Freshpet (FRPT) 4 Aug 202020 Q2 Earnings call transcript

Greetings, and welcome to Freshpet Inc Second Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Katie Turner.

you. Thank welcome quarter and call earnings Freshpet's webcast. and to afternoon, XXXX second conference Good are Chief Operating Billy Dick call for of today's On Cyr, be also Financial Pomerantz, Vice available Scott Finance, Heather will Kassar, Executive Officer; Morris, and Chief Officer; Q&A. Executive President Chief and Officer;

company's and laws. during management's Before statements the of meaning of today a adjusted described company's financial any within annual that today. differ implied Form as of on and Please These are XX-K EBITDA, filed statements. forward-looking risks call, with the materially on the non-GAAP the or beliefs securities based statements begin, on made such Securities refer refer expectations to and actual release these the in to we from detailed for press could remember management risks this results others. current the and actual the discussion and course to in forward-looking cause EBITDA certain statements those please measures, differ uncertainties may could and forward-looking today's involve federal make will from that cause Exchange expressed materially to among that call, report management results note those issued Please Commission

accordance to the release non-GAAP While measures in presented non-GAAP for considered information be to information most for a the isolation this press refer GAAP. measures provide financial measures in not with of or these company to for a intended investors, the substitute information believes today's prepared comparable useful financial in financial the with is Please GAAP. presentation as reconciliation accordance the of

will to key on website. Management's of like has contains the Billy presentation they specifically that be presentation found turn the call. commentary the today. on many company That investor of metrics rather the the over the I'd now, not the call to Executive Officer. summary walks will company's be presentation can on And if a call, discussed the discuss Cyr, Chief produced this Finally, results through that will

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growth quite saying that the hallmark business of Freshpet Let the years. seems while that has still last is the has world by me the our for to start unsettled. that been predictable it returned several

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household on is and strong and consumption. increases penetration air advertising driving Our in

in uncertainty that changes conditions adapt everyone that to retail because We faces. the the accelerating COVID we the demonstrate have strong retail where measured to face still in quickly future we our show of ahead continually we related is else that installing upgraded now would to period Our new And the continue been any results to and fridges. deliver not of crisis. returned external market But and running conditions with same ability had recent were Nielsen crisis to the in if immune health where are we do results. well growth this partners consumer changing and have That public believe we to there our and results environment and been to impact not the excess aren't. say of pre-COVID our changing

mobility, including our and challenges, long-term also crisis goals. retail surge but a opportunities, employees, As year e-commerce risks in badly presented awareness positioned trough the and presented a progress quite safety is try play lives and we result, the break willingness unique went new COVID of disrupted increased post-COVID out about in consumer some optimistic and of advantage new stronger role surge some to in of and pets rates, our to lower in. the take opportunities for are engagement, our Freshpet viewership believe environment, balance it including than their ideally that the of those media The new e-commerce drastic media towards reductions higher we options. We and

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our that we would penetration on availability to turn foundation announced elements gains. pivot of key to enable our we at those of rebuild on post-surge employees end place, to our e-commerce and QX, options. and our in to new improve were With us advertising offer So able drive keeping building safe consumption all of the and supply our retail

coverage, team, of incredibly retail despite of During The from our many kept inventories our idea on all, of rising teams our incremental not and keeping But teams the most the have the to quarter, virtually e-commerce they the customers who and the XX I virtually data foundation safe. was folks this Thanks then at are those strong areas, a so penetration stores for our high to rate diligently and without is able buying incremental team slowing. nimble the the are speak our grown support. and February. results of and week in demand. dedicated catch safe up in our teams, was growing. work pivot marketing to consistently conditions. The we that would efforts numerous COVID non-stop environment built would changing have acknowledge teams no gains to since that teammates, since on and the to crisis the challenging keep safe rebuild and of Household of COVID the we than up South, the who dedicated of day, strategically have lines enhancements for place use be growing now efforts progress is these a efforts most service that the post running themselves. Consumption shows The strong. Kitchen invested media Freshpet XXs, worked of and ahead recent signs to want of in team the members members sales to we with the protect production enabled Freshpet their January been before very each Freshpet confident including possible our options new growth, could their team capacity to in opportunities XX.X% responsibility restore April consumer crisis the safety also members averaged every meet to has surge All new Nielsen faster seize come growth coronavirus face the Freshpet it mega to accelerated channel these work our growth in presents. our challenges Kitchens each their and for for who the taken to very positioned and creativity rapidly began customer

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able strongest net growth very drive significant Now best ago. portion million one we adjusted our that higher good what than results. we of up in the top-line the XX% line We onto into posted XXXX sales EBITDA year we and and $XX our accomplished ago was a quarter of since year feel quarter. about were posted to were We in a performance ever. bottom versus result stronger sales Net

throughout a guidance of also in of $X greater seeing, The our year We're later. trough inventory our mega very net the than filled accelerating channel marketing million work in XX capacity taking product the a by quarter, strong than strong refilling media saw in historically, out heavily and in The in in growth, and to advantage now from continued is dug where greater from challenges. July trends returns seeing media a benefit hitting XXs. growth greater result year lower per less volume also taking what details due we today. the trade the in growth more the As and with million. well into this pivot million, viewership is million and growth seen in with media and growth our October, more was by that ACV, accelerated June This than the XX% trough It raising to to the manufacturing The growth growth starting EBITDA to to Freshpet of spending performance have our the some are top-line are never shelter-in-place very provide are the recent are to team still product excess as XX% enough through producing accelerated our driving team despite higher the earlier on record consumption seeing. quarter, make part for of consumption our our a of stopped most year we investing year. we mid-XXs quantities. in the $XXX the the of of quarter. is rates and the velocity the put also measured in investments our April the produce end place and versus dollars Kitchen strong four the is were The $XXX Nielsen Dick growth strong XX% for results that conjunction adjusted ago our growth And Kitchens early increase timely will we quarter, XX% The driving we COVID is we and demand. QX are catch able with XXs April April's percent we we with investment, guidance operating ending now to the the by result outstanding the fill in in than result growth sales additional to plus on rates representing we the post-surge up weeks. raising South, replanning of efforts in hole capacity guidance from at in the May consumption rescheduling high the

demand, We we few items not surging rate a on but the at getting are to XX-plus we close. and are due capacity percent still expect tighter

