Release Details

SECAUCUS, N.J., Aug. 07, 2017 (GLOBE NEWSWIRE) -- Freshpet, Inc. (“Freshpet” or the “Company”) (NASDAQ:FRPT) today reported financial results for its second quarter and six months ended June 30, 2017.

Second Quarter 2017 Financial Highlights

• Net Sales of $40.0 million, up 21.1% compared to the 2016 second quarter
• Net Loss of $2.7 million compared to a net loss of $3.2 million for the 2016 second quarter
• Adjusted EBITDA of $3.2 million compared to $3.5 million for the 2016 second quarter
• Freshpet Fridges increased 9.9% to 17,357 from 15,795 for the 2016 second quarter

“Our second quarter results reflect the initial strength of our stepped up advertising campaign and the merits of our Feed the Growth strategy. We are very pleased the Freshpet brand experienced an acceleration in the rate of net sales growth that was broad-based across all sales channels for the quarter,” said Billy Cyr, Freshpet’s Chief Executive Officer.  “Going forward, we expect to continue to generate solid growth as we progress through the year, and we remain confident in our ability to achieve our longer term 2020 financial objectives.”

Second Quarter 2017

Second quarter of 2017 net sales increased 21.1% to $40.0 million compared to $33.0 million for the second quarter of 2016. The Company’s core fresh refrigerated product offering grew 24.4% as compared to the same period in the prior year. Net sales for the quarter were driven by velocity gains and a 9.9% increase in Freshpet fridge store locations to 17,357 as of June 30, 2017, as compared to the prior year period.

Gross profit was $18.2 million, or 45.5% as a percentage of net sales for the second quarter of 2017, compared to $14.9 million, or 45.2% as a percentage of net sales, in the same period last year. For the second quarter 2017, Adjusted Gross Profit was $19.6 million, or 49.1% as a percentage of net sales, compared to $16.1 million, or 48.7% as a percentage of net sales, in the prior year period. Adjusted Gross Profit is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to Gross Profit in the financial tables that accompany this release.

Selling, general and administrative expenses (“SG&A”) were $20.0 million for the second quarter of 2017 compared to $17.9 million in the prior year period. As a percentage of net sales, SG&A decreased to 50.0% for the second quarter of 2017 compared to 54.2% in the second quarter of 2016. Adjusted SG&A as a percentage of net sales increased to 47.1% compared to 44.5% in the second quarter of 2016. The increase in SG&A is primarily due to the Company’s planned increased media spend of $1.8 million compared to the prior year period. Adjusted SG&A is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to SG&A in the financial tables that accompany this release.

Net Loss was $2.7 million for the second quarter of 2017 compared to a net loss of $3.2 million for the prior year period. The decrease was primarily related to increased media spend, offset by increased net sales.

Adjusted EBITDA was $3.2 million for the second quarter of 2017, compared to $3.5 million in the second quarter 2016.  Adjusted EBITDA is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to net earnings in the financial tables that accompany this release.

First Six Months of 2017

Net sales increased 15.6% to $74.5 million for the six months ended June 30, 2017 compared to $64.5 million for the prior year period. The Company’s core fresh refrigerated product offering grew 18.5% as compared to the same period in the prior year. Net sales for the first six months of 2017 were driven by velocity gains and an increase in Freshpet fridge store locations as compared to the prior year period.

Gross profit was $34.0 million, or 45.6% as a percentage of net sales for the six months ended June 30, 2017, compared to $29.8 million, or 46.2% as a percentage of net sales, in the same period last year. For the six months ended June 30, 2017, Adjusted Gross Profit was $36.9 million, or 49.5%, as a percentage of net sales, compared to $31.9 million, or 49.5% as a percentage of net sales, in the prior year period. Adjusted Gross Profit is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to Gross Profit in the financial tables that accompany this release.

Selling, general and administrative expenses (“SG&A”) were $38.5 million for the six months ended June 30, 2017 compared to $34.4 million in the prior year period.  As a percentage of net sales, SG&A decreased to 51.7% for the six months ended 2017 compared to 53.3% in the same period last year. Adjusted SG&A as a percentage of net sales increased to 49.0% for the six months ended June 30, 2017 compared to 46.9% in the prior year period. The increase in SG&A is primarily due to the Company’s planned increased media spend of $3.1 million compared to the prior year period. Adjusted SG&A is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to SG&A in the financial tables that accompany this release.

