Freshpet, Inc. · NASDAQ:FRPT
Freshpet — Q1 2021 Earnings Presentation
53 slides from Freshpet's earnings presentation, May 3, 2021
Slide 1: Q1 2021 Earnings Call
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures Forward-Looking Statements 2 10-19"), the Freshpet ftchens Expansion, andthe Company’ general operating and economic envionment. These statements af based on narasatentt Gao Sruturalceecaumrs, belch pre or future results aniy predictor, not historic! fa
Slide 3: Forward Looking Statements & Non-GAAP Measures (cont.)
Forward Looking Statements & Non-GAAP Measures (cont.) frespet defines Adjusted Gross Prot a goss profit before deprecation expense, plant startup expense, COVID-9 expenses and non-cash share based gees expenses ‘expense, Gas] on dposel of ealpmant, fos ested! to eau cteing of ut commen sock, inplre
Slide 4: Nourishing Pets, People and Planet
Nourishing Pets, People and Planet 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 { } !
Slide 5: Q1 2021 Results
freshpet Qi 2021 Results
Slide 6: Q1 2021: Strong growth on both Net Sales & Adj. EBITDA
Q1 2021: Strong growth on both Net Sales & Adj. EBITDA oa Freshpet Net Sales & Adj. EBITDA Performance Aa EET. si20 $800 433% s100 sa00 70.1 $700 kd ss0 g2e%, $78 $600 435% seo ss00 $5.7 +106% so 100 ee 20 200 $00 12020 axz021 aa,
Slide 7: Re-filled ~$3 million of trade inventory in Q1 despite losing $3.5 million of production
Re-filled ~$3 million of trade inventory in Qi despite losing $3.5 million of production to snowstorms Q1 2021 Net Sales Bridge to YA 4% 33%
Slide 8: Strong growth despite out-of-stocks; continued strength in pet specialty
Strong growth despite out-of-stocks; continued strength in pet specialty Latest 13 Week Nielsen Consumption Growth 43% 23% 22% 19% Mega-Channel XAOC Food Pet Superstore
Slide 9: Strong growth on a 2-year stacked basis
Strong growth on a 2-year stacked basis Nielsen Mega-Channel Consumption Growth (2 Year Stacked) oom 5% sey, sex 59% 5% sm som Ed 53% 50% & 4% aay & eB 4 | ms 3 | | won vant arint aa arama awn AB amma ana wma yan. 2020 2021
Slide 10: Building meaningful share of the category
Building meaningful share of the category Freshpet $ Share of Wet & Dry Dog 103 102 56 sa ss 5s a7 as 47 47 24 26 26 2s 130k 260k wk Freshpet share of Wet + Dry Dee
Slide 11: Retailers paying attention: Freshpet is big and growing very fast
Retailers paying attention: Freshpet is big and growing very fast 24 | (are } Freshpet& Ory Dog Food Consumption (use : " Wet & Dry Dog Food Consumption Growth {Nieleen Mega-Channel: ates 52 Wes) ‘Mielsen US Food ending 3/27/21
Slide 12: Strong HH penetration growth despite out-of-stocks
Strong HH penetration growth despite out-of-stocks Freshpet Penetration Growth ‘Total HH’s 4,052,143 4,300,000 243,470 sone 429% 508,256 ee 7 2,200,377 os +16% 2,900,000 556,630, : +26% 3,000,000, 2018 2019 2020 2021
Slide 13: Exceeded MM HH's for first time
Exceeded 4 MM HH’s for first time On our way to 11 MM HH goal Progress Towards 2025 Household Penetration Goal Current HH Penetration 2025 Target HH Penetration
Slide 14: Buying rate continues to grow despite out-of-stocks
Buying rate continues to grow despite out-of-stocks Freshpet Buying Rate s14000 sassy $135.48 $136.99 H2% ai H% $130.00 $119.36 $120.00 40% $115.53 $110.00 $100.00 $90.00 $90.00 $70.90 $60.00 2018 2019 2020 2021
Slide 15: Distribution growth plateaued during COVID crisis and delayed due to out-of-stocks
Distribution growth plateaued during COVID crisis and delayed due to out-of-stocks Freshpet % ACV covip crisis x Sie ee oe oe HP
Slide 16: As expected, modest Q1 store growth due to out-of-stocks and COVID
As expected, modest Q1 store growth due to out-of-stocks and COVID Freshpet Store Count 22,716 22,890 21,570 19,499 18,004 16,609 15,015 13,387 aos 201s 2016 2017 2018 2019 2020 an 2021
Slide 17: Meaningful gains in retail visibility and availability despite short shipments
Meaningful gains in retail visibility and availability despite short shipments Net New Stores Fridge Upgrades 297 297 2679 Son Giank 174 174 3923 22390 2 21967 Tota Oper YO New jaa 2021 am = aia Second Fridges 2588 a | 45, 320 Total Operating YTDNew 012020 wat2021
Slide 18: Retail partners
PETSMART petco. © TARGET. @\ meijer
Slide 19: New fridge placements skew heavily to multi-fridge stores
