Freshpet Inc (FRPT)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	59,785	-17,417	-50,273	-24,650	-1,911
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	1,055,360	953,454	1,031,570	719,754	394,169
Return on total capital		5.66%	-1.83%	-4.87%	-3.42%	-0.48%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $59,785K ÷ ($—K + $1,055,360K)
= 5.66%

The data indicates that Freshpet Inc.'s return on total capital (ROTC) has experienced significant fluctuations over the period from December 31, 2020, to December 31, 2024. At the end of 2020, the company registered a marginally negative ROTC of -0.48%, suggesting minimal or near-zero profitability on the total capital employed during that year. This negative trend deepened by December 31, 2021, with the ROTC declining to -3.42%, reflecting a worsening profitability situation and possibly heightened challenges in generating returns relative to the firm's total capital base.

The decline persisted into 2022, where the ROTC further deteriorated to -4.87%, indicating increased inefficiency or adverse operational conditions impacting overall return generation. The continued negative trend underscores persistent difficulties in converting capital into profits, with the company experiencing arguably the most adverse point during this period.

However, a notable turnaround begins to emerge by December 31, 2023, when the ROTC improves to -1.83%. Although still negative, this represented a meaningful step toward better capital utilization or operational recovery. The partial recovery suggests some improvements in operational efficiency, cost management, or revenue generation, although profitability on total capital remained below break-even.

By December 31, 2024, Freshpet Inc. achieves a positive ROTC of 5.66%, marking a significant turnaround from previous years. This positive return indicates that the company has effectively employed its total capital to generate profitable outcomes, reflecting potentially improved operational performance, cost efficiencies, or favorable market dynamics. The transition from consistent negative returns to a positive figure in 2024 signals a noteworthy improvement in the company's overall ability to generate value from its capital base and may reflect positive strategic or operational developments during this period.