Slide 1: Q2 2024 Earnings
Q2 2024 EARNINGS PRESENTATION1 Q2 2024 Earnings August 5, 2024
Slide 2: Forward Looking Statements & Non-GAAP Measures
Q2 2024 EARNINGS PRESENTATION2 Q2 024 EAR INGS PR SEN ATION Forward Looking Statements & Non-GAAP Measures FORWARD-LOOKING STATEMENTS Certain statements in this presentation by Freshpet, Inc. (the “Company”) constitute “forward-looking” statements within the meaning of the Private Securities Litigat
Slide 3: Freshpet mission statement
Q2 2024 EARNINGS PRESENTATION3 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. 1
Slide 4: Mainstream, Main Meal, More Profitable
Q2 2024 EARNINGS PRESENTATION4 MAINSTREAM Expand the Freshpet consumer base MAIN MEAL Increase the percentage of consumers who are HIPPOHs* MORE PROFITABLE Create a sustainable business by improving our margin and increasing our capital efficiency *High profit pet owning households 1
Slide 5: Highlights
Q2 2024 EARNINGS PRESENTATION5 Highlights
Slide 6: Freshpet is delivering disciplined growth
Q2 2024 EARNINGS PRESENTATION6 "Freshpet is delivering disciplined growth. That has enabled us to significantly improve profitability while continuing to deliver category-leading net sales growth.”
Slide 7: Q2 2024: Robust growth and profitability improvement across each key metric
Q2 2024 EARNINGS PRESENTATION7 Source: Internal Data FINANCIAL RETAIL Q2 2024 YoY Change YoY Change Net Sales $235.3M +28% Household Penetration +25% Adjusted Gross Margin* 45.9% +610 bps Buy Rate +3% Adjusted EBITDA $35.1M +$26.1M Cubic Feet +15% Adjusted EBITDA Margin* 14.9% +1,000 bps Store Count
Slide 8: Strength of the Freshpet growth model
Q2 2024 EARNINGS PRESENTATION8 Strong performance driven by key fundamentals: • 24th consecutive quarter of >25% net sales growth • Volume-based growth of 28% • Household penetration growth of 25% in-line with long-term target • Media spend driving household penetration at a healthy customer acquisi
Slide 9: Long-term tailwinds supporting our growth
Q2 2024 EARNINGS PRESENTATION9 Long-term tailwinds supporting our growth: • Growing importance of pets in our lives • Long-term trend we have seen for over a decade • Consumers recognize quality for the price, not just price • Find value in a differentiated product • Heaviest users growing faster th
Slide 10: Vast runway for growth in a growing category
Q2 2024 EARNINGS PRESENTATION10 Vast runway for growth in a growing category MAINSTREAM 1. NielsenIQ Total US Pet Food $ - OmniChannel by Category 52 Weeks Ended 6/29/24 2. Nielsen MegaChannel 52 Weeks Ended 6/29/24, Gently Cooked Fresh/Frozen Branded Dog Food $53B U.S. pet food category1 $36B Dog f
Slide 11: Household penetration growth; added 2.5m+ households
Q2 2024 EARNINGS PRESENTATION11 6.6 7.7 9.4 10.2 12.8 - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 2020 2021 2022 2023 2024 +8% +25% +22% +17% Continued growth in consumer franchise; added 2.5m+ households YoYMAINSTREAM Source: Numerator Panel data for the 52-week periods ending 7/5/2020, 7/4/2021, 7/3/2022, 7/
Slide 12: Sales concentrated in heaviest users (HIPPOHs)
Q2 2024 EARNINGS PRESENTATION12 1.8 2.4 3.1 3.6 4.8 $195.86 $207.42 $211.76 $241.24 $237.35 $175.00 $195.00 $215.00 $235.00 $255.00 $275.00 $295.00 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2020 2021 2022 2023 2024 Freshpet sales are increasingly concentrated in our heaviest users (HIPPOHs*) and account for 89% o
Slide 13: Converting toppers into main meal users increases buy rate
