet. As we grow our businesses together, we expect our partners to champio
Slide 43: Nature's Fresh Leads the Way
Nature’s Fresh is the Natural Retail Channel’s best selling pet food thanks to its uncompromising quality, superior palatability, and Animal Welfare Certified recipes.Since 2012, Freshpet has partnered with the Global Animal Partnership to ensure that Nature’s Fresh chicken and turkey is raised cage
Slide 44: Carbon Neutral Now
Over the last year, we partnered with 3Degrees to understand Freshpet’s Scope 1, 2, and 3 carbon footprints for 2019 and 2020. This extensive analysis used internationally recognized and widely accepted GHG Protocol guidelines to estimate emissions of our Scope 3 value chain including protein source
Slide 45: Freshpet Sustainability Metrics (SASB)
FRESHPET SUSTAINABILITY METRICS In 2020, Freshpet started to use aspects of leading ESG frameworks established by the Sustainability Accounting Standards Board (“SASB”) to help us identify potential ESG disclosure topics and metrics relevant for our Company. Using relevant SASB metrics for our compa
Slide 46: Freshpet Sustainability Metrics (SASB)
FRESHPET SUSTAINABILITY METRICS 46 Topic Accounting Metric Category Unit ofMeasure Code 2020 Freshpet Response Health & Nutrition Revenue from products labeledand/or marketed to promote health and nutrition attributes Quantitative Reportingcurrency FB-PF-260a.1 Freshpet labels and markets almost all
Slide 47: Freshpet Sustainability Metrics (SASB)
FRESHPET SUSTAINABILITY METRICS 47 Topic Accounting Metric Category Unit of Measure Code 2020 Freshpet Response Environmental &Social Impacts of Ingredient Supply Chain Percentage of foodingredients sourced that are certified to third-party environmental and/or social standards, and percentages by s
Slide 48: Governance and Leadership
Governance and Leadership
Slide 49: Management Team
Management TeamCapable of Leading the Company in Time of Aggressive Growth S C O T T M O R R I SCO - F O U NDE R / P R E S I DE NT B I L L Y C Y RC EO H EA T H ER P O M ER A N T ZC F O GOVERNANCE AND LEADERSHIPOUR LEADERS We’re a team of dog-obsessed, cat-crazy pet parents who live and work alongsid
Slide 50: As We Grow, We Add Important Skills and Talent
INNOVATION FINANCE MANUFACTURING MARKETING FRIDGE TEAM SYSTEMS SALES INTERNATIONAL HUMAN RESOURCES LEADERSHIP ‘15 - ‘19 ‘06 - ‘10––––––––––– Dick Kassar Steve MacchiavernaMichael Hieger Scott Morris Cathal Walsh ––––––––––– Tom Farina ––––––––––– ––––––––––– Scott Morris Charlie Norris Dick Kassar ‘
Slide 51: Freshpet Board Foundation and Evolution
FRESHPET BOARD FOUNDATION AND EVOLUTION COMMITTEES: C – Compensation Committee G – Nominating and Corporate Governance Committee. A – Audit Committee 2014 IPOADDED FINANCIAL AND INDUSTRY EXPERTISE AS WE WENT PUBLICLawrence S. Coben, Ph.D. (G)Walter N. George III (G) Craig D. Steeneck (A) 2016 CEO TR
Slide 52: Board Member Profiles
Member and Chairman of our board since October 2006Served as member of the board of Primo Water until 2020Previously served as Chairman of Glacier Water Services from 2001 to 2016 CH A RL ES N O RRIS Member of our board since September 2018Has over 30 years of executive and senior leadership experie
Slide 53: Board Risk, Sustainability and Ethics Oversight
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 responsibilities, the Board maintains three standing committees: Audit, Compe
Slide 54: Sustainable Shareholder Value Creation: Compensation Tied to Long-Term Strategy
SUSTAINABLE SHAREHOLDER VALUE CREATION: COMPENSATION DIRECTLY TIED TO LONG-TERM STRATEGY Freshpet’s Compensation Committee of the Board designed the executive compensation program to incentivize our management team to achieve or exceed our strategic objectives over the long-run.At the time of our 20
Slide 55: Our Long-Term Compensation Strategy
OUR LONG-TERM COMPENSATION STRATEGYCONTRIBUTES TO GROWTH & VALUE CREATION Pool expansion #1 Equity offering In Q4 of 2020, the Board authorized multi-year grants to our most senior leaders in as part of our retention and succession plans.These grants replace future grants for the next four years for
Slide 56: Board Oversight of Long-Term Strategy
BOARD OVERSIGHT OF LONG-TERM STRATEGYOur board focuses on long-term growth through oversight of strategic initiatives, long-term focus for executive compensation, and support of investments in our growth. 2006-2016 2016-2020 2020-2025+ In 2016, aligned on long term goals (for 2020) and the strategy
Slide 57: Decentralization of Stock Ownership
Since our IPO, the number of shareholders owning 50% of Freshpet stock has increased 4x DECENTRALIZATION OF STOCK OWNERSHIP 3 # of Shareholders Owning 50%at end of fiscal year Freshpet Executive and Other Insider Ownershipon annual date of record 12/31/14 3 53% 12/31/15 5 38% 12/31/16 5 30% 12/31/17
Slide 58: Our Journey from a Young Company to Corporate Maturity
OUR JOURNEY FROM A YOUNG COMPANY TO 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 cre
Slide 59: Our Board Structure Enables Strong Guidance as a Young Company
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 Board to buffer typical volatility and guide organizational tran
Slide 60: Governance Transformation Roadmap
GOVERNANCE TRANSFORMATION ROADMAP * Proposals requiring shareholder action in that year’s Proxy Statement.** The Company has submitted a stockholder proposal to begin declassifying its board in 2023, with the board to be fully declassified by 2025. YOUNG 2020approved by shareholders approved by Boar
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Slide 62: Reconciliation of Adjusted EBITDA to Net Loss
The following table provides a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure presented in accordance with U.S. GAAP: Twelve Months Ended December 31 2020 2019 2017 Net loss $ (3,188) $ (1,383) $ (5,361) Depreciation and amortization 21,125 15,921 14,06