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ICR Conference Presentation: January 2018
Forward Looking Statements
This presentation contains “forward-looking” statements that involve risks, uncertainties andassumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, theCompany’s results may differ materially from those expressed or implied by such forward-lookingstatements. All statements other than statements of historical fact could be deemed forward-looking,including, but not limited to, the Company’s intentions, beliefs or current expectations concerning,among other things, the Company’s results of operations, financial condition, liquidity, prospects,growth, strategies and the industry in which we operate and any statements of assumptions underlyingany of the foregoing. These statements are based on estimates and information available to us at thetime of this presentation and are not guarantees of future performance.
These forward-looking statements are based on certain assumptions and are subject to risks anduncertainties, including those described in the “Risk Factors” section and elsewhere in the preliminaryprospectus for this offering. You should read the prospectus, including the Risk Factors set forth thereinand the documents that the Company has filed as exhibits to the registration statement, of which theprospectus is a part, completely and with the understanding that if any such risks or uncertaintiesmaterialize or if any of the relevant assumptions prove incorrect, the Company’s actual results coulddiffer materially from the results expressed or implied by these forward-looking statements. Except asrequired by law we assume no obligation to update these forward-looking statements publicly, or toupdate the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
2
Safe Harbor
o A disruptive innovation in a huge and growing
industry
o A socially responsible, pet health-centric brand
built around the contemporary consumer
o We are redefining what good pet food is in ways
that are intuitive to consumers
o We deliver a value proposition relevant to the
average consumer and every class of pet
retailer
o We have a scalable and very difficult to replicate
business model
3
Who Is Freshpet?
4
Freshpet Lives at the Intersection of
Two Very Powerful Macro-Trends in CPG
Humanization
of
Pets
Fresh,
Wholesome,
All-Natural
Foods
5
We Operate DifferentlyDelighting consumers with fresh food & our company ideology
Environmentally
Focused
Employee
Engagement
Community &
Consumer Engagement
High Brand
LoyaltyAlignment with deep pet
parent emotional motivations
Differentiated Innovative forms, technologies, and
appearance
ManufacturingProprietary technology,
processes, and infrastructure
Freshpet FridgeBranded, company-owned real estate
Supply Chain Only refrigerated pet food network in
North America
Retailer PartnersDelivers benefits in traffic, frequency
and retailer margins
A Difficult Business to Replicate
6
With Growth Potential in Fresh E-Commerce
Strategy: Grow with winning players in fresh e-commerce
Curbside
Online Fresh Retail
Home Delivery
7
In 2017, we launched our new strategy . . .
8
The essence of our strategic bet in 2017 . . . .
71% Repurchase
Rate
9
The best product nobody heard of . . .
1.4% Penetration
35% Awareness
10
Well below our competitors . . .
35%
52%
86%82%
70%
1.4% 3.6%8.0%
5.2% 3.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%Awareness
Penetration
Freshpet Rachel RayBlue
BuffaloPurina ONE Cesar
Awareness
(Aided)35% 52% 86% 82% 70%
Penetration1.4% 3.6%
(dry)
~8%
(est)
5.2%
(dry)
3.4%
(wet)
Source: 2016 Brand Tracker, IRI 2016 HH Panel11
We increased our advertising investment . . .
+60% media spending
0
2
4
6
8
10
12
14
16
2016 2017
Freshpet Media Spending($ millions)
$13.5
$8.5
6%
9%
% = percent of sales
12
And the growth accelerated . . . .
24.1%
22.0%
18.2%
15.6%
13.4% 13.8%14.3%
15.9%15.1%
17.2%
20.6%
19.4%20.4%
19.9%20.6%
22.8%
24.5%25.5%
27.0%
28.4%27.4% 27.2%
26.4%
24.17%
26.18%
24.55%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Dollar Sales % Chg YA Poly. (Dollar Sales % Chg YA)
20+% fresh growth
13
The media delivered an attractive financial return. . .
90% pay back(about 13 months to get our money back – and
accelerating)
14
Increased awareness and penetration . . .
1.8% Penetration(+0.4 points)
40% Awareness(+5 points)
15
27.0%
25.2%
23.4%
21.6%
19.8%
18.0%
17%
19%
21%
23%
25%
27%
29%
$150 $189 $210 $240 $270 $300
Net Sales ($ in millions)
Infrastructure as a percentage of Net Sales*
Which helped Freshpet grow into its scale in 2017. . .
