Freshpet, Inc. (“Freshpet” or the “Company”) (NASDAQ:FRPT) today
reported financial results for its fourth quarter and full year
ended December 31, 2017.
Fourth Quarter 2017 Financial Highlights
Compared to Prior Year Period
- Net Sales of $40.7 million, up 19.5%
- Net income of $1.5 million compared to a net income of $1.2
million
- Adjusted EBITDA of $6.9 million compared to $6.4 million
- Freshpet Fridges increased 8.4% to 18,004 from 16,609
2017 Financial Highlights Compared to
Prior Year
- Net Sales of $156.4 million, up 17.5%
- Net loss of $4.2 million compared to a net loss of $3.2
million
- Adjusted EBITDA of $17.6 million compared to $17.7 million
“We are pleased with our finish to 2017.
Our fourth quarter results demonstrate continued strong volume
growth as a result of our Feed the Growth strategy. We
believe this financial performance validates the ‘stickiness’ of
the Freshpet brand and our confidence in our growth prospects,”
said Billy Cyr, Freshpet’s Chief Executive Officer. “In 2018
we will leverage our key brand and marketing strengths which we
expect to fuel an accelerated rate of growth and position us to
achieve our longer term 2020 financial objectives.”
Fourth Quarter 2017
Fourth quarter of 2017 net sales increased 19.5%
to $40.7 million compared to $34.1 million for the fourth quarter
of 2016. The Company’s core fresh refrigerated product offering
grew 21.9% as compared to the same period in the prior year.
Net sales for the quarter were driven by velocity gains and an 8.4%
increase in Freshpet Fridges to 18,004 as of December 31, 2017, as
compared to the prior year period.
Gross profit was $18.9 million, or 46.6% as a
percentage of net sales for the fourth quarter of 2017, compared to
$15.2 million, or 44.7% as a percentage of net sales, in the same
period last year. For the fourth quarter 2017, Adjusted Gross
Profit was $20.4 million, or 50.1% as a percentage of net sales,
compared to $17.0 million, or 49.9% as a percentage of net sales,
in the prior year period. Adjusted Gross Profit is a Non-GAAP
financial measure defined under “Non-GAAP Measures,” and is
reconciled to Gross Profit in the financial tables that accompany
this release.
Selling, general and administrative expenses
(“SG&A”) were $17.3 million for the fourth quarter of 2017
compared to $13.7 million in the prior year period. As a percentage
of net sales, SG&A increased to 42.5% for the fourth quarter of
2017 compared to 40.1% in the fourth quarter of 2016. Adjusted
SG&A as a percentage of net sales increased to 39.6% compared
to 38.2% in the fourth quarter of 2016. The increase in SG&A is
primarily due to the fourth quarter effect of the Company’s planned
increased media spend of $6.0 million for the full year 2017.
Adjusted SG&A is a Non-GAAP financial measure defined under
“Non-GAAP Measures,” and is reconciled to SG&A in the financial
tables that accompany this release.
Net income was $1.5 million for the fourth
quarter of 2017 compared to net income of $1.2 million for the
prior year period.
Adjusted EBITDA was $6.9 million for the fourth
quarter of 2017, compared to $6.4 million in the fourth quarter
2016. The improvement in Adjusted EBITDA was primarily due to
increased net sales and improved gross profit, partially offset by
increased media spend. Adjusted EBITDA is a Non-GAAP financial
measure defined under “Non-GAAP Measures,” and is reconciled to net
earnings in the financial tables that accompany this release.
Full Year 2017
Net sales increased 17.5% to $156.4 million for
the full year ended December 31, 2017 compared to $133.1 million
for the prior year. The Company’s core fresh refrigerated product
offering grew 20.1% as compared to the same period in the prior
year. Net sales for the full year 2017 were driven by velocity
gains and an increase in Freshpet fridge store locations as
compared to the prior year.
