Slide 1: Q3 2023 Earnings
Q3 2023 EARNINGS November 6, 2023 1 Q3 2023 EARNINGS PRESENTATION
Slide 2: Forward Looking Statements & Non-GAAP Measures
FORWARD LOOKING STATEMENTS & NON-GAAP MEASURES Forward-Looking Statements Non-GAAP Measures Certain statements in this presentation by Freshpet, Inc. (the “Company”) constitute Freshpet uses certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, “forward-looking” statements, which i
Slide 3: Forward Looking Statements & Non-GAAP Measures
FORWARD LOOKING STATEMENTS & NON-GAAP MEASURES Freshpet defines Adjusted Gross Profit as gross profit before depreciation expense, COVID- Certain of these measures represent the Company's guidance for fiscal year 2023. The 19 expense and non-cash share-based compensation, and Adjusted SG&A as SG&A C
Slide 4: Freshpet Strengthens the Bond Between People and Our Pets
FRESHPET STRENGTHENS THE BOND BETWEEN PEOPLE AND OUR PETS SO THAT WE BOTH LIVE LONGER, HEALTHIER AND HAPPIER LIVES WHILE BEING KIND TO THE PLANET. 4 Q3 2023 EARNINGS PRESENTATION
Slide 5: 2023 Plan: Operational Improvements
2023 PLAN: OPERATIONAL IMPROVEMENTS Ample More efficient Improved Commodity costs capacity logistics quality in line with pricing 5 Q3 2023 EARNINGS PRESENTATION
Slide 6: Progress Report
PROGRESS REPORT Advertising & Innovation Drive Efficiencies Expand HH in Logistics Penetration Leverage Scale Increase in COGS Velocity Leverage Scale Expand Visibility in SG&A & Availability Expand Capacity 6 Q3 2023 EARNINGS PRESENTATION
Slide 7: Q3 2023 Results
Q3 2023 RESULTS 7 Q3 2023 EARNINGS PRESENTATION
Slide 8: Strong Q3 Results Demonstrating Improved Operating Performance
STRONG Q3 RESULTS THAT DEMONSTRATE IMPROVED OPERATING PERFORMANCE & CONTINUING STRONG GROWTH FRESHPET Q3 2023 NET SALES FRESHPET Q3 2023 ADJ. EBITDA ($ millions) ($ millions) $23.2 $200.6 $151.3 +33% +41% $3.5 2022 2023 2022 2023 8 Q3 2023 EARNINGS PRESENTATION
Slide 9: Net Sales Growth Driven by Volume Growth, Mix and Pricing
NET SALES GROWTH DRIVEN BY STRONG VOLUME GROWTH, IMPROVED MIX AND THE BENEFIT OF PRICING CONSUMPTION GROWTH TRENDS (Volume in pounds) 23% 18% 14% 12% Q4 2022 Q1 2023 Q2 2023 Q3 2023 9 Source: NIQ consumption data thru 9/30/23 and internal sales data Q3 2023 EARNINGS PRESENTATION
Slide 10: Q3 Volume & Mix Growth In Line With 2027 Net Sales CAGR Target
Q3 VOLUME & MIX GROWTH RATE IS IN LINE WITH OUR 2027 NET SALES CAGR TARGET 10 Source: Internal sales data and NIQ data ending 9/30/23 Q3 2023 EARNINGS PRESENTATION
Slide 11: Consumption Growth Strong Across All Measured Channels
CONSUMPTION GROWTH IS STRONG ACROSS ALL MEASURED CHANNELS & TIME FRAMES; NET SALES IN UNMEASURED CHANNELS DOUBLED VS YA FRESHPET $ SHARE OF WET & DRY DOG Q3 2023 CONSUMPTION GROWTH ($) Total US Food Total US xAOC Mega-Channel Pet Superstore 17.2 30% 16.8 16.3 28% 15.4 27% 8.7 8.6 8.3 7.8 7.0 6.9 6.7