New fridge placements skew heavily to multi-fridge stores Freshpet Fridge Fleet New Fridge Installations by Size (US & Canada) Distribution by Size (US & canada Stores) 73% | 21% 48% ma 2017 2018 2019 2020 wmsmall mMedium sarge m2Chilers m3 chillers "Small = Medium = Large = 2+ Chillers 2021
Slide 20: Continued strong velocity gains
Continued strong velocity gains Freshpet Velocity $//SMM acy covio crisis SEE GE ESE SS aed LSS SEEPS EES tees PF wee si PPE OPES PEP EL LS
Slide 21: Q1 2021 Freshpet E-Com grew +156% vs. YA
Qi 2021 Freshpet E-Com grew +156% vs. YA amazoniresh : Peapod #* instacart SHIPT 6.3% 10.21 mix of e- commerce sales 91% of Sales Contribute to Brick & Mortar
Slide 22: Canadian business accelerating behind advertising investment
Canadian business accelerating behind advertising investment Retail Sales Leading Canadian Retailer Weekly Sales
Slide 23: Freshpet's advertising-driven model works in the UK
Retail Sales Freshpet's advertising-driven model works in the UK Leading UK Retail Customer Sales by Week piensa [Lost 4weeks+5a%vs.vA [> — ; np | Regular MTV Spots mPani Buying Leading UK Retail Customer Sales by Week [latest 4 weeks #59% vs. ¥A_}-——» Latest Awe ery
Slide 24: Adj. Gross Margin negatively impacted by lost production due to storms and higher beef costs
Adj. Gross Margin negatively impacted by lost production due to storms and higher beef costs Q1 2021 Adj. Gross Margin Progress Adjusted Gross Margin Progression ] | 49.1% | 46.7% | | 46.7% | 45.8% | | 12020 on 2021 12020 a22020 032020 as2020 ar2021 | Gross Margin (GAAP)
Slide 25: Higher freight costs offset by lower media expense
Higher freight costs offset by lower media expense Adj. SG&A Leverage 1.2020 41.3% 38.4% Media: 16.7% Media: 24.6% 12020 12021 Ad}. SGBA % Excluding Media Total Adj. SGBA % SG&A (GAAP)
Slide 26: As we rebuild inventory, fill rates go up and freight costs go down
As we rebuild inventory, fill rates go up and freight costs go down Net Inventory vs. Fill Rate Freight Cost/Pound vs Fill Rate 190 2029050702900 Cases in Inventory (Thousands) @ Actual — @ Trend Line
Slide 27: Guidance
freshpet Guidance
Slide 28: 2021 Guidance Re-Affirmed
2021 Guidance Re-Affirmed $in Millions 2020 2021 % Change Net Sales $318.8 >$430 +35% Adjusted EBITDA $46.9 >$61 +30% + ERP Conversion: Tentatively targeted for 10/1/21 * COVID Addback: Anticipating $2.0 million in COVID-related costs in 2021 until broadscale vaccination has occurred — currently pro
Slide 29: On track for the cadence outlined in our guidance
On track for the cadence outlined in our guidance Q2 Expectations VW Miode Accelerating consumption growth behind improved retail conditions and strong advertising investment Shipment growth modestly in io excess of consumption growth due to trade inventory re-fil Sequentially improving adjusted gro
Slide 30: COVID Impact & Addback
COVID Impact & Addback Q2 Expectations + Team members became eligible for vaccines on March 31, 2021 Offered team members an incentive to provide documentation that they have successfully been vaccinated * 2 days of paid time off if vaccinated by June 1; 1 day of paid time off if vaccinated between
Slide 31: Consumption trends are moving upward again behind improved retail conditions and return of advertising
Consumption trends are moving upward again behind improved retail conditions and return of advertising Nielsen Mega-Channel Consumption Capacity constrained and out-of-stocks iy Scan ae Nielsen Mega-Channel consumption vs. YA: a + Latest 4 weeks: +49% + Qt: +24% one + Q2todate: +49% + YTD: +28% tiam
Slide 32: Estimated April net sales continue the strong performance
Estimated April net sales continue the strong performance ar% Freshpet Monthly Net Sales vs. YA 142% Winter Storms Orlena ‘and. Uri constrained production and shipments 127% Febeuary March Apeifest)
Slide 33: Still have ~$12 million in trade inventory to restore in Q2
Still have ~$12 million in trade inventory to restore in Q2 Consumption, Trade Inventory & Net Sales Progression {Reported growth rates and key drivers by quarter) 006 _ 2% 2% 2% A ia ae asx 29% 29% 20% 2% 1% 4% a fe o* x o | 2% a % om om aos x 2020 22020 3.2020 aa2020 cao Consumption Growth mTradei
Slide 34: Progress Towards Improved Retail Conditions
freshpet Progress Towards Improved Retail Conditions
Slide 35: YTD: Strong, steady improvement in production
YTD: Strong, steady improvement in production PLEE EEE IEEE EM
Slide 36: Production is running well ahead of YA