Gross profit was $72.4 million, or 46.3% as a
percentage of net sales for the full year ended December 31, 2017,
compared to $60.4 million, or 45.4% as a percentage of net sales,
last year. For the full year ended December 31, 2017, Adjusted
Gross Profit was $78.2 million, or 50.0%, as a percentage of net
sales, compared to $66.0 million, or 49.6% as a percentage of net
sales, in the prior year. Adjusted Gross Profit is a Non-GAAP
financial measure defined under “Non-GAAP Measures,” and is
reconciled to Gross Profit in the financial tables that accompany
this release.
SG&A expenses were $75.2 million for the
full year ended December 31, 2017 compared to $62.6 million in the
prior year. As a percentage of net sales, SG&A increased
to 48.1% for the full year ended December 31, 2017 compared to
47.0% last year. Adjusted SG&A as a percentage of net sales
increased to 45.3% for the full year ended December 31, 2017
compared to 43.1% in the prior year. The increase in SG&A is
primarily due to the Company’s planned increased media spend of
$6.0 million compared to the prior year period. Adjusted SG&A
is a Non-GAAP financial measure defined under “Non-GAAP Measures,”
and is reconciled to SG&A in the financial tables that
accompany this release.
Net loss was $4.3 million for the full year
ended December 31, 2017 compared to net loss of $3.2 million for
the prior year. The higher net loss was primarily related to the
planned increased media spend, partially offset by increased net
sales and improved gross profit.
Adjusted EBITDA was $17.6 million for the full
year ended December 31, 2017, compared to $17.7 million in the
prior year. The decrease in Adjusted EBITDA was primarily
related to the planned increased media spend, partially offset by
increased net sales and improved gross profit. Adjusted EBITDA is a
Non-GAAP financial measure defined under “Non-GAAP Measures,” and
is reconciled to net earnings in the financial tables that
accompany this release.
Cash and Net Debt
As of December 31, 2017, the Company had cash
and cash equivalents of $2.2 million, no debt outstanding and $30.0
million of availability from our $30.0 million revolving credit
facility that matures in September 2020 and includes the ability to
increase the revolving credit facility by an additional $10.0
million.
Recasting of 2017 Results for Accounting-Rules – Topic
606
In the first quarter of 2018, the Company is adopting the new
revenue recognition standard (“Topic 606”) on a retrospective
basis.
The adoption of Topic 606 will result in a shift
between Net Sales and Cost of Goods Sold. The net effect
would decrease full year 2017 net sales by approximately 2.6%
compared to the previous accounting standard, and increase the
Company’s gross margin by approximately 130 basis points. For
example, 2017’s net sales of $156.4 million would be reported as
$152.4 million, 2017’s gross margin of 46.3% would be reported as
47.5%, and 2017’s adjusted gross margin of 50.0% would be reported
as 51.3% under the new accounting standard. The new accounting
standard will not impact Net Income, Gross Profit, Adjusted Gross
Profit, or Adjusted EBITDA.
Outlook
For full year 2017, the Company expects following results under
the new revenue recognition standards compared to the prior
year:
|
Full Year 2017 Results |
|
|
|
|
Results under current accounting
standards |
Results under new revenue
recognition standards |
|
2018 Guidance under new revenue recognition
standards |
Increase versus prior year |
Net Sales |
$156.4 million |
$152.4 million |
|
> $185.0 million |
> 21% |
Adj. EBITDA |
$17.6 million |
$17.6 million |
|
> $20.0 million |
> 14% |
The Company does not provide guidance for the
most directly comparable GAAP measure, net income, and similarly
cannot provide a reconciliation between its forecasted Adjusted
EBITDA and net income metrics without unreasonable effort due to
the unavailability of reliable estimates for certain items. These
items are not within the Company’s control and may vary greatly
between periods and could significantly impact future financial
results.
Conference Call and Webcast
The Company will host a conference call and
webcast with the executive management team to discuss these results
with additional comments and details today at 4:30 p.m. ET. The
conference call webcast will be available live over the Internet
through the “Investors” section of the Company’s website at
www.freshpet.com. To participate on the live call listeners in
North America may dial (877) 413-7208 and international listeners
may dial (201) 689-8555.
