Freshpet (NASDAQ:FRPT) reported second-quarter 2026 results that exceeded its annual guidance range, prompting the fresh pet food company to raise its sales and adjusted EBITDA outlook despite what management described as a volatile consumer environment.
Net sales rose 15.5% year over year to $305.6 million, driven by 15.7% volume growth and partly offset by a 0.2% unfavorable price-mix effect. Adjusted EBITDA increased about 18% to $52.2 million, while adjusted EBITDA margin improved to 17.1% from 16.8% a year earlier. Net income totaled $19.5 million, compared with $16.4 million in the prior-year period.
Updated 2026 Outlook
Freshpet raised its 2026 net sales growth forecast to 10% to 12%, from a prior range of 8% to 11%. It also lifted projected adjusted EBITDA to $210 million to $220 million, representing year-over-year growth of 7% to 12%, compared with its earlier outlook of $205 million to $215 million.
CFO John O’Connor said the company expects a more difficult comparison in the third quarter due to a significant expansion at a large club customer and a shift in ordering around the July 4 holiday in 2025. Those factors are expected to reduce reported year-over-year growth by more than two percentage points in the third quarter.
Management said the low end of its sales outlook assumes that current macroeconomic conditions remain unchanged, with little to no sequential sales or household-penetration growth. Reaching or exceeding the high end would require stronger advertising results, further omnichannel gains, additional distribution, stronger dog food category growth or a return of trade-up behavior.
The company now expects adjusted gross margin to improve by approximately 100 to 150 basis points in 2026 at the midpoint of its sales guidance, up from its previous expectation of 50 to 100 basis points. Freshpet maintained its capital expenditure forecast of about $150 million for the year.
Margins, Cash Flow and Costs
Second-quarter adjusted gross margin increased 170 basis points to 48.6%, from 46.9% a year earlier. O’Connor attributed the improvement primarily to stronger leverage on plant expenses from higher sales and lower input costs. The gain was partly offset by disposal-related quality costs associated with commissioning the company’s new manufacturing technology.
Adjusted selling, general and administrative expense rose to 31.4% of net sales from 30.1% in the prior-year quarter. The increase reflected higher variable compensation and higher logistics costs. Logistics represented 6.9% of sales, up from 5.7%, as fuel costs rose and trucking capacity remained constrained.
Media spending declined to 13.4% of net sales from 15% a year earlier. Management said media remains Freshpet’s main source of demand generation and that it would consider additional advertising investment if the company sees attractive returns.
Operating cash flow rose 31% to $44.4 million, while capital spending was $29.7 million, resulting in free cash flow of $14.7 million, compared with $0.5 million a year earlier. Freshpet ended the quarter with $350.8 million in cash. Under its $150 million share repurchase authorization announced in May, the company had repurchased $86.5 million of stock, or 1.6 million shares, as of the end of July.
Omnichannel Growth and Consumer Trends
Freshpet said its products were available in more than 30,000 stores, with about 25% of its U.S. and Canadian locations featuring multiple refrigerators. Distribution points increased 13% in the second quarter.
Digital orders grew 41% and represented 16.7% of total sales, up from 16.1% in the first quarter. About 78% of e-commerce sales volume moved through the company’s refrigerator network, which management described as serving both in-store shoppers and online fulfillment needs.
The company said it expects to be in at least 700 rural lifestyle retail stores by year-end and is testing a third SKU in select club stores. Freshpet has 33 “Fridge Islands” in selected mass, pet specialty and grocery locations, though management said it does not expect a material expansion of those units in 2026. Discussions for 2027 are underway.
Cyr said household penetration rose 5% over the last 52 weeks, while buying rate increased 7%. Freshpet is increasingly focused on higher-value “MVP” households, which management said spend five times more annually than the average household and account for 71% of sales. COO Nicki Baty said the company is transitioning from a more trial-driven model toward a “more durable consumer franchise,” with higher-quality household acquisition and stronger repeat buying.
Manufacturing Technology and 2027 Goals
Freshpet has three production lines using its new bag technology, including two in Bethlehem and one in Ennis. Management said the technology is improving product quality, throughput, yield and unit economics, although the lines remain in a startup and optimization phase.
The company expects the installed lines, once fully optimized, to provide more than 100 basis points of gross-margin improvement across the business. Freshpet expects approximately 25 basis points of benefit from the technology in 2026, with a greater contribution anticipated in 2027.
Strong performance from existing production lines has reduced the immediate need for additional capacity spending, management said. Cyr added that the technology could enable new products with different ingredients, forms and visual appeal. Freshpet has already introduced Homestyle Creations Beef and Healthy Mixers from the new lines.
For 2027, Freshpet raised its adjusted gross-margin goal to at least 49%, from at least 48%, while reiterating its adjusted EBITDA margin target of 20% to 22%. O’Connor said high-single-digit sales growth would position the company toward the lower end of that EBITDA margin range, while low- to mid-double-digit growth would support the higher end, alongside gains from manufacturing, logistics and broader cost improvements.
About Freshpet (NASDAQ:FRPT)
Freshpet Inc (NASDAQ: FRPT) is a leading pet food company specializing in fresh, refrigerated meals and treats for dogs and cats. The company’s products are formulated with carefully selected, natural ingredients and are designed to offer a higher level of nutrition and freshness than traditional dry or canned pet foods. Freshpet’s offerings include refrigerated rolls, pâtés and snacks, all of which are sold through the refrigerated section of grocery, mass-market and pet specialty stores.
Freshpet’s product portfolio is built around the concept of fresh, minimally processed recipes that do not require preservatives or artificial colors.
