Raises 2023 Adjusted EBITDA and net sales guidance
Volume and household penetration growth are strong and accelerating
Strong execution on input costs, logistics and quality continue to drive margin improvement
Third Quarter 2023 Financial Highlights Compared to Prior Year Period
- Net sales of
$200.6 million , an increase of 32.6%. - Net loss of
$7.2 million , compared with prior year net loss of$18.4 million . - Adjusted EBITDA of
$23.2 million , compared to prior year of$3.5 million .1
First Nine Months of 2023 Financial Highlights Compared to Prior Year Period
- Net sales of
$551.5 million , an increase of 28.4%. - Net loss of
$48.9 million , compared with prior year net loss of$56.6 million . - Adjusted EBITDA of
$35.2 million , compared to prior year of$1.3 million .1
"Fiscal year 2023 is shaping up to be the kind of year we had hoped it would – delivering strong top-line and bottom-line growth that puts us ahead of the pace needed to deliver our 2027 goals. As a result of our strong third quarter performance, we are raising our 2023 guidance today," commented
Third Quarter 2023
Net sales increased 32.6% to
Gross profit was
Selling, general and administrative expenses (“SG&A”) were $73.4 million for the third quarter of 2023 compared to
1 Adjusted EBITDA, as well as certain other measures in this release, is a non-GAAP financial measure. See "Non-GAAP Measures" for how the Company defines these measures and the financial tables that accompany this release for reconciliations of these measures to the closest comparable GAAP measures.
Net loss was
Adjusted EBITDA was
First Nine Months of 2023
Net sales increased 28.4% to
Gross profit was
Selling, general and administrative expenses (“SG&A”) were $221.6 million for the first nine months of 2023 compared to
Net loss was
Adjusted EBITDA was
Balance Sheet
As 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 2023, the Company updates its full year Adjusted EBITDA and
- Net sales of ~$755 million, an increase of ~27% from 2022, from previous guidance of
~$750 million . - Adjusted EBITDA of ~$62 million, from previous guidance of at least $55 million.
- Capital expenditures of ~$240 million, unchanged from previous guidance.
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 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,
A replay of the conference call will be archived on the Company's website and telephonic playback will be available from
About
Freshpet’s mission is to improve the lives of dogs and cats through the power of fresh, real food.
Our foods are available in select mass, grocery (including online), natural food, club, and pet specialty retailers across
Connect with
https://www.facebook.com/Freshpet
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Forward Looking Statements
Certain statements in this release constitute “forward-looking” statements, including statements relating to our long-term capacity planning, net sales guidance and Adjusted EBITDA guidance. 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, including our updated guidance, are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While
Non-GAAP Financial Measures
- 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:
Adjusted SG&A Expenses:
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, non-cash share-based compensation expense, implementation and other costs associated with the implementation of an ERP system, loss on disposal of equipment, fees related to the Capped Call Transactions purchases, 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 GAAP results and the reconciliation to the most comparable 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 GAAP measures or any other figure calculated in accordance with 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 GAAP and should not be viewed as an alternative to GAAP measures of performance.
Investor Contact:
ICR
646-277-1263
Jeff.sonnek@icrinc.com
Media Contact:
Freshpet@edelmansmithfield.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share data)
2023 | 2022 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 338,107 | $ | 132,735 | |||
Accounts receivable, net of allowance for doubtful accounts | 54,415 | 57,572 | |||||
Inventories, net | 59,063 | 58,290 | |||||
Prepaid expenses | 8,813 | 9,778 | |||||
Other current assets | 1,992 | 3,590 | |||||
Total Current Assets | 462,390 | 261,965 | |||||
Property, plant and equipment, net | 924,720 | 800,586 | |||||
Deposits on equipment | 2,256 | 3,823 | |||||
