4 th Quarter & Full Year 2016 Supplemental Presentation - PowerPoint PPT Presentation

4 th Quarter & Full Year 2016 Supplemental Presentation Strategic Operational and Financial Update March 9, 2017 1

Safe Harbor Forward Looking Statements “forward - looking” This presentation contains statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the Company’s results may differ materially from those expressed or implied by such forward-looking statements. 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 underlying any of the foregoing. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. These forward-looking statements are based on certain assumptions and are subject to risks and uncertainties, including those described in the “Risk Factors” section and elsewhere in the preliminary prospectus for this offering. You should read the prospectus, including the Risk Factors set forth therein and the documents that the Company has filed as exhibits to the registration statement, of which the prospectus is a part, completely and with the understanding that if any such risks or uncertainties materialize or if any of the relevant assumptions prove incorrect, the Company’s actual results could differ materially from the results expressed or implied by these forward-looking statements. Except as required by law we assume no obligation to update these forward-looking statements publicly, or to update 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

100 Day Review Conclusion: Significant Potential to Grow . . . but we have underinvested in marketing Consumer Operations Customer Capabilities & Appeal & Support for Marketing Model Distribution Opportunities • Expansion complete • High repeat & brand passion • Extensive network & scale • New lines running at parity • Low awareness • Established & broad product portfolio • Major investment in technical • Low Penetration • Highly motivating retailer metrics capability • Strong marketing model • Established sales & marketing team • Strong focus on quality • Outstanding message • Significant white space • Significant capacity to support growth Longer Term Potential = $300 Million in Net Sales as soon as 2020 3

Freshpet Lives at the Intersection of Two Very Powerful Macro-Trends in CPG Fresh, Humanization Wholesome, of All-Natural Pets Foods 4

Freshpet Proprietary Position  Only Fresh Pet Food  Only Chilled Pet Food Manufacturing Distribution System Capability in the U.S. 16,600+  Demonstrable Product  Proven Marketing Freshpet Fridges Preference Message 5

We Operate Differently Delighting consumers with fresh food & our company ideology Community & Employee Environmentally Consumer Engagement Focused Engagement 6

Freshpet Has Seen Significant Growth Over the Past Four Years, Driven by Both Distribution and Same Store Sales Distribution & Sales Growth $12,000,000 55.00 May 2012 – Dec 2016 Total US Multi Outlet IRI (4 wk.) 50.00 $10,000,000 ACV Wtd Dist Dollar Sales 45.00 $8,000,000 40.00 35.00 $6,000,000 30.00 $4,000,000 25.00 20.00 $2,000,000 15.00 $- 10.00 May 20, 2012 Jul 15, 2012 Sep 9, 2012 Nov 4, 2012 Dec 30, 2012 Feb 24, 2013 Apr 21, 2013 Jun 16, 2013 Aug 11, 2013 Oct 6, 2013 Dec 1, 2013 Jan 26, 2014 Mar 23, 2014 May 18, 2014 Jul 13, 2014 Sep 7, 2014 Nov 2, 2014 Dec 28, 2014 Feb 22, 2015 Apr 19, 2015 Jun 14, 2015 Aug 9, 2015 Oct 4, 2015 Nov 29, 2015 Jan 24, 2016 Mar 20, 2016 May 15, 2016 Jul 10, 2016 Sep 4, 2016 Oct 30, 2016 Dec 25, 2016 7

Recent Financial Performance 2013-2016 100% $200,000,000 90% $180,000,000 Fresh Pet Food Sales and Growth Rates 80% $160,000,000 70% $140,000,000 $128 $111 60% $120,000,000 Sales ($ in millions) 50% $100,000,000 $88 Growth 40% $80,000,000 $63 39% 30% $60,000,000 27% 20% $40,000,000 15% 10% $20,000,000 0% $0 2013 2014 2015 2016 Fresh Growth vs YAG 8

Increasing Repeat Rate & Strong Consumer Affinity Freshpet Consumer Repeat Rates 71% 62% 60% 58% 2013 2014 2015 2016 9

Our Biggest Opportunity Freshpet Awareness & Penetration are a Key Focus 100% Awareness 86% 90% Penetration 82% 80% 70% 70% 60% 52% 50% 40% 35% 30% 20% 8.0% 10% 5.2% 3.6% 3.4% 1.4% 0% Blue Freshpet Rachel Ray Purina ONE Cesar Buffalo Awareness 35% 52% 86% 82% 70% (Aided) 1.4% 3.6% ~8% 5.2% 3.4% Penetration (dry) (est) (dry) (wet) 10 Source: 2016 Brand Tracker, IRI 2016 HH Panel

