FRPT Freshpet Inc

Freshpet, Inc. (“Freshpet” or the “Company”) (Nasdaq: FRPT) today reported financial results for its fourth quarter and full year ended December 31, 2024.

Fourth Quarter 2024 Financial Highlights Compared to Prior Year Period

• Net sales of $262.7 million, an increase of 22.0%.
• Net income of $18.1 million, compared to the prior year period of $15.3 million.
• Gross margin of 42.5%, compared to the prior year period of 34.6%.
• Adjusted Gross Margin of 48.1%, compared to the prior year period of 41.1%.1
• Adjusted EBITDA of $52.6 million, compared to the prior year period of $31.3 million.1

Full Year 2024 Financial Highlights Compared to Prior Year

• Net sales of $975.2 million, an increase of 27.2%.
• Net income of $46.9 million, compared to the prior year net loss of $33.6 million.
• Gross margin of 40.6%, compared to the prior year of 32.7%.
• Adjusted Gross Margin of 46.5%, compared to the prior year of 40.0%.1
• Adjusted EBITDA of $161.8 million, compared to the prior year of $66.6 million.1
• For the year ended December 31, 2024, net cash provided by operating activities was $154.3 million, compared to $75.9 million in the prior year.

"Fiscal year 2024 was a breakout year for Freshpet. We continued to deliver the exceptional net sales growth investors have come to expect from Freshpet but also delivered very strong profit improvements - and even exceeded some of the fiscal year 2027 targets we set two years ago. We also delivered full-year positive net income for the first time. The strength of this sustained performance, coupled with our operating cash flow improvements, gives us confidence we will be free cash flow positive in 2026 and able to self-fund our growth going forward," commented Billy Cyr, Freshpet’s Chief Executive Officer. "This strong performance also enables us to raise our long-term profit margin targets today to reflect the additional scale benefits we believe we can deliver as we transform the pet food category and nourish pets, people, and the planet. We remain focused on delivering disciplined, consistent growth, and outsized profitability improvements, that we believe will drive shareholder value going forward."

Fourth Quarter 2024

Net sales increased 22.0% to $262.7 million for the fourth quarter of 2024 compared to $215.4 million for the prior year period. The increase in net sales was primarily driven by volume gains of 20.7%.

Gross profit was $111.6 million, or 42.5% as a percentage of net sales, for the fourth quarter of 2024, compared to $74.6 million, or 34.6% as a percentage of net sales, for the prior year period. The increase in reported gross profit as a percentage of net sales was primarily due to lower input costs, reduced quality costs and improved leverage on plant expenses. For the fourth quarter of 2024, Adjusted Gross Profit was $126.3 million, or 48.1% as a percentage of net sales, compared to $88.5 million, or 41.1% as a percentage of net sales, for the prior year period.1

Selling, general and administrative expenses (“SG&A”) were $92.2 million for the fourth quarter of 2024 compared to $59.7 million for the prior year period. SG&A as a percentage of net sales increased by 740 basis points to 35.1% for the fourth quarter of 2024 compared to 27.7% for the prior year period, primarily due to increased media as a percentage of net sales, higher share-based compensation and increased variable compensation accrual. Adjusted SG&A for the fourth quarter of 2024 was $73.6 million, or 28.0% as a percentage of net sales, compared to $57.2 million, or 26.6% as a percentage of net sales, for the prior year period.1

Net income was $18.1 million for the fourth quarter of 2024 compared to $15.3 million for the prior year period. The increase in net income was due to contribution from higher sales and improved gross margin, partially offset by increased SG&A.

Adjusted EBITDA was $52.6 million for the fourth quarter of 2024 compared to $31.3 million for the prior year period.1 The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A.

Full Year 2024

Net sales increased 27.2% to $975.2 million for the full year ended December 31, 2024, compared to $766.9 million for the prior year. The increase in net sales was primarily driven by volume gains of 26.1%.

