Hello everyone. Thank you for joining today's financial results call for Laird Superfood's third quarter of 2024. My name is Sierra, and I will be your moderator. I would now like to hand the call over to Trevor Rousseau from the company. Please proceed.

Thank you and good afternoon. Welcome to Laird Superfood’s third quarter 2024 earnings conference call and webcast. On today’s call are Jason Vieth, Laird Superfood’s President and Chief Executive Officer; and Anya Hamill, our Chief Financial Officer. By now, everyone should have access to the company’s second quarter earnings release, which was filed today after market close. It is available on the Investor Relations section of Laird Superfood’s website. Before we begin, please note that during this call, management may make forward-looking statements within the context of federal securities laws. These statements are based on management’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those described. Please refer to today’s press release and other filings with the SEC for a detailed discussion of these risks and uncertainties. With that, I’ll turn the call over to Jason.

Thank you, Trevor. Good afternoon. As usual, I want to begin by thanking all of our investors who continue to follow and support Laird Superfood and to welcome all of you who are just joining the journey. Today I am once again thrilled to share outstanding results for our Laird Superfood business. In the third quarter, we grew net sales by an impressive 28%, marking the third straight quarter with strong, double-digit net sales growth. This also marks another quarter where we delivered solid sales teams across both our e-commerce and our wholesale channels, and where we are growing our top line while also holding or even increasing our spend efficiencies across both trade promotional and marketing activities. Q3 net sales growth was once again led by our e-commerce business, which grew by an outstanding 42% year-over-year. Amazon sales once again led the way, increasing by more than 132%, driven by superior commercial execution and bolstered by stronger inventory positions in 2024 and a strong Prime Day execution. Our DTC platform also grew by 10%, even while up against a very challenging lap, given the level of promotional productivity that we executed a year ago. Virtually all of our DTC internal metrics were flashing green again in Q3, with subscription revenue up by 19%, average order size up by 8%, and net sales from e-mail increasing by 38% in the quarter. Similarly, our sales on Amazon were driven by strong increases in subscription sales, new customer acquisition, and gains in winning the buy box for our core products. I'm also pleased to report that net sales from our wholesale business increased in Q3 by nearly 13% year-over-year. In the natural channel, as measured by spins, our growth rate for the 12 weeks ending October 6, 2024, was 27%, driven by double-digit top line growth in all of the products that we measure including powder creamers, liquid creamers, coffee, and instant lattes. This growth was driven by a nearly equal split of distribution gains and increases in our sales velocity. In MULO, we grew even faster, up by 40% in the same 12-week period ending October 6, 2024. And while we remain strategically cautious in expanding to the conventional grocery channel, I'm excited to share that you'll soon be able to find more of our products in new stores in several retailers across the country including Kroger, Albertson, Safeway, Wegmans, and more. Moving into operations, our supply chain team continues to do a solid job of supporting our growing business. During Q3, we expanded our gross margin to 43%, which represents a 12-point increase versus the third quarter of 2023 and marks the fourth straight quarter that we have achieved at least a 40% gross margin. This improvement was driven in large part by the strategic sourcing of our top ingredients, where we will continue to focus during 2025. Our biggest operational challenge in the third quarter, and frankly throughout 2024, has been in keeping product on retailer shelves and available to our e-commerce consumers. Because we have consistently exceeded our growth targets during the last few quarters, our supply chain has been in perpetual change throughout the year. The team has done an admirable job of juggling ingredient supply and manufacturing availability, essentially playing a game of Whac-A-Mole as they've moved from issue to issue. And while there have been some minor out-of-stocks during 2024, we remain in a strong inventory position and expect to be back fully in stock for the important Black Friday event and holiday buying season. I also want to share some of the progress we have been making in building a more environmentally sustainable business. During the past year, we have been able to introduce 30% or more post-consumer recycled material into all of our creamer pouches as well as our nutrition and protein bars. Impressively, we have done this without any significant incremental cost to our business. This is a meaningful ambition for our team and to our consumers, and we are in the process of outlining additional goals and creating a multiyear sustainability program. Many of you were with us during the turnaround that we executed over the past couple of years, and I'm pleased to assert that we are now solidly in the transformation of Laird Superfood into a high-growth premium branded business with strong gross margins. But rather than asking you to take my word for it, I want to take a moment to dimensionalize it a bit so that you can internalize it. Thus far in 2024, our net sales have grown by nearly 27%. At the same time, we've been able to increase our gross margin by 15.3 points, going from 26.4% gross margin to 41.7%, which is well ahead of our financial goal to maintain gross margin in the high 30s. Our net loss for the three quarters of this year has been reduced to less than $1.5 million, which is nearly a $9 million improvement versus the same time period last year. And during the last 12 months, our cash balance actually increased by $776,000 from $7.4 million to more than $8.2 million as of September 30, 2024. And while Q3 and the entire 2024 financial performance has shown tremendous improvement versus our historical performance at Laird Superfood, we are even more excited about the future opportunities for our brand and business. As we have shared before, we still have a tremendous amount of white space to expand distribution and drive sales velocity growth within the natural channel, and we have not yet begun to fully expand into the conventional grocery channel or into the massive on-premise channel for food consumption. We remain confident that we can continue to build our e-commerce business behind relevant and engaging content from our founders and other influencers within health, wellness, nutrition, and fitness. As consumers increasingly seek out healthier and more natural foods, our Laird Superfood portfolio is perfectly positioned to fuel them in their journey. With that, I will now turn it over to Anya to discuss our third quarter results in more detail.

