Slide 1: Q4 2022 Earnings
Q4 2022 EARNINGS February 27, 2023 1 Q4 2022 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 Q4 2022 EARNINGS PRESENTATION
Slide 5: 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 5 Q4 2022 EARNINGS PRESENTATION
Slide 6: Strong finish to 2022 and strongest year of growth since going public
STRONG FINISH TO 2022 THAT DELIVERED STRONGEST YEAR OF GROWTH SINCE THE COMPANY WENT PUBLIC IN 2014 FRESHPET Q4 NET SALES FRESHPET FY 2022 NET SALES ($ millions) ($ millions) $165.5 $595.3 $425.5 +40% $115.9 +43% +37% +33% 2021 2022 2021 2022 6th consecutive year of accelerating growth 6 Q4 2022 EAR
Slide 7: Continuing to drive HH penetration growth towards 20MM HH goal
CONTINUING TO DRIVE HH PENETRATION GROWTH TOWARDS 20MM HH GOAL 9,570,744 8,231,677 Growth amongst heavy 7,210,484 & super heavy users is even stronger 5,675,057 4,425,856 FRESHPET PENETRATION GROWTH (HH’s) 2018 2019 2020 2021 2022 7 Source: Numerator data through 12/31/2022 Q4 2022 EARNINGS PRESENTA
Slide 8: Strong Q4 Adj. EBITDA delivered
BETTER THAN EXPECTED NET SALES AND PLANT START-UP EXPENSES, AND IMPROVED OPERATING PERFORMANCE DELIVERED STRONG Q4 ADJ. EBITDA FRESHPET Q4 ADJ. EBITDA FRESHPET FY 2022 ADJ. EBITDA ($ millions) ($ millions) $18.8 $35.0 +148% -7% $20.1 $7.6 -43% -16% 2021 2022 2021 2022 8 Q4 2022 EARNINGS PRESENTATION
Slide 9: Improvement on input costs/pricing, quality and logistics drove Adj. EBITDA
STRONG IMPROVEMENT ON INPUT COSTS/PRICING, QUALITY AND LOGISTICS DROVE SIGNIFICANT ADJ. EBITDA IMPROVEMENT INPUT COSTS QUALITY COSTS LOGISTICS (% of net sales) (% of net sales) (% of net sales) 6.1% 6.2% 12.2% 36.8% 11.5% 36.1% 4.7% 4.7% 9.9% 9.4% 34.7% 33.6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 9 Q4
Slide 10: Aligning long-term growth with prudent capital expenditures
ALIGNING LONG-TERM GROWTH WITH PRUDENT CAPITAL EXPENDITURES PREVIOUS PROJECTED CAPITAL PROJECTED CAPITAL SPENDING ($ millions) SPENDING ($ millions) $290 $240 $230 $230 Reduced projected capital spending over 2022/2023 by a total of $50 million vs. November guidance. 2022 2023 2022 2023 10 Source: C
Slide 11: Ennis Kitchen: start-up is on-track
ENNIS KITCHEN: START-UP IS ON-TRACK 33 rolls sku’s qualified for production Rolls production and shipments ahead of plan Bag line start-up is on track to ship finished product in Q2 Chicken processing operation is on-track for start-up in Q2 11 Q4 2022 EARNINGS PRESENTATION
Slide 12: Q4 & FY 2022 Results
Q4 & FY 2022 RESULTS 12 Q4 2022 EARNINGS PRESENTATION
Slide 13: Net sales growth driven by volume, pricing/mix and trade inventory re-fill
NET SALES GROWTH DRIVEN BY VOLUME, PRICING/MIX AND TRADE INVENTORY RE-FILL Q4 2022 NET SALES BRIDGE FY 2022 NET SALES BRIDGE 13 Source: Nielsen consumption data thru 12/31/22 and internal sales data Q4 2022 EARNINGS PRESENTATION
Slide 14: Adj. gross margin excluding plant start-up expenses and pricing mismatch
EXCLUDING PLANT START-UP EXPENSES & TIMING MISMATCH ON PRICING/COMMODITIES, ADJ. GROSS MARGIN IS FLAT VS YA Q4 2022 ADJ. GROSS MARGIN FY 2022 ADJ. GROSS MARGIN 43.4% 3.1% 40.6% Pricing/cost mismatch 2.5% 4.4% Plant start-up 4.8% expense Reported Adj. 36.0% 33.0% Gross Margin Q4 2021 Q4 2022 2021 202
Slide 15: Delivered significant Adj. SG&A leverage excluding media & logistics
DELIVERED SIGNIFICANT ADJ. SG&A LEVERAGE EXCLUDING MEDIA & LOGISTICS Q4 2022 ADJ. SG&A LEVERAGE FY 2022 ADJ. SG&A LEVERAGE 34.1% 35.2% 32.9% 22.4% Freight costs: -50 bps 11.4% 11.9% Freight costs: -140 bps 13.2% 11.2% 10.8% 11.7% 10.5% -20 bps -150 bps 1.9% Q4 2021 Q4 2022 FY 2021 FY 2022 42.2% 28.7
Slide 16: Reconciliation of previous reporting method to new Adj. EBITDA definition
FY 2022 VS FY 2021: RECONCILIATION OF PREVIOUS REPORTING METHOD TO NEW ADJ. EBITDA DEFINITION FY 2021 ADJ. EBITDA FY 2022 ADJ. EBITDA Reconciliation of Adj. EBITDA to previous reporting method. 16 Q4 2022 EARNINGS PRESENTATION
Slide 17: Household Penetration & Buying Rate
HOUSEHOLD PENETRATION & BUYING RATE 17 Q4 2022 EARNINGS PRESENTATION
Slide 18: Continued growth in consumer franchise; approaching 10MM HH's
