Laird Superfood, Inc. Q1 FY2021 Earnings Call

Thank you for standing by and welcome to the First Quarter 2021 Earnings Conference Call and Webcast for Laird Superfood. I would now like to turn the call over to Mr. Reed Anderson of ICR to begin.

Thank you, Reed, and aloha everybody. It's a pleasure to be speaking with you regarding our first quarter 2021 earnings report. Let me again start by giving you a brief summary of who we are and what we do as well as provide a review of Q1 highlights and our key growth drivers. I'll then hand over to Scott McGuire, our COO, followed by Valerie Ells, our CFO leaving plenty of time for Q&A. Laird Superfood is a mission-driven high-growth plant-based natural food manufacturer positioned to be a leader among better-for-you brands in the $759 billion grocery industry. Our business is omni-channel, but with a best-in-class native online platform. In the first quarter, online accounted for 59% of our net sales with the balance spread across wholesale, grocery, mass, drug, and foodservice accounts. At Laird, we believe better food leads to a better world because when people are healthier and feel good, they make better decisions. Our product provides sustained energy and nutrition migration that we need to perform from sun-up to sun-down as part of our daily ritual starting with our Superfood coffee and creamer and recently added whole food breakfast products. In addition to delivering great taste and quality, our products are convenient, easy-to-use, and affordable incorporating sustainable and ethical practices through all phases of our supply chain from farm to fork. Now let me hit on some of the Q1 highlights. Improving margins were a key takeaway from Q1 results as our gross margin reached 25.1%, a 480 basis point sequential increase from the fourth quarter. Margins benefited from several factors, including liquid improvements, strong shelf velocities, and shipping and manufacturing efficiencies. Laird has a growth story and driving top-line is a primary focus. But we are equally committed to improving profitability. Results in the first quarter demonstrate meaningful progress toward our longer-term 40% margin goals, and we expect further gains toward that goal as 2021 unfolds. Scott and Val will expand on this further. First-quarter net sales increased 35% over last year to $7.4 million, and we continue to see broad-based gains across all our key categories. Importantly, we saw momentum build steadily throughout the quarter and March was a record month with strong run rates across all channels. Despite timing factors pushing some wholesale revenue into Q2, a reminder as to why we guide annually and set quarterly. Now I'd like to focus on some of the key growth drivers, starting with online. Our online platform continues to be best-in-class, we believe one of the strongest online food and beverage platforms in the industry. Online sales were up 65% on a year-over-year basis, including D2C growth of 135%. As a percent of the total, online accounted for 59% of Laird's Q1 net sales compared to 48% a year earlier, reinforcing the competitive strength of our brand and digitally native model. During the first quarter, customer acquisition growth was up 29%, and new subscriptions grew 153% versus a year ago. Customer retention is also up with repeat purchases of the 2020 cohort being 27% higher in Q1 2021 than the 2019 cohort in Q1 of 2020. Our e-mail list continues to aggressively grow with below industry average churn. Our online conversion rates are twice those of the industry average, and our customer acquisition costs continue to demonstrate the effectiveness and efficiency of our strategy. In the first quarter, we also made strong progress towards balancing the impact of free shipping, and we are happy to announce that we were able to get both our freight expenses as a percentage of D2C sales and average order values to return to their 2020 pre-free shipping levels. Combined with our lowest quarter of discounts since Q1 of 2020, our online machine has continued to be an industry-leading example for the CPG space. As far as wholesale growth drivers, although we had a strong performance this quarter in wholesale, which I'll explain, the year-over-year metric here doesn't look overly exciting and isn't terribly surprising given the timing of COVID and the pantry loading the wholesale world experienced in February and March of 2020. There are three things I'd like to point out here. Q1 of last year was a big wholesale quarter due to COVID stocking, and because we're vertically integrated, we were able to seize the opportunity and meet the elevated demand last year, including a massive quarter of $1.7 million with Costco. The end result was that we saw Q1 2020 wholesale grow 48% over Q4 of 2019. When we really break down Q1 of this year, you'll see that the base wholesale non-club sales were actually elevated due to nearly doubling the door count. Wholesale base sales last year excluding Costco were about $970,000, whereas this year excluding Costco was approximately $1.8 million, showing strong 85% growth in our base wholesale sales year-over-year. We did receive Costco orders in Q1 of this year, but much of it pushed out to Q2, which is a perfect example of why we guide annually versus quarterly, as there will be lumpiness from quarter to quarter due to this dynamic. But having said that, we still firmly believe we'll meet or exceed our annual guidance, which means the rest of this year is set for strong revenue growth. And three, we still have never lost a major retail partner in wholesale, and we have an expanding plot of our products that we're just starting to sell into existing doors new doors across the country, and most recently, new doors in Canada. We've built a very strong base and a much improved base from a year ago, which we expect to see results from for the rest of the year. Now, to talk about a few wholesale wins this quarter. First, at the end of Q1, we expanded our refrigerated creamers into new doors with key retailer launches at Target, Harris Teeter, and Wakefern. It's important to note that our refrigerated creamer growth is not solely driven by distribution gains as we're also increasing velocities at key retailers like Whole Foods, where weekly non-promoted velocities have increased more than 3x when compared to Q4 of 2020. Second, we're also very excited about our innovative fourth wave of functional coffees that grew our coffee business 156% in Q1 of this year versus Q1 of 2020. We feel our coffee products are well-positioned to disrupt the vast coffee scene by introducing added functional benefits to