Freshpet’s third quarter results were met with a significant positive market reaction as the company delivered double-digit sales growth, strong volume gains, and a notable expansion in operating margins. Management pointed to increased household penetration and share gains in the U.S. dog food category as main growth drivers, alongside disciplined capital spending and improved operational efficiency. CEO Billy Cyr credited Freshpet’s ability to adapt quickly to a shifting economic environment, highlighting “continued strong operating performance despite the slowdown in volume growth” and an earlier-than-expected achievement of positive free cash flow for the year.
Is now the time to buy FRPT? Find out in our full research report (it’s free for active Edge members).
Freshpet (FRPT) Q3 CY2025 Highlights:
- Revenue: $288.8 million vs analyst estimates of $284.1 million (14% year-on-year growth, 1.7% beat)
- Adjusted EPS: $1.83 vs analyst estimates of $0.40 (significant beat)
- Adjusted EBITDA: $54.61 million vs analyst estimates of $52.95 million (18.9% margin, 3.1% beat)
- EBITDA guidance for the full year is $192.5 million at the midpoint, below analyst estimates of $193.9 million
- Operating Margin: 8.6%, up from 4.7% in the same quarter last year
- Locations: 29,745 at quarter end, up from 27,838 in the same quarter last year
- Organic Revenue rose 14% year on year vs analyst estimates of 12.4% growth (163.4 basis point beat)
- Sales Volumes rose 12.9% year on year (26.1% in the same quarter last year)
- Market Capitalization: $2.70 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Freshpet’s Q3 Earnings Call
- Peter Benedict (Baird) asked about the timeline and impact of new production technologies. CEO Billy Cyr explained decisions would be based on line reliability and product quality, with significant margin improvements expected from successful implementation.
- Brian Holland (D.A. Davidson) inquired about the scale and measurement criteria for new fridge island rollouts. Chief Operating Officer Nicola Baty detailed operational requirements and a planned four-month lead time for broader expansion, emphasizing collaboration with retail partners.
- Thomas Palmer (JPMorgan) questioned the allocation and timing of capital expenditures amid ample installed production capacity. Interim CFO Ivan Garcia clarified that investments target future capacity needs and new technology, with flexibility to adjust based on demand and retail developments.
- Rupesh Parikh (Oppenheimer) sought clarity on gross margin drivers and path to long-term targets. Garcia identified plant cost leverage and improved operational efficiency as key, with conversion costs and inventory management playing major roles.
- Jon Andersen (William Blair) asked about the strategy for e-commerce and the evolving competitive moat. Cyr affirmed that manufacturing technology, scale, and brand equity are primary differentiators, while Baty described efforts to grow DTC and omnichannel presence for incremental household growth.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will closely watch (1) the pace and effectiveness of new fridge island deployments and expanded retail partnerships, (2) measurable improvements in production margins from advanced bag technology rollouts, and (3) continued growth in digital and DTC channels. We will also track household penetration rates and Freshpet’s ability to navigate increased competitive activity in the fresh pet food segment.
Freshpet currently trades at $55.07, up from $49.21 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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