0001437749-22-026352 | 10-Q | XBRL Viewer

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Note 12 - Subsequent Events (Details Textual) $ in Thousands	1 Months Ended
	Nov. 04, 2022 USD ($)
Credit Facility [Member] \| Subsequent Event [Member]
Repayments of Debt	$ 75,214

Note 2 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Raw Materials and Work in Process	$ 17,593	$ 13,339
Packaging Components Material	6,562	2,823
Finished Goods	40,322	19,704
Inventory, Gross, Total	64,477	35,866
Reserve for Obsolete Inventory	(143)	(292)
Inventories, net	$ 64,334	$ 35,574

Note 10 - Concentrations (Details Textual) $ in Thousands	Sep. 30, 2022 USD ($)
Maximum [Member]
Cash, FDIC Insured Amount	$ 250

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares shares in Thousands	Sep. 30, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	200,000	200,000
Common stock, issued (in shares)	47,838	43,449
Common stock, outstanding (in shares)	47,824	43,435
Treasury Stock, Shares (in shares)	14	14

Note 2 - Inventories (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	*September 30,*			*December 31,*
	*2022*			*2021*
Raw Materials and Work in Process	$	17,593		$	13,339
Packaging Components Material		6,562			2,823
Finished Goods		40,322			19,704
		64,477			35,866
Reserve for Obsolete Inventory		(143	)		(292	)
Inventories, net	$	64,334		$	35,574

Note 8 - Equity Incentive Plans (Details Textual) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-Based Payment Arrangement, Expense	$ 6,671	$ 5,746	$ 19,260	$ 18,587
Performance Based Restricted Stock Units [Member]
Unrecognized Compensation Costs, Performance Based Awards (in shares)	35		35
Service Period Restricted Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			81
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)			$ 85.01
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period (in shares)			57

Note 5 - Debt (Details Textual) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
Note 5 - Debt (Details Textual) - USD ($) $ in Thousands	Apr. 17, 2020	Nov. 04, 2022	Mar. 31, 2021	Sep. 30, 2022	Apr. 29, 2022	Feb. 19, 2021
Credit Facility [Member]
Debt Agreement, Maximum Borrowing Capacity						$ 350,000
Long-Term Debt, Total				$ 75,214
Debt Issuance Costs, Net, Total				3,166
Credit Facility [Member] \| Other Assets [Member]
Debt Issuance Costs, Net, Total				$ 2,342	$ 235
Credit Facility [Member] \| Other Current Assets [Member]
Debt Issuance Costs, Net, Total					$ 99
Credit Facility [Member] \| Subsequent Event [Member]
Repayments of Debt		$ 75,214
Credit Facility [Member] \| Minimum [Member]
Line of Credit Facility, Commitment Fee Percentage				0.30%
Credit Facility [Member] \| Maximum [Member]
Line of Credit Facility, Commitment Fee Percentage				0.50%
Credit Facility [Member] \| Base Rate [Member] \| Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	0.75%
Credit Facility [Member] \| Base Rate [Member] \| Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
Credit Facility [Member] \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] \| Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.75%
Credit Facility [Member] \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] \| Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	3.25%
Credit Facility [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 35,000					50,000
Debt Issuance Costs, Net, Total			$ 3,263
Credit Facility [Member] \| Draw Term Loan [Member]
Long-Term Debt, Total	$ 130,000					$ 300,000
Draw Term Loan [Member]
Debt Issuance Costs, Net, Total			2,797
Amortization of Debt Issuance Costs			$ 485	$ 485

Note 10 - Concentrations

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note 10 – Concentrations:

Concentration of Credit Risk—The Company maintains its cash balances in financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 each. At times, such balances may be in excess of the FDIC insurance limit.

Note 1 - Nature of the Business and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note 1 – Nature of the Business and Summary of Significant Accounting Policies:

Nature of the Business – Freshpet, Inc. (hereafter referred to as “Freshpet”, the “Company”, “we,” "us" or “our”), a Delaware corporation, manufactures and markets natural fresh meals and treats for dogs and cats. The Company’s products are distributed throughout the United States, Canada and other international markets, into major retail classes including Grocery (including online), Mass and Club, Pet Specialty, and Natural retail.

Basis of Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The unaudited consolidated financial statements include the accounts of the Company as well as the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2022, the results of its operations and changes to stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and its cash flows for the nine months ended September 30, 2022 and 2021. The results for the three and nine months ended September 30, 2022, are not necessarily indicative of results to be expected for the year ending December 31, 2022, or any other interim periods, or any future year or period. All amounts included herein have been rounded except where otherwise stated. As figures are rounded, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2021.

Equity method investment – The Company utilizes the equity method to account for investments when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. The Company has the ability to exercise significant influence based on our representation on and the makeup of the investee's Board of Directors. The Company has elected to record its share of equity in income (losses) of equity method investment on a one-quarter lag based on the most recently available financial statements.

In applying the equity method, the Company records the investment at cost and subsequently increases or decreases the carrying amount of the investment by our proportionate share of the net income or loss.

On March 10, 2022, the Company invested $3,300 to maintain our 19% interest in a privately held company that operates in our industry, with our investments to date totaling $31,200. The Company concluded that it is not the primary beneficiary, which is primarily the result of the Company's conclusion that it does not have the power to direct activities that most significantly impact the economic performance. The Company accounts for the investment under the equity method of accounting based on our ability to exercise significant influence even though the Company's percentage of ownership is below 20%. The basis difference between the Company's carrying value of its investment and the amount of underlying equity in net assets of the privately held company is not material to the Company's consolidated financial statements.