this daily ritual enjoyed by over 200 million people in the US every day. At the end of Q1 and into Q2, we finalized our wholesale packaging for new functional coffees, Focused and Boost, and we placed their functional coffees into more than 515 doors with key retail launches at Sprouts and Natural Grocers. The Safeway Seattle division will be adding our whole line of functional coffees to their 200-plus stores in Q2. We secured a major cost reduction in our coffee COGS since May 1st, reducing our functional coffee line pricing to $12.95 in wholesale, which we believe positions us for mass market adoption of these innovative products. Finally, in addition to our progress in the US, we officially entered the Canadian market by launching three items: two shelf-stable creamers and one instafill into 150 Loblaw stores in late January. They have already confirmed expansion into an additional 120 stores in June. As we think about the future growth opportunities, this was a great initial step with strong acceptance that we hope to build upon in the future. Additionally, in growth drivers, on May 4th, we announced the acquisition of Picky Bars, an important strategic milestone that complements our strong organic growth. Picky had revenues of approximately $4 million in 2020 and has been growing rapidly. The deal is materially additive to revenue and supports our pursuit of an improving margin profile. We believe the business should be a powerful brand platform that can support multiple growth drivers, and the Picky acquisition is an ideal transaction for us to prove our M&A capabilities. We believe we can drive revenue synergies under our platform in 2022 to at least $10 million that accrue value in finding these unique and complementary M&A opportunities. From an organizational standpoint, the two companies are closely aligned philosophically in terms of products and market opportunities as well as culturally. Picky is also founder-led, and we've known the principals for many years and have a high degree of respect for their business, for them personally, and their product accomplishments. Their core products are functional bars uniquely positioned to provide balanced fuel for sustained energy and performance, one that we consider to be the best whole food bar in the world. Picky also had several performance granola products in the line of performance oatmeal products, a perfect supplement to our already strong daily morning ritual routine. The Picky Bar products are an amazing incremental non-cannibalistic addition to our catalog. They offer new ready-to-eat options for our customers, which we know they love from the early success of our Harvest Pili Nuts and the newer price points to enhance our carb bundling opportunities and wholesale expansion opportunities. While both companies are targeting similar customers and markets, we have less than 1% existing customer overlap. The addition of Picky definitely provides Laird with broader exposure to mixed diet customers as well as looking at delicious functional and ready-to-eat products for their daily ritual. The synergy here is tremendous when we think about the sales targets these products can achieve when layered onto the Laird Superfood omni-channel platform. The Picky customers online are low and highly recurring, very similar to ours. We know they're highly engaged, and we know their repeat rates are exceptional. So, with shared priorities on functional foods and the highest-quality ingredients, we believe these products will resonate strongly with the Laird Superfood audience. This recent reach will be accelerated under our brand platform and our online business, which comparatively is best-in-class in the CPG industry. And of course, under our marketing leadership, which quarter-after-quarter demonstrates the leadership and results in the form of D2C revenue contribution, customer value, repeat rates, and retention. Finally, regarding key growth drivers, I'd like to discuss new product launches. While there were limited new product launches in Q1, we did see continued strong performance online from new products introduced in Q4, including our activate prebiotic greens through new protein and functional coffees. In Q2, we are very excited for the launch of OatMac Creamer, which we'll be rolling out online starting in June. Within the plant-based beverage ecosystem owns the fastest-growing, probably by a factor of 5x. Our product will be unique, hitting on the strengths of oat and macadamia milks combined, plus including the functional benefits of avocado and acai. This is our first creamer product that falls outside our core coconut base and we feel it will be an accretive addition to our product lineup targeting non-coconut consumers. In addition to expanding our product offering and growing sales, the addition of the OatMac Creamer also serves to advance other core strategies, including manufacturing efficiency, as it will be produced under existing production lines which have ample capacity and also supply chain diversification. Before I hand off to Scott, I'd like to share two great ESG cause initiatives that we've recently kicked off. First, we're working with Feeding America to donate 1.5 million meals to help fight food insecurity. During the past year over 42 million Americans have lived life not knowing where or when their next meal will come from, 13 million of them being children. Second, we've set the foundation for what we're calling our carbon-neutral last mile, ensuring the orders placed at lairdsuperfood.com have their greenhouse gas impact offset. It's been a great year for online business, and we want to be mindful of what that means to the world around us. We've enlisted First Environment to provide comprehensive transparent audits for last mile e-commerce impact, and we're working with Eden Reforestation Projects as our tree planting partner. These are two new initiatives that we are excited to add to our existing efforts for a very minimal cost, and we look forward to expanding and discussing more in the future. To summarize, in Q1, we again demonstrated our ability to continue executing across all of our strategic priorities while driving top line growth that perhaps gets the most attention from investors. We equally prioritize profitability as a core element in our mission of building a sustainable business for the long-term. To that end, efficiency gains in Q1 that manifested in improving gross margins should serve as a clear indicator of our level of commitment as well as optimism for the future. Now I'd like to hand off to Scott to talk about our stellar operational performance this quarter.

