Freshpet reported its financial results for its fourth quarter and full year ended December 31, 2024 at the Consumer Analyst Group of New York conference in Boca Raton, Florida on Feb. 20. Freshpet is a U.S.-based manufacturer of fresh, refrigerated dog treats and food for dogs and cats. The company says all of its meat is 100% farm-raised, according to Petfood Industry’s Top Companies Current Data.
"Fiscal year 2024 was a breakout year for Freshpet,” Billy Cyr, Freshpet’s chief executive officer, said in a press release. “We continued to deliver the exceptional net sales growth investors have come to expect from Freshpet but also delivered very strong profit improvements - and even exceeded some of the fiscal year 2027 targets we set two years ago. We also delivered full-year positive net income for the first time. The strength of this sustained performance, coupled with our operating cash flow improvements, gives us confidence we will be free cash flow positive in 2026 and able to self-fund our growth going forward. This strong performance also enables us to raise our long-term profit margin targets today to reflect the additional scale benefits we believe we can deliver as we transform the pet food category and nourish pets, people, and the planet. We remain focused on delivering disciplined, consistent growth, and outsized profitability improvements, that we believe will drive shareholder value going forward."
Fourth Quarter 2024 Financial Highlights Compared to Prior Year Period
- Net sales of $262.7 million, an increase of 22.0%.
- Net income of US$18.1 million, compared to the prior year period of US$15.3 million.
- Gross margin of 42.5%, compared to the prior year period of 34.6%.
- Adjusted Gross Margin of 48.1%, compared to the prior year period of 41.1%.
- Adjusted EBITDA of US$52.6 million, compared to the prior year period of US$31.3 million.
Full Year 2024 Financial Highlights Compared to Prior Year
- Net sales of US$975.2 million, an increase of 27.2%.
- Net income of US$46.9 million, compared to the prior year net loss of US$33.6 million.
- Gross margin of 40.6%, compared to the prior year of 32.7%.
- Adjusted Gross Margin of 46.5%, compared to the prior year of 40.0%.
- Adjusted EBITDA of US$161.8 million, compared to the prior year of US$66.6 million.
- For the year ended December 31, 2024, net cash provided by operating activities was US$154.3 million, compared to US$75.9 million in the prior year.
Fourth quarter 2024 Freshpet performance
Net sales increased 22.0% to US$262.7 million for the fourth quarter of 2024 compared to US$215.4 million for the prior year period. The increase in net sales was primarily driven by volume gains of 20.7%.
Gross profit was US$111.6 million, or 42.5% as a percentage of net sales, for the fourth quarter of 2024, compared to US$74.6 million, or 34.6% 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 lower input costs, reduced quality costs and improved leverage on plant expenses. For the fourth quarter of 2024, Adjusted Gross Profit was US$126.3 million, or 48.1% as a percentage of net sales, compared to US$88.5 million, or 41.1% as a percentage of net sales, for the prior year period.1
Selling, general and administrative expenses (“SG&A”) were US$92.2 million for the fourth quarter of 2024 compared to US$59.7 million for the prior year period. SG&A as a percentage of net sales increased by 740 basis points to 35.1% for the fourth quarter of 2024 compared to 27.7% for the prior year period, primarily due to increased media as a percentage of net sales, higher share-based compensation and increased variable compensation accrual. Adjusted SG&A for the fourth quarter of 2024 was US$73.6 million, or 28.0% as a percentage of net sales, compared to US$57.2 million, or 26.6% as a percentage of net sales, for the prior year period.1
Net income was US$18.1 million for the fourth quarter of 2024 compared to US$15.3 million for the prior year period. The increase in net income was due to contribution from higher sales and improved gross margin, partially offset by increased SG&A.
Adjusted EBITDA was US$52.6 million for the fourth quarter of 2024 compared to US$31.3 million for the prior year period.1 The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A.
Full year 2024 Freshpet performance
Net sales increased 27.2% to US$975.2 million for the full year ended December 31, 2024, compared to US$766.9 million for the prior year. The increase in net sales was primarily driven by volume gains of 26.1%.
Gross profit was US$396.0 million, or 40.6% as a percentage of net sales, for the full year ended December 31, 2024, compared to US$250.9 million, or 32.7% as a percentage of net sales, for the prior year. The increase in reported gross profit as a percentage of net sales was primarily due to lower input costs, reduced quality costs and improved leverage on plant expenses. For the full year ended December 31, 2024, Adjusted Gross Profit was US$453.5 million, or 46.5% as a percentage of net sales, compared to US$306.6 million, or 40.0% as a percentage of net sales, for the prior year.
SG&A was US$358.0 million for the full year ended December 31, 2024, compared to US$281.3 million for the prior year. As a percentage of net sales, SG&A remained consistent at 36.7% for both the full years ended December 31, 2024 and 2023. SG&A as a percentage of net sales remained consistent as the decreases due to reduced logistics as a percentage of net sales and the absence of non-recurring charges incurred in the prior year were fully offset by increased media as a percentage of net sales, higher share-based compensation and increased variable compensation accrual. Adjusted SG&A for the full year ended December 31, 2024 was US$291.6 million, or 29.9% as a percentage of net sales, compared to US$240.1 million, or 31.3% as a percentage of net sales, for the prior year.1
Net income was US$46.9 million for the full year ended December 31, 2024, compared to a net loss of US$33.6 million for the prior year. The improvement in net income was due to contribution from higher sales, improved gross margin, reduced logistics costs as a percentage of net sales, and gain on equity investment, partially offset by increased SG&A.
Adjusted EBITDA was US$161.8 million for the full year ended December 31, 2024, compared to US$66.6 million for the prior year.1 The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit partially offset by higher Adjusted SG&A.
Freshpet's outlook for 2025
As of December 31, 2024, the Company had cash and cash equivalents of US$268.6 million with US$395.2 million of debt outstanding net of US$7.3 million of unamortized debt issuance costs. For the year ended December 31, 2024, cash from operations was US$154.3 million, an increase of US$78.3 million compared to the prior year.
The Company will utilize its balance sheet to support its ongoing capital needs in connection with its long-term capacity plan.
Adjusted Gross Margin, Adjusted Gross Profit, Adjusted SG&A and Adjusted EBITDA are non-GAAP financial measures. 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.
For full year 2025, the Company is providing the following guidance:
- Net sales in the range of US$1.18 billion to US$1.21 billion, an increase of 21% to 24% from 2024;
- Adjusted EBITDA of at least US$210 million; and
- Capital expenditures of ~US$250 million.
The Company is also updating its long-term guidance. For full year 2027, the Company now expects:
- Net sales of US$1.8 billion, unchanged;
- Adjusted Gross Margin of 48%, compared to 45% previously; and
- Adjusted EBITDA margin of 22%, compared to 18% previously.
Adapted from a press release
