Freshpet Inc. (NASDAQ:FRPT) reported better-than-expected second-quarter results Wednesday, as strong volume growth, improved plant leverage and lower input costs lifted sales and margins.

The company also raised its fiscal 2026 sales and adjusted EBITDA outlook.

Freshpet shares moved sharply higher on a positive second-quarter report and a short squeeze. Almost 21% of the company’s float shows short interest as of Benzinga Pro data.

Earnings and Revenue Beat Estimates

Freshpet reported diluted earnings of 39 cents per share, beating the 32-cent estimate.

The pet food maker reported sales of $305.587 million, topping the $292.163 million estimate and rising 15.5% from $264.7 million a year earlier. Volume increased 15.7%, partly offset by a 0.2% unfavorable price-and-mix impact.

Net income increased to $19.5 million from $16.4 million, helped by higher sales and a $4.5 million gain on an equity investment, partly offset by higher SG&A and income tax expense.

Gross margin improved to 42.1% from 40.9%. Adjusted gross margin expanded 170 basis points to 48.6%, driven by lower input costs and better plant leverage, partly offset by startup-related quality costs.

Adjusted EBITDA rose 18% to $52.2 million, while margin improved to 17.1% from 16.8%.

Logistics costs increased to 6.9% of sales from 5.7% because of higher fuel costs and trucking-capacity pressures.

Digital Growth and Manufacturing Improvements

Digital orders grew 41% and represented 16.7% of sales, with about 78% of digital volume fulfilled through Freshpet’s fridge network.

Total distribution points rose 13%, household penetration increased 5%, and total buy rate grew 7%.

Freshpet had three lines using its new bag technology. It expects about 25 basis points of gross-margin benefit in 2026 and more than 100 basis points annually once the installed lines are fully optimized.

Quarterly operating cash flow rose 31% to $44.4 million, while free cash flow increased to $14.7 million from $0.5 million.

Freshpet ended June with $350.8 million in cash and $398.4 million of debt. It had repurchased 1.6 million shares for $86.5 million by the end of July.

Fiscal 2026 Outlook Raised

Freshpet raised fiscal 2026 sales guidance to $1.212 billion-$1.234 billion from $1.190 billion-$1.223 billion, compared with the $1.211 billion estimate.

Adjusted EBITDA guidance increased to $210 million-$220 million, while capital spending remained about $150 million.

Management expects a difficult comparison to reduce third-quarter growth by slightly more than 2 percentage points. Guidance also includes $8 million of additional logistics costs versus initial expectations.

Freshpet raised its 2027 adjusted gross margin target to at least 49% and maintained its 20%-22% adjusted EBITDA margin target.

FRPT Price Action: Freshpet shares were up 13.72% at $70.94 at the time of publication on Wednesday, according to Benzinga Pro data.

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