Freshpet, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the third quarter of 2026 reached $317.8 million, a 10.0% increase year-over-year from $288.8 million, driven by 10.0% volume gains.
• Gross margin improved to 44.5% in Q3 2026 from 39.5% in the prior year period; Adjusted Gross Margin expanded to 50.0% from 46.0%.
• Net income for Q3 2026 was $29.7 million, compared to $101.7 million in the prior year, a decrease primarily attributed to a $77.9 million discrete tax benefit recognized in the prior year versus income tax expense in the current year.
• Adjusted EBITDA for Q3 2026 was $64.5 million (20.3% of net sales), up from $54.6 million (18.9% of net sales) in the prior year.
• For the first nine months of 2026, net sales totaled $921.1 million, a 12.8% increase from $816.8 million, driven by 13.3% volume gains partially offset by a 0.5% unfavorable price/mix.
• Gross margin for the first nine months was 42.4% compared to 39.9% in the prior year; Adjusted Gross Margin was 48.5% compared to 46.2%.
• Net income for the first nine months of 2026 was $97.7 million, down from $105.3 million in the prior year, impacted by the aforementioned tax benefit and increased logistics costs, partially offset by a $66.6 million gain on equity investment.
• Adjusted EBITDA for the first nine months was $154.6 million, up from $134.5 million in the prior year.
• SG&A expenses were $106.2 million (33.4% of sales) in Q3 2026 versus $89.3 million (30.9% of sales) in the prior year; Adjusted SG&A was $94.2 million (29.6% of sales) versus $78.2 million (27.1% of sales).
• SG&A expenses for the first nine months were $329.5 million (35.8% of sales) versus $295.0 million (36.1% of sales); Adjusted SG&A was $291.9 million (31.7% of sales) versus $242.5 million (29.7% of sales).
• Cash and cash equivalents were $345.9 million as of September 30, 2026, an increase of $67.9 million from $278.0 million at December 31, 2025.
• Debt outstanding was $399.0 million as of September 30, 2026.
• Cash from operations for the nine months ended September 30, 2026, was $145.5 million, an increase of $40.1 million compared to the prior year period.
• Free Cash Flow for the nine months ended September 30, 2026, was $65.3 million, compared to $10.3 million in the prior year period.

Guidance and Future Outlook

• Full-year 2026 net sales growth guidance was raised to 12%–13%, compared to the previous range of 10%–12%.
• Full-year 2026 Adjusted EBITDA guidance was raised to $215 million–$220 million, compared to the previous range of $210 million–$220 million.
• Full-year 2026 capital expenditures guidance was narrowed to $125 million–$150 million, compared to approximately $150 million previously.
• Full-year 2026 Free Cash Flow guidance remains positive.
• Long-term guidance for 2027 reiterates net sales growth well in excess of the category growth rate.
• Long-term guidance for 2027 maintains an Adjusted Gross Margin target of at least 49%.
• Long-term guidance for 2027 maintains an Adjusted EBITDA margin target of 20%–22%.
• The company does not provide guidance for net income or a reconciliation to forecasted Adjusted EBITDA due to the unavailability of reliable estimates for certain cost components.

Business Segments and Product Lines

• Sales growth was primarily driven by volume gains across the business.
• Gross margin expansion was attributed to improved leverage on plant expenses, reduced quality costs, and lower input costs.
• Increased SG&A as a percentage of sales was driven by higher logistics costs and variable compensation accruals, partially offset by decreased media spend.
• The company continues to expand its omnichannel presence and franchise of loyal pet parents.

Market and Competitive Landscape

• The company reported growing market share despite a challenging consumer environment and intense competition.
• Competitive factors include the potential launch of competitive products at higher quality or lower cost.
• The company operates in grocery, mass, digital, pet specialty, and club retailers across the United States, Canada, and Europe, as well as online in the U.S.

Risks and Challenges

• Risks include economic uncertainty, changes in pet acquisition rates, and the effectiveness of media campaigns.
• Operational risks involve the implementation of new technologies, tariffs, and fluctuations in fuel, energy, and ingredient pricing.
• The company faces risks related to attracting and retaining talent, organizational changes, and the success rate of new chillers.
• Forward-looking statements are subject to risks that could cause actual results to differ materially, including those detailed in the company's Form 10-K and 10-Q filings.

Management Commentary and Tone

• CEO Billy Cyr stated that results demonstrate the strength and durability of the business model, highlighting double-digit sales growth, expanded margins, and the strongest Adjusted Gross Margin in over seven years.
• Management expressed confidence in executing against priorities and strengthening competitive advantages related to product quality, manufacturing scale, and omnichannel presence.
• Management believes these advantages provide a strong foundation for sustainable, profitable growth.

Other Key Points

• The company completed $102.3 million in share repurchases pursuant to a previously announced program during the nine months ended September 30, 2026.
• Cash and cash equivalents increased by $67.9 million, driven by $100.0 million in proceeds from the sale of an equity investment and $65.3 million in Free Cash Flow.
• A $66.6 million gain on equity investment contributed to net income for the first nine months of 2026.
• The prior year period included a $77.9 million deferred income tax benefit resulting from the release of a valuation allowance.
• The company hosted a conference call and webcast on November 4, 2026, for investors and media.