Gross profit was $396.0 million, or 40.6% as a percentage of net sales, for the full year ended December 31, 2024, compared to $250.9 million, or 32.7% as a percentage of net sales, for the prior year. The increase in reported gross profit as a percentage of net sales was primarily due to lower input costs, reduced quality costs and improved leverage on plant expenses. For the full year ended December 31, 2024, Adjusted Gross Profit was $453.5 million, or 46.5% as a percentage of net sales, compared to $306.6 million, or 40.0% as a percentage of net sales, for the prior year.1

SG&A was $358.0 million for the full year ended December 31, 2024, compared to $281.3 million for the prior year. As a percentage of net sales, SG&A remained consistent at 36.7% for both the full years ended December 31, 2024 and 2023. SG&A as a percentage of net sales remained consistent as the decreases due to reduced logistics as a percentage of net sales and the absence of non-recurring charges incurred in the prior year were fully offset by increased media as a percentage of net sales, higher share-based compensation and increased variable compensation accrual. Adjusted SG&A for the full year ended December 31, 2024 was $291.6 million, or 29.9% as a percentage of net sales, compared to $240.1 million, or 31.3% as a percentage of net sales, for the prior year.1

Net income was $46.9 million for the full year ended December 31, 2024, compared to a net loss of $33.6 million for the prior year. The improvement in net income was due to contribution from higher sales, improved gross margin, reduced logistics costs as a percentage of net sales, and gain on equity investment, partially offset by increased SG&A.

Adjusted EBITDA was $161.8 million for the full year ended December 31, 2024, compared to $66.6 million for the prior year.1 The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit partially offset by higher Adjusted SG&A.

Balance Sheet

As of December 31, 2024, the Company had cash and cash equivalents of $268.6 million with $395.2 million of debt outstanding net of $7.3 million of unamortized debt issuance costs. For the year ended December 31, 2024, cash from operations was $154.3 million, an increase of $78.3 million compared to the prior year.

The Company will utilize its balance sheet to support its ongoing capital needs in connection with its long-term capacity plan.

1 Adjusted Gross Margin, Adjusted Gross Profit, Adjusted SG&A and Adjusted EBITDA are non-GAAP financial measures. See "Non-GAAP Measures" for how the Company defines these measures and the financial tables that accompany this release for reconciliations of these measures to the closest comparable GAAP measures.

Outlook

For full year 2025, the Company is providing the following guidance:

• Net sales in the range of $1.18 billion to $1.21 billion, an increase of 21% to 24% from 2024;
• Adjusted EBITDA of at least $210 million; and
• Capital expenditures of ~$250 million.

The Company is also updating its long-term guidance. For full year 2027, the Company now expects:

• Net sales of $1.8 billion, unchanged;
• Adjusted Gross Margin of 48%, compared to 45% previously; and
• Adjusted EBITDA margin of 22%, compared to 18% previously.

The Company does not provide guidance for net income (loss), the U.S. GAAP measure most directly comparable to Adjusted EBITDA, and similarly cannot provide a reconciliation between its forecasted Adjusted EBITDA and net income (loss) metrics without unreasonable effort due to the unavailability of reliable estimates for certain components of net income (loss) and the respective reconciliations, including the timing of and amount of costs of goods sold and selling, general and administrative expenses. These items are not within the Company's control and may vary greatly between periods and could significantly impact future results.

Conference Call & Earnings Presentation Webcast Information As previously announced, today, February 20, 2025, the Company will host a conference call with members of its leadership team. The conference call webcast is scheduled to begin at 6:30 a.m. ET and will be hosted and archived on the "Investors" section of the Company's website at www.freshpet.com. Due to the Company's participation in the 2025 Consumer Analyst Group of New York (CAGNY) Conference, there will not be a question and answer session this quarter.

About FreshpetFreshpet’s mission is to improve the lives of dogs and cats through the power of fresh, real food. Freshpet foods are blends of fresh meats, vegetables and fruits farmed locally and made at our Freshpet Kitchens. We thoughtfully prepare our foods using natural ingredients, cooking them in small batches at lower temperatures to preserve the natural goodness of the ingredients. Freshpet foods and treats are kept refrigerated from the moment they are made until they arrive at Freshpet Fridges in your local market.

Our foods are available in select grocery, mass, digital, pet specialty, and club retailers across the United States, Canada and Europe. From the care we take to source our ingredients and make our food, to the moment it reaches your home, our integrity, transparency and social responsibility are the way we like to run our business. To learn more, visit www.freshpet.com.

