Laird Superfood, Inc. (LSF) Q3 2026 Earnings Call Transcript

Hello, everyone. Thank you for joining us and welcome to the Laird Superfood Third Quarter 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over. Please go ahead.

Thank you and good afternoon. Welcome to Laird Superfood's Third Quarter 2026 Earnings Conference Call and Webcast. On today's call are Jason Veeth, Laird Superfood's President and Chief Executive Officer, and Mark Johnson, our Chief Financial Officer. By now, everyone should have access to our earnings release, which was filed today after market close. It's available on the Investor Relations section of our website at lairdsuperfood.com. 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. And with that, I'll turn the call over to Jason.

Thank you, Trevor, and good afternoon, everyone. I'm Jason Veith, President and CEO of Laird Superfood, and I'm joined today by Mark Johnson, our Chief Financial Officer. Mark joined us on October 1st. He was most recently Vice President of Finance, North America, at Tropicana Brands Group. He brings more than 25 years of finance leadership across public consumer packaged goods and private equity-backed companies in beverage food and premium pet food. Prior to Tropicana, Mark was Vice President of Commercial and Supply Chain Finance at Champion Pet Foods, where he helped drive significant profit and sales growth. Mark previously held multiple senior finance leadership roles at Danone and White Wave Foods and spent a decade at the Pepsi Bottling Group in corporate planning and finance roles. We're pleased to have him on the team as we continue integrating the platform and focusing on sustainable, profitable growth. I'm also pleased to introduce Matt Kusinen, our new Senior Vice President of Supply Chain. Matt joins us from Horizon Organic, where he served as Chief Procurement Officer. Prior to that, Matt spent nearly two decades in Danone in senior supply chain roles, including VP of Supply Chain for Beverages and VP of Supply Chain for Plant-Based and Premium Dairy. Along with earlier leadership positions in sales and operations planning, procurement, plant operations, and continuous improvement. His deep experience scaling supply chains in plant-based and premium food and beverage will be a strong asset as we continue to integrate our brands, drive synergies, and support the growth of the platform. I've had the privilege of working with both Matt and Mark in the past, and I expect it will be a smooth transition as we add them to our management team. Q3 was another important quarter in the build-out of our superfood platform. Net sales increased 225% to $42 million, driven primarily by the full quarter contributions of Navitas and Terasol, along with continued distribution expansion in the retail channel. We delivered net income of $1.7 million, or $0.10 per basic and diluted share, and adjusted EBITDA of $2.1 million. Integration continues to progress. As we discussed last quarter, Navitas is fully integrated into our processes, organization, and ERP system. Across Navitas and Laird, we are operating as one team with shared processes and accountability and are presenting a unified face to customers, distributors, and partners. We are now applying the same disciplined approach to Terasol. Accounting and finance are furthest along, while systems and operational integration are now getting underway. We are also expanding the Laird brand platform with several new launches designed to meet continued consumer demand for convenient, functional, and high-protein options. These include a functional instant coffee line, electrolyte coffee powders, and coffee protein bars. These innovations leverage our core coffee and superfood strengths, broaden our relevance across more occasions, and support both retail and e-commerce growth. We are also progressing an updated portfolio of concepts for Navitas and Terasol, which will result in robust 2027 launch platforms across the combined business. The early synergies from bringing these three business platforms together are visible in the results. Adjusted EBITDA of $2.1 million reflects the contribution of the acquired brands and the cost and operational synergies we are beginning to capture in the supply chain, shared overhead, and marketing. We expect those benefits to continue building, and for continued benefits from our combined go-to-market structure to pay dividends in driving future sales. Like many of our peers in the food and beverage industry, we are experiencing elevated cost headwinds. Fuel and freight charges are up significantly, and consumers remain cautious with their wallets. We are countering these pressures through a combination of selective pricing actions in certain channels, active mix management, tighter cost containment, continued supply chain productivity work, and disciplined trade and promotional spend. These steps, along with the integration synergies we are capturing, are helping protect margins while we continue to invest in growth. As I indicated on our Q2 call, we are choosing to meaningfully step up marketing and commercial investment to build our brands and drive sales growth. Consumer behaviors are shifting in ways that play directly to our strengths, and we want to capitalize on that. For example, there is a clear movement from traditional coffee pots towards convenient powder-based coffee products, and we want to ensure that we can capture a strong share of that with our powdered instant latte and other coffee products. At the same time, eating patterns are being disrupted by GLP-1 users who are seeking to maximize every bite with nutritionally dense calories, and our superfood platform, with its focus on clean, functional, high-quality nutrition, is perfectly poised for that demand. In the fourth quarter, we are investing incrementally nearly $2 million of marketing versus last year. And we plan to similarly increase spending in 2027. We are making this investment behind a meaningfully stronger commercial capability than we had just a year ago. And we are laying the foundation to drive continued growth from here. With the platform now at meaningful scale, this is a strategic choice to invest behind brand awareness, velocity, and new distribution so that we can capture these evolving occasions and continue to grow even in a more cautious consumer environment. Commercially, we are seeing solid momentum in key areas. Amazon and other online marketplaces remain strong growth drivers across our brands. We are actively leveraging Terasol's deep expertise and proven best practices in marketplace operations, content, advertising, and fulfillment to operationalize and scale Laird and Navitas on these platforms, accelerating their performance and capturing more of the available demand. Retail expansion also continues, building on the Walmart coffee and creamer launches and the expanded Navitas assortment at Target that we highlighted last quarter. Cacao and coffee products continue to perform well and are helping to drive category momentum. Softness in the direct-to-consumer and club channels offset some of the organic gains, but the overall platform is scaling as planned. We ended the quarter with $17.3 million in cash and no outstanding debt. This strong, unlevered balance sheet supports continued integration work, selective growth investments, and provides meaningful flexibility as we navigate the current environment and build the platform. In Q4, we will remain focused on executing the integration, driving growth across retail, e-commerce, and Amazon, and realizing the cost and revenue synergies of the platform. With the capital and strategic support of our partners at Nexus, we are well-positioned to continue building what we believe can become a leading, scaled platform in positive nutrition and superfoods. I'll now turn the call over to Mark for more details on the numbers.

