Core Insights - Freshpet's third-quarter profits exceeded investor expectations, leading to a stock price increase of over 12% [1] Financial Performance - Freshpet's net sales increased by 14% year over year, reaching $288.8 million [3] - Adjusted EBITDA rose nearly 26% to $54.6 million due to reduced raw material and logistics costs [5] Market Expansion - The company expanded its product availability by increasing the number of stores selling its products by 7% and overall distribution points by 13% compared to Q3 2024 [3][4] Future Outlook - Freshpet revised its full-year net sales growth expectation for 2025 to 13%, down from a previous forecast of 13% to 16% [6] - Adjusted EBITDA guidance was also lowered to a range of $190 million to $195 million, down from $190 million to $210 million [6] - The company plans to reduce expansion-related spending from $175 million to $140 million, aiming for positive free cash flow in 2025, one year ahead of the original target [7]

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Financial Data and Key Metrics Changes - The third quarter net sales were $288.8 million, up 14% year over year, primarily driven by volume growth of 12.9% and a positive price mix of 1.1% [15][25] - Adjusted gross margin in the third quarter was 46.0%, a decrease from 46.5% in the prior year period [16][26] - Adjusted EBITDA for the third quarter was $54.6 million, an increase of approximately $11 million or 25% year over year [16][27] - Net income for the third quarter was $101.7 million, significantly up from $11.9 million in the prior year, primarily due to a deferred income tax benefit [27] Business Line Data and Key Metrics Changes - Freshpet remains the number one dog food brand in the U.S. food category, holding a 95% market share in the gently cooked, fresh, frozen branded dog food segment [16][17] - The company has increased its market share in the U.S. dog food and treats segment to 3.9% [16] - The household penetration as of September 28 was 14.8 million households, up 10% year over year, with a total buy rate of $111, up 4% year over year [18] Market Data and Key Metrics Changes - Freshpet products are now available in 29,745 stores, with 24% of those having multiple fridges [17] - The company ended the third quarter with 38,778 fridges, representing nearly 2.1 million cubic feet of retail space [17] - The company experienced a 45% growth in digital orders, indicating a strong performance in the e-commerce channel [11] Company Strategy and Development Direction - The company is focusing on three key strategies: best food, strong value proposition, and improved accessibility to expand its appeal [7][8] - Freshpet is testing new digital touchpoints and expanding its focus on e-commerce channels, including direct-to-consumer (DTC) [6][11] - The company is also investing in new technology to improve operational efficiency and reduce costs [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented deceleration in sales growth and emphasized the need to adapt strategies to the current economic environment [5][6] - The company expects to achieve positive free cash flow for the full year, one year ahead of its original target [5][21] - Management remains confident in achieving 48% adjusted gross margin and 22% adjusted EBITDA margin by 2027, contingent on sales volume growth [22][23] Other Important Information - The company is currently conducting a search for a new CFO and is confident in the interim CFO's capabilities [23][24] - Capital expenditures for the year are projected to be approximately $140 million, down from previous guidance [31] Q&A Session Summary Question: Inquiry about new production technologies and pricing strategy - Management expressed excitement about new technology and indicated that decisions on expansion would depend on the performance of the initial line [34][35] - The potential for improved margins was acknowledged, but no commitment was made regarding pricing strategies at this time [38] Question: Competitive dynamics in the pet food space - Management noted that new competition has not significantly impacted their retail placement plans and that they view it as validation of the fresh category's potential [40][41] - Retailers have shown strong support for Freshpet, with significant growth in fridge placements despite increased competition [42] Question: Details on the fridge island test and future expansion - The company has installed 16 fridge islands and is working with a major retailer to determine sales velocity criteria for future rollouts [46][47] Question: CapEx and capacity management - Management clarified that the $140 million CapEx will support ongoing projects and new technology implementation, with flexibility for additional investments if needed [53][55] Question: Gross margin improvement strategies - Management indicated that improvements in conversion costs and inventory management are key drivers for achieving gross margin targets [60][61]

