Freshpet Inc ((FRPT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Freshpet Inc. recently held its earnings call, revealing a strong fiscal year 2024 performance. The sentiment expressed during the call was overwhelmingly positive, highlighting significant growth in various financial metrics. The company reported substantial gains in net sales, household penetration, and profitability, despite facing some challenges in specific channels and temporary inventory impacts.
Strong Full Year 2024 Results
Freshpet showcased impressive financial results for fiscal year 2024, with net sales surging by 27% year-over-year to $975 million. The company achieved profitability, reporting a net income of $0.94 per share. Additionally, adjusted EBITDA skyrocketed by 143%, reaching $161.8 million, underscoring Freshpet’s robust financial health.
Record Household Penetration
The company achieved remarkable success in expanding its consumer base, adding approximately 2 million new households. Notably, 800,000 of these were categorized as super heavy and heavy users, marking the highest household penetration gains in the company’s history.
Significant Adjusted Gross Margin Improvement
Freshpet significantly improved its adjusted gross margin by 650 basis points year-over-year, reaching 46.5% for fiscal 2024, surpassing its fiscal 2027 target three years ahead of schedule. This achievement reflects efficient cost management and operational excellence.
Expansion of Distribution and Capacity
To support its growth, Freshpet expanded its distribution network by adding over 1,300 new stores and 2,300 new fridges, closing the year with a total of 28,141 stores and 36,544 fridges. The company also successfully initiated new roll lines and plans further capacity expansions.
Challenges in Pet Specialty Channel
Despite the overall positive performance, Freshpet acknowledged challenges in its pet specialty channel. The company plans to revamp its route to market and change its distribution partner to address underperformance in recent years.
Inventory Management Impact
The fourth quarter’s gross margin benefited from a one-time inventory build-up, which will negatively impact the first quarter of 2025 gross margin by 150 basis points. This temporary setback is part of the company’s inventory management strategy.
Positive Outlook for Fiscal Year 2025
Looking forward, Freshpet has provided optimistic guidance for fiscal year 2025. The company anticipates net sales growth of 21% to 24%, with adjusted EBITDA expected to be at least $210 million. Freshpet is on track to reach $1.8 billion in net sales by fiscal year 2027, reflecting its strong growth trajectory.
In summary, Freshpet’s latest earnings call reveals a company in robust health, with strong fiscal year 2024 results and a positive outlook for the future. Despite some challenges, the company’s strategic initiatives in household penetration, margin improvement, and distribution expansion position it well for continued success.
