Freshpet (FRPT) 7 Aug 232023 Q2 Earnings call transcript

Greetings, and welcome to the Freshpet, Inc.

Second Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded.

to call like host, to now Mr. would turn over the your I Sonnek. Jeff ICR. Investor Relations at Thank you.

begin. may You

Thank you. call Q&A. and Chief will Call Chief Good also morning, Officer Financial and XXXX Second Executive with Chief Webcast. Earnings Officer. Quarter be Scott On Operating Todd available today's and are Morris, Cyr, welcome Billy Cunfer, to Officer, Freshpet's for us

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

to Please EBITDA call, note today's will non-GAAP others. management as that measures, financial such and refer among on EBITDA, adjusted certain

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

website. that is call, Finally, call. investor on the that a on company commentary of the be results walk through on presentation will produced key the will will rather discussed and presentation guidance metrics the the specifically That can this today. company's presentation Management's found not they contains many be the the discuss of summary has

focused performance reported in the or quarter. being remain the Meeting questions Annual beyond your here that what on ask topics Stockholders' the business and today. other the is of we'd the not upcoming Management discuss will Additionally, results

to With I'd over Billy? Executive call like now Cyr, turn to the that, Officer. Billy Chief

Thank everyone. you, good Jeff, morning, and

The ahead well just many message I for business you convinced the we Freshpet away surface operating the Freshpet to is on that of opportunity years remain is that is scratching come. pet to has both both the and food us growth take positioned believe would the that In of the and enormous real momentum to transition lead And like and of line today's Freshpet from future efficiency, to very the top bottom we believe are still that food. line. areas, we the call fresh

the in intense the In QX, targets. the focus the and improvement quality, strength while volume EBITDA this that volume demonstrated committed have growth organizational and our of penetration penetration result Freshpet focus customers supports growth near-term we Household exceptional marketing are our in costs reacceleration The made pillars of significant are an mastery. our of of our we the strategy; The simultaneously progress and improving long-standing the underpin long-term result reaccelerating support operating logistics improvements that innovation adjusted environment. Household delivering input on of unwavering our operational the areas growth we X that the both year built capability and and and of on proposition, foundational to

of our outlook detail the few provide then a quarter on on the an for balance share our I of highlights thoughts more and the the year. Todd few update will the a and and year performance on guidance will for

We growth. greater sales net quarter strong growth first, XX% quarter and than consecutive net delivered with the are: sales our growth. XX% highlights second XX in The

we of was XX% consumption quarter Consumption and the in in was up XXXX. our This on of year-on-year is than contributed with in a little mix growth in for XXXX and CPG our the goal shared pricing more growth strong net QX $X.X XX%, X% the quarter our unlike to us is the the accelerating and many line received. encouraging to quarter. growth to XXXX that of plan called growth in from other higher the growth benefits and accelerated XX% as sales. track volume billion QX quarter's our most in is Pricing volume deliver guidance What and for puts companies, that mid-XXs

growth. Second, Household penetration

As the reaccelerated the more the near-term higher meetings, the in implemented pricing for on The the XX-week rate. ago the up consumers in quarter, XX-week XX-week basis. our users, measures foreshadows we Encouragingly, was trailing penetration which ago digested XX% up year amongst anticipated, was higher past a have had growth we of up as versus versus XX and annual once Household and HIPPOs, higher Household that X-week months. yet, a are penetration the over growth quarter rate the XX% positive heaviest year growth momentum such a even

and was rate our versus year XX% ahead ago. buying the our franchise Additionally, up remains for of well a expectations

of for guidance. well our Third, a This quarter ahead was operations team. breakout adjusted EBITDA

in second by coming biggest the DC. as call, Dallas EBITDA As strong part with the exceeded expected start-up of with quarter performance start-up improvement line to in across those in P&L was weighed heavy last the to logistics. the be NS We greatly our and our we due on every QX expectations costs discussed down of adjusted

XXX by SG&A. points of had costs due utilization the we ago strong basis versus QX, DC, the primarily quality second to input successful strong and costs, points costs but rates fill on year and basis and Our versus our performance improved XXX also logistics

provide for year. detail and As our a we improvement more will of raising the for EBITDA encouraged the that we Todd our by further but are of made rationale and you that improvements have we drive efficiency strong are we ability this our guidance result in are continued and the confident should the seeing, take performance and adjusted operations improvements. very away the to

You take are well embedded the to cost should deliver away we also in goals. on XXXX our improvements that track

proved reflect Freshpet commodity could we even price that grow costs. strongly higher levels when Fourth, at that

the price at have our and a We accelerating. February the demonstrates taken improvement over This and a higher strength volume to of stable have the a increases cumulative as input and a continues higher impact we the price strong absorbed. costs growth XXX brand percent came cost net costs consumer impact months now versus full point more is Freshpet of reflect This our be of totaling increase XX sales pricing, Input year to ago. approximately past in reflects Despite this XX% XX.X%, basis input proposition. of environment. the the

have gains and these we our we we increasing are initiatives believe purchasing. production savings drive underpin improvements cost in in opportunity scale well that as further the necessary XXXX benefits yield, With on such some operating in goal, and hand, to way our to an savings achieving areas

higher our avoid of However, to on goal efficiency and be our environment will cost while is to capital. that us range accessible used help Freshpet will improving the invested improvements generally margins generate price returns to increases further consumers to restore our and can we make broadest

processing up the operating the bag X running, our is is XX/X roll of Fifth, to deliver. the quantities on providing chicken and planned. continues line Kitchen operations The line and schedule, operation large Ennis chicken start-up as Ennis now to and X Kitchen

can of operating We efficiency These are also support as up realize producing our demonstrate were thoughtful about the SKUs we the to full the team, Ennis growth. that execution remain of optimistic we facility. our range full long-term very ramp planned to gains we for future and

to that the that staff bag Ennis We line will and hiring year. expect in be in in commissioning producing we next which half line are in means start early to of begin the stages of the a on of and second line QX this then that second year, up planning

of up. building has construction on the X frame is and well Finally, the Phase gone steel underway,

we of need that expected support capacity which line The in anticipate Phase production QX will we begin first is our late year that X is next in when growth. to to

levels record Sixth, customer of support.

