Thank you for standing by and welcome to the Fourth Quarter 2021 Earnings Conference Call and Webcast for Laird Superfood, Inc. I would now turn the call over to Mr. Reed Anderson of ICR. Please go ahead. Thank you. Good afternoon, and welcome to Laird Superfood's fourth quarter 2021 earnings conference call and webcast. On today's call are Jason Vieth, Chief Executive Officer; Valerie Ells, Chief Financial Officer; and Scott McGuire Chief Operating Officer. By now, everyone should have access to the company's fourth quarter earnings press release filed today after market close. This is available on the Investor Relations section of Laird Superfood's website at www.lairdsuperfood.com. Before we begin, please note that all financial information presented on today's call is unaudited. And during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. And now I'd like to turn the call over to Jason Vieth, Chief Executive Officer of Laird Superfood.

Thank you, Reed. Welcome everyone and thank you for joining us today. I'm going to begin with a brief summary of our overall positioning, key growth drivers and highlights from the quarter. Scott McGuire, our Chief Operating Officer; and Valerie Ells, our Chief Financial Officer will follow with additional detail and we will briefly discuss our 2022 outlook before opening up the call for your questions. Let me start by saying that after spending the last five weeks diving into the business, I can attest that we are making real progress against our long-term vision to become one of the leading players in the natural food and beverage space. Our brand is strong and the products resonate with consumers on every major purchase driver including quality, taste, functionality, sustainability and price. Our customers feel deeply connected to our brand and want to engage with us as evidenced by our strong repeat rate and 76% Net Promoter Score. And perhaps most importantly the Laird Superfood brand is incredibly unique among food brands and that it has proven that it can span multiple dayparts and usage occasions providing consumers with a portfolio of products to activate and power their morning, hydrate and nourish their day and wind down their evenings. Strategically, we have already begun to make two major pivots in our business. First, we are moving from an organization that was built to grow at all costs to one that will be fundamentally more strategic and measured and analytically driven. This will become apparent in our marketing investments during 2022. Like other businesses that rely heavily on the Internet and social media for promoting and selling their products, our digital marketing costs to acquire new customers have increased over the past year in part reflecting structural changes to the largest digital and social platforms, but also due to our overreliance on the same tactics. While we remain deeply committed to our online platform, this challenge will require us to make a more thorough assessment of our marketplace dynamics to help us optimize our marketing spend to drive high ROI and I am pleased to report that we are already underway in this effort. At the same time, we have initiated work streams to gain stronger consumer insights so that we can build a better segmentation and more efficiently target our marketing spend. We have also picked up work to redesign and align our packaging across all of our products so that we can enhance the first and second moment of truth with our consumers. We are also shifting from an entrepreneurial founder-driven organization to a more traditional consumer packaged goods business model. As such, you can expect to see a spring in more CPG talent to grow and operationalize our business. Last month, I mentioned that the wholesale channel will be critical to realizing our vision at scale and that we will continue to broaden our portfolio, while expanding our overall store count. To that end, I am pleased to announce that we have hired a leader for our Wholesale business. Next week, Daryl Moore will be joining us as our Senior Vice President of Sales across all physical retail channels. Daryl joins us with decades of experience in the natural food industry, most recently as the COO and Head of Sales for Performance Kitchen. Formerly as the VP of Sales at Bulletproof, Daryl was instrumental in the growth of that brand from around $20 million to more than $100 million in sales across many categories channels and retailers. With Daryl on board, we will be able to drive strategic focus and activity with key sales agencies and retailers and will begin building our go-to-market strategy in foodservice and other alternative channels. Operationally, I'm very pleased to report that we continue to punch well above our weight despite all the challenges that our industry has faced leading into inflation, labor, material availability, overall supply chain and more. Our 98% fill rate during the fourth quarter is a great example of our team's success and illustrates the strength of our operation as well as the acumen of the team that runs it every day. And we are identifying numerous opportunities for cost reduction across various factors including ingredients, packaging and distribution. As we look to 2022 and beyond, the future for Laird Superfood remains exciting and expansive. We have quickly built a trusted and respected brand with a portfolio of health and wellness oriented foods and remain confident in our ability to grow distribution in bricks-and-mortar stores as well as in our native online environment. Given the recent challenges I mentioned with the value proposition for digital advertising, we do expect that our growth will slow in the near-term, as we assess various marketing tactics to acquire new customers online. Nevertheless, we recognize that we have built something special within the CPG industry and remain deeply committed to the digital channel. We will focus on converting our database of existing Laird Superfood customers into repeat purchasers and subscriptions by executing a new white glove customer experience. And while we will aggressively sell into the wholesale channel, that startup takes time due to retailer reset timing and so we expect our net sales to come in between $41 million to $44 million in 2022. We anticipate that our gross margin percentage will be lower in the first half of the year, but will improve steadily through the year as we implement several operational improvements and update our free shipping policy. These initiatives will take time to implement and drive benefit, which we should start to see in Q2 and then accelerating for the balance of the year. In summary, although we do expect some modest headwinds in the near-term as we reset our customer acquisition model and continue to operationalize our manufacturing facility, the growth opportunity for our brand has never been stronger. As consumers continue to seek out great-tasting plant-based nutritious foods, Laird Superfood is poised to capitalize on this opportunity by expanding our portfolio in the wholesale, improving our positioning in packaging and adapting our marketing model. We remain deeply committed to building a premier health and wellness plant-based food brand and will continue to drive the business to add our commitments to our planet and our people. With that, I will hand it over to our Chief Operating Officer, Scott McGuire, to discuss our fourth quarter and annual operations in a bit more detail. Scott?