Thanks, Paul. You will hear me refer back to several topics I outlined in the fourth-quarter earnings announcement, which highlighted areas of notable progress as well as priorities for the first quarter. As it should be during the pandemic, our top priorities remain keeping people safe, keeping our customers' orders filled, and positioning ourselves to handle greater, but welcome complexity that comes with exciting new products and greater revenues. We did it. People safety in every way you measure was a home run. Customer service was excellent. We greatly reduced out-of-stock challenges in 2020, and Q1 only had one out of stock of our greens product for 13 days. We procured, planned, and project managed every facet of the supply chain to set up our multiyear strategy of growing revenues and our margins. This was driven by our simple but effective priorities I spoke to last quarter, the 3Ms: manufacture more ourselves, make it more efficiently, move it smarter and faster. So for manufacturing more ourselves, I want to stress that we don't do this blindly; we evaluate our costs including capital, labor, and transportation. However, we have a strong bent towards our amazing team being able to produce better than anyone. We also value being valuable and having the ability to call scheduling and fulfillment audibles as customer needs and supply chains demand. This was just demonstrated when we received a very large order with a short lead time. We had 100% control of every aspect of the process, and we've got the job done and done very well, and frankly, done faster than requested. So, like the fourth quarter, we converted more co-pack items to in-house, and one of our largest, most exciting new products was successful during in-house trial lines. Make it more efficiently, this can be seen in our margin improvements. And as noted last quarter, again, we improved our throughput on our original line and our newest lines, now at parity in capacity, capability, and instantaneous output. This has enabled us to keep our safety stocks at levels that ensure orders are filled and has given us the flexibility to respond to customer needs, like I mentioned earlier. Additionally, we continue best practice as I spoke during the fourth quarter such as refinement of our sales and operations planning process, execution of our production master scheduling and sequencing algorithm, continued enhancements to our preventive maintenance, and leveraging automated controls, creating visibility to real-time results. Of course, you can't make things more efficiently if you don't have the raw materials. As we all know, the pandemic and port congestions have created supply chain havoc across most industries. But through tireless work by our procurement team, we are at our targeted inventory levels on all core materials, and all of them stay tight. And then for moving it smarter and faster, several big wins here in terms of liquid and master production schedule optimization, master delivery schedule line and raw material strategies made improvements in shelf life and reduced manufacturing waste and spoils. All of this positions us well for flawless execution as we see exciting developments in the liquid channel. Direct-to-consumer free shipping, one of our greatest 'capital investments' which attracts new customers and more trial and thus more revenue, has an obvious and frequently discussed cost to it. We continue to mitigate those costs through increasing average order value. We reduced our cost as a percent of revenue and we had our best quarter ever in parcel ship for people. And then there is more to look forward to as we continue to build out our new customer fulfillment center, which is designed to maximize velocity, further enable growth, and amaze our customers by executing perfect orders. This is the best place to comment on the Picky Bar acquisition. Beyond the fact that more of the world will be exposed to their game-changing delicious products, we get to combine our supply chains, further improve our average order values, and improve every aspect of moving smarter and faster. Finally, I'd like to add a fourth M: my company. From day one, we have always been about authenticity, values, our culture, and our people. Our people are one of our greatest assets and we want everyone to say and truly believe this is my company. With every one of our teammates acting like an owner contributing to the culture and in turn driving safety, quality, service and efficiency gains, nothing can stop a great outcome for the other three Ms, so we will frequently speak to the four Ms.