Financial Performance - Net sales reached $288.8 million, a 14.0% year-over-year increase[15] - Adjusted EBITDA was $54.6 million, an increase of $11.1 million year-over-year[15] - Adjusted EBITDA margin was 18.9%, a 170 bps increase year-over-year[15] - Operating cash flow was $66.8 million, an increase of $10.7 million year-over-year[15] Retail Growth - Total household penetration increased by 10%[15] - Total buy rate increased by 4%[15] - MVP (Most Valuable Pet Parents) household penetration increased by 15%[15] - Cubic feet increased by 12%[15] - Store count increased by 7%[15] - Total distribution points increased by 13%[15] - Ecommerce share of sales is 14%[15] Strategic Initiatives - The company expects to spend approximately $140 million in capital expenditures in 2025[31] - The company is adapting its model to the current environment by focusing on targeted marketing, affordability/value portfolio, and expanding visibility and availability[17, 16] - The company aims for a 48% adjusted gross margin target and a 22% adjusted EBITDA margin target[78] Market Position - Freshpet holds a 3.9% market share of the total U S dog food category, which is valued at approximately $38 billion[33] - Freshpet accounts for 95% of the fresh/frozen dog food market in measured channels[35]

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Core Viewpoint - Freshpet's CEO, Billy Cyr, along with family members and trusts, plans to adopt trading plans to exercise options set to expire in 2026, while maintaining a significant ownership stake in the company [1][2][3]. Group 1: Trading Plans and Share Ownership - Billy Cyr and his family currently hold 1,322,737 shares, approximately 2.71% of Freshpet's outstanding shares [2]. - After executing the trading plan, Cyr and his family intend to retain at least 350,000 shares of Freshpet stock [2]. - The trading plan will comply with SEC rules and will not allow for share sales until after the fourth quarter financial results are reported in February 2026 [1]. Group 2: CEO's Perspective - Cyr has not sold any shares during his nine-year tenure as CEO and has acquired shares worth over $4 million at current prices [3]. - The decision to exercise options is driven by their impending expiration, not a lack of confidence in the company's future [3]. - Cyr emphasizes his belief in Freshpet as a strong investment that will enhance long-term shareholder value [3]. Group 3: Company Overview - Freshpet focuses on providing fresh, nutritious pet food made from locally sourced ingredients, prepared in small batches [4]. - The company's products are available through various retail channels across the U.S., Canada, and Europe, as well as online [5]. - Freshpet emphasizes integrity, transparency, and social responsibility in its operations [5].

Core Viewpoint - Freshpet's CEO, Billy Cyr, along with family members and trusts, plans to adopt trading plans to exercise options set to expire in 2026, while maintaining a significant ownership stake in the company [1][2][3] Company Actions - The trading plans will involve exercising options granted in 2016, which expire on September 6, 2026, and selling shares to cover exercise costs, taxes, and estate planning needs [1] - The stock trading plan will comply with Rule 10b5-1 of the Securities Exchange Act of 1934, with sales not occurring until after the fourth quarter financial results are reported in February 2026 [1] Ownership Details - Cyr and his family currently hold 1,322,737 shares, approximately 2.71% of Freshpet's outstanding shares, and plan to retain at least 350,000 shares post-exercise [2] - Cyr has not sold any shares during his nine-year tenure as CEO and has invested over $4 million in Freshpet shares at current prices [3] Company Mission and Products - Freshpet aims to enhance pet nutrition with fresh food made from locally sourced ingredients, prepared in small batches to preserve quality [4] - The company's products are available in various retail formats across the U.S., Canada, and Europe, emphasizing integrity and social responsibility in their operations [5]

