Freshpet, Inc. (“Freshpet” or the “Company”) (NASDAQ:FRPT) today
reported financial results for its third quarter and nine months
ended September 30, 2016.
Third Quarter 2016 Financial Highlights
Compared to Prior Year Period
- Net sales were $34.5 million, up 13%
- Net Income was $0.6 million
- Adjusted EBITDA was $5.3 million, up 135%
- Freshpet Fridges increased 11% to 16,261 from 14,670
“In the third quarter, we generated solid net
sales and profit growth largely driven by increased velocity per
fridge, increased store count, and very promising early results
from a new advertising campaign,” said Billy Cyr, Freshpet’s Chief
Executive Officer. “We completed our plant expansion program in
October and have also made positive improvements in quality and
logistics. While we still have significant opportunities to
improve our performance, we believe these marketing and
manufacturing efforts will drive greater sales and efficiencies
which we will leverage across our business model.”
Third Quarter 2016
Net sales increased 13.0% to $34.5 million for
the third quarter of 2016 while the Company’s Fresh product
offering grew 17.1%. Net sales for the quarter were driven by
velocity gains and a 10.8% increase in Freshpet fridge store
locations to 16,261 as of September 30, 2016, as compared to the
prior year period.
Gross profit was $15.4 million, or 44.4% as a
percentage of net sales, compared to $14.0 million, or 45.9% as a
percentage of net sales, in the same period last year. For the
third quarter 2016, Adjusted Gross Profit was $17.1 million
compared to $14.7 million in the prior year and Adjusted Gross
Margin was 49.6% compared to 48.1% in the prior year period.
Adjusted Gross Profit is a Non-GAAP 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 $14.5 million compared to $16.1 million in the
same period in the prior year. As a percentage of net sales,
SG&A decreased to 42.1% for the third quarter of 2016 compared
to 52.5% in the third quarter of 2015. Adjusted SG&A as a
percentage of net sales decreased to 40.8% compared to 46.8% in the
third quarter of 2015. Adjusted SG&A is a Non-GAAP measure
defined under “Non-GAAP Measures,” and is reconciled to SG&A in
the financial tables that accompany this release.
Net Income was $0.6 million compared to a net
loss of $1.7 million for the same period in 2015.
Adjusted EBITDA was $5.3 million for the third
quarter of 2016, compared to $2.3 million in the same period in
2015. Adjusted EBITDA is a Non-GAAP measure defined under
“Non-GAAP Measures,” and is reconciled to net earnings in the
financial tables that accompany this release.
First Nine Months of 2016
Net sales increased 15.1% to $99.0
million compared to $86.0 million during the first
nine months of 2015. Net sales for the quarter were driven by
velocity gains and the increase of Freshpet Fridge store
locations.
Gross profit was $45.2 million, or 45.6% as a
percentage of net sales, compared to $41.0 million, or 47.6% as
percentage of net sales, in the same period last year. For the
first nine months of 2016, Adjusted Gross Profit, which is a
non-GAAP financial measure, was $49.0 million compared to $42.9
million in the prior year and Adjusted Gross Margin was 49.5%
compared to 49.8% in the prior year.
SG&A was $49.0 million compared to $47.5
million in the same period last year. As a percentage of net sales,
SG&A decreased to 49.4% from 55.2% in the same period last
year. Adjusted SG&A as a percentage of net sales, which
is a non-GAAP financial measure, decreased as a percentage of net
sales to 44.8% during the nine months ended September 30, 2016
compared to 48.4% of net sales in the same period of 2015.
Net loss for the nine months
ended September 30, 2016 was $4.4
million compared to $6.5 million in the same period
of 2015.
Adjusted EBITDA, which is a Non-GAAP financial
measure, was $11.3 million for the nine months ended September 30,
2016, compared to $7.1 million in the same period in
2015.