Variable interest entities – In accordance with the applicable accounting guidance for the consolidation of variable interest entities, the Company analyzes its variable interests to determine if an entity in which it has a variable interest is a variable interest entity. The Company's analysis includes both quantitative and qualitative reviews to determine if we must consolidate a variable interest entity as its primary beneficiary.

Estimates and Uncertainties – The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used in determining, among other items, trade incentives, share-based compensation and useful lives for long-lived assets. Actual results, as determined at a later date, could differ from those estimates.

Fair Value of Financial Instruments – Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

• Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies.

• Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets for cash and cash equivalents, other receivables, accounts payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments. Certain assets, including the equity method investment, right-of-use assets and property and equipment are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review.

As of September 30, 2022, the Company maintained Level 1 and Level 2 assets and liabilities.

Cash Equivalents – The Company holds treasury bills with original maturities when purchased of less than three months, measured as a level 2 asset. Treasury bills have been classified as available-for-sale which may be sold before maturity or are not classified as held-to-maturity or trading. Cash equivalents classified as available-for-sale are carried at fair value with unrealized gains or losses reported in other comprehensive income (loss).

Short-Term Investments – The Company holds treasury bills with original maturities when purchased of greater than three months, measured as a Level 2 asset. Treasury bills have been classified as available-for-sale which may be sold before maturity or are not classified as held to maturity or trading. Short-term investments classified as available-for-sale are carried at fair value with unrealized gains or losses reported in other comprehensive income (loss).

Trade accounts receivable – The allowance for doubtful accounts is based on the Company's assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer's ability to pay.

Implementation Costs of Cloud Computing Arrangement – As of September 30, 2022 and December 31, 2021, the Company's deferred implementation costs of our new ERP system associated with our cloud computing arrangement, which were reflected within prepaid and other assets, were $9,138 and $7,380, respectively. The cost will be recognized over the term of the agreement, which began in the first quarter of 2022.

Debt Issuance Cost – During the first quarter of 2021, as part of the Sixth Amended and Restated Loan and Security Agreement, dated February 19, 2021, (as amended, the "New Loan Agreement"), the Company incurred an additional $3,263 of fees associated with the debt modification, of which $2,797 of the fees were related to the Delayed Draw Term Loan ("DDTL") (as defined below) with the remaining balance relating to the Revolving Loan Facility (as defined below). The Company also wrote down $485 of fees incurred from the prior credit facilities. The Company’s policy is to record the debt issuance cost related to the Delayed Draw Term Loan, net of debt, for the portion of the Delayed Draw Term Loan that is outstanding, with the remaining amount recorded within assets.

The Company amortizes debt issuance costs categorized as assets on a straight-line basis over the term of the loan and amortizes the debt issuance costs that are categorized net of debt using the effective interest method, over the term of the loan.

Net Sales - Information about the Company’s net sales by class of retailer is as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2022 2021 2022 2021

Grocery, Mass and Club
$ 132,757 $ 91,148 $ 375,847 $ 259,227

Pet Specialty and Natural
18,576 16,442 53,664 50,393

Net Sales (a)
$ 151,333 $ 107,590 $ 429,511 $ 309,620

^(a) Online sales associated with each class of retailer are included within their respective total.

Recently Adopted Accounting Standards

The Company did not adopt any new Accounting Standard Updates during the quarter ended September 30, 2022.

Note 9 - Earnings Per Share Attributable to Common Stockholders

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 9 – Earnings Per Share Attributable to Common Stockholders:

Basic net earnings (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net earnings (loss) per share of common stock is computed by giving effect to all potentially dilutive securities.

The potentially dilutive securities excluded from the determination of diluted loss per share, as their effect is antidilutive, are as follows (in thousands):

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Service Period Stock Options		1,269		1,275		1,259		1,298
Restricted Stock Units		149		160		147		173
Performance Stock Options		944		886		944		886
Total		2,362		2,321		2,350		2,357

For the three and nine months ended September 30, 2022 and 2021, diluted net loss per share of common stock was the same as basic net loss per share of common stock, due to the fact that potentially dilutive securities would have an antidilutive effect as the Company incurred a net loss during such periods.

Note 1 - Nature of the Business and Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended		12 Months Ended
	Mar. 10, 2022	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Payments to Acquire Equity Method Investments			$ 3,293	$ (0)
Equity Method Investments			26,180		$ 25,856
Implementation Costs			9,138		$ 7,380
Credit Facility [Member]
Debt Issuance Costs, Net, Total			3,166
Credit Facility [Member] \| Revolving Credit Facility [Member]
Debt Issuance Costs, Net, Total		$ 3,263
Draw Term Loan [Member]
Debt Issuance Costs, Net, Total		2,797
Amortization of Debt Issuance Costs		$ 485	$ 485
Privately Held Company, Not Primary Beneficiary [Member]
Equity Method Investment, Ownership Percentage	19.00%
Equity Method Investments	$ 31,200,000
Privately Held Company, Not Primary Beneficiary [Member]
Payments to Acquire Equity Method Investments	$ 3,300,000

Note 3 - Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property, plant and equipment, gross	$ 855,260	$ 697,504
Less: Accumulated Depreciation	(135,816)	(113,582)
Property, plant and equipment, net	719,444	583,922
Refrigeration Equipment [Member]
Property, plant and equipment, gross	132,233	122,063
Machinery and Equipment [Member]
Property, plant and equipment, gross	162,863	140,471
Land, Buildings and Improvements [Member]
Property, plant and equipment, gross	167,463	150,927
Furniture and Office Equipment [Member]
Property, plant and equipment, gross	9,340	8,844
Leasehold Improvements [Member]
Property, plant and equipment, gross	1,319	1,319
Construction in Progress [Member]
Property, plant and equipment, gross	$ 382,043	$ 273,880

Note 6 - Leases - Maturities of Lease Liabilities (Details)
$ in Thousands

Sep. 30, 2022

USD ($)

2022 (a)

$ 443

^[1]

1,802

1,511

1,210

1,576

6,542

Less: Imputed interest

(476)

Present value of lease liabilities

$ 6,066

[1]	Excluding the three months ended March 31, 2022.

