Why Pet Food Company Freshpet's Shares Are Jumping Today

Freshpet Inc FRPT reported third-quarter FY23 sales growth of 32.6% year-on-year to $200.60 million, beating the analyst consensus estimate of $194.11 million.

Net sales for the third quarter of 2023 were driven by both velocity gains and pricing.

Gross profit increased 48.9% Y/Y to $66.3 million, with the margin expanding from 29.4% to 33%. The increase in gross margin was primarily due to decreased unabsorbed plant cost, reduced quality and input cost as a percentage of net sales.

Selling, general and administrative expenses rose 21.5% to $73.4 million. The operating loss for the quarter narrowed to $(7.1) million from $(15.9) million last year.

Adjusted EBITDA was $23.2 million, compared to $3.5 million last year.

EPS loss of $(0.15) beat the analyst consensus of $(0.19).

The company held $338.1 million in cash and equivalents as of September 30, 2023.

"Our strengthened organization is delivering improved margins from better operational performance in logistics, input costs and quality while maintaining strong volume-based revenue growth," commented CEO Billy Cyr.

Outlook: Freshpet raised its FY23 sales outlook from ~$750 million to ~$755 million versus an estimate of $750.62 million.

The company raised FY23 adjusted EBITDA guidance from at least $55 million prior guidance to ~$62 million. FRPT sees capital expenditures of ~$240 million, unchanged from previous guidance.

Price Action: FRPT shares traded higher by 11.50% at $64.95 premarket Monday.