Cash and Net Debt
During the nine months ended September 30, 2016,
the Company generated cash of $7.3 million from operations compared
to $5.0 million during the same period in 2015. As of
September 30, 2016, the Company had cash and cash equivalents of
$3.5 million and $30.0 million available under its $40.0 million
Credit Facilities. The $7.8 million decrease in cash, cash
equivalents and short-term investments from December 31, 2015 is
primarily due to the capital expenditures related to the expansion
of the Company’s Freshpet Kitchens in Bethlehem, Pennsylvania, in
which the Company invested $17.4 million during 2016. A portion of
the new equipment was placed in service in July, which resulted in
incremental depreciation expense of $0.5 million in the third
quarter. The remainder of the new equipment will be placed in
service in the fourth quarter of 2016. In order to fund the
expansion, the Company borrowed $10.0 million of its $40.0 million
Credit Facilities in the second and third quarters of 2016, and
repaid $1.0 million by September 30, 2016. The Company expects to
repay the remainder of this indebtedness by the first half of
fiscal 2017.
Outlook
For the full year ended December 31, 2016 the Company now
expects the following:
- Net sales of over $133 million, an increase of approximately
14%, compared to prior guidance of $137 million
- Adjusted EBITDA of over $17.5 million, an increase of
approximately 58%, compared to prior guidance of $18.5 million
- Freshpet fridges of over 16,600, an increase of approximately
10%
Based on the Company’s year-to-date results and
outlook for the remainder of the year, it is updating guidance for
net sales and Adjusted EBITDA. This is due to lower than expected
baked sales and lower than expected sales in the pet specialty
channel while it is reiterating Freshpet fridge guidance.
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, such as
non-cash gains or losses resulting from mark-to-market adjustments
of warrants. 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 with
members of the executive management team to discuss these results
with additional comments and details. The conference call is
scheduled to begin at 5 p.m. ET on Tuesday, November 1, 2016. To
participate on the live call listeners in North America may dial
(844) 452-6821 and international listeners may dial (724) 924-4985;
the passcode is 94561523.
In addition, the call will be broadcast live
over the Internet hosted at the "Investor" section of the Company's
website at www.freshpet.com and will be archived online. A
telephonic playback will be available from 8 p.m. ET on November 1,
2016, through November 15, 2016. North American listeners may dial
(855) 859-2056 and international listeners may dial (404) 537-3406
the passcode is 94561523. 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, Freshpet
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.
Freshpet foods are available in select mass,
grocery, natural food, club, and pet specialty retailers across the
United States, Canada and are currently testing in the United
Kingdom. From the care Freshpet takes to source their ingredients
and make their food, to the moment it reaches your home, Freshpet’s
integrity, transparency and social responsibility are the way they
like to run their 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
a number of 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 as a result 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 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 expenses
- Adjusted SG&A expenses 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 expense.
Adjusted SG&A Expenses: Freshpet defines
Adjusted SG&A Expenses as SG&A Expenses before non-cash
items related to share-based compensation, leadership transition
expenses, and secondary fees.
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, and launch expenses.
Management believes that the non-GAAP 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.