Thanks, Jason and greetings, everyone. I will speak to three key highlights in the fourth quarter and provide an update on the supply chain and the current impact on our business. First off, we achieved record production output both in units and in overall efficiency. This was the result of multiple engineering projects and the collective efforts of our strong team always focused on driving excellence. Secondly, last quarter we mentioned that we had moved our new customer fulfillment center. This move has enabled us to consolidate critical raw and finished goods inventory on campus. Most importantly, it was a key step in attaining the planned synergies between Laird Superfood and the Picky Bars acquisition. And finally, the design of this facility enables a faster, more efficient fulfillment process for direct and retail customers. All of this was put in place in time for a successful Black Friday promotion where we hit our velocity and service goals. Third, in our growing refrigerated creamer channel, we had our first full quarter of a new production and supply plan that led to a continued reduction in spoils and therefore improved margins. Our supply to distributor distribution centers was strong. And while we encountered some store-level in-stock issues on the initial distribution of our two new flavors, we believe those are now resolved. Now speaking to supply, in recent quarters we have discussed the common concern regarding our unique internationally sourced ingredients and the supply chain delays dominating the headlines. Because we bypass the largest ports and have positioned ourselves well with safety stock, we saw very little impact and were able to fill orders at 98% in the fourth quarter. We realized there was ongoing risk to shipment delays and unavailable ingredients, but we continue to carefully plan ahead and stay very close to the most recent supply chain developments in the areas of inflation and availability. And finally, stepping back to Jason's comments on our go-forward approach to gross margin improvement opportunities, while we expect that Q1 will be at a lower margin due to seasonally lower volumes, increased shipping expenses and product mix, we should see our gross margin rise through the year as we implement and leverage technology, and automation projects, expand our in-house SKU production, further improve our fulfillment process, and leverage increased volumes during the back half of the year.