Thank you, Jason, and good afternoon, everyone. As Jason noted in the third quarter, we have continued to make progress executing the strategy we articulated earlier in the year, which is to return the business to growth while improving profitability. I am pleased to share that our third quarter results were strong on every key metric, building on the first half of the year momentum and delivering significant improvements versus the same period prior year. Net sales grew 28% to a record $11.8 million compared to $9.2 million in the prior year period and were up by $1.8 million sequentially versus the second quarter of 2024. Our e-commerce channel led the company's growth, increasing by 42% year-over-year and accounting for 58% of our total net sales. Sales on the Amazon platform had by far the best quarter in the company's history, delivering an impressive 133% growth driven by outstanding commercial execution and a better in-stock inventory position. Our direct-to-consumer platform also grew 10%, driven by a steady increase in subscribers and repeat orders, higher order value, and lower discount rates due to a strategic shift in promotional spend. Wholesale net sales increased by 13% year-over-year and contributed 42% of total net sales, driven by 36% growth in the retail channel from new distribution and velocity acceleration as well as more efficient promotional spend. This was partially offset by the timing of cross-channel orders. Gross margin for the third quarter came in at 43%, reaching a new high and expanding 12 points versus last year. This margin expansion was driven by supply chain cost-saving initiatives specifically from a strategic shift to direct procurement of key raw materials, settlements with the supplier to recover costs previously incurred in connection with the quality event experienced in 2023, as well as a reduction in inefficient trade promotion spend. I am pleased to highlight that this is the fourth consecutive quarter where we have achieved gross margins at or above the 40% threshold. These results further support our expectation for sustainably achieving gross margins in at least the high 30s in the coming quarters. Operating expenses decreased by $0.3 million in the third quarter compared to the third quarter last year, driven by lower sales and marketing costs as we improve the efficiency of our marketing programs. This was in part offset by higher general and administrative expenses driven by higher professional fees and stock-based compensation, which is a non-cash expense. Operating expenses as a percentage of net sales were lower by 16 points compared to the prior year quarter as we focus on ongoing expense management in order to improve our bottom line. The net loss for the third quarter was $0.2 million, which is $2.5 million better than during the prior year period. Turning to our balance sheet, we ended the quarter with $8.2 million in cash, and I am particularly pleased to report that for the second quarter in a row we have delivered a positive quarterly cash flow, which was $374,000 in Q3 and totaled $495,000 for the first nine months of the year. This reflects our improved performance and disciplined management of our working capital, which decreased year-over-year, excluding cash while driving year-to-date revenue growth of 27%. We also have no debt outstanding and no expected need to draw on our line of credit. We continue to project that we have enough cash to fund our operations as we grow our business and make operating improvements that drive us towards breakeven and profitability. Overall, we feel confident about the remainder of 2024. We expect continued growth in our core business segments as we remain focused on executing our strategic priorities. As such, we are increasing our full-year guidance on both net sales and gross margin. We now expect net sales to be in the range of $43 million to $44 million for the full year 2024, which represents 26% to 29% growth versus the prior year, and gross margin is expected to expand to approximately 41% to 42%, representing an 11- to 12-point improvement versus 2023. Looking ahead to 2025, we made a decision to strategically focus on growth. In doing so, we expect to achieve 20% to 25% top-line growth and to manage our P&L to positive cash flow and EBITDA. And now I will turn the discussion back over to Jason for any closing remarks.