Operating lease right of use assets | 3,990 | 5,165 | |||||
Equity method investment | — | 25,418 | |||||
Long term investment in equity securities | 23,528 | — | |||||
Other assets | 27,449 | 28,426 | |||||
Total Assets | $ | 1,444,333 | $ | 1,125,383 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 40,908 | $ | 55,088 | |||
Accrued expenses | 39,377 | 33,016 | |||||
Current operating lease liabilities | 1,445 | 1,510 | |||||
Current finance lease liabilities | 2,043 | — | |||||
Total Current Liabilities | $ | 83,773 | $ | 89,614 | |||
Convertible senior notes | 392,562 | — | |||||
Long term operating lease liabilities | 2,846 | 4,200 | |||||
Long term finance lease liabilities | 26,596 | — | |||||
Total Liabilities | $ | 505,777 | $ | 93,814 | |||
Commitments and contingencies | — | — | |||||
STOCKHOLDERS' EQUITY: | |||||||
Common stock — voting, | 48 | 48 | |||||
Additional paid-in capital | 1,283,744 | 1,325,524 | |||||
Accumulated deficit | (344,021 | ) | (295,117 | ) | |||
Accumulated other comprehensive (loss) income | (959 | ) | 1,370 | ||||
(256 | ) | (256 | ) | ||||
Total Stockholders' Equity | 938,556 | 1,031,569 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,444,333 | $ | 1,125,383 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited, in thousands, except per share data)
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
$ | 200,621 | $ | 151,333 | $ | 551,474 | $ | 429,511 | ||||||||
COST OF GOODS SOLD | 134,328 | 106,788 | 375,177 | 289,187 | |||||||||||
GROSS PROFIT | 66,293 | 44,545 | 176,297 | 140,324 | |||||||||||
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES | 73,371 | 60,449 | 221,638 | 190,241 | |||||||||||
LOSS FROM OPERATIONS | (7,078 | ) | (15,904 | ) | (45,341 | ) | (49,917 | ) | |||||||
OTHER EXPENSES: | |||||||||||||||
Interest and Other Income, net | 4,130 | 256 | 9,185 | 492 | |||||||||||
Interest Expense | (4,148 | ) | (1,817 | ) | (10,648 | ) | (4,060 | ) | |||||||
(18 | ) | (1,561 | ) | (1,463 | ) | (3,568 | ) | ||||||||
LOSS BEFORE INCOME TAXES | (7,096 | ) | (17,465 | ) | (46,804 | ) | (53,485 | ) | |||||||
INCOME TAX EXPENSE | 70 | 41 | 210 | 123 | |||||||||||
LOSS ON EQUITY METHOD INVESTMENT | - | 943 | 1,890 | 2,969 | |||||||||||
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (7,166 | ) | $ | (18,449 | ) | $ | (48,904 | ) | $ | (56,577 | ) | |||
OTHER COMPREHENSIVE LOSS: | |||||||||||||||
Change in foreign currency translation | $ | (296 | ) | $ | (592 | ) | $ | (2,329 | ) | $ | 895 | ||||
Unrealized gain on available for sale investments | $ | - | $ | 271 | $ | - | $ | 271 | |||||||
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | (296 | ) | (321 | ) | (2,329 | ) | 1,166 | ||||||||
TOTAL COMPREHENSIVE LOSS | $ | (7,462 | ) | $ | (18,770 | ) | $ | (51,233 | ) | $ | (55,411 | ) | |||
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | |||||||||||||||
-BASIC | $ | (0.15 | ) | $ | (0.39 | ) | $ | (1.02 | ) | $ | (1.24 | ) | |||
-DILUTED | $ | (0.15 | ) | $ | (0.39 | ) | $ | (1.02 | ) | $ | (1.24 | ) | |||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | |||||||||||||||
-BASIC | 48,194 | 47,856 | 48,123 | 45,545 | |||||||||||
-DILUTED | 48,194 | 47,856 | 48,123 | 45,545 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
For the Nine Months Ended | |||||||
2023 | 2022 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (48,904 | ) | $ | (56,577 | ) | |
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: | |||||||
Provision for loss (gains) on accounts receivable | 9 | (23 | ) | ||||
Loss on disposal of equipment | 688 | 203 | |||||
Share-based compensation | 24,952 | 20,409 | |||||
Inventory obsolescence | — | 3,455 | |||||
Depreciation and amortization | 45,436 | 24,422 | |||||
Write-off and amortization of deferred financing costs and loan discount | 3,548 | 596 | |||||
Change in operating lease right of use asset | 1,175 | 1,021 | |||||
Loss on equity method investment | 1,890 | 2,969 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 3,148 | (22,403 | ) | ||||
Inventories | (773 | ) | (32,215 | ) | |||
Prepaid expenses and other current assets | (696 | ) | 1,074 | ||||
Other assets | (3,495 | ) | (1,639 | ) | |||
Accounts payable | 2,300 | 1,430 | |||||
Accrued expenses | 11,109 | 4,626 | |||||
Operating lease liability | (1,419 | ) | (1,028 | ) | |||
Net cash flows provided by (used in) operating activities | 38,968 | (53,680 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of short-term investments | (113,441 | ) | (19,840 | ) | |||
