Freshpet, Inc. · NASDAQ:FRPT
Freshpet — CAGNY Lunch 2019
36 slides from Freshpet's conference presentation, Dec 2, 2019
Slide 1: CAGNY Lunch December 2, 2019
Exhibit 99.1 CAGNY Lunch December 2, 2019
Slide 2: Slide 2
Slide 3: Safe Harbor Forward Looking Statements
Safe Harbor 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 imp
Slide 4: Freshpet has the potential to change the way people feed their pets
WE FUNDAMENTALLY BELIEVE THAT FRESHPET HAS THE POTENTIAL TO CHANGE THE WAY PEOPLE FEED THEIR PETS . . . FOREVER
Slide 5: 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 6: Until Freshpet, a dog's choices were really limited
Until Freshpet, a dog’s choices were really limited Dry Kibble Canned Mystery Meat
Slide 7: A totally different approach to nourishing pets
A totally different approach to nourishing pets
Slide 8: Delivering a noticeable impact on pet's wellbeing
Delivering a noticeable impact on pet’s wellbeing 83% of Consumers Report Visible Difference Source: Freshpet Visible Difference Study 2018 n= 202
Slide 9: Creating very high satisfaction
Even my dad knows that Freshpet is really good Creating very high satisfaction Source: Freshpet Quality and Satisfaction Study, July 2018 % Extremely/Very Satisfied on Product Satisfaction % Agree Completely/Somewhat on Good Value
Slide 10: We operate differently
pets. The power of fresh natural & simple foods Less processed Acts of kindness people. Our team Our partners Our families planet. Renewable energy Carbon footprint offset Conservation – land fill free Sustainable practices WE OPERATE DIFFERENTLY Delighting consumers with fresh food & our company id
Slide 11: A difficult business to replicate
A difficult business to replicate High Brand Loyalty Alignment with deep pet parent emotional motivations Differentiated Innovative forms, technologies, and appearance Manufacturing Proprietary technology, processes, and infrastructure Freshpet Fridge Branded, company-owned real estate Supply Chain
Slide 12: Goal: $300 million in Net Sales as soon as 2020
Goal: $300 million in Net Sales as soon as 2020 2017: Launched Feed the Growth
Slide 13: Media investment re-accelerated growth
Media investment re-accelerated growth +18% +27% +26% +14%
Slide 14: Key Feed the Growth Learnings
Key Feed the Growth Learnings Feed the Growth virtuous cycle is working Successful transition from a store-growth driven model to HH penetration-driven model High product satisfaction has driven steadily increasing buying rate and the ability to take pricing when needed Increasing velocity has drive
Slide 15: HH penetration gains accelerate
HH penetration gains accelerate . . . but are still a small share of the pet universe +6% +16% +14% +22% Source: Nielsen HH Panel data ending September 2019
Slide 16: Media investment drives HH penetration gains
Media investment drives HH penetration gains Source: Nielsen HH Panel and internal company data
Slide 17: Focused innovation helps drive HH penetration
Focused innovation helps drive HH penetration *HH’s may purchase both new and old items. Total exceeds net HH penetration. Source: Nielsen HH Panel
Slide 18: Focused innovation adds unique users
Focused innovation adds unique users Source: Nielsen HH Panel
Slide 19: Buying rate continues to grow despite new buyers
Despite rapid influx of new buyers, buying rate continues to grow Total Freshpet Buying Rate +9% +3% +11% +4%
Slide 20: Premium innovation helps drive buying rate
Premium innovation helps drive buying rate Freshpet Core Dog Product Mix Freshpet Premium Innovation Source: Nielsen XAOC Data 52 weeks through 11/2/19; Freshpet Select only
Slide 21: Feed the Growth Progress