A replay of the conference call will be archived
on the Company’s website and telephonic playback will be available
from 7:30 p.m. ET today through March 19, 2018. North American
listeners may dial (844) 512-2921 and international listeners may
dial (412) 317-6671. The passcode is 13676201. About
Freshpet
Freshpet has a single-minded mission – to
improve the lives of dogs and cats everywhere through the power of
fresh, natural food. Packed with vitamins and proteins, our foods
offer fresh meats, poultry, and vegetables farmed locally. At our
Freshpet Kitchens, we thoughtfully prepare these natural
ingredients and everyday essentials, cooking them in small batches
at lower temperatures to preserve key nutrients. That way, your pet
gets the best. Freshpet refrigerated foods and treats are kept cool
from the moment they are made until they arrive at Freshpet Fridges
in your local market.
Our foods are available in select mass, grocery,
natural food, club, and pet specialty retailers across the United
States, Canada and in the United Kingdom. From the care, we take to
source our ingredients and make our food, to the moment it reaches
your home, our integrity, transparency and social responsibility
are the way we like to run our business. To learn more, visit
www.freshpet.com.
Connect with Freshpet:
https://www.facebook.com/Freshpet
https://twitter.com/Freshpet
http://instagram.com/Freshpet
http://pinterest.com/Freshpet
https://plus.google.com/+Freshpet
https://en.wikipedia.org/wiki/Freshpet
https://www.youtube.com/user/freshpet400
Forward Looking Statements
Certain statements in this release may
constitute “forward-looking” statements. These statements are based
on management's current opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or
future results. These forward-looking statements are only
predictions, not historical fact, and involve certain risks and
uncertainties, as well as assumptions. Actual results, levels of
activity, performance, achievements and events could differ
materially from those stated, anticipated or implied by such
forward-looking statements. While Freshpet believes that its
assumptions are reasonable, it is very difficult to predict the
impact of known factors, and, of course, it is impossible to
anticipate all factors that could affect actual results. There are
several risks and uncertainties that could cause actual results to
differ materially from forward-looking statements made herein
including, most prominently, the risks discussed under the heading
“Risk Factors” in the Company's latest annual report on Form 10-K
filed with the Securities and Exchange Commission. Such
forward-looking statements are made only as of the date of this
release. Freshpet undertakes no obligation to publicly update or
revise any forward-looking statement because of new information,
future events or otherwise, except as otherwise required by law. If
we do update one or more forward-looking statements, no inference
should be made that we will make additional updates with respect to
those or other forward-looking statements.
Non-GAAP Financial Measures
Freshpet uses the following non-GAAP financial
measures in its financial communications. These non-GAAP financial
measures (collectively, “the non-GAAP financial measures”) should
be considered as supplements to the GAAP reported measures, should
not be considered replacements for, or superior to, the GAAP
measures and may not be comparable to similarly named measures used
by other companies.
- Adjusted Gross Profit
- Adjusted Gross Profit as a % of net sales (Adjusted Gross
Margin)
- Adjusted SG&A
- Adjusted SG&A Adjusted SG&A as a % of net sales
- EBITDA
- Adjusted EBITDA
Adjusted Gross Profit: Freshpet defines Adjusted
Gross Profit as Gross Profit before plant start-up expenses and
processing and plant depreciation expenses.
Adjusted SG&A Expenses: Freshpet defines
Adjusted SG&A as SG&A expenses before non-cash items
related to share-based compensation, leadership transition
expenses, fees related to a secondary offering, and fees related to
the litigation of a securities lawsuit.
EBITDA and Adjusted EBITDA: EBITDA represents
net loss plus depreciation and amortization, interest expense, and
income tax expense, and Adjusted EBITDA represents EBITDA plus loss
on disposal of equipment, plant startup expense, share-based
compensation, warrant fair valuation, secondary fees, leadership
transition expenses, launch expenses, and fees related to the
litigation of a securities lawsuit.