Thank you, Anya, and thank you once again to all of you who are supporting our journey at Laird Superfood. Our last four quarters demonstrate an incredible turnaround in our business, one where we not only have shored up our finances but have also returned our business to best-in-class growth rates in the industry. Operator, this concludes our prepared remarks, and we are now ready to open the call to questions.

Thank you. We will now begin the Q&A session. Our first question today comes from Alex Fuhrman with Craig-Hallum. Your line is now open.

Hey, guys. Thanks very much for taking my question, and congratulations on a really strong quarter. Nice to see a really strong initial outlook for 2025. I wanted to ask a little bit more about where that growth is going to come from. I think, Jason, you mentioned in your prepared remarks that we're likely to see a number of retail doors coming. You named some impressive national accounts coming. Is that really going to be the biggest driver of your growth? Obviously, this year, it's been more driven by the online business. Curious how you get to that 20%-25% growth next year if that maybe looks a little bit different.

Hey, Alex. How are you doing? Good to hear from you again today. Yeah, I mean…

Good to hear from you as well.

Yeah. Thank you. It's a great question and one that we've been pressing the team on. The reality on this, Alex, is we had a great year this year in the online business, the e-commerce business a bit unexpectedly. We had pulled a lot of the spend out, and we knew that we were getting the better marketing tactics, but we were really pleasantly surprised with the performance this year. And the great thing about it is we've turned a number of our purchases into repeat purchasers and our repeat purchasers into subscribers. And as a result, we have very sticky revenue as we go into next year. So we still feel really great about our ability to grow DTC. And at the same time, Amazon has been on fire, as you saw. We know that we still have a lot of latent growth in Amazon, just executing the playbook that we've been running. So we think that e-commerce business is going to continue to do really well. Probably, though we would expect even more growth next year as we look at the wholesale business. We did pick up a number of accounts, as I just mentioned. And we're being very strategic and selective with the retailers that we're working with. I think I had mentioned previously that we've been entering in with Target into a couple of categories, and the performance looks good there, and same thing with these other retailers that I mentioned. But the reality behind that too is our natural channel sales have been thriving, and it's been a combination of additional distribution including a lot that we gained this year, as well as velocity gains. They’ve been fairly equal, as I had mentioned, in the velocity and distribution gains that we've had this year. So it's really a case of everything kind of hitting at the same point. And that's the point that Anya was making with regards to next year and how to think about our business. We're going to invest in the growth. We have a plethora of opportunities in front of us right now with consumers online, as well as retailers and their consumers and guests where they're shopping out in physical stores. And we want to ensure that we have sharp prices on promotion with extra display as much as we can, and that we're marketing behind the brand and really getting to new consumers, while also leveraging the very strong database that we have. We have an incredible database with over 0.5 million consumers that are very loyal to our brand, and we have the ability to launch new products into channels. So you're going to see strong growth across all of these channels next year, Alex. And you're going to see it come across frankly all of our categories. We are winning in all of our categories. When I look at the spins report, everything is green right now. Everything is lighting up green, and it's been that way this year. And it's the same thing on the e-commerce platforms of Amazon and DTC. So we're going to just use 2025 just to reinvest and grow and build this business very carefully. So as you know, we've been very good stewards with marketing dollars, and we really watch the ROAS and ROIs very carefully. But we're in a position right now where we can spend effectively. And so we're going to do that, and you're going to see really great growth across all these channels as we move forward, in our opinion.

That's really helpful, Jason. Thank you. And then if I could just follow-up. As you think about your expansion into more mainstream grocery and big-box type retailers as well as the success you're having in your more long-standing natural foods partners, which products have those two categories of retailers really been gravitating towards as you move towards some of these more mainstream bigger retailers? Are they opting for your core powder creamer SKUs? Or just any color on which products have been resonating as you open more doors would be helpful.

