Freshpet, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
- Freshpet (FRPT) achieved net sales of $766.9 million for full year 2023, a 28.8% increase from the previous year.
- Adjusted EBITDA for 2023 was $66.6 million, showing substantial growth compared to $20.1 million in the prior year.
- The company's Q4 2023 net sales reached $215.4 million, a 29.9% increase from the same period in 2022.
- Net income for Q4 2023 was $15.3 million, a significant improvement from a net loss of $2.9 million in the prior year.
- Freshpet's gross profit margin for full year 2023 was 32.7%, up from 31.2% in the prior year, driven by improved leverage on plant expenses and reduced quality costs.
- SG&A expenses decreased to 36.7% of net sales for full year 2023, compared to 40.0% in the prior year, due to reduced logistics costs and increased leverage on depreciation and share-based compensation.
- Freshpet provided a positive outlook for 2024, expecting net sales of at least $950 million, an increase of 24% from 2023, and Adjusted EBITDA in the range of $100 to $110 million.
- The company ended 2023 with cash and cash equivalents of $296.9 million and $393.1 million in debt outstanding, with a significant increase in cash from operations compared to the previous year.
- None.
Insights
The financial results reported by Freshpet Inc. reflect a robust growth trajectory, with net sales growth exceeding 25% for the sixth consecutive year and a notable increase in Adjusted EBITDA. This performance highlights the company's ability to leverage its first-mover advantage in the fresh pet food market, translating into improved profitability and operating cash flow. The growth in net sales, primarily driven by volume gains, suggests a strong consumer demand for Freshpet's offerings. The improvement in gross profit margin indicates successful cost management and operational efficiency, particularly in plant expenses and quality costs.
The reduction in net loss compared to the previous year demonstrates a positive shift towards profitability, which is of significant interest to investors and stakeholders. The company's capital discipline, alongside its growth strategy, is likely to be a focal point for market analysts evaluating the stock's future performance. Freshpet's guidance for the upcoming year, projecting a continuation of sales growth and an increase in Adjusted EBITDA, could signal confidence in the company's strategic direction and operational execution.
However, the substantial capital expenditures planned for 2024 highlight the company's ongoing investment in capacity expansion, which will need to be monitored to assess the balance between growth and spending. The lack of guidance on net income and the inability to reconcile forecasted Adjusted EBITDA to net income may introduce some uncertainty for investors attempting to forecast the company's bottom-line performance.
Freshpet's impressive sales growth is indicative of a larger trend within the pet care industry, where consumers are increasingly seeking out premium and fresh food options for their pets. This consumer shift is driven by the humanization of pet care, where pet owners are willing to spend more on high-quality products that promote health and wellness for their pets. The company's sustained net sales growth aligns with this market trend and positions Freshpet as a leader in the fresh pet food category.
The decrease in SG&A as a percentage of net sales, despite increased media spend, suggests that Freshpet is achieving better economies of scale as the business grows. The company's ability to reduce logistics costs as a percentage of net sales also reflects operational improvements that can enhance profit margins over time. As Freshpet continues to invest in marketing and brand awareness, it is essential to evaluate the effectiveness of these expenditures in driving further market penetration and customer loyalty.
Looking ahead, the pet food industry's growth potential, coupled with Freshpet's positive sales outlook, could present opportunities for expansion into new markets and product lines. However, competition from other premium pet food brands and potential shifts in consumer spending patterns will be critical factors to watch.
The financial performance of Freshpet can be seen as a microcosm of broader economic forces, such as consumer discretionary spending and the elasticity of demand for premium products. The company's ability to increase net sales pricing without significantly deterring consumer demand suggests that Freshpet's products have a relatively inelastic demand, which is a positive indicator for resilience in various economic conditions. The increased operating cash flow supports this view and provides the company with more liquidity to manage its operations and investments.
The planned capital expenditures are indicative of Freshpet's growth strategy, which may be based on forecasts of sustained consumer spending in the pet sector. However, it is important to consider the broader economic context, including interest rates, inflation and consumer confidence, as these factors could influence discretionary spending on premium pet food products. If economic conditions were to deteriorate, Freshpet's high-growth strategy could be challenged.