Connect with Freshpet:

https://www.facebook.com/Freshpet

https://x.com/Freshpet

http://instagram.com/Freshpet

http://pinterest.com/Freshpet

https://www.tiktok.com/@Freshpet

https://www.youtube.com/user/freshpet400

Forward Looking Statements

Certain statements in this release constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to our ability to achieve our 2027 targets, create meaningful shareholder value, and guidance with respect to 2024 net sales, Adjusted EBITDA and capital expenditures. These statements are based on management's current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. While Freshpet believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are several risks and uncertainties which could cause actual results, performance, and achievements to differ materially from those stated or implied by the forward-looking statements described herein, including, most prominently, the risks discussed under the heading “Risk Factors” in the Company's latest annual report on Form 10-K and its quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. Such forward-looking statements are made only as of the date of this release. Freshpet undertakes no obligation to publicly update or revise any forward-looking statement because of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

Non-GAAP Financial Measures

Freshpet uses the following non-GAAP financial measures in its financial communications. These non-GAAP financial measures should be considered as supplements to the U.S. GAAP reported measures, should not be considered replacements for, or superior to, the U.S. GAAP measures and may not be comparable to similarly named measures used by other companies.

• Adjusted Gross Profit
• Adjusted Gross Profit as a percentage of net sales (Adjusted Gross Margin)
• Adjusted SG&A Expenses
• Adjusted SG&A Expenses as a percentage of net sales
• EBITDA
• Adjusted EBITDA
• Adjusted EBITDA as a percentage of net sales

Adjusted Gross Profit: Freshpet defines Adjusted Gross Profit as gross profit before depreciation expense, non-cash share-based compensation and loss on disposal of manufacturing equipment.

Adjusted SG&A Expenses: Freshpet defines Adjusted SG&A as SG&A expenses before depreciation and amortization expense, non-cash share-based compensation, implementation and other costs associated with the implementation of an enterprise resource planning ("ERP") system, fees related to the capped call transactions, loss on disposal of equipment, advisory fees related to shareholder activism defense engagement, and organizational changes.

EBITDA and Adjusted EBITDA: EBITDA represents net income (loss) plus interest expense net of interest income, income tax expense and depreciation and amortization expense, and Adjusted EBITDA represents EBITDA less gain on equity investment, plus loss on equity method investment, non-cash share-based compensation expense, implementation and other costs associated with the implementation of an ERP system, loss on disposal of property, plant and equipment, fees related to the capped call transactions, advisory fees related to shareholder activism defense engagement, and organizational changes.

Management believes that the non-GAAP financial measures are meaningful to investors because they provide a view of the Company with respect to ongoing operating results. The non-GAAP financial measures are shown as supplemental disclosures in this release because they are widely used by the investment community for analysis and comparative evaluation. They also provide additional metrics to evaluate the Company’s operations and, when considered with both the Company’s GAAP results and the reconciliation to the most comparable U.S. GAAP measures, provide a more complete understanding of the Company’s business than could be obtained absent this disclosure. The non-GAAP measures are not and should not be considered an alternative to the most comparable U.S. GAAP measures or any other figure calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The Company’s calculation of the non-GAAP financial measures may differ from methods used by other companies. Management believes that the non-GAAP measures are important to an understanding of the Company's overall operating results in the periods presented. The non-GAAP financial measures are not recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance.

Investor Contact:Rachel UlshRulsh@freshpet.com

Media Contact:Press@freshpet.com

FRESHPET, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except per share data)
	December 31,2024				December 31,2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	268,633			$	296,871
Accounts receivable, net of allowance for doubtful accounts		68,419				56,754
Inventories, net		80,794				63,238
Prepaid expenses		16,026				7,615
Other current assets		3,126				2,841
Total Current Assets		436,998				427,319
Property, plant and equipment, net		1,065,869				979,164
Deposits on equipment		1,047				1,895
Operating lease right of use assets		3,366				3,616
Long term investment in equity securities		33,446				23,528
Other assets		34,152				28,899
Total Assets	$	1,574,878			$	1,464,421
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	39,164			$	36,096
Accrued expenses		56,263				49,816
Current operating lease liabilities		1,322				1,312
Current finance lease liabilities		2,120				1,998
Total Current Liabilities	$	98,869			$	89,222
Convertible senior notes		395,163				393,074
Long term operating lease liabilities		2,213				2,591
Long term finance lease liabilities		23,273				26,080
Total Liabilities	$	519,518			$	510,967
Commitments and contingencies		—				—
STOCKHOLDERS' EQUITY:
Common stock — voting, $0.001 par value, 200,000 shares authorized, 48,716 issued and 48,702 outstanding on December 31, 2024, and 48,277 issued and 48,263 outstanding on December 31, 2023		49				48
Additional paid-in capital		1,338,160				1,282,984
Accumulated deficit		(281,806	)			(328,731	)
Accumulated other comprehensive loss		(787	)			(591	)
Treasury stock, at cost — 14 shares on December 31, 2024 and on December 31, 2023		(256	)			(256	)
Total Stockholders' Equity		1,055,360				953,454
Total Liabilities and Stockholders' Equity	$	1,574,878			$	1,464,421