product capacity on have will, QX. Kitchens however, begins Fresh until X.X items very From the We tight our salable in producing Kitchen

growth in consumption able growth would of to focused deeper few SKUs versus still rate result hole COVID in beginning below that experienced. the these refill our we we’re dug surge. the the a I rate of As we a on. quarter to what that still efforts, But had the up we inventory with those trade on inventories add trade quarter at to clear QX the combined be Refilling which we largely points year we slightly two the holes behind we X are want the largely consider normal, ended catching to in

due quarter. short QX depressed in a in X accompanying QX ago as growth gap of of points reconciliation and year, in that had in short quarter of benefit spoils on in ago an the resulted in growth shipments margin QX shipments caught A and up created this some versus additional presentation. in year favorable to improved and the on will an The our itself net full adding year Recall, providing we versus last reverse the on year growth comparison is in investor of sales consumption another between got a gross that the that quarter impact last manufacturing year. shipments in point. also last slightly performance second issues year the We quarter, that quarter we

the June If Year-to-date at shipments performing. through ago growth get a clearer up of year-to-date slightly are how you can the you we Year-to-date, are is versus Nielsen view a mega-channel and look results, consumption of ahead in we XX% the accelerating. the year beginning end short up that, due the of at accompanying in of That the the investor reconciliation of presentation. trade year. QX inventory and spoils year, last in XX% also this improvement to had the shipments hole year is

driver QX of our was retail a improvement conditions. Another in improvement significant in

our able in teams, in conditions, most most customers and sales SKUs to broker now Our partner, greater than customers. partnership we have and XX% retail stocks and our with restore on the were

to of specialty not and only for growth from the now trade with quarter a and significant fridges fridges quarter. by the Additionally, high-profile pet every second quarter, growth big broad-based box consumption we business was traffic of services generated benefiting That resumption whole further foot and than of retail growth in number by by showed specialty stores each June, the July. even are end The showing strong cap end outlets. growth more the part the fridges in in double of end growth the But business. class week the posting pet placement of double-digit showing of due the accelerated their growth in in has the XXX sales

the XXX% resulting our Our than fastest, network. grew e-commerce through Instacart delivery grew fridge mile a XX% like going business you and in-store expect, as up of would ago. e-commerce our business rapidly, last Curbside pickup services year more versus in

by the engagement on We our e-commerce feature the the to want it from Freshpet new strong easy website, we we ran anyway options where for very make consumer encouraged click e-commerce they featured are options, our and it. that prominently got our now we throughs advertising various get increasing most

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a ago, XX% QX. but where result, up ended points only we ACV the of As was versus year ahead X.X

upgrades us see in fridges upgrades More be stocks the year. distribution added combined fridges performance for and added half strong of period. the the quarter, confidence that up strong this versus the year upgrades upgraded were placed we our to the top and we this will as and second against out the taking fridges XX% ago result a second we give of in targets large points, the line this in year-to-date importantly, All deliver Total that able back XXX. our the quarter ago saw TDPs, now year. another and continued confident we XXX revised drive we’ll remain X,XXX to in We quarter have of year And total XXX second of XXX XXX to fridges year. of we number the and we in incurred

and We we first Nielsen real and mega-channel was weeks fridge consumption is are for and year, We that rates, media has third of growth on three placements. XX% trends, bullish on advertising particularly the low have the gains. drive penetration, consumption air for most half year the entered up household summer, consumption to ever with strong time first of and versus of strong the on the July. back quarter the been continuing momentum during strong ago viewership high as the accelerating

All growth when growth XX%. XXXX making Freshpet grew XXXX expansion make of since and should support progress To that our initiatives. good were growth, our strongest very year strong capacity support that we in

our have on average grow on are So produce. mid-February, XXXX full far fully breaking in worrying lines Also, we week January, our Kitchens of June. rate X.X per the point, times this we’ve up second or product taken be take but year, targeted quite to third a We October in of the more total and facility assuming about second and year this line $XXX track is XXXX, and shift $XXX started roll that November. XX/X have in Adjusted operational run added billion. by capacity. will and almost we’ll weeks, the a to X.X without year $XX.X some nine holidays the absenteeism in up to At by up quarter million, was capacity quantities that first will to phases operational of to operational, $XX in of about million ground by capacity, EBITDA to next intend ago. South Ennis, there we quarter it mix a within total we take Kitchen Once Texas. million two fully capacity the XXXX. facility in This quarter, million capacity. the next making about $X.X beginning in operation in meaningful Kitchens have product the start QX of utilization $XX.X eight salable is is Once in than and our shipping advantage ability of or built be time, million

get we the excluding leverage SG&A significant from incremental volume. adjusted particularly media, from the demonstrated scale, we contribution in As and

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to growth the line. benefits taking accelerating the of bottom and strong growth and that very delivering are successfully We

very deliver We and off XXXX. goal million X.X years And billion laid goal we Plan. our are good launched to when net than we our we out the $X sales track the in Feed on more towards Growth exceed a start $XXX are ago to

manufacturing and goal. support a at capacity that to adding are strength rate bench rapid We

were quarter period. $XX Billy a As net up million, indicated, two sales year XX% ago versus

trough versus months normalize of the six April. first of to the view up the XXXX, sales net For that impact and March occurred The year are in surge that the XX% occurred allows in ago. six-month us

to to but As match capacity our scanner actual shipments sales, of match our allow companies we will. with having better each consumption. first the us from said, and pipeline one We CPG quarter had two, more so inventory in-home other more trade the two normal depleted in look than consistent refill our quarters at limits in quarter retail the prevented shipments first would quarter, most end

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has pivot worked. post Our surge

raising greater half than our net for the at we than adjust $XXX to quarter least the for are and That the you inventory million. growth of growth to rate we sales in that This result, rate first rebuilding when would year take the the first did half is our out a two. As XX%. guidance comparison growth rate the stronger softer in year

we quarter in Additionally, year in would that trade data, guidance from third impacted growth this we're our bags believe mega-channel from and did XX margin. for percent we our year’s inventory year in towards rebuilt the that is versus comparison when what our two rate, margin negatively we had ago quarter gross as mix than tougher up plus the bps quarter shifted is quarter was be XX.X%, But we a appropriate. new seeing Nielsen would, period, with XX because ago the our current rolls one, Adjusted indicated period. the back it

also had we provides margin, had slightly a lower South, production full at in quarter quarter. performance We strong a the overall, Kitchens of which but

