FRPT 10-K & 10-Q changes, risk factors and insider trading

Developing our business has in the past requiredrequired, and will in the future continue to requirerequire, significant capital. To meet our capital needs, we expect to continue to rely on our cash flow from operations, as well as amounts previously raised through the issuance of the Convertible Notes (as defined below), and other third-party financing. Third-party financing in the future may not, however, be available on terms favorable to us, or at all. Our ability to obtain additional funding will be subject to various factors, including general economic and market conditions, our operating performance, the market’s perception of our growth potential, lender sentiment and our ability to incur additional debt in compliance with our contractual restrictions.

Our future success depends to a significant degree on the skills, experience and efforts of our key executive officers. The sudden loss of any of these executives' services or our failure to appropriately plan for any expected key executive succession could materially and adversely affect our business and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all. Additionally, we depend on our ability to attract and retain qualified personnel to efficiently operate and expand our business, and in recent years have rapidly expanded our workforce to support our increased manufacturing capacity. Certain specialized and technical knowledge is required to maintain satisfactory operating conditions and food quality standards at our manufacturing facilities, and if employees assigned to such facilities are not adequately trained, able to assimilate into those roles, or adhere to such standards, or if we fail to attract or retain talented new employees, our business and results of operations could be negatively affected.

The pet food product category in which we participate is highly competitive. There are numerous brands and products that compete for shelfretail spacespace, e-commerce and direct-to-consumer sales, with competition based primarily upon brand recognition and loyalty, product packaging, quality and innovation, taste, nutrition, breadth of product line, price and convenience. We compete with a significant number of companies of varying sizes, including divisions or subsidiaries of larger companies.companies and private label brands. We face strong competition from competitors’ products that are sometimes sold at lower prices. Price gaps between our products and our competitors’ products may result in market share erosion and harm our business. A number of our competitors have broader product lines, substantially greater financial and other resources and/or lower fixed costs than we have. Our competitors may succeed in developing new or enhanced products, including additional fresh, refrigerated pet food, that are more attractive to customers or consumers than our products. These competitors may also prove to be more successful in marketing and selling their products or may be better able to increase prices to reflect cost pressures. We may not be able to compete successfully with these other companies or maintain or grow the distribution of our products. We cannot predict the pricing or promotional activities of our competitors or whether their strategies will negatively affect us. Many of our competitors engage in aggressive pricing and promotional activities. There are competitive pressures and other factors which could cause our products to lose market share or decline in sales or result in significant price or margin erosion, which would have a material adverse effect on our business, financial condition and results of operations.

In general, due to the highly competitive nature of the businesses in which we compete, we must execute effective and efficient marketing investments and trade spending programs with respect to our businesses overall to sustain our competitive position in our markets. Marketing investments may be costly. Additionally, we may, from time to time, change our marketing and trade spending strategies, including the timing, amount or nature of television advertisingadvertising, use of social media and related promotional programs. The sufficiency and effectiveness of our marketing and trade spending practices is important to our ability to retain or improve our market share or margins. If our marketing and trade spending programs are not successful or if we fail to implement sufficient and effective marketing and trade spending programs, our business, financial condition and results of operations may be adversely affected.

We have in the past and may in the future be exposed to product recalls, including voluntary recalls or withdrawals, and adverse public relations if our products are alleged to cause injury or illness or if we are alleged to have mislabeled or misbranded our products or otherwise violated governmental regulations. We may also voluntarily recall or withdraw products that we consider below our standards, whether for taste, appearance or otherwise, in order to protect our brand reputation. Consumer or customer concerns (whether justified or not) regarding the quality or safety of our products could adversely affect our business. Product recalls or withdrawals can result in substantial and unexpected expenditures, destruction of product inventory, and lost sales due to the unavailability of the product for a period of time, which could reduce profitability and cash flow. In addition, a product recall or withdrawal may require significant management attention.attention Asand an example,result in Juneproduction 2022delays, weas initiatedwas the case with a voluntary recall of a single lot of aproduct particular brand due to potential salmonella contamination. Althoughthat we received no reports of harm to pets or their owners as a result of this potential contamination, this recall resultedinitiated in productionJune delays and significant diversion of management time to identify and remediate the issue.2022. Product recalls, product liability claims (even if unmerited or unsuccessful), or any other events that cause consumers to no longer associate our brands with high quality and safe products may also result in adverse publicity or legal challenges, hurt the value of our brands, lead to a decline in consumer confidence in and demand for our products, and lead to increased scrutiny, fines, or other penalties by federal and state regulatory agencies of our operations, which could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to successfully implement initiatives to improve productivity and product quality, to streamline operationsoperations, or to control or reduce costs. Failure to successfully implement such initiatives could adversely affect our results of operations.

