Slide 1: First Quarter 2020 Earnings Update
Exhibit 99.2 First Quarter 2020 Earnings Update May 4, 2020
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures Forward-Looking Statements Certain statements in this presentation constitute “forward-looking” statements, which include any statements related to the novel coronavirus ("COVID-19"), the Freshpet Kitchens Expansion, and the Company's general operating
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 costs, COVID-19 expenses and non-cash share-based compensation, and Adjusted SG&A as SG&A expenses before depreciation and amortization expense, n
Slide 4: #1 Priority: protecting our team and communities we serve
#1 Priority: protecting our team and the communities we serve while delivering food to our pet parents Protecting and Rewarding our team Wellness check: Third-party nurse Deep cleaning: Expert “deep cleaning” of Kitchens’ break/ meeting areas Social distancing: Tripled size of break / meeting areas
Slide 5: Delivering strong results in the face of a challenging environment
Delivering strong results in the face of a challenging environment COVID-19 impacts to Freshpet Drew down trade inventory in Q1 due to surge buying: We estimate that $4 million in net sales moved from Q1 to Q2. April shipments expected to be up ~33% y/y despite post-surge consumption trough Retail d
Slide 6: Kitchens South small bag line began producing in mid-February
Kitchens South small bag line began producing in mid-Feb & second shift will be added by beginning of June Will catch up to bags demand in Q2 Began Q1 with low inventory due to stronger than anticipated Nov./Dec. ‘19 sales Buying surge in March overwhelmed supply despite increase from Kitchens South
Slide 7: Freshpet has the ability to deliver strong results despite external challenges
Freshpet has the ability to deliver strong results despite the current external challenges Well-positioned for current environment Growth Model 80% driven by advertising Consumer Interest Healthy Financials “Essential business” Well capitalized Less dependent on retailer activity Consistent demand a
Slide 8: Pet adoptions and fostering increased significantly during COVID-19
Pet adoptions and fostering increased significantly during COVID-19 crisis Dogs make shelter-in-place better My dog(s) have given me companionship 88% My dog(s) have made me feel less lonely 82% My dog(s) have given me something to look forward to 81% My dog(s) have given me activities/things to do
Slide 9: Curbside pick-up and e-commerce are growth opportunities
Curbside pick-up in pet specialty and grocery + pure e-commerce are growth opportunities New opportunities in e-commerce Source: COVID Omnibus, COVID E-Commerce FP Panel Survey
Slide 10: Uniquely positioned to grow in this chaotic environment
Uniquely positioned to grow in this chaotic environment Driving through the crisis by focusing on our strengths Nielsen Mega-Channel cons. (Jan-Feb) +29% Jan-Feb. shipments +25% Capacity constrained Began year with low trade inventory Endcap Fridge placements in Walmart completed New products shippe
Slide 11: $4 million investment to offset delays due to retail issues
$4 million investment to offset delays due to retail issues Leaning in to drive revenue in the midst of chaos Increasing media investment behind proven campaigns Low cost media Heavy viewership Highly effective message Pet parents caring more about their pets Investing in e-commerce Media-driven “Or
Slide 12: Reiterating Net Sales guidance; updating profit outlook
See assumptions on next page Reiterating Net Sales guidance; Updating profit outlook to reflect “Lean-in” initiatives 20192020% Change Net Sales$245.9>$310+26% Adjusted EBITDA$29.2>$44+51% $ in Millions Volume cadence: Similar to previous years with potential for tight bag capacity in Q1 and Q3 caus
Slide 13: Reiterating 2020 net sales guidance and lowering Adj. EBITDA guidance
Reiterating 2020 net sales guidance and lowering Adj. EBITDA guidance to reflect incremental investment Guidance assumptions Our guidance considers the following factors. We believe we have made reasonable assumptions about each factor. However, the external environment is very dynamic so we want in
Slide 14: Current estimate of COVID-19 related cost: $4 million
Current estimate of COVID-19 related cost: $4 million Protecting our employees 3rd party medical staff performing health checks on employees Increased deep cleanings Increased sanitizing and social distancing cost Providing employees with mandatory personal protective equipment Increased COVID-19 re
Slide 15: Q1 2020: Continued strong top line growth and accelerating bottom line
8 of last 9 quarters >25% growth Q1 2020: Continued strong top line growth and accelerating bottom line +27% +28% +106% Net Income (Loss) ($ millions) $(3.6) $(3.4) +54%
Slide 16: Averaged 28% growth during the surge/trough
Averaged 28% growth during the surge/trough Strong, consistent growth prior to surge/trough related to COVID-19 crisis Source: Nielsen Mega-Channel Data thru 4/18/20
Slide 17: Change in Easter timing makes April comparisons more difficult