Q2 2024 EARNINGS PRESENTATION13 $63.26 $75.64 $80.35 $96.77 $99.94 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 2020 2021 2022 2023 2024 MAIN MEAL Converting toppers into main meal users will continue to increase buy rate Source: Numerator Panel data for the 52-week periods ending 7/5/2020, 7/4/2021, 7
Slide 14: Expanding depth and breadth of stores
Q2 2024 EARNINGS PRESENTATION14 Expanding depth and breadth: 22% of all stores have multiple fridges Source: Internal data for the period ending 6/30/24; *U.S. Fridges Freshpet Store Count Number of Fridges per Store* Second/Third Fridges 22% One Fridge 78% YTD +720 10,826 13,387 15,015 16,609 18,00
Slide 15: More Profitable: enhancing margins through improved operating performance
Q2 2024 EARNINGS PRESENTATION15 MORE PROFITABLE Enhancing margins through improved operating performance and leveraging scale and efficiency Source: Internal Data 1. Excluding an $11.1 million true-up of non-cash share-based compensation based on multi-year share-based awards granted in fiscal year
Slide 16: Improved costs by 770 bps in Q2 2024
Q2 2024 EARNINGS PRESENTATION16 -220 bps Q2 2024 -90 bps Q2 2024 -460 bps Q2 2024 Improved costs by 770 bps in Q2 2024 across key focus areas MORE PROFITABLE All comparisons to prior year period
Slide 17: Capacity Update
Q2 2024 EARNINGS PRESENTATION17 Capacity Update Source: Internal Data Facility # Lines Today # Lines Projected Bethlehem Kitchen 6 7 Kitchen South 3 5+ Ennis Kitchen 3 10 Total 12 22+ Q2 2024 EARNINGS PRESENTATION Fourth line in Ennis to begin production by the end of Q3 2024
Slide 18: Capital Efficiency Framework
Q2 2024 EARNINGS PRESENTATION18 Capital Efficiency Framework MORE OUT OF EXISTING LINES MORE OUT OF EXISTING SITES DEVELOP & IMPLEMENT NEW TECHNOLOGIES
Slide 19: Long-Term Strategy: Path to 2027
Q2 2024 EARNINGS PRESENTATION19 Long-Term Strategy: Path to 2027 Expand HH Penetration Increase Velocity Advertising & Innovation Expand Visibility & Availability Drive Efficiencies Build Organization Capability to Increase Effectiveness & Leverage Scale Expand Capacity ~18% Adjusted EBITDA Margin (
Slide 20: Q2 2024 Results
Q2 2024 EARNINGS PRESENTATION20 Q2 2024 Results
Slide 21: Strong Q2 results demonstrate all volume-driven growth
Q2 2024 EARNINGS PRESENTATION21 Strong Q2 results demonstrate all volume-driven growth $183.3 $235.3 Q2 2023 Q2 2024 +28% Q2 2024 Net Sales ($m) Q2 2024 Net Sales Bridge Source: Internal Data
Slide 22: Consumption growth remains strong and has accelerated
Q2 2024 EARNINGS PRESENTATION22 Consumption growth remains strong and has accelerated Source: NIQ consumption data, latest 13 weeks thru 6/29/24 and internal sales data Q2 2024 Consumption Growth ($) Consumption Growth Trends (volume in pounds) 24% 26% 24% 9% Total US Pet Retail Plus XAOC Food Pet S
Slide 23: Nielsen data demonstrates robust growth
Q2 2024 EARNINGS PRESENTATION23 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 $22,000,000 $24,000,000 $26,000,000 Nielsen Total US Pet Retail Plus Consumption Nielsen data demonstrates robust growth Source: NIQ Total US Pet Retail Plus, data thru 7/20/24. The Pet Retail Plu
Slide 24: Q2 2024 delivered significant margin improvement
Q2 2024 EARNINGS PRESENTATION24 Q2 2024 delivered significant margin improvement Gross Margin (GAAP) 39.9%32.3% Q2 2024 Adj. Gross Margin % of net sales Q2 2024 Adj. EBITDA ($m) % of net sales 39.8% 45.9% Q2 2023 Q2 2024 $9.0 $35.1 Q2 2023 Q2 2024 4.9% 14.9% Net Income (loss) ($17.0m) ($1.7m)1 Sourc
Slide 25: Key margin improvement targets and progress
