Freshpet, Inc. (NASDAQ:FRPT) Q4 2022 Earnings Call Transcript

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Mark Astrachan: Yes. Thanks and good morning, everyone. I wanted to ask about a couple of things related to volume. So first, you talked about media spend being back on air year-to-date versus 4Q. Could you talk a bit about how volumes have progressed relative to expectations? If I look at our scanner data, volume trends have been largely flat with 4Q. So how would you expect that to progress relative to the advertising spend? And related to that or sort of related to that 13% or so in the fridge space by my calculation, how do we think about the productivity of that adding to the sales growth, layering on your volume assumptions and layering on the points of price that you talked about? Thanks.

Todd Cunfer: Mark, so I’m a little obsessive with it, especially during this type of period. I look at the pounds weekly. And I’m a prior period guy, right? I’m all about – when I look at the business, I could care less about a year ago is interesting, but it’s all about prior period and are we making progress. And so I’ve been watching pounds weekly. Every single week over the past four or five weeks – actually almost six weeks, we’ve made progress in pounds versus if you take a look at Q4, and we should reconcile potentially on the numbers here maybe offline. But when you look at Q4, we’re up about 6% versus Q4, which is right in line with where we expect it to be from – on a pound basis year-to-date. Would I like to be higher?

Absolutely. And we’re kind of in that double-digit range, low double digit, but we’re in the double-digit range on pounds. So we’re kind of tracking with exactly how we would expect. So then the second part of your question was around fridges. So fridges unquestionably availability. But at the end of the day, we’re selling dollars and pounds and it helps with the advertising productivity, et cetera, et cetera. Now when fridges come on, it’s great that they come on. But – and again, I’m looking for prior period, we haven’t added a whole lot quite yet. We’ve added some kind of quarter-to-date. The biggest quarter is going to be probably next quarter and from a fridge standpoint, we’ll add a lot during that period, and it will help. But when a fridge first goes in a couple of weeks, it’s not doing a whole lot.

It takes a few months. I think the number we quote is within six months is doing about 80% of what that channel typically ends up doing if we add a totally new fridge. We are adding a lot of second fridges here. They take a little bit longer in order to create the level of productivity that we would see on a first fridge, for example. So we know that those definitely add. And we have – we’ve done a bottoms-up view on what the fridges add over the course of the year with the advertising ads and how kind of – how it all works together. And that’s kind of how we’ve gotten to the guidance that we’ve all gotten comfortable with. Does that give you enough?.

Scott Morris: Just let me add one more point, Mark, because not everybody sees all the data that we see. When we add pet in, pet, and I mean in much of last year was a very significant drag on the published Nielsen’s data, but on our data, not the published data. But it has had a rebirth lately, the last four weeks, we’re up 20% versus a year ago. So we’re starting to see renewed growth in the pet channel that is helping pull the total business along. So I would just add that piece to it.

Mark Astrachan: That’s definitely helpful, Scott, to answer your question. And just related to that, you called that out in the presentation, right, the pet specialty piece. So would the expectation be that, that continues to build relative to the number in the fourth quarter? And what’s driving it? Is the comparison coming off of the big base from a couple of years ago? What’s going on within that channel?

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