Thanks, Scott. From a financial performance perspective, as you've been hearing, solid year-over-year top line growth, as well as better-than-expected gross margins were the big story in Q1. Net sales grew 35% year-over-year to $7.4 million, fueled by 135% growth in our lairdsuperfood.com platform. So the first half of Q1 is historically a softer sales period for our business coming out of the holiday season. We exited the first quarter with a very strong run rate across channels, fueling our confidence in achieving our annual targets, which is a good reminder on why we look at our business and why we encourage others to look at our business in terms of the annual period and not quarter-to-quarter. Given our size and our stage of growth, quarter-to-quarter can be lumpy especially related to the timing of significant wholesale orders. In terms of channel performance, online we saw continued improvement in our average order value and retention metrics. Our repeat and subscription business continued its strong performance, delivering 69% of DTC sales. In wholesale, despite lower club sales compared to the prior year which included COVID-related pantry loading, our grocery business showed solid growth given our nearly doubled door count and the launch of our refrigerated liquid creamer products, expanding our reach to the previously untapped 90% of the creamer total addressable market. Additionally, our first Canadian door showed solid early results, paving the way for potential expansion in that country moving forward. Our gross margin for the quarter was 25.1%, up 480 basis points from the fourth quarter, and our highest quarterly margin in the past 12 months. Key factors contributing to sequential improvement in gross margin included improving liquid creamer spoiled rates, shelf life and waste, optimizing our DTC shipping expenses while also driving average order value improvements, and driving efficiencies in our manufacturing processes. Operating expenses were $7.2 million in the first quarter of 2021, compared to $4.1 million in the first quarter of 2020, with the current quarter inclusive of approximately $1 million in non-cash stock-based compensation, approximately $160,000 of transaction-related expenses, and ongoing public company costs. As a reminder, we are building a large CPG platform and investment into our SG&A cost is required to build a best-in-class and much larger business than we are today. However, we remain very confident in our ability to leverage SG&A costs, as our top line continues to expand in future periods. Our balance sheet remains strong with over $60 million in cash and investments on March 31, 2021, and essentially no debt. Subsequent to the quarter end, approximately $10 million of cash was used to complete the Picky acquisition, leaving substantial liquidity to operate and grow our business as planned for the foreseeable future. In terms of guidance, as you know, we have committed to only providing annual guidance. However, given the midyear acquisition of Picky Bar, we do anticipate generating incremental revenues from the expanded product lines and customer base. So we have increased our previous 2021 net sales estimate of $42 million to $46 million, given the unique transaction. The incremental $4 million of net sales is primarily expected as a result of the strong organic growth that Picky Bar has been experiencing on its own, anticipated to represent approximately $3 million of the total $4 million incremental revenue. We further anticipate driving the remaining $1 million of revenues in 2021 by exposing our much larger online customer base to the newly acquired lines of bars, oatmeal, and granola as well as exposing the existing Picky customer base to our core layered lineup, given that we share less than 1% of online customers. We feel this represents a very modest adoption rate both ways and further anticipate that we start seeing the benefits of wholesale opportunities in 2022. As noted on the acquisition call last week, we are not making any updates to our margin guidance of 28% to 30% for the annual period and expect that incremental sales driven by the new product lines acquired in the Picky Bar deal will be supportive of our path to 40% margins over time.

Thanks, Val. Q1 was a solid quarter with year-over-year growth and major operational improvements which were reflected in the gross margin increase and the successful close of our first M&A deal which is so well aligned with our brand that we expect to be highly accretive to shareholders. Looking from the outside, it's easy to say, wow, Laird Superfood, there's a lot going on. But let me assure you, with the benefit of being well capitalized and our capability of attracting top talent, we have an incredible team, highly capable of managing all the moving pieces, which will continue to enable and drive the rapid growth of our brand platform strategy. As we have said, we guide annually not quarterly. The timing of significant wholesale orders can greatly influence quarterly results, and having said that, we fully expect to meet or exceed the annual guidance, which means we should expect strong revenue growth for the rest of the year ahead. We appreciate the support of all our shareholders. Now to Q&A.