100 bps reduction YTD
16
*- Leverage adjusted to projected inflationary growth of infrastructure
0
20
40
60
80
100
120
140
160
180
200
2015 2016 2017 2018
Freshpet Net Sales(Fresh Only Growth Rate)
Fresh Baked
In 2018, we will accelerate fresh growth. . .
+15%
+20%
>20%
17
By increasing media investment to further drive penetration
0
5
10
15
20
25
30
2016 2017 2018 2019 2020
Freshpet Media Spending($ Million)
$27
$13.5
$8.5
6%
9%
9%
>9%>9%
% = percent of sales
18
That will deliver even stronger growth in 2019. . .
0
50
100
150
200
250
300
2015 2016 2017 2018 2019
Freshpet Net Sales
Fresh Baked
+15%+20%
>20%
>20+%
19
Putting Freshpet well on its way to our $300 million goal . . .
2017 2018 2019 2020
Accelerated Media Spend
9% Media Spend
Pro
jecte
d
Net S
ale
s
20
$300 million
$157 million
• xxx• More stores
• Right stores
While driving both distribution and velocity . . .
• HH Penetration
• Buying Rate
• In-store conditions
Distribution Drivers
Velocity Drivers
Significant White Space
21
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
04/05/14 07/05/14 10/04/14 01/03/15 04/04/15 07/04/15 10/03/15 01/02/16 04/02/16 07/02/16 10/01/16 12/31/16 04/01/17 07/01/17 09/30/17
xAOC + PS Stores
Previously, store growth closely mirrored revenue growth . . .
Nielsen Measured Revenue
Growth
(includes pet specialty)
Freshpet Store Growth
22
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
04/05/14 07/05/14 10/04/14 01/03/15 04/04/15 07/04/15 10/03/15 01/02/16 04/02/16 07/02/16 10/01/16 12/31/16 04/01/17 07/01/17 09/30/17
xAOC + PS Stores
Until we implemented our new strategy . . .
Nielsen Measured Revenue
Growth
(includes pet specialty)
Freshpet Fridge
Growth
23
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
04/05/14 07/05/14 10/04/14 01/03/15 04/04/15 07/04/15 10/03/15 01/02/16 04/02/16 07/02/16 10/01/16 12/31/16 04/01/17 07/01/17 09/30/17
xAOC + PS Stores xAOC + PS per ACV Point
Now, velocity growth is a better predictor of revenue growth
Nielsen Measured Revenue
Growth
(includes pet specialty)
Velocity
24
Velocity growth will drive the incremental growth rate to deliver our 2020 goal . . .
2016 2017 2018 2019 2020
Freshpet Growth Rate
Distribution Velocity
+15%
+18%
Growth Rate Required to Hit $300M
25
27.0%
25.2%
23.4%
21.6%
19.8%
18.0%
17%
19%
21%
23%
25%
27%
29%
$150 $189 $210 $240 $270 $300
Net Sales ($ in millions)
Infrastructure as a percentage of Net Sales*
Driving significant margin improvement . . .
26
*- Leverage adjusted to projected inflationary growth of infrastructure
By 2020: 9 pt. reduction in fixed costs
Which will drive long term net sales and profitability . . .
+$156mm Net Sales
+$300mm Net Sales
+9 Points of Profit Margin+$16mm Adj. EBITDA
+$60mm Adj. EBITDA
27
Delivering our 2020 goals. . .
28
While positioning Freshpet for future growth beyond 2020. . .
HH Penetration
Buying Rate
New Stores
E-commerce
Geographic Expansion
10% of HH’s
+10%/year
10% of sales
UK and beyond
30,000 stores
Growth Potential: 2020 and beyond
29
Further strengthening our barriers to entry . . .
30
Delighting pet parents, pets, shareholders and employees . . .
31
APPENDIX
33
$7.47
$7.05
$5.31
$3.80
$3.30
$2.40 $2.40 $2.14
$1.92 $1.77 $1.73 $1.62 $1.55
$1.28
$0.61 $0.61 $0.49
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Cost to Feed a 30lb Dog Daily
Grocery and MassSelect is middle of the pack on cost to feed
34
$7.47
$6.48
$5.50
$4.50 $4.44 $4.37
$4.00 $3.80 $3.77 $3.75
$3.26 $3.09
$2.81
$2.50 $2.42 $2.12
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Cost to Feed a 30lb Dog Daily Title
Pet SpecialtyVital is an economical choice in Pet
35