Note 11 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Apr. 08, 2022	Sep. 30, 2022	Dec. 31, 2021
Other Assets, Noncurrent		$ 27,057	$ 13,670
Phillips Feed Service, Inc., d/b/a Phillips Feed And Pet Supply Complaint [Member]
Loss Contingency, Damages Sought, Value	$ 8,300
Other Assets, Noncurrent		$ 8,971

Note 7 - Warrants (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

		As of September 30,
		2022
Exercise price of warrants granted		$ 0.01
Expected volatility		52.5%
Expected terms in years		0.0
Risk-free interest rate		3.9%
Expected dividend yield		0.0%

Note 3 - Property, Plant and Equipment (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Depreciation, Depletion and Amortization, Total	$ 8,485	$ 7,389	$ 24,264	$ 21,571
Cost of Sales [Member]
Depreciation, Depletion and Amortization, Total	$ 5,159	$ 4,075	$ 14,208	$ 11,896

Note 1 - Nature of the Business and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Disaggregation of Revenue [Table Text Block]

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Grocery, Mass and Club	$	132,757	$	91,148	$	375,847	$	259,227
Pet Specialty and Natural		18,576		16,442		53,664		50,393
Net Sales (a)	$	151,333	$	107,590	$	429,511	$	309,620

Note 6 - Leases

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note 6 – Leases:

We have various noncancelable lease agreements for office and warehouse space, as well as office equipment, with original remaining lease terms of two years to five years, some of which include an option to extend the lease term for up to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. The Company’s leases generally do not include termination options for either party to the lease or restrictive financial or other covenants.

Weighted-average remaining lease term (in years) and discount rate related to operating leases were as follows:

Weighted-average remaining lease term			3.82
Weighted-average discount rate			6.15	%

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.

Maturities of lease liabilities under noncancelable operating leases as of September 30, 2022 were as follows:

Operating Lease Obligations	*As of September 30, 2022*
2022 (a)	$	443
2023		1,802
2024		1,511
2025		1,210
2026 and beyond		1,576
Total lease payments	$	6,542
Less: Imputed interest		(476	)
Present value of lease liabilities	$	6,066

(a)

Excluding the nine months ended September 30, 2022.

A summary of rent expense for the three and nine months ended September 30, 2022 and 2021 was as follows:

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Operating lease cost	$	438	$	444	$	1,314	$	1,335

Supplemental cash flow information and non-cash activity relating to operating leases are as follows:

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
Operating cash flow information:	*2022*		*2021*		*2022*		*2021*
Cash paid for amounts included in the measurement of lease liabilities	$	443	$	440	$	1,321	$	1,313

Note 6 - Leases (Details Textual)	Sep. 30, 2022
Lessee, Operating Lease, Renewal Term (Year)	5 years
Minimum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)	2 years
Maximum [Member]
Lessee, Operating Lease, Remaining Lease Term (Year)	5 years

Note 6 - Leases (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Lease, Cost [Table Text Block]

Weighted-average remaining lease term			3.82
Weighted-average discount rate			6.15	%

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Operating lease cost	$	438	$	444	$	1,314	$	1,335

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
Operating cash flow information:	*2022*		*2021*		*2022*		*2021*
Cash paid for amounts included in the measurement of lease liabilities	$	443	$	440	$	1,321	$	1,313

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Operating Lease Obligations	*As of September 30, 2022*
2022 (a)	$	443
2023		1,802
2024		1,511
2025		1,210
2026 and beyond		1,576
Total lease payments	$	6,542
Less: Imputed interest		(476	)
Present value of lease liabilities	$	6,066

Note 9 - Earnings Per Share Attributable to Common Stockholders (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Service Period Stock Options		1,269		1,275		1,259		1,298
Restricted Stock Units		149		160		147		173
Performance Stock Options		944		886		944		886
Total		2,362		2,321		2,350		2,357

Note 4 - Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	*September 30,*		*December 31,*
	*2022*		*2021*
Accrued Compensation and Employee Related Costs	$	5,822	$	6,934
Accrued Chiller Cost		2,889		2,050
Accrued Customer Consideration		1,278		828
Accrued Freight		2,225		1,547
Accrued Production Expenses		4,529		1,862
Accrued Corporate and Marketing Expenses		1,631		1,081
Other Accrued Expenses		1,202		648
Accrued Expenses	$	19,576	$	14,950

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Nature of the Business [Policy Text Block]

Basis of Accounting, Policy [Policy Text Block]

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2021.

Equity Method Investments [Policy Text Block]

Equity method investment – The Company utilizes the equity method to account for investments when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. The Company has the ability to exercise significant influence based on our representation on and the makeup of the investee's Board of Directors. The Company has elected to record its share of equity in income (losses) of equity method investment on a one-quarter lag based on the most recently available financial statements.

In applying the equity method, the Company records the investment at cost and subsequently increases or decreases the carrying amount of the investment by our proportionate share of the net income or loss.