Thanks, Scott. Net sales increased 29% to $9.4 million in the fourth quarter of 2021 compared to $7.3 million in the fourth quarter of 2020. The year-over-year improvement was led by 39% growth online, reflecting strong direct-to-consumer sales, and a 16% gain in wholesale. Our continued DTC growth reflected ongoing strength in conversion rate, a 40% gain in average order value, a further 6% improvement in reorder rates compared to the fourth quarter of the prior year, and the benefit of our Picky Bars acquisition. Our mid-teens gain in wholesale reflected continued progress in grocery, both in our refrigerated liquid creamer business, as well as our shelf-stable product assortment, partially offset by a slight retraction due to timing of club sales. Related to product categories, the current year quarter delivered strong growth in Harvest Snacks led by our acquired Picky Bar portfolio. Coffee Creamer remained stable, largely due to the offsetting impact of continued growth from refrigerated liquid creamer sales and softer club performance related to our shelf-stable creamers. Gross margins improved 350 basis points on a year-over-year basis to 23.6% of net sales in the fourth quarter of 2021, compared to 20.1% of net sales in the prior year period. This improvement stems from lower inventory costs due to operational efficiencies, continued optimization of our DTC shipping expense via an improved average order value, and improvements in both distributor chargebacks and production waste from our refrigerated liquid creamer, due to our extended shelf life and takeover of logistics discussed in previous quarters. These improvements were partially offset by wholesale fulfillment costs, timing of promotional activities, and general inflationary pressure. Operating expenses were $9.2 million compared to $6 million in the year-ago period. General and administrative expenses increased $1.2 million over the fourth quarter of the prior year, primarily on personnel costs, professional fees, and amortization of Picky Bar acquisition-related intangibles. Club sales and marketing expense rose $2 million, largely due to growth in advertising and marketing. From the sequential quarter, operating expenses of $9.2 million in the fourth quarter, compared to $8.5 million in the third quarter of 2021, with stable general and administrative expenses and an approximately $650,000 increase in marketing expenses, due to the timing of promotional activity. As noted in previous calls, after completing the infrastructure build-out required to support our business as a public company, we have now shifted to finding opportunities to maximize our efficiency and leverage in general and administrative expenses. And as such, we were pleased to deliver another sequentially flat quarter. Related to sales and marketing, we are now focused on driving returns and efficiency in our investments, while not sacrificing growth. We expect to continue to make progress here in the coming quarters though not always in a perfectly linear manner. Our balance sheet remains healthy and we completed the year with nearly $32 million of cash and investments and no debt. Our inventory position remains strong and we continue to hold that investment level to be ready to support growth and mitigate supply chain-related disruption. And now for our 2022 outlook, we are anticipating net sales of $41 million to $44 million driven by wholesale growth, particularly in refrigerated liquid creamer and functional coffee products, as well as online gains across our portfolio. The strategies Jason referenced, as well as our new SVP of Sales Daryl Moore bode well for our future in retail, but will require time to ramp-up implying more visible progress of our wholesale growth in the second half of 2022 and building to early 2023. We expect full-year 2022 gross margins of 24% to 26%, with continued operational efficiencies in our Sisters facility, optimization of our DTC parcel costs and improvements in our refrigerated liquid creamer margin profile, offset by inflationary pressure. Over the course of 2022, we will be further focused on finding elasticity in our free shipping program, optimizing product pricing, sizing and packaging, reviewing our portfolio for SKU rationalization opportunities and many other initiatives to drive additional margin improvements in late 2022 and into 2023. And as our business continues to scale and we realize continued share gains across the several large addressable markets in which we operate, a vertically integrated approach creates significant opportunity for fixed cost leverage. I'll turn the call back to Jason.

Thanks Val. In summary, 2021 was a strong year for Laird Superfood, as we drove 43% net sales growth in a difficult macro environment and against challenging year-over-year comps. We have made and continue to make progress against many key initiatives that will set up our organization for continued success. As we go forward, we will continue to execute against a tight set of strategies that will help us to further drive our top line growth by expanding our distribution points and improving our customer and consumer marketing model. And while we expect some choppiness in the next couple of quarters as we stand up these initiatives and work to improve our operations, our long-term growth thesis remains intact as we continue to lead and innovate within the plant-based food industry. This concludes our prepared remarks. Operator, we are now ready to open the call to questions.

Thank you. The first question is from Bobby Burleson with Canaccord. Your line is open.

Hey guys. Thanks for taking my questions. So I guess the first one would just be it sounds like wholesale and liquid creamer in particular are a big part of your growth outlook for 2022. Curious, in terms of all the different products and segments you guys operate in, where do you think the guidance is most conservative if you had to call out a couple of things?

Yeah, hey Bobby, thanks for the question. It's great to connect with you again. The liquid creamer segment presents a significant opportunity for us due to the sizable addressable market. Currently, we're at about 5% ACV in conventional, which highlights the enormous potential. We've been focused on aligning our capacity to meet this demand. We have a new sales leader joining who will quickly take charge and help drive this business forward. With review season approaching, there will be many opportunities for him to engage with the sales organization. We see a remarkable opportunity to expand this segment, particularly in the bricks-and-mortar channels, making it a critical focus for us. Additionally, the powder creamers represent a largely untapped market, and we're currently at approximately 15% ACV for that product. We're aiming for wider distribution, especially within the club channels, where we've already made significant progress. The coffee portfolio has also generated interest from retailers, and we plan to present it in the coming months for potential expansion into club channels. On the DTC side, there's a great chance to enhance the overall portfolio. This channel allows us to bring more products to Amazon and tap into that platform more effectively, which presents considerable upside as we move forward.