Proceeds from maturities of short-term investments | 113,441 | — | |||||
Investments in equity method investment | — | (3,293 | ) | ||||
Acquisitions of property, plant and equipment, software and deposits on equipment | (161,642 | ) | (167,437 | ) | |||
Net cash flows used in investing activities | (161,642 | ) | (190,570 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from common shares issued in primary offering, net of issuance cost | — | 337,508 | |||||
Proceeds from exercise of options to purchase common stock | 4,172 | 329 | |||||
Tax withholdings related to net shares settlements of restricted stock units | (859 | ) | (1,279 | ) | |||
Proceeds from borrowings under Credit Facility | — | 78,000 | |||||
Repayment of borrowings under Credit Facilities | — | (2,786 | ) | ||||
Purchase of capped call option | (66,211 | ) | — | ||||
Proceeds from issuance of convertible senior notes | 393,518 | — | |||||
Principal payments under finance lease obligations | (548 | ) | — | ||||
Debt issuance costs | (2,026 | ) | — | ||||
Net cash flows provided by financing activities | 328,046 | 411,772 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 205,372 | 167,522 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 132,735 | 72,788 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 338,107 | $ | 240,310 |
RECONCILIATION BETWEEN GROSS PROFIT AND ADJUSTED GROSS PROFIT
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Gross profit | $ | 66,293 | $ | 44,545 | $ | 176,297 | $ | 140,324 | |||||||
Depreciation expense | 11,767 | 5,159 | 33,106 | 14,208 | |||||||||||
Non-cash share-based compensation | 2,579 | 2,450 | 8,696 | 4,789 | |||||||||||
Adjusted Gross Profit | $ | 80,639 | $ | 52,154 | $ | 218,099 | $ | 159,321 | |||||||
Adjusted Gross Profit as a % of | 40.2 | % | 34.5 | % | 39.5 | % | 37.1 | % |
RECONCILIATION BETWEEN SG&A EXPENSES AND ADJUSTED SG&A EXPENSES
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
SG&A expenses | $ | 73,371 | $ | 60,449 | $ | 221,638 | $ | 190,241 | |||||||
Depreciation and amortization expense | 4,452 | 3,387 | 12,043 | 10,216 | |||||||||||
Non-cash share-based compensation | 5,511 | 5,371 | 16,256 | 15,620 | |||||||||||
Loss on disposal of equipment | 226 | 124 | 688 | 203 | |||||||||||
Enterprise Resource Planning (a) | 212 | 1,937 | 1,550 | 4,946 | |||||||||||
Capped Call Transactions fees (b) | — | — | 113 | — | |||||||||||
Activism engagement (c) | 5,548 | — | 8,177 | — | |||||||||||
Organization changes (d) | — | 734 | (67 | ) | 734 | ||||||||||
Adjusted SG&A Expenses | $ | 57,422 | $ | 48,896 | $ | 182,878 | $ | 158,522 | |||||||
Adjusted SG&A Expenses as a % of | 28.6 | % | 32.3 | % | 33.2 | % | 36.9 | % |
(a) | Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system. |
(b) | Represents fees associated with the Capped Call Transactions purchases. |
(c) | Represents advisory fees related to activism engagement. |
(d) | 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. |
RECONCILIATION BETWEEN NET (LOSS) AND ADJUSTED EBITDA
Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Net loss | $ | (7,166 | ) | $ | (18,449 | ) | $ | (48,904 | ) | $ | (56,577 | ) | |||
Depreciation and amortization | 16,219 | 8,546 | 45,149 | 24,424 | |||||||||||
Interest expense, net of interest income | 18 | 1,817 | 1,463 | 4,060 | |||||||||||
Income tax expense | 70 | 41 | 210 | 123 | |||||||||||
EBITDA | $ | 9,141 | $ | (8,045 | ) | $ | (2,082 | ) | $ | (27,970 | ) | ||||
Loss on equity method investment | — | 943 | $ | 1,890 | 2,969 | ||||||||||
Loss on disposal of equipment | 226 | 124 | 688 | 203 | |||||||||||
Non-cash share-based compensation | 8,090 | 7,821 | 24,952 | 20,409 | |||||||||||
Enterprise Resource Planning (a) | 212 | 1,937 | 1,550 | 4,946 | |||||||||||
Capped Call Transactions fees (b) | — | — | 113 | — | |||||||||||
Activism engagement (c) | 5,548 | — | 8,177 | — | |||||||||||
Organization changes (d) | — | 734 | (67 | ) | 734 | ||||||||||
Adjusted EBITDA | $ | 23,217 | $ | 3,514 | $ | 35,221 | $ | 1,291 | |||||||
Adjusted EBITDA as a % of | 11.6 | % | 2.3 | % | 6.4 | % | 0.3 | % |
(a) | Represents implementation, amortization of deferred implementation costs and other costs associated with the implementation of an ERP system. |
(b) | Represents fees associated with the Capped Call Transactions purchases. |
(c) | Represents advisory fees related to activism engagement. |
(d) | 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. |
Source:
2023 GlobeNewswire, Inc., source