On March 10, 2022, the Company invested $3,300 to maintain our 19% interest in a privately held company that operates in our industry, with our investments to date totaling $31,200. The Company concluded that it is not the primary beneficiary, which is primarily the result of the Company's conclusion that it does not have the power to direct activities that most significantly impact the economic performance. The Company accounts for the investment under the equity method of accounting based on our ability to exercise significant influence even though the Company's percentage of ownership is below 20%. The basis difference between the Company's carrying value of its investment and the amount of underlying equity in net assets of the privately held company is not material to the Company's consolidated financial statements.

Consolidation, Policy [Policy Text Block]

Variable interest entities – In accordance with the applicable accounting guidance for the consolidation of variable interest entities, the Company analyzes its variable interests to determine if an entity in which it has a variable interest is a variable interest entity. The Company's analysis includes both quantitative and qualitative reviews to determine if we must consolidate a variable interest entity as its primary beneficiary.

Use of Estimates, Policy [Policy Text Block]

Estimates and Uncertainties – The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used in determining, among other items, trade incentives, share-based compensation and useful lives for long-lived assets. Actual results, as determined at a later date, could differ from those estimates.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments – Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

	•	Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.
	•	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies.
	•	Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets for cash and cash equivalents, other receivables, accounts payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments. Certain assets, including the equity method investment, right-of-use assets and property and equipment are also subject to measurement at fair value on a non-recurring basis if they are deemed to be impaired as a result of an impairment review.

As of September 30, 2022, the Company maintained Level 1 and Level 2 assets and liabilities.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents – The Company holds treasury bills with original maturities when purchased of less than three months, measured as a level 2 asset. Treasury bills have been classified as available-for-sale which may be sold before maturity or are not classified as held-to-maturity or trading. Cash equivalents classified as available-for-sale are carried at fair value with unrealized gains or losses reported in other comprehensive income (loss).

Investment, Policy [Policy Text Block]

Short-Term Investments – The Company holds treasury bills with original maturities when purchased of greater than three months, measured as a Level 2 asset. Treasury bills have been classified as available-for-sale which may be sold before maturity or are not classified as held to maturity or trading. Short-term investments classified as available-for-sale are carried at fair value with unrealized gains or losses reported in other comprehensive income (loss).

Receivable [Policy Text Block]

Trade accounts receivable – The allowance for doubtful accounts is based on the Company's assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer's ability to pay.

Implementation Costs of Cloud Computing Arrangement Policy [Policy Text Block]

Implementation Costs of Cloud Computing Arrangement – As of September 30, 2022 and December 31, 2021, the Company's deferred implementation costs of our new ERP system associated with our cloud computing arrangement, which were reflected within prepaid and other assets, were $9,138 and $7,380, respectively. The cost will be recognized over the term of the agreement, which began in the first quarter of 2022.

Debt Issuance Cost [Policy Text Block]

Debt Issuance Cost – During the first quarter of 2021, as part of the Sixth Amended and Restated Loan and Security Agreement, dated February 19, 2021, (as amended, the "New Loan Agreement"), the Company incurred an additional $3,263 of fees associated with the debt modification, of which $2,797 of the fees were related to the Delayed Draw Term Loan ("DDTL") (as defined below) with the remaining balance relating to the Revolving Loan Facility (as defined below). The Company also wrote down $485 of fees incurred from the prior credit facilities. The Company’s policy is to record the debt issuance cost related to the Delayed Draw Term Loan, net of debt, for the portion of the Delayed Draw Term Loan that is outstanding, with the remaining amount recorded within assets.

The Company amortizes debt issuance costs categorized as assets on a straight-line basis over the term of the loan and amortizes the debt issuance costs that are categorized net of debt using the effective interest method, over the term of the loan.

Revenue from Contract with Customer [Policy Text Block]

Net Sales - Information about the Company’s net sales by class of retailer is as follows:

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*
Grocery, Mass and Club	$	132,757	$	91,148	$	375,847	$	259,227
Pet Specialty and Natural		18,576		16,442		53,664		50,393
Net Sales (a)	$	151,333	$	107,590	$	429,511	$	309,620

^(a) Online sales associated with each class of retailer are included within their respective total.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Standards

The Company did not adopt any new Accounting Standard Updates during the quarter ended September 30, 2022.

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash and cash equivalents	$ 240,310	$ 72,788
Short-term investments	19,891	0
Accounts receivable, net of allowance for doubtful accounts	48,235	34,780
Inventories, net	64,334	35,574
Prepaid expenses	8,395	5,834
Other current assets	2,314	1,349
Total Current Assets	383,479	150,325
Property, plant and equipment, net	719,444	583,922
Deposits on equipment	3,821	4,100
Operating lease right of use assets	5,516	6,537
Equity method investment	26,180	25,856
Other assets	27,057	13,670
Total Assets	1,165,497	784,410
CURRENT LIABILITIES:
Accounts payable	37,046	42,612
Accrued expenses	19,576	14,950
Current operating lease liabilities	1,478	1,384
Current portion of long-term debt	72,872	0
Total Current Liabilities	130,972	58,946
Long term operating lease liabilities	4,588	5,710
Total Liabilities	135,560	64,656
STOCKHOLDERS' EQUITY:
Common stock — voting, $0.001 par value, 200,000 shares authorized, 47,838 issued and 47,824 outstanding on September 30, 2022, and 43,449 issued and 43,435 outstanding on December 31, 2021	48	43
Additional paid-in capital	1,321,299	955,710
Accumulated deficit	(292,200)	(235,623)
Accumulated other comprehensive income (loss)	1,046	(120)
Treasury stock, at cost — 14 shares on September 30, 2022 and on December 31, 2021	(256)	(256)
Total Stockholders' Equity	1,029,937	719,754
Total Liabilities and Stockholders' Equity	$ 1,165,497	$ 784,410

Note 8 - Equity Incentive Plans

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 8 – Equity Incentive Plans:

Total compensation cost for share-based payments recognized for the three and nine months ended September 30, 2022 was $6,671 and $19,260, respectively, and for the three and nine months ended September 30, 2021 was $5,746 and $18,587, respectively. During the nine months ended September 30, 2022, 35 thousand stock options were exercised. During the nine months ended September 30, 2022, 81 thousand service period restricted stock units were granted at a weighted average grant-date fair market value of $85.01. During the nine months ended September 30, 2022, 57 thousand restricted stock units vested.

Note 3 - Property, Plant and Equipment (Tables)

9 Months Ended

Sep. 30, 2022

Notes Tables

Property, Plant and Equipment [Table Text Block]

	*September 30,*			*December 31,*
	*2022*			*2021*
Refrigeration Equipment	$	132,233		$	122,063
Machinery and Equipment		162,863			140,471
Building, Land, and Improvements		167,463			150,927
Furniture and Office Equipment		9,340			8,844
Leasehold Improvements		1,319			1,319
Construction in Progress		382,043			273,880
		855,260			697,504
Less: Accumulated Depreciation		(135,816	)		(113,582	)
Property, plant and equipment, net	$	719,444		$	583,922

Note 1 - Nature of the Business and Summary of Significant Accounting Policies - Net Sales by Class of Retailer (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Net Sales

^[1]

$ 151,333

$ 107,590

$ 429,511

$ 309,620

Grocery (including Online), Mass and Club [Member]

Net Sales

132,757

91,148

375,847

259,227

Pet Specialty and Natural [Member]

Net Sales

$ 18,576

$ 16,442

$ 53,664

$ 50,393

[1]	Online sales associated with each class of retailer are included within their respective total.

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Note 7 - Warrants (Details Textual) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares
Class Of Warrant Or Right, Issued During Period (in shares) \| shares	194	194
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share) \| $ / shares	$ 0.01	$ 0.01
Class of Warrant or Right, Exercised During Period (in shares) \| shares	194	194
Class of Warrant or Right, Granted During the Period, Fair Value Per Share (in dollars per share) \| $ / shares	$ 50.32	$ 50.32
Amortization of Warrants	$ 1,150	$ 1,150
Measurement Input, Exercise Price [Member]
Warrants and Rights Outstanding, Measurement Input	0.01	0.01
Measurement Input, Expected Dividend Rate [Member]
Warrants and Rights Outstanding, Measurement Input	0	0
Current Prepaid Expenses [Member]
Warrants and Rights Outstanding	$ 4,600	$ 4,600
Other Current Assets [Member]
Warrants and Rights Outstanding	$ 4,026	$ 4,026

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2022	Oct. 31, 2022
Document Information [Line Items]
Entity Central Index Key	0001611647
Entity Registrant Name	Freshpet INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-36729
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-1884894
Entity Address, Address Line One	400 Plaza Drive, 1st Floor
Entity Address, City or Town	Secaucus
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07094
City Area Code	201
Local Phone Number	520-4000
Title of 12(b) Security	Common Stock
Trading Symbol	FRPT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,020,070

Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

NET SALES

^[1]

$ 151,333

$ 107,590

$ 429,511

$ 309,620

COST OF GOODS SOLD

106,788

66,065

289,187

188,689

GROSS PROFIT

44,545

41,525

140,324

120,931

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

60,449

42,365

190,241

137,955

LOSS FROM OPERATIONS

(15,904)

(840)

(49,917)

(17,024)

OTHER (EXPENSES)/INCOME:

Other (Expenses)/Income, net

256

492

(5)

Interest Expense

(1,817)

(677)

(4,060)

(2,232)

Nonoperating Income (Expense), Total

(1,561)

(675)

(3,568)

(2,237)

LOSS BEFORE INCOME TAXES

(17,465)

(1,515)

(53,485)

(19,261)

INCOME TAX EXPENSE

123

LOSS ON EQUITY METHOD INVESTMENT

943

539

2,969

1,124

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

(18,449)

(2,070)

(56,577)

(20,433)

OTHER COMPREHENSIVE (LOSS) INCOME:

Change in foreign currency translation

(592)

895

173

Unrealized gain on available for sale investments

271

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

(321)

1,166

173

TOTAL COMPREHENSIVE LOSS

$ (18,770)

$ (2,066)

$ (55,411)

$ (20,260)

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

-BASIC (in dollars per share)

$ (0.39)

$ (0.05)

$ (1.24)

$ (0.48)

-DILUTED (in dollars per share)

$ (0.39)

$ (0.05)

$ (1.24)

$ (0.48)

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING USED IN COMPUTING NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

-BASIC (in shares)

47,856

43,373

45,545

42,774

-DILUTED (in shares)

47,856

43,373

45,545

42,774

[1]	Online sales associated with each class of retailer are included within their respective total.

Note 7 - Warrants - Valuation Techniques (Details)	Sep. 30, 2022
Measurement Input, Exercise Price [Member]
Warrants and Rights Outstanding, Measurement Input	0.01
Measurement Input, Price Volatility [Member]
Warrants and Rights Outstanding, Measurement Input	52.5
Measurement Input, Expected Term [Member]
Warrants and Rights Outstanding, Measurement Input	0.0
Measurement Input, Risk Free Interest Rate [Member]
Warrants and Rights Outstanding, Measurement Input	3.9
Measurement Input, Expected Dividend Rate [Member]
Warrants and Rights Outstanding, Measurement Input	0

Note 4 - Accrued Expenses

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block]

Note 4 – Accrued Expenses:

	*September 30,*		*December 31,*
	*2022*		*2021*
Accrued Compensation and Employee Related Costs	$	5,822	$	6,934
Accrued Chiller Cost		2,889		2,050
Accrued Customer Consideration		1,278		828
Accrued Freight		2,225		1,547
Accrued Production Expenses		4,529		1,862
Accrued Corporate and Marketing Expenses		1,631		1,081
Other Accrued Expenses		1,202		648
Accrued Expenses	$	19,576	$	14,950

Note 3 - Property, Plant and Equipment

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note 3 – Property, Plant and Equipment:

	*September 30,*			*December 31,*
	*2022*			*2021*
Refrigeration Equipment	$	132,233		$	122,063
Machinery and Equipment		162,863			140,471
Building, Land, and Improvements		167,463			150,927
Furniture and Office Equipment		9,340			8,844
Leasehold Improvements		1,319			1,319
Construction in Progress		382,043			273,880
		855,260			697,504
Less: Accumulated Depreciation		(135,816	)		(113,582	)
Property, plant and equipment, net	$	719,444		$	583,922

Depreciation expense related to property, plant and equipment totaled $8,485 and $24,264 for the three and nine months ended September 30, 2022, respectively, of which $5,159 and $14,208 was recorded to cost of goods sold for the three and nine months ended September 30, 2022, respectively, with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense.

Depreciation expense related to property, plant and equipment totaled $7,389 and $21,571 for the three and nine months ended September 30, 2021, respectively, of which $4,075 and $11,896 was recorded to cost of goods sold for the three and nine months ended September 30, 2021, respectively, with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense.

Note 12 - Subsequent Events

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Subsequent Events [Text Block]

Note 12 – Subsequent Events:

As of September 30, 2022, the Company was not in compliance with the total funded debt ratio and the fixed charge coverage ratio financial covenants associated with the credit facility referenced in Note 5. Prior to the issuance of these financial statements, the lenders under the Credit Facility consented to such covenants not being tested as of such date. At the time such consent was granted, the Company repaid in full the $75,214 outstanding amount under the Delayed Draw Facility.

Note 9 - Earnings Per Share Attributable to Common Stockholders - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities (in shares)	2,362	2,321	2,350	2,357
Service Period Stock Options [Member]
Antidilutive Securities (in shares)	1,269	1,275	1,259	1,298
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities (in shares)	149	160	147	173
Performance Stock Options [Member]
Antidilutive Securities (in shares)	944	886	944	886

Note 7 - Warrants

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Warrant Disclosure [Text Block]

Note 7 – Warrants:

In connection with an agreement with one of our suppliers during the third quarter of 2022 in exchange for services, we issued our partner warrants to purchase up to an aggregate of 194 thousand shares of voting common stock of the Company at a purchase price of $0.01 per share. The Company determined these warrants are accounted for under FASB ASC 718 Stock Compensation. The warrants were recorded as a prepaid expense as the warrants were exercisable at the grant date. The prepaid expense will be amortized within Cost of Goods Sold as services are provided by the supplier. As of September 30, 2022, there were $4,600 of warrants in prepaid expense and $4,026 of warrants in other assets.

During the three and nine months ended September 30, 2022, 194 thousand warrants were issued and exercised, respectively. The grant date fair value of warrants granted during the three and nine months ended September 30, 2022 was $50.32 per share.

Warrants Assumptions

Fair value of the warrants at September 30, 2022, was based on the Black Scholes Option Pricing Model, which is based, in part, upon level 3 unobservable inputs for which there is little or no market data, requiring the Company to develop its own assumptions.

The Company used the following assumptions for its warrants:

Expected Volatility - Expected volatility was based on the historical volatility of the Company's common stock.

Exercise Price of Warrants Granted - The Company determined the exercise price pursuant to the terms of the warrant agreement of $0.01 per share.

Risk-Free Interest Rate - The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term in effect at the time of the warrant issuance.

Expected Dividend Yield - The Company has not historically declared dividends, and no future dividends are expected to be available to benefit warrant holders at the time of warrant issuance. Accordingly, the Company used an expected dividend yield of zero in the valuation model.

A summary of warrants assumptions as of September 30, 2022 were as follows:

		As of September 30,
		2022
Exercise price of warrants granted		$ 0.01
Expected volatility		52.5%
Expected terms in years		0.0
Risk-free interest rate		3.9%
Expected dividend yield		0.0%

Total amortization associated with partner warrants for the three and nine months ended September 30, 2022 was $1,150.

Note 2 - Inventories

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note 2 – Inventories:

	*September 30,*			*December 31,*
	*2022*			*2021*
Raw Materials and Work in Process	$	17,593		$	13,339
Packaging Components Material		6,562			2,823
Finished Goods		40,322			19,704
		64,477			35,866
Reserve for Obsolete Inventory		(143	)		(292	)
Inventories, net	$	64,334		$	35,574

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (56,577)	$ (20,433)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Provision for loss (gains) on accounts receivable	(23)	15
Loss on disposal of equipment	203	284
Share-based compensation	20,409	18,516
Inventory obsolescence	3,455	249
Depreciation and amortization	24,422	22,489
Amortization of deferred financing costs and loan discount	596	1,013
Change in operating lease right of use asset	1,021	992
Loss on equity method investment	2,969	1,124
Changes in operating assets and liabilities:
Accounts receivable	(22,403)	(13,794)
Inventories	(32,215)	(10,435)
Prepaid expenses and other current assets	1,074	(1,140)
Other assets	(1,639)	(5,520)
Accounts payable	1,430	5,057
Accrued expenses	4,626	(781)
Other lease liabilities	(1,028)	(971)
Net cash flows used in operating activities	(53,680)	(3,335)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments	(19,840)	0
Investments in equity method investment	(3,293)	0
Acquisitions of property, plant and equipment, software and deposits on equipment	(167,437)	(220,835)
Net cash flows used in investing activities	(190,570)	(220,835)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common shares issued in primary offering, net of issuance cost	337,508	332,172
Proceeds from exercise of options to purchase common stock	329	2,048
Tax withholdings related to net shares settlements of restricted stock units	(1,279)	(3,198)
Proceeds from borrowings under Credit Facility	78,000	0
Repayment of borrowings under Credit Facility	(2,786)	0
Fees paid in connection with financing agreements	0	(3,263)
Net cash flows provided by financing activities	411,772	327,759
NET CHANGE IN CASH AND CASH EQUIVALENTS	167,522	103,589
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	72,788	67,247
CASH AND CASH EQUIVALENTS, END OF PERIOD	240,310	170,836
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	3,152	1,288
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Property, plant and equipment purchases in accounts payable	15,486	2,599
Issuance of partner warrants	$ 9,775	$ 0

Note 5 - Debt

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 5 – Debt:

On February 19, 2021, the Company entered into the Sixth Amended and Restated Loan and Security Agreement ("Sixth Amendment"), which amended and restated in full the Company's Fifth Amended and Restated Loan and Security Agreement, dated as of April 17, 2020. The Sixth Amendment provides for a $350,000 senior secured credit facility (as amended the "Credit Facility"), encompassing a $300,000 delayed draw term loan facility (the "Delayed Draw Facility") and a $50,000 revolving loan facility (the "Revolving Loan Facility"), which replaced the Company's prior $130,000 delayed draw term loan facility and $35,000 revolving loan facility.

The Credit Facility matures on February 19, 2026 and borrowings thereunder bear interest at variable rates depending on the Company's election, either at a base rate or at the adjusted term SOFR (which rate shall be calculated based upon a one-month tenor in effect on such date and shall be determined on a daily basis), in each case, plus an applicable margin. Subject to the Company's leverage ratio, the applicable margin varies between 0.75% and 2.25% for base rate loans and 1.75% and 3.25% for SOFR loans. The Company has the option to borrow term loans under the Delayed Draw Facility ("Delayed Draw Term Loans") until August 19, 2023, subject to certain conditions. As of August 19, 2022, the amount of any outstanding Delayed Draw Term Loans shall be repayable in equal consecutive quarterly installments equal to 1/28th of the total single term loan ("the Initial Combined Delayed Draw Term Loan"). Commencing on August 19, 2023, the amount of any outstanding Delayed Draw Term Loans, combined with the Initial Combined Delayed Draw Term Loan, shall be repayable in equal consecutive quarterly installments equal to 1/28th of the outstanding Delayed Draw Term Loans and the remainder shall be due and payable on February 19, 2026.

As of September 30, 2022, the Company had $75,214 outstanding under the Delayed Draw Facility. Any prepayments of the Delayed Draw Facility under the agreement may not be reborrowed. The Credit Facility includes a quarterly commitment fee on any unused amounts at a per annum rate between 0.30% to 0.50% depending on the aggregate principal outstanding. As of September 30, 2022, the Company was not in compliance with the total funded debt ratio and the fixed charge coverage ratio financial covenants associated with the Credit Facility. Prior to the issuance of these financial statements, the lenders under the Credit Facility consented to such covenants not being tested as of such date. At the time such consent was granted, the Company repaid in full the $75,214 outstanding amount under the Delayed Draw Facility.

In connection with entering into the Sixth Amendment, the Company incurred $3,166 of debt issuance cost, which is capitalized on the balance sheet and amortized over the life of the facility, and wrote off $485 of fees incurred from the prior credit facilities.

As of September 30, 2022, there was $2,342 of debt issuance cost recorded against the Current Portion of Long-Term Debt related to the issuance costs of the Delayed Draw Facility. In addition, $235 of debt issuance costs recorded to other assets, and $99 was recorded in other current assets related to the issuance costs of the Revolving Loan Facility.

On April 29, 2022, the Company entered into the First Amendment to the New Loan Agreement, which amendment, among other things, (i) made amendments to allow for the Company's projected capital expenditures without either triggering mandatory prepayment obligations or violating the covenant and (ii) replaced the LIBOR interest rate for U.S. dollar loans to a term Secured Overnight Financing Rate ("Term SOFR").

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
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-Paragraph 1B
-Subparagraph (h)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (d)
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Section S99
-Paragraph 1
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Note 11 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 11 – Commitments and Contingencies:

We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims resulting from employment related matters. None of these claims or proceedings, most of which are covered by insurance, are expected to have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash flows.

On April 8, 2022, Phillips Feed Service, Inc., d/b/a Phillips Feed And Pet Supply ("Phillips") filed a complaint against the Company in U.S. District Court for the Eastern District of Pennsylvania (Allentown Division) for damages allegedly sustained as a result of the termination of the Company's distribution arrangement with Phillips, a former distributor of Freshpet products. Phillips asserts a claim for breach of contract, and seeks monetary damages in excess of $8,300 based on a claimed "termination payment" under a 2018 "Letter Of Intent" and additional damages based on a claim for improper notice of termination. Phillips also claims a right of setoff with respect to monies owed by Phillips to the Company.

On July 5, 2022, the Company answered the complaint disputing the claimed damages, assertions of breach of contract, and the right of offset. In addition, the Company counterclaimed breach of contract for amounts owed to Freshpet earned while Phillips served as an authorized distributor of Freshpet product. As of September 30, 2022, due to the claims and counterclaims between the parties, the Company reclassified the amounts due from Phillips of $8,971 to other noncurrent assets.

Based on information currently available and advice of counsel, we do not believe that the outcome of any of this matter is likely to have a material adverse effect on our business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of this matter, if unfavorable, may be materially adverse to our business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to selling, general and administrative expenses in the period incurred.

Note 4 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accrued Compensation and Employee Related Costs	$ 5,822	$ 6,934
Accrued Chiller Cost	2,889	2,050
Accrued Customer Consideration	1,278	828
Accrued Freight	2,225	1,547
Accrued Production Expenses	4,529	1,862
Accrued Corporate and Marketing Expenses	1,631	1,081
Other Accrued Expenses	1,202	648
Accrued Expenses	$ 19,576	$ 14,950

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balances (in shares) at Dec. 31, 2020	40,732				14
Balances at Dec. 31, 2020	$ 41	$ 600,388	$ (205,924)	$ (80)	$ (256)	$ 394,169
Exercise of options to purchase common stock (in shares)	203
Exercise of options to purchase common stock	$ 0	2,048				2,048
Vesting of restricted stock units (in shares)	54				0
Vesting of restricted stock units	$ 0	(3,198)	0	0	$ 0	(3,198)
Share-based compensation expense		18,587				18,587
Shares issued in primary offering, net of issuance costs (in shares)	2,415				0
Shares issued in primary offering, net of issuance costs	$ (2)	(332,170)	0	0	$ 0	(332,172)
Unrealized gain on available for sale investments						0
Foreign currency translation				173		173
Net loss			(20,433)			(20,433)
Shares issued in primary offering, net of issuance costs	$ 2	332,170	0	0	$ 0	332,172
Balances (in shares) at Sep. 30, 2021	43,404				14
Balances at Sep. 30, 2021	$ 43	949,995	(226,357)	93	$ (256)	723,518
Balances (in shares) at Jun. 30, 2021	43,373				14
Balances at Jun. 30, 2021	$ 43	944,222	(224,287)	89	$ (256)	719,811
Exercise of options to purchase common stock (in shares)	29
Exercise of options to purchase common stock	$ 0	308				308
Vesting of restricted stock units (in shares)	2				0
Vesting of restricted stock units	$ 0	(281)	0	0	$ 0	(281)
Share-based compensation expense		5,746				5,746
Shares issued in primary offering, net of issuance costs	0	0	0	0	0	0
Unrealized gain on available for sale investments						0
Foreign currency translation				4		4
Net loss			(2,070)			(2,070)
Shares issued in primary offering, net of issuance costs	$ (0)	(0)	(0)	(0)	$ (0)	(0)
Balances (in shares) at Sep. 30, 2021	43,404				14
Balances at Sep. 30, 2021	$ 43	949,995	(226,357)	93	$ (256)	723,518
Balances (in shares) at Dec. 31, 2021	43,449				14
Balances at Dec. 31, 2021	$ 43	955,710	(235,623)	(120)	$ (256)	719,754
Exercise of options to purchase common stock (in shares)	34
Exercise of options to purchase common stock	$ 0	329				329
Vesting of restricted stock units (in shares)	35				0
Vesting of restricted stock units	$ 1	(1,279)	0	0	$ 0	(1,278)
Share-based compensation expense		19,260				19,260
Issuance of partner warrants	$ 0	9,775	0	0	$ 0	9,775
Shares issued in primary offering, net of issuance costs (in shares)	4,320				0
Shares issued in primary offering, net of issuance costs	$ (4)	(337,504)	0	0	$ 0	(337,508)
Unrealized gain on available for sale investments	0	0	0	271	0	271
Foreign currency translation				895		895
Net loss			(56,577)			(56,577)
Shares issued in primary offering, net of issuance costs	$ 4	337,504	0	0	$ 0	337,508
Balances (in shares) at Sep. 30, 2022	47,838				14
Balances at Sep. 30, 2022	$ 48	1,321,299	(292,200)	1,046	$ (256)	1,029,937
Balances (in shares) at Jun. 30, 2022	47,834				14
Balances at Jun. 30, 2022	$ 48	1,305,260	(273,751)	1,367	$ (256)	1,032,668
Exercise of options to purchase common stock (in shares)	2
Exercise of options to purchase common stock	$ 0	0				0
Vesting of restricted stock units (in shares)	2				0
Vesting of restricted stock units	$ 0	(66)	0	0	$ 0	(66)
Share-based compensation expense		6,671				6,671
Issuance of partner warrants	$ 0	9,775	0	0	$ 0	9,775
Shares issued in primary offering, net of issuance costs (in shares)	0				0
Shares issued in primary offering, net of issuance costs	$ 0	(341)	0	0	$ 0	(341)
Unrealized gain on available for sale investments	0	0	0	271	0	271
Foreign currency translation				(592)		(592)
Net loss			(18,449)			(18,449)
Shares issued in primary offering, net of issuance costs	$ (0)	341	(0)	(0)	$ (0)	341
Balances (in shares) at Sep. 30, 2022	47,838				14
Balances at Sep. 30, 2022	$ 48	$ 1,321,299	$ (292,200)	$ 1,046	$ (256)	$ 1,029,937

Note 6 - Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Weighted-average remaining lease term (Year)	3 years 9 months 25 days		3 years 9 months 25 days
Weighted-average discount rate	6.15%		6.15%
Operating lease cost	$ 438	$ 444	$ 1,314	$ 1,335
Cash paid for amounts included in the measurement of lease liabilities	$ 443	$ 440	$ 1,321	$ 1,313