Freshpet raises yearly guidance following strong performance
The New Jersey-based pet business has raised its forecast for the second consecutive quarter, projecting a 27% increase in net sales.
Freshpet announced net sales of $253.4 million (€232.8M) from July to September 2024, a 26.3% increase from the same period last year, when the company’s net sales hit $200.6 million (€184.29M).
The firm’s net income reached $11.9 million (€10.9M) during the third quarter of the year, compared to a net loss of $7.2 million (€6.6 million) during the same period in 2023.
Net income hit $28.8 million (€26.5M) for the first nine months of 2024.
In a press release posted before the company’s earnings call, Freshpet executives cited higher sales volumes and reduced logistical costs.
“I think we are making good progress at proving that we can reliably deliver improved operating performance and strong growth simultaneously,” says company CEO Billy Cyr. “This disciplined growth is the result of our strengthened organizational capability, improved analytics systems, and intense focus. That has enabled us to generate outsized gains in productivity and profitability.”
Freshpet updated its full-year guidance to reflect the quarter’s high growth. It now projects net sales of around $975 million (€895.7M) for 2024, a 27% increase from 2023. The company had previously updated its projected net sales to $965 million for the year, up from an original projection of $950 million.
Freshpet’s stock price rose on Monday 4 November, after the numbers were released, hitting a high for the year.
20 million households
Sales numbers coincided with rising market share – the company reported a 17% year-over-year increase in household penetration.
According to NielsenIQ data shared by Freshpet, it currently accounts for 3.2% of the U.S. dog food market, up from 3% earlier this year.
The company’s food, marketed as fresh and meant to be refrigerated, makes up 96% of the market for fresh/frozen branded dog food. Freshpet aims to reach 20 million households by 2027, which Cyr says it’s on track to meet.
The barrier
Freshpet faces a barrier many of its competitors don’t have to worry about – it relies on retailers being willing to provide refrigerator space.
Cyr admits that this barrier has come down somewhat over time. “Our customers continue to believe that Freshpet is the future of pet food and continue committing additional retail space to Freshpet.”
With a foothold on retail shelves, the company hopes to drive new customers to its refrigerated food.
“We think the combination of retail support and our ability to drive household penetration is a clear indication that Freshpet is leading the way towards making fresh pet food a mainstream idea,” says the Freshpet CEO.
Looking ahead
The adjusted gross margin, a measure of the company’s profitability, increased 46.5% year over year in the third quarter. That’s ahead of the company’s goals – it aimed to reach 45% year-over-year adjusted gross margin growth by 2027.
Billy Cyr expressed confidence in the company’s ability to “meet or exceed” their 2027 goals. “Freshpet is becoming increasingly mainstream but still has a long runway for growth,” he concludes.
(Photo credit: Freshpet)
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