Freshpet Q4 Earnings Call Highlights

23 Feb 2026, 17:06 by Mitch Edgeman · The Markets Daily

Freshpet (NASDAQ:FRPT) executives said the company exited fiscal 2025 with improved agility after what Chief Executive Officer Billy Cyr described as a sharp slowdown in category growth and consumer sentiment that pressured the company’s growth algorithm. Freshpet’s net sales growth decelerated to 13% in fiscal 2025 from 27% in fiscal 2024, but management said the company still outgrew the category by more than 10 points, gained share, surpassed $1 billion in annual net sales, protected margins, and generated positive free cash flow.

Management highlights: adapting to a slower category

Cyr said 2025 forced Freshpet to reevaluate messaging, media buying, and value at the entry point while maintaining flexibility in capacity expansion. He emphasized that the company “withstood the onslaught” of new competitors with “little discernible impact” and said Freshpet’s competitive advantages include manufacturing scale, a broad fridge network, and an expanding omni-channel strategy.

Freshpet also updated its view of the total addressable market, saying it now estimates 36 million households, up from 33 million households discussed the prior year. Cyr attributed growth in the addressable market to continued pet humanization and generational shifts toward younger consumers.

Fourth-quarter and full-year results

Freshpet reported fourth-quarter net sales of $285.2 million, up 8.6% year-over-year, primarily driven by volume. Adjusted gross margin was 48.4% versus 48.1% a year ago, and adjusted EBITDA was $61.2 million, up 16% year-over-year.

For fiscal 2025, net sales were $1.102 billion, up 13% year-over-year. Adjusted gross margin increased 20 basis points to 46.7%, and adjusted EBITDA rose 21% to $195.7 million, representing 17.8% of net sales.

Chief Financial Officer John O’Connor said fourth-quarter volume contributed 9.7% growth, partially offset by 1.1% unfavorable price mix. He said the price/mix impact reflected modest pricing actions intended to improve value at the entry point and favorable pricing items in the prior-year period. O’Connor also noted that prior-quarter pipeline fill at a large club customer boosted third-quarter shipments and reduced fourth-quarter shipments by about a point.

Freshpet’s fourth-quarter net income was $33.8 million versus $18.1 million a year earlier. Full-year net income increased to $139.1 million from $46.9 million, which O’Connor said was driven in part by a deferred income tax benefit tied to releasing a $68.4 million valuation allowance, along with higher sales.

On spending, O’Connor said fourth-quarter adjusted SG&A was 27.0% of net sales compared to 28.0% a year ago, reflecting lower variable compensation, partially offset by higher media. Media spending was 10% of net sales in the quarter, up from 8.9% a year earlier. Full-year media was 12.7% of net sales versus 11.4% in fiscal 2024.

Distribution, household trends, and omni-channel push

Management said 2025 was the company’s best year in more than a decade for new store growth, driven largely by club expansion. Freshpet ended the fourth quarter with products in 30,235 stores, with 24% of locations featuring multiple fridges. The company reported 39,347 fridges in the field at year-end and an average of 19.1 SKUs in distribution. Percent ACV reached 80% in grocery and 72% in xAOC.

Freshpet highlighted improving household metrics. For the 12 months ended Dec. 31, 2025, household penetration was 15.2 million households, up 10% year-over-year, and total buy rate was about $115, up 4%. The company’s “MVP” heavy-user households reached 2.4 million, up 11%, with an average buy rate of $506. Freshpet also cited its fastest-growing buyer group as “ultra buyers,” nearly 500,000 households spending over $1,100 annually.

Executives repeatedly emphasized omni-channel as a growth priority. Cyr said digital business grew nearly 40% in fiscal 2025 and is now 14% of total sales, with fourth-quarter e-commerce at 14.6% of sales. COO Nicki Baty said the company views omni-channel broadly, including click-and-collect, last-mile delivery, pure-play e-commerce, and direct-to-consumer (DTC). She said Freshpet went national with its DTC offering about a year ago and that more than 74% of DTC households are incremental to Freshpet, having not previously purchased in retail.

Manufacturing technology, capacity, and “Fridge Islands” tests

Cyr said Freshpet installed and started up what he called the biggest manufacturing technology breakthrough in company history. He said the first line using the new technology is operating and began shipping product to customers the prior month, with early indications of “significant quality, throughput, and yield benefits,” though management said it wants to run the line for several months before quantifying results.

Freshpet also outlined plans to retrofit an existing bag line in Bethlehem with a “light version” of the new technology in the second quarter, which management said should require minimal downtime and modest capital. On capacity, Freshpet said it has 16 lines capable of supporting over $1.5 billion in sales when fully staffed, excluding any potential incremental throughput or yield improvements from the new technology.

On the retail side, Baty said Freshpet expanded its “Fridge Islands” test in a mass retailer to 28 stores from 16. She said the islands provide about 2.5 times the capacity of a single fridge, enabling broader assortment, improved in-stocks, and greater holding capacity to support omni-channel services such as click-and-collect. Freshpet also said it is testing open-air bunker fridges and full-size open-air end caps. Separately, management said a rural lifestyle retailer test confirmed an expansion to 250 stores in the first half of the year.

Guidance, 2027 targets, and capital allocation update

For fiscal 2026, Freshpet guided to net sales growth of 7% to 10% and adjusted EBITDA of $205 million to $215 million. Management said the outlook assumes no material change in the macro environment and does not include any significant Fridge Island expansion.

O’Connor said media as a percentage of sales is expected to be roughly in line with 2025 but front-half weighted, with the first quarter the largest media spend quarter. He also said incentive compensation is expected to reset to target levels in 2026, creating an unfavorable comparison versus 2025 when lower variable compensation helped cushion margins.

Capital expenditures are expected to be about $150 million in 2026, excluding potential incremental investment to accelerate manufacturing technology rollouts or expand Fridge Islands. Cyr said if the company chooses to accelerate those initiatives, it may increase CapEx by $20 million to $50 million. Management reiterated an expectation to be free cash flow positive in 2026 at the planned CapEx level.

For fiscal 2027, Freshpet said it remains confident it can grow net sales well above U.S. dog food category growth, with potential outcomes described as high single digits to low double digits depending on macro conditions. The company said it believes it can achieve at least 48% adjusted gross margin under a variety of growth scenarios and updated its adjusted EBITDA margin target to 20% to 22%.

Freshpet also disclosed it received approximately $95.5 million in January proceeds from the sale of Ollie, a DTC dog food brand in which Freshpet invested a total of $33.4 million over time. Cyr said the investment provided both strategic learnings about DTC and a strong financial return. O’Connor said the proceeds brought Freshpet’s cash balance to approximately $400 million, and Cyr said the company is evaluating its capital allocation strategy and expects to share an update in coming months.

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.