Slide 1: Fourth Quarter & Full Year 2017 Results 2018 Plan Review
Fourth Quarter & Full Year 2017 Results 2018 Plan Review Exhibit 99.2
Slide 2: Forward Looking Statements
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 implied by such
Slide 3: Agenda
Agenda Freshpet Full Year 2017 Review Billy Cyr, Chief Executive Officer Financial Review & 2018 Guidance Dick Kassar, Chief Financial Officer 2018 Strategic Plan Billy Cyr, Chief Executive Officer Q&A Billy Cyr, Chief Executive Officer Dick Kassar, Chief Financial Officer Scott Morris, Chief Operat
Slide 4: Billy Cyr, Chief Executive Officer
Billy Cyr Chief Executive Officer
Slide 5: Freshpet Financial Highlights & Business Performance
Freshpet Financial Highlights & Business Performance Q4 net sales grew 19.5% with fresh sales +21.9% Double digit growth in all classes of trade FY17 net sales grew 17.5% with fresh sales +20.1% Accelerated growth rate from FY16’s +15% FY17 Adjusted EBITDA of $17.6 million Flat vs. YA despite +60% i
Slide 6: 2017 Results Exceed Full Year Guidance
2017 Results Exceed Full Year Guidance $34.1 +19.5% $40.7 $156.4 $133.1 $156.0 +40 bps +20 bps
Slide 7: All Channel Results Are Strong for Freshpet Fresh Products
All Channel Results Are Strong for Freshpet Fresh Products Source: Internal company shipment results by channel and Nielsen 52 weeks ending 12/30/17 Grocery/Mass Q4 2017 Freshpet +23.8% +24% Dog Food Category (Nielsen XAOC) +2.4% +0.8% Pet Specialty/Natural/Other Q4 2017 Freshpet +14.8% +5.6% Dog Fo
Slide 8: Advertising Drives Awareness, Penetration and Buying Rate
Advertising Drives Awareness, Penetration and Buying Rate Source: Nielsen HH Panel Q3 ’17; Buying Rate is internal calculation for dog food only 1.4%
Slide 9: Opportunity to Expand Awareness and HH Penetration
Opportunity to Expand Awareness and HH Penetration Freshpet Blue Buffalo Rachel Ray Cesar Beneful Awareness (Aided) 40% 86% 66% 75% 95% Penetration 1.8% ~10% (est) 4.5% (dry) 6.8% (wet+dry) 7.6% (dry) Source: 2017 Brand Tracker, Nielsen 2017 HH Panel
Slide 10: Adjusted Gross Margin Progress is Not Linear
Adjusted Gross Margin Progress is Not Linear Maintained progress on yields in Q4 Lower gross margin in Q4 than Q3 Commodity and inbound freight inflation Mix shift to FFTK Ongoing testing Seasonal labor expenses (e.g. holidays, incentive pay, etc…) Eliminated all start-up expenses Offset part of mix
Slide 11: Freshpet Fridges: More Placements and Higher Velocity
Freshpet Fridges: More Placements and Higher Velocity Velocity Drivers # of Fridges In-stock conditions Assortment Penetration and buying rate Fridge size and location/placement Q4 2017 Store Count Gross Stores +478 +2,001 Net Stores +354 +1,395 18,004 Velocity Increase ($/$M ACV – Nielsen XAOC) +16
Slide 12: Strong Velocity Growth
Strong Velocity Growth Original $/S/W Fr éshp t FEED THE GROWTH?# 2017 Same Stores Sales Growth By Vintage Representative customer WJan-12 S/W a Jan-13 SSAV man-14 S/SAVmJan-15 SSW wJan-16 S/SW
Slide 13: Dick Kassar, Chief Financial Officer
Dick Kassar Chief Financial Officer
Slide 14: Tax Reform Impact
Tax Reform Impact No meaningful impact to earnings or the balance sheet The Company has a $175 million NOL that will eliminate most federal taxes for many years The NOL was not capitalized so there is no balance sheet impact from the change in tax rates Other changes in the tax reform law will have
Slide 15: Revenue Recognition Policy Change
Revenue Recognition Policy Change Previous Policy New Policy 2016 2017 2020 Goal 2016 2017 2020 Goal Net Sales ($ millions) 133.0 156.4 300 129.7 152.4 300 Cost of Sales ($ millions) 72.7 84 -- 69.3 79.9 -- Adjusted Gross Margin 49.6% 50.0% ~52% 50.9% 51.3% 53.9% Adjusted EBITDA ($ millions) 17.7 17
Slide 16: Long-term Goals Revised for Accounting Change
Long-term Goals Revised for Accounting Change Future Economic Model Original Goals Revised Accounting Policy FY 2016 FY 2020 FY 2016 FY 2020 Growth Rate 15% 15-20% 15% 15-20% Stores 16,609 23,000 16,609 23,000 Adj. Gross Margin 49.6% ~52% 50.9% 53.9% Adj. EBITDA Margin 13% 20+% 13% 20+% Media Invest
Slide 17: Feed the Growth: Year II -- 2018 Guidance
Feed the Growth: Year II -- 2018 2018 Guidance 20172018% Change Net Sales$152.4>$18521+% Adjusted EBITDA$17.6>$2014+% Media Spend Increase+60%60+%-- $ in Millions
Slide 18: Billy Cyr, Chief Executive Officer
Billy Cyr Chief Executive Officer
Slide 19: Slide 19
Slide 20: We Operate Differently
We Operate Differently Delighting consumers with fresh food & our company ideology Environmentally Focused Employee Engagement Community & Consumer Engagement