Thank you, Jason, and good afternoon, everyone. Third quarter was our first full quarter with all three brands under one roof. I will walk you through what drove our quarter three results and then spend some time on how we're thinking about the full year. Net sales for the third quarter of 2026 were $42 million, up 225% compared to $12.9 million in the third quarter of 2025, and up 2% from $41.3 million last quarter. The increase was primarily due to the Navitas and Terracel acquisitions, as well as distribution expansion in our retail channel. E-commerce was our largest channel at this quarter, growing more than three and a half times year-over-year to $22.5 million and representing 54% of our total net sales. Growth was led by the addition of Nuvitas and Teresol and strong growth on Amazon.com. Wholesale grew nearly three times year-over-year to $19.4 million and made up 46% of total net sales, driven by the addition of Navitas and Teresol. For the first nine months of the year, net sales were $97.2 million, up 166% compared to $36.5 million in the prior year period, With wholesale contributing 51% of the total net sales and e-commerce contributing 49%. Gross profit in the third quarter was $12.4 million, or 29.6%, of net sales, compared to $4.7 million, or 36.5%, of net sales in the prior year period, a contraction of roughly 7 percentage points. The margin compression was primarily due to inflationary commodity costs and lower margins associated with the Terrasol brand and its lower brand investment business model. On a year-to-date basis, gross profit was $29.6 million, or 30.4% of net sales, compared to $14.4 million and 39.3% of net sales in the prior year period, reflecting the same underlying drivers. Total operating expenses were $10.2 million in quarter three of 2026, compared to $5.7 million in the prior year period, an increase of 79%. Sales and marketing expenses increased 158% to $7.7 million, reflecting the larger scale of the business following the acquisitions, variable selling costs on higher sales volume, increased people costs as we build out the team to support the broader organization, and higher marketing investment across both online and retail channels. General and administrative expenses decreased 9% to $2.4 million. That decrease was driven by a $4.1 million non-cash gain from the change in fair value of contingent consideration related to the acquisitions. Excluding that gain, GMA would have been $6.6 million. That figure includes $0.7 million of business combination and integration costs, $1.1 million of amortization of acquired intangible assets, and $1.5 million of stock-based compensation. These items are either one-time or non-cash in nature. Net income for the third quarter of 2026 was $1.7 million, compared to a net loss of $1 million in the prior year period. Adjusted EBITDA was $2.1 million in the third quarter of 2026, compared to $0.2 million in the prior year period. We view adjusted EBITDA as a more representative measure of our underlying operating performance because it excludes items that do not reflect the ongoing cash economics of the business. The increase in adjusted EBITDA was driven primarily by the addition of a Novitas and Teresol and early synergy realization, partially offset by inflationary commodity costs and higher marketing and selling expenses. On a year-to-date basis, net income was $1.7 million compared to a net loss of $1.5 million for the first nine months of 2025. Year-to-date adjusted EBITDA was $3.9 million compared to $0.7 million in the prior year period. Now turning to our balance sheet. As of September 30th, 2026, we had $17.3 million of cash compared to $23.2 million at the end of the last quarter. In quarter three, we did see cash utilization increase as both inventory and receivables increased due to timing of sales and the seasonal purchase of raw materials. We expect to end the year with over $20 million in cash. Now turning to our 2026 financial outlook. We are updating our full year 2026 guidance. For fiscal 2026, we expect consolidated net sales to be in the range of $135 million to $140 million, reflecting a full year of layered superfood and the post-acquisition contributions of Navitas and Terasol. We expect adjusted EBITDA to be in the range of $5 million to $6 million, reflecting our strategic decision to further invest in marketing activities to drive incremental consumer demand. With that, I'll turn the call back to Jason for closing remarks, and then we will open it up for questions.

