Freshpet (FRPT) Q2 2024 earnings summary

Executive summary

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

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

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

• Household penetration reached 12.8 million, up 25% year-over-year, with heavy buyers now representing 89% of sales.

• Raised full-year 2024 net sales and adjusted EBITDA guidance due to strong first-half performance and disciplined capacity management.

Financial highlights

• Q2 net sales: $235.3 million, up 28% year-over-year, all volume-driven.

• Adjusted gross margin: 45.9% (up 610 bps year-over-year); GAAP gross margin: 39.9%.

• Adjusted EBITDA: $35.1 million (14.9% of net sales), up from $9.0 million (4.9%) last year.

• Operating cash flow: $42.4 million in Q2; cash on hand: $251.7 million at quarter end.

• Capital expenditures: $48.3 million in Q2; $94.8 million in H1 2024; 2024 capex forecasted at ~$200 million.

Outlook and guidance

• 2024 net sales guidance raised to at least $965 million (26%+ growth).

• Adjusted EBITDA guidance increased to at least $140 million for 2024.

• 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.