Our ability to introduce new products and execute our growth strategy depends, in part, on our ability to successfully launch new proprietary technologies. If these technologies fail to perform as expected, we encounter unexpected difficulty training employees on use of these technologies, or we or our business partners are unable to implement these technologies in the time frame, at the cost, or with anticipated efficiencies and beneficial impact on product quality, our results of operations could be adversely affected. Because our ability to effectively implement price increases for our products can be affected by factors outside of our control, our profitability and growth depend significantly on our efforts to control our operating costs. BecauseAs many of our costs, such as energy and logistics costs, packaging costs and ingredient,ingredients, commodity and raw product costs, are affected by factors outside or substantially outside our control, we generally must seek to control or reduce costs through operating efficiency or other initiatives. If we are not able to identify and complete initiatives designed to control or reduce costs and increase operating efficiency on time or within budget, our results of operations could be adversely impacted. In addition, if the cost savings initiatives we have implemented to date, or any future cost-savings initiatives, do not generate expected efficiencies and cost savings, our business, financial condition and results of operations could be adversely affected.

Our business is dependent on our ability to timely source ingredients that comply with our product quality standards. The primary inputs, commodities and ingredients that we use include meat, poultry products, vegetables, fruits, carrageenans, whole grains, vitamins, minerals, packaging and energy (including wind power).energy. Prices for these and other items we use may be volatile, and we may experience shortages in these items due to factors beyond our control, such as commodity market,market pricing, availability of supply, increased demand (whether for the item we require or for other items, which in turn impacts the item we require), shortages of agricultural workers (including due to U.S. immigration policies); weather conditions, natural disasters, animal disease outbreaks (such as HPAI), pestilence, operational disruption, financial distress or insolvency of key suppliers or other third parties on whom we or they rely, the effects of climate change, currency fluctuations, tariffs or trade wars, inflationary and/or interest rate pressures, governmental regulations (including import restrictions), sustained government or regulatory shutdowns, regulatory uncertainty or delays, agricultural programs or issues, energy programs, geopolitical concerns, including the ongoing conflictglobal betweengeopolitical Ukraine and Russia,conflict, labor strikes and the financial health of our suppliers.

In February 2025, the newThe U.S. presidential administration has in the past year announced the imposition of tariffs on imports from many countries, including but not limited to Canada, Mexico and China, and certain of those countries subsequently announced retaliatory tariffs in response.response, with citizens of several countries calling for boycotts of U.S. products. Although theto impositiondate Freshpet has not experienced a material adverse impact on our business and results of certainoperations as a result of thesesuch tariffs wasand temporarilyforeign stayed,trade therelations, situationwe iscontinue dynamic,to rapidly evolvingmonitor and uncertain.assess Iftheir allowedpotential toimpact. become or remain effective, theseThese or any new or increased tariffs or resultant trade wars could have an adverse effect on us or on our suppliers, which could lead to significant increases in the costs of materials, and as a result could negatively impact our results of operations, cash flow and financial condition. New or increased tariffs could also negatively affect U.S national or regional economies or lead to increased inflation or a recession, which also could negatively impact our sales growth, and our business and results of operations.

The ingredients that we use in the production of our products (including,such among others,as meat and poultry products, vegetables, fruits, carrageenans,and whole grains, vitamins and mineralsgrains) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, frosts, fires, earthquakes, tornadoes, livestock disease such as avian influenza and pestilences. Adverse weather conditions may be impacted by climate change and other factors. Adverse weather conditions and natural disasters can reduce crop size and crop quality, which in turn could reduce our supply of ingredients, lower recoveries of usable ingredients, increase the prices of our ingredients, increase our transportation costs or increase our cost of storing ingredients if harvests are accelerated and processing capacity is unavailable. Additionally, the growth of crops, asthe wellraising asof cattle, and the manufacturemanufacturing and processing of our products, requiresall require significant amounts of water. Drought or other causes of a reduction of water in aquifers may affect availability of water, which in turn may adversely affect the cost of beef, vegetables and fruits, as well as our results of operations. Competing manufacturers may be affected differently by weather conditions and natural disasters depending on the location of their supplies or operations. If our supply of ingredients is reduced, we may not be able to find enough supplemental supply sources on favorable terms, if at all, which could impact our ability to supply product to our customers and adversely affect our business, financial condition and results of operations. Increased costs for ingredients or other inputs could also adversely affect our business, financial condition and results of operations as described in “—The inputs, commodities and ingredients that we require are subject to macroeconomic factors, government regulation, and other factors outside of our or our suppliers' control, including but not limited to, price increases, inflationary and interest rate pressures, tariffs, trade wars, product or agricultural industry labor shortages, livestock disease or pestilence, any of which could adversely affect our results of operations.”