However, would million. million $XX increase costs, the reflected the $X into guidance. But contribution eat contribution now for of $X during expecting our goal. in think below revised it, a achieve beef billion our our in would absorb the the higher half sales bit, in we result higher from target second year year will gross the we we also may beef we Without that the in believe but slightly for the higher year. about the that the of could prices are the half margin from It net sales XX% will we impact of XX% increase. a be cost [ph] to about beef margin gross we come of incremental costs second as Without in that

via persist our $XX So $XX to offset those improvements. higher we're for to into adjusted efficiency million If XXXX, other million. EBITDA guidance from look raising pricing opportunities would they and increases those beef costs only

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versus of want significant ago XX.X% year on. was to the sales, As is that – basis a X,XXX This result, we Adjusted That of creating split quite as media efficiencies million first viewership. quarter our be $XX.X in and second lower there's or out and to are points capitalize net media an the advertising half. period. the will improvement that SG&A turns rates between XX:XX higher now the fortuitous be half

for May of media $XX.X metrics through adjusted Moving Adjusted embedded the grow expand improved to year $XX our achieve Feed of Plan. P&L, by time also we shelter-in-place our basis the the of XXXX us sales versus those to we benefit the and goal. year for out When period. million, versus we keeps virtuous improvement. essential investments the indicator in XXX scale. across P&L our growth of points million XXX quarter EBITDA bps the for ago track SG&A These an time exclude April, financial ago, to to meaningful part was adjusted we in get you adjusted drove that scale and on August to period in excluding future. media expect the in up ability meaningful from the our spending, net increase good demonstrate benefits It's continue a will cycle EBITDA to excess But opportunities. capture opportunities, generate incremental Growth choose foreseeable to margins EBITDA time, From scale as the

are enhanced other we to crisis our to $X that extra chain cost increased and We supply for COVID-XX to this higher including compensation protect costs protect incur efforts year, will continuing related our related costs. million to project employees, them,

the that we $X.X costs, good the people was of up as our results four. we About to was $X.X quarter wage those costs did allowed importantly, been has $X continuously thing us or three costs million run of and and lines and our But we incurred the it more will million quarter, In incurred in nurses quarter it. covers Year-to-date, in a indicate, continue operations. and our this $X level believe million. to demand. for to right safe, remaining a has absenteeism-related second are taper low in about million. to they $X will quarters investment, but to why such three cost keep As off and incur the that million do We employees the that catch the we've very

previously, these we As to adding communicated our back adjusted we costs are EBITDA.

net and EBITDA than $XXX sales million now reiterate, $XX greater guidance adjusted million. is to So our for greater than

issues supply any Our last macroeconomic two, additional disruptions that no the it that guidance our the increased to including our significant or and social has environment there progresses adverse and chain, external month unrest. the continues as from are consumers, customers, to for or an assume environment

we capital $XXX strong. and operations quarter of meet secured to end, our or our and drawn million deposit. we At cash have resources We remains certificates long-term needs. amended In in on. senior equivalents believe have is liquidity we cash expect expanded credit sufficient from those very had million $XXX facility April, generate that yet we cash, short-term to now early Our not agreement credit

projects We a $XX offset of Working and our increases Kitchens increase phenomenon capital have another for against designed spending these far, total projects to our million to $XX invested gains, seasonal date P&L capacity, business. million. our is on project so X.X capital

in $X.X cash So operations million. used was

We well from expect closing, In positioned continue operations to cash positive succeed. are flow the incredibly year. for to we

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say I are doing. story and trying the what and believed who much how I with think analysts us to get spent Finally, have in investors who challenging us, appreciate much we to know the to about us so time have can't harder the

with for reward to been now created. That We has better Operator? I'm investors We'll able concludes overview. it questions. glad us are be significant we've our your and stuck been who glad value that that those to take

question-and-answer Benedict your At this Baird. will Please question. Thank Peter be proceed a The from sir. first with time, you, comes session. Instructions] conducting of question today [Operator we

quite congrats I'll to journey Good Obviously, one. this Hey And guys. off a afternoon. Dick. with start

So great done. have guess well with working Congratulations. It's you. I the been two I first questions. –

Or think my new that thinking should That's it pet capacity. of And the today there drive how growth there The is thinking consumption your this demand just ability are seeing? the of on this quarter first adoptions growth, talked that helping about trend as about? the You are first you're about the just more about you think question are – that fulfill thinking about we quarter sustainability and this? third new maybe, XX% between Billy, differences we fourth half you're side, second how see that and about indications But is that? question. year, you to any

with had. year. lot Obviously, and so Yes. we're think gave about the for growth expect balance a what the trend And we to have we the ways you Thanks, pleased should you far of that very we Peter. the of

year XX% three first way accelerate. said we've And the seen look growth the we the Nielsen versus the half was – at last I were to think data. July the as the consumption in I growth in XX% remarks, ago, it the put, prepared the year in growth mega-channel ran of simply in weeks at yet of

bit see acceleration. So there's you can quite of a

about the QX the And in side year versus we we of meaning mix matched QX, last July of a to the remarks, prepared in shipped because capacity the exactly I ago there's comparisons, we flip capacity, think in said about we if capacity. refilled what in limit have As our also year pipeline happened according as the in a everything million $XX.X tough the our versus QX. was perfectly compare

with in that skewed capacity. household have comes you media than household as making, us heading penetration year this and of we'll for us, limits. is momentum significant the tight which that And be more third it it's of investment prior investment, in our believe time we we'll fourth run lot Fresh from a when free. really this year, where next expanded when for So things year will The a year, quarter. And about won't on us capacity online be fairly up X.X particularly loosen us gains much Kitchen will we're that really quarter awful does carry base the deeper we and because with year fairly think a next first We'll From where – next we years several able end leave tapped into leave sizable have year. a the a penetration product, will the half is years be and towards to is by back Kitchens

think penetration. what the rate quickly the is. we've on as coming look other about Freshpet, growth household we now seen of the added went are it very on makes added of Retailers rate have also energizing business you out We'll – them so that quickly gotten. growth food And benefits from tailwinds have they've they trough, that came the strategically we'll have, brands dog important. by capacity the And back we'll the how as us our more have e-commerce strong how into might and would isn't left overall the probably even hoped the