“Feed the Growth” Progress Expanding consumer franchise . . . that is increasingly loyal Source: Nielsen HH Panel and internal company data 2016 Today Growth Awareness 35% 46% +31% Penetration 1.54% 2.45% +59% Buying Rate $81.73 $105.19 +29% Repeat Rate 67% 70% +300 bps
Slide 22: Very little price sensitivity
Very little price sensitivity Out-of-stocks 14% Retail Price Increase
Slide 23: First inflection point: velocity gains become biggest driver of growth
First Inflection point: velocity gains become biggest driver of growth Source: Nielsen Mega-Channel Data through 11/2/19
Slide 24: Created growth and scale for retailers
3yr CAGR 28.9% Created growth and scale for retailers Source: Nielsen Mega Channel (xAOC + Pet) Latest 52wks end 11-02-19 2016 Today 52wk Dollars (Nielsen) $172.7M $327.6M ACV Adj. Share Dog Food 4.5 6.9 Avg. Dollars / Store / Week $244 $366 Average Unit Price $7.45 $8.31
Slide 25: Second inflection point: retailers respond to rapid growth
Second inflection point: retailers respond to two years of rapid growth Source: Nielsen Mega-Channel Data through 11/2/19
Slide 26: Growing distribution and velocity with significant room to grow
Growing distribution and velocity . . . with significant room to grow Source: Nielsen Mega Channel (xAOC + Pet) Latest 52wks end 11-02-19 and internal company data 2016 Today Growth Store Count 16,609 20,994 +4,385 % ACV Distribution 41 50 +24% Total Distribution Points 517 718 +39% Velocity ($/MM A
Slide 27: Increasing depth of distribution to enable broader product line-up
Increasing depth of distribution to enable broader product line-up 778 Stores with double fridges Upgraded 1342 fridges since 2018 39 items 27 items 17 items
Slide 28: Upgrading from small fridge to big fridge accelerates growth
Upgrading from small fridge to a big fridge accelerates growth $235 Not-upgraded stores Upgraded stores $179 Freshpet Fridge Upgrades ($/store/week) Chiller swaps start Jan 2018 +42.2% Vs Q4 2017 +74.9% Vs Q4 2017 Source: Growth rate is latest 4wks vs Q4 2017. Leading grocery retailer store level PO
Slide 29: Broader line-up distribution enables faster growth
Broader line-up distribution enables faster growth double chillers triple-chillers New Items Chiller Upgrades +50.6% +41.6% +22.1% Source: Growth rate is latest 4wks vs Q4 2018. Leading grocery retailer store level POS data period ending 9/14/19.
Slide 30: Media investments driving distribution gains in Canada and UK
Media investments are beginning to drive distribution gains in Canada and UK .. ~7% ACV ~23% ACV ~1000 stores ~400 stores
Slide 31: Feed the Growth Progress: Growing into our scale
“Feed the Growth” Progress Growing into our scale . . . and reinvesting for growth 2016 Today* Growth Net Sales $130M $244M +88% Adj. SG&A (excl. media) 31.2% 25.3% +590 bps Media Spending $8M $29M +263% Media Spending % of Sales 6.3% 11.9% -560 bps *2019 Guidance
Slide 32: Scale is beginning to turn into profits
Scale is beginning to turn into profits Feed the Growth progress Freshpet Financial Performance 2016 2019 Guidance* Change Net Sales ($ millions) $129.3 >$244 +89% vs YA +17% +26% +1300 bps Adj. EBITDA ($ millions) $17.7 >$29 +64% Adj. EBITDA Margin 13.6% 11.9% -170 bps *Excluding incremental invest
Slide 33: Kitchens 2.0 to open in Q3 2020
Kitchens 2.0 to open in Q3 2020
Slide 34: Incremental bag line in Q1 2020 to enable growth in 2020
Installing an incremental bag line in Q1 2020 to enable strong growth in 2020
Slide 35: Rapid growth will require incremental capacity in 2022
Rapid growth will require incremental capacity in 2022 Current Kitchens Kitchens 2.0 Midwest Expansion
Slide 36: Bringing the power of fresh food to pets
bringing the power of fresh food to pets