BEDMINSTER, NJ. — Freshpet witnessed a “breakout” year, according to Chief Executive Officer Billy Cyr. The company released its fourth quarter and full-year financials for the period ended Dec. 31, 2024, sharing increases in net sales, improvements in costs and enhancements in capacity. With all this in mind, the company also provided guidance for 2025, expecting to hit billions in net sales.

For the fourth quarter, net sales were reported at $262.7 million, a 22% increase from the fourth quarter of 2023. Net income was $18.1 million, an increase from $15.3 million in the prior year period. Freshpet attributed this to higher sales and improved gross margin. 

Gross margin was 42.5% and adjusted gross margin was 48.1% of net sales, an increase from 41.1% from the prior year. Adjusted EBITDA was $52.6 million, representing 20% of net sales, an increase from $31.3 million in the prior year. Freshpet attributed these increases to lower input costs, reduced quality costs and improved leverage on plant expenses. 

Selling, general and administrative (SG&A) expenses were reported at $92.2 million, an increase from $59.7 million in the prior year. SG&A expenses as a percentage of net sales rose by 740 basis points to 35.1%, compared to 27.7% in the prior year. Freshpet attributed this increase in SG&A expenses to increased media spending. 

For the full year 2024, net sales were reported at $975.2 million, a 27.2% increase from $766.9 million in 2023. The company attributed this increase to volume gains of 26.1%. Net income was $46.9 million, an improvement from a net loss of $33.6 million in 2023. Freshpet attributed this turnaround to higher sales, improved gross margin, reduced logistics costs and gain on equity investment.

“Fiscal year 2024 was a breakout year for Freshpet,” Cyr said. “We continued to deliver the exceptional net sales growth investors have come to expect from Freshpet but also delivered very strong profit improvements — and even exceeded some of the fiscal year 2027 targets we set two years ago. We also delivered full-year positive net income for the first time. The strength of this sustained performance, coupled with our operating cash flow improvements, gives us confidence we will be free cash flow positive in 2026 and able to self-fund our growth going forward.”

Gross profit was $396.0 million, an increase from $250.9 million in 2023, which Freshpet attributed primarily to lower input costs, reduced quality costs and improved leverage on plant expenses. Adjusted gross profit was $453.5 million, an increase from $306.6 million in 2023. Adjusted EBITDA was reported at $161.8 million, a significant increase from $66.6 million in 2023. 

SG&A expenses were reported at $358.0 million, an increase from $281.3 million in 2023. According to Freshpet, as a percentage of net sales, SG&A expenses remained consistent at 36.7% from 2023 to 2024. Adjusted SG&A expenses were $291.6 million, compared to $240.1 million in 2023.  

Freshpet continues to work on improving its costs. For the fourth quarter, logistics costs represented 6.2% of net sales, input costs represented 28.4% and quality costs represented 2.7%. For the full year, logistics costs represented 6.0% of net sales, input costs represented 29.7% and quality costs represented 2.6%. 

Household penetration for 2024 rose to 13.5 million households, a 17% increase from 11.6 million households in 2023. A majority (69%) of Freshpet’s sales came from the company’s heaviest users, which includes 2.1 million users. Buy rate for the full year was $104.89, a 6% increase from $99.30 in 2023. 

The company also continues to make headway on its retail footprint. At the end of the year, Freshpet’s store count was about 28,141, an increase of 1,300 new stores. Twenty-two percent of these retail stores have multiple Freshpet fridges and 78% have one fridge, totaling 36,544 fridges or about 1.9 million cubic feet of retail space across the company’s entire retail network with an average of 20.5 SKUs. 

“The household penetration gains were our largest on record as we added approximately 2 million households, 800,000 of which were super heavy and heavy users,” Cyr revealed. “We also added new distribution with approximately 1,300 new stores and almost 900 second and third fridges for a total of nearly 2,300 new fridges. Further, we demonstrate our ability to add capacity to support this growth on time and on budget. 

“We threaded the needle on managing our capacity expansion and media spend to not get ahead of ourselves,” he added. “We managed to maintain over 99% fill rates, while adding capacity and selling 27% more volume than last year.”

To continue its retail expansion, Freshpet plans to change its approach to the pet specialty channel, according to Chief Financial Officer Todd Cunfer. The company plans to change its distribution partner in that particular channel.

“That channel has struggled quite a bit over the past few years, and our market share is underdeveloped in that channel,” Cunfer shared. “We continue to believe that it represents a sizable opportunity, but we need to change our route to market and invest in some new approaches that would enable those customers to succeed.”

Regarding its operations, the company has continued to expand its capacity to keep pace with projected demand. A fifth roll line was installed at Freshpet’s Ennis facility, which it expects will provide necessary capacity well into 2026. The company is installing a new bag line at its Kitchen South plant, which is expected to startup later in the first quarter of 2025; and is planning to commission new technology for bag products at its Bethlehem facility in the fourth quarter of 2025.

“When fully built out, we expect the three kitchens we have today to be able to support up to $3 billion in sales,” Cyr said. “We commit to incremental capacity from a new line about 18 to 24 months out. So, we’re not committed to all $3 billion of capacity today and won't be for several years.”

Looking to 2025, Freshpet expects net sales to reach the billions, between $1.18 billion and $1.21 billion. Net sales growth is expected between 21% to 24%, adjusted EBITDA is expected to achieve more than $210 million, and capital expenditures are expected to be around $250 million. Looking even further to 2027, the company hopes to achieve $1.8 billion in net sales and be in 20 million households. 

“This strong performance also enables us to raise our long-term profit margin targets today to reflect the additional scale benefits we believe we can deliver as we transform the pet food category and nourish pets, people and the planet,” Cyr said. “We remain focused on delivering disciplined, consistent growth, and outsized profitability improvements, that we believe will drive shareholder value going forward.”

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