June 16, 2021 Business Update
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June 16, 2021 Business Update
Forward Looking Statements & Non-GAAP Measures
Forward-Looking Statements
Certain statements in this presentation constitute “forward-looking” statements, which include any statements related to the novel coronavirus ("COVID-19"),
the Freshpet Kitchens Expansion, 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, 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 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 present the Company’s guidance for fiscal year 2021. The Company does not provide guidance for the most directly comparable
GAAP measure and similarly cannot provide a reconciliation to such measure without unreasonable effort due to the unavailability of reliable estimates for
certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.
3
2021 Guidance Review
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 projected to occur within Q3
6
Assumptions behind guidance
Q1 Expectations Q2 Expectations Q3 & Q4 Expectations
• Moderating consumption growth • Accelerating consumption behind • Strong period-to-period
due to out-of-stocks improved retail conditions and consumption growth behind
• Net sales in excess of consumption strong advertising investment advertising investment and strong
as we re-fill trade inventory – slight • Shipment growth modestly in supply
acceleration in growth rate from Q4 excess of consumption growth due • Shipment growth in excess of
• Adj. gross margin in line with Q4 to trade inventory re-fill consumption growth due to short
due to higher staffing levels to drive • Lower cost per lb. of production shipments in the YA
higher throughput, beef costs, lost (improved mix & higher • Continuing to expect adjusted gross
production due to storms and mix throughput) margin lift due to increased
shift to bags • Incremental costs associated with throughput
• U. S. advertising investment disposals & incremental processing • Continued heavy advertising
delayed to allow for improved in- • Strong advertising investment investment
stocks– in line with previous year • Resumption of fridge placements as • Meaningful store count growth
• Low new store additions until trade inventories are replenished
inventory is replenished in April
7
Inflation considerations heading into 2H 2021
Chicken Beef Packaging Labor Freight
Key cost element
Priced annually in Floats with resin Assumed
Tight labor
December; Priced quarterly; price; expect inflation but
Potential cost impact market; impact
potential impact assumed in plan some impact in exceeding
likely next year
next year back half expectations
• Full year 2021 adjusted gross margin could be pressured and be slightly below previous year
• May require pricing actions to offset rising costs in 2022
8COVID impact & addback
Q1 Results Q2 Expectations Q3 Expectations
• Includes $950K of COVID-related • Team members became eligible for • Anticipated completion of COVID
addbacks for supplemental wages vaccines on March 31, 2021 addback
to production team, incremental • Offered team members an incentive • Final quarter of supplemental pay
sanitation and health screening, to provide documentation that they and compensation for
and above normal absenteeism have successfully been vaccinated asymptomatic testing/quarantine
• 2 days of paid time off if • Maintaining supplemental
vaccinated by June 1; 1 day of screening and sanitation costs per
paid time off if vaccinated OSHA and CDC guidance
between June 1 and August 1
• $25 gift card
• Entered in drawing to win
$1500
• Continuing all safety protocols,
supplemental wages,
testing/quarantine costs
9Current Business Performance
Strong net sales growth YTD; tough year-on-year comp in
June will bring Q2 growth rate to low-mid 30’s
2021 Freshpet Monthly Net Sales vs. YA Q2 2020 Net Sales vs. YA
Winter Storms Orlena and
154%
Uri constrained 150%
production and shipments
144%
124%
140% 119%
137%
122%