a very fridges total fridges food and that of but being growing capturing begin placed and project the new fridges, program the efforts, net demonstrates interest second upgrades to fridge those During effort a fridges the more fridges where a third single second of commitment large began and stores were we QX, in Freshpet X,XXX X,XXX implementation shares the upgrades, of June. in placement we X-month saw place of balance single quarter, history, outlets. new the than were third including several major our at customers Many customer category. them we existing XXX with In or late their largest of in very large-scale in Freshpet

are than retail. which For heavily refrigerated to the year, more the fridges. second install year, will similarly expect end the X.X have where By to fridges, than to space continue feet to more we at million and of of new placing be third expect we we skewed X,XXX cubic stores

part to Chief the now was additions we strengthen J.M. CEO the And weeks Supply is And brings of West In recently, to Big and businesses. former he we've excellent In our of was Conagra strong that, May, high-growth joined Dave Vice our for to he Chairman continue Chain CEO the some Board. of Seventh, prior our Pet perishable Board. Simply for expertise is Good Foods. our most appreciation expertise, Smucker. we Dave Two will join to brings an Committee. CFO which the the pet food highly announced operations has Campbell Soup of financial and Board. that challenges industry and our Officer our Dave Dave months, deep to the X past of Biegger, Board. announced Hershey. unique made relevant former of appointment Dave ago, Audit acumen the business. Dave Heart

announced as George new we our Chair. Board Walt selected was Finally, that

our retirement Walt despite hire that retired knowledge place Norris, we year. accordance Charlie that with in X-year policy champions in the to we mandatory as in is of we put transformation replacing announced XXXX. who that part plan plan compelled the this Charlie governance just him

the his grateful of challenges rapid a began That pet as both the its the of for into the he net sales over life. is on gives pet of committed largest in from in even on the from Chairman Diet years. operations and health step million the $XXX animals. since the Charlie officer but projected public network building in and million an with $X.X in as one funding importantly, vision a Freshpet unique a will seat food moment large of and to also supporting deep supply during knowledge with Board $XXX perilous many personally growth his million to at nonprofit a company industry. and year to billion. Hill's Frito-Lay, been Foundation, went of We Animal creating well-being growth. deeply the Walt studies Walt was and $X in support brand Morris has which board Science company in insight this the key companion more capable career him executive at sales into early He's the company advancing to XXXX is sales he the scientific debt He worldwide his of animals seamlessly. one company organizations the and serves advance Walt guaranteed of of at are health companion the shepherded a a so incredibly to that

Board change of to and provide X-year pursue our business needs the parallel years to evolving in That governance the to meet us are changes a the our and pets in better commitment be way our of plan the governance Board complexity multiyear people that changes to plan counsel we the scale a evolution to strengthen a built philosophy feed our also in with These team effort our Board demonstrate punctuate company These and increasing to should addressing their we capable our XXXX. transformation initiated changing prepare they mission ahead. emerging that challenges leadership and encounter Board's forever. on practices our and will match our

announced critical have strengthen capital Last impactful Freshpet the which in have organization. touched skills ago, our our efforts the workforce, that we part investment X of turnover reducing to our we production dramatically are announced Our September, delivered today. sharing stabilized and every results human our building rapid a numerous changes strengthen years since and we several to filled a strengthened CFO, EVP has roles. Academy, our other a a our Supply both a CIO, roles new Chain, Manufacturing team needed management new our of Manufacturing then, new growth. Logistics, a support and and VP of and Head of including numerous new of Each was to team and these new important

that increasingly operations continued growth. based Looking will volume deliver our forward, household and improvement in penetration strong and I expect our efforts

very us. from have and built of our to our team strength our floor is goals that Our team surface should kind set to we scratching to you is We is more team, delivering and team the only production what year logistics marketing performance focused our everywhere finance the believe we the and team, for this is on the and expect possible. sales of from

focused on as very goals out year and we are in this quickly We the Fresh doing future we can. earlier delivering our XXXX laid it plan as

momentum, We that show results those our building and track deliver we date are to on goals. to are

results. over it for turn Todd? me let Now Todd the on details QX to the

morning, and Billy, good you, Thank everyone.

this earlier to Billy year have in strong we reflect our the and guidance that EBITDA raised saw we QX, As said, strength. adjusted continued performance

bit Let down me a it further. break

Net ago. XX% at in up $XXX.X a came sales million, year versus

mix the up more volume versus around dollar but X.X and across in and Nielsen Our year channels, the slightly stronger ago greater was xAOC non-measured The was in in growth points a unmeasured ranging our from than channels in a XX% measured pet X% ago growth XX% to in added about the was was quarter price versus year of channels and XX%. our growth. in net much the low channel measured quarter XX% than broad-based Total grew a up specialty channels. to growth XX%

better This pricing operational QX, performance ago our above of of solid in better is XXX plan was Adjusted to points our than improved margin and expectations. the focused Ennis. due was factors, gross in inputs, a improvement improvements XX.X% variety of including base quality, year that on. cost our a team All a in aspects basis start-up and

continued to we drive will expect We margin and move as enhancement. elements improve forward these continue

of chicken and less but the have time. and incremental that than As Ennis in to grow staffing up operations cost of prepare in production dilution will line, our we our next we in processing, full up margin ramp both will some our utilization the into to due we as over capacity start we

of struggled in more kinds also The to logistics our previous make absorb total costs. will company the a increasing incidental also able years we resilient in issues lower production us much with and supply Ennis that

points percentage the the XX.X% The strong quarter, increased of gained XX% a costs XXXX, half quarter we however, year million. XX% flat in XX.X% to we year as when offset improvement Total media was of in but costs. adjusted was the We utilization of The spent spending this SG&A into balance ago was second was versus logistics, $X.X first due increase. down the sales below net ago. we spent year the impact lane to February XX.X% price in sales media SG&A leaned our fill the up Year-on-year, the of DC, the ago sales were our quarter. in of media from net where in biggest a rates rates, XXX of diesel healthy basis favorable and lower