Production is running well ahead of YA 2021 vs. 2020 Production Performance Comparison j ‘Api production = 519k Ibs/ealendar day i caster Holdoy = wre ‘Aug production 4/1/20 ~ 12/31/20 = 354k Ibs/calendar day tnase nme neem whom inom wae samen me® a —olina 7 Day Average 2020 —Roling7 Day Average - 2
Slide 37: Production is well in excess of consumption
Production is well in excess of consumption Winter storm ur (sitchans South) ‘sso "ie ansyae) yanem nym yaya sae Tre unm ana NA RAO Ayr MAM RAM Re aE Source: Nhe Megs Channa Dstt 4/24/21 anne compa ata
Slide 38: Out-of-stocks are improving
Out-of-stocks are improving Freshpet Consumer Comments: Out-of-stock & Can't find Cisne io eee Misti eee ec LILLE —outof:
Slide 39: TDP's beginning to move up again; reflect better in-stocks
TDP’s beginning to move up again; reflect better in-stocks Freshpet Total Distribution Points TDP) ae ‘Nielsen Mega-Channel COMin cre LLEEEEESEP EEE EER ISSSSAI SES eiee 3 6 SSH es SSH HHH HHH HHH HH EHH OH GH
Slide 40: Actively communicating with consumers via social media to explain the out-of-stocks
Actively communicating with consumers via social media to explain the out-of-stocks fe Freshpet Item Wanted Available On Last Shopping Trip
Slide 41: The vast majority of users are likely to remain with the brand despite out-of-stocks
The vast majority of users are likely to remain with the brand despite out-of-stocks 3% of users (8% of the 40% who struggle to find Freshpet) are at risk 40% struggle to find Freshpet J Freshpet Rarely available ‘Never avaliable SE Nota al ely to buy sen som Suvvey asia
Slide 42: Capacity
freshpet
Slide 43: Steady increases in capacity throughout the year
Steady increases in capacity throughout the year 2021 successfully 24/7 operation started up rolls on bags in in kitchens 2.0 kitchens 2.0 $590 $590 $490 $390 Freshpet Annualized Production Capacity Gace Line 2 Kitchens 2.0t0 Kitchens South 24/7 $640 $640 $590 $540 i ae a a 'm Equipment Capacity ($
Slide 44: On track to deliver key projects
On track to deliver key projects Bethlehem ve engineering man s Under construction Under construction teers Souh ==> suleing2 Under construction lew technology urrent technology 2019 2020 2021 2022 2023 2024 2025
Slide 45: Almost $2 billion in net sales production capacity by 2025
Almost $2 billion in net sales production capacity by 2025 Freshpet Capacity Net Sales Potential Opens in 2023 | fens Pulled forward one quarter —_—_— $1,460 sss sre sa oe ss $300 $300 $350 ‘oe $300 | $50 an | Oo A |_| a hewia: Sadie Af 7 wise ei ie amas mNew Capacity Cumulative Capacity
Slide 46: Capital spending plan supports up to ~$2 billion in capacity
Capital spending plan supports up to ~$2 billion in capacity South Line mt Psismiion south Une #2813 =i hie recetie tn ==> south suilding2 [s:c0 itor 2019 2020 2021 2022 2023 2024 2025 Total Capex* $7imm = ~$135mm_=—*$380mm = “$300 mm _~—~$75-95mm_ ~$70-$90mm _~$70-S90 mm. fidges and it “ «
Slide 47: Kitchens 2.0: Expanding shifts in Q2
Kitchens 2.0: Expanding shifts in Q2
Slide 48: Kitchens 3.0 will include all the technical advances of Kitchens 2.0
kitchens 3.0 will include all the technical advances found in Kitchens 2.0 with additional improvements designed to increase throughput, improve quality and safety, and enhance the environmental sustainability of the facility
Slide 49: Freshpet: 2 Million HH by 2025
freshpet e 11 MILLION HH BY 2025
Slide 50: Appendix
freshpet Appendix
Slide 51: FRESHPET, INC. AND SUBSIDIARIES
FRESHPET, INC. AND SUBSIDIARIES ETWEEN ND ‘Three Months Ended ) Gross Profit s 36315 $ 31,790, Depreciation expense 3,800 1744 Plant start-up expense (a) 1,843 467 ‘Non-cash share-based compensation 710 449 ) 953 217 Adjusted Gross Profit s 8.020 S 34.67, Adjusted Gross Profit as a % of Net Sales 46
Slide 52: FRESHPET, INC. AND SUBSIDIARIES
FRESHPET, INC. AND SUBSIDIARIES SORA expenses Depreciation and amortization expense ‘Non-cash share-based compensation [Launch expense (a) {Loss on disposal of equi Equity offering expenses () jae Resource 1) COVID-19 expense (4) Adjusted SG&A 1 Adjusted SG&A Expenses as a % of Net Sales 384% 413% s
Slide 53: FRESHPET, INC. AND SUBSIDIARIES
IRESUPET. ING AND SUBSIDIARIES BETWEEN NI 1085) AN “These Months Ended March 31, Subpott our woowisedistabution network ‘Freshpet Kitchens expansion projets (eiRepreceats fees asocated wih pblic offering of our comune sock. (oRepe ‘CONTD-10 ponte