Freshpet, a US-based manufacturer of fresh and refrigerated pet food, has reported a strong financial performance in 2023, achieving its highest annual sales growth and turning a profit in the fourth quarter. The company’s CEO, Billy Cyr, has described 2023 as an “inflection point” for Freshpet, as it benefits from its investments in scaling up and expanding its market presence.
Freshpet posts record sales and improved margins in 2023
According to its latest earnings release, Freshpet hit $766.9 million in net sales in 2023, an increase of 28.8% compared to 2022. This is the sixth consecutive year of more than 25% sales growth for the company, which exceeded its own guidance of $755 million. Freshpet also reached 11.5 million households in 2023, 1.8 million more than in 2022.
The company’s gross profit stood at $250.9 million in 2023, up from $186 million in 2022. The gross margin improved from 32.7% to 32.7%. The company also reduced its net loss from $59.5 million in 2022 to $33.6 million in 2023. In the fourth quarter of 2023, the company reported a net income of $15.3 million, compared to a net loss of $2.9 million in the same period of 2022.
The company attributed its positive results to the contribution profit from higher sales, increased gross margins, and reduced logistics costs as a percentage of net sales. Freshpet also generated $66.6 million in adjusted EBITDA in 2023, more than triple the amount in 2022.
Freshpet invests in capacity expansion and innovation
Freshpet’s CEO, Billy Cyr, said that the company has reached an “inflection point” in 2023, as it reaps the rewards of its significant investments in creating scale and extending its first-mover advantage. He said that the company’s Fresh Future plan, announced in 2022, is working and delivering improved profitability and cash flow.
As part of its plan, Freshpet has invested in expanding its production capacity and distribution network. The company completed the construction of its third kitchen in Ennis, Texas, in 2023, which added 140 million pounds of annual capacity. The company also started the construction of its fourth kitchen in Ennis, which will add another 400 million pounds of capacity by 2026.
In addition, Freshpet has increased its store count and fridge count in 2023, reaching over 23,000 stores and 35,000 fridges across the US. The company also launched new products and innovations, such as Freshpet Select Tender Chicken Recipe, Freshpet Select Roasted Meals, and Freshpet Select Cat Cups.
Freshpet expects to continue growing in 2024 and beyond
Freshpet is confident that it can sustain its growth momentum in 2024 and beyond, as it capitalizes on the rising demand for fresh and natural pet food. The company estimates that the total addressable market for fresh pet food in the US is $30 billion, and that it has only captured 3% of it so far.
For 2024, Freshpet has forecast net sales of at least $950 million, an increase of 24% from 2023. The company also expects to improve its margins and profitability, while maintaining its capital discipline and shareholder value creation.
Cyr said that Freshpet is well-positioned to achieve its long-term vision of “feeding 8 million pets by 2027 and generating $1.25 billion in net sales along the way”.