Financial Performance - Net sales increased by 14.0% to $288.8 million in Q3 2025, up from $253.4 million in the prior year period, driven by volume gains of 12.9% and a favorable price/mix of 1.1%[4] - Gross profit for Q3 2025 was $114.2 million, representing 39.5% of net sales, a decrease from 40.4% in the prior year period, primarily due to reduced leverage on plant expenses[5] - Adjusted EBITDA for Q3 2025 was $54.6 million, compared to $43.5 million in the prior year period, reflecting increased Adjusted Gross Profit[8] - Net income for Q3 2025 was $101.7 million, significantly up from $11.9 million in the prior year, aided by a $77.9 million tax benefit due to sustained profitability[7] - For the first nine months of 2025, net sales rose by 14.6% to $816.8 million, compared to $712.5 million in the prior year period, driven by volume gains of 12.8%[8] - Adjusted Gross Profit for Q3 2025 was $132.8 million, or 46.0% of net sales, compared to 46.5% in the prior year period[5] - Net income attributable to common stockholders for Q3 2025 was $101.7 million, significantly higher than $11.9 million in Q3 2024[26] - Adjusted EBITDA for the nine months ended September 30, 2025 was $134,547,000, compared to $109,204,000 for the same period in 2024, reflecting a growth of 23.2%[33] - Adjusted EBITDA as a percentage of Net Sales improved to 18.9% in Q3 2025, up from 17.2% in Q3 2024[33] Expenses and Liabilities - SG&A expenses for Q3 2025 were $89.3 million, a decrease from $90.3 million in the prior year, with SG&A as a percentage of net sales decreasing by 480 basis points to 30.9%[5] - Adjusted SG&A expenses for Q3 2025 were $78.2 million, representing 27.1% of net sales, down from 29.3% in Q3 2024[30] - Total liabilities rose to $567.1 million as of September 30, 2025, up from $519.5 million at the end of 2024[24] - Interest expense net of interest income was $1,194,000 in Q3 2025, compared to a net income of $(40,000) in Q3 2024[33] - The company incurred $10,680,000 in distributor transition costs during the nine months ended September 30, 2025, due to a change in distribution partners[34] - The company reported a legal obligation expense of $716,000 in Q3 2025, with no corresponding expense in Q3 2024[34] Cash Flow and Assets - Cash and cash equivalents as of September 30, 2025, were $274.6 million, with outstanding debt of $396.8 million[10] - Cash and cash equivalents at the end of Q3 2025 were $274.6 million, slightly up from $268.6 million at the end of 2024[28] - The company reported net cash flows provided by operating activities of $105.5 million for the nine months ended September 30, 2025[28] - Total assets increased to $1.75 billion as of September 30, 2025, compared to $1.57 billion at the end of 2024[24] Guidance and Future Outlook - The company updated its 2025 guidance to reflect net sales growth of approximately 13%, down from a previous range of 13% to 16%[12] - The company expects to achieve positive free cash flow for fiscal year 2025, a year earlier than originally planned[3] - The company plans to continue expanding its market presence and investing in new product development to drive future growth[31] - The company anticipates continued sales growth in the pet specialty channel despite the transition to a new distribution partner[34] Depreciation and Other Costs - Depreciation and amortization expenses increased to $23,650,000 in Q3 2025 from $18,709,000 in Q3 2024, representing a rise of 26.0%[33] - The loss on disposal of property, plant, and equipment was $126,000 in Q3 2025, down from $768,000 in Q3 2024[33] - Income tax benefit for Q3 2025 was $(77,958,000), compared to an expense of $54,000 in Q3 2024[33]

Net Sales Growth of 14% Outperforms CategoryCompany Achieves Positive Free Cash Flow in Third Quarter and Now Expects to be Free Cash Flow Positive in 2025Updates 2025 Guidance BEDMINSTER, N.J., Nov. 03, 2025 (GLOBE NEWSWIRE) -- Freshpet, Inc. (“Freshpet” or the “Company”) (Nasdaq: FRPT) today reported financial results for its third quarter and nine months ended September 30, 2025. Third Quarter 2025 Financial Highlights Compared to Prior Year Period Net sales of $288.8 million, an increase of 14.0%.Gross ...

Core Viewpoint - Freshpet Inc. (NASDAQ:FRPT) shares are currently trading at $54.50, reflecting a slight increase of 0.70% in the current session, but the stock has seen a significant decline of 58.54% over the past year, raising questions about its valuation despite current performance [1]. Group 1: Stock Performance - Freshpet's stock has increased by 0.88% over the past month, but it has decreased by 58.54% in the past year [1]. - The current trading price of Freshpet shares is $54.50 [1]. Group 2: P/E Ratio Analysis - Freshpet has a P/E ratio of 82.0, which is significantly higher than the Food Products industry's aggregate P/E ratio of 17.71, suggesting that investors may expect better future performance from Freshpet compared to its peers [6]. - A higher P/E ratio may indicate that the stock is overvalued, although it could also reflect investor optimism about future performance and potential dividend increases [5][6]. Group 3: Investment Considerations - The P/E ratio is a useful metric for evaluating market performance, but it should be used cautiously as a low P/E can indicate undervaluation or weak growth prospects [9]. - Investors should consider the P/E ratio alongside other financial metrics, industry trends, and qualitative factors for a comprehensive analysis of a company's financial health [9].