FRESHPET, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(In thousands, except per share data)
	Three Months EndedDecember 31,								Year EndedDecember 31,
		2024				2023				2024				2023
	(Unaudited)
NET SALES	$	262,708			$	215,420			$	975,177			$	766,895
COST OF GOODS SOLD		151,108				140,846				579,221				516,023
GROSS PROFIT		111,600				74,575				395,956				250,872
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES		92,223				59,680				357,957				281,318
INCOME (LOSS) FROM OPERATIONS		19,377				14,895				37,999				(30,446	)
OTHER INCOME (EXPENSES):
Interest and Other Income, net		2,710				3,843				11,868				13,029
Interest Expense		(3,528	)			(3,449	)			(12,262	)			(14,097	)
Gain on Equity Investment		—				—				9,918				—
		(818	)			394				9,524				(1,068	)
INCOME (LOSS) BEFORE INCOME TAXES		18,559				15,289				47,523				(31,514	)
INCOME TAX EXPENSE		436				—				598				210
LOSS ON EQUITY METHOD INVESTMENT		—				—				—				1,890
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	18,123			$	15,289			$	46,925			$	(33,614	)
OTHER COMPREHENSIVE (LOSS) INCOME:
Change in foreign currency translation	$	(603	)		$	368			$	(196	)		$	(1,961	)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(603	)			368				(196	)			(1,961	)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	17,520			$	15,657			$	46,729			$	(35,575	)
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
-BASIC	$	0.37			$	0.32			$	0.97			$	(0.70	)
-DILUTED	$	0.36			$	0.31			$	0.93			$	(0.70	)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING
-BASIC		48,642				48,244				48,487				48,163
-DILUTED		50,407				49,889				50,255				48,163

FRESHPET, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF CASH FLOWS (In thousands)
	Year EndedDecember 31,
		2024				2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	46,925			$	(33,614	)		$	(59,494	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Provision for loss (gains) on accounts receivable		467				(2	)			(20	)
Loss on disposal of property, plant and equipment		1,284				4,321				396
Share-based compensation		51,807				24,935				26,092
Inventory obsolescence		347				—				3,455
Depreciation and amortization		73,615				58,517				34,555
Write-off and amortization of deferred financing costs and loan discount		2,089				4,060				795
Change in operating lease right of use asset		1,350				1,549				1,372
Loss on equity method investment		—				1,890				3,731
Gain on equity investment		(9,918	)			—				—
Changes in operating assets and liabilities:
Accounts receivable		(12,228	)			820				(32,993	)
Inventories		(15,484	)			(1,207	)			(26,171	)
Prepaid expenses and other current assets		269				(2,249	)			(435	)
Other assets		(5,063	)			(4,053	)			(3,141	)
Accounts payable		12,484				3,543				(3,063	)
Accrued expenses		7,811				19,237				13,078
Operating lease liability		(1,467	)			(1,807	)			(1,384	)
Net cash flows provided by (used in) operating activities		154,288				75,940				(43,227	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment, software and deposits on equipment		(187,092	)			(239,093	)			(230,071	)
Purchase of short-term investments		—				(113,441	)			(19,840	)
Proceeds from maturities of short-term investments						113,441				19,840
Investments in equity method investment		—				—				(3,293	)
Net cash flows used in investing activities		(187,092	)			(239,093	)			(233,364	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options to purchase common stock		9,138				4,517				471
Tax withholdings related to net shares settlements of restricted stock units		(2,595	)			(1,400	)			(1,441	)
Principal payments under finance lease obligations		(1,977	)			(1,109	)			—
Purchase of capped call options		—				(66,211	)			—
Proceeds from issuance of convertible senior notes		—				393,518				—
Debt issuance costs		—				(2,026	)			—
Proceeds from borrowings under Credit Facility		—				—				78,000
Repayment of borrowings under Credit Facility		—				—				(78,000	)
Proceeds from common shares issued in primary offering, net of issuance cost		—				—				337,508
Net cash flows provided by financing activities		4,566				327,289				336,538
NET CHANGE IN CASH AND CASH EQUIVALENTS		(28,238	)			164,136				59,947
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		296,871				132,735				72,788
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	268,633			$	296,871			$	132,735