was operating considerably than QX, we due addition had and in expectation is better in million QX. in COGS $X to primarily EBITDA performance and shift the in spending was modest to that provided a SG&A the to QX initially from strong logistics Adjusted

the of For we of to we $XX ahead expectations million at set in the initial date, year. have well delivered the outset the EBITDA adjusted year,

construction of $XX outlook is Capital which of below our sequencing in first this capital There early production change no chicken largely and at related year, building, the facility spending some spending Phase expenses slightly $XXX for in to stages million. of remains completion expectation the processing of the X. to in in the the million, recent quarter at most came Ennis sizable due

very position Our cash strong. is

to of believe fund through expect and positive We For cash fully be the have income that remainder will each we adequate we interest year, interest the expense offset our XXXX. to and we flow XXXX, largely other. free in growth cash

forms a of access bridge have if traditional occurs. that gap to to it in We will we also non-dilutive XXXX, believe capital

to be volume sales but business half the from pricing. be first of growth X%. growth. X%. balance of strong had driven the increasingly XXXX, we in net And will In to of the XX% the that terms less growth we than a dropped cadence demonstrated pricing QX, versus our continue by QX, we In will for growth the by QX, benefit In it expect

expect We to continue XX% growth from the volume the we in QX rate year-end. by to experienced in increase be mid-XXs the and

to it where by of growth, will XX% measured where the consumption the We dollars, the expect mid-XXs continue to XXs upper measured from in it and end around is Nielsen in that is was the QX now grow year. from which

growth rate is accelerating. business the growing quickly channel non-measured even Our as stronger be will and

growth than inventory very refill The in stronger be will net QX large year QX ago a as rate the during versus sales a in ago QX. had trade we year

amount QX did XX we very and While of it's difficult to the of growth measured XXXX. in refill, rate rate gap Nielsen points the growth net the determine inventory sales between have that a of trade

refill occurred favorable the million estimate the trade we in than in to year's recall more and interruptions $XX last year's due bit $XX So year-on-year comparison also that QX that Separately, year was to a QX. will QX make had the we this inventory some now in million range. last had supply

build logistics scale continuing see have operating to in continue already costs the seen in delivery as quality. improvement continue We our Ennis in QX and in we we strong and

adjusted with the additional half significant to margin gross we in and will adjusted the range. in the improvement will impact year, year demand However, in generate prior anticipation the adjusted the staffing margin will will XX% be the we second of the meeting half QX Despite XXXX, margin. XX% experience versus expect gross that we gross in adding of back staffing, of in

cost relief some our this locked we typically of we that in modest At for year inflation over the continue also year. past those see costs our point, seeing some in inflation, fairly labor are were constrained heavy terms on costs In other of the component, but commodities portions with a over structure, to XX% are X. or of

like. opportunity little will year's or what is upside cost tell this is it downside to there So input on risk next look too total basket early costs year. And

though, In we investment this the a spending than on plan sales will a QX. second half. we a will to the presence have year, $XX split half includes benefit X/X. translates media X/X year Unlike back first year, lower for half as in million from media the XXXX. of of expect percent second Recall, last versus half, media spending net we of of back we meaningful of in media half the up also year versus that around to be had our in first This the half the

Now the balance to me the year. guidance our for let of turn

$XX to being outperformance at occur adjusted but adjusted quarter. reflect half, at from build EBITDA the with $XX for lightest our Given year net of we each we absorb guidance EBITDA approximately expect for half the Thus, are our EBITDA quarter million, we raising historically sales period, some to and to adjusted year leave will to are in us of QX some room that fourth the our least million issues. full our also first guidance to continuing we least raising performance, media investment unexpected

recent and growth year we in year Household of our the our at penetration volume this for full growth ability in this implies. to are The $XXX remain reaffirming plan, confident sales million time. and in trends support target continue We the net around that acceleration drive to our guidance

how capacity spending on projects. are provide and Finally, I perspective to managing want capital expansion our we some

our principles are without work. to achieve dilution. need further There principles plan and will Our goal. I We support outline any key that goal are will our X believe that is the plan guiding for growth long-term our

few cost one, with and meet when endured and Number demand. customers increases want to consumer to freight always past capacity we short consumers. quality our we unacceptable in up to demand, have shipping over Further, adequate frustrated the keep we struggle customers years,

plan so we ahead will always that issues or to meet growth. ourselves enough we demand can capacity some us unanticipated and So to also to rapid capacity leave absorb more cushion both have require want that

Fortunately, is Freshpet predictable. demand growth and very reliable generally

the as we So we and construction to able lead times, have past supply than be match for should return more to for we better and timetables demand few equipment years. normal

do we Ideally, need need any we large, Number will two, want we or do to more in not need. than sooner than capacity conversely, time, to we have given have to cash than might cost point commit prematurely. more at not stranded want we consumer and capacity

lines which capacity of and Ennis this point, consistent cash with current has that we We XX our for before we is only cash to Our new comfortably them pay already committed almost us this X months takes $X.X total to plan about need principle. Phase that part with have. committing the At we are billion. can to

have III made the lines at commitments second for of any We Phase additional or Phase X, part Ennis not Ennis South. Kitchens

We do commitments we will not those justifies to they more soon Further, on too as to as efficient technologies technology ready ourselves any far that when manufacturing are so get commercialize. implement ability to will it. want we the ahead only make have of demand

opportunities have Freshpet have under As engineers exciting you team and to and working development. a years some have meat who scientists more on ways been know, efficiently several produce for we of

will generation we also These resources and growth should provides we conditions It not present our expectations the with where we but advantageous under that is flow will our That give that produce. principles business lower downside some free me confident plan. expectation, about very cash the risk the should able can comfort themselves. some it long-term of growth be the make that to certainly accelerate have financial you fulfill scenarios optionality our

we capital to make financial The out will the expectation projections targets. in ROIC us laid after-tax allow ROIC with an that that CAGNY an clear these investment is deliver be we each I at also want achieve to we mid-teens.

the of we closing, the In are very are with year. happy midpoint where at we

to we that long-term in on the see to and pets. deliver way Household seeing penetration enable We growth are rebound improvement glide in change will operations us nurse continue mission that their to our The the growth plan strong put ahead strong the targets. people place us volume revenue on our long-term needed improvements consistent to or now and margin last in September path put of has produced achieve track

significant processing our successfully at include and on-site have to our capacity that customers And fresh our chicken rapid and leaning expansion effort, adding expanded us successfully. goals. up long-term third are into Ennis started rate. feeling We leaves capability bullish total, our future a about very our and most category by second fridges our In the ability to deliver

concludes That our review.

