Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 04, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | FRPT | |
Entity Registrant Name | FRESHPET, INC. | |
Entity Central Index Key | 1,611,647 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,586,930 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 675,184 | $ 3,908,177 |
Accounts receivable, net of allowance for doubtful accounts | 11,514,646 | 8,886,790 |
Inventories, net | 7,686,101 | 5,402,735 |
Prepaid expenses and other current assets | 1,382,285 | 1,045,651 |
Total Current Assets | 21,258,216 | 19,243,353 |
Property, plant and equipment, net | 101,658,434 | 101,493,080 |
Deposits on equipment | 3,583,799 | 3,620,444 |
Other assets | 2,239,533 | 2,094,339 |
Total Assets | 128,739,982 | 126,451,216 |
CURRENT LIABILITIES: | ||
Accounts payable | 7,579,513 | 6,884,155 |
Accrued expenses | 5,073,975 | 4,531,139 |
Accrued warrants | 632,072 | 253,391 |
Borrowings under Credit Facilities | 7,500,000 | 7,000,000 |
Total Current Liabilities | 20,785,560 | 18,668,685 |
Total Liabilities | 20,785,560 | 18,668,685 |
STOCKHOLDERS' EQUITY: | ||
Common stock — voting, $0.001 par value, 200,000,000 shares authorized, 34,513,231 and 33,961,650 issued and outstanding on June 30, 2017 and December 31, 2016, respectively | 34,513 | 33,961 |
Additional paid-in capital | 305,180,732 | 299,477,706 |
Accumulated deficit | (197,260,823) | (191,729,136) |
Total Stockholders' Equity | 107,954,422 | 107,782,531 |
Total Liabilities and Stockholders' Equity | $ 128,739,982 | $ 126,451,216 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 34,513,231 | 33,961,650 |
Common stock, shares outstanding | 34,513,231 | 33,961,650 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
NET SALES | $ 39,968,983 | $ 33,002,209 | $ 74,482,918 | $ 64,455,910 |
COST OF GOODS SOLD | 21,799,146 | 18,090,405 | 40,509,804 | 34,656,218 |
GROSS PROFIT | 18,169,837 | 14,911,804 | 33,973,114 | 29,799,692 |
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES | 19,996,958 | 17,886,746 | 38,540,706 | 34,373,829 |
LOSS FROM OPERATIONS | (1,827,121) | (2,974,942) | (4,567,592) | (4,574,137) |
OTHER EXPENSES: | ||||
Other Expenses, net | (614,586) | (93,768) | (556,909) | (134,637) |
Interest Expense | (189,701) | (159,292) | (365,679) | (276,030) |
Other Expenses, Total | (804,287) | (253,060) | (922,588) | (410,667) |
LOSS BEFORE INCOME TAXES | (2,631,408) | (3,228,002) | (5,490,180) | (4,984,804) |
INCOME TAX EXPENSE | 20,754 | 15,000 | 41,507 | 30,000 |
NET LOSS | (2,652,162) | (3,243,002) | (5,531,687) | (5,014,804) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (2,652,162) | $ (3,243,002) | $ (5,531,687) | $ (5,014,804) |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||||
-BASIC | $ (0.08) | $ (0.10) | $ (0.16) | $ (0.15) |
-DILUTED | $ (0.08) | $ (0.10) | $ (0.16) | $ (0.15) |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING USED IN COMPUTING NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||||
-BASIC | 34,287,006 | 33,554,395 | 34,138,251 | 33,545,837 |
-DILUTED | 34,287,006 | 33,554,395 | 34,138,251 | 33,545,837 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,531,687) | $ (5,014,804) |
Adjustments to reconcile net loss to net cash flows provided by operating activities: | ||
Provision for loss on accounts receivable | 47,568 | 10,403 |
Loss on disposal of equipment and deposits on equipment | 90,873 | 158,612 |
Share-based compensation | 2,159,510 | 2,671,418 |
Fair value adjustment for outstanding warrants | 378,681 | 28,175 |
Change in reserve for inventory obsolescence | 104,572 | 128,112 |
Depreciation and amortization | 6,195,619 | 4,237,677 |
Amortization of deferred financing costs and loan discount | 81,502 | 72,069 |
Changes in operating assets and liabilities | ||
Accounts receivable | (2,675,424) | (1,205,900) |
Inventories | (2,387,938) | (1,139,291) |
Prepaid expenses and other current assets | (336,634) | (562,498) |
Other assets | (147,201) | (160,372) |
Accounts payable | 1,369,961 | 1,534,916 |
Accrued expenses | 542,836 | 2,685,756 |
Net cash flows provided by (used in) operating activities | (107,762) | 3,444,273 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from maturities of short-term investments | 3,250,000 | |
Acquisitions of property, plant and equipment, software and deposits on equipment | (7,169,300) | (21,248,425) |
Proceeds from sale of equipment | 10,672 | |
Net cash flows used in investing activities | (7,169,300) | (17,987,753) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Exercise of options to purchase common stock | 3,544,069 | 233,156 |
Proceeds from borrowings under Credit Facilities | 2,000,000 | 8,000,000 |