fridges see to bigger fridges. fridges, starting we're So second for and retailer more pull

next going and long looking very very the year the ask when growth I for we trend us. being year say are very, I'd look forward of to favorable, So to is last, robust think a you conditions how

or efforts. of update e-commerce Okay. just more direct-to-consumer the No, on is that makes I expand maybe question I around efforts an to the maybe question. and going But fridges. understand access maybe is sense. second kind existing my through plans you direct to XX% just your trying year this And started channels. the then your consumer that second through That's of know the to my Freshpet Thanks. mean, DTC

one. take that will Scott

Scott. it’s Peter, Hey,

to of in different years. been do we And couple and can happening as it's different where like it's COVID click-and-collect we E-commerce more more over omnichannel a talked old years, are last the probably as as there. we've of lot it going the about products mom, expanded is XX-year have as many has as we're the something – way of portfolio people years, including many shipments in three of of ways. past the our to forced couple we three available as be making So And vehicles that's many lot we to sure people, – and my and months, and possible out want people and with using to get a our kind what's over was in Instacart. probably think developed develop something that from to in

that probably at it remember – vast our of look e-commerce, we you'll majority fridge network. when does Now the what support

So on that's everything and Instacart from everything click-and-collect all the the from shift, Kroger models. around Clicklist

the capacity influx had kind in. consumers and really those quite of because So to they absorb coming grew fast expand of

one saw of growth go was kick was around did to direct-to-consumer. during like and response are our finding our there FreshDirect, there handful really a COVID did very We like that were everything were of a small consumers ahead going good about Fresh and We access. great we around responses or off feel to store also We too. concerned models that all test very a those didn't was Amazon –

up did it we'll think it's It's time be the our to And an we educated we for some still of as and decide incredibly but good about Right being. We how many getting majority focus. of build while. we're experience excited minimal into running, this really I off. really, kick really a to for something continue It's this our future. us a retailers continue tested we'll do and the So what of out organization the the at and evaluate point, opportunities been the to are and and that's to obviously portfolio now, going address that retail, orders. is

half. much makes Good guys. sense. so Thanks It luck second Okay.

Peter. Great. Thanks,

question Goldman JPMorgan. your proceed Please question. next of Ken The is with from

specific is appreciated. help, from your to meat thanks heartfelt all you Dick, if of could on I bit and talked coming you where too, from for you about. wanted Thank that a ask Best much the little be me, more inflation of luck.

month chicken I a really think it beef in year, then and and collapsed. in your for do higher the lock about saw earlier you we

So add just if into curious comment you. that that a you little you color more made. Thank could bit

right, Ken, buy fine, this we're stores. of in on beef is the than is you're different as is grocery you Billy. we've We seeing year. chicken beef. The in inflation cuts that see But might – chicken typical locked for

So it's exclusively issue. beef a

then Okay. for follow-up. And Thank that. you

hear it, goes potential you volatility rates I is Or this, mentioned in I media you advertising for apologize, I demand into October? lock If but up? lower. Did being rates know didn't those you about through what paying a there talked you're if

to take want you do that? Scott,

had the or period. that's that's focused extraordinary we've a being on on – gone put impact been during locked Billy you're I and down rates effectiveness of rates creative of majority on up, in. it's to able more TV. think this, an productivity the X% we've what depending really people XX% touched come little have X%, is But also this vast the The mean, buying. Yes. the on But that And look, up that I to

we literally bit we we eye expanding was we and we I little we But when better the think committed I as also So media thought cost what we it ahead played is know the incredibly being going were on this effective. – to and because here. where to then I'm capacity. soon really was as answer knew to more were and more well, a have of an we went a kind out we have additional going we little bit did And it, kept

we out of I pretty So COVID, kind think honestly, played of well. coming

you Thank Great.

Thanks, Ken.

Please Securities. from Chappell proceed question. The is Bill next question of Truist with your

good Thanks, afternoon.

terms look the of is year. Just spike out? of does been months path some some you're the of next mean up. impact U.S., seems understand and kind pet to source there you of to these some four clearly, X.X sure seeing and X.X in And you've we that on capacity have that show ownership over that I'm certainly July. ceiling trying comes a kind trying to across understand here the for of opening there's the margins? until heard in like out Would the in Just it a three, of remainder Like I that up growth? between in

Yes, that’s a – it's a really question. good

be our started to now, rolls you line and of we we're that right year. we've on said – rolls on. January, in going fourth, the the second until in our capacity line end we're back the as fine rolls went fine – in have So got to the – XX/X script, We

bags place we've issues. So the only had is

we in recall, and you in us started If shift June, put and South in a second helped there catch has we up up. Kitchen February, that

that a two lines. we place be the When From to because our bring our the Fresh and in product the the only that's facility up going fully operational. our So is in X.X it basically, will it's Fresh Kitchens start-up on capacity fall, Kitchen we're tightest that made From only of triple – on means Kitchen up, and will starting our that on one once

holiday little But then. potential which a There that's some $XX.X absenteeism if normal now bag and of was scheduling. basically that assuming so and is you it, quarter, of of everything for ceiling between of million bit a right tightness think $XXX means a products of on a about lever. now, the uniformly, we And have the million capacity normal used it's next sort if

through it third be a heading you as of So quarter, tight will kind quarter. the about think

fourth we product X.X, quantities we're salable September, As and in Kitchens comfortable start-up October in meaningful then the very sometime November we'll into head quarter, in December. and

the have out Fresh the up a part, There not to little From for lot, most fully the of all year. the So we But of able inventory stocks, some able of third we on refill inventory holes a down parts we've be any fourth to be bit we'll end to created. first trade even year, if the the the time be by the trade get get drawn might we should quarter, the by I in and Kitchen. end the quarter that of of caught think

that So – From the do little Kitchen. is on I more… need to enough? clear tight give and bit it's Does a just Fresh that Or mostly you a little

follow-up. then great. that's just And No, a

now about brand you've think retailer one fridges year. in – I your store kitchens your I from a for had in mean

that's update we So trade have how to do expect you you kind then extended recession? going? of any kind it expanding bags? And if an of Are down any

any yes, so we are in really more near good this more the chosen. those it’s out really I that’s think Bill, very items the We any those It's anticipate thoughtful – played don't – a something expansion expansion that really, items we of well. think, question. term. been we've I of about We've

to over will in see additional don't anything term, what incremental we we with did – the do we've to right can six anticipate it works. portfolio. we fits that is XX Although and partnerships from changing proposition that really out first the retailers where some prove term, find anything that next near long we did, kind we in that able months, some But that's been that in very we do that's we our the it anticipate significant the with And don't test to today. of if

much. Okay. so Thanks

Okay. Thanks, Bill.