We questions will and a the your your now Operator? as answer questions. to be please And reminder, the glad quarter operations. on focus company's

[Operator Instructions] line Stifel. Astrachan question of the Our first with comes Mark from

of -- I sort ask that. how thinking I and media about about you're guess spend

helpful. in aiming terms in? thinking folks? an versus terms are cohorts of the to the bringing spending it And new it that you're who cohorts give of the traditional? to terms you How about users? years be the in the at update if different about the in, you the correlation. media you think Is in you aimed as do terms existing spend still about it's new would at of of timing returns How repurchases you're was maybe relates how on it you're more How few think on of sort consumers? what could age I it it bringing relative ago, year, In that. you purchases of get Are efficient how it's media media, social a historic as through But spending it other as versus

towards always this year. so budgeted towards half weighted the media And money more bit of budgeted like been Mark, little from dollars year, year have the I in front we've towards actually think spend. total half a back this our more historically, heavily total the we

So overall for for point, late of Household hoping an inflection really look around February, February, where penetration, happening we and started year-to-date, to in it correlation March. it at see our and waiting in we and and early if the were you kind we're are plan media timing

have the to seen similarly in was time we past. So kind of it what

If you our the slightly per year, of overall above kind look historical at we're on consumer. dollars

point, perform to us since look a to in right inflection But back more year-to-date. that norm. starting if you at So it get cost little bit the actually period consumers it's the

still think driving together was we're and in I business stock back I is we over much those goes working and back were consistently the efficiencies. course media being to pricing and what's us stock in smooth of all not full that on be this back QX, until supply the between plus the seeing of think that And kind a fridges And those innovation broader think piece back. really plus to with things the holding consistently of I chain the

is is So we're respond penetration. to the CPG. about and on also be just which most really really it's not able progress excited on see based kind see to category a I across really driving units think unique Household the dollars front, drive to of that pretty we're excited thing really, great think the media I to the we're And seeing pounds and that

you And about asked media bit you about little cohorts, a asked mix.

after probably to spend more year year, is its into marketing would over -- of continuing we we celebrate think as addressable done productive deeper job gives what have And media evolve able sure amazing business the team time. us that our to and what They've I we get to year So the thing in that do potential both the I confidence incredible total market. of after it and as mix done partners make an our that our is our consistently. been

strict year. e-commerce of strike, -- more incredibly a always and more to the and before even very kind us see media testing. even writer that over meaning agnostic, refer We're pressing us. no to to lot payout. we and to the digital We I are helpful we're fame. our And sports been that's very, channels going into some There's are productive our of -- around industry. They've analytics the that we're dollars best more in and for we for the it It's around being are literally to spending glory figure do dollars. new spend sports. us and be from a I to You'll in see that's standpoint, been class committed down And as want us. more that you'll think testing that past We've been to and want best what's where productive out comes

around strong performance From that's is of think -- and only And we way of the about growth, over -- work but do from -- year long-term mentioned the purchases to value the really in group, we either groups dogs, script time. a of these and one I like We're the in really dogs, is we're penetration bigger are repeat value also HIPPOs. what's continue nice, it to strong LTVs, basis, we growth the things in really long-term pet always a are the presentation, seeing us. and cohort households. the overall perform out. continue are we and that seeing lot consistent seeing consumers. that And the and think they the in of grow repeat year we consumer are Those high-profit with from seeing owning more the people multiple spend to those tend have And not that

really a of think kind sign kind of it's healthy I another business. fundamental of

were a know I there you questions there. in that lot So -- of

hit I the hopefully, them. majority of So on

with Baird. Our comes from Peter of the Benedict question next line

I was expand more hoping strong how maybe channel the on a that's been. can bit you growth, little unmeasured

that that and see Just how color growth? some you durability the on of kind more average what's driving of

growth continued e-commerce. performance expansion, that's side our some want the strong just on leading was expansion. still careful centered of have seen. really continued and The able very, see see just channels. to the mentioning is and when those we I business, really, to non-measured the smaller incredible are And and we've club a and around both selective returns done about say in e-commerce that marketing e-commerce. Peter, to lot so the we're that We've very marketing been we've recognized a but we I of around around nice

the just and proud that job, the we area. there, -- team that. in really love done opportunity a So we're terrific also love The see and has of progress we we

a for we few bit a been just of years. that in partially the haven't had pressing We've little inventory area, laggard because a into

of as don't we to So a much. want really press into new kind channel

there. lot a of there's opportunity So

get for with all different retailer on club We see really continued for that think the works we've to works for really, really able we've well us. nice works for and it then well we've And consumer, front, partners. the to the And there. distribution proposition works come a and well been the expansion

of that's, in done channels business. The a to we've the the pretty other non-measured able thing consumers that I to the unmeasured is to important overall to of in significant and been seem channels kind those work on coming amount think, incremental be identify those note

really, we aspect of So like it. really that

pricing, then my just Billy, increases. follow-up just would price a think I around And to be you desire more avoid mentioned

across assortment? comment points your behaviors that's how how curious Just now? you might given you -- price you're about make, you feel if want maybe there that how set your adjustments your right demand seeing across portfolio? could to any elasticities on And you you Are across think

little had bags, XX a consumer like of really is and come pretty good it's the small right in today. place months, a that grand we're we've The but we're there sitting relationship seen looks Yes. We Obviously, in shift good. value and rolls are very good things. along where consumption now. in we of but XX% of bumps side, feel than we've to seen The the pricing the other bit the out digest piece we've way some feel more very scheme only about

part, most quite For the digest they're the well. pricing consumers

and because the -- some all bit the where have to little of a a the that to might price the been ago, and we a in-stocks feel year hard masks we're sit were be like commodities since somewhat because bit Consumers adopted good It's have we But quite a we frankly, some our see. spot our of seem we overall, stable. pretty where like in improving see sensitivity pricing. details

least this feel we've smooth we sailing the for at like a foreseeable got clear fairly future So at point.