Slide 12: 780 bps Improvement on Key Operating Costs
GENERATED 780 BPS IMPROVEMENT YEAR-ON-YEAR ON KEY OPERATING COSTS: INPUT COSTS/PRICING, LOGISTICS AND QUALITY Q3 2023 KEY OPERATING COSTS Q3 2022 ADJ. GROSS MARGIN (% of net sales) 34.7% 34.1% 40.2% Q3 22 Q3 23 12.2% 34.5% 6.8% 6.2% 4.3% Input Costs Logistics Quality Q3 2022 * Q3 2023 * 29.4% 33.0%
Slide 13: Ahead of Pace on Cost Improvements for FY 2027 Margin Targets
AHEAD OF PACE TO DELIVER THE CRITICAL COST IMPROVEMENTS EMBEDDED IN OUR FY 2027 MARGIN TARGETS KEY MARGIN IMPROVEMENT TARGETS & PROGRESS 35.2% 34.1% 33.5% 10.7% 6.8% 7.5% 5.4% 4.3% 2.9% Input Costs Logistics Quality FY 2022 Q3 2023 2027 Target 13 Q3 2023 EARNINGS PRESENTATION
Slide 14: Strong Progress on Adj. Gross Margin
STRONG PROGRESS ON ADJ. GROSS MARGIN; ON TRACK TO ACHIEVE LONG-TERM GOALS ADJ. GROSS MARGIN PROGRESS VS 2027 TARGETS 45.0% 40.2% 34.5% Q3 2022 Q3 2023 2027 Target 14 Q3 2023 EARNINGS PRESENTATION
Slide 15: SG&A Improvements Tracking to Long Term Target
SG&A IMPROVEMENTS ALSO TRACKING TO LONG TERM TARGET; LOGISTICS IS WELL AHEAD OF PLAN AND G&A WILL FOLLOW AS WE ADD SCALE ADJ. SG&A PROGRESS VS TARGETS 32.2% 28.6% 25.3% * 12.4% 12.2% 10.8% ** 8.8% 9.2% 9.5% 9.0% 6.8% 7.5% Adj. SG&A % Excluding Media & Media % Logistics % Total Adj. SG&A % Logistics
Slide 16: Ennis Kitchen Producing ~25% of Total Production
ENNIS KITCHEN: NOW PRODUCING ~25% OF TOTAL FRESHPET PRODUCTION FROM TWO LINES IN THE ENNIS KITCHEN Both bag line and roll line are operating 24/7 Chicken processing operation is online & performing well Second bag line commissioning has commenced; expect saleable product by end of the year Phase II
Slide 17: YTD 2023 Results
YTD 2023 RESULTS 17 Q3 2023 EARNINGS PRESENTATION
Slide 18: Strong FYTD Results and Growth
STRONG FYTD RESULTS THAT DEMONSTRATE IMPROVED OPERATING PERFORMANCE AND STRONG GROWTH FRESHPET YTD 2023 NET SALES FRESHPET YTD 2023 ADJ. EBITDA ($ millions) ($ millions) $551.5 $35.2 $429.5 +28% +39% $1.3 2022 2023 2022 2023 18 Q3 2023 EARNINGS PRESENTATION
Slide 19: 610 bps YTD Improvement on Key Operating Costs
GENERATED 610 BPS IMPROVEMENT YTD vs YA ON KEY OPERATING COSTS: INPUT COSTS/PRICING, LOGISTICS AND QUALITY YTD 2023 KEY OPERATING COSTS YTD 2023 ADJ. GROSS MARGIN 35.8% 34.5% 39.5% YTD 22 37.1% YTD 23 11.3% 7.9% 5.7% 4.3% Input Costs Logistics Quality 2022 * 2023 * 32.7% 32.0% Gross Margin (GAAP) 19
Slide 20: FY 2023 Guidance
FY 2023 GUIDANCE 20 Q3 2023 EARNINGS PRESENTATION
Slide 21: Raising 2023 Adj. EBITDA and Net Sales Guidance