The cost of the protein-based ingredients we use in our products has been adversely impacted in the past by the publicity surrounding animal diseases, such as bovine spongiform encephalopathy, or “mad cow disease.” As a result of extensive global publicity and trade restrictions imposed to provide safeguards against mad cow disease, the cost of alternative sources of the protein-based ingredients we use in our products has from time to time increased significantly and may increase again in the future if additional cases of mad cow disease or similar pathogens are found.

Adverse and uncertain economic conditions may impact distributor, customer, and consumer demand for our products. In addition, our ability to manage normal commercial relationships with our suppliers, contract manufacturers, distributors, customers, consumers, and creditors may suffer. Consumers have access to lower-priced offerings and, during economic downturns, may shift purchases to these lower-priced or other perceived value offerings. Customers may become more conservative in response to these conditions and seek to reduce their inventories.inventories Forin example,response duringto theconsumer economic downturn from 2007 through 2009, customers significantly reduced their inventories.behavior. Global or local pandemics could also have adverse impacts on our business operations. In addition, any tariffs imposed by the new U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war. If effected, these or anyAny new or increased tariffs or resultant trade wars could have an adverse effect on us or on our suppliers, distributors or customers, which could lead to significant increases in the costs of materials and services, resulting in product cost increases and reduced consumer demand.

Manufacturing, processing, labeling, packaging, storing and distributing pet products are activities subject to extensive federal, state and local regulation, as well as foreign regulation. In the United States, these aspects of our operations are regulated by the FDA, and various state and local public health and agricultural agencies. The FDA Food Safety Modernization Act of 2011 provides direct recall authority to the FDA and includes a number of other provisions designed to enhance food safety, including increased inspections by the FDA of domestic and foreign food facilities and increased review of food products imported into the United States. In addition, many states have adopted the Association of American Feed Control Officials’ (AAFCO) model pet food regulations or variations thereof, which generally regulate the information manufacturers provide about pet food. Complying with government regulationregulation, including state by state adoption of AAFCO guidelines, can be costly or may otherwise adversely affect our business. Regulatory delays or uncertainty, including as a result of any government or regulator shutdown or defunding could impede our ability to manufacture and timely deliver our products. In addition, failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our business, financial condition and results of operations. Both international regulations and state regulations have Extended Producer Responsibility (EPR) laws which do, and in the future, may impact our business. These EPR regulations require annual reporting and fees. Failure to pay these authorities in a timely manner can result in large penalties.

We rely on trademark, copyright, trade secret, patent and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our intellectual property rights as well as the intellectual property of third parties with respect to which we are subject to non-use and non-disclosure obligations. We may need to engage in litigation or similar activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others. Any such litigation could require us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations. The steps we take to prevent misappropriation, infringement or other violation of our intellectual property or the intellectual property of others may not be successful. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited for some of our trademarksintellectual and patentsproperty in some foreign countries. Failure to protect our intellectual property could harm our business, financial condition and results of operations.

Our brand names and trademarks are important to our business, and we have registered or applied to register many of these trademarks.trademarks, Webut cannothave assureno youassurance that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks or branding are successfully challenged, we could be forced to rebrand our products, which could result in the loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

We rely on unpatented proprietary know-how in the areas of recipes, ingredients sourcing, cooking techniques, packaging, transportation and delivery. It is possible that others will independently develop the same or similar know-how or otherwise obtain access to our proprietary know-how. To protect our trade secrets and other proprietary know-how, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you thatIf these agreements willfail to provide meaningful protection in the event of any unauthorized use, misappropriation or disclosure of our trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature ofinformation, our recipes, methods and other know-how, webusiness could be materially adversely affected.

In recent years, we have expanded our global footprint by entering into new markets and may expand into additional markets in the future. For example, we currently do business with four retailers in the United Kingdom, where our products are selling in approximately 608637 stores. AsShould we continue to expand our business into new countries, we may encounter tariffs, regulatory, personnel, technological and other difficulties that increase our expenses or delay our ability to become profitable in such countries. This may have an adverse effect on our business.

In addition, our expansion into new countries may require significant resources and the efforts and attention of our management and other personnel, which will divert resources from our existing business operations. As we expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our operations outside of the United States and Canada.