Repayment of borrowings under Credit Facilities | (1,500,000) | |
Net cash flows provided by financing activities | 4,044,069 | 8,233,156 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (3,232,993) | (6,310,324) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,908,177 | 8,029,413 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 675,184 | 1,719,089 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Interest paid | 296,116 | 131,302 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Property, plant and equipment purchases in accounts payable | $ 769,825 | $ 1,232,743 |
Nature of the Business and Summ
Nature of the Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of the Business and Summary of Significant Accounting Policies | Note 1 – Nature of the Business and Summary of Significant Accounting Policies: Nature of the Business – Freshpet, Inc. (hereafter referred to as “Freshpet” or the “Company”), a Delaware corporation, manufactures and markets natural fresh meals and treats for dogs and cats. The Company’s products are distributed throughout the United States and other international markets into major retail classes including Grocery and Mass (which includes club) as well as Pet Specialty and Natural retail. Principles of Consolidation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The financial statements include the accounts of the Company as well as the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation – The accompanying consolidated balance sheet as of June 30, 2017, statements of operations and comprehensive loss for the three and six months ended June 30, 2017 and 2016, and statements of cash flows for the six months ended June 30, 2017 and 2016 are unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with the rules and regulations of the United States Securities and Exchange Commission. In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2017, the results of its operations for the three and six months ended June 30, 2017 and 2016, and its cash flows for the six months ended June 30, 2017 and 2016. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2017 and 2016 are unaudited. The results for three and six months ended June 30, 2017 are not necessarily indicative of results to be expected for the year ending December 31, 2017, or any other interim periods, or any future year or period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2016. Estimates and Uncertainties – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Foreign Currency Contracts – The Company may enter into forward exchange contracts to reduce the Company’s exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies. The foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized on the Consolidated Statements of Operations and Comprehensive Loss in Other expenses, net, and carried at their fair value in the Consolidated Balance Sheet with assets reported in Prepaid expenses and other current assets and liabilities reported in Accrued expenses. As of June 30, 2017, the notional value of-foreign currency forward contracts outstanding was 0.9 million Pounds Sterling. The fair value of the foreign currency forward contracts are measured using Level 2 inputs in the fair value hierarchy because they are determined based on a market approach utilizing externally quoted forward rates for similar contracts. For the three months and six months ended June 30, 2017 the net loss recognized on forward contracts was less than $0.1 million. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Note 2 – Recently Issued Accounting Standards: Not Yet Adopted In May 2014, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In connection with this ASU, the FASB also issued ASU No. 2016-10 regarding identification of performance obligations and licensing considerations, ASU No. 2016-12 regarding narrow scope improvements and practical expedients, and ASU No. 2016-08 which clarifies the implementation of guidance on principal versus agent considerations. In August 2015, the FASB deferred the effective date of ASU No. 2014-09 to fiscal years beginning after December 15, 2017, with early adoption permitted only for fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently utilizing a comprehensive approach to assess the impact of this guidance by reviewing current accounting policies to identify the potential impact of the new requirements on its revenue contracts. The Company does not currently expect this guidance to have a material impact on its consolidated financial statements. The Company currently expects to adopt the new guidance beginning in the fiscal year ended December 31, 2018 and has not yet selected a transition method. In February 2016, the FASB issued ASU No. 2016-02, "Leases,” which requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is assessing the impact of ASU No. 2016-02 on its corporate office lease, and upon adoption of this guidance, expects to record the lease on its consolidated balance sheet in accordance with ASU No. 2016-02. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 3 – Inventories: June 30, 2017 December 31, 2016 Raw Materials and Work in Process $ 1,785,197 $ 1,568,789 Packaging Components Material 939,158 908,771 Finished Goods 5,151,634 3,219,634 7,875,989 5,697,194 Reserve for Obsolete Inventory (189,888 ) (294,459 ) $ 7,686,101 $ 5,402,735 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | Note 4 – Property, Plant and Equipment: Property, plant and equipment, net are summarized as follows: June 30, 2017 December 31, 2016 Refrigeration Equipment $ 66,740,955 $ 62,603,188 Machinery and Equipment 46,396,613 45,953,884 Building, Land, and Improvements 25,162,046 25,114,611 Furniture and Office Equipment 4,214,652 3,941,995 Automotive Equipment 319,496 317,615 Leasehold Improvements 311,348 297,681 Construction in Progress 4,112,171 2,841,035 147,257,281 141,070,009 Less: Accumulated Depreciation and Amortization (45,598,847 ) (39,576,929 ) $ 101,658,434 $ 101,493,080 Depreciation expense related to property, plant and equipment totaled $3,085,140 and $6,081,309 for the three and six months ended June 30, 2017, of which $1,448,015 and $2,881,632 was recorded to cost of goods sold for the three and six months ended June 30, 2017, with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense. Depreciation expense related to property, plant and equipment totaled $2,127,220 and $4,161,502 for the three and six months ended June 30, 2016 of which $740,099 and $1,418,777 was recorded to cost of goods sold for the three and six months ended June 30, 2016 with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2017 | |
Payables And Accruals [Abstract] | |
Accrued Expenses | Note 5 – Accrued Expenses: June 30, 2017 December 31, 2016 Accrued Compensation $ 1,555,616 $ 1,895,443 Accrued Chiller Cost 1,207,700 1,010,018 Accrued Marketing 748,002 282,784 Accrued Freight 313,393 359,009 Accrued Utility 159,770 124,000 Deferred Rent 142,768 — Accrued Leadership Transition Expenses (1) 122,484 428,150 Other Accrued Expenses 824,242 431,735 $ 5,073,975 $ 4,531,139 (1) Accrued Leadership Transition Expenses represent costs detailed within our former Chief Executive Officer’s separation agreement as well as incremental costs associated with leadership transition. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Note 6 – Debt: On November 13, 2014, the Company entered into senior secured credit facilities (the “Debt Refinancing”) comprised of a 5-year $18.0 million term facility (the “Term Facility”), a 3-year $10.0 million revolving facility (the “Revolving Facility”) and a $12.0 million additional term loan commitment earmarked primarily for capital expenditures (the “Capex Commitments” and together with the Term Facility and Revolving Facility, the “Credit Facilities” and such loan agreement, the “Loan Agreement”). On December 23, 2014, the Company repaid the outstanding $18.0 million and modified the terms of the $40.0 million Credit Facilities. The $18.0 million term facility was extinguished, the 3-year $10.0 million Revolving Facility remained unchanged, and the $12.0 million term loan commitment earmarked for capital expenditures was increased to $30.0 million. Any drawn Capex Commitments will mature on the fifth anniversary of the execution of the Loan Agreement. Any undrawn Capex Commitments will expire on the third anniversary of the execution of the Loan Agreement. Under the terms of the Loan Agreement, the commitments for the Revolving Facility may be increased up to $20.0 million subject to certain conditions. The Loan Agreement provides for the maintenance of various covenants, including financial covenants, and includes events of default that are customary for facilities of this type. As of June 30, 2017, the Company was in compliance with all the covenants in the Loan Agreement and had $7.5 million in debt outstanding under the Credit Facilities. Borrowings under our Credit Facilities totaled $2.0 million, partially offset by repayments of $1.5 million for the six months ended June 30, 2017. Interest expense and fees totaled $0.2 million and $0.4 million for the three and six months ended June 30, 2017, respectively. Interest expense and fees totaled $0.1 million and $0.2 million for the three and six months ended June 30, 2016, respectively. There was less than $0.1 million of accrued interest on the Credit Facilities as of June 30, 2017 and December 31, 2016. |