from of next Our comes question Piper line the Sandler. Lavery Michael with

EBITDA we sure unpack the And bit just drives well? pickup of tied make acceleration in help half? us what -- understand as to that second volume guide just the a much how you Can is the little and

and I'll about about pickup. talk the Todd EBITDA talk let the acceleration

the earlier outlined working of and conditions placements question. digested it's the as fridge worked getting the lots on that look in is pricing the good. air But what's the consumer it is the Scott and driving second We're in-stock we way, media and historically

to not of return the media without on basically in being getting it's air. model all bumps out necessarily business the and work to So the stocks

So it's really back to business as usual.

don't I talk to the you about know, want back half.

our in Yes, spend know, second first back One we the spend really in happened first in of half the as aspects. the you versus It's X/X half. half, X it's more half, almost pretty simple. media is, heavily

be then second huge quarter, That's $XX first of revenue between And we'll margin delta second dollars obviously off we're million. weighting in anticipating half half the that sequentially, will a EBITDA is So variable there. absolute of that. larger, and get and chunk half almost just every

really do half big better the cost, see the the big those But continue a So those we'll the did than little pieces, we to bit I are we'll in favorable in are second even and X logistics very first think half. buckets.

away prices off. next have -- chicken sweet annually. early And figuring you it's that year, for Obviously, think is of of come have kind visibility. you year I that just you us some can you of be cost That's out how in as and to But would give spot makes you next lock curious as your contract in the and the a And I perfect is? that when when just of Okay. know far for for far -- when input helpful. sense timing discussions those sense said locking

of quickly. and officially can goes you us say between over we because The in market it's to is but on move lock December, always the mean you think discussion and chicken started September early fairly that chickens time hard a cycles period dance there's that know, and short. the suppliers I Yes. on as the very chicken sort as as growing

and expand fairly can contract quickly. and supply demand so And

optimistic. we're encouraged. We're So

on to is bit year, room for the have We the for the information much so I you down the in what chicken that price don't do end back there little to as see but get -- of we'll up still reported remember room go see though. the what we it to publicly there. you doesn't chicken have of didn't as much know think as our time human market, when but go a

Bryan Our next Spillane Bank question with comes of of from the line America.

got could couple I on -- this we a of today. if Billy, questions

you and guess of morning maybe inbox of you looks is much a acceleration how Household -- little how I if comps fill some comparisons the about my you this the the stack could multiyear on again? easy is some on basically of how maybe the trying on look comfort how to bit of volume it's so kind presentation has people and talk Slide the and sort with growth that you chart. little talk a and where is, can a XX the just that in into the a out And lay like basis, think it bit that is it about, just just have of volume basis? distribution much at question stack or come So And volume net I versus think, gain it I lot growing of penetration

Yes.

year the is of year price about we're necessarily -- both seeing period up and price bit price, a the bit week-to-week seeing consistently, pounds starts accelerating which the pounds year, is basis, in very a to we're elevating the way unusual the is you ago continually not the on of and driving had early it what stabilized for the -- on has the time is pounds think which this the on a ago, year. little pound year this growth side, the part you in a I you're little getting the well, a growth, on go once then it's -- think side,

in Obviously, go through shift very the see we've And of part, throughout But a sequential bit little as consistent us basis to very, of there's the us. consumption and summer increasing most that's for the the you weeks pound growth be a For encouraging seeing summer. been to the week-to-week. month. on

tell So obviously continues even we're accelerate the what very of side bullish you the growth story. a quite to can But is than more on is data volume there. seen growth we the bit. And volume we've

a tiny just on that -- I'll expand bit. Let me

average So average that if this take we're Mega versus and Nielsen about QX an XX% we average you you of where to of pounds. date, in kind you basically are that take QX, at up is look and

of been like Billy been it said, -- weeks couple consistently and every forward, has up. literally it's So it's been from February

February. think but consistently and year weeks, and the look mean were volume. of comparables, period, of think in -- since the at been end look the prior setting to versus So compare we're where And I I -- you you new look can at it's you records I couple it at up at you every

I about deck, know as And then channel the but and follow-up mega -- other non-measured got maybe quick just to a don't slide I the I this, talked in that. you've channels. of but missed you the some

can't see was of the it's -- So all of were we quarter channels, we kind do and in of have all X. where a kind of if So what the running you now? composite other consumption those

of consumption a like of all wide. to composite sense So get looks what the channels just trying

Yes.

a It's based quarter, unmeasured. on our that's measured we're project small that the business. shipment up that composite use we've And it. that that still was quoted quarter. in seeing And includes We volume our that is part acceleration the and seen XX% data accelerate. the unmeasured can XX% the relatively is so to So still the to of we XX% and continue this quarter-to-quarter, to the to in XX%

The big at a rate part in in of in that's unmeasured we growing the XX%. of that's call, that driver is the excess as the said is

is small, expanding relatively an of portion it's it the while growth. so And

Okay.

for a consumption. a XX% kind the like of as we volume So or proxy at decent new lot any There's like like distribution should or of inventory not look that? pipe anything

as it's we looking and as at based well are track and how customers No, at the numbers for can included that's shipped in not at we part, also that you measured what on XX%. looking what the arrive who Nielsen measured the is the

comes question line from of Truist next Our Chappell Securities. the Bill with

hear you me? Can

Now we can.

different we the that of and as in and because to more back throughout a the marketplace. forward premium what happens I I follow-up that the I pricing dry to bigger competitors start consumers the -- comfortable a different But the be, on food coming market price seems costs to the see that a if increasing you understand the gaps you're seems Just on where in pricing. are promotions issue. see with price product, there's roll get general it's more but guess, risk back, know come packaged pricing

So any there? thoughts

Yes.

