Slide 1: Q1 2022 Earnings Presentation
Q1 2022 Earnings Presentation May 2, 2022 1
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures Forward-Looking Statements Certain statements in this presentation by Freshpet, Inc. (the “Company”) constitute “forward-looking” statements, which include any statements related to the novel coronavirus ("COVID-19"), the Freshpet Kitchens Expansion, ou
Slide 3: Forward Looking Statements & Non-GAAP Measures (cont.)
Forward Looking Statements & Non-GAAP Measures (cont.) Freshpet defines Adjusted Gross Profit as gross profit before depreciation expense, plant start-up expense, COVID-19 expenses and non-cash share-based compensation, and Adjusted SG&A as SG&A expenses before depreciation and amortization expense,
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Slide 5: Q1 2022 Results
freshpet Q1 2022 Results
Slide 6: Strong start to 2022
Strong start to 2022 Net Sales Freshpet Q1 2022 Financial Results Adj. EBITDA $140 $132.2 $14 $120 +41% $12 $100 $93.4 $10 +33% $7.8 $80 $8 +35% $60 $6 $5.1 $40 -35% $4 $20 $2 $0 $0 Q1 2021 Q1 2022 Net Sales ($ millions) Adj. EBITDA ($ millions) 6
Slide 7: Net Sales growth driven by volume/mix, pricing and trade inventory re-fill
Net Sales growth driven by volume/mix, pricing and trade inventory re-fill 7 Source: Nielsen consumption data thru 3/26/22 and internal sales data
Slide 8: Mismatch between price increase and commodity cost timing depressed Adj. Gross Margin
Mismatch between timing of price increase and commodity cost increases temporarily depressed Adj. Gross Margin Q1 2022 Adj. Gross Margin Progress 46.7% 46.4% Estimated impact of mismatch between price increase and 41.9% cost increases Q1 2021 Q1 2022 38.9% 33.9% Gross Margin (GAAP) 8 Freshpet define
Slide 9: Strong production performance post-ERP conversion enabled strong shipments
Strong production performance post-ERP conversion enabled strong shipments Year-on-Year Production Performance Comparison Omicron: ERP Rolling 7-Day Average Pounds Produced 800,000 Shut down 1 Conversion line 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1/1/2022 2/1/2022 3/1/2022 4/1/20
Slide 10: Reinvested in increased media investment to drive accelerated growth
Reinvested in increased media investment to drive accelerated growth Q1 2022 Adj. SG&A Leverage 38.4% 38.2% Freight costs: -170 bps 14.7% 16.3% 12.2% 12.0% +420 bps -270 bps Q1 2021 Q1 2022 Adj. SG&A % Excluding Media & Logistics Media % Total Adj. SG&A % 45.9% 49.3% SG&A (GAAP) Freshpet defines Adj
Slide 11: Q1 2022 consumption: Strong growth in all channels
Q1 2022 consumption: Strong growth in all channels Latest 13wk Nielsen Consumption Growth 41% 41% 37% 19% Mega-Channel XAOC Food Big Box Pet 11 Source: Nielsen consumption data thru 3/26/22
Slide 12: Continued strong velocity gains
Continued strong velocity gains Freshpet Velocity ($/$MM ACV) Nielsen Mega-Channel 1043 1000 987 COVID Crisis 953 924 889 897 872 855 830 826 816 805 783 745 750 753 748 754 744 744 740 712 719 692 658 613 601 600 598 602 584 572 545 $ / $ MM ACV = Nielsen Measured Mega-Channel sales / retail availa
Slide 13: Freshpet is now the leading brand in the grocery channel
On a total brand dollar sales basis, Freshpet is now the leading brand in the grocery channel Total Wet & Dry Dog Food Brands Dollar Sales: US Food (Latest 13wks thru 3/26/22 -- $M ) Freshpet Total RFG $92,506 Blue Buffalo Total Dog Food $81,146 Pedigree Total Dog Food $80,757 Purina ONE Total Dog F