Great. And then just a quick follow-on. In terms of inflationary and supply chain concerns, you touched on having, I think, managed to avoid any significant disruptions. Are there specific ingredients or supply chain kind of channels that you could call out where maybe you're more concerned about inflation and disruptions?

Yes. Thanks. Great question Bobby. I would say that just like you heard from everybody anything coming over ocean container has risk whether you can get it on a ship, whether it's going to make it to the port. That's all worked out pretty good for us up to this point. And as I've said, we've been at a really good spot in inventory levels. And so we haven't had quite the same issues that others have had, but we have to keep an eye on it too, because even though we largely bypassed the major ports, there are still challenges in some countries getting products onto the ship.

Great. Understood. Thank you.

Thank you, Mr. Burleson. The next question is from the line of Alex Fuhrman with Craig-Hallum Capital Group. Your line is open.

Hey, guys. Thanks for taking my question. I wanted to ask about, first of all, I guess, about the online channel showed really strong growth in 2021. It looks like you're expecting that growth to moderate pretty significantly in 2022. Can you talk about what's driving that? Is that mostly the planned reduction of some of the underperforming SKUs that you have, or just a different approach to digital marketing? If you could give us a little bit more color on that that would be helpful.

Hey, Alex, this is Jason. I want to clarify that our approach is a strategic decision. As we entered Q4 last year, we began encountering challenges with customer acquisition costs and noticed a slowdown during that quarter. Additionally, we experienced a significant increase in acquisition costs. Moving into this year, particularly in the first half, our focus will be on optimizing our direct-to-consumer spending to ensure we're investing in the highest return on investment channels. There has been a shift that many have read about regarding Apple and Facebook and iOS, leading numerous companies, including ours, to adopt similar strategies, which drove up costs. Therefore, we're reassessing our spending in these areas, resulting in a deliberate moderation of our growth. I believe we'll eventually see a similar trend as costs stabilize, allowing us to utilize effective tactics from the past again. We're currently collaborating with various agency partners to determine the best and most efficient allocation of our marketing budget to maximize online growth. Concurrently, while addressing acquisition costs, we are fortunate to be ahead of our competitors with a substantial CRM database that we can leverage for customer outreach. We intend to actively convert one-time orders into repeat purchases and subscriptions, having achieved success in this previously without focused efforts. The new white glove service will enhance our outreach by analyzing customers' purchasing behavior to offer cross-sell suggestions and targeted, personalized messaging that makes them feel appreciated. As we transition to improved digital strategies and seek better-performing opportunities, we will utilize our extensive consumer database to provide tailored products that align with their needs and preferences.

Great. That's really helpful. And then if I could ask on the wholesale side. You've had nice slow and steady growth there over the last couple of years without a shelf stable liquid creamer. How should we think about how you're planning to grow that channel this year and next year? Is it kind of continued growth with your existing products and then, layer in the shelf stable liquid creamer or are you similarly going to be reducing some of the SKUs that you have out there for wholesale just like you are on the e-commerce side?

Yeah. That's a good question. So Alex, what I would tell you on that is, we have already a terrific offering in the shelf-stable space with our powder and in the refrigerated space with our liquid creamer. I mentioned coffee as well. That's another area where in retail we are getting inbound interest and have had some early success. And so, we'll be pressing all of those much more aggressively as we go forward. We started digitally native. That's really where our focus was over the last couple of years and we had great efficiencies in growing that business and during COVID, we were able to leverage the fact that shoppers were going online rather than the stores. But now, we recognize that as we go forward that is going to be the big growth driver for us getting our products out into those stores. The aseptic creamer, I would think about is gravy on top, because as I mentioned, our maximum ACV item is the shelf-stable creamer and conventional. And that's a 15% ACV. So, we have incredible upside in both natural and in conventional across the creamer category including both our powders and our refrigerated and then that aseptic product that we're still working on right now and haven't yet launched. When we get that launched that will present us with a great DTC opportunity as well as another shelf-stable opportunity to compete with a few liquid shelf-stable creamers that are at market today.