|
FRESHPET INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
|
September
30,2016 |
|
December 31,2015 |
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
3,496,313 |
|
|
$ |
8,029,413 |
|
Short-term investments |
|
— |
|
|
|
3,250,000 |
|
Accounts receivable, net of
allowance for doubtful accounts |
|
8,669,359 |
|
|
|
7,030,719 |
|
Inventories, net |
|
6,320,806 |
|
|
|
6,853,447 |
|
Prepaid expenses and other current
assets |
|
780,023 |
|
|
|
229,631 |
|
Total Current Assets |
|
19,266,501 |
|
|
|
25,393,210 |
|
Property, plant and equipment, net |
|
100,006,113 |
|
|
|
82,793,007 |
|
Deposits on equipment |
|
3,244,730 |
|
|
|
3,243,519 |
|
Other assets |
|
2,085,824 |
|
|
|
1,667,838 |
|
Total Assets |
$ |
124,603,168 |
|
|
$ |
113,097,574 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
Accounts payable |
|
5,669,788 |
|
|
|
6,668,643 |
|
Accrued expenses |
|
4,720,267 |
|
|
|
2,274,557 |
|
Accrued warrants |
|
185,307 |
|
|
|
204,314 |
|
Borrowings under Credit
Facilities |
|
9,000,000 |
|
|
|
— |
|
Total Current Liabilities |
$ |
19,575,362 |
|
|
$ |
9,147,514 |
|
Total Liabilities |
$ |
19,575,362 |
|
|
$ |
9,147,514 |
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Common stock |
|
33,839 |
|
|
|
33,537 |
|
Additional paid-in capital |
|
297,956,502 |
|
|
|
292,484,986 |
|
Accumulated deficit |
|
(192,962,535 |
) |
|
|
(188,568,463 |
) |
Total Stockholders' Equity |
|
105,027,806 |
|
|
|
103,950,060 |
|
Total Liabilities and Stockholders' Equity |
$ |
124,603,168 |
|
|
$ |
113,097,574 |
|
FRESHPET
INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME/(LOSS) |
(Unaudited) |
|
|
|
For the
Three Months Ended |
|
|
For the Nine
Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
NET SALES |
|
$ |
34,536,151 |
|
|
$ |
30,570,506 |
|
|
$ |
98,992,060 |
|
|
$ |
85,984,583 |
|
COST OF GOODS SOLD |
|
|
19,185,274 |
|
|
|
16,523,960 |
|
|
|
53,841,492 |
|
|
|
45,024,855 |
|
GROSS PROFIT |
|
|
15,350,877 |
|
|
|
14,046,546 |
|
|
|
45,150,568 |
|
|
|
40,959,728 |
|
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES |
|
|
14,542,680 |
|
|
|
16,060,244 |
|
|
|
48,916,509 |
|
|
|
47,476,089 |
|
INCOME/(LOSS) FROM OPERATIONS |
|
|
808,197 |
|
|
|
(2,013,698 |
) |
|
|
(3,765,941 |
) |
|
|
(6,516,361 |
) |
OTHER INCOME/(EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/(Expenses), net |
|
|
41,601 |
|
|
|
467,168 |
|
|
|
(93,036 |
) |
|
|
332,325 |
|
Interest Expense |
|
|
(214,067 |
) |
|
|
(113,820 |
) |
|
|
(490,097 |
) |
|
|
(262,038 |
) |
|
|
|
(172,466 |
) |
|
|
353,348 |
|
|
|
(583,133 |
) |
|
|
70,287 |
|
INCOME/(LOSS) BEFORE INCOME TAXES |
|
|
635,731 |
|
|
|
(1,660,350 |
) |
|
|
(4,349,074 |
) |
|
|
(6,446,074 |
) |
INCOME TAX EXPENSE |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
45,000 |
|
|
|
45,000 |
|
NET INCOME/(LOSS) |
|
|
620,731 |
|
|
|
(1,675,350 |
) |
|
|
(4,394,074 |
) |
|
|
(6,491,074 |
) |
NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS |
|
$ |
620,731 |
|
|
$ |
(1,675,350 |
) |
|
$ |
(4,394,074 |
) |
|
$ |
(6,491,074 |
) |
NET INCOME/(LOSS) PER SHARE ATTRIBUTABLE TO
COMMON STOCKHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-BASIC |
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.19 |
) |
-DILUTED |
|
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.19 |
) |
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING USED IN COMPUTING NET INCOME/(LOSS) PER SHARE
ATTRIBUTABLE TO COMMON STOCKHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-BASIC |
|
|
33,717,676 |
|
|
|
33,509,303 |
|
|
|
33,603,535 |
|
|