We are subject to environmental regulation and environmental risks, which may adversely affect our business. Climate change or evolving views or concerns regarding climate change may increase environmental regulationrisks and environmental regulation of such risks.

As a result of our agricultural and food processing operations, we are subject to numerous environmental laws and regulations at the federal, state and local levels. As these laws and regulations become increasingly complex, evolve or are reinterpreted, our compliance costs may become increasingly expensive. Changes in environmental conditions may result in existing legislation having a greater impact on us. Additionally, we may be subject to new legislation and regulation in the future.

For example, theThe long-term effects of global climate change present both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable. These changes could over time affect, for example, the availability and cost of products, commodities, including our ingredients, and energy (including utilities), which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require. RegulationsAlthough the current presidential administration has taken steps to reassess and scale back existing environmental regulation, future presidential administrations could adopt a different policy, in which case federal regulations limiting greenhouse gas emissions and energy inputs may alsocould increase in coming years, which may increase our costs associated with compliance.

Additionally, complianceCompliance with evolving environmental legislation and regulations at the international, national,federal, state and local levels, particularly if they are more aggressive than our current sustainability measures used to monitor our emissions and improve our energy efficiency, may increase our costs and adversely affect our results of operations. We cannot predict the extent to which any environmental law or regulation that may be reinterpreted, enacted or enforced in the future may affect our operations. The effect of these actions and future actions on the availability and use of pesticides could adversely impact our financial position or results of operations. If the cost of compliance with applicable environmental laws or regulations increases, our business, financial condition and results of operations could be negatively impacted.

We have in the past been, and may in the future be, subject to proposals by stockholders urging us to take certain corporate actions. If activist stockholder activities continue,arise in the future, our business could be adversely affected because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees. For example, we have been and may continue to be required to retain the services of various professionals to advise us on activist stockholder matters, including legal, financial, and communications advisers, the costs of which may negatively impact our future financial results. This may be exploited by our competitors, cause concern to our current or potential customers, and make it more difficult to attract and retain qualified personnel. In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Our net sales are derived from the sale of fresh pet food products to retailers, through direct sales and distributor arrangements. Our products are primarily sold to consumers through a fast-growing network of company-owned branded refrigerators, known as Freshpet Fridges, located in our customers’ stores. We continue to roll out Freshpet Fridges at leading retailers across North America and parts of Europe and have installed Freshpet Fridges in approximately 28,14130,235 retail stores as of December 31, 2024.2025. Our products are sold under the Freshpet brand name with ingredients, packaging and labeling customized by class of retail. Sales are recorded net of discounts, returns and promotional allowances.

Our net sales growth strategy is driven by the following key factors:

•Increasing distribution and penetration of Freshpet Fridge locationsproducts in major classes of retail, including Grocery, Mass, International, Digital, Pet Specialty, and Club. The impact of new Freshpet Fridge installations on our net sales varies by retail class and depends on numerous factors including store traffic, refrigerator size, placement within the store, and proximity to other stores that carry our products. Digital orders include any purchases made online, including our direct-to-consumer business, and may also be fulfilled by our Freshpet Fridge network in brick and mortar stores.

•Consumer trends including growinglong-term growth in pet ownership, pet humanization and a focus on health and wellness.

Marketing & advertising. Our marketing and advertising expenses primarily consist of national television media,advertising, digitaldigital, marketing,and social media channels. Our digital efforts span a range of platforms and grassenvironments, rootsincluding marketingcompany toand driveretail brandwebsites, awareness.retail media networks, search engines, blogs, and online reviews. These expenses may vary from quarter to quarter depending on the timing of our marketing and advertising campaigns. Our Feed the Growth initiative focuses on growing the business through increased marketing investments.

Freshpet Fridge operating costs. Freshpet Fridge operating costs consist of repair costs and depreciation. The purchase and installation costs for new Freshpet Fridges are capitalized and depreciated over the estimated useful life. AllFreshpet newFridges refrigeratorspurchased in 2025 are coveredprotected by a manufacturer warranty forof threefive years.years, while those purchased prior to 2025 carry a three-year manufacturer warranty. We subsequently incur maintenance and freight costs for repairs and refurbishments handled by third-party service providers.

Share-based compensation. The Company recognizes share-based compensation based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. The Company estimates grant date fair value of its options using the Black-Scholes Merton option-pricing model. RestrictedService and performance based restricted stock units are measured based on the fair market value of the underlying stock on the dates of the grants.grants whereas market based restricted stock units, such as total shareholder return awards, are measured using the Monte-Carlo simulation. Share awards are amortized under the straight-line method over the requisite service period of the entire award. The Company accounts for forfeitures as they occur.