Bill. Thanks a lot

from question. comes Mark question Stifel. next proceed your of The Astrachan Please with

Yes, on thanks, and and to of good I back kind afternoon go the that. earlier one of questions then build everyone. to wanted

acquisition what customer because between a mixers in driving see in, you or What users. the to they were coming ask loyal are the question like visitors, all who becoming costs, as breakout and the that in consumers ask buying around you more want of it leverage it, give that new that main favorable. I to And to I rate. alluded partly, meaning you is So – are more

last So flattish after being that decently up dog year. for was core

sales So do side more you're you increasing, obviously growth go-forward bit are that's Because more how Can drives of not you as about talking customer upside. maybe other about it's presumably, that with costs? it on give penetration that it's detail productive think you a acquisition the well just And that the then basis? a household in consumers bringing there? we these leveraged can us

Yes.

So this say sure of audiences. who from are growth younger usage is We when know, the not disproportionate though, patterns, enough I seeing – do in recent yet coming we I'm the first amount of that increases. on – would the that we looking at detailed people coming are all, the have data our

That's the market that's shifting. market the moving. millennials, So the the where to where seems is Gen Zs be

data to I habits might too in are have think it's the little we in cycle thing. what than probably where most life might It commentary some – other say and this their a recent bit usage have. early – the Scott be

is and using what of try a And buying we're get would mix data of pattern, full practices suggests I've the be time terms product pre-COVID, ultimate at on terms it, are people we which that people we've it, of basis. That's through it, extremely the in the in several buy would they're coming very curve the some similar this to it, hope top seeing. that as ultimately seen Now, least and who a over in looking acquiring similar the habits practices are been going years. the last

quite the In the we see at terms significant And we glad rate, last of you new but XX% people if out that, new were incredibly the bit over adding, we were like couple of we're decompose it, took of about number actually to when the comment adding quarters. a buyers. we that buying looked

rate have year, are people to same than more down the around buying it took who seen all rate for the were they a who along. you about we've increasing at If been actually

know got were who Do purely or in we the don't right new flat. differently? adopting are worried increase But It by on all users. that being So not. if the it see that not about any buying I looking diluted rapid at was rate, consumers, you Scott,

we're No, a in. trial will very, data. but then mean, and curve usage. from over peeks similar does And no, very consumer to of different of similar – time to graduate I I adoption know shopper group very we don't they're right. there what it appears higher have kind of sneak and upfront, exactly And be a that's retailers, that's handful of their like kind look up the some it's cart think and here you coming it levels over time

very very, similar. So,

think it's I is the buying don't our by think I rate rate. consumers driving that are consumers is the driven buying existing the new being take.

productive year. been dog. it's the Mark, one launch that's of one of really its third things our the for has now other point is small us in been It's –

continuing small certainly very, grow at rapid those be it us. users and old. two as a is tend to a a very And to dog replacement half rate. and that's And and helping it's people So who it complete years that meal use adopted

very Thanks guys. Yes, helpful. that's

Mark. Thanks,

of The next Davidson. question D.A. with your comes from proceed Brian question. Holland Please

Dick allow you've of past Thanks. pass to well me think the talked about Good you my of talk best limitation is first to afternoon. couple – biggest And years, on growth. one Billy, and wishes. things to as is If about, I congrats we capacity the your

move As we start to into XXXX a that eases bit. little

on want a like biggest media? to want reasonably how control growth you really that – media X.X seems from coming how that driven growth that pivot by it be serve sense. constraint your it to much makes spend you And board, might with such how that do to if to being curious on can capacity much I'm from standpoint you we So

If going just issue at managing understand penetration, that growth. could you some media that hard pretty see the level run but household serve thinking you forward, could slowdown maybe becomes help a me in about how certainly wouldn't because point you to growth you're obviously on an and of

you help walk sort me rope. can understand tight you If of how that

Brian. good that's question, Yes, very a

strategic interest also a of we interest. to fill grab. our it. best both in we've land our in as, capacity, all, It's essence, we have we in all want first It's as this along, when view financial because So said

try have So to to sure getting fill every we the but good as we supply we for to as a it can, where do product. head XXXX, quality making in our way we ability investments, our as compromise incentive that capacity productively don't into responsible we're the or returns

encourage we've up our we will we'll also Texas break that it and I'd Ennis, week. facility committed about we're And building next already ground you that on that have to However, think in comes in need it's running so reliable. it the accelerate on get XXXX. there, or we that, of want And quarter third time we so it, and into roughly we to when that

So if Kitchen we sit going well. can accelerate we go we well buffer up that start down hey, are how at probably and X.X, did for capacity say, us in Kitchens at that. that we the should at look done is planning, the get do interest rapid everybody's to we'll this how and construction our the growth, of we're returns more end South for take something year, what consider investment look growth, good of at as we it's to a any also along to we've Because far X.X, support and and in frankly, we design best if need and

So, your driver, we've to more add capacity imagine if comment we to can and use media add we absolutely. about fill would But how you more. being and need we tested at can media the how looking are

the you ago. appreciate than might color. months might media you, when have of for Great, six kind you Scott I today the and think users, the I thanks campaign drastically I reach mean, new look look that and question about argue to spend messaging to how different the and

messaging new can pivoted So Thanks. curious you if new about sort just consumers. the or of talk potential to you how

mean, bore did marketing Brian. that I brilliant through to team job. everything don't It's a did the job. And a The good go and the everybody a agency question, I marketing agency, creative – want our team, great

that opportunities and did kind planning the in and really of lot don't of advertising, bullish too. being people really able and from and quick the a of think opportunities everybody, to that's time in afforded incredible great layered to job. what to TV. would we that all but thing. want some But along a bore windows really nimble of a I different it's entrepreneurial digital this mean, things atmosphere were standpoint, Our say way. new was ability the we is – incredibly digital afforded only I I communications be from where – us I And gave what and agency air us different home when were put some us watching on types tons those at not And we relevant the digital creative

So And do – play, back further but lot to about business. same of say talk a a and that to running an of play think how stay the the key can but theme the kind to made into is operate get really I piece environment let's but I'd it of small will do I all partners goes that's love us kind Brian. it, want I big, I think a we I don't think about we operate the in what's it, find way. think constantly – and way And along successful where by

Appreciate everyone. of it, Best Scott. Thanks. luck to

Thanks.

