Slide 1: Q1 2024 Earnings
Q1 2024 Earnings May 6, 2024 1 Q1 2024 EARNINGS PRESENTATION
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures FORWARD-LOOKING STATEMENTS adjusted SG&A as a % of net sales. These non-GAAP financial measures component of internal budgeting and setting management should be considered as supplements to GAAP reported measures, compensation. The non-GAAP measures are
Slide 3: Freshpet mission statement
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. 3 Q1 2024 EARNINGS PRESENTATION
Slide 4: Mainstream, Main Meal, More Profitable
MAINSTREAM Expand the Freshpet consumer base MORE PROFITABLE MAIN MEAL Create a sustainable Increase the percentage business by improving of consumers who our margin and increasing are HIPPOHs* our capital efficiency 4 *High profit pet owning households Q1 2024 EARNINGS PRESENTATION
Slide 5: Highlights
Highlights 5 Q1 2024 EARNINGS PRESENTATION
Slide 6: Q1 2024: Solid growth and profitability improvement across all metrics
Q1 2024: Solid growth and profitability improvement across all metrics FINANCIAL RETAIL Q1 2024 YoY Change YoY Change Net Sales $223.8M +34% Household Penetration +24% Adjusted Gross Margin* 45.3% +680 bps Buy Rate +5% Adjusted EBITDA $30.6M +$27.6M Cubic Feet +15% Adjusted EBITDA Margin* 13.7% +1,1
Slide 7: Strong performance driven by key fundamentals
Strong performance driven by key fundamentals: Strength of the Freshpet Improved operational Operating discipline growth model effectiveness to balance capacity and demand at a high growth rate • 31% volume-based growth • 920 basis point improvement • Expanding capacity on-budget • Increased househo
Slide 8: Expanding depth and breadth: 23% of all stores have multiple fridges
Expanding depth and breadth: 23% of all stores have multiple fridges Freshpet Store Count Number of Fridges per Store* YTD +320 26,777 27,097 25,281 23,631 Second/Third 22,716 Fridges 21,570 23% 19,499 18,004 16,609 15,015 13,387 One Fridge 77% 10,826 2013 2014 2015 2016 2017 2018 2019 2020 2021 202
Slide 9: Vast runway for growth in a growing category
MAINSTREAM Vast runway for growth in a growing category $53B U.S. pet food category1 96% $37B Dog food category1 3% Freshpet market share of fresh/frozen in Freshpet market share of dog food1 measured channels2 9 1. NielsenIQ Total US Pet Food $ - OmniChannel by Category 52 Weeks Ended 3/30/24 Q1 20
Slide 10: Continued growth in consumer franchise; added 2.4m+ households YoY
Continued growth in consumer franchise; MAINSTREAM added 2.4m+ households YoY Freshpet Household Penetration Growth (in millions) (52 weeks) 12.4 12.0 +24% 9.9 10.0 9.2 +8% 8.0 7.3 +26% 6.2 6.0 +18% 4.0 2.0 0.0 2020 2021 2022 2023 2024 10 Source: Numerator Panel data for the 52-week periods ending 4
Slide 11: Sales concentrated in heaviest users (HIPPOHs)
Freshpet sales are increasingly concentrated MAIN MEAL in our heaviest users (HIPPOHs*) and account for 89% of Q1 2024 net sales 5.0Users who are Super Heavy/Heavy Buyers (in millions) Freshpet 4.6 $300.00 Super4.5 Heavy/Heavy HHP Super Heavy/Heavy Buy Rate $280.00 4.0 3.4 89% 3.5 $260.00 3.0 2.9 of
Slide 12: Converting toppers into main meal users will increase buy rate
Converting toppers into main meal users MAIN MEAL will continue to increase buy rate Freshpet Buy Rate $96.84 (52 weeks) $91.99 +5% +22% $74.33 $75.48 $62.35 +19% +2% 2020 2021 2022 2023 2024 12 Source: Numerator Panel data for the 52-week periods ending 4/5/2020, 4/4/2021,4/3/2022, 4/2/2023, 3/31/2
Slide 13: Enhancing margins through improved operating performance
Enhancing margins through improved operating performance and leveraging scale and efficiency MORE PROFITABLE Q1 2024 Adj. Gross Margin Q1 2024 Adj. EBITDA ($m) % of net sales % of net sales 45.3% $30.6 13.7% 38.5% $3.0 1.8% Q1 2023 Q1 2024 Q1 2023 Q1 2024 30.3% 39.4% ($24.8m) $18.6m Gross Margin (GA
Slide 14: Improved costs by 920 bps in Q1 2024
Improved costs by 920 bps in MORE PROFITABLE Q1 2024 across key focus areas -290 bps -240 bps -390 bps Q1 2024 Q1 2024 Q1 2024 14 All comparisons to prior year period Q1 2024 EARNINGS PRESENTATION
Slide 15: Capacity Update
Capacity Update Ennis Kitchen producing ~25% of total Freshpet production from three lines Phase II construction is slightly ahead of schedule; expect fourth line to begin production by the end of Q3 2024 Additional roll line in Ennis to reduce complexity of changeovers and SKU assortment 15 Q1 2024
Slide 16: Capital Efficiency Framework
Capital Efficiency Framework MORE OUT OF MORE OUT OF DEVELOP & IMPLEMENT EXISTING LINES EXISTING SITES NEW TECHNOLOGIES 16 Q1 2024 EARNINGS PRESENTATION