January February March April May April 2020 May 2020 June 2020 11Strong growth vs. YA will narrow before expanding again in late
Q3 & Q4 behind increased capacity and advertising investment
Nielsen Mega-Channel Consumption
12,000,000 Winter Storm Uri
+>35% (est)
11,000,000
+~20% (est)
10,000,000
+34%
9,000,000
+49% Capacity constrained and out-of-stocks
+30%
8,000,000
Nielsen Mega-Channel consumption vs. YA:
• Latest 4 weeks: +33%
7,000,000 • Q2 to date: +41%
• YTD: +30%
6,000,000
1/2/21 2/2/21 3/2/21 4/2/21 5/2/21 6/2/21 7/2/21 8/2/21 9/2/21 10/2/21 11/2/21 12/2/21
Mega Channel 2021 Mega Channel 2020
Source: Nielsen Mega-Channel Data thru 6/5/21
12Strong growth on a 2-year stacked basis
Nielsen Mega-Channel Consumption Growth
(2 Year Stacked)
66%
62% 63% 62%
59% 58% 59% 59% 59%
58% 57% 58%
54% 55% 56% 55%
53% 1% 53% 54%
50%
34% 45%
43%
34%
31% 28%
28% 26% 17% 34%
46% 32% 28%
41% 39%
20% 15% 42%
66% 50%
46% 54%
45%
57%
32% 33%
28% 28% 30% 28% 28%
26% 25% 24% 26%
22%
16% 18% 17%
14%
10% 9% 8%
4%
1/9/21 1/16/21 1/23/21 1/30/21 2/6/21 2/13/21 2/20/21 2/27/21 3/6/21 3/13/21 -3%
3/20/21 3/27/21 4/3/21 4/10/21 4/17/21 4/24/21 5/1/21 5/8/21 5/15/21 5/22/21 5/29/21 6/5/21
2020 2021
13
Source: Nielsen Mega-Channel Data thru 6/5/212-year stacked will remain strong and could accelerate in
late Q3 and Q4 behind increased advertising
Nielsen Mega-Channel Consumption Growth
(2 Year Stacked)
66%
62% 63% 62%
59% 58% 59% 59% 59%
58% 58%
54% 55% 56% 57%55%
53% 1% 53% 54%
50%
34% 45%
43% 45%45%44%
34% 41% 42% 42%
31%28% 40% 41%40% 39% 41% 40%
17%
28% 26% 46% 41% 32%34%28% 37% 38%
35%
38% 38% 37%38% 39% 38%
36% 35%
38% 39%
36%
20%15% 39% 33%
42% 32%
66%46%50% 54% 30%
45%
57%
32% 33%
28%26% 28%30%28% 28% 26%
25%
22%24%
16%14%18%17%
10% 9% 8%
4%
-3%
2020 2021
14
Source: Nielsen Mega-Channel Data thru 6/5/21Channels & Distribution
Q2 to date: Strong performance on upgrades & second
fridges
Net New Stores Fridge Upgrades Second Fridges
550
2,940 2,953
405
1,809
253 231 1,586
Store Count
779
554 476
23,121 218
22,120 Qtr. Increase YTD Increase Total Operating YTD New Total Operating YTD New
Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021
Q2 2020 Q2 2021
2021 Guidance: ~23,750
2021 Guidance: +~1000 to 23,750 2021 Guidance: +~500 to 2,900 2021 Guidance: +~550 to 3,150 16
Source: Internal company data through 6/7/21Innovative new products launched to meet emerging
consumer needs with focus on Millennials & GenZ
Environmentally friendly Ethical treatment of Home cooking
animals
17Q1 2021 Freshpet E-Com grew +156% vs. YA
9%
Online
Fresh Delivery
29%
Last Mile
Delivery
$6.2MM
6.3%
1Q 21 mix of e- 62%
Click & Collect
commerce sales
91% of Sales
Contribute to Brick
& Mortar
18Freshpet is an omni-channel brand with differentiated
propositions to serve the widest range of consumer needs
“Healthy, Tail-Wagging “Purposeful Food, “Fresh Food for Your
Nourishment” Thriving Pets” “Good Food that Does Good”
Family’s Pack”
”
19 19Partnership with Chewy.com to provide subscription
capability to consumers who prefer to buy that way
Q1 Letter to Shareholders
Chewy.com Shareholder Letter: https://s23.q4cdn.com/610444331/files/doc_financials/2021/q1/Q1-2021-Shareholder-Letter.pdf
20International Business
$-
$100,000.00
$10,000.00
$20,000.00
$30,000.00
$40,000.00
$50,000.00
$60,000.00
$70,000.00
$80,000.00
$90,000.00
Retail Sales
201801
201804
201807
201810
201813
201816
201819
201822
201825
201828
201831
201834
201837
201840
201843
201846
201849
201852
201903
201906
201909
201912
201915
201918
201921
201924
201927
201930
201933
201936
201939
201942
201945
201948
investment
201951
202001
202004
202007
202010
202013
Leading Canadian Retail Customer Weekly Sales
202016
202019
202022
202025
202028
202031
202034
202037
202040
202043
202046
202049
202052
202103
202106
Last 4 weeks +46% vs. YA
Canadian business accelerating behind advertising
202109
22
202112
202115
202118£0
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
£70,000
£80,000
£90,000
Week 40
Retail Sales
Week 42
Week 44
Week 46