Hi. Thanks for taking the question, and congratulations on the gross margins. Fantastic performance.

Thank you, Bobby.

I'm curious about the gross margins. Since we are already in May and I know you’re not changing your guidance for this year, could you share your thoughts on what will drive additional expansion of gross margins? Specifically, what are the major contributors for the remainder of the year to reach that target?

Yes. No, of course, Bobby, happy to talk through it.

You're welcome.

Looking at what changed from the fourth quarter, it's very similar to what we've been talking about. On the DTC side, the lost shipping revenue and optimizing our parcel costs. So from Q4 to Q1, we optimized our DTC shipping expense, improving margins by about 110 basis points. That was really the AOV improving; that was getting more dollars into every package, ensuring we're using the right price or cost, working with carriers, reducing single item orders—a laundry list of initiatives that are proving to be very successful. I don't think we're done there. I think there's still more room. As we look to bridge the gap to where we're hoping to finish the year, as well as looking to get back to those 40% margins that we're targeting long-term, we have more room to improve there and that's something that Scott is working really diligently on. The other part is we still have a lot of room to continue to improve the liquid creamer product. That in the fourth quarter improved 140 basis points from Q4 to Q1, but we still have long ways to go gaining optimizations on the shelf life. We still do have some distribution center chargebacks, and our goal is to get that way down from where we are today. The shelf life will help there as will some distribution changes that we're putting into place. Looking even longer term, a really big driver is going to be to continue leveraging the fixed costs that we put into our factory here, which are able to support really three to four times what we're running through our sister facilities today. It will be the combination of those; each one will contribute to the rest of the year and each will continue to contribute as we move forward in the next couple of years to get to that 40% and beyond.

That's great. Thank you for that. And then just one more from me. Obviously, with your multi-omnichannel approach, you guys have a pretty good sense of what's happening dynamically with demand and your wholesale partners and what they're planning. This was a big year last year for plant-based milk and plant-based dairy. I think it surprised a lot of people in terms of the growth in some categories actually accelerated quite a bit over the previous year. So I'm wondering just what your partners are telling you in terms of what they think the stickiness is of that elevated growth rate? Is this something that feels like it's sustainable, like it's going to last? Is there some permanence to it? Just curious any insights on how much you think those elevated growth rates can linger that we saw because of COVID.

We think there's just going to be continued demand for plant-based products. I mean, we've been eating plant-based foods for eternity. Nothing has really changed. People are coming back around. There are more products available, and it's not just the plant-based aspect of it. It's really the functional food aspect of it. You may be seeing a lot of reports coming around now that mushrooms are going to be a really big play for us this year. We've had mushroom products for years. So we've been ahead of that curve and our liquid creamer was really the first to come out with mushrooms in the creamer. So we're already a step ahead. As we look to the future, it's just going to be continued focus on functional food products, which is really what consumers are starting to demand. They're eating something, and they want to get a functional benefit from that. That is really the trend that we see that we don't think is going to go away.

Great. I know that foodservice is just a tiny contributor at this point, but things are reopening nicely where I live and it seems like across the country. Are partners and customers there reengaging? Are there some things that could happen this year maybe that could take things to a step function higher in terms of the revenue you guys are collecting there?

Yes. We still believe foodservice is just a major opportunity with our products in particular. We are doing some things. We're testing with a bunch of corporate office environments that are opening back up. We've been working with a coffee retail partner and experimenting with various different recipes that have proven to be very successful. So we're now looking to start to expand that and it's definitely going to be something that we're going to keep pressure on and look for those opportunities. The foodservice space is very relationship-driven, and it takes a while to build the business, but we have been working on building relationships and we do think it's going to continue to grow, especially as things come back here post-COVID.

Great. Thanks for taking my questions.

You bet.

Hey, everyone. I appreciate you taking my questions. I have a couple for you. First, regarding the liquid creamer business, what is the current status of the repackaging? I’m not sure if I missed it in your prepared remarks, but is that still set for around the middle of this year? Also, do you plan to introduce an oat liquid product?