Management believes that the non-GAAP financial
measures, are meaningful to investors because they provide a view
of the Company with respect to ongoing operating results. The
non-GAAP financial measures are shown as supplemental disclosures
in this release because they are widely used by the investment
community for analysis and comparative evaluation and provides
additional metrics to evaluate the Company’s operations and, when
considered with both the Company’s GAAP results and the
reconciliation to the most comparable GAAP measures, provides a
more complete understanding of the Company’s business than could be
obtained absent this disclosure. The non-GAAP measures are not and
should not be considered an alternative to the most comparable GAAP
measures or any other figure calculated in accordance with GAAP, or
as an indicator of operating performance. The Company’s calculation
of the non-GAAP financial measures may differ from methods used by
other companies. Management believes that the non-GAAP measures are
important to an understanding of the Company's overall operating
results in the periods presented. The non-GAAP financial measures
are not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance.
CONTACTICRKatie
Turner646-277-1228katie.turner@icrinc.com
Michael
Fox203-682-8218Michael.fox@icrinc.com
FRESHPET, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
2017 |
2016 |
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
2,184,259 |
|
|
$ |
3,908,177 |
|
Accounts
receivable, net of allowance for doubtful accounts |
|
12,721,521 |
|
|
|
8,886,790 |
|
Inventories, net |
|
10,118,394 |
|
|
|
5,402,735 |
|
Prepaid
expenses |
|
1,200,834 |
|
|
|
741,091 |
|
Other
current assets |
|
732,960 |
|
|
|
304,560 |
|
Total
Current Assets |
|
26,957,968 |
|
|
|
19,243,353 |
|
Property, plant and
equipment, net |
|
100,598,639 |
|
|
|
101,493,080 |
|
Deposits on
equipment |
|
4,370,922 |
|
|
|
3,620,444 |
|
Other assets |
|
1,972,805 |
|
|
|
2,094,339 |
|
Total Assets |
$ |
133,900,334 |
|
|
$ |
126,451,216 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
Accounts
payable |
|
9,173,169 |
|
|
|
6,884,155 |
|
Accrued
expenses |
|
7,519,348 |
|
|
|
4,531,139 |
|
Accrued
warrants |
|
— |
|
|
|
253,391 |
|
Borrowings under Credit Facilities |
|
— |
|
|
|
7,000,000 |
|
Total
Current Liabilities |
$ |
16,692,517 |
|
|
$ |
18,668,685 |
|
Other liabilities |
|
304,839 |
|
|
|
— |
|
Total Liabilities |
$ |
16,997,356 |
|
|
$ |
18,668,685 |
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
|
|
|
Common
stock |
|
35,132 |
|
|
|
33,961 |
|
Additional paid-in capital |
|
312,783,195 |
|
|
|
299,477,706 |
|
Accumulated deficit |
|
(195,991,478 |
) |
|
|
(191,729,136 |
) |
Accumulated other comprehensive income/(loss) |
|
76,129 |
|
|
|
— |
|
Total Stockholders'
Equity |
|
116,902,978 |
|
|
|
107,782,531 |
|
Total Liabilities and
Stockholders' Equity |
$ |
133,900,334 |
|
|
$ |
126,451,216 |
|
|
