Freshpet, a prominent manufacturer of frozen pet food, has announced impressive financial outcomes for both the fourth quarter and the entirety of 2025, which concluded on December 31. The company notably exceeded the US$1 billion mark in annual net sales, a significant first in its operational history. These results underscore a period of robust growth in net sales, considerable expansion of profit margins, and the generation of positive free cash flow, demonstrating the firm's strong financial health and market penetration.
For the fourth quarter of 2025, Freshpet recorded a notable increase in net sales, climbing 8.6% to US$285.2 million, up from US$262.7 million in the corresponding period of the previous year. This surge was primarily fueled by a 9.7% rise in sales volume, although partially tempered by a 1.1% adverse impact from pricing and product mix adjustments. Gross profit for this quarter stood at US$123.5 million, representing 43.3% of net sales, an improvement from US$111.6 million, or 42.5%, reported in the prior year. This enhancement was attributed to reduced quality-related expenditures and better utilization of plant assets, despite facing increased input costs. Adjusted gross profit reached US$138.1 million, or 48.4% of net sales, an increase from US$126.3 million, or 48.1%, year-over-year. Operating expenses, specifically selling, general, and administrative costs, decreased to 27.7% of net sales, totaling US$79.0 million, compared to 35.1%, or US$92.2 million, in the previous year. This reduction was largely due to lower share-based compensation and variable compensation accruals, even with higher media spending. Net income saw a substantial rise to US$33.8 million from US$18.1 million, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached US$61.2 million, up from US$52.6 million.
Reviewing the full fiscal year 2025, Freshpet's net sales soared by 13.0%, achieving US$1,102.0 million compared to US$975.2 million in 2024. This growth was driven by a 12.0% increase in volume and a favorable 1.0% impact from pricing and mix. The gross profit for the full year reached US$449.6 million, accounting for 40.8% of net sales, an increase from US$396.0 million, or 40.6%, in the preceding year. Adjusted gross profit was US$515.2 million, or 46.7% of net sales, against US$453.5 million, or 46.5%, in 2024. Selling, general, and administrative expenses for the year were US$374.0 million, or 33.9% of net sales, an improvement from US$358.0 million, or 36.7%, in 2024. The company's net income significantly climbed to US$139.1 million from US$46.9 million, including a US$68.4 million income tax benefit primarily due to the release of a valuation allowance. Adjusted EBITDA also saw a rise to US$195.7 million from US$161.8 million. Freshpet achieved positive free cash flow of US$12.4 million, a remarkable turnaround from a negative US$32.8 million in the prior year. As of December 31, 2025, the company held US$278.0 million in cash and cash equivalents, with US$397.3 million in outstanding debt, net of unamortized debt issuance costs.
Billy Cyr, Freshpet's chief executive officer, commented on these achievements, emphasizing the company's resilience and agility during 2025. He highlighted the team's ability to significantly outpace the general dog food category in growth, achieve the US$1 billion sales milestone, expand margins, and secure positive free cash flow. Cyr noted the strengthening of Freshpet's foundational elements for future expansion, including a revamped marketing approach to boost household penetration and increasing momentum in e-commerce. He also mentioned the pilot program for 'island fridges,' designed to enhance retail visibility and availability, and the launch of a new manufacturing line incorporating advanced technology aimed at improving product quality and profitability. These strategic initiatives are expected to support continued robust growth and enhanced profitability, aligning with Freshpet's mission to promote the longevity, happiness, and health of pets.
Looking ahead to 2026, Freshpet projects net sales growth between 7% and 10%. The company anticipates adjusted EBITDA to be in the range of US$205 million to US$215 million, alongside maintaining a positive free cash flow, with capital expenditures estimated at approximately US$150 million.