Freshpet, Inc. · NASDAQ:FRPT

Freshpet — Q4 2023 Earnings Presentation

38 slides from Freshpet's earnings presentation, Feb 26, 2024

  1. Slide 1: Q4 2023 Earnings Presentation

    February 26, 2024 1 Q4 2023 EARNINGS PRESENTATION

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS Margin), adjusted SG&A and adjusted SG&A as a % of net obtained absent this disclosure. adjusted EBITDA is also an sales. These non-GAAP financial measures should be important component of internal budgeting and setting Certain statements in this presentation by Freshpet,

  3. Slide 3: Q4 2023 Earnings Presentation

    3 Q4 2023 EARNINGS PRESENTATION

  4. 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 Q4 2023 EARNINGS PRESENTATION

  5. Slide 5: Q4 2023 Earnings Presentation

    5 Q4 2023 EARNINGS PRESENTATION

  6. Slide 6: Financial and Retail Highlights

    FINANCIAL RETAIL All comparisons to prior year period All comparisons to prior year period Q4 2023 FY 2023 FY 2023 Net Sales Growth +30% +29% Household Penetration +19% Adjusted Gross Margin +810 bps +400 bps Buy Rate +6% Adjusted EBITDA Margin +320 bps +530 bps Cubic Feet +18% Logistics Costs -310

  7. Slide 7: 6th Consecutive Year with >25% Growth

    Freshpet Net Sales ($ millions) $766.9 6TH CONSECUTIVE YEAR WITH >25% GROWTH $595.3 +29% +40% $425.5 $318.8 +33% $245.9 $193.2 +30% $152.4 +27% +27% +17% 2017 2018 2019 2020 2021 2022 2023 7 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  8. Slide 8: Freshpet Store Count and Fridges per Store

    Freshpet Store Count Number of Fridges per Store* YOY: +1,496 26,777 25,281 Second/Third 23,631 Fridges 22,716 22% 21,570 19,499 18,004 16,609 15,015 13,387 One Fridge 78% 10,826 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 8 Source: Internal data for the period ending 12/31/23; *U.S. Frid

  9. Slide 9: Freshpet Market Share of Fresh/Frozen

    MAINSTREAM U.S. pet food category1 Dog food category1 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 12/30/23 Q4 2023 EARNINGS PRESENTATION 2. Nielsen MegaChannel 52 Weeks Ende

  10. Slide 10: Freshpet Household Penetration Growth

    MAINSTREAM Freshpet Household Penetration Growth (52 weeks) 11,555,201 9,701,270 +19% 8,481,582 +14% 7,191,115 +18% 5,731,640 +26% 2019 2020 2021 2022 2023 10 Source: Numerator Panel data for the 52-week periods ending 1/5/2020, 1/3/2021,1/2/2022, 1/1/2023, 12/31/2023 Q4 2023 EARNINGS PRESENTATION

  11. Slide 11: Freshpet Users who are Super Heavy/Heavy Buyers

    MAIN MEAL Freshpet Users who are Super Heavy/Heavy Buyers 4,500,000 4,245,825 $340.00 Super Heavy/Heavy HHP Super Heavy/Heavy Buy Rate 4,000,000 $320.00 3,500,000 3,312,610 89% $300.00 of Freshpet sales $280.00 3,000,000 2,699,270 $260.00 2,500,000 2,206,604 $233.11 $231.19 $240.00 2,000,000 1,531,5

  12. Slide 12: Freshpet Buy Rate

    MAIN MEAL Freshpet Buy Rate (52 weeks) $95.86 $90.61 +6% $72.08 $75.31 +20% $59.96 +20% +5% 2019 2020 2021 2022 2023 12 Source: Numerator Panel data for the 52-week periods ending 1/5/2020, 1/3/2021,1/2/2022, 1/1/2023, 12/31/2023 Q4 2023 EARNINGS PRESENTATION

