Freshpet Q1 Earnings Call Highlights

Key Points

• Freshpet raised its 2026 net sales guidance after reporting Q1 net sales of $297.6 million (up 13.1% YoY), and reiterated adjusted EBITDA guidance of $205–215 million while saying it expects to be free-cash-flow positive in 2026 with roughly $150 million in CapEx.
• Adjusted gross margin expanded to 46.9% and adjusted EBITDA was $37.9 million, while GAAP net income swung to $48.5 million (vs. a loss a year earlier) largely due to the sale of its equity stake in Ollie; operating cash flow was $40.3 million and free cash flow $12.7 million.
• Omnichannel scale is a key growth driver: Freshpet operates over 39,000 refrigerated fridges across 30,435 stores, digital orders grew 43% to represent 16.1% of sales, household penetration reached 16.1 million (+8% YoY) and MVP heavy users rose 13% to 2.5 million households.

Freshpet NASDAQ: FRPT reported first-quarter 2026 results that management said put the company “off to a strong start to the year,” while raising its full-year net sales outlook and reiterating its adjusted EBITDA guidance amid a volatile macro backdrop.

First-quarter results and updated 2026 outlook

Chief Executive Officer Billy Cyr said first-quarter net sales growth came in ahead of the company’s guidance range for the year and reflected Freshpet’s ability to “successfully adapt our growth plans to the dynamic environment.” Freshpet posted first-quarter net sales of $297.6 million, up 13.1% year-over-year, primarily driven by volume.

Adjusted gross margin was 46.9% versus 45.7% a year earlier, while adjusted EBITDA was $37.9 million, up $2.4 million year-over-year, Cyr said. Freshpet raised its 2026 net sales guidance to 8% to 11% growth, up from 7% to 10% previously, and reiterated adjusted EBITDA guidance of $205 million to $215 million. Cyr also said the company continues to expect capital expenditures of about $150 million and to be free cash flow positive in 2026, absent incremental investments.

Chief Financial Officer John O’Connor said volume contributed 14.6% growth in the quarter, partially offset by unfavorable price mix of 1.5%, which he attributed primarily to gross-to-net items and targeted price reductions. He also noted Freshpet had broad-based consumption growth across channels and cited 13.5% growth in Nielsen-measured dollars for total U.S. pet retail plus Costco.

On profitability, O’Connor said the 120-basis-point increase in adjusted gross margin was driven by improved leverage on plant expenses and lower input costs. Adjusted SG&A rose to 34.2% of net sales from 32.2% a year earlier due to higher variable compensation, increased media as a percentage of sales due to timing, and higher logistics costs. Logistics costs were 6.3% of net sales versus 5.8% in the prior-year quarter, driven in part by storm-related costs and fuel increases that began in March.

Freshpet reported first-quarter net income of $48.5 million compared with a net loss of $12.7 million a year earlier. O’Connor said the increase was primarily due to the sale of the company’s equity investment in Ollie, higher sales, and lower non-recurring SG&A charges, partially offset by higher income tax expense related to the gain on the Ollie sale. Operating cash flow was $40.3 million, capital spending was $27.6 million, and cash on hand ended at $381.4 million, including $95.5 million in proceeds from the Ollie sale. Free cash flow was $12.7 million, he said.

Consumer trends, household metrics, and category backdrop

Cyr said the company is balancing a strong start to the year against an increasingly volatile macro environment, watching potential changes in consumers’ willingness to trade up. However, he said Freshpet is not seeing trade-down among its users. He also pointed to long-term tailwinds in pet food, including “the humanization of pets” and generational shifts in feeding higher-quality food.

Freshpet highlighted household and buy-rate metrics as of March 29, 2026. Cyr said household penetration reached 16.1 million households, up 8% year-over-year, and total buy rate was approximately $114, up 6%. “MVPs” (super heavy and ultra-heavy users) totaled 2.5 million households, up 13% year-over-year, with an average buy rate of $513, he said, adding that Numerator’s panel reset in April revised some absolute historical numbers while leaving trends intact.

COO Nicki Baty described the broader dog food category as “still a little bit pressured,” with household penetration broadly flat. She said online remains a faster-growing part of the category and noted trends toward club and other “affordable retailers,” while lower-income groups remain more pressured. She said Freshpet’s growth has been broad-based across income groups and demographics, with particular strength among Millennials and Gen Z.