|
33,488,161 |
|
-DILUTED |
|
|
34,171,036 |
|
|
|
33,509,303 |
|
|
|
33,603,535 |
|
|
|
33,488,161 |
|
FRESHPET
INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS |
(Unaudited) |
|
|
|
|
For the Nine
Months Ended |
|
September 30, |
|
2016 |
|
2015 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net loss |
$ |
(4,394,074 |
) |
|
$ |
(6,491,074 |
) |
Adjustments to reconcile net loss
to net cash flows provided by operating activities: |
|
|
|
|
|
|
|
Provision for gains on accounts
receivable |
|
(7,147 |
) |
|
|
(2,784 |
) |
Loss on disposal of equipment and
deposits on equipment |
|
169,797 |
|
|
|
83,322 |
|
Share based compensation |
|
3,459,094 |
|
|
|
5,490,090 |
|
Fair value adjustment for
outstanding warrants |
|
(19,007 |
) |
|
|
(405,083 |
) |
Change in reserve for inventory
obsolescence |
|
113,581 |
|
|
|
32,877 |
|
Depreciation and amortization |
|
6,958,113 |
|
|
|
5,543,031 |
|
Amortization of deferred financing
costs and loan discount |
|
109,678 |
|
|
|
108,961 |
|
Changes in operating assets and
liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(1,631,493 |
) |
|
|
(1,666,171 |
) |
Inventories |
|
419,060 |
|
|
|
479,251 |
|
Prepaid expenses and other current
assets |
|
(550,392 |
) |
|
|
995,823 |
|
Other assets |
|
(324,893 |
) |
|
|
(164,798 |
) |
Accounts payable |
|
571,388 |
|
|
|
1,698,144 |
|
Accrued expenses |
|
2,445,710 |
|
|
|
(732,021 |
) |
Net cash flows provided by
operating activities |
|
7,319,415 |
|
|
|
4,969,568 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Purchases of short-term
investments |
|
— |
|
|
|
(7,499,205 |
) |
Proceeds from maturities of
short-term investments |
|
3,250,000 |
|
|
|
3,750,000 |
|
Acquisitions of property, plant and
equipment, software and deposits on equipment |
|
(26,096,094 |
) |
|
|
(17,565,512 |
) |
Acquisitions of land and
building |
|
— |
|
|
|
(4,984,501 |
) |
Proceeds from sale of
equipment |
|
12,513 |
|
|
|
29,400 |
|
Net cash flows used in investing
activities |
|
(22,833,581 |
) |
|
|
(26,269,818 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Exercise of options to purchase
common stock |
|
1,981,066 |
|
|
|
291,750 |
|
Proceeds from borrowings under
Credit Facilities |
|
10,000,000 |
|
|
|
— |
|
Repayment of borrowings under
Credit Facilities |
|
(1,000,000 |
) |
|
|
— |
|
Net cash flows provided by
financing activities |
|
10,981,066 |
|
|
|
291,750 |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
(4,533,100 |
) |
|
|
(21,008,500 |
) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
|
8,029,413 |
|
|
|
36,259,252 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
3,496,313 |
|
|
$ |
15,250,752 |
|
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 |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Gross Profit (as
reported) |
|
$ |
15,351 |
|
|
$ |
14,047 |
|
|
$ |
45,151 |
|
|
$ |
40,960 |
|
Depreciation expense
(a) |
|
|
1,242 |
|
|
|
645 |
|
|
|
2,660 |
|
|
|
1,897 |
|
Plant startup expenses
and processing (b) |
|
|
540 |
|
|
|
— |
|
|
|
1,208 |
|
|
|
— |
|
Adjusted Gross
Profit |
|
$ |
17,133 |
|
|
$ |
14,692 |
|
|
$ |
49,019 |
|
|
$ |
42,857 |
|
Adjusted Gross Profit
as a % of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Gross Profit |
|
$ |
17,133 |
|
|
$ |
14,692 |
|
|
$ |
49,019 |
|
|
$ |
42,857 |
|
Net Sales |
|
$ |
34,536 |
|
|
$ |
30,571 |
|
|
$ |
98,992 |
|
|
$ |
85,985 |
|
Adjusted Gross Profit as a % of
sales |
|
|
49.6 |
% |
|
|
48.1 |
% |
|
|
49.5 |
% |
|
|
49.8 |
% |
(a) Represents non-cash depreciation expense
included in Cost of Goods Sold.