Slide 21: 2020 Goals
2020 Goals Future Economic Model FY 2016 FY 2020 Growth Rate 15% 15-20% Stores 16,609 23,000 Adj. Gross Margin 50.9% 53.9% Adj. EBITDA Margin 13% 20+% Media Investment ~6% of sales ~9% of sales Advertising Payback 1.5 yrs -- Free Cash Flow -$13.9M ~15% of sales* *Before capacity expansion for sales
Slide 22: Feed the Growth: Year II: Bigger and Faster
Freshpet FEED THEG GROWTH/ YEAR II: Bigger and Faster
Slide 23: Freshpet Operating Model
Freshpet Operating Model Investment in Media SG&A Velocity l ~, Increase everege. Freshpet a (+Revenue) FEED THEY ' GROWTH/ | \ u Plant Leverage Distribution eee (Incr. Pounds Increase Produced) — (+Revenue) GROWTH/
Slide 24: Advertising Investment Drives Consumption Consistently
Advertising Investment Drives Consumption Consistently TV On Air TV Off Air TV On Air TV Off Air
Slide 25: Driving Significant Margin Improvement
Driving Significant Margin Improvement . . . *Leverage adjusted to projected inflationary growth of infrastructure By 2020: 9 pt. reduction in fixed costs
Slide 26: Strong Barriers to Entry: A Difficult Business to Replicate
Strong Barriers to Entry: 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
Slide 27: Increasing Media Investment to Accelerate Growth
Increasing Media Investment to Accelerate Growth +200 bps +280 bps investment 2018: Reinvesting Scale Benefits Into Media
Slide 28: In 2018, We Expect to Accelerate Fresh Growth
In 2018, We Expect to Accelerate Fresh Growth. . . and Carry Momentum into 2019 +15% +17.5% >21% >23% Fresh-only sales: +23%
Slide 29: Putting Freshpet Well On Its Way to Our $300M Goal
Putting Freshpet Well On Its Way to Our $300M Goal . . . Accelerated Media Spend 9% Media Spend Projected Net Sales $300M $152.4M
Slide 30: More Stores, Right Stores: Driving Distribution and Velocity
xxx More stores Right stores While Driving Both Distribution and Velocity . . . HH Penetration Buying Rate In-store conditions Distribution Drivers Velocity Drivers Significant White Space
Slide 31: Fridge Upgrades Drive Incremental Velocity
After Before Fridge Upgrades Drive Incremental Velocity Fridge upgrades have yielded significant incremental growth Maximizes existing retail location sales opportunities Payback in ~36 months Upgrades provide: Expanded space 22% -200% larger Opportunity for wider assortment Significantly improved v
Slide 32: With Consistent Ability to Drive Product Availability
With Consistent Ability to Drive Product Availability Source: Nielsen XAOC data ending 1/27/18
Slide 33: And With Growth Potential in Fresh E-commerce
And With Growth Potential in Fresh E-commerce Strategy: Grow with winning players in fresh e-commerce Curbside Online Fresh Retail Home Delivery
Slide 34: Freshpet Long-Term Capacity Planning
Freshpet Long-Term Capacity Planning Existing Kitchens can support $300M to 400M in net sales – depending on product mix If we deliver our 2020 goals, we will need new bag capacity sometime in 2020, rolls in 2021 It takes two years to add capacity: Year 1: Planning and permitting plus ordering long
Slide 35: Guiding Principles for Capacity Expansion
Guiding Principles for Capacity Expansion Freshpet has tremendous growth potential ahead of it Capacity increases must envision and enable future expansions in a cost effective way Manufacturing expertise must remain a competitive advantage We will continue to advance our mastery of the technology P
Slide 36: Gaining Basis Points of Fixed Cost Leverage in 2018
Gaining 200 Basis Points of Fixed Cost Leverage in 2018 * Leverage adjusted to projected inflationary growth of infrastructure
Slide 37: Feed the Growth: Year II -- 2018 Guidance
Feed the Growth: Year II -- 2018 2018 Guidance 20172018% Change Net Sales$152.4>$18521+% Adjusted EBITDA$17.6>$2014+% Media Spend Increase+60%60+%-- $ in Millions
Slide 38: Further Strengthening Our Barriers to Entry
Further Strengthening Our Barriers to Entry . . .
Slide 39: While delighting pet parents, pets, shareholders and employees
While delighting pet parents, pets, shareholders and employees . . .
Slide 40: Appendix
Appendix Freshpet FEED THE Ve GROWTH/
Slide 41: Historical Impact of the upcoming Revenue Recognition Policy (ASC 606) - Annually
Historical Impact of the upcoming Revenue Recognition Policy (ASC 606) - Annually
Slide 42: Historical Impact of the upcoming Revenue Recognition Policy (ASC 606) - Quarterly
Historical Impact of the upcoming Revenue Recognition Policy (ASC 606) - Quarterly