Our heritage lies in powdered creamers, and we continue to see growth and solid performance in that area. However, the dry shelf will never match the productivity of liquid creamers. In terms of sales velocity per distribution point, liquid creamers clearly outperform powdered creamers, though we're seeing success in both product types. When we assess our performance, using a quintile analysis that divides shelf products into five groups, we typically find ourselves in the top tier, either in the first or second quintile, with a few exceptions. Overall, we generally rank at the top of these metrics. Although powdered creamers faced challenges two years ago, they have rebounded strongly this year, showing significant growth in distribution and velocity. We are transitioning our liquid creamer into a larger size, enhancing value to consumers and offering convenience by reducing the frequency of purchases. We're excited about the prospects for liquid creamer as we head into next year, having enjoyed notable distribution successes. Both product categories look promising. A pleasant surprise for me has been the explosive growth of our coffee and instant latte offerings, which have contributed significantly to grocery growth and performed well online. We're planning to launch new SKUs in both categories. A protein creamer we introduced has sold out multiple times, exceeding our expectations, leading us to produce larger batches. We're also introducing a new matcha instant latte and have rolled out additional coffee products, focusing on adaptogenic functional mushrooms that are appealing to both retailers and consumers. These four product areas are set to experience rapid growth as we enter next year, alongside our green products that have performed exceptionally well throughout the year.

Great. That’s really helpful, Jason. Thanks very much.

You bet, Alex.

Great. Hi, Anya, hi Jason. Thanks for taking the question. If I could just start maybe touching on growth a little bit more. I want to specifically go to kind of the discounts and promotional activity. It sounds like it's going to be a continued focus next year with the prepared remarks about investing some of that margin. I was hoping you could kind of just talk about where you're seeing the most success, what kind of promotions you are finding really resonate, and just how you're thinking about next year in terms of discounting and promotional activity.

Yes. Hi JP. Thanks for that question. I'll jump in, and then Anya if you want to give your vocal cords a workout, you can jump in as well. It's really interesting, JP. A year ago you probably recall we overspent on the trade line and we really invested too much into pricing. We felt the consumer was a little shaky last year and we were trying to entice them to purchase, especially first-time consumers. What we found is we gave too much away, and in doing so, we were really giving away our brand equity as well. So we made a strategic pivot at the end of last year, really in Q4, and we've carried that forward this year to do a lot less pricing promotion, and it's been very effective. As you can see from the net sales increases that we've had this year, selling at full price has worked out a lot better for us. What that's done is it's really let us keep up the premium cachet of the brand. We heard from our consumers specifically that we are a premium brand and they were surprised to see us on sale as often as we were last year. What we do now is we run fewer deeper sales online. So we leverage Amazon Prime Days, we leverage Black Friday internally on DTC, and then we have one other big sale on the DTC business. And then by and large we really don't run a lot of promotions. Almost none in fact. That's working out really well for us because the consumers that are buying Laird at this point are really believers in what the brand benefits are, giving them the functionality of the food, and they're willing to pay for it at the price that it's at without the need for promotion. We've really backed away from that pricing promotion and that extends into grocery as well. We've pulled back, Anya, what did we pull back? Probably 10 points or so of trade over the course of the year.

11.

Yes, 11 points. Yes. Yes. And so that's really a very strategic decision, JP, that we made to focus around quality promotions we call quality merchant. That's a function of getting a secondary display or getting into the circulars at grocers with what's called feature and display. That's really where you'll see us poking next year. We have a couple of big planned or committed promotions that will pick up that secondary display, and that's just a tremendous way to introduce your products to a lot of new consumers in a tight timeframe. That's really going to be our focus next year. I would just think about it as more of the same in terms of the pricing promotion that we're going to do. There will be more concerted marketing efforts to really build the brand and drive awareness and pick up more consumers. We've found a number of marketing tactics that have worked really well over the last 12 months, especially those that leverage our founders, sharing the functionality of the food and general health wellness, fitness, and nutrition tips. So across the various media platforms where we've continued to invest and grow our subscribership, you'll see us making a more significant effort to drive awareness and build those consumer bases.