FRESHPET, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME/(LOSS)(Unaudited)
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
For the Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
NET SALES |
|
$ |
40,696,512 |
|
|
$ |
34,061,456 |
|
|
$ |
156,379,210 |
|
|
$ |
133,053,517 |
|
COST OF GOODS SOLD |
|
|
21,756,437 |
|
|
|
18,841,142 |
|
|
|
83,963,292 |
|
|
|
72,682,634 |
|
GROSS PROFIT |
|
|
18,940,075 |
|
|
|
15,220,314 |
|
|
|
72,415,918 |
|
|
|
60,370,883 |
|
SELLING, GENERAL, AND
ADMINISTRATIVEEXPENSES |
|
|
17,322,757 |
|
|
|
13,669,325 |
|
|
|
75,167,168 |
|
|
|
62,585,833 |
|
INCOME/(LOSS) FROM
OPERATIONS |
|
|
1,617,318 |
|
|
|
1,550,989 |
|
|
|
(2,751,250 |
) |
|
|
(2,214,950 |
) |
OTHER
INCOME/(EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income/(Expenses), net |
|
|
(9,931 |
) |
|
|
(88,814 |
) |
|
|
(525,404 |
) |
|
|
(181,850 |
) |
Interest
Expense |
|
|
(79,560 |
) |
|
|
(208,022 |
) |
|
|
(910,492 |
) |
|
|
(698,119 |
) |
|
|
|
(89,491 |
) |
|
|
(296,836 |
) |
|
|
(1,435,896 |
) |
|
|
(879,969 |
) |
INCOME/(LOSS) BEFORE
INCOME TAXES |
|
|
1,527,827 |
|
|
|
1,254,153 |
|
|
|
(4,187,146 |
) |
|
|
(3,094,919 |
) |
INCOME TAX EXPENSE |
|
|
12,933 |
|
|
|
20,754 |
|
|
|
75,195 |
|
|
|
65,754 |
|
NET INCOME/(LOSS) |
|
|
1,514,894 |
|
|
|
1,233,399 |
|
|
|
(4,262,341 |
) |
|
|
(3,160,673 |
) |
NET INCOME/(LOSS)
ATTRIBUTABLE TO COMMONSTOCKHOLDERS |
|
$ |
1,514,894 |
|
|
$ |
1,233,399 |
|
|
$ |
(4,262,341 |
) |
|
$ |
(3,160,673 |
) |
OTHER COMPREHENSIVE
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
foreign currency translation |
|
$ |
76,129 |
|
|
$ |
— |
|
|
$ |
76,129 |
|
|
$ |
— |
|
TOTAL OTHER
COMPREHENSIVE INCOME |
|
$ |
76,129 |
|
|
$ |
— |
|
|
$ |
76,129 |
|
|
$ |
— |
|
TOTAL COMPREHENSIVE
INCOME/(LOSS) |
|
$ |
1,591,023 |
|
|
$ |
1,233,399 |
|
|
$ |
(4,186,212 |
) |
|
$ |
(3,160,673 |
) |
NET INCOME/(LOSS) PER
SHARE ATTRIBUTABLE TO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
STOCKHOLDERS |
-BASIC |
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
-DILUTED |
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
WEIGHTED AVERAGE SHARES
OF COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING USED
IN COMPUTING NET LOSS PER |
SHARE
ATTRIBUTABLE TO COMMON |
STOCKHOLDERS |
-BASIC |
|
|
34,994,895 |
|
|
|
33,885,519 |
|
|
|
34,487,239 |
|
|
|
33,674,416 |
|
-DILUTED |
|
|
35,823,559 |
|
|
|
34,226,963 |
|
|
|
34,487,239 |
|
|
|
33,674,416 |
|
|
FRESHPET, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS(Unaudited)
|
|
|
|
For the Twelve Months Ended |
|
|
December 31, |
|
|
|
2017 |
|
|
|
2016 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net
loss |
$ |
(4,262,341 |
) |
|
$ |
(3,160,673 |
) |
Adjustments to reconcile net loss to net cash flows provided by
operating activities: |
|
|
|
|
|
|
|
Provision for loss/(gains) on accounts receivable |
|
17,348 |
|
|
|
(5,164 |
) |
Loss on disposal of equipment and deposits on equipment |
|
103,716 |
|
|
|
189,531 |
|
Share-based compensation |
|