Thank you, Mark. To summarize, the third quarter demonstrates the scale and early synergy capture of the combined platform. We are progressing the integration of Terasol, expanding the Laird platform with new functional and high-protein offerings while building robust 2027 launch platforms for Navitas and Terasol, deliberately increasing marketing and commercial investment, including an incremental nearly $2 million in Q4 and further increases in 2027. To capitalize on shifting consumer behaviors, such as the move to powder-based coffee and the demand for nutritionally dense options among GLP-1 users, applying Terasol's marketplace best practices across the portfolio, and actively managing industry cost headwinds. We look forward to updating you on continued progress. Thank you for joining us today.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Delorier with Craig Hallam. Eric, your line is open. Great. Thank you for taking my questions.

First, I was wondering if you could expand on the marketing increases, just a little bit more color on where you're investing, what channels, should we think of this? I think you mentioned more kind of brand awareness, so should we think of this as more kind of top of funnel? Type of investments. If you could just expand on the expanded marketing investment outlook overall, that'd be helpful. Thank you.

Hey, Eric. It's Jason. Great question, and thanks for asking that. We really wanted to take a couple of minutes to talk about that. As you know from a couple of the previous calls, we did bring Andy Judd back into the organization. Andy had been with us previously and then had left to go run marketing at Poppy. And upon Andy's return, I think there's a pretty strong assumption that we had that we would find opportunities that we could go really invest marketing dollars into that would help to build the brand for many years to come. And that's really what this is representative of, Eric. So exactly as you said, I would think of this as more top of funnel activation. It will be a mix because as much as we, you know, as much as we see opportunity to go build the brand and each of the brands, I should say, Laird and Navitas at this point, As much as we see an opportunity to really bring these in as household brands over the next years, we do still see a lot of conversion opportunity on the various marketplaces as well. At this point, we're not really thinking about a lot of high, you know, kind of top of the funnel, higher level marketing for Terasol. It is still more of a commodity play and just a very strong brand within the various marketplaces that it plays in today. So we're going to tiptoe our way into that. We do believe that's an opportunity over time as well. But right now, the focus is really on getting Laird and Navitas brands out. And I'll tell you, Eric, you know, it really was something that we, that surprised all of us very positively, all the way up to the board level. We ran a... Some surveys with consumers to look at our brand equity, and what we found was very consistent. We were seen as being one of the absolute top brands that consumers recognized and trusted when they knew us. But we also found we were very much not known whether that was Laird or Novitas or Terasol amongst consumers. And so they're going in and purchasing our brands. They like our products. They see the package, but we just don't have that name recognition. And so we're setting out to change that and to really, you know, leverage those high NPS and brand affinity scores with more consumers as we go forward.

All right, that's very helpful. And then on the recent wins with Walmart, the last quarter talked about the launch of new SKUs and about 1,000 Walmart doors, and then for Navitas, some expanded shelf space at Target. What's your early take on how those are performing? How do you think about potential paths to continue distribution gains with those customers?

Yeah, it's a great question. I mean, it's early still. We're in the first quarter, and obviously, this is a big jump for us as a natural-oriented brand in Laird to take that brand to Walmart, and even, frankly, for Navitas to be expanding into Target in a bigger way. So I'd tell you they're both going well. We're monitoring, we're putting a lot of pressure into those stores. So we're currently running various campaigns, not only with those two retailers where we can, but we're running social campaigns around the local stores for those retailers where we have distribution, as well as leveraging Instacart and other vehicles that are proving to be very effective. I tell you, the read is still early. It's positive, and it's been growing, frankly, week after week, pretty much since we launched. So we still have a little bit of headroom to where we want to get that to, but we feel really confident about where we are so far.

