Freshpet has reported its monetary outcomes for the second quarter ending June 30, 2024.
In Q2 2024, Freshpet web gross sales elevated by 28.3% to $235.3 million. Internet loss decreased to $1.7 million from $17.0 million. Gross margin improved to 39.9% from 32.3%. Adjusted Gross Margin rose to 45.9% from 39.8%. Adjusted EBITDA grew to $35.1 million from $9.0 million.
For the primary six months of 2024, web revenue for Freshpet was $16.9 million, a reversal from web lack of $41.7 million within the first six months of 2023. This enchancment was attributed to increased gross sales, improved gross margin, lowered logistics prices and beneficial properties in fairness funding.
“Freshpet is delivering disciplined progress,” mentioned Billy Cyr, Freshpet’s CEO. “That has enabled us to considerably enhance profitability whereas persevering with to ship category-leading web gross sales progress. The momentum we’ve at the moment offers us even higher confidence in our means to attain our 2027 targets, quite a few which we’ve already exceeded.
“We’re elevating our web gross sales and adjusted EBITDA steering for the 12 months to replicate our outperformance within the first half, in addition to our conviction in our means to execute within the second half of the 12 months,” Cry continued. “If we proceed to ship the sort of disciplined progress we’ve achieved to this point this 12 months, we consider we are going to create significant shareholder worth in a method that serves pets, individuals and the planet.”
Cyr mentioned through the earnings name that over the previous two years the corporate has discovered to fastidiously handle its progress to about 25%, which permits it to drive working enhancements and handle money extra successfully.
“That’s our definition of disciplined progress,” he mentioned. “And if we try this properly, customers will win, prospects will win, and our shareholders will win. Our second quarter outcomes exhibit the robust progress we’re making towards delivering that disciplined progress. We delivered our twenty fourth consecutive quarter of web gross sales progress over 25% and did it inside our current capability limits, so we maintained distinctive customer support and robust fill charges.”
Strong 12 months in retail
From a retail perspective, Cyr mentioned Freshpet is having a stable 12 months of retail availability progress. Retailer rely progress is according to its long-term charges.
“A few of our bigger prospects are participating with us on potential plans so as to add second and third fridges in high-velocity shops,” he mentioned. “That’s the place we count on to see the majority of our progress. Particularly, we positioned 790 fridges within the second quarter together with new shops, upgrades, and second/third fridges, bringing us to a complete of 35,602 fridges at retail or greater than 1.8 million cubic ft of retail house.”
As of June 30, 2024, Freshpet might be present in 27,497 shops, 22% of which now have a number of fridges within the U.S. Fill charges proceed to be robust, mentioned Cyr. Freshpet is turning into more and more mainstream, however nonetheless has an extended runway for progress, he added.
“Based on Nielsen omnichannel knowledge, which incorporates e-commerce and direct-to-consumer, as of June 29, 2024, complete U.S. pet meals is a $53 billion class,” he defined. “We solely have a 3% market share inside the $36 billion pet food section, which is almost all of our enterprise at the moment. Throughout the recent frozen subcategory in measured channels, Freshpet has a 96% market share.”
Contemporary continues to outperform the broader pet meals class and plenty of retailers consider it’s the way forward for pet meals, mentioned Cyr. “Consequently, Freshpet is now in 66% ACV in Nielsen xAOC, and we proceed so as to add distribution breadth and depth with second and third fridges,” he mentioned. “Our family penetration beneficial properties additionally exhibit that we’re properly on our approach to making Freshpet extra mainstream. Family penetration on the finish of the second quarter was 12.8 million households, up 25% 12 months over 12 months, and on observe to fulfill our goal of 20 million households by 2027.”
Proceed to execute growth plans
Cyr mentioned to help its progress, Freshpet will proceed to develop its capability. The corporate’s Bethlehem Kitchen has six working traces, the Kitchen South has three traces, and the Ennis Kitchen has three traces with a fourth anticipated to start manufacturing by the top of the third quarter this 12 months. Trying ahead, Freshpet predicts the Bethlehem Kitchen can have seven traces, the Kitchen South can have 5, and the Ennis Kitchen can have 10, representing a complete of twenty-two manufacturing traces.
“We’re intensely targeted on, one, maximizing the throughput of our current traces; two, maximizing the capability of our three current websites; and three, creating and implementing new applied sciences that generate extra throughput per line,” mentioned Cyr. “Whereas we have come a great distance since our first facility in Quakertown, Pennsylvania, the manufacturing techniques to make Freshpet meals are nonetheless not the place we might like them to be.”
Cyr mentioned Freshpet will proceed to speculate closely in each know-how and expertise to make its manufacturing extra secure, dependable and environment friendly.
“We have made super progress, however nonetheless consider the alternatives for enchancment are sizable,” he mentioned.
Based on Petfood Trade’s Prime Pet Meals Firms, Freshpet is a U.S.-based producer of recent, refrigerated canine treats and meals for canines and cats. The corporate says all of its meat is 100percentfarm-raised. In 2022, the corporate’s gross sales grew by 39.9%, and the corporate is investing in elevated manufacturing capability for additional progress.