Consolidated Statements of Operations and Comprehensive Income (Loss)

Net sales wereincreased $975.2$126.8 millionmillion, andor $766.913.0%, to $1,102.0 million for the yearsyear ended December 31, 2024 and 2023, respectively, representing increases of $208.3 million and $171.6 million, or 27.2% and 28.8%,2025 as compared to $975.2 million for the respectiveyear priorended years.December 31, 2024. The $126.8 million increase in net sales increases werewas driven by year-over-year growth in the Grocery, Mass, InternationalInternational, and Digital channel of $158.5$92.2 million and $138.6 million in 2024 and 2023, respectively,million, with the remaining growth in the Pet Specialty and Club channel. ThisThe growthnet sales increase was primarily driven by year-over-year volume gains of 26.1%12.0% and 20.0%favorable inprice/mix 2024of and 2023, respectively.1.0%.

Gross profit was $396.0$449.6 million, or 40.6%40.8% as a percentage of net sales, for the year ended December 31, 2024,2025, compared to $250.9$396.0 million, or 32.7%40.6% as a percentage of net sales, forin the prior year. The increase in gross profit as a percentage of net sales was primarily due to lower input costs,costs and reduced quality costscosts, andpartially improvedoffset by reduced leverage on plant expenses. For the year ended December 31, 2024, Adjusted Gross Profit was $453.5 million, or 46.5% as a percentage of net sales, compared to $306.6 million, or 40.0% as a percentage of net sales, in the prior year. See "—Non-GAAP Financial Measures" below.

Selling, general and administrative expenses ("SG&A") were $358.0$374.0 million for the year ended December 31, 2024,2025, compared to $281.3$358.0 million forin the prior year. As a percentage of net sales, SG&A remaineddecreased consistentto at 36.7%33.9% for boththe yearsyear ended December 31, 20242025, andcompared 2023.to 36.7% in the prior year. The decrease in SG&A as a percentage of net sales remainedwas consistent as the decreasesprimarily due to reduceddecreased logisticsshare-based compensation, driven by the reversal of previously recorded expense in the current year related to performance-based conditions deemed improbable of achievement as of year end, and decreased variable compensation accrual, partially offset by increased media spend as a percentage of net sales and the absence ofhigher non-recurring charges incurred in the prior year were fully offset by increased media as a percentage of net sales, higher share-based compensation and increased variable compensation accrual.2025.

Adjusted SG&A for the year ended December 31, 2024,2025, was $319.4 million, or 29.0% as a percentage of net sales, compared to $291.6 million, or 29.9% as a percentage of net sales, compared to $240.1 million, or 31.3% as a percentage of net sales, forin the prior year. See "—Non-GAAP Financial Measures" below.

Income (Loss) from Operations

As a result of the factors discussed above, income from operations increased by $68.4$37.7 million to income from operations of $38.0$75.7 million for the year ended December 31, 20242025 as compared to a loss from operations of $30.4$38.0 million forin the prior year.

The Company recorded interest and other income, net of $11.9$9.2 million for the year ended December 31, 20242025 as a result of interest income generated from cash and cash equivalents as compared to $13.0$11.9 million forin the prior year, which also included interest income generated from short-term investments.year.

The $9.9 million gain on equity investment for the year ended December 31, 2024,2024 resulted from the change in fair value of the Company's equity interest in a privately held company.company, as discussed in Note 1 - Summary of Significant Accounting Policies of our consolidated financial statements.

NetIncome incometax benefit increased $80.5$69.0 million to net income of $46.9$68.4 million for the year ended December 31, 20242025 as compared to aincome nettax lossexpense of $33.6$0.6 million in the prior year,year. The increase is primarily due to contributionthe deferred income tax benefit resulting from higherthe sales, improved gross margin, reduced logistics costs as a percentagerelease of netthe sales,valuation andallowance gainin on equity investment,2025, partially offset by increaseddeferred SG&Aincome expenses.tax expense.

Adjusted EBITDA was $161.8$195.7 million, or 16.6% as a percentage of net sales,million for the year ended December 31, 2024,2025, compared to $66.6$161.8 million, or 8.7% as a percentage of net sales, in the prior year. The increase in Adjusted EBITDA was a result of increased Adjusted Gross ProfitProfit, partially offset by higher Adjusted SG&A expenses. See "—Non-GAAP Financial Measures" below.

