Slide 1: 4th Quarter & Full Year 2016 Supplemental Presentation
4th Quarter & Full Year 2016 Supplemental Presentation Strategic Operational and Financial Update March 9, 2017 Exhibit 99.2
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the Company’s results may differ materially from those expressed or implied by such
Slide 3: 100 Day Review Conclusion: Significant Potential to Grow
100 Day Review Conclusion: Significant Potential to Grow . . . but we have underinvested in marketing Expansion complete New lines running at parity Major investment in technical capability Strong focus on quality Significant capacity to support growth High repeat & brand passion Low awareness Low P
Slide 4: Freshpet at the Intersection of Two Powerful Macro-Trends in CPG
Freshpet Lives at the Intersection of Two Very Powerful Macro-Trends in CPG Humanization of Pets Fresh, Wholesome, All-Natural Foods
Slide 5: Freshpet Proprietary Position
Freshpet Proprietary Position Only Chilled Pet Food Distribution System Only Fresh Pet Food Manufacturing Capability in the U.S. 16,600+ Freshpet Fridges Proven Marketing Message Demonstrable Product Preference
Slide 6: We Operate Differently
We Operate Differently Delighting consumers with fresh food & our company ideology Environmentally Focused Employee Engagement Community & Consumer Engagement
Slide 7: Significant Growth Over the Past Four Years
Freshpet Has Seen Significant Growth Over the Past Four Years, Driven by Both Distribution and Same Store Sales Distribution & Sales Growth May 2012 – Dec 2016 Total US Multi Outlet IRI (4 wk.)
Slide 8: Recent Financial Performance 2013-2016
Recent Financial Performance 2013-2016 Fresh Pet Food Sales and Growth Rates
Slide 9: Increasing Repeat Rate & Strong Consumer Affinity
Increasing Repeat Rate & Strong Consumer Affinity
Slide 10: Our Biggest Opportunity: Awareness & Penetration
Our Biggest Opportunity Freshpet Rachel Ray Blue Buffalo Purina ONE Cesar Awareness (Aided) 35% 52% 86% 82% 70% Penetration 1.4% 3.6% (dry) ~8% (est) 5.2% (dry) 3.4% (wet) Source: 2016 Brand Tracker, IRI 2016 HH Panel Freshpet Awareness & Penetration are a Key Focus
Slide 11: Key Learning: Time to Shift to Rapid Scaling
Key Learning: Time to Shift to Rapid Scaling On trend product Reasonable margins Low awareness / high repurchase rate Ample plant capacity Financial flexibility Established business model Proven marketing program Installed Freshpet Fridge base Opportunity Capacity Capability
Slide 12: Organization Capability and Focus
Organization Capability and Focus Distribution Food Pet Mass Operations Scale & Efficiency Education Awareness Research & Development
Slide 13: Sharpen Focus & Drive the Core
Sharpen Focus & Drive the Core Focus on US Refrigerated: 96% of Current Net Sales % net sales breakdown by class of trade/product line as of 12/31/16 Freshpet Net Sales by Class of Trade/Product Line
Slide 14: Strategy, Tactics, Result
Strategy Tactics Result Drive HH Awareness & Penetration TV & Digital Advertising Accelerates Penetration Growth Accelerate Fridge Placements Change Selling Approach Make Freshpet Essential New Fridge Placements Growth Accelerates in 2018 Strengthen Gross Margin Convert From Building to Optimization
Slide 15: Cost Savings and Investment in Media
Cost Savings Investment in Media Velocity Increase (+Revenue) Distribution Increase (+Revenue) Plant Leverage (Incr. Pounds Produced) SG&A Leverage
Slide 16: Growing Into Our Scale
Growing Into Our Scale *- Leverage adjusted for projected inflationary growth of infrastructure Sales ($ in millions)
Slide 17: 1Q17 Strategic Tests Implemented
1Q17 Strategic Tests Implemented Advertising and Communications Strong and consistent returns driving POS records New Selling Approach Developed new plans for several top customers Cost Savings Opportunities Identified several points of cost savings opportunities Advertising Model Advertising has dr
Slide 18: Growth Has Started to Return, Driven by Advertising
Over the Past Six Months Growth Has Started to Return to the Business Primarily Driven by Advertising Adv. flight Adv. flight Q1 Has Provided Us with Insight Around Additional Testing
Slide 19: Growth is Accelerating Behind Advertising
Growth is Accelerating Behind Advertising Latest 4 Week Period IRI Consumption +23.3% vs. YA in MULO Latest 4 Weeks Ending Feb 19, 2017 Latest 12 Weeks Ending Feb 19, 2017 Latest 52 Weeks Ending Feb 19, 2017 Dollar Sales % Change YoY Dollar Sales % Change YoY Dollar Sales % Change YoY Total US - Foo
Slide 20: Revamped Selling Approach is Gaining Traction
Better align with key retailers on their strategies using their data to make Freshpet more strategic for the category and store Help retailers achieve their broader objectives Create unique and flexible assets to drive business at each customer Freshpet Fridge as a beacon of quality Leverage increas
Slide 21: Drive Cost Savings and Adjusted Gross Margin Improvements
Increase: Yield Reliability Throughput Drive simplification and standardization Drive Cost Savings and Adjusted Gross Margin Improvements Adj. Gross Margin is a non-GAAP measure. See the Company’s March 9, 2017 Press Release or 10-K for more info and reconciliation from GAAP to non-GAAP measures. Go
Slide 22: Strong Innovation at Freshpet Kitchens
Strong innovation at Freshpet Kitchens provides revolutionary offerings and a broad product platform Freshpet R&D - meeting consumer needs and driving production optimization Rolls Single Serve Treats Roasted Meals Shredded Optimization Improvement Efficiencies Scale Research & Development
Slide 23: Accelerating Growth Rate
Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Digital Support Plan TV Plan TV Plan Accelerating Growth Rate Investments in advertising, distribution gains and new products will accelerate growth rate throughout 2017 2017 Advertising Plans and Growth Rate by Quarter 13% Change vs YAG 20 % Change vs YAG
Slide 24: Future Economic Model: Profitable in 2018
Future Economic Model: Profitable in 2018 FY 2016FY 2020 Growth Rate15%15-20% Stores16,60923,000+ Adj. Gross Margin (1)49.6%~52% Adj. SG&A (2) 43.1%~33% Adj. EBITDA Margin13%20+% Media Investment~6% of sales~9% of sales Advertising Payback1.5 yrs.-- Free Cash Flow$(13.9)M~15% of sales (1) Gross Marg
Slide 25: Feed the Growth Plan Summary
Accelerates growth rate from 13% in Q4 2016 to 20% in Q4 2017 Proven advertising campaign investment drives the growth Strengthens the company’s barriers to entry/competitive advantages Improves the structural economics of the business More quickly absorb the fixed infrastructure costs Increase the
Slide 26: Rapid Scaling Delivering Sustainable Competitive Advantage
Rapid Scaling Delivering Sustainable Competitive Advantage Established & Broad Product Portfolio Impeccable Consumer Fundamentals First Mover On Trend Brand & Company Manufacturing & Distribution Scale Installed Distribution Network Free Cash Flow Marketing Model Operating Expertise
Slide 27: Freshpet
Freshpet FEED ruEG GROWTH/