Equity Incentive Plans
Equity Incentive Plans | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity Incentive Plans | Note 7 – Equity Incentive Plans: Total compensation cost for share-based payments recognized for the three months ended June 30, 2017 and 2016 was $1,229,353 and $ 1,684,390 2006 Stock Plan— In December 2006, the Company approved the 2006 Stock Plan (the “2006 Plan”) under which options to purchase approximately 624,223 shares of the Company’s common stock were granted to employees and affiliates of the Company. These options are time-based (vest over five years). Certain option awards provide for accelerated vesting if there is a change in control (as defined in the 2006 Plan). At June 30, 2017, there were zero shares available for grant as the 2006 Plan is frozen. 2010 Stock Plan —In December 2010, the Company approved the 2010 Stock Plan (the “2010 Plan”) under which options to purchase approximately 2,146,320 shares of the Company’s common stock were granted to employees and affiliates of the Company (in 2012, the 2010 Plan was amended to allow for the granting of approximately 2,220,280 options to purchase shares of the Company’s common stock). The outstanding options are time-based (vest between two and four years). The options granted have maximum contractual terms of 10 years. The Board of Directors froze the 2010 Plan such that no further grants may be issued under the 2010 Plan. 2014 Omnibus Incentive Plan —In November 2014, the Company approved the 2014 Omnibus Incentive Plan (the “2014 Plan”) under which 1,479,200 shares of common stock may be issued or used for reference purposes as awards granted under the 2014 Plan. In September 2016, the 2014 Plan was amended to allow for the granting of an additional 2,500,000 shares of common stock to be issued or used for reference purposes as awards granted, for a total of 3,979,200 shares. These awards may be in the form of stock options, stock appreciation rights, restricted stock, as well as other stock-based and cash-based awards. As of June 30, 2017, the awards granted were either time-based, performance-based (vest when performance targets are met, as defined in the stock option grant agreement), or restricted stock units (employee RSUs vest over 3 years and non-employee director RSUs vest over 1 year). At June 30, 2017, there were 2,073,286 shares of common stock available to be issued or used for reference purposes under the 2014 Plan. NASDAQ Marketplace Rules Inducement Award —During fiscal year 2016, stock-based awards were granted to the Company’s CEO as an inducement under the NASDAQ Marketplace Rules, and therefore outside of any Plan. Under the terms of the agreement, the grant is governed as if issued under the 2014 Omnibus Plan. As of June 30, 2017, the awards granted were time-based (cliff vest over four years) and performance-based (vest when performance targets are met, as defined in the stock option grant agreement). Service Period Stock Options The following table includes activity related to outstanding service period stock options during the six months ended June 30, 2017. Service Period Stock Options Shares Weighted Average Exercise Price Outstanding at December 31, 2016 2,788,285 $ 8.61 Granted 340,618 11.00 Exercised (492,493 ) 7.20 Forfeited (3,572 ) 13.94 Outstanding at June 30, 2017 2,632,838 $ 14.70 Performance-Vested Stock Options The following table includes activity related to outstanding performance-vested stock options during the six months ended June 30, 2017. Performance Based Options Shares Weighted Average Exercise Price Outstanding at December 31, 2016 1,357,561 $ 10.24 Granted 110,741 11.00 Expired (26,156 ) 8.87 Forfeited (2,936 ) 15.00 Outstanding at June 30, 2017 1,439,210 $ 10.31 (1) As of June 30, 2017, 516,877 performance-vested stock options at a weighted average exercise price of $9.79 have performance metrics that are probable of achievement. These shares are included in share-based compensation costs for the three and six months ended June 30, 2017. Restricted Stock Units The following table includes activity related to outstanding restricted stock units during the six months ended June 30, 2017. Restricted Stock Units Shares Weighted-Average Grant-Date Fair Value Per Unit Outstanding at December 31, 2016 97,515 $ 9.05 Granted 115,320 11.00 Issued Upon Vesting (59,088 ) 9.05 Outstanding at June 30, 2017 153,747 $ 10.51 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 8 – Earnings Per Share: Basic net loss per share of common stock is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share of common stock is computed by giving effect to all potentially