Slide 14: Freshpet: Building meaningful share of the category
Freshpet: Building meaningful share of the category Freshpet $ Share of Wet & Dry Dog 13.2 12.7 12.2 11.8 7.0 6.7 6.5 6.3 5.6 5.5 5.3 5.2 2.5 2.5 2.6 2.7 4wk 13wk 26wk 52wk Freshpet Share of Wet + Dry Dog Total US Food Total US xAOC Mega-Channel Pet Superstore 14 Source: Nielsen Mega-Channel Data th
Slide 15: Q1 2022 Freshpet E-Com grew +79% vs. YA
Q1 2022 Freshpet E-Com grew +79% vs. YA 15% Online Fresh Delivery 26% Last Mile Delivery $11.2MM 8.0% % of Total FP Sales 59% Through E-Com Click & Collect 85% of Sales Contribute to Brick & Mortar 15 Source: Freshpet Internal Data
Slide 16: HH penetration growth expected to accelerate in 2022
HH penetration growth expected to accelerate in 2022 following improved in-stocks and advertising support Freshpet Penetration Growth 4,116,151 4,201,693 +27% +2% 3,541,963 3,234,106 3,305,956 +7% +27% +32% 2,537,798 2,495,808 +11% +32% 1,888,830 +21% 2019 2020 2021 2022 Total Penetration Core Dog P
Slide 17: 4-week buying HH's growth rate is moving up again
4-week buying HH’s growth rate is moving up again as in- stocks have improved Freshpet 4-Week Buying HH's Growth vs. YA 50% 45% Out-of-stocks 40% +12% vs YA 35% 30% 25% 20% 15% 10% 5% 0% 4-Week Buyers Growth vs. YA Poly. (4-Week Buyers Growth vs. YA) 17 Source: Nielsen HH Panel for the period ending
Slide 18: Still on path to meet our 2025 HH penetration goal
Still on path to meet our 2025 HH penetration goal Progress Towards 2025 Household Penetration Goal 6.80 2025 Goal: 11 Million HH’s 4.20 Current HH Penetration Households to Achieve 2025 Target 18 Source: Nielsen HH Panel for the period ending 3/26/22
Slide 19: Buying rate continues to grow strongly
Buying rate continues to grow strongly and is helped by price increases Freshpet Buying Rate $164.99 $149.02 +22% $137.77 $136.45 $135.77 +26% +12% -1% $118.29 >-1% $115.29 $115.75 +16% >1% +2% 2019 2020 2021 2022 Total Buying Rate Core Dog Buying Rate 19 Source: Nielsen HH Panel for the 52-week per
Slide 20: Pricing
Pricing
Slide 21: Limited evidence of price sensitivity on the first price increase
Limited evidence of price sensitivity on the first price increase overall Total Freshpet Price Sensitivity – Grocery & Mass 13,000,000 9.40 9.20 12,000,000 9.00 11,000,000 8.80 8.60 10,000,000 8.40 9,000,000 8.20 8,000,000 8.00 7.80 7,000,000 7.60 6,000,000 7.40 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4
Slide 22: Diesel costs increased dramatically in the past 8 weeks
Diesel costs increased dramatically in the past 8 weeks Weekly U.S. No 2 Diesel Retail Prices (Dollars per Gallon) $6.00 $5.00 Russia invades Ukraine $4.00 2022 Guidance Assumption $3.00 FY 22 Guidance Issued $2.00 $1.00 $0.00 Sep Sep Sep Oct 04, Oct 11, Oct 18, Oct 25, Nov Nov Nov Nov Nov Dec Dec D
Slide 23: Q1 2022 Visibility & Availability
Q1 2022 Visibility & Availability
Slide 24: Store count continues to grow
Store count continues to grow Freshpet Store Count 23,631 23,931 22,716 21,570 2022 Guidance: +~1,300 to 24,931 19,499 18,004 16,609 15,015 13,387 10,826 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD 2022 24 Source: Internal data for the period ending 3/25/22
Slide 25: Q1 2022: Strong performance on Upgrades & 2nd Fridges
Q1 2022: Strong performance on Upgrades & 2nd Fridges Net New Stores Fridge Upgrades Second/Third Fridges 3,322 300 300 3,380 2,679 2,588 174 174 Store Count 23,931 293 179 72 121 Qtr. Increase YTD Increase Total Operating YTD Increase Total Operating YTD Increase 22,890 Q1 2021 Q1 2022 Q1 2021 Q1 2