•Adjusted EBITDA as a percentage of net sales (Adjusted EBITDA Margin) Such financial measures are not financial measures prepared in accordance with U.S. GAAP. We define Adjusted Gross Profit as Gross Profit before depreciation expense, non-cash share-based compensation, and loss on disposal of manufacturing equipment. We define Adjusted SG&A as SG&A expenses before depreciation and amortization expense, non-cash share-based compensation, implementation and other costs associated with the implementation of an ERP system, fees related to the Capped Call Transactions associated with the sale of our Convertible Notes in 2023, loss on disposal of equipment, advisorydistributor feestransition relatedcosts, tolegal shareholder activism defense engagement,obligation and organizationalinternational changes.business charges. EBITDA represents net income (loss) plus depreciation and amortization expense, interest expense net of interest income,income and, income tax expense and depreciation and amortization(benefit) expense. Adjusted EBITDA represents EBITDA less gain on equity investment, plus loss on equity method investment, non-cash share-based compensation expense, implementation and other costs associated with the implementation of an ERP system, loss on disposal of property, plant and equipment, feesdistributor relatedtransition tocosts, thelegal Capped Call Transactions, advisory fees related to activism engagement,obligation, and organizationalinternational changes.business charges.

(a)Includes true-ups to share-based compensation expense compared to prior periods.expense. We have certain outstanding share-based awards with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA margins, Adjusted EBITDA and/or Net Sales targets as a condition of vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets. When the probability of achieving such performance conditions changes, the compensation cost previously recorded is adjusted as needed. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed.

(bd)Represents termination costs associateddue withto thea implementationbusiness ofchange anin ERPour system.international go-to-market strategy.

(a)Includes true-ups to share-based compensation expense compared to prior periods.expense. We have certain outstanding share-based awards with performance-based vesting conditions that require the achievement of certain Adjusted EBITDA margins, Adjusted EBITDA and/or Net Sales targets as a condition of vesting. At each reporting period, we reassess the probability of achieving the performance criteria and the performance period required to meet those targets. When the probability of achieving such performance conditions changes, the compensation cost previously recorded is adjusted as needed. When such performance conditions are deemed to be improbable of achievement, the compensation cost previously recorded is reversed.

(bd)Represents termination costs associateddue withto thea implementationbusiness ofchange anin ERPour system.international go-to-market strategy.

To meet our capital needs, we issued approximately $402.5 million in convertible notes in March 2023 (the "Convertible Notes"), used $66.2 million of the proceeds to enter into capped call transactions, and used $11.0 million of the proceeds on debt issuance related costs. Further, on March 13, 2023, in connection with the proposed offering of the Convertible Notes, the Company notified City National Bank of Freshpet's intent to terminate the Credit Agreement, and such termination became effective as of March 15, 2023 (the "Termination Date"). The Company had no borrowings outstanding under the Credit Agreement as of the Termination Date.

Our primary cash needs, in addition to our plant expansions, are for purchasing ingredients, operating expenses, marketing expenses and capital expenditures to procure Freshpet Fridges. We believe that cash and cash equivalents, expected cash flow from operations, amounts previously raised through the issuance of the Convertible Notes and our ability to access the capital markets, if appropriate, are adequate to fund our debt service requirements, operating and finance lease obligations, capital expenditures and working capital obligations for the foreseeable future. We believe our sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow from operations and our ability to manage costs and working capital successfully. Additionally, our cash flow generation ability is subject to general economic factors at the international, national and regional levels, including but not limited to increased interest rates and inflation, tariffs, trade wars, recession, financial, competitive, legislative and regulatory factors and other factors that are beyond our control, including government or regulatory shutdowns or defunding, or disruptions with or increased costs imposed by our key suppliers or others within our supply chain. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. Expanding certain of our Freshpet Kitchens primarily comprises our material future cash requirement. However, our capital requirements, including our cash requirements, may vary materially from those currently planned if, for example, our revenues do not reach expected levels, or we have to incur unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may seek alternative financing, such as issuing additional debt or equity securities, and we cannot assure you that we will be able to do so on favorable terms, if at all. Moreover, if we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity or if the Convertible Notes are converted to common shares, existing stockholders may experience dilution, and such new securities could have rights senior to those of our common stock. These factors may make the timing, amount, terms and conditions of additional financing unattractive. Our inability to raise capital could impede our growth or otherwise require us to forego growth opportunities and could materially adversely affect our business, financial condition and results of operations.

Net cash provided by operating activities consists primarily of net income (loss) adjusted for certain non-cash items (i.e., provision for loss (gains) on accounts receivable, loss on disposal of property, plant and equipment, share-based compensation, change in reserve for inventory obsolescence, depreciation and amortization, write-off and amortization of deferred financing costs and loan discount,costs, change in operating lease right of use asset, losschange onin equitydeferred methodincome investment,taxes, and gain on equity investment).