That's very helpful. Jason, you touched on this a bit, but if we take a step back and consider the customer base now, how are you approaching the customer and whether you've made a significant leap into a new set of customers? Perhaps extending beyond the strictly health and wellness-focused segment? With another year of strong projected growth, have you transitioned into a new customer set? How do you view your current position compared to a year ago?

That's an excellent question. As a smaller company with limited data, we often analyze what we have. When I joined a couple of years ago, our consumer base mainly consisted of Laird and Gabby's friends and family. We initially launched by engaging with groups connected to them, using platforms like Instagram to build a following through their networks. Our reach was primarily in the surfing community along the West Coast and some health and wellness circles, with one exception being some influencer events which provided temporary boosts but were costly and didn't retain those consumers. Over time, we focused on reaching the core health and wellness enthusiasts, particularly in key areas like the West Coast, parts of Colorado, Texas, Minneapolis, and Chicago. We didn't initially target the East Coast due to lower brand awareness. In the past year, we have begun expanding further into the next circle, reaching consumers who are health-aware and interested in functional foods. We're cautious with our marketing spending, carefully monitoring our return on advertising spend as we connect with new consumer segments. Our marketing team has successfully tapped into these new audiences, and as we push into conventional channels, we're likely to engage even more diverse customers. So, yes, we are expanding our consumer base, but we're doing so with a measured approach.

Great. Yes, certainly, I have two questions. If I could sneak one last one in, I want to discuss the inventory balance. You have done a great job managing a tight operation. I would like to know how you view your cash and liquidity position, especially with the return to growth. Do you feel the need for more inventory or wish you had more? Can you talk about liquidity, please?

JP, this is Anya. Thank you for that question. Yes. As you know, we put an ABL in place, a line of credit, that was put in place in Q2. We have not drawn on it, but we do have it available if we need to finance our working capital expansion. So far, we have been able to manage it efficiently, really balancing our AR, AP, and inventory, perfecting our sales and operations forecasting and refining that in order to really efficiently manage our working capital. If we need financing to grow next year, we have this ABL available should we need to draw upon it.

Yes, JP, let me provide a bit more context. We find ourselves in a situation where we need to invest in additional inventory. Our stock levels have been quite tight throughout the year, and we may currently be a bit below our desired inventory levels. Our team is lean and is learning to operate within a just-in-time supply chain model. I don’t expect a significant need for increased inventory. As Anya mentioned, we have a backstop in place with the ABL, which we don’t plan to use. This was set up as a precautionary measure because we could. Our cash position has improved, increasing by almost $0.5 million year-over-year. We anticipate generating cash in the upcoming year and will continue investing in growth. However, we do not intend to deplete our cash reserves. While there will be typical fluctuations from quarter to quarter, I expect that a year from now we'll report on further increases in our cash balances for 2025, similar to what we achieved in 2024. We don’t plan to use cash to run our business as we see no need for it. Our P&L looks solid. The only reason we would consider raising cash now would be if we identified a compelling investment opportunity in a new product or an exceptional acquisition that aligns perfectly with our business. In that case, our perspective could change, but we currently have sufficient cash to run our operations confidently. Looking ahead, we believe we are well-positioned to continue our current path.

Great. Well, thank you for taking my questions, and best of luck going forward.

Yeah. Thanks very much. Appreciate it.

Thank you.

Thank you all for your questions. There are no longer questions in the queue. So I'll pass the conference back to the management team for any further or closing remarks.

Yes, I'll just close. I think you guys have heard enough from me today, but I'll just close by saying that we can't be more excited about where we are. Hopefully, you all agree. We've got a great year at Laird Superfood. We're in a very fun position compared to where we've been, at any point while I've been here. At the same time, we couldn't be more excited about where we are for the balance of this year and in general for our future. As Anya pointed out previously in this call, we're in a great position for 2025 expecting to grow 20% or more next year and continuing to add to our cash balance on the balance sheet. Thank you all for joining us today. We look forward to getting back in front of you with another quarter that hopefully looks a lot like this one.

That will conclude today's conference call. Thank you all for your participation. You may now disconnect your lines.