Freshpet(FRPT) - 2021 Q2 - Quarterly Report

Financial Performance - Total net sales for the second quarter of 2021 reached $108.6 million, a 35.8% increase compared to $80.0 million in the same period of 2020[13] - Gross profit for the second quarter of 2021 was $43.1 million, representing a gross margin of 39.7%, up from $33.9 million in Q2 2020[13] - The company reported a net loss attributable to common stockholders of $7.5 million for Q2 2021, compared to a net income of $0.2 million in Q2 2020[13] - For the six months ended June 30, 2021, the net loss was $18,364,000 compared to a net loss of $3,437,000 for the same period in 2020[18] - For the three months ended June 30, 2021, the operating lease cost was $444,000, a decrease of 3.3% from $459,000 in the same period of 2020[51] - The net loss attributable to common stockholders for the three months ended June 30, 2021, was $(7,475,000), compared to a net income of $153,000 in the same period of 2020[53] - The basic earnings per share for the three months ended June 30, 2021, was $(0.17), compared to $0.00 for the same period in 2020[53] - For the six months ended June 30, 2021, the net loss attributable to common stockholders was $(18,364,000), compared to $(3,437,000) in the same period of 2020[53] Assets and Liquidity - Total current assets increased to $344.6 million as of June 30, 2021, compared to $109.1 million at the end of 2020, reflecting a significant liquidity improvement[10] - Total assets grew to $783.4 million as of June 30, 2021, up from $434.4 million at the end of 2020, indicating strong overall growth[10] - The company’s cash and cash equivalents increased to $280.3 million as of June 30, 2021, compared to $67.2 million at the end of 2020, enhancing financial stability[10] - Total cash and cash equivalents at the end of the period were $280,323,000, up from $107,728,000 at the end of June 2020[18] Expenses - Selling, general, and administrative expenses for the first half of 2021 were $95.6 million, a 39.8% increase from $68.4 million in the same period of 2020[13] - Share-based compensation expense increased to $12,770,000 for the six months ended June 30, 2021, compared to $4,464,000 in the same period of 2020[18] - Total compensation cost for share-based payments for the three months ended June 30, 2021, was $6,690,000, an increase of 186.5% from $2,333,000 in the same period of 2020[52] - The company experienced a depreciation and amortization expense of $14,743,000 for the six months ended June 30, 2021, compared to $9,894,000 in the same period of 2020[18] Investments and Financing - The company invested $117,592,000 in property, plant, and equipment during the first half of 2021, compared to $73,251,000 in the same period of 2020[18] - The company reported a total of $332,172,000 in proceeds from common shares issued in a primary offering for the six months ended June 30, 2021, compared to $252,062,000 in the same period of 2020[18] - The New Credit Facility provides for a $350,000,000 senior secured credit facility, including a $300,000,000 delayed draw term loan and a $50,000,000 revolving loan facility[42] - The Company incurred $3,166,000 in debt issuance costs related to the New Loan Agreement, which will be amortized over the life of the facility[46] Inventory and Assets Management - As of June 30, 2021, total inventories amounted to $24,597,000, compared to $19,119,000 as of December 31, 2020, reflecting a 28.5% increase[37] - The Company reported property, plant, and equipment net of accumulated depreciation at $391,934,000 as of June 30, 2021, up from $281,073,000 at the end of 2020[39] Operational Focus - The company is focused on expanding its manufacturing capacity with the construction of Freshpet Kitchens South and Freshpet Kitchens Ennis to meet growing demand[8] - Freshpet aims to improve its product offerings and introduce new products to enhance market competitiveness[8] - The company is committed to meeting sustainability targets, which may be impacted by climate change and other external factors[8] Legal and Regulatory - The company is involved in various claims and legal actions, but none are expected to have a material adverse effect on its financial condition[55] Cash Flow - Cash flows from operating activities provided $2,935,000 in the first half of 2021, a significant improvement from cash used of $5,118,000 in the same period of 2020[18] - The net cash flows used in investing activities totaled $117,592,000 for the first half of 2021, compared to $93,252,000 in the same period of 2020[18] - The company reported a change in cash and cash equivalents of $213,076,000 for the six months ended June 30, 2021, compared to $98,256,000 in 2020[18] Lease Liabilities - The weighted-average remaining lease term for operating leases is 4.97 years, with a weighted-average discount rate of 6.15%[49] - As of June 30, 2021, the present value of lease liabilities under noncancelable operating leases was $7,752,000[50] - For the six months ended June 30, 2021, cash paid for amounts included in the measurement of lease liabilities was $874,000, an increase of 2.9% from $849,000 in the same period of 2020[51] Accounts Receivable - The allowance for doubtful accounts is regularly reviewed based on historical experience and current economic conditions affecting customer payment ability[29]