•$168.0 million of net income, adjusted for reconciling non-cash items, which excludes $121.0 million of non-cash items related to $73.6 million of depreciation and amortization, $51.8 million of share-based compensation including amortization of warrants, $2.1 million of write-off and amortization of deferred financing costs and loan discount,costs, $1.4 million of change in operating lease right of use asset, $1.3 million of loss on disposal of property, plant and equipment, $0.3 million of a reserve for inventory obsolescence, $0.5 million of provision for loss on accounts receivable, partially offset by $9.9 million of gain on equity investment.

Our net sales are derived from the sale of fresh pet food products to retailers, through direct sales and distributor arrangements. Our products are primarily sold to consumers through a fast-growing network of company-owned branded refrigerators, known as Freshpet Fridges, located in our customers’ stores. We continue to roll out Freshpet Fridges at leading retailers across North America and parts of Europe and have installed Freshpet Fridges in approximately 30,42530,721 retail stores as of MarchJune 31,30, 2026. Our products are sold under the Freshpet brand name with ingredients, packaging and labeling customized by class of retail. Sales are recorded net of discounts, returns and promotional allowances.

Outbound freight. We use a third-party logistics providerproviders for outbound freight that shipsship directly to retailers as well as third-party distributors.

Condensed Consolidated Statements of Income (Loss)

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net sales increased $34.4$40.9 million, or 13.1%,15.5%, to $297.6$305.6 million for the three months ended MarchJune 31,30, 2026 as compared to $263.2$264.7 million in the same period in the prior year. The $34.4$40.9 million increase in net sales was driven by growth in the Grocery, Mass, International, and Digital channel of $17.2$22.1 million, with the remaining growth in the Pet Specialty and Club channel. The net sales increase was primarily driven by volume gains of 14.6%,15.7%, partially offset by unfavorable price/mix of 1.5%.0.2%.

Gross profit was $120.7$128.7 million, or 40.5%42.1% as a percentage of net sales, for the three months ended MarchJune 31,30, 2026, compared to $103.8$108.2 million, or 39.4%40.9% as a percentage of net sales, in the prior year period. The 1.1%1.2% increase in gross profit as a percentage of net sales was primarily due to lower input costs and improved leverage on plant expenses.expenses, partially offset by higher quality costs related to the startup of new technology lines.

Adjusted Gross Profit for the three months ended MarchJune 31,30, 2026 was $139.6$148.4 million, or 46.9%48.6% as a percentage of net sales, compared to $120.2$124.0 million, or 45.7%46.9% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Selling, general and administrative expenses ("SG&A") were $116.3$107.0 million, or 39.1%35.0% as a percentage of net sales, for the three months ended MarchJune 31,30, 2026, compared to $115.3$90.4 million, or 43.8%34.1% as a percentage of net sales, in the prior year period. The decreaseincrease in SG&A as a percentage of net sales was primarily due to aincreased decreaselogistics incosts non-recurringand chargesvariable thatcompensation occurred in the first quarter of 2025,accrual, partially offset by increaseddecreased media spend.spend as a percentage of net sales.

Adjusted SG&A for the three months ended MarchJune 31,30, 2026 was $101.7$96.1 million, or 34.2%31.4% as a percentage of net sales, compared to $84.7$79.6 million, or 32.2%30.1% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Income (Loss) from Operations

As a result of the factors discussed above, income from operations increased by $15.8$3.9 million to income from operations of $4.3$21.7 million for the three months ended MarchJune 31,30, 2026 as compared to loss from operations of $11.5$17.8 million in the prior year period.

The Company recorded interest and other income, net of $2.9$2.8 million for the three months ended MarchJune 31,30, 2026 as a result of interest income generated from cash and cash equivalents as compared to $2.4$2.2 million in the prior year period.

Interest expense increaseddecreased $0.1$0.2 million to $3.6$3.5 million for the three months ended MarchJune 31,30, 2026 as compared to $3.5$3.7 million in the prior year period. The increasedecrease was primarily driven by $0.1higher million of additionalcapitalized interest expensein relatedthe to a finance lease liability.period.

The $62.0$4.5 million additional gain on equity investment for the three months ended MarchJune 31,30, 2026, resultedrepresents fromcertain post-closing adjustments related to the sale of the Company's non-controlling interest in a privately held company following the equity investment's acquisition by a third party, as discussed in Note 1 of our (unaudited) condensed consolidated financial statements.

