frpt20221121_8k.htm
false 0001611647 0001611647 2023-02-27 2023-02-27
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): February 27, 2023
 
 
FRESHPET, INC.
(Exact name of Registrant as Specified in Its Charter)
 
 
Delaware
001-36729
20-1884894
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
     
400 Plaza Drive, 1st Floor
Secaucus, NJ
 
07094
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (201) 520-4000
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
FRPT
NASDAQ Global Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
Item 2.02. Results of Operations and Financial Condition.
 
On February 27, 2023, Freshpet, Inc. (“Freshpet”) issued a press release disclosing its financial results for the quarter and year ended December 31, 2022. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
As previously announced, Freshpet will hold a conference call at 8:00 a.m., Eastern Time, on Monday, February 27, 2023 to discuss its financial results for the quarter and year ended December 31, 2022.
 
Freshpet references non-GAAP financial information in the press release and makes similar references in the transcript to the conference call. A reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures is contained in the attached Exhibit 99.1 press release.
 
Item 7.01. Regulation FD Disclosure.
 
On February 27, 2023, Freshpet published to the investor relations section of its website a presentation which will be used by Freshpet’s management team in meetings with analysts and stockholders. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
 
The information furnished with Item 2.02 and this Item 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) or incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
 
Freshpet uses the “Investors” section of its website (investors.freshpet.com) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit
Number
 
 
Description
 
 
 
99.1
 
99.2   Investor Presentation
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
FRESHPET, INC.
Date: February 27, 2023
By:
/s/ Todd Cunfer
Name: Todd Cunfer
Title: Chief Financial Officer
 
 
 
ex_449597.htm

Exhibit 99.1 

 

 

https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-ex_224442img001.jpg

Freshpet, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

FY 2022: Strongest topline growth since the Company went public

Q4 shows significant improvement in operations

Ennis start-up is on-track

 

SECAUCUS, N.J. – February 27, 2023 – Freshpet, Inc. (“Freshpet” or the “Company”) (Nasdaq: FRPT) today reported financial results for its fourth quarter and full year ended December 31, 2022.

 

Fourth Quarter 2022 Financial Highlights Compared to Prior Year Period

 

 

Net sales of $165.8 million, an increase of 43.1%

 

Net loss of $2.9 million, compared to net loss of $9.3 million

  ●   Adjusted EBITDA of $18.8 million, compared to $7.6 million 1

   

2022 Financial Highlights Compared to Prior Year

 

 

Net sales of $595.3 million, an increase of 39.9%

 

Net loss of $59.5 million compared to a net loss of $29.7 million

 

Adjusted EBITDA of $20.1 million compared to $35.0 million 1


“We had a very strong finish to 2022. Between record net sales growth, improved performance on quality and logistics, and a strong start-up of our Ennis Kitchen, we were able to exceed our guidance and build a strong foundation for 2023," commented Billy Cyr, Freshpet's Chief Executive Officer. "With the Ennis Kitchen now on-line, we finally have enough capacity to meet the growing demand for Freshpet. That will enable us to focus on driving our operational improvements and margin enhancement under our Fresh Future plan while finally having the ability to fully leverage our marketing, innovation, and distribution capabilities. That will enable us to continue building the Freshpet franchise and deliver on our long-term growth and profitability goals."

 

Fourth Quarter 2022

 

Net sales increased 43.1% to $165.8 million for the fourth quarter of 2022 compared to $115.9 million for the fourth quarter of 2021. Net sales for the fourth quarter of 2022 were driven by pricing, velocity, distribution gains and innovation.