Great. That’s really helpful. Thank you very much.

Thank you, Mr. Fuhrman. The last question is from George Kelly with ROTH Capital Partners. Your line is now open.

Hey, everyone. I appreciate you taking my questions. I have a few for you. First, I want to discuss the online business. You mentioned that it's become more difficult to acquire new customers, and it seems that the environment is quite competitive with other online businesses. We're noticing this trend across the board. Could you provide more details on whether the slowdown in growth is primarily due to higher churn rates, customer acquisition costs, conversion issues, or any other factors?

Absolutely, George. As we approached the end of the year, we experienced a significant customer acquisition cost (CAC) issue, with CAC roughly doubling during that quarter. This isn't entirely unusual, considering the competitive advertising landscape and the seasonal factors. Additionally, the issues related to Facebook and iOS contributed to this challenge. Many others in the industry are facing similar difficulties. However, our lifetime value (LTV) metrics for online consumers remain strong, and our subscription rates have also held up well. We're confident in our retention abilities, which align closely with best-in-class consumer packaged goods (CPG) standards. We're committed to engaging our consumers effectively, focusing on how we reach them and the messaging we deliver, assessing the use of various influencers and search terms. Our team is currently analyzing these aspects to ensure we maintain an efficient marketing strategy moving forward. It's indeed a challenging time for customer acquisition online, as you've mentioned. Fortunately, we have a solid foundation of consumers, complete with their email addresses and purchase preferences. We're eager to leverage this situation to our advantage.

Okay. Cool. That's helpful. And the next question for me on OpEx expectations for 2022. So I'm just a little bit unclear on the two big buckets being G&A and sales and marketing. It sounds like, you've said regarding sales and marketing, you're going to test more and kind of maybe pull it back a bit and see how it reacts. Is that a fair characterization of what you said in the prepared remarks, we should expect it to kind of come in before maybe it builds again? And then, can you also just talk about the opportunity, should G&A be kind of stable in 2022 or maybe just grow more moderately?

Yeah, George, great question. I'll jump in and then I'll let Val come in as well and share a little bit more detail. But yeah, I would tell you that in terms of sales and marketing spend, we anticipate growing that at a slower rate than we're going to grow our net sales, I would say approximately half in terms of the total growth because we do believe there's some spend there that was not efficient. And that's not all accounted for. We're rebuilding our marketing plan at this point. And I think we may find additional opportunities either to more efficiently grow based off of those dollars or conversely to be able to pull back some dollars, based on our in our targets and what we can put to market effectively and efficiently, so all of that review is taking place at this point. And then in terms of G&A, I know we've expanded that rather significantly in the last couple of years. Certainly, as we went public, there were a number of costs that we had to incur as related to that overall capital situation. And as we go forward from here, we're going to be able to gain leverage out of that by really holding that to a much slower growth rate than our net sales top line. So, I feel really great about, where both of those two lines can go over the next couple of years and that's really starting in this year we're gaining that first round of leverage.

Okay. Great. Thank you.

Thank you, Mr. Kelly. There are no additional questions waiting at this time. I will now pass the call over to Mr. Vieth for any closing remarks.

I believe you have a clear understanding of the current state of the business. I've been here for six weeks, and in that time, I've observed that we have a remarkably strong brand and a unique product portfolio within the consumer packaged goods sector. This portfolio effectively covers different times of day and occasions, allowing us to engage with consumers throughout. There aren’t many brands, if any, that can match our capabilities in this area. Reflecting on the situation, it’s incredibly exciting, and we had a solid performance last year. While we expect our growth to decelerate somewhat this year due to a challenging environment, I remain optimistic about our outlook. We plan to refine our sales and marketing strategies to maximize effective opportunities and collaborate with the right influencers to implement impactful tactics. This approach will give us the chance to revitalize our overall top-line growth while we also expand our presence in the retail space through our sales organization and the opportunities available for our portfolio. I am very enthusiastic about our direction. We will pursue this growth smartly, balancing growth with responsible costs, which will be our guiding principle moving forward. I am eager to demonstrate what we can achieve in the upcoming quarters. Thank you for your time today; I look forward to our next conversation.

Thank you, for your participation on today's call. You may now disconnect your lines.