Freshpet, Inc. (FRPT) swung to a net profit for the quarter ended Sep. 30, 2016. The company has made a net profit of $0.62 million, or $ 0.02 a share in the quarter, against a net loss of $1.68 million, or $0.05 a share in the last year period.
Revenue during the quarter grew 12.97 percent to $34.54 million from $30.57 million in the previous year period. Gross margin for the quarter contracted 150 basis points over the previous year period to 44.45 percent. Operating margin for the quarter period stood at positive 2.34 percent as compared to a negative 6.59 percent for the previous year period.
Operating income for the quarter was $0.81 million, compared with an operating loss of $2.01 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $5.34 million compared with $2.27 million in the prior year period. At the same time, adjusted EBITDA margin improved 804 basis points in the quarter to 15.45 percent from 7.42 percent in the last year period.
"In the third quarter, we generated solid net sales and profit growth largely driven by increased velocity per fridge, increased store count, and very promising early results from a new advertising campaign," said Billy Cyr, Freshpet’s Chief Executive Officer. "We completed our plant expansion program in October and have also made positive improvements in quality and logistics. While we still have significant opportunities to improve our performance, we believe these marketing and manufacturing efforts will drive greater sales and efficiencies which we will leverage across our business model."
Operating cash flow improves significantly
Freshpet, Inc. has generated cash of $7.32 million from operating activities during the nine month period, up 47.28 percent or $2.35 million, when compared with the last year period.
The company has spent $22.83 million cash to meet investing activities during the nine month period as against cash outgo of $26.27 million in the last year period. It has incurred net capital expenditure of $26.08 million on net basis during the nine month period, up 15.82 percent or $3.56 million from year ago period.
Cash flow from financing activities was $10.98 million for the nine month period, up 3,663.86 percent or $10.69 million, when compared with the last year period.
Cash and cash equivalents stood at $3.50 million as on Sep. 30, 2016, down 77.07 percent or $11.75 million from $15.25 million on Sep. 30, 2015.
Working capital turns negative
Working capital of Freshpet, Inc. has turned negative to $0.31 million on Sep. 30, 2016 from positive $23.94 million on Sep. 30, 2015. Current ratio was at 0.98 as on Sep. 30, 2016, down from 3.60 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 4 days for the quarter from 22 days for the last year period. Days sales outstanding were almost stable at 20 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 15 days for the quarter compared with 41 days for the previous year period. At the same time, days payable outstanding went down to 31 days for the quarter from 39 for the same period last year.
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