Freshpet has turned a full-year net profit for the first time and also raised its longer-term margin targets following a “strong” annual sales performance.
The Nasdaq-listed pet-food maker exceeded its sales growth target in the 12 months ended 31 December with a 27.2% increase to $975.2m, above the 27% yearly goal it planned to reach by 2027.
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In what CEO Billy Cyr described as a “breakout year” for Freshpet in fiscal 2024, the New Jersey-based business posted net income of $46.9m, a sharp turnaround from a $33.6m loss a year earlier.
Adjusted EBITDA more than doubled to $161.8m from $66.6m.
Cyr commented: “We continued to deliver the exceptional net sales growth investors have come to expect from Freshpet but also delivered very strong profit improvements, and even exceeded some of the fiscal year 2027 targets we set two years ago.
“We remain focused on delivering disciplined, consistent growth, and outsized profitability improvements that we believe will drive shareholder value going forward.”
The premium refrigerated pet-food producer for cats and dogs left its 2027 sales target for 2027 at $1.8bn but lifted the margin guidance.
Adjusted gross margin is now expected to reach 48% by that threshold, compared to 45% previously. And Freshpet now foresees the adjusted EBITDA margin hitting 22% versus the prior goal of 18%.
In fiscal 2024, the adjusted gross margin rose 650 basis points to 46.5%, while the EBITDA equivalent climbed 790 basis points to 16.6%.
Despite last year’s sales performance and a turnaround in profits, Freshpet’s shares closed the session lower yesterday (20 February) as the company guided to a slower growth pace in the new financial year.
The stock ended the day down almost 19% at $106.39. However, the share price has still risen 19% over the past 12 months.
Freshpet expects growth of 21-24% in fiscal 2025 to $1.18-1.21bn. Adjusted EBITDA was guided to “at least” $210m.
Robert Moskow, an analyst at US-based investment bank TD Cowen, said Freshpet’s more conservative sales guidance – “below consensus expectations for 24.6%” – was put down to a “near-term slowdown in dog food trends”, which the likes of General Mills had also pointed to.
“We view investor concerns that Freshpet’s growth will keep decelerating as an overreaction to a transitory slump in the dog-food category,” Moscow wrote in a research note.
“We think the stock can recover in 2H as the category normalises and Freshpet’s growth re-accelerates behind new distribution and advertising.”