Furthermore, the company's debt level, with $393.1 million outstanding, needs to be assessed in light of its cash position and cash flow generation. While the current cash position appears strong, the interest rate environment and debt servicing costs will be important factors in assessing the company's financial health and its capacity to sustain investment in growth.
Full Year 2023 Net Sales and Adjusted EBITDA Exceed Company Guidance
Sixth Consecutive Year of >
Provides Full Year 2024 Outlook
SECAUCUS, N.J., Feb. 26, 2024 (GLOBE NEWSWIRE) -- Freshpet, Inc. (“Freshpet” or the “Company”) (Nasdaq: FRPT) today reported financial results for its fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights Compared to Prior Year Period
- Net sales of
$215.4 million , an increase of29.9% - Net income of
$15.3 million , compared to net loss of$2.9 million - Adjusted EBITDA of
$31.3 million , compared to$18.8 million 1
2023 Financial Highlights Compared to Prior Year
- Net sales of
$766.9 million , an increase of28.8% - Net loss of
$33.6 million compared to net loss of$59.5 million - Adjusted EBITDA of
$66.6 million compared to$20.1 million 1
“Our strong 2023 results demonstrate that Freshpet has reached an inflection point: The significant investments we have made to create scale and extend our first mover advantage have begun to generate improved profitability and significant operating cash flow. That is the promise of the Fresh Future plan we announced last year, and it is working," commented Billy Cyr, Freshpet's Chief Executive Officer. "In 2024, we intend to continue making strong margin improvement and demonstrate continued capital discipline, while sustaining the net sales growth that Freshpet has become known for —further driving profitability and creating significant shareholder value. We believe the future of pet food is fresh and Freshpet is well positioned to drive growth and deliver the profitability one would expect from our leadership position."
Fourth Quarter 2023
Net sales increased
Gross profit was
Selling, general and administrative expenses (“SG&A”) were
Net income was
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 measures to the closest comparable U.S. GAAP measures.
Adjusted EBITDA was
Full Year 2023
Net sales increased
Gross profit was
Selling, general and administrative expenses ("SG&A") were
Net loss was
Adjusted EBITDA was
Balance Sheet
As of December 31, 2023, the Company had cash and cash equivalents of
The Company will utilize its balance sheet to support its on-going capital needs in connection with its long-term capacity plan.
Outlook
For full year 2024, the Company is providing the following guidance:
- Net sales of at least
$950 million , an increase of at least24% from 2023, - Adjusted EBITDA in the range of
$100 t o$110 million , and - Capital expenditures of ~
$210 million .
The Company does not provide guidance for net income, the U.S. GAAP measure most directly comparable to Adjusted EBITDA, 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.
Conference Call & Earnings Presentation Webcast Information
As previously announced, today, February 26, 2024, 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 11, 2024. North American listeners may dial (844) 512-2921 and international listeners may dial (412) 317-6671; the passcode is 13744252.
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 grocery, mass, club, pet specialty, natural and digital 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://x.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 within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to our long-term prospects for growth, the future of pet food, profitability, capital discipline and guidance with respect to 2024 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, involve certain risks and uncertainties which could cause actual results, performance, and achievements to differ materially from those stated or implied by such forward-looking statements 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.
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 U.S. GAAP reported measures, should not be considered replacements for, or superior to, the U.S. 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 loss on disposal of manufacturing equipment.
Adjusted SG&A Expenses: Freshpet defines Adjusted SG&A as SG&A expenses before depreciation and amortization, non-cash share-based compensation, loss on disposal of equipment, implementation and other costs associated with the implementation of an enterprise resource planning ("ERP") system, fees related to the capped call options purchased, and advisory fees related to activism engagement.
EBITDA and Adjusted EBITDA: EBITDA represents net income (loss) plus interest expense net of interest income, income tax expense and depreciation and amortization expense; and Adjusted EBITDA represents EBITDA plus loss on equity method investment, loss on disposal of property, plant and equipment, non-cash share-based compensation expense, implementation and other costs associated with the implementation of an ERP system, fees related to the capped call option purchased, and advisory fees related to activism engagement.