Slide 26: Continued success with placements of large and multi-fridge stores
Q1 2022: Continued success with placements of large and multi-fridge stores Freshpet Fridge Fleet Installed Fridges by Size and Year Installed Distribution by Size (US & Canada) (US & Canada Stores) 2% 7% 2% 1% 7% 3% 14% 18% 14% 24% 28% 19% 68% 42% 68% 56% 53% 60% 31% 20% 21% 12% 10% 2018 2019 2020
Slide 27: Current Business Trends
Current Business Trends
Slide 28: Strong, sustained growth
Strong, sustained growth Nielsen Mega-Channel Consumption 16,000,000 15,000,000 Nielsen Mega-Channel consumption vs. YA: 14,000,000 • Latest 4 weeks: +42% 13,000,000 • Q1: +37% • Q2 to date: +42% 12,000,000 • YTD: +39% 11,000,000 +36% vs. YA (w/e 4/23/22-- includes Easter holiday) 10,000,000 9,000,0
Slide 29: 2-year stacked growth rate continues at a robust rate
2-year stacked growth rate continues at a robust rate Nielsen Mega-Channel Consumption Growth (2 Year Stacked) 97% 90% 93% 87% 83% 73% 43% 63% 60% 65% 64% 64% 65% 66% 65% 65% 64% 63% 41% 47% 58% 60% 56% 62% 59% 59% 58% 57% 59% 60% 61% 60% 60% 62% 62% 61% 62% 60% 42% 36% 34% 13% 17% 21% 18% 22% 21% 2
Slide 30: Consistent improvement in in-stock rates drives accelerated growth
Consistent improvement in in-stock rates drives accelerated growth Freshpet Nielsen Mega-Channel Growth Rate 48% 47% Improving in-stocks 44% 43%43% 43% 42% 41% 39% 38% 37% 37% 36% 34% 31% 31% 28% 27% 27% 25%25% 26% 22% 22% 22% 21% 23% 22% 21% 21% 20% 21% 18% 18% 18% 17% 30 Source: Nielsen Mega-Chann
Slide 31: Distribution growth continues despite capacity limits
Distribution growth continues despite capacity limits Freshpet Distribution (% ACV) Nielsen Mega-Channel 57.7 57.4 56.9 56.9 57.0 57.1 56.4 56.5 56.5 56.5 56.5 56.7 56.1 56.3 55.5 55.4 55.5 55.7 55.7 55.8 55.1 55.4 54.8 54.9 55.0 54.4 54.5 54.7 53.7 52.7 52.9 51.4 50.3 49.7 49.9 49.4 49.0 48.3 48.5
Slide 32: Retail availability continues at a high level
Retail availability continues at a high level Freshpet Total Distribution Points (TDP's) Nielsen Mega-Channel 852 840 829 817 816 806 805 807 794 793 798 792 790 773 778 776 765 756 752 758 756 739 745 732 727 728 732 735 718 723 708 711 698 686 683 690 678 683 678 670 663 643 637 630 32 Source: Nie
Slide 33: Positive pet ownership and related sentiment trends remain intact
Positive pet ownership and related sentiment trends remain intact post-COVID peaks 33 Source: APPA COVID-19 Pulse Study: Pet Ownership During the Pandemic
Slide 34: Pet ownership continues to grow amongst younger households
Pet ownership continues to grow amongst younger households 34 Source: APPA COVID-19 Pulse Study: Pet Ownership During the Pandemic
Slide 35: International Business
International Business 35
Slide 36: Canadian business accelerating behind advertising investment
$0 $20,000 $40,000 $80,000 $100,000 $60,000 1/4/20 1/18/20 2/1/20 2/15/20 2/29/20 3/14/20 3/28/20 4/11/20 4/25/20 Source: Internal company data through 4/16/22 5/9/20 5/23/20 6/6/20 6/20/20 7/4/20 7/18/20 8/1/20 8/15/20 8/29/20 9/12/20 9/26/20 10/10/20 10/24/20 11/7/20 11/21/20 12/5/20 12/19/20 1/2/
Slide 37: Freshpet's advertising-driven model works in the UK
Freshpet’s advertising-driven model works in the UK Freshpet UK Weekly Sales by Retailer £120,000 £110 £110 £110 £109 £107 £108 £108 £105 £105 £106 £103 £104 £103 £104 £102 £103 £102 £102 £102 £103 £102 £103 £103 £100 £101 £102 £102 £101 £101 £101 £100 £100£100 £98 £99 £99 £99 £96 £97 £96 £98 £97 £9
Slide 38: Long-Term Capacity Plan Update