dilutive securities. For the three and six months ended June 30, 2017 and 2016, there were no adjustments between net loss and net loss attributable to common stockholders. The potentially dilutive securities are as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Service Period Stock Options 2,823,313 2,149,748 2,792,566 2,063,021 Restricted Stock Units 175,918 59,022 136,933 29,511 Warrants 61,117 61,117 61,117 61,117 Total 3,060,348 2,269,887 2,990,616 2,153,649 For the three and six months ended June 30, 2017 and 2016, diluted net loss per share of common stock is the same as basic net loss per share of common stock, due to the fact that potentially dilutive securities would have an antidilutive effect as the Company incurred a net loss during such periods. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9 – Related Party Transactions: Payments of $2,288,537 and $4,306,300 for the three and six months ended June 30, 2017, and $1,606,521 and $3,181,895 for the three and six months ended June 30, 2016, were made to one stockholder for the purchase of raw materials. The Company believes that all payments made to the shareholder are at market value and thus at arms-length. |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2017 | |
Risks And Uncertainties [Abstract] | |
Concentrations | Note 10 – Concentrations: Concentration of Credit Risk —The Company maintains its cash balances in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 each. At times, such balances may be in excess of the FDIC insurance limit. Net Sales By Class of Retailer – The following table sets forth net sales by class of retailer: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Grocery, Mass and Club $ 32,165,601 $ 25,878,388 $ 60,140,654 $ 50,033,099 Pet Specialty, Natural and Other 7,803,382 7,123,821 14,342,264 14,422,811 Net Sales $ 39,968,983 $ 33,002,209 $ 74,482,918 $ 64,455,910 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events: The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or unrecognized subsequent events that have required adjustment or disclosure in the financial statements. |
Nature of the Business and Su17
Nature of the Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business – Freshpet, Inc. (hereafter referred to as “Freshpet” or the “Company”), a Delaware corporation, manufactures and markets natural fresh meals and treats for dogs and cats. The Company’s products are distributed throughout the United States and other international markets into major retail classes including Grocery and Mass (which includes club) as well as Pet Specialty and Natural retail. |
Principles of Consolidation | Principles of Consolidation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The financial statements include the accounts of the Company as well as the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation – The accompanying consolidated balance sheet as of June 30, 2017, statements of operations and comprehensive loss for the three and six months ended June 30, 2017 and 2016, and statements of cash flows for the six months ended June 30, 2017 and 2016 are unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with the rules and regulations of the United States Securities and Exchange Commission. In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2017, the results of its operations for the three and six months ended June 30, 2017 and 2016, and its cash flows for the six months ended June 30, 2017 and 2016. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2017 and 2016 are unaudited. The results for three and six months ended June 30, 2017 are not necessarily indicative of results to be expected for the year ending December 31, 2017, or any other interim periods, or any future year or period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2016. |
Estimates and Uncertainties | Estimates and Uncertainties – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. |
Foreign Currency Contracts | Foreign Currency Contracts – The Company may enter into forward exchange contracts to reduce the Company’s exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies. The foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized on the Consolidated Statements of Operations and Comprehensive Loss in Other expenses, net, and carried at their fair value in the Consolidated Balance Sheet with assets reported in Prepaid expenses and other current assets and liabilities reported in Accrued expenses. As of June 30, 2017, the notional value of-foreign currency forward contracts outstanding was 0.9 million Pounds Sterling. The fair value of the foreign currency forward contracts are measured using Level 2 inputs in the fair value hierarchy because they are determined based on a market approach utilizing externally quoted forward rates for similar contracts. For the three months and six months ended June 30, 2017 the net loss recognized on forward contracts was less than $0.1 million. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | June 30, 2017 December 31, 2016 Raw Materials and Work in Process $ 1,785,197 $ 1,568,789 Packaging Components Material 939,158 908,771 Finished Goods 5,151,634 3,219,634 7,875,989 5,697,194 Reserve for Obsolete Inventory (189,888 ) (294,459 ) $ 7,686,101 $ 5,402,735 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Summary of Property, Plant and Equipment, Net | Property, plant and equipment, net are summarized as follows: June 30, 2017 December 31, 2016 Refrigeration Equipment $ 66,740,955 $ 62,603,188 Machinery and Equipment 46,396,613 45,953,884 Building, Land, and Improvements 25,162,046 25,114,611 Furniture and Office Equipment 4,214,652 3,941,995 Automotive Equipment 319,496 317,615 Leasehold Improvements 311,348 297,681 Construction in Progress 4,112,171 2,841,035 147,257,281 141,070,009 Less: Accumulated Depreciation and Amortization (45,598,847 ) (39,576,929 ) $ 101,658,434 $ 101,493,080 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Payables And Accruals [Abstract] | |
Summary of Accrued Expenses | June 30, 2017 December 31, 2016 Accrued Compensation $ 1,555,616 $ 1,895,443 Accrued Chiller Cost 1,207,700 1,010,018 Accrued Marketing 748,002 282,784 Accrued Freight 313,393 359,009 Accrued Utility 159,770 124,000 Deferred Rent 142,768 — Accrued Leadership Transition Expenses (1) 122,484 428,150 Other Accrued Expenses 824,242 431,735 $ 5,073,975 $ 4,531,139 (1) Accrued Leadership Transition Expenses represent costs detailed within our former Chief Executive Officer’s separation agreement as well as incremental costs associated with leadership transition. |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Service Period Stock Options | |
Summary of Activity Related to Outstanding Stock Options | The following table includes activity related to outstanding service period stock options during the six months ended June 30, 2017. Service Period Stock Options Shares Weighted Average Exercise Price Outstanding at December 31, 2016 2,788,285 $ 8.61 Granted 340,618 11.00 Exercised (492,493 ) 7.20 Forfeited (3,572 ) 13.94 Outstanding at June 30, 2017 2,632,838 $ 14.70 |
Performance-Vested Stock Options | |
Summary of Activity Related to Outstanding Stock Options | Performance-Vested Stock Options The following table includes activity related to outstanding performance-vested stock options during the six months ended June 30, 2017. Performance Based Options Shares Weighted Average Exercise Price Outstanding at December 31, 2016 1,357,561 $ 10.24 Granted 110,741 11.00 Expired (26,156 ) 8.87 Forfeited (2,936 ) 15.00 Outstanding at June 30, 2017 1,439,210 $ 10.31 (1) As of June 30, 2017, 516,877 performance-vested stock options at a weighted average exercise price of $9.79 have performance metrics that are probable of achievement. These shares are included in share-based compensation costs for the three and six months ended June 30, 2017. |
Restricted Stock Units | |
Summary of Activity Related to Outstanding Stock Options | The following table includes activity related to outstanding restricted stock units during the six months ended June 30, 2017. Restricted Stock Units Shares Weighted-Average Grant-Date Fair Value Per Unit Outstanding at December 31, 2016 97,515 $ 9.05 Granted 115,320 11.00 Issued Upon Vesting (59,088 ) 9.05 Outstanding at June 30, 2017 153,747 $ 10.51 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Potentially Dilutive Securities | The potentially dilutive securities are as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Service Period Stock Options 2,823,313 2,149,748 2,792,566 2,063,021 Restricted Stock Units 175,918 59,022 136,933 29,511 Warrants 61,117 61,117 61,117 61,117 Total 3,060,348 2,269,887 2,990,616 2,153,649 |
Concentrations (Tables)
Concentrations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Risks And Uncertainties [Abstract] | |
Net Sales by Class of Retailer | Net Sales By Class of Retailer – The following table sets forth net sales by class of retailer: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Grocery, Mass and Club $ 32,165,601 $ 25,878,388 $ 60,140,654 $ 50,033,099 Pet Specialty, Natural and Other 7,803,382 7,123,821 14,342,264 14,422,811 Net Sales $ 39,968,983 $ 33,002,209 $ 74,482,918 $ 64,455,910 |
Nature of the Business and Su24