Bill, I right. you're think So

we're what kind to still that think the specialized are in start if -- food think with the And basically reality its know been But which a the the a like I what market. And doing disruption, I consumers I that food, of consumers. see in to has think the is have I well of we I to -- offering -- versus we've we there's in get dry. think buying that brought what seen, really we've of there get XX% like that up what script, the really things past, is have we proposition end of certain that brought significant comfortable -- the I it's promotion, of universe. a mean value specialness like it really quoted people but get what went day, almost amazing penetration and significant think but that it's very they through fresh to it short-term expansion can is we're of And amount, pet and do have fresh bringing I is I work able do increase. been a own Billy at could still one demonstrates price marketplace. think people And to extraordinary. seeing the the amount rate, to this

kind us. better next value even to possibly Now innovation handful offer literally beginning we sure year. innovation and X we're that then year that of past will at proposition actually be offer we're address in secondarily, of new made to the some type the months going some the to some continuing parity launching make consumers also decisions back can. value for additional to offer in And that the margins of And a over of that there's best we this we'll

we're significant category. point we've going what your to of of there cognizant in think really I in place. to kind our And has not ton could be we've a the of on a promotion to in some seen do of slowed is progress. tried good we we're think know of forward -- So the But We kind do offset that could that. has overall, not activity it that. past. order It think We in

certain same sensitive customers And you customers, Got I or the in it. I even the stand? -- further feel are past, very you guess you've know are where follow-up. do to on the price done vein, expand if some for the you need that comfortable

a cut out Bill, tiny just you So bit.

said certain that. I You something customers, and missed

that think was I an important...

already certain you're for Sorry, label customers? doing private

So yes.

Was a need Yes. to expand that?

Got it.

Okay.

So actually, I'm glad you brought that up.

we've and going we're that like the the progress of based of have the basically winding -- and we to -- start what we some actually yes, lack or with seeing in majority that private are we're We where it's have -- of of the progress those made label, market to on customers. -- And most be the you the will we've course significantly year. to always that it's where some shared think offerings have But is less down, be our of program going going if over discussion. we're today, there it with next about actually

tighten So we'll up. that

acceptable. say, they're been And margins able They're private we've actually means, not label they've the us. to when -- but that we to have the been have leading I'd part, for items, done most acceptable any by definitely are, not

think innovation to we'd can market. bring to and overall, but So utilize capacity we like that -- different that towards better we we things some

line question UBS. from the of Ross next with Cody comes Our

to wanted reaccelerate you I growth metrics on But in guys Slide You into XX. been to provided just the penetration. have volume Household able dig

can is penetration you did plans that your here? more the a us into half, plans in for from Your for back to Household just growth the XX-week in what on penetration basis. you're up Household XX% How coming from looking detail your compare volume And year? describe

question. good really a it's So

slow about a standpoint. of liked little since very We beginning seen consumer. track we'd the February on basically see to Household I were think a re-acceleration a mentioned I and But when of to in was acquire it slower have back performance -- it's bit a advertising. actually actually than we've Mark got the to off type to March, the would we what and see penetration had asking that cost and start. level to we're from actually, like January

if is right, the you'd clear line which really So we which ask up starting was March, it me is it's now turned in going, really turn, to which it's that but into the is way and terrific. thought

that's recently, XX. more on And of couple really weeks, good posted some kind we've and a rolling really, a of actually

improvements adopted think creative really and back behind -- of that by now. creative we and we consistently. The value think innovation. and and a We've again, lot top good epic stock I in We're put So plan, consumers in the well going have pretty place literally seems it's big got have -- we're it's I the really in a great media back and got We've right to of be absorbed advertising kind in marketplace. stock.

algorithm. -- we're I growth the think like earlier, feel Billy historical we used we're the to term So returning returning

guys a Got as guidance that's on That's helpful. you can finer you. to revised if then, was higher put not plan? accelerate guess, that EBITDA earlier. hit you think Do a super you I your point question you did Todd, volume now just And

obviously, year change full I in outlook. Look, Yes. no our so mean,

the $XXX So holding level. to we're still million

bit the re-acceleration than was hoping. steeper we that we as now the re-acceleration volumes later QX I strong that thought. going to fine full but we perfectly got is thought. would a happened change no really bit think But are than year. be wasn't what we in as -- So originally it off for to say a were the little

enter we QX, feel are where terrific So as we we about.

to could that. So again, thought no the year hit change we guidance. We full

bit different Just a we anticipated. than is the curve originally little

from of line comes the Rupesh Oppenheimer. Parikh question with next Our

back So far. so just going ramp and to the Ennis' facility

you curious, to or the surprises ramp facility? Just negative continue positive any as

are -- we good tell and up bag going very can a share What bit downs in the I'll of little got well. roll greenfield the hoped. the has longer the our we side downs longer to that wanted now production gone good I would levels the very to The it, imagine, about ups the part, it's of say and has the ramp about made the well. up that. in took is do we we've feel line. facility We would that's But business, fair we along. the guess feel what all where get side is have producing and very items. very, is I bit the that, to little than we've next and business you in items And lineup. as qualifying today a staffing all the on and for starting you a why chicken we had steeper begun line very the progress took always of it We're ups bag in to processing doing And

year. that So to keep need to we give QX ourselves producing up. a that time in bit little more We of next start

give so little staffing now, some adding more a can line. lead bag we bit ramp-up on started So the we've of ourselves time the