Long-Term Capacity Plan Update 38
Slide 39: Revising the long-term capacity plan
Revising the long-term capacity plan Since we last established a long-term capacity plan, several things have changed: • Lead times: Construction and equipment lead times have been extended • Costs: Cost of construction has increased significantly • Operational expertise: We have learned how to desi
Slide 40: Construction projects are taking longer and cost more
Construction projects are taking longer and cost more 40
Slide 41: Key principles guiding our new long-term plan
Key principles guiding our new long-term plan • Build where our talent is based (Bethlehem, Ennis, Kitchens South) to maximize utilization of technical staff • Locate and group technology/equipment in most cost-effective manner • Group roll lines together and bag lines together for optimal operating
Slide 42: Tactical adjustments tailored to drive capital efficiency and enhance capacity
Tactical adjustments tailored to drive capital efficiency and enhance capacity to meet demand • Splitting Ennis Phase II into two phases (rolls operation and bags operation) with the rolls phase constructed first • Enables more rapid addition of needed rolls capacity and more rolls lines • Buys more
Slide 43: New plan adds capacity, capability and efficiency
New plan adds capacity, capability and efficiency Ennis Phase lll Ennis Phase II Ennis Phase II Bethlehem Innovation Center Ennis Phase I Ennis Phase I South Line 2-4 & Building 2 South Line 2-5 South Line 1 South Line 1 Bethlehem Bethlehem 43 Previous Plan*: $2.4 billion net sales capacity +20% New
Slide 44: Phases of Expansion to Reach $2.9 Billion Revenue Total Capacity Goal
Phases of Expansion to Reach $2.9 Billion Revenue Total Capacity Goal Phase 1: Phase 2: Phase 3: Phase 4: Net Sales Capacity Net Sales Capacity Net Sales Capacity Net Sales Capacity $465m $815m $975m $650m PA Kitchens 1.0* PA Kitchens 2.0* Ennis Phase 2 Ennis Phase 3 Kitchens South Line 1* Kitchens
Slide 45: 3x increase in capacity by the end of 2025
3x increase in capacity by the end of 2025 Targeted Annualized Net Sales Capacity (in $ billions) $2.9 $2.6 This capacity is comprised of: ✓ New technologies → increased speed $1.9 ✓ New capabilities → new product forms ✓ Our existing footprint → leverages our $1.3 existing and new facilities & team
Slide 46: Technology advancement drives speed & efficiency
Technology advancement drives speed & efficiency Relative Net Sales Capacity per Production Line vs Kitchens 1.0 (core rolls & bags lines only) 1.9 1.6 Higher speed lines increase capacity for the full network by nearly 40% compared to our PA Kitchens 1.0 facility. 1.4 This will provide: ▪ Ability t
Slide 47: > $1B investment will continue to deliver strong returns
> $1B investment will continue to deliver strong returns Installed & Planned, Planned, Total Operating Core Lines Innovation Capacity PA Kitchens 1.0 Ennis Phase 1 Kitchens South 4 PA Kitchens 2.0 Ennis Phase 2 Bethlehem Innovation Kitchens South 1,2 Kitchens South 3,5 Ennis Phase 3 Annual Net Sales
Slide 48: Automation and quality investments reduce net sales efficiency but scale drives profitability
Automation and quality improvement investments reduce cumulative net sales efficiency but scale drives profitability Net Sales Efficiency per Cumulative Capex $ Adjusted EBITDA per Cumulative Capex $ $0.54 $4.86 $0.49 $0.43 $0.27 $2.13 $2.16 $1.77 Phase 1 Phase 2 Phase 3 Phase 4 Phase 1 Phase 2 Phas
Slide 49: Site of Freshpet Kitchens 3.0: Ennis, TX
Site of Freshpet Kitchens 3.0: Ennis, TX 49
Slide 50: Expanding Ennis in 3 phases
Expanding Ennis in 3 phases Chicken 2022 processing Phase III: • 2 rolls lines 2024 • 4 bag lines Phase II: 2023 • 3 rolls lines Phase I: • 2 bag lines 2022 • 1 roll line 50
Slide 51: Ennis Kitchen
Ennis Kitchen Phase l Full Build Out 51
Slide 52: Phase I on track to start up in late Q3
Phase l is on track to start up in late Q3 and site preparation work for Phase ll has already begun 52
Slide 53: Leasing and equipping new facility in Bethlehem, PA
Leasing and equipping new facility to scale up innovative new products in Bethlehem, PA • Purpose: Quickly commercialize innovative new products while leveraging the talent and physical infrastructure available at the existing Bethlehem Campus • Location: Less than 1 mile from existing campus • Timi
Slide 54: 2022 Guidance
freshpet 2022 Guidance
Slide 55: Re-affirming Guidance
Re-affirming Guidance Net Sales Freshpet Financial Projections Adj. EBITDA $100 $700 $90 $600 $575.0 $80 +35% $70 $500 $425.5 $55.0 $60 $400 +33% +28% $50 $43.0 $300 $40 -8% $30 $200 $20 $100 $10 $0 $0 2021 2022 Guidance 55 Net Sales ($ millions) Adj. EBITDA ($ millions)
Slide 56: 2022 Freshpet Guidance: Net Sales
2022 Freshpet Guidance: Net Sales Key Drivers of Net Sales Cadence Q1 Actual Q2 Q3 Q4 FY 2022 ++ neutral ++ - 35+% growth vs YA Out-of-stocks and delayed marketing investment in YA Significant trade inventory re-fill in YA Front loaded media investment (65/35) Complete trade Warehouse inventory refi
Slide 57: 2022 Freshpet Guidance: Adj. Gross Margin
2022 Freshpet Guidance: Adj. Gross Margin Key Drivers of Adj. Gross Margin Cadence Q1 Actual Q2 Q3 Q4 FY 2022 -- ++ + -- 42% (down ~250 bps vs YA) Buffer capacity Inflation in cost of materials, labor and transportation Second price increase ERP conversion Potential bracket pricing Ennis start-up/un
Slide 58: 2022 Freshpet Guidance: Adj. EBITDA
2022 Freshpet Guidance: Adj. EBITDA Key Drivers of Adj. EBITDA Cadence Q1 Actual Q2 Q3 Q4 FY 2022 -- - + ++ +28% vs. YA Buffer capacity Front loaded media investment (65/35) Ennis start-up/under-utilization Mismatch Potential bracket pricing between inflation costs and pricing Lower advertising inve
Slide 59: "Feed the Growth" creates scale and leverage
“Feed the Growth” creates scale and leverage through accelerated growth rate 59
Slide 60: Appendix
Appendix
Slide 61: Reconciliation Between Gross Profit and Adjusted Gross Profit
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT Three Months Ended March 31, 2022 2021 (Dollars in thousands) Gross Profit $ 44,753 $ 36,315 Depreciation expense 4,701 3,800 Plant start-up expense (a) 4,748 1,843 Non-cash share-based compensation 1,168 7
Slide 62: Reconciliation Between SG&A and Adjusted SG&A
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES Three Months Ended March 31, 2022 2021 (Dollars in thousands) SG&A expenses $ 60,631 $ 46,033 Depreciation and amortization expense 3,285 3,289 Non-cash share-based compensation $,127 5,370 Launch expense
Slide 63: Reconciliation Between Net Loss and Adjusted EBITDA
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN NET INCOME (LOSS) AND ADJUSTED EBITDA Three Months Ended arch 31, 2022 2021 (Dollars in thousands) Net loss $ (17,542) $ (10,888) Depreciation and amortization 7,986 7,089 Interest expense S71 901 Income tax expense 41 16 EBITDA $ 8,944) $ (2,88
Slide 64: Freshpet 11 Million HH by 2025
freshpet 4 11 MILLION HH BY 2025