  13. Slide 13: Q4 2023 Adj. Gross Margin and Adj. EBITDA

    MORE PROFITABLE Q4 2023 Adj. Gross Margin Q4 2023 Adj. EBITDA ($m) % of net sales 41.1% $31.3 33.0% 14.5% $18.7 11.3% Q4 2022 Q4 2023 Q4 2022 Q4 2023 27.6% 34.6% Gross Margin (GAAP) 13 *Ennis plant start-up expenses included in adj. gross margin and gross margin. Source: Internal Data Q4 2023 EARNIN

  14. Slide 14: Logistics, Quality and Input Cost Changes

    MORE PROFITABLE -320 bps -130 bps -110 bps FY 2023 FY 2023 FY 2023 All comparisons to prior year period 14 Q4 2023 EARNINGS PRESENTATION

  15. Slide 15: Record Production Month; Ennis Kitchen Update

    December was a record production month across the system and then January topped that Ennis kitchen now producing ~25% of total Freshpet production from three lines in the Ennis Kitchen Phase II construction is on track or slightly ahead of schedule; expect roll line to begin production by the end o

  16. Slide 16: 2027 Targets

    20 million Freshpet Households by 2027 (target) Advertising & Innovation Expand HH Drive Efficiencies Penetration $1.8 billion Net Sales (target) Leverage Scale in Increase Velocity COGS & SG&A ~18% Adjusted EBITDA Margin (target) Expand Visibility Expand Capacity & Availability 16 Q4 2023 EARNINGS

  17. Slide 17: Q4 2023 Earnings Presentation

    17 Q4 2023 EARNINGS PRESENTATION

  18. Slide 18: Q4 2023 Net Sales and Bridge

    Q4 2023 Net Sales ($m) Q4 2023 Net Sales Bridge $215.4 $165.5 +30% Q4 2022 Q4 2023 18 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  19. Slide 19: Q4 2023 Consumption Growth

    Q4 2023 Consumption Growth ($) Consumption Growth Trends (volume in pounds) 30% 25% 28% 28% 23% 18% 14% 15% 12% Mega-Channel XAOC Food Pet Specialty Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 PLUS >100% GROWTH IN UNMEASURED CHANNELS 19 Source: NIQ consumption data thru 12/31/23 and internal sales data

  20. Slide 20: Q4 2023 Adj. Gross Margin and Adj. EBITDA

    Q4 2023 Adj. Gross Margin* Q4 2023 Adj. EBITDA ($m) % of net sales 41.1% $31.3 33.0% 14.5% $18.7 11.3% Q4 2022 Q4 2023 Q4 2022 Q4 2023 27.6% 34.6% Gross Margin (GAAP)* 20 *Ennis plant start-up expenses included in adj. gross margin and gross margin. Source: Internal Data Q4 2023 EARNINGS PRESENTATIO

  21. Slide 21: Key Margin Improvement Targets & Progress

    Key Margin Improvement Targets & Progress Q4 2022 Q4 2023 2027 Target 33.6% 33.9% 33.5% 9.4% 6.3% 7.5% 4.7% 3.6% 2.9% Input Costs Logistics Quality 21 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  22. Slide 22: Adj. Gross Margin Progress vs. 2027 Targets

    Adj. Gross Margin Progress vs. 2027 Targets 45.0% 41.1% 33.0% Q4 2022 Q4 2023 2027 Target 22 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  23. Slide 23: Adj. SG&A Progress vs. Targets

    Adj. SG&A Progress vs. Targets Q4 2022 Q4 2023 2027 Target 26.6% 25.3% 22.4% 13.9%* 11.2% 8.8% 9.0% 9.4% 7.5% 6.3% 6.3% 1.9% Adj. SG&A Excluding Media & Media % Logistics % Total Adj. SG&A % Logistics 28.8% 27.7% SG&A (GAAP) 23 *Includes 130 bps annual bonus true-up. Source: Internal Data Q4 2023 EA