FRESHPET, INC. AND SUBSIDIARIESRECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT
	Three Months EndedDecember 31,								Year EndedDecember 31,
		2024				2023				2024				2023
	(Dollars in thousands)
Gross profit	$	111,600			$	74,575			$	395,956			$	250,872
Depreciation expense		13,358				8,103				49,056				41,209
Non-cash share-based compensation		1,310				2,299				7,761				10,995
Loss on disposal of manufacturing equipment		5				3,547				696				3,547
Adjusted Gross Profit	$	126,273			$	88,524			$	453,469			$	306,623
Adjusted Gross Profit as a % of Net Sales		48.1	%			41.1	%			46.5	%			40.0	%

FRESHPET, INC. AND SUBSIDIARIESRECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES
	Three Months EndedDecember 31,								Year EndedDecember 31,
		2024				2023				2024				2023
	(Dollars in thousands)
SG&A expenses	$	92,223			$	59,680			$	357,957			$	281,318
Depreciation and amortization expense		5,780				4,248				21,747				15,849
Non-cash share-based compensation (a)		12,635				(2,315	)			44,045				13,941
Loss on disposal of equipment		225				86				588				774
Enterprise Resource Planning (b)		—				465				—				2,457
Capped Call Transactions fees (c)		—				—				—				113
Shareholder activism defense engagement (d)		—				—				—				8,177
Organization changes (e)		—				—				—				(67	)
Adjusted SG&A Expenses	$	73,583			$	57,196			$	291,577			$	240,074
Adjusted SG&A Expenses as a % of Net Sales		28.0	%			26.6	%			29.9	%			31.3	%

(a)	Includes true-ups to share-based compensation expense compared to prior periods. We have certain outstanding share-based awards with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA and/or Net Sales targets as a condition of vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets. When the probability of achieving such performance conditions changes, the compensation cost previously recorded is adjusted as needed. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed.
(b)	Represents costs associated with the implementation of an ERP system.
(c)	Represents fees associated with the Capped Call Transactions associated with our sale of Convertible Notes in 2023.
(d)	Represents advisory fees related to shareholder activism defense engagement.
(e)	Represents a true-up to transition costs related to the organization changes designed to support growth, including several changes in organizational structure designed to enhance capabilities and support long-term growth objectives.

FRESHPET, INC. AND SUBSIDIARIESRECONCILIATION BETWEEN NET INCOME (LOSS) AND ADJUSTED EBITDA
	Three Months EndedDecember 31,								Year EndedDecember 31,
		2024				2023				2024				2023
	(Dollars in thousands)
Net income (loss)	$	18,123			$	15,289			$	46,925			$	(33,614	)
Depreciation and amortization		19,138				12,351				70,803				57,058
Interest expense, net of interest income		760				(394	)			335				1,069
Income tax expense		436				—				598				210
EBITDA	$	38,457			$	27,246			$	118,661			$	24,723
Gain on equity investment	$	—			$	—			$	(9,918	)		$	—
Loss on disposal of property, plant and equipment		230				3,633				1,284				4,321
Non-cash share-based compensation (a)		13,946				(16	)			51,807				24,936
Loss on equity method investment		—				—				—				1,890
Enterprise Resource Planning (b)		—				465				—				2,457
Capped Call Transactions fees (c)		—				—				—				113
Shareholder activism defense engagement (d)		—				—				—				8,177
Organization changes (e)		—				—				—				(67	)
Adjusted EBITDA	$	52,633			$	31,328			$	161,834			$	66,550
Adjusted EBITDA as a % of Net Sales		20.0	%			14.5	%			16.6	%			8.7	%

(a)	Includes true-ups to share-based compensation expense compared to prior periods. We have certain outstanding share-based awards with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA and/or Net Sales targets as a condition of vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets. When the probability of achieving such performance conditions changes, the compensation cost previously recorded is adjusted as needed. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed.
(b)	Represents costs associated with the implementation of an ERP system.
(c)	Represents fees associated with the Capped Call Transactions associated with our sale of Convertible Notes in 2023.
(d)	Represents advisory fees related to shareholder activism defense engagement.
(e)	Represents a true-up to transition costs related to the organization changes designed to support growth, including several changes in organizational structure designed to enhance capabilities and support long-term growth objectives.