Nature of the Business and Summary of Significant Accounting Policies - Additional Information (Details) - Foreign Currency Forward Contracts $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2017GBP (£) | |
Derivatives Fair Value [Line Items] | |||
Notional value outstanding | £ | £ 900,000 | ||
Maximum | |||
Derivatives Fair Value [Line Items] | |||
Net loss recognized in derivative | $ | $ 0.1 | $ 0.1 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Work in Process | $ 1,785,197 | $ 1,568,789 |
Packaging Components Material | 939,158 | 908,771 |
Finished Goods | 5,151,634 | 3,219,634 |
Inventory gross | 7,875,989 | 5,697,194 |
Reserve for Obsolete Inventory | (189,888) | (294,459) |
Inventory net | $ 7,686,101 | $ 5,402,735 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, Plant and Equipment, Net (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 147,257,281 | $ 141,070,009 |
Less: Accumulated Depreciation and Amortization | (45,598,847) | (39,576,929) |
Property, plant and equipment, net | 101,658,434 | 101,493,080 |
Refrigeration Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 66,740,955 | 62,603,188 |
Machinery and Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 46,396,613 | 45,953,884 |
Building, Land, and Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 25,162,046 | 25,114,611 |
Furniture and Office Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,214,652 | 3,941,995 |
Automotive Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 319,496 | 317,615 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 311,348 | 297,681 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 4,112,171 | $ 2,841,035 |
Property, Plant and Equipment27
Property, Plant and Equipment - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation expense | $ 3,085,140 | $ 2,127,220 | $ 6,081,309 | $ 4,161,502 |
Cost of goods sold, depreciation | $ 1,448,015 | $ 740,099 | $ 2,881,632 | $ 1,418,777 |
Accrued Expenses - Summary of A
Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 | |
Payables And Accruals [Abstract] | |||
Accrued Compensation | $ 1,555,616 | $ 1,895,443 | |
Accrued Chiller Cost | 1,207,700 | 1,010,018 | |
Accrued Marketing | 748,002 | 282,784 | |
Accrued Freight | 313,393 | 359,009 | |
Accrued Utility | 159,770 | 124,000 | |
Deferred Rent | 142,768 | ||
Accrued Leadership Transition Expenses | [1] | 122,484 | 428,150 |
Other Accrued Expenses | 824,242 | 431,735 | |
Accrued expenses | $ 5,073,975 | $ 4,531,139 | |
[1] | Accrued Leadership Transition Expenses represent costs detailed within our former Chief Executive Officer’s separation agreement as well as incremental costs associated with leadership transition. |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Dec. 23, 2014 | Nov. 13, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||||||
Debt outstanding | $ 7,500,000 | $ 7,500,000 | $ 7,000,000 | ||||
Borrowings under credit facilities | 2,000,000 | $ 8,000,000 | |||||
Repayments of borrowings | 1,500,000 | ||||||
Interest expense and fees | 200,000 | $ 100,000 | 400,000 | $ 200,000 | |||
Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Accrued interest | $ 100,000 | $ 100,000 | $ 100,000 | ||||
$40,000,000 Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 40,000,000 | ||||||
Capex Commitments | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 12,000,000 | ||||||
Capex Commitments | $40,000,000 Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | 30,000,000 | ||||||
Term Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 18,000,000 | ||||||
Credit facility term | 5 years | ||||||
Term Facility | $40,000,000 Credit Facilities | |||||||
Debt Instrument [Line Items] | |||||||
Extinguishment amount of debt | 18,000,000 | ||||||
Revolving Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 10,000,000 | ||||||
Credit facility term | 3 years | ||||||
Increase in credit facility | $ 20,000,000 |
Equity Incentive Plans - Additi
Equity Incentive Plans - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Sep. 30, 2016 | Dec. 31, 2010 | Dec. 31, 2006 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Nov. 30, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Share-based compensation | $ 1,229,353 | $ 1,684,390 | $ 2,159,510 | $ 2,703,078 | ||||
Service Period Stock Options | CEO | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Vesting period | 4 years | |||||||
2006 Stock Plan | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Stock options, number of shares granted | 624,223 | |||||||
Vesting period | 5 years | |||||||
Stock options, available for grant | 0 | 0 | ||||||
2010 Stock Plan | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Stock options, number of shares granted | 2,146,320 | |||||||
Stock options, available for grant | 2,220,280 | 0 | 0 | |||||
