LOS ANGELES
,
May 10, 2023
(Industry Intelligence Inc.)
–
Freshpet expects reduced input costs in Q2 to coincide with plans to complete ramping up production on its bag line in Ennis, Texas, to unlock significant logistics savings, according to executives at the company’s Q1 earnings call on May 8. Freshpet reported strong net sales growth of 27%, with a 14% volume growth and 15% price/mix growth. The company restored customer service to a high 90s fill rate, and the number of heavy and super heavy users grew by 18% over the past 52 weeks despite an over 20% increase in pricing. CEO William B. Cyr remarked that the company was also updating its packaging graphics after several years and “premarket testing has shown they elicit an extremely favorable response”.
Growth is expected to be driven increasingly by volume growth rather than pricing growth, said CFO Todd E. Cunfer. The company expects to continue to improve its operating costs, particularly in logistics and quality, but will absorb the full operating cost of the Ennis tag line in Q2.
COO Scott James Morris highlighted that Freshpet is introducing new value-oriented products, including limited ingredient products and bulk packs to rollout across the country over the next year. He opined that offering bulk packs will change buying behavior and allow customers to purchase more products at once.
Cunfer reaffirmed the company’s guidance for the year, with net sales of approximately $750 million and adjusted EBITDA of at least $50 million.
The executives pointed out that the company has sizable opportunities to recover the efficiencies it lost over the last three years and has a goal of having 1.7 million cubic feet of space at retail by the end of the year.
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