Slide 17: Long-Term Strategy: Path to 2027
Long-Term Strategy: Path to 2027 Advertising & Innovation $1.8 billion Net Sales Drive Expand HH (target) Efficiencies Penetration Build Organization Capability to Increase Increase ~18% Velocity 20 million Effectiveness & Leverage Scale Adjusted EBITDA Margin (target) Freshpet Households by 2027 (t
Slide 18: Q1 2024 Results
Q1 2024 Results 18 Q1 2024 EARNINGS PRESENTATION
Slide 19: Strong Q1 results that demonstrate volume-driven growth
Strong Q1 results that demonstrate volume-driven growth Q1 2024 Net Sales ($m) Q1 2024 Net Sales Bridge $223.8 +34% $167.5 Q1 2023 Q1 2024 19 Source: Internal Data Q1 2024 EARNINGS PRESENTATION
Slide 20: Consumption growth remains strong and has accelerated
Consumption growth remains strong and has accelerated Q1 2024 Consumption Growth ($) Consumption Growth Trends (volume in pounds) 28% 26% 31% 25% 25% 23% 18% 13% 14% MegaChannel XAOC Food Pet Specialty Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 PLUS >100% GROWTH IN UNMEASURED CHANNELS 20 Source: NIQ co
Slide 21: Q1 2024 delivered significant margin improvement
Q1 2024 delivered significant margin improvement Q1 2024 Adj. Gross Margin Q1 2024 Adj. EBITDA ($m) % of net sales % of net sales 45.3% $30.6 13.7% 38.5% $3.0 1.8% Q1 2023 Q1 2024 Q1 2023 Q1 2024 30.3% 39.4% ($24.8m) $18.6m Gross Margin (GAAP) Net Income (loss) 21 Source: Internal Data Q1 2024 EARNI
Slide 22: 920 basis point improvement in Q1 2024; progress to 2027 margin targets
920 basis point improvement in Q1 2024; demonstrated our ability to deliver FY 2027 margin targets and now focused on consistency Key Margin Improvement Targets & Progress Q1 2023 Q1 2024 2027 Target 35.2% 33.5% 31.2% 9.3% 6.4% 7.5% 5.2% 2.8% 2.9% Input Costs Logistics Quality 22 Source: Internal Da
Slide 23: Significant Adj. Gross Margin improvement YOY
Significant Adj. Gross Margin improvement YOY; ahead of our long-term target and now focused on consistent performance Adj. Gross Margin Progress vs. 2027 Targets 45.3% 45.0% 38.5% Q1 2023 Q1 2024 2027 Target 23 Source: Internal Data Q1 2024 EARNINGS PRESENTATION
Slide 24: SG&A improvements tracking to long-term target
SG&A improvements 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 Q1 2023 Q1 2024 2027 Target 36.7% 31.7% 25.3% 15.5% 14.3% 11.9% 11.0% 8.8% 9.0% 9.3% 6.4% 7.5% Adj. SG&A Excluding Media & Media % Logistics % Total Adj.
Slide 25: FY 2024 Guidance
FY 2024 Guidance 25 Q1 2024 EARNINGS PRESENTATION
Slide 26: Updated FY 2024 Guidance
Updated FY 2024 Guidance Previous Updated Net Sales >$950M no change Net Sales Growth YoY >24% no change Adjusted EBITDA $100 - $110M >$120M Capital Expenditures ~$210M no change Additional considerations: • Net Sales: Maintaining guidance until we have greater confidence that we have adequate rolls
Slide 27: Capital Spending, Cash Flow & Liquidity
Capital Spending, Cash Flow & Liquidity 27 Q1 2024 EARNINGS PRESENTATION
Slide 28: Significant improvement in operating cash flow
Significant improvement in operating cash flow Capital Spending: Operating Cash Flow ($m) • Key projects remain on-track and on-budget; estimated 2024 spending of ~$210 million • Once Ennis Phase II is completed this summer/fall, we will have built adequate infrastructure/buildings to accommodate ou
Slide 29: Appendix
Appendix 29 Q1 2024 EARNINGS PRESENTATION
Slide 30: Reconciliation between Gross Profit and Adjusted Gross Profit
Freshpet, Inc. and Subsidiaries Reconciliation between Gross Profit and Adjusted Gross Profit (a) Includes the true-up of share-based compensation expense in the three months ended December 31, 2023. We have certain outstanding multi-year share-based awards, granted in FY 2020, with performance-base
Slide 31: Reconciliation between SG&A Expenses and Adjusted SG&A Expenses
Freshpet, Inc. and Subsidiaries Reconciliation between SG&A Expenses and Adjusted SG&A Expenses (a) Includes true-ups, if required, to share-based compensation expense compared to prior periods. We have certain outstanding share-based awards with performance-based vesting conditions that require the
Slide 32: Reconciliation between Net Income (loss) and Adjusted EBITDA
Freshpet, Inc. and Subsidiaries Reconciliation between Net Income (loss) and Adjusted EBITDA Three Months Ended March 31, 2024 2023 (Dollars in thousands) Net income (loss) $ 18,602 $ (24,786 ) Depreciation and amortization 15,745 14,492 Interest income, net of interest expense (275 ) 2,225 Income t
Slide 33: Q1 2024 EARNINGS PRESENTATION
33 Q1 2024 EARNINGS PRESENTATION
Slide 34: Q1 2024 EARNINGS PRESENTATION
34 Q1 2024 EARNINGS PRESENTATION