Q2 2024 EARNINGS PRESENTATION25 34.4% 8.0% 3.6% 29.8% 5.8% 2.7% 33.5% 7.5% 2.9% Input Costs Logistics Quality 770 basis point improvement in Q2 2024; demonstrated our ability to deliver FY 2027 margin targets again Key Margin Improvement Targets & Progress Q2 2023 Q2 2024 2027 Target Source: Interna
Slide 26: Significant Adj. Gross Margin improvement YOY
Q2 2024 EARNINGS PRESENTATION26 Significant Adj. Gross Margin improvement YOY; ahead of our long-term target and now focused on consistent performance 39.8% 45.9% 45.0% Q2 2023 Q2 2024 2027 Target Adj. Gross Margin Progress vs. 2027 Targets Source: Internal Data
Slide 27: SG&A improvements tracking to long-term target
Q2 2024 EARNINGS PRESENTATION27 SG&A improvements tracking to long-term target; logistics is well ahead of plan and G&A will follow as we add scale Source: Internal Data Adj. SG&A Progress vs. Targets Q2 2023 Q2 2024 2027 Target SG&A (GAAP)40.7%41.5% 12.1% 14.8% 8.0% 34.9% 13.0% 12.2% 5.8% 31.0% 8.8
Slide 28: FY 2024 Guidance
Q2 2024 EARNINGS PRESENTATION28 FY 2024 Guidance
Slide 29: Updated FY 2024 Guidance
Q2 2024 EARNINGS PRESENTATION29 Updated FY 2024 Guidance Additional considerations: • Net Sales: Raising guidance with improvements on production capacity; managing growth as new line ramps up at the end of 3Q and through 4Q • Volume cadence: Expect volume to be sequentially lower throughout the yea
Slide 30: Capital Spending, Cash Flow & Liquidity
Q2 2024 EARNINGS PRESENTATION30 Capital Spending, Cash Flow & Liquidity
Slide 31: Significant improvement in operating cash flow
Q2 2024 EARNINGS PRESENTATION31 Significant improvement in operating cash flow Capital Spending: • Key projects remain on-track and on-budget; estimated 2024 spending of ~$200 million • Once Ennis Phase II is completed this summer/fall, we will have built adequate infrastructure/buildings to accommo
Slide 32: Appendix
Q2 2024 EARNINGS PRESENTATION32 Appendix
Slide 33: Reconciliation between Gross Profit and Adjusted Gross Profit
Q2 2024 EARNINGS PRESENTATION33 Freshpet, Inc. and Subsidiaries Reconciliation between Gross Profit and Adjusted Gross Profit For the Three Months Ended June 30, For the Six Months Ended June 30, 2024 2023 2024 2023 (Dollars in thousands) Gross profit $ 93,952 $ 59,244 $ 182,110 $ 110,004 Depreciati
Slide 34: Reconciliation between SG&A Expenses and Adjusted SG&A Expenses
Q2 2024 EARNINGS PRESENTATION34 Freshpet, Inc. and Subsidiaries Reconciliation between SG&A Expenses and Adjusted SG&A Expenses (a) Includes true-ups to share-based compensation expense compared to prior periods. We have certain outstanding share-based awards with performance-based vesting condition
Slide 35: Reconciliation between Net (loss) Income and Adjusted EBITDA
Q2 2024 EARNINGS PRESENTATION35 Freshpet, Inc. and Subsidiaries Reconciliation between Net (loss) Income and Adjusted EBITDA (a) Includes true-ups to share-based compensation expense compared to prior periods. We have certain outstanding share-based awards with performance-based vesting conditions t
Slide 36: Convertible Share Dilution Calculations at Maturity
Q2 2024 EARNINGS PRESENTATION36 Convertible Share Dilution Calculations at Maturity ▪ We have run share dilution calculations to compare outcomes for the 2028 convertible notes ▪ Freshpet has structured the convertible with Flexible Settlement, so we have the option to settle the convertible in shar
Slide 37: PRESENTATION37
Q2 2024 EARNINGS PRESENTATION37
Slide 38: PRESENTATION38
Q2 2024 EARNINGS PRESENTATION38