Financial Data and Key Metrics Changes - First quarter net sales were $263.2 million, up approximately 18% year over year, primarily driven by volume growth [20][26] - Adjusted gross margin in the first quarter was 45.7%, compared to 45.3% in the prior year period [20][28] - Adjusted EBITDA in the first quarter was $35.5 million, up approximately $5 million or 16% year over year [20][30] - Operating cash flow was $4.8 million in the first quarter, with cash on hand of $243.7 million at the end of the quarter [30] Business Line Data and Key Metrics Changes - Volume contributed 14.9% growth, with a positive price mix of 2.7% primarily driven by mix [27] - The company signed a new distribution agreement with Pet Food Experts, which is expected to improve route to market [20] - The company has a 96% market share within the gently cooked fresh frozen branded dog food segment [22] Market Data and Key Metrics Changes - Freshpet competes in the $54 billion U.S. pet food category, holding only a 3.5% market share within the $37 billion U.S. dog food and treats segment [21] - Household penetration as of March 30 was 14.1 million households, up 13% year over year [23] - Total buy rate was $110, up 6% year over year [23] Company Strategy and Development Direction - The company plans to adapt its strategies to the current economic backdrop, focusing on advertising, retail availability, and product innovation [9][10] - Freshpet is launching a new entry price point bag product under the Freshpet Complete Nutrition label to attract more consumers [9] - The company aims to be free cash flow positive in 2026 and is balancing capacity investments with anticipated demand [11][18] Management's Comments on Operating Environment and Future Outlook - Management noted a significant shift in the macro environment impacting growth, but Freshpet continues to outperform the category [6][8] - The company does not expect short-term changes in consumer behavior to affect long-term demand for pets or premium pet food [8][16] - Management remains optimistic about long-term growth potential despite current economic uncertainties [35] Other Important Information - The company is expanding its small DTC business nationally and making progress in getting Freshpet into more value-oriented stores [10] - Capital expenditures are projected to be approximately $225 million this year, down from previous estimates [34] Q&A Session Summary Question: Concerns about updated guidance range amid economic uncertainty - Management considered various scenarios and believes the current consumer environment will continue for the balance of the year [39][40] Question: Insights on price mix and expectations for the rest of the year - Most of the favorable price mix was driven by product mix, with no intention to change list prices [41][42] Question: Incremental changes in value products and marketing strategies - The company is accelerating plans to improve affordability and change marketing strategies to enhance speed of business [45][46] Question: Inventory health and risk of destocking - Inventory across most channels is in good shape, with no significant destocking expected [85][88] Question: Contingency plans if growth slows - The company has flexibility to adjust capital expenditures and staffing of production lines based on growth trends [100][102]

Core Insights - Freshpet, Inc. reported a net sales growth of approximately 17.6% for Q1 2025, reaching $263.2 million compared to $223.8 million in the prior year [4][9] - The company experienced a net loss of $12.7 million in Q1 2025, a significant decline from a net income of $18.6 million in the same period last year [8][9] - Freshpet has adjusted its 2025 outlook due to macroeconomic challenges, projecting net sales between $1.12 billion and $1.15 billion, a decrease from previous guidance [12][16] Financial Performance - Net sales increased by 17.6% to $263.2 million, driven by a volume gain of 14.9% and a favorable price/mix of 2.7% [4][9] - Gross profit for Q1 2025 was $103.8 million, maintaining a gross margin of 39.4%, while adjusted gross profit was $120.2 million, or 45.7% of net sales [5][9][30] - Selling, general and administrative expenses (SG&A) rose to $115.3 million, increasing as a percentage of net sales to 43.8% from 35.6% in the prior year [6][9] Adjusted Metrics - Adjusted EBITDA for Q1 2025 was $35.5 million, up from $30.6 million in the prior year, reflecting improved adjusted gross profit despite higher SG&A [10][9] - Adjusted gross margin improved slightly to 45.7% from 45.3% year-over-year, indicating operational efficiency [5][30] - Adjusted SG&A expenses were $84.7 million, or 32.2% of net sales, compared to $70.9 million, or 31.7% of net sales, in the prior year [6][31] Balance Sheet and Cash Flow - As of March 31, 2025, Freshpet had cash and cash equivalents of $243.7 million and total debt of $395.7 million [11][24] - Cash from operations for the quarter was $4.8 million, a decrease from the previous year, indicating tighter cash flow management [11][29] - The company plans to utilize its balance sheet to support ongoing capital needs related to its long-term capacity plan [11] Outlook - Freshpet has revised its 2025 guidance, now expecting net sales growth of 15% to 18% compared to the previous forecast of 21% to 24% [12][16] - The adjusted EBITDA guidance has also been lowered to a range of $190 million to $210 million, down from at least $210 million [12][16] - Capital expenditures are now projected at approximately $225 million, reduced from the previous estimate of $250 million [12][16]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Freshpet despite higher revenues, with the actual results being crucial for stock price movement [1][2]. Earnings Expectations - Freshpet is expected to report quarterly earnings of $0.11 per share, reflecting a year-over-year decrease of 47.6%, while revenues are projected to be $259.92 million, an increase of 16.1% from the previous year [3]. - The consensus EPS estimate has been revised down by 28.49% over the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Freshpet is lower than the consensus estimate, resulting in an Earnings ESP of -57.87%, which complicates the prediction of an earnings beat [10][11]. - Freshpet currently holds a Zacks Rank of 5, further indicating a challenging outlook for surpassing the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Freshpet was expected to earn $0.44 per share but only achieved $0.36, resulting in a surprise of -18.18% [12]. - Over the past four quarters, Freshpet has beaten consensus EPS estimates three times [13]. Conclusion - Freshpet does not appear to be a strong candidate for an earnings beat, and investors should consider additional factors when evaluating the stock ahead of its earnings release [16].