2010 Stock Plan | Minimum | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Vesting period | 2 years | |||||||
2010 Stock Plan | Maximum | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Options granted maximum contractual terms | 10 years | |||||||
2014 Omnibus Incentive Plan | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Stock options, available for grant | 3,979,200 | 2,073,286 | 2,073,286 | 1,479,200 | ||||
Stock options, number of additional shares granted | 2,500,000 | |||||||
2014 Omnibus Incentive Plan | Restricted Stock Units | Employee | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Vesting period | 3 years | |||||||
2014 Omnibus Incentive Plan | Restricted Stock Units | Non-employee Director | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||||
Vesting period | 1 year |
Equity Incentive Plans - Summar
Equity Incentive Plans - Summary of Activity Related to Outstanding Stock Options (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Service Period Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 2,788,285 |
Shares, Granted | shares | 340,618 |
Shares, Exercised | shares | (492,493) |
Shares, Forfeited | shares | (3,572) |
Shares, Outstanding Ending Balance | shares | 2,632,838 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 8.61 |
Weighted Average Exercise Price, Granted | $ / shares | 11 |
Weighted Average Exercise Price, Exercised | $ / shares | 7.20 |
Weighted Average Exercise Price, Forfeited | $ / shares | 13.94 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 14.70 |
Performance-Vested Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 1,357,561 |
Shares, Granted | shares | 110,741 |
Shares, Expired | shares | (26,156) |
Shares, Forfeited | shares | (2,936) |
Shares, Outstanding Ending Balance | shares | 1,439,210 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 10.24 |
Weighted Average Exercise Price, Granted | $ / shares | 11 |
Weighted Average Exercise Price, Expired | $ / shares | 8.87 |
Weighted Average Exercise Price, Forfeited | $ / shares | 15 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 10.31 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 97,515 |
Shares, Granted | shares | 115,320 |
Shares, Issued Upon Vesting | shares | (59,088) |
Shares, Outstanding Ending Balance | shares | 153,747 |
Weighted-Average Grant-Date Fair Value Per Unit, Outstanding Beginning Balance | $ / shares | $ 9.05 |
Weighted-Average Grant-Date Fair Value Per Unit, Granted | $ / shares | 11 |
Weighted-Average Grant-Date Fair Value Per Unit, Issued Upon Vesting | $ / shares | 9.05 |
Weighted-Average Grant-Date Fair Value Per Unit, Outstanding Ending Balance | $ / shares | $ 10.51 |
Equity Incentive Plans - Summ32
Equity Incentive Plans - Summary of Activity Related to Outstanding Stock Options (Parenthetical) (Details) - Performance-Vested Stock Options | Jun. 30, 2017$ / sharesshares |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Performance-vested stock options | shares | 516,877 |
Performance-vested stock options, weighted average exercise price | $ / shares | $ 9.79 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||
Adjustments between net loss and net loss attributable to common stockholders | $ 0 | $ 0 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Potentially Dilutive Securities (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 3,060,348 | 2,269,887 | 2,990,616 | 2,153,649 |
Service Period Stock Options | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 2,823,313 | 2,149,748 | 2,792,566 | 2,063,021 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 175,918 | 59,022 | 136,933 | 29,511 |
Warrants | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 61,117 | 61,117 | 61,117 | 61,117 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Purchases of Raw Materials | ||||
Related Party Transaction [Line Items] | ||||
Payments made to a stockholder for distribution services | $ 2,288,537 | $ 1,606,521 | $ 4,306,300 | $ 3,181,895 |
Concentrations - Additional Inf
Concentrations - Additional Information (Details) | Jun. 30, 2017USD ($) |
Maximum | |
Concentration Risk [Line Items] | |
Cash, FDIC insured amount | $ 250,000 |
Concentrations - Net Sales by C
Concentrations - Net Sales by Class of Retailer (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Concentration Risk [Line Items] | ||||
Net Sales | $ 39,968,983 | $ 33,002,209 | $ 74,482,918 | $ 64,455,910 |
Grocery, Mass and Club | ||||
Concentration Risk [Line Items] | ||||
Net Sales | 32,165,601 | 25,878,388 | 60,140,654 | 50,033,099 |
Pet Specialty, Natural and Other | ||||
Concentration Risk [Line Items] | ||||
Net Sales | $ 7,803,382 | $ 7,123,821 | $ 14,342,264 | $ 14,422,811 |