Yes. So I'll start with the repackaging. So we've been talking repackaging with the liquid product. Where we ended up coming out is, we are sticking with the fresh product but extending the shelf life for that fresh product. We have a very unique product, and that's really the only fresh packaged plant-based creamer in the market. We've had such incredible positive feedback from consumers. The shelf velocities are growing. I think we mentioned that our Whole Foods shelf velocity, for example, is 3x what it was in Q4. People really love the product. The key is how to extend the shelf life. We've been making progress on that so it has a longer shelf life than it did. We're continually taking steps to work on that and additionally working on the supply chain by reducing the time taken to get our product on the shelves once it's manufactured. So we're making progress on all fronts and you saw that big improvement from Q4 to Q1, and we expect that to continue to show improvement as we go here. We're really excited about our unique differentiated product that tastes great, and also has performance mushrooms, oatmeal, and other ingredients being very clean in recyclable fresh packaging compared to some packaging that's just not recyclable. We are excited about that. As far as the oat liquid creamer, that's not a product that we've announced yet. Of course, we're constantly experimenting with various formulas and being innovative and looking for functionality. There are oat and other bases that we're looking at constantly, but nothing announced at this time.

Okay. And then you also mentioned launching into Target and Harris Teeter. Could you tell us more about what you're doing there? Is it tests, or how broadly distributed into each of those retailers are you?

Yes. So Harris Teeter and full Target, we launched into a couple of hundred stores primarily on the West Coast. It's more of a test. We had some positive early indications that our product is doing very well. That just happened right at the end of Q1. So it's still very new, and something we're excited about. So far everything is looking strong.

Okay, very cool. Last question for me about Picky Bars. You mentioned hoping to reach $10 million in sales next year. Can you explain how you plan to grow from $4 million to $10 million next year? Will this be primarily through wholesale distribution, or are there other factors you can share?

We are planning to generate an additional $4 million in 2021, with $3 million expected to be supported by the historical performance of the Picky business. The remaining $1 million will come from our larger customer base on the Laird website by introducing new products to that audience. For instance, if we can get 20% of our 2020 active customers to buy two boxes of bars, that could generate $1 million, not factoring in growth in our customer base or additional products. We believe this goal is easily attainable this year, and we are confident in our capabilities. Looking ahead to next year, given Picky's historical growth, we anticipate that they can independently handle $5 million of the total $10 million in sales we aim to generate. The remaining $5 million would come from developing synergies. There are significant opportunities in direct-to-consumer sales, and at that stage, we plan to introduce new packaging and start wholesale distribution, likely beginning with the bars. We have strong confidence in all our products and expect a positive reception.

It also plays in the foodservice. As we're looking at expanding foodservice over the next year, this is another great product for office workers and people on the go.

Okay. Great. I just plugged through about $45 worth of Picky Bars. We got a shipment a few days ago. So your strategy is already working. Thank you very much.

Thank you.

Great. Thanks very much for taking my question. Looks like a pretty dramatic shift in the online business in Q1 towards lairdsuperfoods.com. It certainly seems like your own website has been growing faster than the overall business for some time now, but really that's been pronounced the last couple of quarters. Can you talk a little bit about what's driving that strength? As the business continues to get bigger and you add more products and presumably more M&A over time like Picky Bar, is there a point at which you reach an escape velocity where you don't really even need to have an online presence on other channels? Just curious how you think about that ecosystem given how quickly your own subscriptions and customer base is growing on your platform?

I think all of us probably want to answer that, but I can start. We just believe the future is online. It's a big part of our business. It's an area where we can actually do a good job of educating our customers. So videos of Laird and Gabby influencers talking about the unique aspects of our products. We are really excited about the online platform as far as its capability and potential. We just have a great team, but we've constructed a best-in-class team that's doing a great job working with influencers, getting content out there in an efficient organic way to really just continue to build that business. We really see no end in sight on the online business. We still feel like we're just tapping the surface of the potential of online.

Great. That’s really helpful. Thanks, Paul.

You bet.

All right. Well thanks everyone, and we're excited about a lot of things: our Q1 operational performance, closing our first M&A deal, which we believe will be highly accretive to shareholders; new product launches in Q2; and our ESG initiatives. We're really excited about those as well. We're poised for growth for the rest of the year, and we've got strong execution in all of our strategic priorities. The Laird Superfood brand is really on its way to become a powerful CPG brand platform in the food space, the first to come natively from a natural food foundation. So thanks for your support, and I'm really looking forward to talking to everybody next quarter about our continued strong performance. Thank you so much, speakers. This concludes today's conference call. Thank you all for joining. You may now disconnect.