Executive Summary

Q2 delivered solid profitability amid slower top-line: net sales $264.7M (+12.5% YoY), Adj. EBITDA $44.4M (16.8% margin) with GAAP gross margin 40.9% and Adj. Gross Margin 46.9% . EPS was $0.33 vs $(0.03) LY as SG&A fell and margins improved .
Mixed vs consensus: slight revenue miss (−$3.25M), material EPS beat (+$0.24) as execution offset softer shipments; S&P EBITDA consensus ~in line on their definition while company Adj. EBITDA was stronger (definitions differ) . S&P consensus values marked with asterisks; see table and disclaimer below.*
Guidance cut on growth, capex reduced: 2025 net sales growth trimmed to 13–16% (from 15–18% in Q1), capex cut to ~$175M (from ~$225M), Adj. EBITDA unchanged at $190–$210M; 2027 $1.8B sales target removed, but 48% Adj. GM and 22% Adj. EBITDA margin targets reiterated .
Stock catalysts: near-term pressure from lower growth guide and removal of 2027 sales target, offset by improving margins, capex deferral ($100M 2025–2026) and channel catalysts (club test to 125 stores, digital +40% Y/Y; 13% of sales) .

What Went Well and What Went Wrong

What Went Well
- Margin execution: Adj. Gross Margin 46.9% (+100 bps YoY) on lower input and quality costs; Adj. EBITDA $44.4M (16.8% vs 14.9% LY) . “We continue to significantly outperform the dog food category… and strong improvements in operations” — CEO Billy Cyr .
- Operational step-change: Ennis now most profitable site; OEE, yields and new bag technology underpin capex deferral of at least $100M in 2025–2026 and higher long-term margins .
- Channel momentum: Digital orders +40% Y/Y; 13% of sales; club test expanded to 125 stores with positive early reads; second/third fridges growing, 29,141 stores and 37,985 fridges .
What Went Wrong
- Growth slower than plan: Net sales slightly below internal expectations; order timing shift from June to early July impacted Q2 by ~1 point; growth guidance cut to 13–16% .
- Macro headwinds: Weaker consumer trade-up, fewer new dog additions, RTO and housing constraints; management removed 2027 $1.8B sales target given category deceleration .
- Q1 non-recurring burdens lingered in 1H: Distributor liquidation, legal accrual, and international changes earlier in 1H increased YTD SG&A; logistics and quality costs improved but weighed on YoY compares in 1H .

Financial Results

P&L Trends vs Prior Periods

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($M)	$262.7	$263.2	$264.7
YoY Growth	+22.0%	+17.6%	+12.5%
GAAP Gross Margin	42.5%	39.4%	40.9%
Adjusted Gross Margin	48.1%	45.7%	46.9%
Adjusted EBITDA ($M)	$52.6	$35.5	$44.4
Adjusted EBITDA Margin	20.0%	13.5%	16.8%
Net Income ($M)	$18.1	$(12.7)	$16.4
Diluted EPS ($)	$0.36	$(0.26)	$0.33

Notes: Adjusted metrics per company definitions with reconciliations provided in filings .

Q2 2025 vs Wall Street Consensus (S&P Global)

Metric	Actual	Consensus	Surprise
Revenue ($M)	$264.69	$267.94*	−$3.25 (−1.2%)*
EPS ($)	$0.3355	$0.0908*	+$0.2447*
EBITDA ($M, S&P-defined)	$38.64*	$38.93*	−$0.29*
Adjusted EBITDA ($M, Company)	$44.40	n/a	n/a

*Values retrieved from S&P Global.

Why: EPS beat driven by lower variable comp accruals and lower share-based comp, and better gross profit, partially offset by higher media; slight revenue miss reflects 1-pt shipment timing shift into early July .

Mix and Cost Drivers (Q2 2025)

Driver	Q2 2025 Detail
Volume vs Price/Mix	+10.8% volume, +1.7% price/mix
Cost Focus Areas (% of sales)	Input 28.9%, Logistics 5.7%, Quality 2.0% (all improved YoY)
Media Spend	15% of net sales (vs 12.2% LY)

Channel/Consumption

Channel Metric	Q1 2025	Q2 2025
Total US Pet Retail + XAOC ($ consumption growth, 13-wk)	+16%	+13%
Food	+17%	+12%
Pet Specialty	+7%	+6%
Unmeasured Channel Contribution	+1 pt	+1.5 pts

Balance Sheet & Cash

Cash $243.7M; debt $396.2M; YTD operating cash flow $38.7M; YTD capex $59.9M (reducing FY capex plan) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth YoY	FY 2025	15%–18% (Q1 guide)	13%–16%	Lowered
Adjusted EBITDA	FY 2025	$190M–$210M	$190M–$210M	Maintained
Capital Expenditures	FY 2025	~$225M	~$175M	Lowered
Long-term Net Sales Target	FY 2027	$1.8B (prior)	Removed	Removed
Long-term Adj. Gross Margin	FY 2027	48%	48% reiterated	Maintained
Long-term Adj. EBITDA Margin	FY 2027	22%	22% reiterated	Maintained