Net Loss was $5.5 million for the six months ended June 30, 2017 compared to a net loss of $5.0 million for the prior year period. The decrease was primarily related to increased media spend, partially offset by increased net sales.

Adjusted EBITDA was $5.1 million for the six months ended June 30, 2017, compared to $5.9 million in the prior year period.  Adjusted EBITDA is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to net earnings in the financial tables that accompany this release.

Cash and Net Debt

As of June 30, 2017 the Company had cash and cash equivalents of $0.7 million; debt of $7.5 million and $28.0 million available under its Credit Facilities.

Outlook

For full year 2017, the Company increased its net sales outlook and reiterated its Adjusted EBITDA and Freshpet Fridges outlook.  The Company expects the following results:

• Net Sales to exceed $156 million, an increase of approximately 17% from the prior year, which reflects an increase from its prior guidance of $153 million
• Adjusted EBITDA to exceed $16 million, a decrease of approximately 10% from the prior year, consistent with prior guidance
• Freshpet Fridges of over 18,200, an increase of approximately 10% from the prior year, consistent with prior guidance

The Company does not provide guidance for the most directly comparable GAAP measure, net income, and similarly cannot provide a reconciliation between its forecasted Adjusted EBITDA and net income metrics without unreasonable effort due to the unavailability of reliable estimates for certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of warrants. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.

Conference Call and Webcast

The Company will host a conference call and webcast with the executive management team to discuss these results with additional comments and details today at 4:30 p.m. ET. The conference call webcast will be available live over the Internet through the “Investors” section of the Company’s website at www.freshpet.com. To participate on the live call listeners in North America may dial (877) 407-0792 and international listeners may dial (201) 689-8263.

A replay of the conference call will be archived on the Company’s website and telephonic playback will be available from 7:30 p.m. ET today through August 21, 2017. North American listeners may dial (844) 512-2921 and international listeners may dial (412) 317-6671 the passcode is 13666533.

About Freshpet

Freshpet has a single-minded mission – to improve the lives of dogs and cats everywhere through the power of fresh, natural food. Packed with vitamins and proteins, our foods offer fresh meats, poultry, and vegetables farmed locally. At our Freshpet Kitchens, we thoughtfully prepare these natural ingredients and everyday essentials, cooking them in small batches at lower temperatures to preserve key nutrients. That way, your pet gets the best. Freshpet refrigerated foods and treats are kept cool from the moment they are made until they arrive at Freshpet Fridges in your local market.

Our foods are available in select mass, grocery, natural food, club, and pet specialty retailers across the United States, Canada and are currently testing in the United Kingdom. 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://twitter.com/Freshpet 

http://instagram.com/Freshpet 

http://pinterest.com/Freshpet 

https://plus.google.com/+Freshpet 

https://en.wikipedia.org/wiki/Freshpet 

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

Forward Looking Statements

Certain statements in this release may constitute “forward-looking” statements. 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 several 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 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 (collectively, “the non-GAAP financial measures”) should be considered as supplements to the GAAP reported measures, should not be considered replacements for, or superior to, the GAAP measures and may not be comparable to similarly named measures used by other companies.

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

Adjusted Gross Profit: Freshpet defines Adjusted Gross Profit as Gross Profit before plant start-up expenses and processing and plant depreciation expense.

Adjusted SG&A Expenses: Freshpet defines Adjusted SG&A as SG&A expenses before non-cash items related to share-based compensation, leadership transition expenses, and fees related to a secondary offering.

EBITDA and Adjusted EBITDA: EBITDA represents net loss plus depreciation and amortization, interest expense, and income tax expense, and Adjusted EBITDA represents EBITDA plus loss on disposal of equipment, plant startup expense, share-based compensation, warrant fair valuation, secondary fees, leadership transition expenses, and launch expenses.

Management believes that the non-GAAP 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 and provides 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, provides 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 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.

CONTACT
ICR
Katie Turner
646-277-1228
katie.turner@icrinc.com

Michael Fox
203-682-8218
Michael.fox@icrinc.com

   Source: Freshpet, Inc.