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iCrowdNewswire Nov 3, 2020 11:11 AM ET

Freshpet, Inc. Reports Third Quarter 2020 Financial Results


Freshpet, Inc. Reports Third Quarter 2020 Financial Results

iCrowd Newswire - Nov 3, 2020

Freshpet, Inc. reported financial results for its third quarter and nine months ended September 30, 2020.

Third Quarter 2020 Financial Highlights Compared to Prior Year Period

“Despite capacity limitations and the COVID pandemic, Freshpet continued to deliver incredibly strong and consistent growth on the top line and even stronger growth on the bottom line in the third quarter. Clearly, our strategies are working,” commented Billy Cyr, Freshpet’s Chief Executive Officer. “More importantly, our engineering team was able to complete construction and start-up our Kitchens 2.0, which will provide the capacity to support continued strong growth in 2021 and beyond. We now have the ability to change the way so many more families will feed their pets – forever.”  

Third Quarter 2020

Third quarter of 2020 net sales increased 29.0% to $84.2 million compared to $65.3 million for the third quarter of 2019. Net sales for the third quarter of 2020 were driven by velocity, innovation, and distribution gains.

Gross profit was $36.7 million, or 43.5% as a percentage of net sales, for the third quarter of 2020, compared to $30.7 million, or 47.0% as a percentage of net sales, in the same period last year. For the third quarter 2020, Adjusted Gross Profit was $41.5 million, or 49.3% as a percentage of net sales, compared to $32.5 million, or 49.8% as a percentage of net sales, in the prior year period. The decrease in Adjusted Gross Profit as a percentage of net sales was primarily due to increased processing cost, and increased beef input cost, partially offset by higher sales price realization and a shift in sales mix, as well as plant cost efficiencies. Adjusted Gross Profit is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to Gross Profit in the financial tables that accompany this release.

Selling, general and administrative expenses (“SG&A”) were $32.9 million for the third quarter of 2020 compared to $27.2 million in the prior year period. As a percentage of net sales, SG&A decreased to 39.1% for the third quarter of 2020 compared to 41.6% in the third quarter of 2019. Adjusted SG&A for the third quarter of 2020 was $24.5 million, or 29.1% as a percentage of net sales, compared to $20.5 million, or 31.4% as a percentage of net sales, in the prior year period. The decrease in Adjusted SG&A as a percentage of net sales was a result of increased expense leverage on higher net sales. Adjusted SG&A is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to SG&A in the financial tables that accompany this release.

Net income was $3.5 million for the third quarter of 2020 compared to net income of $3.1 million for the prior year period. The increase in net income was due to higher net sales and increased gross profit, partially offset by increased SG&A.

Adjusted EBITDA was $17.0 million, or 20.2% as a percentage of net sales, for the third quarter of 2020, compared to $12.0 million, or 18.4% as a percentage of net sales, in the third quarter of 2019. The increase in Adjusted EBITDA was a result of higher net sales, increased Adjusted Gross Profit, partially offset by increased Adjusted SG&A expense. Adjusted EBITDA is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to net loss in the financial tables that accompany this release.

1Adjusted EBITDA, as well as certain other measure 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 measure to the closet comparable GAAP measures.

First Nine Months of 2020

Net sales increased 30.1% to $234.3 million for the first nine months of 2020 compared to $180.1 million for the first nine months of 2019. Growth in net sales for the first nine months of 2020 was driven by velocity, innovation, and distribution gains.

Gross profit was $102.4 million, or 43.7% as a percentage of net sales, for the first nine months of 2020, compared to $83.9 million, or 46.6% as a percentage of net sales, in the same period last year. For the first nine months of 2020, Adjusted Gross Profit was $115.4 million, or 49.3% as a percentage of net sales, compared to $89.2 million, or 49.5% as a percentage of net sales, in the prior year period. The slight decrease in Adjusted Gross Profit as a percentage of net sales was primarily due to increased processing cost, and increased beef input cost, partially offset by higher sales price realization and a shift in sales mix. Adjusted Gross Profit is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to Gross Profit in the financial tables that accompany this release.

SG&A expenses were $101.3 million for the first nine months of 2020 compared to $89.1 million in the prior year period. As a percentage of net sales, SG&A decreased to 43.2% for the first nine months of 2020 compared to 49.5% in the prior year period. Adjusted SG&A for the first nine months of 2020 was $81.5 million, or 34.8% as a percentage of net sales, compared to $73.2 million, or 40.7% as a percentage of net sales, in the prior year period. The decrease in SG&A and Adjusted SG&A as a percentage of net sales was a result of increased expense and media leverage on higher net sales. Adjusted SG&A is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to SG&A in the financial tables that accompany this release.

Net income was $0.1 million for the first nine months of 2020 compared to net loss of $6.0 million for the prior year period. The improvement in net income (loss) was due to higher net sales and increased gross profit, partially offset by increased SG&A expenses.

Adjusted EBITDA was $34.0 million, or 14.5% as a percentage of net sales, for the first nine months of 2020, compared to $16.0 million, or 8.9% as a percentage of net sales, in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by increased Adjusted SG&A expense. Adjusted EBITDA is a Non-GAAP financial measure defined under “Non-GAAP Measures,” and is reconciled to net loss in the financial tables that accompany this release.

Balance Sheet and Cash Flow

In February 2020, the Company raised $252.1 million in net proceeds from common stock issued in a primary offering. The Company utilized a portion of the proceeds to pay down $76.0 million of the outstanding balance of its credit facilities as well as partially fund the $77.0 million capital expansion project spend incurred during the nine months ended September 30, 2020. Further, on September 2, 2020 the Company made a $26.6 million minority interest investment in a privately held company.

As of September 30, 2020, the Company had cash and cash equivalents of $84.2 million and short-term certificates of deposits of $10.0 million, with no debt outstanding. The Company has an available $130.0 million delayed draw term loan facility and a $35.0 million revolving loan facility.

Outlook

For full year 2020, the Company reiterated its guidance. The Company continues to expect the following results: 

The Company does not provide guidance for the most directly comparable GAAP measure, net income, 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 items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.

Conference Call & Earnings Presentation Webcast Information
As previously announced, today the Company will host a conference call beginning at 4:30 p.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 7:30 p.m. Eastern Time today through November 16, 2020. North American listeners may dial (844) 512-2921 and international listeners may dial (412) 317-6671; the passcode is 13711364.

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 Kitchens in Bethlehem PA.  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 mass, grocery (including online), natural food, club, and pet specialty 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.

Contact Information:

www.freshpet.com








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