4,438,181 |
|
|
|
4,193,490 |
|
Fair value adjustment for outstanding warrants |
|
334,628 |
|
|
|
49,077 |
|
Change in reserve for inventory obsolescence |
|
291,898 |
|
|
|
(117,944 |
) |
Depreciation and amortization |
|
12,692,355 |
|
|
|
9,887,168 |
|
Amortization of deferred financing costs and loan
discount |
|
426,534 |
|
|
|
150,272 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(3,852,079 |
) |
|
|
(1,850,907 |
) |
Inventories |
|
(5,007,557 |
) |
|
|
1,568,656 |
|
Prepaid expenses and other current assets |
|
(797,427 |
) |
|
|
(816,020 |
) |
Other assets |
|
(90,135 |
) |
|
|
(398,059 |
) |
Accounts payable |
|
2,682,094 |
|
|
|
853,854 |
|
Accrued expenses |
|
2,988,209 |
|
|
|
2,256,582 |
|
Other liabilities |
|
304,839 |
|
|
|
— |
|
Net cash flows provided by operating
activities |
|
10,270,263 |
|
|
|
12,799,863 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Purchases
of short-term investments |
|
— |
|
|
|
— |
|
Proceeds
from maturities of short-term investments |
|
— |
|
|
|
3,250,000 |
|
Acquisitions of property, plant and equipment, software and
deposits on equipment |
|
(13,003,756 |
) |
|
|
(29,952,536 |
) |
Acquisitions of land and building |
|
— |
|
|
|
— |
|
Proceeds
from sale of equipment |
|
— |
|
|
|
13,442 |
|
Net cash flows used in investing
activities |
|
(13,003,756 |
) |
|
|
(26,689,094 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Debt
issuance costs |
|
(270,885 |
) |
|
|
— |
|
Exercise
of options to purchase common stock |
|
8,280,460 |
|
|
|
2,767,995 |
|
Proceeds
from borrowings under Credit Facilities |
|
7,500,000 |
|
|
|
10,000,000 |
|
Repayment
of borrowings under Credit Facilities |
|
(14,500,000 |
) |
|
|
(3,000,000 |
) |
Net cash flows provided by financing
activities |
|
1,009,575 |
|
|
|
9,767,995 |
|
NET CHANGE IN CASH AND
CASH EQUIVALENTS |
|
(1,723,918 |
) |
|
|
(4,121,236 |
) |
CASH AND CASH
EQUIVALENTS, BEGINNING OF YEAR |
|
3,908,177 |
|
|
|
8,029,413 |
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD |
$ |
2,184,259 |
|
|
$ |
3,908,177 |
|
|
FRESHPET, INC. AND
SUBSIDIARIES
RECONCILIATION BETWEEN GROSS PROFIT AND
ADJUSTED GROSS PROFIT(Unaudited)
(Amounts in thousands)Certain totals may not sum
due to rounding
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Gross Profit (as
reported) |
|
$ |
18,940 |
|
|
$ |
15,220 |
|
|
$ |
72,416 |
|
|
$ |
60,371 |
|
Depreciation expense
(a) |
|
|
1,462 |
|
|
|
1,368 |
|
|
|
5,791 |
|
|
|
4,028 |
|
Plant start-up expenses
(b) |
|
|
— |
|
|
|
420 |
|
|
|
— |
|
|
|
1,628 |
|
Adjusted Gross
Profit |
|
$ |
20,402 |
|
|
$ |
17,008 |
|
|
$ |
78,207 |
|
|
$ |
66,027 |
|
Adjusted Gross Profit
as a % of Net Sales |
|
|
50.1 |
% |
|
|
49.9 |
% |
|
|
50 |
% |
|
|
49.6 |
% |
(a) Represents non-cash depreciation expense
included in Cost of Goods Sold.
(b) Represents additional operating costs
incurred in 2016 in connection with the start-up of our new
manufacturing lines as part of the Freshpet Kitchens expansion
project.