RAISING 2023 ADJ. EBITDA AND NET SALES GUIDANCE FRESHPET FINANCIAL PROJECTIONS $80 • Volume cadence: Accelerating consumption growth in $800 ~ $750.0 ~ $755.0 $70 Q4; Q4 net sales growth lapping large trade inventory $700 ~ $62.0 re-fill YA ($10-15 million) which drives low-mid 20’s >$55.0 $60 $600
Slide 22: Capital Spending, Cash Flow & Liquidity
CAPITAL SPENDING, CASH FLOW & LIQUIDITY 22 Q3 2023 EARNINGS PRESENTATION
Slide 23: Significant Improvement in Operating Cash Flow; Capex In Line
SIGNIFICANT IMPROVEMENT IN OPERATING CASH FLOW; CAPITAL SPENDING PLANS REMAIN IN-LINE WITH PROJECTIONS • Capital Spending: • Key projects remain on track and on budget; estimated 2023 spending of $240 million • Only committing to capacity as it is needed; multiple decision points for each increment
Slide 24: Household Penetration & Buying Rate
HOUSEHOLD PENETRATION & BUYING RATE 24 Q3 2023 EARNINGS PRESENTATION
Slide 25: Continued Growth in Consumer Franchise
CONTINUED GROWTH IN CONSUMER FRANCHISE; ADDED >1 MM HH’S AND ACCELERATED BUYING RATE FRESHPET PENETRATION GROWTH FRESHPET BUYING RATE (52 weeks) (52 weeks) $97.21 10,777,994 $84.80 9,500,318 +15% +13% $76.01 $66.85 +12% 7,846,790 +21% +14% 7,007,662 $58.65 +12% +14% 5,410,287 +30% 2019 2020 2021 202
Slide 26: Household Penetration Rolling 13-Week Trend
26 3,500,000 4,500,000 5,000,000 6,000,000 4,000,000 5,500,000 13WE 2022-01-09, Rolling 13WE 2022-01-16, Rolling 13WE 2022-01-23, Rolling 13WE 2022-01-30, Rolling 13WE 2022-02-06, Rolling 13WE 2022-02-13, Rolling 13WE 2022-02-20, Rolling 13WE 2022-02-27, Rolling 13WE 2022-03-06, Rolling 13WE 2022-03
Slide 27: Freshpet Becoming More Mainstream
FRESHPET IS BECOMING MORE “MAINSTREAM”: HH PENETRATION GROWTH IS BROAD-BASED ACROSS AGE GROUPS & INCOME LEVELS FRESHPET BUYING HH'S GROWTH BY INCOME FRESHPET BUYING HH'S GROWTH BY GENERATION (past 52 weeks) (past 52 weeks) 22.7% 22.7% 18.5% 16.9% 14.3% 10.6% 10.3% Low Income (Under $40k) Middle Inco
Slide 28: Freshpet Becoming More Main Meal
FRESHPET IS BECOMING MORE “MAIN MEAL”: ~4 MILLION SUPER HEAVY/HEAVY USERS (HIPPOHs) ACCOUNT FOR 88% OF OUR VOLUME FRESHPET ULTRA/SUPER HEAVY/HEAVY BUYERS 5 YEAR TREND (PAST 52 WEEKS) 4,500,000 Ultra/Super Heavy/Heavy Buyers: 3,965,047 $290.00 4,000,000 Bought at least $40 in the most recent 10 weeks
Slide 29: Current Consumption Trends
CURRENT CONSUMPTION TRENDS 29 Q3 2023 EARNINGS PRESENTATION
Slide 30: Consumption Continues to Grow at Strong and Steady Rate
CONSUMPTION CONTINUES GROW AT A STRONG & STEADY RATE NIELSENIQ MEGA-CHANNEL CONSUMPTION ($) $22,000,000 $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 12/31/2022 1/31/2023 2/28/2023 3/31/2023 4/30/2023 5/31/2023 6/30/2023 7/31/2023 8/31/2023 9/30/2023 10/31/2023 11/30/2023 M
Slide 31: 2-Year Stacked Growth Remains Strong