feel other than it. going We about that, well. But it's good

As production for our said, XX% we doing it's pretty that's X of good. lines, over point. this And at

just X follow-up maybe for And Great. then Todd. question

margin. EBITDA our beaten you've by quarters a X significant So

through of to we back you Or more the if upside bottom is curious business? line? in would bias it Just see the reinvesting the more in the half flow there consider let to year,

will do I $XX we have choose know, up in first we of very, half just I going to little more we in we spend if this you though QX. But even media good on in very over point year. to out, spending probably significantly we're question, evaluate the then have year. QX -- to as do is year weighted, about XX% additional it's And continue go Look, media and QX, returns the year-over-year million X/X very than we in Yes. the to a mean, second we'll that. spend want we next almost be this and half

of versus media solid even years, second prior year previous and half. amount in we the we a have have So

more, look at a like of you that as we over sales look, opportunity definitely a invest net media take But it. percent But an if know, see we'll we time, to margin smart bit down to great EBITDA come advantage us if XXXX. we'll we to see But opportunity, to a get be in target we'll of it. to our allow XX% take a as

of line Stephens Jim Inc. comes question Our from next Salera the with

fridge customer. think in commitment there had opening remarks, your that I was a mentioned Billy, a from X,XXX you single

us been If right to size? make time into you what catalyst around something some it can they've now decision them? just why at just that the give for of was order now? for looking us some is idea give that that the insight Is and Or them an

Yes.

of to progress able that and So I'll our I in customers and about fresh think see of We going kind retailers their inherent they first finally, call double and Ennis, have or we customer, pet going And third and customer build start the an years. capacity, to And think to model. an probably were got talking plenty really because and expand -- with and large do that come and put is on how us filling get is happened we've with was consumer idea X front, strategy put to actually it and expand existing consumers our the several customer, a and the X think fridges. about that business benefits aisle off And how comfortable on bolt first fresh the It's very that's do one about coming the I in a what's being bit. been seconds there this have top then made of really for wanted foods that and expanding. X we down in something was we first. years place that fresh of ago that a visit ahead

food it, think aisle. dollars they they've then pet really time impact And halo for business aisle. food entire both brings and looking more in behind I've and the that continue I the again lot X a years, the heard And kind see of it's made quality retailers the that we're their along realized repeated advantageous And and and consumer they new for realize they their overall and retailers of of traffic, consumers, the and core human going the going think I past see their them to overall around I with many increased where others. And to aisle decision more on a store as maybe an they think that that are margins, benefits follow side this Freshpet fridges. lots benefits their are strong of same over to time add and per really see and

we fridges we've more have mean owns to some that going we'll have -- had I more we're years. -- have year-to-date in

back about can can, the change. fill And then those And we to that if Todd's So we're I guess earlier. think we are We've and put excited confident I comment we have goes they're sure fridges. retailers got they to make able to been -- it to, willing if in more.

them and up CEO the to convinced at that July, able point, customer, the supply better and We're planner spent pet to all particular And that at starting day commitment. us. and they that that the way we category came at willing convinced part Yes. for of it be amplify the could walk away Group, end, to let the to a the me get of this full supply And with to Sante almost they them. the we'll just kind buyer Ennis last make

there other more we've see would the customers put can in that the to confidence fill have to I now capacity, and good and [indiscernible] has the fridges got lean rates, they So it expect in.

majority is that. given obviously are varies how fridges? it third actual these? store. expand from aisles? and little to maybe to bit second then and is pet your to do in If lot of aisle there that fridge and larger as about we the a follow-on much And have in the space the I Great. mean, of a accommodate second a retailers, Okay. fridges, there retailers But store pet a they third new the to in fridges Or most enough think or

Yes.

see even -- XX at typically see food, grocery dog So just XX to in least store, feet. -- you'll the you'll a in

-- just So in the food section. that's dog there's

kind plenty category going metrics there's to deliver of think of And calories we're in the over to that room. to and -- more really that So and strong I time, take the continue of more the retailer.

and to years many I continue for for room think opportunity plenty there's to expand that plenty come. to of of us

question Andersen with next Our from the of comes line Jon William Blair.

can extent next innovation value The just both months? segments equation or bigger consumers guess, enhancing packaging we your past that getting over in? oriented provide maybe to the underrepresented perhaps to also then wondering comment for what what targeting I we've now how does you've levels fill kind XX what seen as XX perhaps from it around the filling innovation of you should And feel you been looking I'm and more the of expect in-stock so, that on months a compare XX months? XX been rates kind building even a key an back restage. longer as and the perspective XX capacity, out of question the to maybe is, kind to terms And at in of driver, over have you're So specific past some

test and coming talked rework some the I think around that. about of you've consumer results that's packaging

Yes, about can tell you the Scott just I'm to comment, and and a top give innovation you the going line packaging.

there we out opportunity on that enormous. bags projections and largely capacity into said built been because is get opportunity But gravy more our Having bit And has have the line we But rolls to if we is have think built a flexibility we that, little line rolls bags system on to absolutely able we comment the And is us. our are that's think innovation. the to upon and accommodate that the enormous. the all that. focused existing built top the be on that,

lot innovative And a opportunity. opportunities. to very of attention innovation continuing so and a our we're of there's on going bulk to put got the Having focus maximize team. that, said that We've

little Scott, bit a you of that? can color give you on just So

and the aren't term renovating it's then then around with retiring that want there's that is Yes. we so retirement. on and And make pounds start products too. some productive, making which productivity some improvements things things sure Actually, there's but we're I'll internally, to renovation, margin, existing innovation, there's simple we that is a and use also

which we're single sure make very, would literally the in over I us the on looking productive. making at innovation also more about with, innovation do on progress making biggest way. think will place call big give our very say, we to And renovation I future. would a is coming So sure But want win that we're what impact that sure innovation, were, that giant that we're that the and we're that existing it We making the that the is area of lines and margin they're time.

company, oriented both a teams process will also stream on that overall production our retiring smart making using margins, word increase there's better innovating to sure an -- tight So constant things but -- which for that processes make innovation, better some of time. margins grow get expand really to the and are overall throughput but and and productive aren't we're that and over very

restage? In the packaging

Thank you.