Income tax expense increased $17.0$23.2 million to $17.1$23.2 million for the threesix months ended MarchJune 31,30, 2026 as compared to the nominal income tax expense of $0.1 million in the prior year period, primarily attributable to an increase in taxable income due to the gain on equity investment.

Net Income (Loss)

Net income increased $61.2$64.3 million to net income of $48.5$68.0 million for the threesix months ended MarchJune 31,30, 2026 as compared to a net loss of $12.7$3.7 million in the prior year period, primarily due to the gain on equity investment, contributions from higher sales, and decreased non-recurring SG&A charges, partially offset by the increaseincreases in logistics costs, variable compensation accrual and income tax expense.

Adjusted EBITDA was $37.9$90.1 million for the threesix months ended MarchJune 31,30, 2026 as compared to $35.5$79.9 million in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A expenses. See “—Non-GAAP Financial Measures” below.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net income (loss),income, the most directly comparable financial measure presented in accordance with U.S. GAAP:

We expect to make future capital expenditures in connection with the completion of our planned development of Freshpet Kitchens Ennis Phase 2 and 3. During the threesix months ended MarchJune 31,30, 2026, we spent approximately $27.6$57.3 million of capital to meet our capacity needs as well as recurring capital expenditures. We expect capital expenditures to total approximately $150 million in fiscal year 2026.

Additionally, ourOur cash flow generation ability is subject to general economic factors at the international, national and regional levels, including but not limited to increased interest rates and inflation, tariffs, trade wars, geopolitical conflict, war, recession, financial, competitive, legislative and regulatory factors and other factors that are beyond our control, including government or regulatory shutdowns or defunding, or disruptions with or increased costs imposed by our key suppliers or others within our supply chain. Further, such macroeconomic factors could negatively impact consumer sentiment, resulting in reduced demand and changes in purchasing behaviors for some or all of our products and other relevant factors, such as consumer hesitancy to trade up in pet food, deferral of pet-related expenses, and reduced pet adoption rates. While these factors are expected to persist in the near term, the Company has implemented strategic initiatives, including targeted marketing, value-focused product innovation, and expanded distribution in club and mass channels, to mitigate their impact. Management believes these actions will support continued growth and margin expansion, even if the current economic environment remains unchanged. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs.

Working capital consists of current assets net of current liabilities. Working capital increased $97.0$74.4 million to $454.1$431.5 million as of MarchJune 31,30, 2026 compared to working capital of $357.1 million as of December 31, 2025. The increase was primarily a result of an increase of $103.4$72.8 million in cash and cash equivalentsequivalents, primarily as a result of the proceeds from the sale of our equity investment, an increase of $3.8$10.0 million in inventories, net, an increase of $1.6 million in accounts receivable, and a decrease of $7.0$5.6 million in accounts payable. The increase was partially offset by a decrease of $2.5$2.1 million in prepaid expenses, a decrease of $0.3$1.0 million in other current assets, and an increase of $15.9$12.5 million in accrued expenses as a result of timing, and an increase of $0.1 million in lease liabilities.timing.

As of MarchJune 31,30, 2026, our capital resources consisted primarily of $381.4$350.8 million of cash and cash equivalents on hand.

Net cash provided by operating activities of $4.8$84.8 million for the threesix months ended MarchJune 31,30, 20252026 was primarily attributed to:

•$31.0$91.4 million of net income, adjusted for reconciling non-cash items, which excludes $43.7$23.4 million of non-cash items related to $21.8$21.5 million of deferred income tax expense, $50.0 million of depreciation and amortization, $11.5 million of provision for loss on accounts receivable, $8.8$15.5 million of share-based compensation, $0.5$1.1 million of amortization of deferred financing costs, $0.7$0.2 million of loss on disposal of property, plant and equipment, and $0.3$1.6 million of change in operating lease right of use asset.asset, partially offset by $66.6 million of gain on equity investment.

•a $26.2$6.6 million decrease due to changes in operating assets and liabilities. The decrease was primarily due to the changeschange in accrued expenses, accounts receivable, inventories, and other assets, accounts payable, and operating lease liability, partially offset by the changechanges in accountsaccrued payableexpenses and prepaid expenses and other current assets.

Net cash provided by investing activities of $67.9$42.7 million for the threesix months ended MarchJune 31,30, 2026 was primarily attributed to:

Net cash used in investing activities of $26.5$59.9 million for the threesix months ended MarchJune 31,30, 2025 was primarily attributed to:

Net cash used in financing activities of $4.8$54.6 million for the threesix months ended MarchJune 31,30, 2026, was primarily attributed to: