Freshpet (FRPT) Q2 2024 earnings summary

Executive summary

• Net sales grew 28.3% year-over-year to $235.3 million in Q2 2024, driven entirely by volume growth, marking the 24th consecutive quarter of 25%+ net sales growth.

• Adjusted EBITDA rose to $35.1 million (14.9% margin), up from $9.0 million (4.9%) in Q2 2023, reflecting significant operational improvements.

• Adjusted gross margin reached 45.9%, up 610 bps year-over-year and exceeding long-term targets for the second consecutive quarter.

• Net loss narrowed to $1.7 million from $17.0 million in Q2 2023, as higher sales and improved margins offset increased SG&A expenses.

• Household penetration rose to 12.8 million, up 25% year-over-year, with high-profit households growing even faster.

Financial highlights

• Net sales: $235.3 million in Q2 2024 (+28% YoY); first six months 2024 net sales: $459.1 million (+30.9% YoY), driven by 29.4% volume growth.

• Adjusted EBITDA: $35.1 million (14.9% margin) in Q2; $65.7 million for H1 2024.

• Adjusted gross margin: 45.9% in Q2 2024 (up from 39.8%); GAAP gross margin: 39.9% (up from 32.3%).

• Operating cash flow: $42.4 million in Q2; $47.8 million for H1 2024; cash on hand: $251.7 million as of June 30, 2024.

• Net income for H1 2024 was $16.9 million, compared to a net loss of $41.7 million in H1 2023.

Outlook and guidance

• 2024 net sales guidance raised to at least $965 million (26%+ growth), up from prior guidance of $950 million.

• Adjusted EBITDA guidance increased to at least $140 million for 2024, up from $120 million prior guidance.

• Adjusted gross margin expected to expand by ~500 bps for the full year.

• Capital expenditures for 2024 projected at ~$200 million.

• Confident in being free cash flow positive by 2026 and able to fund growth through 2025 with existing resources.