Change in Easter timing makes April y/y comparisons more difficult Weekly data through April shows the post-surge buying trough is ending Source: Nielsen Mega-Channel Data thru 4/25/20
Slide 18: Freshpet continued to build share in the post-surge trough
Despite slowdown in April consumption, Freshpet continued to build share in the post-surge trough Building market share through the crisis Period Ending 04/18/20 Freshpet Share of Wet + Dry Dog 4wk 13wk 26wk 52wk Total xAOC+Pet+WFM 4.2 3.8 3.7 3.6 Total US xAOC 4.6 4.3 4.1 4.0 Total US Food 7.7 7.5
Slide 19: Two-year stacked growth of 61% in Nielsen Mega-Channel
Two-year stacked growth of 61% in Nielsen Mega-Channel Q1 2020: Strong growth across channels Source: Nielsen Consumption Data thru 3/28/20
Slide 20: 15% increase in ACV in Q1 2020
15% increase in ACV in Q1 2020 Strong distribution progress despite retailers refocusing on COVID-19 issues Source: Nielsen Meg-Channel Data thru 4/18/20
Slide 21: Significant out-of-stocks during surge reduced SKUs in distribution
Significant out-of-stocks during surge reduced SKU’s in distribution Increasing Total Distribution Points (TDP’s) Source: Nielsen Mega-Channel Data thru 4/18/20
Slide 22: COVID-19 disruptions will slow fridge placements in Q2
COVID-19 related in-store disruptions will slow fridge placements in Q2; expect placements to resume in Q3 Large store fridges drove ACV & TDP gains Freshpet Distribution Gains Q1 2019 Q1 2020 Store Count 20,053 21,867 vs YA +10% +9% Upgraded Fridges (Cum.) 1,008 1,623 YTD Increase - 32 2nd Fridges
Slide 23: 3.3% of Freshpet sales in Q1 2020 were e-commerce
3.3% of Freshpet sales in Q1 2020 were e-commerce Q1 2020 e-commerce sales +98% vs. YA 30% Last Mile Delivery 50% Click & Collect 20% Online Fresh Delivery >80% of e-commerce sales go through a Freshpet Fridge
Slide 24: Almost Doubled Core Dog HH Penetration in Years
Almost Doubled Core Dog HH Penetration in 3 Years Accelerating penetration growth Source: Nielsen HH Panel for the periods ending March 2017, 2018, 2019, 2020 +33% +28% +1% +11% +15% +2%
Slide 25: Stable buying rate despite adding 33% new Core Dog users
Stable buying rate despite adding 33% new Core Dog users Buying rate growth diluted by strong penetration growth Source: Nielsen HH Panel for the period ending March 2017, 2018, 2019, 2020 and company internal data
Slide 26: Strong HH penetration gains stunted buying rate gains
Strong HH penetration gains in most recent quarter stunted buying rate gains HH penetration and buying rate both grow over the long-term but impact each other in the short-term Source: Nielsen HH Panel for the period ending March 21, 2020
Slide 27: Net New Stores in Q1
297 Net New Stores in Q1 Store count growth limited by COVID-19 related retail disruption +11% +8% +8% +11% +12% +24% +28% Source: Internal company data; all periods are ending 12/31 except 2020 which is quarter end 3/20 compared to YA +9%
Slide 28: Q1 2020: Gross margin impacted by start-ups and COVID-19 costs
Q1 2020: Gross margin impacted by start-ups and COVID-19 related costs Excluding COVID-19 related costs, on track for 49-50% adjusted gross margin target
Slide 29: Invested $1.7 million more in media in Q1 2020
Invested $1.7 million more in media in Q1 2020 vs. Q1 2019 Q1 2020: Continued gains in SG&A leverage Media: 16.7% Media: 18.4%
Slide 30: Completed $252 million capital raise on March 2, 2020
Completed $252 million capital raise on March 2, 2020 We have ample liquidity (1) – On April 20, 2020 Freshpet amended and restated its senior secured credit facility. This New Credit Facility includes a $130 million delayed draw term loan facility and a $35 million revolving loan facility that repl
Slide 31: Modest increase in scope of Kitchens 2.0
Modest increase in scope of Kitchens 2.0 to include more office space for expansion Capital spending plan is on track *also includes maintenance capex, fridges and IT ** includes 3 production lines, taking total capacity to $1.2 billion
Slide 32: Accelerated growth rate and capturing scale benefits
Accelerated growth rate and capturing scale benefits “Feed the Growth” is working
Slide 33: Feed the Growth
¥y 2©25 FEED THE GROWTH freshness
Slide 34: Appendix
Appendix fréshpet @ oo
Slide 35: 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, Gross Profit $ Depreciation expense (a) 1,744 1,566 Plant start-up expense (b) 487 - Non-cash share-based compensation (c) 449 148 COVID-19 expense (4) 217 - Adjusted Gross Prof
Slide 36: Reconciliation Between SG&A Expenses and Adjusted SG&A Expenses
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES Three Months Ended March 31, 2020 2019 (Dollars in thousands) SG&A expenses $ 34,676 $ 29,232 Depreciation and amortization expense (a) 2,709 2,154 Non - cash share - based compensation (b) 1,729 1,052 La
Slide 37: Reconciliation Between Net Loss and Adjusted EBITDA
Re tt Oe RECONCILIATION BETWEEN NET LOSS AND ADJUSTED EBITDA ‘Three Months Ended March 34, 2020 2019 (Dollars in thousands) Net loss, $ 590) $ (3,422) Depreciation and amortization 4453 3,720 Interest expense 704 103 Income tax expense 22 19 EBITDA 1589 a0 Loss on disposal of equipment 2 8 Non-cash