Context: Original FY25 guide (Feb) was $1.18–$1.21B sales (21–24%), >$210M Adj. EBITDA, ~$250M capex, later cut in Q1 and again refined in Q2 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24)	Previous Mentions (Q1’25)	Current Period (Q2’25)	Trend
Macro/Consumer	Strong 2024; momentum into 2025	Slower HH penetration; adapt plan	Category slowdown; trade-up hesitation; dog acquisition headwinds	Worsened; growth tempered
Capex & Capital Efficiency	FY25 capex ~$250M	Cut to ~$225M	Cut to ~$175M; defer ≥$100M 2025–26	Improving efficiency
Production Technology	New bag tech 2H’25	Commission in 4Q’25	4Q’25 start; “lite” retrofit in 2026; Ennis margins lead	Advancing
Distribution Expansion	Capacity on time; fridges +	Value channels focus	Club test to 125 stores; more fridges; digital +40%; 13% mix	Positive
Tariffs/Supply Chain	Not highlighted	n/a	Minor tariff impact (veg/spare parts); mitigations	Manageable
Legal/Regulatory	n/a	Phillips legal accrual in Q1	No new accrual; carryover noted in 1H	Stabilizing
Marketing/Creative	2024 media in line	Increase media; target higher income	New health-focused creative; heavier social/digital; MVP targeting	Repositioning

Management Commentary

CEO strategy and macro: “Against a more challenging consumer sentiment backdrop, we continue to significantly outperform the dog food category… accelerating advertising and distribution, reducing capital expenditures, and strengthening operations” . “We now believe that we can defer at least $100,000,000 in CapEx from 2025–2026… still meet demand” .
Long-term targets: “Removing the $1,800,000,000 net sales target… reiterating 48% adjusted gross margin and 22% adjusted EBITDA margin targets in 2027” .
Operations: “Ennis has become our most profitable plant… expected to provide more than 50% of our production volume within the next few years” .
Channels and marketing: “Digital orders… up 40%… now 13% of our sales… expanded our test in a leading club retailer… now in 125 stores” . New creative “going after our health credentials… in a clean label environment” .

Q&A Highlights

Path to 22% 2027 EBITDA margin: Requires low-to-mid teens sales growth; lever in G&A and further gross margin improvement; new tech upside not in target .
Household penetration vs buy rate: Penetration growth slowed; buy rate elevated; value entry formats and bundles to aid HH acquisition; Homestyle Creations performing well .
Competition: Blue Buffalo/fresh entrants likely expand category; Freshpet scale and brand should benefit from increased awareness .
Club & distributor dynamics: Club test expansion informs H2 outlook; pet specialty distributor transition issues from Q1 are largely resolved .
EBITDA resiliency vs lowered sales: Outsized operational gains (Ennis, quality costs) maintained EBITDA guide despite reduced sales outlook .
Shipment timing: ~$3–4M slipped from June to July; POS stable; expect similar or slightly better net sales growth in Q3 .

Estimates Context

Q2 results vs S&P Global consensus: EPS beat on lower SG&A (variable comp) and better gross profit; revenue slight miss tied to shipment timing; S&P EBITDA roughly in line, while company-reported Adjusted EBITDA stronger (definition differences). Revenue estimate $267.94M vs actual $264.69M; EPS $0.0908 vs $0.3355; S&P EBITDA $38.93M vs S&P “actual” $38.64M; Company Adj. EBITDA $44.40M . S&P values marked with asterisks in the table above.
Forward estimate implications: With FY25 sales growth trimmed and capex lowered, street models likely reduce revenue trajectory and long-term TAM penetration pace, while maintaining or modestly lifting margin/FCF assumptions given operational efficiency and capex deferral .

KPIs (Q2 2025 snapshot)

KPI	Q2 2025
Household Penetration (LTM)	14.4M (+11% YoY)
MVP Households (LTM)	2.2M (+18% YoY), ~70% of sales
Digital Mix / Growth	13% of sales; +40% YoY
Store Count / Fridges	29,141 stores; 37,985 fridges
ACV (Grocery)	79%; XAOC 68%

Key Takeaways for Investors

Profitability momentum intact: Adj. GM at 46.9% and Adj. EBITDA margin at 16.8% show sustainable operational gains, supporting unchanged FY25 Adj. EBITDA guide despite softer growth .
Growth expectations reset: FY25 sales growth cut to 13–16% and 2027 sales target removed, aligning with macro/category headwinds; expect sentiment pressure near term .
Capital efficiency a positive offset: Capex cut to ~$175M (from ~$225M) and ≥$100M deferral through 2026 improve FCF trajectory; management reiterates FCF-positive in 2026 .
Execution levers for reacceleration: New health-forward creative, value entry formats, club expansion, and digital scale-up should aid penetration and stabilize growth cadence in H2 .
Long-term margin targets credible: 48% Adj. GM and 22% Adj. EBITDA margin reiterated; new tech and Ennis outperformance provide upside optionality if volume returns to teens .
Watch list items: H2 sequential sales ramp delivery vs guidance, club rollout pace, digital channel mix/profitability, bag technology commissioning in 4Q’25, and tariff/veg/spare parts cost mitigation .

Footnotes:

Non-GAAP measures per company definitions with reconciliations in filings .
S&P Global consensus and “actual” estimate values are marked with asterisks and were retrieved from S&P Global.

Freshpet, Inc. (FRPT)·Q2 2025 Earnings Summary