 

Gross profit was $45.7 million, or 27.6% as a percentage of net sales, for the fourth quarter of 2022, compared to $41.2 million, or 35.6% as a percentage of net sales, in the prior year period. For the fourth quarter of 2022, Adjusted Gross Profit was $54.8 million, or 33.0% as a percentage of net sales, compared to $47.0 million, or 40.6% as a percentage of net sales, in the prior year period. The decreases in gross profit and Adjusted Gross Profit as a percentage of net sales were primarily due to increased plant start-up cost, inflation of ingredient cost and labor, and quality issues, partially offset by increased pricing. Beginning with the third quarter of 2022, the Company is no longer adding back plant start-up expense in its calculation of Adjusted Gross Profit, which for the fourth quarter represented $8.0 million. 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 $47.8 million for the fourth quarter of 2022 compared to $48.9 million in the prior year period. As a percentage of net sales, SG&A decreased to 28.8% for the fourth quarter of 2022 compared to 42.2% in the prior year period. The decrease in SG&A as a percentage of net sales was a result of decreased media spend in 2022 of $10.1 million, decreased logistics cost as a percentage of net sales, and increased leverage on sales volume, slightly offset by cost associated with implementing a new ERP system. Adjusted SG&A for the fourth quarter of 2022 was $37.2 million, or 22.4% as a percentage of net sales, compared to $39.5 million, or 34.1% as a percentage of net sales, in 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 $2.9 million for the fourth quarter of 2022 compared to net loss of $9.3 million for the prior year period. The decrease in net loss was due to higher net sales, increased gross profit and decreased SG&A.

 

1 Adjusted EBITDA, as well as certain other measures in this release, is a non-GAAP financial measure. See "Non-GAAP Measures" for how we define these measures and the financial tables that accompany this release for reconciliations of these measure to the closest comparable GAAP measures. 

 

1

 

Adjusted EBITDA was $18.8 million, or 11.3% as a percentage of net sales, for the fourth quarter of 2022, compared to $7.6 million, or 6.5% as a percentage of net sales, in the prior year period. The increase in Adjusted EBITDA was a result of higher net sales, increased Adjusted Gross Profit and decreased Adjusted SG&A expense. 

 

Full Year 2022

 

Net sales increased 39.9% to $595.3 million for the full year ended December 31, 2022, compared to $425.5 million in the prior year. The increase in net sales was driven by pricing, velocity, distribution gains and innovation. 

 

Gross profit was $186.0 million, or 31.2% as a percentage of net sales, for the full year ended December 31, 2022, compared to $162.1 million, or 38.1% as a percentage of net sales, in the prior year. For the full year ended December 31, 2022, Adjusted Gross Profit was $214.1 million, or 36.0% as a percentage of net sales, compared to $184.6 million, or 43.4% as a percentage of net sales, in the prior year. The decreases in gross profit and Adjusted Gross Profit as a percentage of net sales were primarily due to increased plant start-up cost, inflation of ingredient cost and labor, and quality issues, partially offset by increased pricing. 

 

Selling, general and administrative expenses ("SG&A") were $238.0 million, for the full year ended December 31, 2022, compared to $186.8 million in the prior year. As a percentage of net sales, SG&A decreased to 40.0% for the full year ended December 31, 2022, compared to 43.9% in the prior year. The decrease in SG&A as a percentage of net sales was a result of increased leverage on sales volume, decreased media expenses as a percentage of net sales, slightly offset by cost associated with implementing a new ERP system. Adjusted SG&A for the full year ended December 31, 2022, was $195.7 million, or 32.9% as a percentage of net sales, compared to $149.7 million, or 35.2% as a percentage of net sales, in the prior year period.

 

Net loss was $59.5 million for the full year ended December 31, 2022, compared to a net loss of $29.7 million for the prior year. The increase in net loss was due to increased SG&A, which includes increased media spend of $16.6 million and increased plant start-up cost of $21.2 million, partially offset by higher net sales and increased gross profit.

 

Adjusted EBITDA was $20.1 million, or 3.4% as a percentage of net sales, for the full year ended December 31, 2022, compared to $35.0 million, or 8.2% as a percentage of net sales, in the prior year period. The decrease in Adjusted EBITDA was a result of increased Adjusted SG&A expense (including $4.1 million of launch expense) partially offset by higher net sales and Adjusted Gross Profit (including $26.1 million of plant start-up expense). 

 

Balance Sheet

 

As of December 31, 2022, the Company had cash and cash equivalents of $132.7 million with no debt outstanding.

 

Outlook

 

For full year 2023, the Company is providing the following guidance:

 

 

Net sales of ~$750 million, an increase of ~26% from 2022.

 

Adjusted EBITDA of at least $50 million.

 

Capital expenditures for 2023 of ~$240 million. 

 

The Company does not provide guidance for the GAAP measure most directly comparable to Adjusted EBITDA, 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 components of net income and the respective reconciliations, including the timing of and amount of costs of goods sold and selling, general and administrative expenses. These items are not within the Company's control and may vary greatly between periods and could significantly impact future results.  

 

2

 

 

Conference Call & Earnings Presentation Webcast Information

As previously announced, today, February 27, 2023, the Company will host a conference call beginning at 8:00 a.m. Eastern Time with members of its leadership team. 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 12:00 p.m. Eastern Time today through March 13, 2023. North American listeners may dial (844) 512-2921 and international listeners may dial (412) 317-6671; the passcode is 13736375.

 


About Freshpet

Freshpet’s mission is to improve the lives of dogs and cats through the power of fresh, real food. Freshpet foods are blends of fresh meats, vegetables and fruits farmed locally and made at our Freshpet Kitchens. We thoughtfully prepare our foods using natural ingredients, cooking them in small batches at lower temperatures to preserve the natural goodness of the ingredients. Freshpet foods and treats are kept refrigerated from the moment they are made until they arrive at Freshpet Fridges in your local market.

 

Our foods are available in select mass, grocery (including online), natural food, club, and pet specialty retailers across the United States, Canada and Europe. 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

 

http://www.tiktok.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 constitute “forward-looking” statements, including statements relating to our long-term capacity planning and guidance with respect to, net sales, Adjusted EBITDA and capital expenditures. 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, including our updated guidance, 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 and its 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 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.

 

3

 

Non-GAAP Financial Measures

 

Freshpet uses the following non-GAAP financial measures in its financial communications. These 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 EBITDA as a % of net sales

 

Adjusted Gross Profit: Freshpet defines Adjusted Gross Profit as gross profit before depreciation expense, non-cash share-based compensation and COVID-19 expenses.

 

Adjusted SG&A Expenses: Freshpet defines Adjusted SG&A as SG&A expenses before depreciation and amortization, non-cash share-based compensation, fees related to equity offerings of our common stock, implementation and other costs associated with the implementation of an enterprise resource planning ("ERP") system, loss on disposal of equipment, COVID-19 expenses and organization changes designed to support long-term growth objectives.

 

EBITDA and Adjusted EBITDA: EBITDA represents net income (loss) plus interest expense, income tax expense and depreciation and amortization expense, and Adjusted EBITDA represents EBITDA plus loss on equity method investment, non-cash share-based compensation expense, fees related to equity offerings of our common stock, implementation and other costs associated with the implementation of an ERP system, loss on disposal of equipment, COVID-19 expenses and organization changes designed to support long-term growth objectives. Beginning with the period ended September 30, 2022, the Company is no longer adding back launch expenses and plant start-up expense in its calculation of non-GAAP financial measures. This change is part of a renewed focus on capital efficiency, that will provide greater clarity on our path toward generating positive net income as the business scales further following our planned capacity additions. 

 

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. 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. 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. 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.

 

 

Investor Contact:

ICR

Jeff Sonnek

646-277-1263

Jeff.sonnek@icrinc.com 

 

Media Contact:

Freshpet@edelmansmithfield.com

 

4

 

FRESHPET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

   

December 31,

   

December 31,

 
   

2022

   

2021

 

ASSETS

               

CURRENT ASSETS:

               

Cash and cash equivalents

  $ 132,735     $ 72,788  

Accounts receivable, net of allowance for doubtful accounts

    57,572       34,780  

Inventories, net

    58,290       35,574  

Prepaid expenses

    9,778       5,834  

Other current assets

    3,590       1,349  

Total Current Assets

    261,965       150,325  

Property, plant and equipment, net

    800,586       583,922  

Deposits on equipment

    3,823       4,100  

Operating lease right of use assets

    5,165       6,537  

Equity method investment

    25,418       25,856  

Other assets

    28,426       13,670  

Total Assets

  $ 1,125,383     $ 784,410  

LIABILITIES AND STOCKHOLDERS' EQUITY

               

CURRENT LIABILITIES:

               

Accounts payable

  $ 55,088     $ 42,612  

Accrued expenses

    33,016       14,950  

Current operating lease liabilities

    1,510       1,384  

Total Current Liabilities

  $ 89,614     $ 58,946  

Long term operating lease liabilities

    4,200       5,710  

Total Liabilities

  $ 93,814     $ 64,656  

STOCKHOLDERS' EQUITY:

               

Common stock — voting, $0.001 par value, 200,000 shares authorized, 48,051 issued and 48,037 outstanding on December 31, 2022, and 43,449 issued and 43,435 outstanding on December 31, 2021

    48       43  

Additional paid-in capital

    1,325,524       955,710  

Accumulated deficit

    (295,117 )     (235,623 )

Accumulated other comprehensive income (loss)

    1,370       (120 )

Treasury stock, at cost — 14 shares on December 31, 2022 and on December 31, 2021

    (256 )     (256 )

Total Stockholders' Equity

    1,031,569       719,754  

Total Liabilities and Stockholders' Equity

  $ 1,125,383     $ 784,410  

 

 

5

 

 

FRESHPET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

 

 

   

For the Three Months Ended

   

For the Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

                 
       

NET SALES

  $ 165,833     $ 115,869     $ 595,344     $ 425,489  

COST OF GOODS SOLD

    120,124       74,654       409,311       263,343  

GROSS PROFIT

    45,709       41,216       186,033       162,146  

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

    47,775       48,854       238,016       186,809  

LOSS FROM OPERATIONS

    (2,066 )     (7,638 )     (51,983 )     (24,663 )

OTHER INCOME/(EXPENSES):

                               

Other Income/(Expenses), net

    1,217       18       1,710       13  

Interest Expense

    (1,148 )     (650 )     (5,208 )     (2,882 )
      70       (632 )     (3,498 )     (2,869 )

LOSS BEFORE INCOME TAXES

    (1,997 )     (8,271 )     (55,481 )     (27,532 )

INCOME TAX EXPENSE

    159       114       282       162  

LOSS ON EQUITY METHOD INVESTMENT

    762       881       3,731       2,005  

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ (2,918 )   $ (9,265 )   $ (59,494 )   $ (29,699 )

OTHER COMPREHENSIVE INCOME (LOSS):

                               

Change in foreign currency translation

  $ 595     $ (214 )   $ 1,490     $ (40 )

Unrealized loss on available for sale investments

    (271 )     -       -       -  

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

    324       (214 )     1,490       (40 )

TOTAL COMPREHENSIVE LOSS

  $ (2,594 )   $ (9,479 )   $ (58,004 )   $ (29,740 )

NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

                               

-BASIC

  $ (0.06 )   $ (0.21 )   $ (1.29 )   $ (0.69 )

-DILUTED

  $ (0.06 )   $ (0.21 )   $ (1.29 )   $ (0.69 )

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

                               

-BASIC

    48,011       43,399       46,191       42,931  

-DILUTED

    48,011       43,399       46,191       42,931  

 

6

 

FRESHPET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

 

   

For the Year Ended

 
   

December 31,

 
   

2022

   

2021

   

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

                       

Net loss

  $ (59,494 )   $ (29,699 )   $ (3,188 )

Adjustments to reconcile net loss to net cash flows (used in) provided by operating activities:

                       

Provision for (gains) loss on accounts receivable

    (20 )     29       (23 )

Loss on disposal of equipment

    396       538       1,805  

Share-based compensation

    26,092       24,998       10,925  

Inventory obsolescence

    3,455       349       232  

Depreciation and amortization

    34,555       30,468       21,125  

Amortization of deferred financing costs and loan discount

    795       1,212       834  

Change in operating lease right of use asset

    1,372       1,329       1,289  

Loss on equity method investment

    3,731       2,005        

Changes in operating assets and liabilities:

                       

Accounts receivable

    (32,993 )     (16,371 )     166  

Inventories

    (26,171 )     (16,804 )     (6,808 )

Prepaid expenses and other current assets

    (435 )     (2,891 )     9,437  

Other assets

    (3,141 )     (7,899 )     (719 )

Accounts payable

    (3,063 )     14,958       (5,922 )

Accrued expenses

    13,078       (273 )     (6,762 )

Other lease liabilities

    (1,384 )     (1,302 )     (1,198 )

Net cash flows (used in) provided by operating activities

    (43,227 )     647       21,193  

CASH FLOWS FROM INVESTING ACTIVITIES:

                       

Purchase of short-term investments

    (19,840 )           (20,000 )

Proceeds from maturities of short-term investments

    19,840             20,000  

Investments in equity method investment

    (3,293 )           (27,894 )

Acquisitions of property, plant and equipment, software and deposits on equipment

    (230,071 )     (322,099 )     (134,568 )

Net cash flows used in investing activities

    (233,364 )     (322,099 )     (162,462 )

CASH FLOWS FROM FINANCING ACTIVITIES:

                       

Proceeds from common shares issued in primary offering, net of issuance cost

    337,508       332,172       252,062  

Proceeds from exercise of options to purchase common stock

    471       2,271       5,441  

Tax withholdings related to net shares settlements of restricted stock units

    (1,441 )     (4,187 )     (2,568 )

Proceeds from borrowings under Credit Facility

    78,000             20,933  

Repayment of borrowings under Credit Facility

    (78,000 )           (76,000 )

Fees paid in connection with financing agreements

          (3,263 )     (824 )

Net cash flows provided by financing activities

    336,538       326,993       199,044  

NET CHANGE IN CASH AND CASH EQUIVALENTS

    59,947       5,541       57,775  

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

    72,788       67,247       9,472  

CASH AND CASH EQUIVALENTS, END OF PERIOD

  $ 132,735     $ 72,788     $ 67,247  

 

 

 

7

 

FRESHPET, INC. AND SUBSIDIARIES 

RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT

 

 

   

Three Months Ended

   

Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Dollars in thousands)

 

Gross Profit

  $ 45,709     $ 41,216     $ 186,033     $ 162,146  

Depreciation expense

    6,566       4,649       20,774       16,545  

Non-cash share-based compensation

    2,505       1,182       7,293       4,152  

COVID-19 expense (a)

                        1,753  

Adjusted Gross Profit

  $ 54,780     $ 47,046     $ 214,100     $ 184,596  

Adjusted Gross Profit as a % of Net Sales

    33.0 %     40.6 %     36.0 %     43.4 %

  

 

(a)

Represents COVID-19 expenses including (i) costs incurred to protect the health and safety of our employees during the COVID-19 pandemic, (ii) temporary increased compensation expense to ensure continued operations during the pandemic, and (iii) costs related to mitigating potential supply chain disruptions during the pandemic included in cost of goods sold.

 

 

8

 

 

FRESHPET, INC. AND SUBSIDIARIES 

RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES

 

 

   

Three Months Ended

   

Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Dollars in thousands)

 

SG&A expenses

  $ 47,775     $ 48,854     $ 238,016     $ 186,809  

Depreciation and amortization expense

    3,565       3,330       13,781       13,923  

Non-cash share-based compensation

    3,178       5,300       18,799       20,846  

Loss on disposal of equipment

    193       482       396       1,000  

Enterprise Resource Planning (a)

    3,613       256       8,558       1,379  

COVID-19 expense (b)

                      5  

Organization changes (c)

                734        

Adjusted SG&A Expenses

  $ 37,227     $ 39,486     $ 195,748     $ 149,656  

Adjusted SG&A Expenses as a % of Net Sales

    22.4 %     34.1 %     32.9 %     35.2 %

 

 

 

(a)

Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system.

 

(b)

Represents COVID-19 expenses including (i) costs incurred to protect the health and safety of our employees during the COVID-19 pandemic, (ii) temporary increased compensation expense to ensure continued operations during the pandemic, and (iii) costs related to mitigating potential supply chain disruptions during the pandemic included in SG&A.

 

(c)

Represents transition costs related to the organization changes designed to support growth, including several changes in organizational structure designed to enhance capabilities and support long-term growth objectives.

 

 

9

 

 

FRESHPET, INC. AND SUBSIDIARIES 

RECONCILIATION BETWEEN NET INCOME (LOSS) AND ADJUSTED EBITDA 

 

 

   

Three Months Ended

   

Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Dollars in thousands)

 

Net loss

    (2,918 )   $ (9,265 )   $ (59,494 )   $ (29,699 )

Depreciation and amortization

    10,131       7,979       34,555       30,468  

Interest expense

    1,148       650       5,208       2,882  

Income tax expense

    159       114       282       162  

EBITDA

  $ 8,520     $ (523 )   $ (19,449 )   $ 3,813  

Loss on equity method investment

  $ 762     $ 881     $ 3,731     $ 2,005  

Loss on disposal of equipment

    193       482       396       1,000  

Non-cash share-based compensation

    5,683       6,482       26,092       24,998  

Enterprise Resource Planning (a)

    3,613       256       8,558       1,379  

COVID-19 expense (b)

                      1,758  

Organization changes (c)

                734        

Adjusted EBITDA

  $ 18,771     $ 7,578     $ 20,062     $ 34,953  

Adjusted EBITDA as a % of Net Sales

    11.3 %     6.5 %     3.4 %     8.2 %

 

 

 

(a)

Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system.

 

(b)

Represents COVID-19 expenses including (i) costs incurred to protect the health and safety of our employees during the COVID-19 pandemic, (ii) temporary increased compensation expense to ensure continued operations during the pandemic, and (iii) costs related to mitigating potential supply chain disruptions during the pandemic included in SG&A.

 

(c)

Represents transition costs related to the organization changes designed to support growth, including several changes in organizational structure designed to enhance capabilities and support long-term growth objectives.

 

 

Prior to September 30, 2022 the Company presented for the following items as adjustments to its non-GAAP metrics. Those details are provided again here for your convenience and for consideration in making comparisons to prior periods:

 

 

   

FY 2022

   

FY 2021

   

FY 2020

 
   

(Dollars in thousands)

 

Plant start-up expense

  $ 26,089     $ 4,868     $ 5,962  

Launch expense

    4,116       3,130       3,421  

 

 

 

   

Three Months Ended

 
   

12/31/2022

   

9/30/2022

   

6/30/2022

   

3/31/2022

   

12/31/2021

   

9/30/2021

   

6/30/2021

   

3/31/2021

 
   

(Dollars in thousands)

 

Plant start-up expense

  $ 8,033     $ 8,015     $ 5,293     $ 4,748     $ 1,306     $ 588     $ 1,130     $ 1,843  

Launch expense

    1,438       1,542       504       632       819       562       1,018       731  

 

 

10
Image Exhibit

Exhibit 99.2

 

https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a01.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a02.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a03.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a04.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a05.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a06.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a07.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a08.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a09.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a10.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a11.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a12.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a13.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a14.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a15.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a16.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a17.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a18.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a19.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a20.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a21.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a22.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a23.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a24.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a25.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a26.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a27.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a28.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a29.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a30.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a31.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a32.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a33.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a34.jpg

 

 

 
https://cdn.kscope.io/ffc634947ac0c1e0f071807f70244430-a35.jpg