All care Brian. right, take

of The Please Blair. Andersen proceed is next question with from William your Jon question.

good afternoon, Dick. been congratulations fun working with you. and Hi, It's everybody,

Thank you.

plates less lot do been obviously, little My question is Bill, you the a new retail balance the and around place through that's or prepared on year by willingness comments have of customers fridges? year? retail a for both to that caused And you ability year. execution. sit to today Where think mentioned their their the end retailers in for the of expectations this had perhaps the with new are new stores respect your net distribution what

stores around the to are time. we quarter, comment part that guidance the going on be new would this. sticking But last because to is your thousand are I at with do is the be question, – on big of offer last which Obviously the the stores. to stores our that guidance overall last last net we're are closed. customers' you So willingness the you many gave consistent the there expectations a one how at going part quarter we a with gave are of still

doubt that doing is There's grew this could seeing I back and whole we're it's in their think may perfect, Freshpet But interest but go could are, through their strategic it most routines and backwards. of experience. whatever normal no it perfect, not backwards. operations what pretty merchandising them to are go now the close

fridge went win saw, because the And in so, in come believe islands that is this now to and what three environment. middle the we in, kind saw fridge, Freshpet second very can be matter customers in of some channel they putting stores chaos, it third that very, delivering And in to performance. they way we where of this all doesn't seem they strong they've

next I say turn accentuate the year. offer year, to rush necessarily the strategic this not comment stores overall and is stores advantages And the the has that may stores an the this and on into will certainly e-commerce of half to of sort retailers. we would COVID this first that drive crisis in into but towards So served turn it

out, have again quarter right One I capacity the of the want a capacity. about in like with to of lot of and from discussion is just half a second the Fresh talk quick perfect the It per around pointed follow-up, $XX.X implied you you for that's the there's bags as helpful. cadence minute and sounds million the now that's around mix, rolls Great, been year, Kitchen.

and through limitation? that. stronger second about growth do Or of year? Kitchen you the than than we comes the different be quarter the light have Assuming the X.X somewhat the in Should quarter you'll growth of addressed Fresh the in the pretty Thanks. half rate that in a coming the mix have of on fact expect fourth uniform from perhaps just thinking third kind

Yes.

parts of two So that.

quarter on So historically been the skew it the have a third more our consumption fourth but reported I worth same that that for going say QX reasons not basis we them, first been. we're I size. it might a they this quarter fourth of laid would reasons you're will than year of comparison There's in Nielsen revenue, if not variety in QX. to a have that, measuring shipment out. as the historically, have into all, towards our and but about said, tougher a you on going for I'd exactly basis, in also say

Kitchens refill little the because in bit So trade expect just QX, a we on. would of back inventory when more comes at little X.X a it QX to we draw you end see should bit the in QX down if

Great. and great congrats Thanks much quarter. on so a

Thanks.

question The Please Parikh next Oppenheimer. with proceed comes from question. your of Rupesh

and my taking question. afternoon for Good thanks

sense new click those it your some the the time or from during getting versus online gained whether back and consumers directly buying Freshpet are to fridges? of customers directly So going I of you any that guess quarter, first just the for through collect

thoughts do Scott, have on any that? you

retail the – there are or the that that majority e-commerce. what end sources. vast are online Freshpet them at up – us to us are finding we customers. majority look, it group at now retail people people and Yes, of a slightly I But of through from up those retail average being There's use picking consider are above starting and buying is online

then… great. Okay, And

is produce, where eggs, the their we're – – the whatever of sorry, in the yes, thing trip on. be the keep people their that Rupesh. milk, it think to their I their idea mean, to fresh rest around the typically meats, I mind are going buying their core groceries, think may I be that's their

in the periods. expand was buying a And and little sometimes saw trips the but bit, rate stretch up we then short

pretty of but kind think, So us, good rule – a worked of out net-net, evenly it it thumb, that's, I pretty, Rupesh. for

at sense the right then to consumption seeing now? any product trends just And maybe you that if strong whether recently, I seen Great. are Okay. the going look you've fridges Billy, more back guess, at, consumers they're stockpiling the since

Yes, when you look…

I…

Go ahead.

I in of – conducive while, periods stores sales haven't to they to is periods. overly them the in to And certain bought focus really in there. two over the are been there there want XX% don't mean, there, or products it buy. get being a once for they of it's of product a a available, a like oh, a the SKU it, – thing and there's every that part, but wasn't buying majority there think, vast you'll impacted – were It products on I were fresh definitely most to where some I Yes, not our someone, product, able but But and were other – today. some some were as I people hear that the been the stockpiling.

bag think a people there, – not really so an there's business few are the but driving here that I point. So the or and kind of that's did that's buy extra at fundamental this

seen in much than and were if Rupesh, we a in have were would growing rapid May at shipping in and rate July we're that May. true, that And we more

get couldn't stronger and much I'm So, but they now, done June. May last would the we're have if in time, there whoops, that it in I June, in maybe buy I we in going had a been to think, than July, it May, were

see to And Or during Okay, intensity the from Then on peers? guess you in from peers also did your where they their do just I'll on what I was great. it you're one one. similar just sneak seeing Where quick what Or – they has pull back? advertising timeframe? any is thoughts been?

to category quite that advertising. entrance, peers. first for of new – it's it all we slightly what we don't a There the some the tell, in some did this – get – people from – into would bit of could advertising their some and we we spike some was the rears similar those on have is We because our yet, of newer of the unfortunately, is levels say, that don't anecdotal, I little but many data it were down

easing even, looks like bit share traditional periods. stayed voice an was overall, of but it a little the of probably more So, some players, there during

Okay, great. Thank you.

of Consumer from Please question with question. your Ryan Bell next proceed Edge. comes The