Key Learning: Time to Shift to Rapid Scaling • On trend product Opportunity • Reasonable margins • Low awareness / high repurchase rate • Ample plant capacity Capacity • Financial flexibility • Established business model • Proven marketing program Capability • Installed Freshpet Fridge base 11

A WARENESS D ISTRIBUTION F OOD P ET M ASS E DUCATION Organization Capability and Focus O PERATIONS R ESEARCH & S CALE & E FFICIENCY D EVELOPMENT 12

Sharpen Focus & Drive the Core UK Freshpet Net Sales by Class of Trade/Product Baked Line Refrigerated Refrigerated Food/Mass/Club Pet Specialty ~77% ~19% Focus on US Refrigerated: 96% of Current Net Sales 13 % net sales breakdown by class of trade/product line as of 12/31/16

Strategy Tactics Result Drive HH • Accelerates • Awareness & TV & Digital Advertising Penetration Growth Penetration • New Fridge • Accelerate Fridge Change Selling Approach Placements Growth • Placements Make Freshpet Essential Accelerates in 2018 • • Convert From Building to Adjusted Gross Margin Strengthen Gross Optimization/Efficiency Grows Several • Margin Drive Yield, Throughput, Percentage Pts. by Reliability 2020 14

Cost Savings Investment in Media Velocity SG&A Increase Leverage (+Revenue) Plant Distribution Leverage Increase (Incr. Pounds (+Revenue) Produced) 15

Growing Into Our Scale Infrastructure as Percentage of Sales * 29.0% 27.0% 27.0% 25.2% 25.0% 23.4% 23.0% 21.6% 21.0% 19.8% 18.0% 19.0% 17.0% $150 $189 $210 $240 $270 $300 Sales ($ in millions) 16 *- Leverage adjusted for projected inflationary growth of infrastructure

1Q17 Strategic Tests Implemented Advertising and Communications • Strong and consistent returns driving POS records New Selling Approach • Developed new plans for several top customers Cost Savings Opportunities • Identified several points of cost savings opportunities Same Store Sales Growth & Advertising TRP’s 160 $2,200,000 $2,100,000 140 Advertising Model $2,000,000 120 $1,900,000 100 • $1,800,000 Advertising has driven significant and 80 $1,700,000 consistent growth over the past 4 years 60 $1,600,000 40 • $1,500,000 Q1 testing supports model and provides us 20 $1,400,000 with investment return metrics to build out $1,300,000 0 2017 TRPs Same Store Sales 17

Over the Past Six Months Growth Has Started to Return to the Business Primarily Driven by Advertising Q1 Has Provided Us with Insight Around Additional Testing IRI Multi Outlet Weekly Dollar Sales Rolling 4wks $3,100,000 Adv. flight Adv. flight $3,000,000 $2,900,000 $2,800,000 $2,700,000 $2,600,000 $2,500,000 $2,400,000 $2,300,000 18

Growth is Accelerating Behind Advertising Latest 4 Week Period IRI Consumption +23.3% vs. YA in MULO $12,000,000 55.00 ACV Wtd Dist 50.00 $10,000,000 Dollar Sales 45.00 $8,000,000 40.00 35.00 $6,000,000 30.00 $4,000,000 25.00 20.00 $2,000,000 15.00 $- 10.00 May 20, 2012 Jul 15, 2012 Sep 9, 2012 Nov 4, 2012 Dec 30, 2012 Feb 24, 2013 Apr 21, 2013 Jun 16, 2013 Aug 11, 2013 Oct 6, 2013 Dec 1, 2013 Jan 26, 2014 Mar 23, 2014 May 18, 2014 Jul 13, 2014 Sep 7, 2014 Nov 2, 2014 Dec 28, 2014 Feb 22, 2015 Apr 19, 2015 Jun 14, 2015 Aug 9, 2015 Oct 4, 2015 Nov 29, 2015 Jan 24, 2016 Mar 20, 2016 May 15, 2016 Jul 10, 2016 Sep 4, 2016 Oct 30, 2016 Dec 25, 2016 Feb 19, 2017 Latest 4 Weeks Latest 12 Weeks Latest 52 Weeks Ending Feb 19, 2017 Ending Feb 19, 2017 Ending Feb 19, 2017 % % Change % Change Dollar Sales Dollar Sales Dollar Sales Change YoY YoY YoY Total US - Food $6,611,633 25.0% $19,105,230 23.6% $76,773,072 19.2% Total US - Multi Outlet $11,884,581 23.3% $34,626,176 21.1% $139,945,312 17.0% MULO + Petco $13,297,545 20.5% $38,762,540 18.5% $157,836,080 14.8% 19