Freshpet (FRPT) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales grew 28–28.3% year-over-year to $235.3 million, driven entirely by volume gains, with strong growth across all channels and a 24th consecutive quarter of 25%+ net sales growth.

• Adjusted gross margin reached 45.9% (up 610 bps year-over-year), exceeding long-term targets for the second consecutive quarter, while GAAP gross margin improved to 39.9%.

• Adjusted EBITDA rose to $35.1 million (14.9% margin), up from $9.0 million (4.9%) in Q2 2023, with net loss narrowing to $1.7 million from $17.0 million.

• Growth was fueled by increased household penetration (up 25% to 12.8 million), especially among high-profit pet-owning households, and a shift toward larger pack sizes.

• Strong fill rates and customer service were maintained within capacity limits, supporting operational efficiency and profitability.

Financial highlights

• Q2 net sales: $235.3 million (+28–28.3% year-over-year), all volume-driven.

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

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

• Operating cash flow: $42.4 million in Q2; $47.8 million YTD 2024.

• Cash and equivalents: $251.7 million at June 30, 2024; capital expenditures for Q2: $48.3 million; H1 2024: $94.8 million.

Outlook and guidance

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

• Adjusted EBITDA guidance increased to at least $140 million; full-year adjusted gross margin expected to expand by ~500 bps.

• 2024 capital expenditures forecasted at ~$200 million, down from ~$210 million.

• Confident in ability to fund operations and growth strategy for at least the next twelve months and to be free cash flow positive by 2026.

• Volume expected to be sequentially lower through the year to manage growth and cash with capacity.