Sorry.

package. every every new there's to restage, significant don't packaging time of X start it's coming brand do there's do years. The believe in beginning out. incredibly the companies -- We very, kind done thoughtful we QX, over about some test going thoroughly results the manager, quantitatively. to see We we we're -- and -- And to mean, end this and everything test we've gently to tend be launch flow pretty it a step change. very seems is think predictive. new that time time quantitative I with a of try X what try be QX, On very of we It you'll things every I it be to these beginning kind of of

and we So think help that will next something year. a for us will it that be support be

that work they've on again distribution, here and for the team the the and their work broad mentioned to team, also that's innovation now and packaging, team broad, advertising very I earlier. the that's the expanded marketing congratulations the the then sales done And and

Our from next Research. Connor Rattigan of the question Consumer comes Edge line with

portfolio shift summer given a pack year price sort in any observed of issue. how But the such? shift top consumers your what margin? line of to mean, pack bit gross traveling of So I months, to so, last that if gas the mix And the the I larger and I as in anomaly was typically, noticeable wondering, across recall context an sizes? tend we to a have should larger know you think about just

than Yes. I towards whole difference nothing periods, biggest shift but -- year feed it's we of way that's those obviously even not slight to that a your economical have shift the we've earlier, is lot recent sizes had, would more is most seen the development roles more historically a I in significant. inside which not little it's mix made The bit a is larger don't it's very what think this which dog. But big. comment the

So huge in don't to terms have bags between bags We difference higher do. difference of rolls rolls and than a margins a the have do between tend the margin have sizes. and in impact, we margins

Scott, guess, just is targeting also result current just look specific if data what this terms of then would this -- media in any consumers And channels earlier up to wanted that other And of of function any whatnot? incremental. of this a just the and I I Great. your on I if different you distribution there highly have mean, than comment can just is consumers? those great. are mean Or your a is maybe like, that consumers, share maybe in guess, rollout? a on kind Okay. made sort of you be non-measured maybe spend? income I I on these are you Or just follow consumers

question Yes. the Well, back of I'll first. answer the

the really So a been consumer. type in there change hasn't of much of

with income, household of similar importance down comes mean, nutrition, on amazingly and the that's like this family. they're a households". the relationship is income it's go, of to -- like income kind $XX,XXX and and average very is must their pet lot times What people "Oh, be people So put for I it that high for themselves

business. seen consumers of that So across -- the historically were we're similar we seeing kind have group of

some some Our that specific I've that we product that consumers it." those been in channel wow, but certain it's encouraging broader in are which for as belief think e-commerce distribution here. are have that pet of clubs, heard there And of there primarily in or are channel. they the whether media primarily distribution, much tend of through food a store traditional in pet to now consumers has is added food shopping been that we've that shop "Oh, for So more new going, grocery trip them, is I haven't making the a channel, a or in.

So able see -- that have now channel, we're Freshpet believe, shopping able to and of their that's from in primary what part what is family. we're them the become we to we've everything that been trip and that's

Moskow from comes morning this question Robert final the with of Cowen. line Our TD

you Todd, doing? how are

new Welcome your home. to

volume won't pretty it. growth around there capital phase It quantify need Yes, it's the pretty question. guess it a to XX%? hit Is is mentioned you're Is to way kind in it X%? any XX%? But I volume you I there you -- that great. of Ennis of you until the Todd, put what last volume threshold? like much to to think one that any there. for Is number you'll sounds going XXXX is to way is be next do it? that committing know sure

Around Rob? volume,

the of XXXX threshold capital volume round the growth to in next much be would Yes. How outlays? justify

Yes.

grow any next X don't algorithm over anticipate know, you years is us pricing. the And XX%. I line as to we on for the for So 'XX, top for the additional mean, average

to it's So a But we wraparound going 'XX, February. we'll price that almost volume. for be have last little on a bit in that took all increase of

So 'XX. it be for right way now growth will seeing volume close to XX%. The we're

starting So lot second over that's earlier right comments, of seeing we're because a that Ennis couple sooner of And the later rather now. get again, Billy in next to we're anticipating years. than bag made volume staff acceleration why growth line we're

X is Phase We X said is X into have, as comments, in pieces. Phase to split add under already it construction. could the I we If we

the also fully are So in Phase that Recall some there we are though, of X system part have lines not right now. lines other first in the X. utilized

that said to is projects is, almost have committed, the capacity. when in So already the are reality billion what up we we $X.X

grow long lead you anything committed you a about all need at to that a it's XX but you So have it depends us will take recognize you that it building do XX-month and when what's how line, time and say an into whether need do to is beyond a minimum, that, need and it that that's or to at months. then look

in out mean allocations like Okay. for that tamp there of question, the I event flex that's only, guess in does enough volume what that? nature kind the the XXXX, in that capital XX% is down the Is of there? put to if say, system it you've an like

it to next the tamp our we're obviously we're there's degree. Yes. we that to we not And slow spending spending. But ways year. would for anticipating X did, reason, We're is going absolutely to for will that down. -- One we CapEx some down CapEx slow slow

is many would that how these one we of The have lines flexibility second on we staff.

the all seeing seeing if not anticipating, again, strong those But we're we what anticipate now, very we right growth. lines. from very, not So we're will staff we're growth that

to comments. gentlemen, our for floor you. and that concludes turn the Mr. any question-and-answer session. Thank back I'll Cyr Ladies final

time. next would his owner an time in To Freshpet tail interest thought which and express respond, Karen tongue can stop hours." a their them meal. until end tail I this more the with that for won't express everyone, for his dog Thanks, She can minutes talking feed from your Great. author said, "A with your you the in I'll for and Davison. with

Thanks, everyone. Thanks for your interest.

call. conference today's concludes This you. Thank

You Thank this may lines for your disconnect you time. your participation. at