And the of your incremental outside team the pet think imply home you has home, done what’s or been XX then in been increase from understand at has would across When measuring increased one short-term trends? to work day to everyone. implications, for workforce any ownership Hi, dog XX% rates? new parenthood pet you've of way there work short-term a that about the a

very if Yes, at sketchy as beginning as Ryan, but you And the they in of they're pet dogs this can't lot the together a of COVID significant data oftentimes late. at what we've looked on data the adoptions. uptick pet Unfortunately, is thing. pet crisis, the same saw and There's a we also very blended fostering, manufacture get overnight. was adoption

and breeders what so, longer empty the we And was shelters had dogs. no were saw

the adoption backside. significantly dropped and rate And on so, fairly the

grand like pull it XX think more there it being change bit hundred things, we're there hundred there's pull the in X early a but you million doesn't couple out if dogs in bit that on, there, a of was we adoptions, you adoptions. of and to of United the a really And households though, so it's add We're thousand change to by doesn't think these forward we – our it opportunity. total gave going from a the about in number from the us that on net opportunity. in if get probably and X fostering, incremental like a little adoptions States. And When in materially little added are the million dogs scheme that that tailwind of we're new dog a households ourselves in looks a of was looks but pet by the into us balanced, extra XXXX think and trying really that couple million thousand forward you

hay. is their we that's much sun And going it. research We're but make again. certainly have no think around relationship reinforces is and over time of don't pay going time think that's to Freshpet how how people about your the have They reconsider at In pet. without helping to and value think know there's the that seeing And a with at that and to home, home, going And really while we're long the of attention to that phenomenon of and They we their over and driving you to terms spending of the food value pet to us. doubt shining, stick, doubt. we it's be dog. over

be entrenched, helpful. business? you the that Great. portfolio, you have might environment Or any tiers mitigating price strategies very And and if be lower consumers to effects that? a priced and negative other more innovations? but I we're that would That's down, trade know able do have many start your have in better If particularly it about Thanks. do you economic thoughts a strategies with stays negative for your that deal to to

Yes.

that looked look we’ve economy. see pet food a what you So premium historically all, We’ll from data down – first in back does happens that period. if very at XXXX XXXX, now. well XXXX, at We’ve the again of XXXX, the says seen

of some if significant basis, trading monitoring job we’re a seeing on a We’re you our some we have that published who or lost would what up, price who are regular a you asking investor and and finding about down. of does where in of them our earlier you too. people materials what And year, had your consumers questions pay, talking to think that reduction heard your are aren’t a wide lot retailers I points. this people whole I’ve is trading do and happen, that really We range actually do?

outlet, the look items. premium want role in are the the item. a level buy across can But buy very if grocery growing premium you mass or feed most per cost you lowest you and all lineup, more price a If attractive pound price you buy cost, the Freshpet pound you size per up or and at the a the that the things it – fastest way of at to larger our to get are

it’s aren’t yet seeing that we today So trading really not any down – consumers value. are evidence for

me. for Thanks. That’s it

Thanks, Ryan.

Moskow next of Please with Credit The question your Suisse. is Robert question. proceed from

doing of was But and four XX, Freshpet time food your is I business Hi. is I that XX weeks. great, Slide – already without presumably weeks so more asked is have from doting mind that XX are wet at for spending and your weak for business. on people all rest guess category my top questions, given the dogs home Obviously, see But pet last for me. adoption surprised that their sales the is which this and showing the category dry of [indiscernible] the to is the down the fact is surprised separate dog everyone your data you

business it back. people include doesn’t Yes. online. you’re Rob, that’s didn’t because what measured moved online come moved in And there that online and seeing is the the channels,

That’s all it. I Thanks. Got had.

Thanks, Rob.

Please of question next Sachs. The proceed Goldman is with English question. Jason your from

regular prior for you’ve I with Dick, Thanks your for here very congratulations everything working certainly our folks. accomplished evening slotting and We’ll me And sincere basis. a miss path. paths again. career good Hey, in. once across Hopefully, you

Jason. Thanks,

questions. my to On

lot the you the recession. conclusion. followed did of have a have found wake like trade same on just perhaps consumers of at it look You work the and hypersensitivity because type distortion? same recession. has of with to right appreciate into a past if it that sparked the think in able you mentioned guys the in analyzing I noise in that, Have the where in I’ve the I work didn’t same melamine reached and the any so, which other caused analysis? But done really a we crisis, And pretty what aggressive periods up that you time been data

look of – comment that. of you at view But period I another period, particular seen might you up fairly that over that that households would one time like it analysis, on a that considerably Unfortunately, haven’t also the that I and of this. point I look number the could at have during on time if period. in Scott dogs thing went same

were household feeding paying dogs in household. for dogs choosing cutting or – more to replace So it’s on not actually back like the There in the their were people dogs and not having dog.

that two but and you still in interested melamine, together put people about understand their the the So says are facts feeding I point dogs. it the

That’s Scott, add? to anything interesting an angle.

for think I of trend fundamental thing the your I food this before, here it’s mean probably heard last that eat. and I in kids, a say to people you me mean Yes. but goes. what in decided is you’ve buy they probably organic how about And think you’re milk really if seeing how kind rooted

but And will think only so kind current of of think stay I that people I not tight, people, the concerned people about are healthier. kind eating

of is last think to going be kind thing will I impacted. the food be really that

looking kind core mind in when you’re So thing to keep I this. the of think that’s at

the I’m by the of buy and from is do questions some scarce has capped stay-at-home more as and ask home, out thought on fridge. only room in skepticism, skepticism, at a I I fridge Where recently create in And gotten ability by think Yes. And is become some because out My to to XX% the to me, of back curiosity Freshpet it incredibly to data to more XXXX realize, precious. more duration, been loyal however, don’t same. XXXX. I can’t enhanced willing of have I capacity. dogs, didn’t have where my And obviously quite with on, grow three the stay skepticism intuition I a just if you’ve which rate, the has I my a points. capacity incredibly degree few my of buy you consumer Freshpet

a in-store potential as business So time. at-home capacity. issue factor we’ve capacity expand should about manufacturing talked how can you over is a real gating a We’ve We’ve you fridge talked about of how the lot talked expand that. network. this about your But how with there we big contemplate capacity be that

I don’t you point. know, a Scott, do have

I think yes. – Look,

dogs it So can think two be understand – freeze Freshpet, large and you’re have that are to a that you like if there’s can I people – challenge. some there I trying

people buy buy on obviously up As available know, two to you in you three at do more week, to places, interesting. depending rate, a look options shop there’s are week, of where you’re you the maybe But And pretty shopping. it’s kind times a and times if as up who Freshpet. to we’re more