FRESHPET, INC. AND
SUBSIDIARIES
RECONCILIATION BETWEEN SG&A EXPENSES
AND ADJUSTED SG&A EXPENSES(Unaudited)
(Amounts in thousands)Certain totals may not sum
due to rounding
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
SG&A expenses (as
reported) |
|
$ |
17,323 |
|
|
$ |
13,669 |
|
|
$ |
75,167 |
|
|
$ |
62,586 |
|
Non-cash share-based
compensation (a) |
|
|
1,078 |
|
|
|
690 |
|
|
|
4,195 |
|
|
|
3,972 |
|
Leadership transition
expenses (b) |
|
|
(37 |
) |
|
|
(36 |
) |
|
|
63 |
|
|
|
1,291 |
|
Litigation expense
(c) |
|
|
145 |
|
|
|
— |
|
|
|
145 |
|
|
|
— |
|
Adjusted
SG&A Expenses |
|
$ |
16,136 |
|
|
$ |
13,015 |
|
|
$ |
70,764 |
|
|
$ |
57,323 |
|
Adjusted SG&A
Expenses as a % of Net Sales |
|
|
39.6 |
% |
|
|
38.2 |
% |
|
|
45.3 |
% |
|
|
43.1 |
% |
(a) Represents non-cash stock based compensation
expense.
(b) Represents costs detailed within our former
Chief Executive Officer’s separation agreement as well as
incremental costs associated with leadership transition.
(c) Represents fees associated with the
response to a securities lawsuit, Curran v. Freshpet, Inc. et al,
Docket No. 2:16-cv-02263.
FRESHPET, INC. AND
SUBSIDIARIES
RECONCILIATION BETWEEN NET INCOME/(LOSS)
AND ADJUSTED EBITDA(Unaudited)
(Amounts in thousands)Certain totals may not sum
due to rounding
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
(Dollars in thousands) |
|
Net income/(loss) |
|
$ |
1,515 |
|
|
$ |
1,233 |
|
|
$ |
(4,262 |
) |
|
$ |
(3,161 |
) |
Depreciation and
amortization |
|
|
3,281 |
|
|
|
2,929 |
|
|
|
12,692 |
|
|
|
9,887 |
|
Interest expense |
|
|
80 |
|
|
|
208 |
|
|
|
910 |
|
|
|
698 |
|
Income tax expense |
|
|
13 |
|
|
|
21 |
|
|
|
75 |
|
|
|
66 |
|
EBITDA |
|
$ |
4,889 |
|
|
$ |
4,391 |
|
|
$ |
9,414 |
|
|
$ |
7,490 |
|
Loss on disposal of
equipment |
|
|
6 |
|
|
|
20 |
|
|
|
104 |
|
|
|
190 |
|
Launch expense (a) |
|
|
706 |
|
|
|
775 |
|
|
|
3,066 |
|
|
|
2,813 |
|
Plant start-up expenses
(b) |
|
|
— |
|
|
|
420 |
|
|
|
— |
|
|
|
1,628 |
|
Non-cash share-based
compensation (c) |
|
|
1,146 |
|
|
|
734 |
|
|
|
4,438 |
|
|
|
4,193 |
|
Warrant fair valuation
(d) |
|
|
- |
|
|
|
68 |
|
|
|
335 |
|
|
|
49 |
|
Leadership transition
expenses (e) |
|
|
(37 |
) |
|
|
(36 |
) |
|
|
63 |
|
|
|
1,291 |
|
Litigation expense
(f) |
|
|
145 |
|
|
|
— |
|
|
|
145 |
|
|
|
— |
|
Adjusted
EBITDA |
|
$ |
6,855 |
|
|
$ |
6,372 |
|
|
$ |
17,565 |
|
|
$ |
17,654 |
|
|
(a) Represents new store marketing allowance of $1,000 for each
store added to our distribution network as well as the
non-capitalized freight costs associated with Freshpet Fridge
replacements. The expense enhances the overall marketing spend to
support our growing distribution network.
(b) Represents additional operating costs
incurred in 2016 in connection with the start-up of our new
manufacturing lines as part of the Freshpet Kitchens expansion
project.
(c) Represents non-cash stock based compensation
expense.
(d) Represents the change of fair value for the
outstanding common stock warrants. All warrants were
converted to common stock in the third quarter of 2017.
(e) Leadership Transition Expenses represent
costs detailed within our former Chief Executive Officer’s
separation agreement as well as incremental costs associated with
leadership transition.
(f) Represents fees associated with the
response to a securities lawsuit, Curran v. Freshpet, Inc. et al,
Docket No. 2:16-cv-02263.
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