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 U.S. GAAP results and the reconciliation to the most comparable U.S. 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 U.S. GAAP measures or any other figure calculated in accordance with U.S. 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 U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance.
| FRESHPET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) | ||||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 296,871 | $ | 132,735 | ||||
| Accounts receivable, net of allowance for doubtful accounts | 56,754 | 57,572 | ||||||
| Inventories, net | 63,238 | 58,290 | ||||||
| Prepaid expenses | 7,615 | 9,778 | ||||||
| Other current assets | 2,841 | 3,590 | ||||||
| Total Current Assets | 427,319 | 261,965 | ||||||
| Property, plant and equipment, net | 979,164 | 800,586 | ||||||
| Deposits on equipment | 1,895 | 3,823 | ||||||
| Operating lease right of use assets | 3,616 | 5,165 | ||||||
| Equity method investment | — | 25,418 | ||||||
| Long term investment in equity securities | 23,528 | — | ||||||
| Other assets | 28,899 | 28,426 | ||||||
| Total Assets | $ | 1,464,421 | $ | 1,125,383 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 36,096 | $ | 55,088 | ||||
| Accrued expenses | 49,816 | 33,016 | ||||||
| Current operating lease liabilities | 1,312 | 1,510 | ||||||
| Current finance lease liabilities | 1,998 | — | ||||||
| Total Current Liabilities | $ | 89,222 | $ | 89,614 | ||||
| Convertible senior notes | 393,074 | — | ||||||
| Long term operating lease liabilities | 2,591 | 4,200 | ||||||
| Long term finance lease liabilities | 26,080 | — | ||||||
| Total Liabilities | $ | 510,967 | $ | 93,814 | ||||
| Commitments and contingencies | — | — | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock — voting, | 48 | 48 | ||||||
| Additional paid-in capital | 1,282,984 | 1,325,524 | ||||||
| Accumulated deficit | (328,731 | ) | (295,117 | ) | ||||
| Accumulated other comprehensive (loss) income | (591 | ) | 1,370 | |||||
| Treasury stock, at cost — 14 shares on December 31, 2023 and on December 31, 2022 | (256 | ) | (256 | ) | ||||
| Total Stockholders' Equity | 953,454 | 1,031,569 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 1,464,421 | $ | 1,125,383 | ||||
| FRESHPET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except per share data) | ||||||||||||||||
| For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| NET SALES | $ | 215,420 | $ | 165,833 | $ | 766,895 | $ | 595,344 | ||||||||
| COST OF GOODS SOLD | 140,846 | 120,124 | 516,023 | 409,311 | ||||||||||||
| GROSS PROFIT | 74,575 | 45,709 | 250,872 | 186,033 | ||||||||||||
| SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES | 59,680 | 47,775 | 281,318 | 238,016 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | 14,895 | (2,066 | ) | (30,446 | ) | (51,983 | ) | |||||||||
| OTHER EXPENSES: | ||||||||||||||||
| Interest and Other Income, net | 3,843 | 1,217 | 13,029 | 1,710 | ||||||||||||
| Interest Expense | (3,449 | ) | (1,148 | ) | (14,097 | ) | (5,208 | ) | ||||||||
| 394 | 70 | (1,068 | ) | (3,498 | ) | |||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | 15,289 | (1,997 | ) | (31,514 | ) | (55,481 | ) | |||||||||
| INCOME TAX EXPENSE | - | 159 | 210 | 282 | ||||||||||||
| LOSS ON EQUITY METHOD INVESTMENT | - | 762 | 1,890 | 3,731 | ||||||||||||
| INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 15,289 | $ | (2,918 | ) | $ | (33,614 | ) | $ | (59,494 | ) | |||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Change in foreign currency translation | $ | 368 | $ | 595 | $ | (1,961 | ) | $ | 1,490 | |||||||
| Unrealized loss on available for sale investments | - | (271 | ) | - | - | |||||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | 368 | 324 | (1,961 | ) | 1,490 | |||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | 15,657 | $ | (2,594 | ) | $ | (35,575 | ) | $ | (58,004 | ) | |||||
| NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||||||||||||||||
| -BASIC | $ | 0.32 | $ | (0.06 | ) | $ | (0.70 | ) | $ | (1.29 | ) | |||||
| -DILUTED | $ | 0.31 | $ | (0.06 | ) | $ | (0.70 | ) | $ | (1.29 | ) | |||||
| WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | ||||||||||||||||
| -BASIC | 48,244 | 48,011 | 48,163 | 46,191 | ||||||||||||
| -DILUTED | 49,889 | 48,011 | 48,163 | 46,191 | ||||||||||||
| FRESHPET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) | ||||||||||||
| For the Year Ended | ||||||||||||
| December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | (33,614 | ) | $ | (59,494 | ) | $ | (29,699 | ) | |||
| Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: | ||||||||||||
| Provision for (gains) loss on accounts receivable | (2 | ) | (20 | ) | 29 | |||||||
| Loss on disposal of property, plant and equipment | 4,321 | 396 | 538 | |||||||||
| Share-based compensation | 24,935 | 26,092 | 24,998 | |||||||||
| Inventory obsolescence | - | 3,455 | 349 | |||||||||
| Depreciation and amortization | 58,517 | 34,555 | 30,468 | |||||||||
| Write-off and amortization of deferred financing costs and loan discount | 4,060 | 795 | 1,212 | |||||||||
| Change in operating lease right of use asset | 1,549 | 1,372 | 1,329 | |||||||||
| Loss on equity method investment | 1,890 | 3,731 | 2,005 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 820 | (32,993 | ) | (16,371 | ) | |||||||
| Inventories | (1,207 | ) | (26,171 | ) | (16,804 | ) | ||||||
| Prepaid expenses and other current assets | (2,249 | ) | (435 | ) | (2,891 | ) | ||||||
| Other assets | (4,053 | ) | (3,141 | ) | (7,899 | ) | ||||||
| Accounts payable | 3,543 | (3,063 | ) | 14,958 | ||||||||
| Accrued expenses | 19,237 | 13,078 | (273 | ) | ||||||||
| Operating lease liability | (1,807 | ) | (1,384 | ) | (1,302 | ) | ||||||
| Net cash flows provided by (used in) operating activities | 75,940 | (43,227 | ) | 647 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchase of short-term investments | (113,441 | ) | (19,840 | ) | — | |||||||
| Proceeds from maturities of short-term investments | 113,441 | 19,840 | — | |||||||||
| Investments in equity method investment | — | (3,293 | ) | — | ||||||||
| Acquisitions of property, plant and equipment, software and deposits on equipment | (239,093 | ) | (230,071 | ) | (322,099 | ) | ||||||
| Net cash flows used in investing activities | (239,093 | ) | (233,364 | ) | (322,099 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from common shares issued in primary offering, net of issuance cost | — | 337,508 | 332,172 | |||||||||
| Proceeds from exercise of options to purchase common stock | 4,517 | 471 | 2,271 | |||||||||
| Tax withholdings related to net shares settlements of restricted stock units | (1,400 | ) | (1,441 | ) | (4,187 | ) | ||||||
| Proceeds from borrowings under Credit Facility | — | 78,000 | — | |||||||||
| Repayment of borrowings under Credit Facility | — | (78,000 | ) | — | ||||||||
| Purchase of capped call options | (66,211 | ) | — | — | ||||||||
| Proceeds from issuance of convertible senior notes | 393,518 | — | — | |||||||||
| Principal payments under finance lease obligations | (1,109 | ) | — | — | ||||||||
| Debt issuance costs | (2,026 | ) | — | — | ||||||||
| Fees paid in connection with financing agreements | — | — | (3,263 | ) | ||||||||
| Net cash flows provided by financing activities | 327,289 | 336,538 | 326,993 | |||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 164,136 | 59,947 | 5,541 | |||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 132,735 | 72,788 | 67,247 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 296,871 | $ | 132,735 | $ | 72,788 | ||||||
| FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Gross profit | $ | 74,575 | $ | 45,709 | $ | 250,872 | $ | 186,033 | ||||||||
| Depreciation expense | 8,103 | 6,566 | 41,209 | 20,774 | ||||||||||||
