Freshpet, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Freshpet, Inc. (FRPT) reports strong financial results for Q4 2023 and full year 2023 with net sales exceeding guidance, showcasing over 25% growth for the sixth consecutive year. Adjusted EBITDA for the year was $66.6 million, a significant increase from $20.1 million in the prior year. CEO Billy Cyr highlights the company's profitability, operating cash flow, and future growth potential in the pet food industry.
Positive
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.
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.
02/26/2024 - 06:30 AM
Full Year 2023 Net Sales and Adjusted EBITDA Exceed Company Guidance Sixth Consecutive Year of >25% Net Sales Growth 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 of 29.9% 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 of 28.8% 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 29.9% to $215.4 million for the fourth quarter of 2023 compared to $165.8 million for the fourth quarter of 2022. The increase in net sales was primarily driven by volume gains of 25% .
Gross profit was $74.6 million , or 34.6% as a percentage of net sales, for the fourth quarter of 2023, compared to $45.7 million , or 27.6% as a percentage of net sales, for the prior year period. The increase in reported gross profit as a percentage of net sales was primarily due to improved leverage on plant expenses and reduced quality costs, partially offset by depreciation expense associated with the Company's capacity expansion and cost related to the disposal of equipment. For the fourth quarter of 2023, Adjusted Gross Profit was $88.5 million , or 41.1% as a percentage of net sales, compared to $54.8 million , or 33.0% as a percentage of net sales, in the prior year period. 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 $59.7 million for the fourth quarter of 2023 compared to $47.8 million for the prior year period. As a percentage of net sales, SG&A decreased to 27.7% for the fourth quarter of 2023 compared to 28.8% for the prior year period. The decrease of 110 basis points in SG&A as a percentage of net sales was mainly a result of reduced logistics cost as a percentage of net sales, decreased cost related to the ERP implementation, and increased leverage on depreciation and share-based compensation as the business scales, partially offset by increased media spend and variable compensation accrual. Adjusted SG&A for the fourth quarter of 2023 was $57.2 million , or 26.6% as a percentage of net sales, compared to $37.2 million , or 22.4% as a percentage of net sales, for the prior year period. 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 $15.3 million for the fourth quarter of 2023 compared to net loss of $2.9 million for the prior year period. The improvement in net income was due to contribution from higher sales, increased gross margin, and reduced logistics costs as a percentage of net sales, partially offset by increased SG&A including increased media spend of $10.4 million .
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 $31.3 million , or 14.5% as a percentage of net sales, for the fourth quarter of 2023, compared to $18.8 million , or 11.3% as a percentage of net sales, for the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit partially offset by higher Adjusted SG&A expense.
Full Year 2023
Net sales increased 28.8% to $766.9 million for the full year ended December 31, 2023, compared to $595.3 million for the prior year. The increase in net sales was primarily driven by volume gains of 20% .
Gross profit was $250.9 million , or 32.7% as a percentage of net sales, for the full year ended December 31, 2023, compared to $186.0 million , or 31.2% as a percentage of net sales, for the prior year. The increase in gross profit as a percentage of net sales was primarily due to improved leverage on plant expenses, reduced quality costs, and decreased input cost as a percentage of sales mainly due to an increase in net sales pricing, partially offset by increased depreciation expense associated with the Company's capacity expansion and cost related to the disposal of equipment. For the full year ended December 31, 2023, Adjusted Gross Profit was $306.6 million , or 40.0% as a percentage of net sales, compared to $214.1 million , or 36.0% as a percentage of net sales, for the prior year. 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 $281.3 million , for the full year ended December 31, 2023, compared to $238.0 million for the prior year. As a percentage of net sales, SG&A decreased to 36.7% for the full year ended December 31, 2023, compared to 40.0% for the prior year. The decrease of 330 basis points in SG&A as a percentage of net sales was mainly a result of reduced logistics cost as a percentage of net sales, decreased cost related to the ERP implementation, and increased leverage on depreciation and share-based compensation as the business scales, partially offset by activism engagement charges, increased media spend, and increased variable compensation accrual. Adjusted SG&A for the full year ended December 31, 2023, was $240.1 million , or 31.3% as a percentage of net sales, compared to $195.7 million , or 32.9% as a percentage of net sales, for the prior year.
Net loss was $33.6 million for the full year ended December 31, 2023, compared to a net loss of $59.5 million for the prior year. The decrease in net loss was due to contribution profit from higher sales, increased gross margins and reduced logistics cost as a percentage of net sales, partially offset by increased SG&A including increased media spend of $23.1 million .
Adjusted EBITDA was $66.6 million , or 8.7% as a percentage of net sales, for the full year ended December 31, 2023, compared to $20.1 million , or 3.4% as a percentage of net sales, for the prior year. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit partially offset by higher 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
As of December 31, 2023, the Company had cash and cash equivalents of $296.9 million with $393.1 million of debt outstanding net of $9.4 million of unamortized debt issuance costs. For the full year ended December 31, 2023, cash from operations was $75.9 million , a significant increase of $119.1 million compared to the prior year, driven by improved profitability and more efficient working capital.
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 least 24% 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
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
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 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, $0.00 1 par value, 200,000 shares authorized, 48,277 issued and 48,263 outstanding on December 31, 2023, and 48,051 issued and 48,037 outstanding on December 31, 2022 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) 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 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.
What were Freshpet's (FRPT) net sales for full year 2023?
Freshpet reported net sales of $766.9 million for the full year ended December 31, 2023.
What was Freshpet's (FRPT) Adjusted EBITDA for 2023?
Freshpet's Adjusted EBITDA for 2023 was $66.6 million, a substantial increase from $20.1 million in the prior year.
How did Freshpet (FRPT) perform in Q4 2023 compared to Q4 2022?
In Q4 2023, Freshpet achieved net sales of $215.4 million, a 29.9% increase from the same period in 2022.
What was Freshpet's (FRPT) gross profit margin for full year 2023?
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.
What is Freshpet's (FRPT) outlook for 2024?
Freshpet expects net sales of at least $950 million for 2024, an increase of 24% from 2023, and Adjusted EBITDA in the range of $100 to $110 million.
How did Freshpet (FRPT) end 2023 in terms of cash and debt?
Freshpet ended 2023 with cash and cash equivalents of $296.9 million and $393.1 million of debt outstanding, with a significant increase in cash from operations compared to the previous year.
