Freshpet Posts 25% Growth In Q2 Revenue, But Misses Analyst Expectations

Freshpet Inc FRPT reported second-quarter FY23 sales growth of 25% year-on-year to $183.30 million, missing the analyst consensus estimate of $185.75 million.

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

Gross profit increased 15.8% Y/Y to $59.2 million, with the margin contracting from 35% to 32.3%. The decrease in gross margin was primarily due to increased depreciation expense associated with the company's capacity expansion, unabsorbed plant cost and increased share-based compensation.

Selling, general and administrative expenses rose 9.3% to $76 million. The operating loss for the quarter widened to $(21.5) million from $(15.8) million last year.

Adjusted EBITDA was $9 million, compared to a loss of $(1.9) million last year.

EPS loss of $(0.35) beat the analyst consensus of $(0.38).

The company held $244 million in cash and equivalents as of June 30, 2023.

Outlook: Freshpet sees FY23 sales of about $750 million (consensus $750.23 million), representing an increase of ~26% from 2022.

The company expects FY23 adjusted EBITDA of at least $55 million. It sees capital expenditures of about $240 million.

Price Action: FRPT shares were climbing 7.6% to $79.26 at last check Monday.

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