(b) Represents additional operating costs
incurred in 2016 in connection with the startup 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 |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
SG&A Expenses (as
reported) |
|
$ |
14,543 |
|
|
$ |
16,060 |
|
|
$ |
48,917 |
|
|
$ |
47,476 |
|
Non-cash stock based
compensation (a) |
|
|
716 |
|
|
|
1,750 |
|
|
|
3,282 |
|
|
|
5,269 |
|
Secondary fees (b) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
593 |
|
Leadership transition
expenses (c) |
|
|
(253 |
) |
|
|
— |
|
|
|
1,327 |
|
|
|
— |
|
Adjusted
SG&A Expenses |
|
$ |
14,080 |
|
|
$ |
14,310 |
|
|
$ |
44,308 |
|
|
$ |
41,614 |
|
Adjusted SG&A
Expenses as a % of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted SG&A Expenses |
|
$ |
14,080 |
|
|
$ |
14,310 |
|
|
$ |
44,308 |
|
|
$ |
41,614 |
|
Net Sales |
|
$ |
34,536 |
|
|
$ |
30,571 |
|
|
$ |
98,992 |
|
|
$ |
85,985 |
|
Adjusted SG&A Expense as a % of
sales |
|
|
40.8 |
% |
|
|
46.8 |
% |
|
|
44.8 |
% |
|
|
48.4 |
% |
(a) Represents non-cash stock based compensation
expense.
(b) Represents fees associated with the
secondary public offering of our common stock, which was completed
on May 5, 2015.
(c) Represents charges associated within our former Chief
Executive Officer’s separation agreement as well as changes in
estimates associated with leadership transition costs.
|
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 |
|
Nine Months
Ended |
|
|
September 30, |
|
September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net income (loss) |
|
$ |
621 |
|
|
$ |
(1,675 |
) |
|
$ |
(4,394 |
) |
|
$ |
(6,491 |
) |
Depreciation and
amortization |
|
|
2,720 |
|
|
|
1,919 |
|
|
|
6,958 |
|
|
|
5,543 |
|
Interest expense |
|
|
214 |
|
|
|
114 |
|
|
|
490 |
|
|
|
262 |
|
Income tax expense |
|
|
15 |
|
|
|
15 |
|
|
|
45 |
|
|
|
45 |
|
EBITDA |
|
$ |
3,570 |
|
|
$ |
373 |
|
|
$ |
3,099 |
|
|
$ |
(641 |
) |
Loss on disposal of
equipment |
|
|
11 |
|
|
|
3 |
|
|
|
170 |
|
|
|
84 |
|
Launch expense (a) |
|
|
728 |
|
|
|
540 |
|
|
|
2,038 |
|
|
|
1,940 |
|
Plant start-up expenses
and processing (b) |
|
|
540 |
|
|
|
— |
|
|
|
1,208 |
|
|
|
— |
|
Non-cash stock based
compensation (c) |
|
|
788 |
|
|
|
1,826 |
|
|
|
3,459 |
|
|
|
5,490 |
|
Warrant fair valuation
(d) |
|
|
(47 |
) |
|
|
(475 |
) |
|
|
(19 |
) |
|
|
(405 |
) |
Secondary fees (e) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
593 |
|
Leadership transition
expenses (f) |
|
|
(253 |
) |
|
|
— |
|
|
|
1,327 |
|
|
|
— |
|
Adjusted
EBITDA |
|
$ |
5,337 |
|
|
$ |
2,267 |
|
|
$ |
11,281 |
|
|
$ |
7,061 |
|
(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 startup 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.
(e) Represents fees associated with the
secondary public offering of our common stock, which was completed
on May 5, 2015.
(f) Represents charges associated within our former Chief
Executive Officer’s separation agreement as well as changes in
estimates associated with leadership transition costs.
CONTACT
ICR
Katie Turner
646-277-1228
katie.turner@icrinc.com
Michael Fox
203-682-8218
Michael.fox@icrinc.com
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