What happened
Shares of Freshpet (FRPT 1.31%) were moving higher today after the fresh pet food company posted strong results in its second-quarter earnings report this morning.
The stock closed Monday up 11.5%.
So what
Freshpet continued to deliver strong top-line growth with revenue rising 25.6% to $183.3 million, but that was short of estimates at $185.1 million.
The company, which is known for refrigerated fresh pet food, said its adjusted gross margin improved from 38.7% to 39.8%, which excluded a depreciation expense. Selling, general, and administrative expenses fell 590 basis points to 41.5% due to lower logistics expenses, increased leverage on advertising expenses, and other efficiencies.
As a result, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $9 million, compared to a loss of $1.9 million. On a generally accepted accounting principles (GAAP) basis, its loss per share improved from $0.45 to $0.35, beating analyst estimates at a loss of $0.43.
CEO Billy Cyr said: "The Freshpet business has real momentum. In the second quarter, we delivered strong volume and net sales growth, and significant improvements in our operating performance -- particularly in quality and logistics -- which is the basis for increasing our 2023 adjusted EBITDA guidance today."
Now what
For the full year, the company maintained its revenue guidance calling for an increase of 26% to $750 million, and it raised its adjusted EBITDA from at least $50 million to at least $55 million.
While Freshpet has delivered strong top-line growth, the company has struggled on the bottom line, but the improved EBITDA results and guidance show the company is bringing costs in line.
Freshpet is still trading at a premium, but it's penetrating a large addressable market and grabbing market share. If it can deliver profits, the stock looks like a long-term winner.
