Business Update May 26, 2022 - Investors
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Business Update
May 26, 2022
1
Forward Looking Statements & Non-GAAP Measures
Forward-Looking Statements
Certain statements in this presentation by Freshpet, Inc. (the “Company”) constitute “forward-looking” statements, which include any statements related to
the novel coronavirus ("COVID-19"), the Freshpet Kitchens Expansion, our long-term capacity planning, our net sales and Adjusted EBITDA guidance and the
Company's general operating and economic environment. These statements are based on management's current opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and
involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially
from those stated, anticipated or implied by such forward-looking statements. 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 many risks and
uncertainties that could cause actual results to differ materially from forward-looking statements made herein, including our long-term capacity planning, and
most prominently, the risks discussed under the heading “Risk Factors” in the Company's latest annual report on Form 10-K and 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 presentation. 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 Measures
Freshpet uses certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDA as a % of net sales (Adjusted EBITDA Margin),
Adjusted Gross Profit, Adjusted Gross Profit as a % of net sales (Adjusted Gross Margin), Adjusted SG&A and Adjusted SG&A as a % of net sales. These non-
GAAP financial measures should be considered as supplements to GAAP reported measures, should not be considered replacements for, or superior to, GAAP
measures and may not be comparable to similarly named measures used by other companies.
Freshpet defines EBITDA as net income (loss) plus interest expense, income tax expense and depreciation and amortization expense, and Adjusted EBITDA as
EBITDA plus net income (loss) on equity method investment, plant start-up expense, non-cash share-based compensation, launch expense, fees related to
equity offerings of our common stock, implementation and other costs associated with the implementation of an ERP system, and other expenses, including
loss on disposal of equipment and COVID-19 expenses.
2
Forward Looking Statements & Non-GAAP Measures (cont.)
Freshpet defines Adjusted Gross Profit as gross profit before depreciation expense, plant start-up expense, COVID-19 expenses and non-cash share-based
compensation, and Adjusted SG&A as SG&A expenses before depreciation and amortization expense, non-cash share-based compensation, launch expense,
gain (loss) on disposal of equipment, fees related to equity offerings of our common stock, implementation and other costs associated with the
implementation of an ERP system and COVID-19 expenses.
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. Non-GAAP financial measures are shown as supplemental disclosures in this presentation 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 GAAP measures, provide a more complete understanding of the Company’s
business than could be obtained absent this disclosure. Adjusted EBITDA is also an important component of internal budgeting and setting management
compensation. The non-GAAP measures are not and should not be considered an alternative to the most comparable GAAP measures or any other figure
calculated in accordance with 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 GAAP and should not be viewed as an
alternative to GAAP measures of performance.
Certain of these measures represent the Company's guidance for fiscal year 2022. The Company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a
reasonable degree of certainty the type and impact of certain items, including the timing of and amount of costs of goods sold and selling, general and
administrative expenses, that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. The unavailable
information could significantly impact our financial results. These items are not within the Company's control and may vary greatly between periods. Based on
the foregoing, the Company believes that providing estimates of the amounts that would be required to reconcile these forecasted non-GAAP measures to
forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
34
Strong, sustained growth
Nielsen Mega-Channel Consumption
18,000,000
16,000,000 Nielsen Mega-Channel consumption vs. YA:
• Latest 4 weeks: +41%
• Q2 to date: +42%
14,000,000
• YTD: +40%
12,000,000
+43% vs. YA
(w/e 5/14/22)
10,000,000
Capacity constrained and out-of-stocks
8,000,000
6,000,000
Source: Nielsen Mega-Channel Data thru 5/14/22 52-year stacked growth rate continues at a robust rate
Nielsen Mega-Channel Consumption Growth
(2 Year Stacked)
97%
90% 93%
87%
83% 85% 81% 82%
73%
43%
65% 64% 64% 65% 66% 65% 65% 64% 63% 41% 47%
62% 61% 60% 60% 62% 63% 60% 62% 61% 62%
58% 60% 56% 59% 59% 58% 57% 59% 60% 60% 42% 36% 43%
40% 43%
34%
13% 17% 21% 18%
18% 20% 22% 21% 23% 22% 21% 25% 25% 26% 28% 27% 31% 37% 27% 31% 37% 44%
18% 21% 22% 22% 39%
44% 48% 35%
43%
54%
45% 44% 43% 46% 50% 45% 46% 42%
38% 42% 41% 40% 38% 36% 37% 38% 39% 39% 38% 41%
42%
35%
40% 38% 36% 39%
35% 34% 34% 31% 38% 41% 39%
28% 28% 26%
20% 15% 17%
1% -3%
Previous Year Current Year
6
Source: Nielsen Mega-Channel Data thru 5/14/22Limited evidence of price sensitivity overall
Total Freshpet Price Sensitivity – Grocery & Mass
13,000,000 $10.40
2/28/22: ~12.5% price increase
12,000,000
$9.90
11,000,000
$9.40
10,000,000
11/29/21: ~4.5% price increase
$8.90
9,000,000
$8.40
8,000,000
$7.90
7,000,000
6,000,000 $7.40
4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E 4 W/E
01/30/21 02/27/21 03/27/21 04/24/21 05/22/21 06/19/21 07/17/21 08/14/21 09/11/21 10/09/21 11/06/21 12/04/21 01/01/22 01/29/22 02/26/22 03/26/22 04/23/22
Freshpet Total Pounds Freshpet Total Avg Unit Price
7
Source: Nielsen Consumption Data thru 4/23/22At current 2022 guidance growth rate (35%), we are well
ahead of the path to our 2025 $1.25 billion goal
Freshpet Net Sales Projections
(@ 2022 Net Sales guidance growth rate)
$1,600.0
$1,400.0
2025 Goal: $1.25 billion*
$1,200.0
$1,000.0
$800.0
$600.0
$575.0
$425.5 +35%
$400.0
+33%
$200.0
$-
2021 2022 Guidance 2023 Projected 2024 Projected 2025 Projected
8
*We are not raising long-term guidance until we can assess the impact of higher pricing on HH penetration and buying rate. We intend to revisit the long-term goal by year end to better reflect the above target performance trends.At current Nielsen growth rate, we would fully utilize our
$2.9 billion in planned capacity by late 2026
Freshpet Net Sales Projections
(@ Q2 2022 Nielsen Mega-Channel Growth Rate)
$3,500.0
$3,000.0 Planned Capacity: $2.9 billion
$2,500.0
$2,000.0
$1,500.0
$1,000.0
$575.0
$500.0
$425.5
+35%
+33%
$-
2021 2022 Run Rate 2023 Projected 2024 Projected 2025 Projected * 2026 Projected 2027 Projected
9
*We are not raising long-term guidance until we can assess the impact of higher pricing on HH penetration and buying rate. We intend to revisit the long-term goal by year end to better reflect the above target performance trends.Cash from operations and credit facility can fully support
$2.9 billion capacity plan while maintaining low leverage
Freshpet Growth & Leverage
$1,250.0*
$575.0
$425.5 +35%
+33%
2021 2022 Guidance 2023 Projected 2024 Projected 2025 Projected
Adj. EBITDA ($ millions) $55 $312.5
Cap. Ex. ($ millions) ~$400 ~$300 ~$200HH penetration growth expected to accelerate in 2022
following improved in-stocks and advertising support
Freshpet Penetration Growth
4,262,316
4,127,963
+26% +3%
3,607,689
3,276,741 3,318,990
+9%
+26% +31%
2,603,791 2,538,977
+12% +29%
1,961,409
+21%
2019 2020 2021 2022
Total Penetration Core Dog Penetration
11
Source: Nielsen HH Panel for the 52-week period ending late April 2017-2022Despite higher pricing, HH penetration grew 20% in latest
4 weeks vs. YA
Freshpet 4-Week Buyers
Growth vs. YA
50%
45% Out-of-stocks 4-week HH penetration:
+20% vs YA
40%
2/28/22: ~12.5% price increase
35%
30% 11/29/21: ~4.5% price increase
25%
20%
15%
10%
5%
0%
4-Week Buyers Growth vs. YA Poly. (4-Week Buyers Growth vs. YA)
12
Source: Nielsen HH Panel for the period ending 4/23/22Buying rate continues to grow strongly and is helped by
price increases; well ahead of long-term trend
Freshpet Buying Rate
$166.76
$151.02 +20%
$135.63 $135.13 $139.13 +24%
+11% 1%
2019 2020 2021 2022
Total Buying Rate Core Dog Buying Rate
13
Source: Nielsen HH Panel for the 52-week period ending late April 2018-2022 and company internal dataYou can also read