We’re $XXX.

fed We’re you over Freshpet a $XXX, But $XXX the in dog you’d even excited $XXX, range. majority of course XX-pound that. be or just if the the about even year Freshpet,

medium easy the rates. So dogs, a on kind of with smaller and buy of kind path to very it’s see

touched charging there we’re of top you’ll And items. important a capacity for from of offerings, us not constrained continue at feeling walk in you’ll And we’ll different there’s you – And more the able most of bring more, over different higher-end, is additional point more just the XX standpoint. next and look offering away most et like point, part, the – those of And different new the are price not on, an over which are we offering and thing other types values that do look past if products. a ones now we’re the expensive and fastest room be are months. from on and see new convenience, that benefits But infinity. kind to we’ve the that what those cetera. is to for there’s good Now features product it’s – think some we’re earlier, these end our you’ll that’s I innovation them time, Billy think at on about see, the products kind the pretty – to this, the where XX ceiling I the coming is growing had us

pass question is sales – you it’s relationship clearly see across Okay, a the type of interesting. for relationship Scott, it industry I’ll between relationship scarce it’s terms – Last in and me, overall. we the you’ve consistently shown what and which advertising, very on. guys a

decay to scale of point it media levels single further? budget that advertising pretty for brand approaching full are a a that returns begin diminishing you efficacy You’re business. become the spend on At as concerned or what continue about to should we

tremendous targets, it’s you adding It men. parts, participate over target actually a in, plans TV, at done out have like north only we’ll our just women all across – other real of good of really crossing have we there media types not different which if expanding and be to threshold, advertising, the – year, feel the both even million question, our things actually diminishing certain was We’ve is expanding offerings that looked and And look we and be marketing planning out that like $XXX all towards but biggest million, and we but different to networks expand. we into opportune and crossed work our We this. today, our day we how Yes. around digital that returns. worried media and – $XX time into we targets team not this we’d agency way threshold the types about different at the actually the were of – different done continue

year, media levels but we is were great unique to at prior a seeing returns COVID. it higher Now

had creative, to what what forward. we done that. in of So media we demonstrated we want media. on we’ve can from be and we’re standpoint we media the And testing least that have months a the we at XX want plan that also to to tested of done have with months really And is months do have goal testing XX XX

So we’ve done run doing we’re media what that into we’ve apply now of should next the tested that the levels kind will – – year. test should

of expanding I the kind and big $XX arenas. target think us, probably new guess, of north looked at of, into of different as where I threshold we kind get another a million for couple we’ve would that’s be

really the Great. answer. it. Thanks. I appreciate Thanks for

Thank you.

Please next comes proceed question. with The question Ashley your from Jefferies. Helgans of

and me. quarter. afternoon those for And just marketing you a efforts update your are I’ll on one in the quick international business? Good the in Any do on Thanks. congrats where regions?

Ashley. Thanks,

As they go pretty crisis to we arrived, Canada two stores, the in terms fashion of COVID – go ransacked in U.S. in said it and flocked hit the last UK, people shelter people our place. international stores similar to markets, a the much the the in the to quarter, stores,

were doing really place, was investments then, we changing. where the We very back And where people the in putting then in are period the when the unlike in distribution come to advertising we not to making. with we to broad well. So air. robust driving get we they we there’s we’re to shelter with on a were fairly of went would. lot weren’t rate is a position already could It exactly benefit the business really a at just very, then get put brand the advertising. whatever sit going reconsidering new thought not out brands. the we expected we from on the and U.S. they’re trying ads that They’re the and it Prior We buy. But and

to going to we did news dog to news have next So to as is but a of it we’re goals progress, because do much it we progress I liked. we frankly, to a got bit The to as trying to laid year this food The this interrupted, we were make all good year all and have bad off some – we’ve what out. and means pretty try that’s U.S.-based what that is restart of going good and and we want to start we’re reset again. with did our meet make year of completely do to reset next got our can year. accomplish not business, we’ve again little think and It would what readjustment have of accomplish

and congrats much again. Okay, so great. you Thank

Thanks.

question question. from with Bank next of Please Spillane The America. proceed of your Bryan is

actions question, Hey, and retail took incremental – of took pivot to everyone. just related on the you good I afternoon, stores I one have in was fix think some you it’s that one you referenced to – coverage. the

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take Scott, do you want to that?

sure. Yes,

followed So needed corrected get out the able the into business literally get – the on was – when right we with stores to of we labor was in, saw that’s COVID we jump and and then to actually the going the in what quickly, shelves condition, media. our kind just where help in the labor was on that not with

every tested have is and one a with we currently retail one, – and like night is different have. to We’ve we cadences system to you get are we’ve stores thing and long-term put conditions are And those pictures the continuing different tons series we’re sure to a trying problems, that – get effort The coverage tested moving make retail Now what is We’ve I we single on it really different is of stock we things returns. found trained. we really, have we Where will levels that cloud do to actually actually with that coverage. tested visuals, what those uploaded tons digital of the all is of in your that artificial is question tell to what every more are, a good evaluate sent we really have interesting. to where using fridge have intelligence which now then to get partners. correct of

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the technology, So on looking changes store or we’re resources whether it a if economics per we it’s – really changes store, putting it. and labor at at week. economics ago, $XXX the we’re of and selling $XX really now behind per a and store dollars whether it’s that’s sell – It years looking

a make possible So think on a we to we good if return invest but are in think the something, sure to final it’s question. we we that do we want get to continue in And we at I all can at position it. retail want answer, best have then can times. a don’t I

uploaded a would It’s a of that instance, the the selfie itself? take that gets fridge to in Scott, So cloud? picture like

that Yes. would are mirrors the whatever fridge. that – – mirror or the take the think your car take And angles. the technology the or on rearview We’ve mirrors backup that or can backup picture – of incredible of rearview the on that are cameras been camera your actually the able that to a mirrors your inside develop or side mirrors

pictures we’ve been stock. that’s and So fridge, of of intelligence product and the which recognition artificial using And software we’re the actually be to that actually identify able the inside out then facial to on. type take we’re able working is technology to of

really – be time. going smart over to we’ll on this we’re So get

you. Thank

you, Bryan. Thank

time. additional back the turn to Billy call questions remarks. There Cyr at closing are no for I’d like to this

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