  24. Slide 24: Q4 2023 Earnings Presentation

    24 Q4 2023 EARNINGS PRESENTATION

  25. Slide 25: FY 2023 Net Sales and Bridge

    FY 2023 Net Sales ($m) FY 2023 Net Sales Bridge $766.9 $595.3 +29% 2022 2023 25 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  26. Slide 26: FY 2023 Adj. Gross Margin and Adj. EBITDA

    FY 2023 Adj. Gross Margin* FY 2023 Adj. EBITDA ($m) % of net sales $66.6 40.0% 8.7% 36.0% $20.1 3.4% 2022 2023 2022 2023 31.2% 32.7% Gross Margin (GAAP)* 26 *Ennis plant start-up expenses included in adj. gross margin and gross margin. Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  27. Slide 27: FY 2023 Key Operating Costs

    FY 2023 Key Operating Costs FY22 FY23 2027 Target (% of net sales) 35.2% 34.1% 33.5% 10.7% 7.5% 7.5% 5.4% 4.1% 2.9% Input Costs Logistics Quality 27 Source: Internal Data Q4 2023 EARNINGS PRESENTATION

  28. Slide 28: Q4 2023 Earnings Presentation

    28 Q4 2023 EARNINGS PRESENTATION

  29. Slide 29: FY 2024 Financial Projections

    Volume cadence: Expect Q1 to have the highest Freshpet Financial Projections ($m) percent growth YoY then sequentially lower throughout the year to manage growth and cash as we ramp capacity >$950 Advertising investment: Expect media to grow in- line with sales, and will pull back as necessary to co

  30. Slide 30: Q4 2023 Earnings Presentation

    30 Q4 2023 EARNINGS PRESENTATION

  31. Slide 31: Capital Spending, Operating Cash Flow and Liquidity

    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 next summer, we will have built adequate infrastructure/buildings to $75.9 accommodate our next 5+ lines Cash flow: • Generated $76 mil

  32. Slide 32: Q4 2023 Earnings Presentation

    32 Q4 2023 EARNINGS PRESENTATION

  33. Slide 33: NielsenIQ MegaChannel Consumption Growth

    NielsenIQ MegaChannel Consumption Growth 50% $24,500,000 45% $22,500,000 40% 35% $20,500,000 30% 25% $18,500,000 20% Growth Rate 20% $16,500,000 15% 10% $14,500,000 5% 0% $12,500,000 Freshpet Total MegaChannel (xAOC+Pet) Pounds vs YA Freshpet Total MegaChannel (xAOC+Pet) Mega-Channel $ Sales 33 Sour

  34. Slide 34: Adjusted Gross Profit Reconciliation

    Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 (Dollars in thousands) Gross Profit $ 74,575 $ 45,709 $ 250,872 $ 186,033 Depreciation expense 8,103 6,566 41,209 20,774 Non-cash share-based compensation 2,299 2,505 10,995 7,293 Loss on disposal of manufacturing e

  35. Slide 35: Adjusted SG&A Reconciliation

    Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 (Dollars in thousands) SG&A expenses $ 59,680 $ 47,775 $ 281,318 $ 238,016 Depreciation and amortization expense 4,248 3,565 15,849 13,781 Non-cash share-based compensation (a) (2,315 ) 3,178 13,941 18,799 Loss on d

  36. Slide 36: Adjusted EBITDA Reconciliation

    Three Months Ended Twelve Months Ended December 31, December 31, 2023 2022 2023 2022 (Dollars in thousands) Net Income (loss) 15,289 $ (2,918 ) $ (33,614 ) $ (59,494 ) Depreciation and amortization 12,351 10,131 57,058 34,555 Interest expense, net of interest income (394 ) 1,148 1,069 5,208 Income t

  37. Slide 37: Q4 2023 Earnings Presentation

    37 Q4 2023 EARNINGS PRESENTATION

  38. Slide 38: Q4 2023 Earnings Presentation

    38 Q4 2023 EARNINGS PRESENTATION

Freshpet — Q4 2023 Earnings Presentation on 6ix