Week 48
Week 50
Week 52
Week 01
Week 03
Week 05
Week 07
Week 09
Week 11
Week 13
Regular
Week 15
Week 17
Week 19
Week 21
Week 23
TV Spots
Week 25
Week 27
Week 29
Week 31
Week 33
Week 35
Panic Buying
Week 37
Week 39
Week 41
Week 43
Week 45
Week 47
Last 4 weeks +40% vs. YA
Week 49
Week 51
Leading UK Retail Customer Sales by Week
Week 01
Week 03
Week 05
Week 07
Week 09
Week 11
£2,000
£4,000
£6,000
£10,000
£12,000
£14,000
£16,000
£18,000
£20,000
£8,000
£0
1-Jun
Retail Sales
15-Jun
29-Jun
13-Jul
27-Jul
10-Aug
24-Aug
7-Sep
21-Sep
5-Oct
Regular
19-Oct
2-Nov
16-Nov
TV Spots
30-Nov
14-Dec
28-Dec
Panic Buying
11-Jan
25-Jan
8-Feb
Latest 4 weeks +29% vs. YA
22-Feb
8-Mar
Leading UK Retail Customer Sales by Week
22-Mar
5-Apr
Freshpet’s advertising-driven model works in the UK
19-Apr
23
3-May
17-MayManufacturing Progress
Production is running well ahead of YA with more capacity
coming on-stream in Q3
2021 vs. 2020 Production Performance Comparison
Rolling 7-Day Average Pounds Produced
April 1 – June 13 production = 496k lbs/calendar day
Thousands
600
500
400
+40%
300
Easter Holiday
200
Winter storms Memorial Day Avg. production 4/1/20 – 12/31/20 = 354k lbs/calendar day
Holiday
100
0
1/1/21 2/1/21 3/1/21 4/1/21 5/1/21 6/1/21 7/1/21 8/1/21 9/1/21 10/1/21 11/1/21 12/1/21
Rolling 7 Day Average - 2020 Rolling 7 Day Average - 2021
25Outside of holidays and snowstorms, production is in
excess of consumption every week this year
Production vs. Consumption Winter Storm Orlena Easter holiday
$14,000,000
$13,000,000
$12,000,000
$11,000,000
$10,000,000
$9,000,000
$8,000,000
$7,000,000 Memorial Day
holiday
$6,000,000 Winter Storm Uri
(Kitchens South)
$5,000,000
$4,000,000
3/7/2020 4/7/2020 5/7/2020 6/7/2020 7/7/2020 8/7/2020 9/7/2020 10/7/2020 11/7/2020 12/7/2020 1/7/2021 2/7/2021 3/7/2021 4/7/2021 5/7/2021 6/7/2021
Total Weekly Retail $ Value (incl. treats) Production Nielsen Mega-Channel Consumption
Source: Nielsen Mega-Channel Data thru 6/5/21 and internal company data
26Out-of-stocks are improving
Freshpet Consumer Comments: Out-of-stock & Can’t find
1200
1000
800
600
400
200
0
Out of Stock/Can't Find
27
Source: Internal company dataSteady increases in production capacity throughout 2021
Freshpet Annualized Production Capacity
2021
Successfully 24/4 operation on both Kitchens 2.0 rolls
started up rolls lines in Kitchens 2.0 line to 24/7
(incremental step to increase
$640 (pulled forward)
$640
in Kitchens 2.0
output on rolls)
$590 $590 $590
24/7 operation Line 2 in
on bags in
$540
Kitchens South
Kitchens 2.0
$490
$390 Begins July 5th Begins Q3 with
(slight delay from output in Q4
original timing (slight delay from
due to staffing) original timing)
Q1 Q2 Q3 Q4
Equipment Capacity ($ million/year) Staffed Capacity ($ million/year)
28Successfully added significant talent but labor supply
remains a real challenge
Successfully Hiring Key Talent Challenges in the Labor Market
Freshpet Staffing Pipeline
(candidates seeking jobs)
Pending Hires
Stimulus
1/3/21
2/7/21
3/7/21
4/4/21
5/2/21
5/9/21
1/10/21
1/17/21
1/24/21
1/31/21
2/14/21
2/21/21
2/28/21
3/14/21
3/21/21
3/28/21
4/11/21
4/18/21
4/25/21
5/16/21
5/23/21
U.S. Dept. of Labor Initial Unemployment Claims
29
Source: US Dept. of Labor and internal dataKitchens 2.0 bag line produces more pounds with fewer people –
fulfilling its potential for greater efficiency and throughput
Avg. Pounds Per Production Day: April 2021 Production Staffing
120,000
12
100,000
Production FTE’s per shift
80,000
60,000
40,000 10 10
20,000
-
Kitchens 1.0 Bag Line #1 Kitchens 1.0 Bag Line #2 Kitchens 2.0 Bag Line #3 Kitchens 1.0 Bag Line #1 Kitchens 1.0 Bag Line #2 Kitchens 2.0 Bag Line #3
30
*Results will vary for each line based on package and product mix on each line on each day. Staffing only includes production personnel. Does not include support services.Kitchens 3.0 in Ennis, TX: Construction is on track for a
Q2 2022 start-up
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
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