CONTINUED GROWTH IN CONSUMER FRANCHISE; APPROACHING 10MM HH’S FRESHPET PENETRATION GROWTH FRESHPET BUYING RATE $87.94 9,570,744 $77.23 8,231,677 $69.73 +14% 7,210,484 +16% $59.17 $55.52 5,675,057 +11% +14% 4,425,856 +18% +27% +28% +7% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Total Penetrati
Slide 19: Freshpet heavy/super heavy buyers continue to increase
FRESHPET HEAVY/SUPER HEAVY BUYERS CONTINUE TO INCREASE FRESHPET ULTRA/SUPER HEAVY/HEAVY BUYERS 5 YEAR TREND 3,500,000 Ultra/Super Heavy/Heavy Buyers: 3,230,480 $290 Bought at least $40 in the most recent 10 weeks 3,000,000 +31% $270 2,467,116 2,500,000 $250 2,100,249 2,000,000 +17% $230 1,475,604 +4
Slide 20: FY 2023 Guidance
FY 2023 GUIDANCE 20 Q4 2022 EARNINGS PRESENTATION
Slide 21: 2023 Guidance: focus on improving profitability while driving growth
2023 GUIDANCE: FOCUS ON IMPROVING PROFITABILITY WHILE DRIVING GROWTH FRESHPET FINANCIAL PROJECTIONS $100 • Volume cadence: Shipment growth strongly tied to $800 ~ $750.0 $90 sequential consumption growth. Year-on-year growth $700 trends skewed by trade inventory re-fill in 2022. $80 $595.3 $600 $70
Slide 22: 2023 Plan: Key Growth Drivers
2023 PLAN: KEY GROWTH DRIVERS STRONG ADVERTISING SIGNIFICANT INCREASE NEW PRODUCT INVESTMENT IN RETAIL PRESENCE LAUNCHES 22 Q4 2022 EARNINGS PRESENTATION
Slide 23: 2023 Plan: Operational Improvements
2023 PLAN: OPERATIONAL IMPROVEMENTS Ample More efficient Improved Commodity costs capacity logistics quality in line with pricing 23 Q4 2022 EARNINGS PRESENTATION
Slide 24: 2023 Guidance: Q1 Expectations
2023 GUIDANCE: Q1 EXPECTATIONS Volume cadence: Year-ago included the benefits of two price increases (11/21 and 2/22) and ~4 points of growth due to trade inventory re-fill that we will be lapping. Q1 2023 will be similar in net sales to Q4 2022 due to trade inventory re-fill being completed in Q4.
Slide 25: Current Consumption Trends
CURRENT CONSUMPTION TRENDS 25 Q4 2022 EARNINGS PRESENTATION
Slide 26: 3-year stacked growth is remarkably consistent
3-YEAR STACKED GROWTH IS REMARKABLY CONSISTENT NIELSEN MEGA-CHANNEL CONSUMPTION GROWTH 3-YEAR STACKED 111% 101%100% 101% 102% 100%100% 99% 99% 99% 99% 99% 98% 97% 97% 99% 97% 96% 97% 98% 96% 97% 95% 97% 96% 97% 96% 96% 97% 96% 97% 95% 96% 93% 93% 92% 94% 92% 94% 94% 96% 93% 93% 93% 93% 95% 93% 95% 9
Slide 27: Strong growth in grocery and mass; pet specialty beginning to rebound
STRONG GROWTH IN GROCERY AND MASS; PET SPECIALTY BEGINNING TO REBOUND LATEST 13WK NIELSEN CONSUMPTION GROWTH 36% 36% 32% 10% MegaChannel (xAOC+Pet Superstore) Total US xAOC Total US Food Pet Superstores + PSP 27 Source: Nielsen consumption data thru 1/28/23 Q4 2022 EARNINGS PRESENTATION
Slide 28: Q4 2022 Visibility & Availability
Q4 2022 VISIBILITY & AVAILABILITY 28 Q4 2022 EARNINGS PRESENTATION
Slide 29: Retail availability at record levels
RETAIL AVAILABILITY AT RECORD LEVELS FRESHPET TOTAL DISTRIBUTION POINTS (TDP'S) NIELSEN MEGA-CHANNEL 1,100 1,000 977 900 800 700 600 500 29 Source: Nielsen Mega-Channel Data thru 2/11/23 Q4 2022 EARNINGS PRESENTATION
Slide 30: Store count continues to grow
STORE COUNT CONTINUES TO GROW FRESHPET STORE COUNT 25,281 23,631 22,716 21,570 19,499 18,004 16,609 15,015 13,387 10,826 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 30 Source: Internal data for the period ending 12/31/22 Q4 2022 EARNINGS PRESENTATION
Slide 31: Appendix
APPENDIX 31 Q4 2022 EARNINGS PRESENTATION
Slide 32: Reconciliation between gross profit and adjusted gross profit
FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 (Dollars in thousands) Gross Profit $ 45,709 $ 41,216 $ 186,033 $ 162,146 Depreciation expense 6,566 4,649 20,774 16,545
Slide 33: 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 Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 (Dollars in thousands) SG&A expenses $ 47,775 $ 48,854 $ 238,016 $ 186,809 Depreciation and amortization expense 3,565
Slide 34: Reconciliation between net income (loss) and adjusted EBITDA
FRESHPET, INC. AND SUBSIDIARIES. RECONCILIATION BETWEEN NET INCOME (LOSS) AND ADJUSTED EBITDA ‘Three Months Ended ‘Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 (Dollars in thousands) Net loss 2,918) S$ (9.265) S$ (59,494) $ (29,699) Depreciation and amortization 10,131 7,979 34,
Slide 35: Q4 2022 EARNINGS PRESENTATION
35 Q4 2022 EARNINGS PRESENTATION