Freshpet(US:FRPT)2020-08-04 20:44Financial Performance - Net sales for the three months ended June 30, 2020, were $79,980,060, representing a 33.3% increase from $60,052,179 in the same period of 2019[13] - Gross profit for the six months ended June 30, 2020, was $65,722,707, up from $53,241,562 in 2019, indicating a 23.4% year-over-year growth[13] - The company reported a net loss attributable to common stockholders of $3,437,138 for the six months ended June 30, 2020, compared to a loss of $9,083,350 in the same period of 2019, reflecting a 62.1% improvement[13] - Net sales for the six months ended June 30, 2020, reached $150,077,864, up 30.6% from $114,844,381 in the prior year[35] Operating Expenses - Operating expenses for the three months ended June 30, 2020, were $33,702,103, slightly increasing from $32,672,284 in 2019, which is a 3.2% rise[13] - The company incurred share-based compensation expenses of $4,464,116 for the six months ended June 30, 2020, compared to $2,630,180 in 2019, marking a 69.9% increase[18] - The company incurred depreciation expense of $5,365,720 for the three months ended June 30, 2020, compared to $3,843,199 for the same period in 2019[40] Cash Flow and Financing - Cash flows used in operating activities for the six months ended June 30, 2020, were $5,117,799, an improvement from $9,835,535 in the same period of 2019[18] - The company reported net cash flows provided by financing activities of $196,625,961, significantly higher than $29,922,736 in the prior period[19] - The Company borrowed $20.9 million under the New Credit Facility during the six months ended June 30, 2020, including $13.9 million related to Delayed Draw Term Loans and $7.0 million related to the Revolving Loan Facility[45] - As of June 30, 2020, the Company had no outstanding debt under the New Credit Facility after paying down $76.0 million[45] Assets and Inventory - Cash and cash equivalents at the end of the period were $107,727,885, compared to $4,752,836 at the end of the previous period[19] - The total inventory as of June 30, 2020, was $18,692,994, an increase from $12,542,269 at the end of 2019[38] - Property, plant, and equipment increased to $220,074,510 as of June 30, 2020, compared to $165,287,597 at the end of 2019[39] - The reserve for obsolete inventory was $259,452 as of June 30, 2020, compared to $172,743 at the end of 2019[38] Legal and Regulatory Matters - The Company settled a securities lawsuit with total settlement funds of $10.1 million dispersed as of June 30, 2020, with no appeals filed[69] - The company accrued an estimated probable loss of $0.2 million related to a shareholder derivative lawsuit, which includes proposed settlement and accrued legal fees[70] Foreign Exchange and Commodity Risks - The company is subject to commodity price volatility, which could increase operating costs as a percentage of net sales if prices rise without adjustments[163] - Approximately 1% of consolidated revenue for the three and six months ended June 30, 2020, was recognized in Europe, indicating exposure to foreign exchange rate fluctuations[164] - As of June 30, 2020, there were no forward exchange contracts outstanding to mitigate foreign currency fluctuations[165] Internal Controls and Management - The company's management concluded that its disclosure controls and procedures were effective as of the end of the reporting period[166] - No changes in internal control over financial reporting were identified that materially affected the company's internal control during the reporting period[167] - The company acknowledges inherent limitations in its control systems, which may not prevent all errors or fraud[168]