2-YEAR STACKED GROWTH REMAINS STRONG NIELSENIQ MEGA-CHANNEL CONSUMPTION GROWTH 2-YEAR STACKED 78% 75% 75% 72% 72% 71% 70% 69% 67% 66% 66% 65% 66% 66% 67% 65% 66% 68% 67% 66% 65% 65% 64% 66% 64% 63% 65% 64% 64% 64% 65% 63% 63% 62% 64% 62% 62% 61% 61% 61% 61% 61% 59% 30% 27% 32% 53% 30% 28% 27% 22% 39
Slide 32: Consistently Strong Volume Growth Trends
32 2,750,000 2,950,000 3,150,000 3,350,000 3,550,000 3,750,000 3,950,000 4,150,000 4,350,000 1 W/E 09/04/21 1 W/E 09/18/21 1 W/E 10/02/21 1 W/E 10/16/21 1 W/E 10/30/21 1 W/E 11/13/21 1 W/E 11/27/21 1 W/E 12/11/21 1 W/E 12/25/21 1 W/E 01/08/22 1 W/E 01/22/22 1 W/E 02/05/22 1 W/E 02/19/22 Source: Niel
Slide 33: Q3 2023 Visibility, Availability & Innovation
Q3 2023 VISIBILITY, AVAILABILITY & INNOVATION 33 Q3 2023 EARNINGS PRESENTATION
Slide 34: Store Count Continues to Grow
STORE COUNT CONTINUES TO GROW: 20% OF ALL STORES HAVE MULTIPLE FRIDGES FRESHPET STORE COUNT YTD: +1,104 SECOND/THIRD FRIDGES 26,385 25,281 5,803 23,631 22,716 21,570 19,499 3,762 18,004 16,609 2,423 15,015 13,387 10,826 382 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD Total Operating YTD In
Slide 35: Retail Availability at Record Levels
35 500 800 600 700 900 1,000 1,200 1,100 8/21/2021 9/4/2021 9/18/2021 NIELSENIQ 10/2/2021 10/16/2021 10/30/2021 11/13/2021 11/27/2021 12/11/2021 12/25/2021 1/8/2022 MEGA-CHANNEL 1/22/2022 2/5/2022 2/19/2022 3/5/2022 3/19/2022 4/2/2022 4/16/2022 4/30/2022 5/14/2022 5/28/2022 6/11/2022 FRESHPET TOTAL
Slide 36: Product Innovation Expands Appeal to Broader Audience
PRODUCT INNOVATION CONTINUES TO EXPAND THE APPEAL OF FRESHPET TO A BROADER AUDIENCE OF POTENTIAL USERS Top 10 velocity item Entry price point item will be in >9500 stores by year end 36 Q3 2023 EARNINGS PRESENTATION
Slide 37: Appendix
APPENDIX 37 Q1 2023 EARNINGS PRESENTATION
Slide 38: Reconciliation Between Gross Profit and Adjusted Gross Profit
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (Dollars in thousands) Gross profit $ 66.293 $ 44.545 $ 176,297 $ 140,324 Depreciation expense 11,767 3,159 33,106 14.208
Slide 39: Reconciliation Between SG&A Expenses and Adjusted SG&A
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (@ollars in thousands) SG&A expenses $ 73,371 $ 60,449 $ 221,638 $ 190,241 Depreciation and amortization expense 4.452
Slide 40: Reconciliation Between Net Loss and Adjusted EBITDA
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN NET (LOSS) AND ADJUSTED EBITDA Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (Dollars in thousands) Net loss $ (7,166) $ (18,449) $ (48,904) $ (56,577) Depreciation and amortization 16,219 8,346 45,149 24.4
Slide 41: Q3 2023 EARNINGS PRESENTATION
41 Q3 2023 EARNINGS PRESENTATION