Omnichannel expansion and distribution footprint

Freshpet continues to emphasize an omnichannel strategy built around its refrigerator network. Cyr said the company has more than 39,000 fridges that serve as fulfillment centers. He said Freshpet products are in 30,435 stores, and 25% of those stores in the U.S. and Canada have multiple fridges. Management said it is adding fridges faster than new stores and expects that trend to continue.

Digital orders grew 43% in the first quarter and accounted for 16.1% of the business, up from 14.6% in the fourth quarter, Cyr said. He added that 81% of those sales volume went through the fridge network. In response to a question on omnichannel economics, Baty said the strategy is “based on a local fulfillment model” through the installed fridge base and that 82% of online sales go through that network. She said Freshpet does not anticipate a significant shift in economics because fulfillment runs through the existing retail structure, while direct-to-consumer is expected to remain a relatively small part of the business.

On distribution, Baty referenced a retail partner’s planned expansion that she said would reach 250 stores by the end of the first half and around 700 by year-end, with phasing still being worked through. In a later question, she said Freshpet’s range and pack sizes have been tailored based on a long test, including larger-dog SKUs and the company’s Vital pet specialty range alongside top-selling Homestyle Creations items, and said the mix “has been performing very well.”

Manufacturing technology, capacity, and margin targets

Management reiterated its focus on capital efficiency and new manufacturing technology. Cyr said the first bag line in Bethlehem using the new technology started up in January and is performing well, while a “light version” of the technology was installed on another Bethlehem bag line last month. Freshpet plans to convert a bag line in Ennis to the light version, with completion expected by late June or early July, Cyr said.

By year-end, Freshpet expects about 35% of its bag capacity to use some version of the new technology, with “modest” capital that does not change the company’s CapEx guidance, according to Cyr. He also said the company will decide in coming months whether to convert an additional bag line and whether to pull forward installation of a completely new line using the full version of the technology—moves that would be above the original $150 million capital budget.

Pressed on quantifying savings, Cyr said the company does not want to provide specific numbers yet and is focused on yield, throughput, and quality, noting the impact in 2026 should be “skewed towards the back half” and “relatively modest,” with more meaningful benefits expected in 2027. He also said the technology could enable broader innovation, including different shapes, potentially different proteins, and “higher quality inclusion” ingredients.

O’Connor reaffirmed Freshpet’s fiscal 2027 targets: net sales growth well in excess of U.S. dog food category growth, at least 48% adjusted gross margin, and adjusted EBITDA margin of 20% to 22%. He said that while additional staffing could be needed if Freshpet meaningfully outperforms its 2026 sales guidance, the company believes it can add staffing and still achieve leverage as it scales. He also emphasized that the 2027 margin targets are based on adjusted gross margin, which excludes depreciation, while any new technology rollout would primarily add capital costs that are depreciated.

Competitive landscape and pricing approach

On competition, Cyr said Freshpet is seeing “a wide range of people trying to compete” across channels, but argued the company’s breadth of portfolio and distribution has insulated it against entrants with narrower offerings and fewer distribution points. Baty added that while some shelf-stable products make “fresh” claims, she is not seeing much traction in Nielsen data, and said frozen entrants face challenges gaining traction without heavy brand investment.

On pricing, Cyr said management is “very comfortable with the pricing that we have in the market today,” emphasizing that it is supporting household penetration growth while gross margin expands. He said the company would consider pricing actions if sustained cost increases emerge, but also aims to offset inflation through productivity efforts and formulation changes to help keep the category affordable.

About Freshpet NASDAQ: FRPT

Freshpet Inc NASDAQ: FRPT is a leading pet food company specializing in fresh, refrigerated meals and treats for dogs and cats. The company's products are formulated with carefully selected, natural ingredients and are designed to offer a higher level of nutrition and freshness than traditional dry or canned pet foods. Freshpet's offerings include refrigerated rolls, pâtés and snacks, all of which are sold through the refrigerated section of grocery, mass-market and pet specialty stores.

Freshpet's product portfolio is built around the concept of fresh, minimally processed recipes that do not require preservatives or artificial colors.

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