| Non-cash share-based compensation | 2,299 | 2,505 | 10,995 | 7,293 | ||||||||||||
| Loss on disposal of manufacturing equipment | 3,547 | — | 3,547 | — | ||||||||||||
| Adjusted Gross Profit | $ | 88,524 | $ | 54,780 | $ | 306,623 | $ | 214,100 | ||||||||
| Adjusted Gross Profit as a % of Net Sales | 41.1 | % | 33.0 | % | 40.0 | % | 36.0 | % | ||||||||
| FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| SG&A expenses | $ | 59,680 | $ | 47,775 | $ | 281,318 | $ | 238,016 | ||||||||
| Depreciation and amortization expense | 4,248 | 3,565 | 15,849 | 13,781 | ||||||||||||
| Non-cash share-based compensation (a) | (2,315 | ) | 3,178 | 13,941 | 18,799 | |||||||||||
| Loss on disposal of equipment | 86 | 193 | 774 | 396 | ||||||||||||
| Enterprise Resource Planning (b) | 465 | 3,613 | 2,457 | 8,558 | ||||||||||||
| Capped Call Transactions fees (c) | — | — | 113 | — | ||||||||||||
| Activism engagement (d) | — | — | 8,177 | — | ||||||||||||
| Organization changes (e) | — | (67 | ) | 734 | ||||||||||||
| Adjusted SG&A Expenses | $ | 57,196 | $ | 37,227 | $ | 240,074 | $ | 195,748 | ||||||||
| Adjusted SG&A Expenses as a % of Net Sales | 26.6 | % | 22.4 | % | 31.3 | % | 32.9 | % | ||||||||
| (a) | Includes the true-up of share-based compensation expense in the three months ended December 31, 2023. We have certain outstanding multi-year share-based awards, granted in FY 2020, with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA targets in FY 2024 as a condition to vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets set in 2020. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed. | |
| (b) | Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system. | |
| (c) | Represents fees associated with the Capped Call Transactions. | |
| (d) | Represents advisory fees related to activism engagement. | |
| (e) | Represents a true-up to 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. |
| FRESHPET, INC. AND SUBSIDIARIES RECONCILIATION BETWEEN NET INCOME (LOSS) AND ADJUSTED EBITDA | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Net Income (loss) | 15,289 | $ | (2,918 | ) | $ | (33,614 | ) | $ | (59,494 | ) | ||||||
| Depreciation and amortization | 12,351 | 10,131 | 57,058 | 34,555 | ||||||||||||
| Interest expense, net of interest income | (394 | ) | 1,148 | 1,069 | 5,208 | |||||||||||
| Income tax expense | — | 159 | 210 | 282 | ||||||||||||
| EBITDA | $ | 27,246 | $ | 8,520 | $ | 24,723 | $ | (19,449 | ) | |||||||
| Loss on equity method investment | $ | - | $ | 762 | $ | 1,890 | $ | 3,731 | ||||||||
| Loss on disposal of property, plant and equipment | 3,633 | 193 | 4,321 | 396 | ||||||||||||
| Non-cash share-based compensation (a) | (16 | ) | 5,683 | 24,936 | 26,092 | |||||||||||
| Enterprise Resource Planning (b) | 465 | 3,613 | 2,457 | 8,558 | ||||||||||||
| Capped Call Transaction fees (c) | — | — | 113 | — | ||||||||||||
| Activism engagement (d) | — | — | 8,177 | — | ||||||||||||
| Organization changes (e) | — | — | (67 | ) | 734 | |||||||||||
| Adjusted EBITDA | $ | 31,328 | $ | 18,771 | $ | 66,550 | $ | 20,062 | ||||||||
| Adjusted EBITDA as a % of Net Sales | 14.5 | % | 11.3 | % | 8.7 | % | 3.4 | % | ||||||||
| (a) | Includes the true-up of share-based compensation expense in the three months ended December 31, 2023. We have certain outstanding multi-year share-based awards, granted in FY 2020, with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA targets in FY 2024 as a condition to vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets set in 2020. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed. | |
| (b) | Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system. | |
| (c) | Represents fees associated with the Capped Call Transactions. | |
| (d) | Represents advisory fees related to activism engagement. | |
| (e) | Represents a true-up to 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. |
FAQ
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