Okay, great. And then this last one from me, just kind of want to take your temperature on M&A. I mean, obviously still. You know, some meaningful wood to chop on the pterosol integration. So, you know, I would I would assume. We shouldn't be necessarily holding our breath for another acquisition here. It's probably a second half 27 thing if I were to just kind of guess myself. But anyway, if you could just kind of talk about, I guess, one, your sort of appetite in the near term for continued M&A, and then just more broadly and kind of timing aside, how has the inflationary commodity cost environment impacted your M&A pipeline, if at all? Thanks.

Yeah. Well, a couple things in there, so I'll try and hit them all, and you can tell me if I miss anything. So I think your intuition is right. We have some work to do right now as we move. Navitas was a fairly simple integration, and we were, frankly, able to bring the business in and operate it within the existing layered infrastructure across systems, processes, people, et cetera. And that went really, I think, really smoothly. Teresol's a different beast. You know, we have a facility down in Fort Worth, and there is certainly going to be a lot of opportunity for us. And as we think about expanding additional products down into that, you know, whether that's pulling Laird and Avidas volumes, some of those volumes down there out of existing network or launching new products, you know, we have some network designed to do so that we're really thinking holistically about an in-house facility and then some really strong Copac relationships that we may balance the entire business across. So there's a lot of work to do there in terms of getting to the best cost efficiency across now with the in-source, outsource network, as well as putting in a combined ERP system. I think I've mentioned before that we have an ERP system down in Terrasol that really can't handle additional expansion, and we're going to have to bring them into a similar, if not the same, instance of ERP that we have today. So there's quite a bit of work to do there. We're starting that work really in earnest right now. We've had a kickoff. We've had first discussions, but we just brought on a new supply chain leader and a new CFO, and those are really the two folks where the rubber is going to meet the road. So we'll be wrapping our arms around that here in the next couple of weeks and putting in place the plan for next year to get that up and running, and as we do that, ultimately to put ourselves back in position, a better position for future M&A. I would tell you, we're not taking ourselves out of the market from an M&A perspective, but we would be much more cautious and careful, and it would take something pretty special right now, given some of the other priorities that we have in the business. With regards to the pipeline, look, the pipeline is still robust by virtue of Nexus. Being so integrated into this business from a strategy and board governance perspective, we see a lot more opportunities than we ever used to. The level of opportunities has grown exponentially. And as a result, as you might imagine, we can be a lot more discerning with regards to what we want to do. And we're very confident that we have a coffee and, you know, coffee solutions platform, as well as a functional health and wellness ingredients platform where Navitas and Carasol really fit. And we'll look to build onto those two platforms, as well as to set up a third leg on that stool. So that's not certainly not going away, but probably for the next six months, I'd say your intuition is probably very similar to mine.

Great. I appreciate you taking my questions.

You bet. Your next question comes from the line of J.P. Wallum with Roth Capital Partners. J.P., your line is open.

Great. Thanks, guys. Appreciate you taking my questions today. Maybe just start on the sales guidance revision. Can you just maybe elaborate a little bit on kind of where the shortfall is relative to your expectations last quarter? And then just could you update us on sort of what the underlying growth rates are for each business that you're assuming for that new guidance level?

Hi, thanks for the question. This is Mark. We expected just about everything else to be flat. What we continue to see is some little headwinds in club and DCC, as we've talked about in the past, and we kind of just built that in for the fourth quarter. So we anticipate that being the main driver of what we pulled down to kind of the bottom end of the range. And I'm sorry, I missed the second question.

Oh, it was just the sort of organic growth underlying the guide now for each business. I think maybe in the past it was kind of like high single digit or low double digit for each business, but just wondering if you can update kind of what's baked in now.

Hey, JP. Yeah, you know, I tell you that hasn't really changed. You know, as we go forward, we believe that that's where the business is. We're just going to have a little bit of lumpiness. We've talked about this in the past. I know it won't be a surprise to you. The club business is lumpy, and so really in Q3, you know, if you look at that layered business, that's really what we saw taking place vis-a-vis last year in particular. And so we're going to go through some of those lumps on the club side. If I were telling you, think about how these businesses project going forward, Terasol's doing great. It's confined within a different position than some of the other two businesses from a channel perspective, but it's just doing great within the channels that it operates, and we've seen a lot more strength, frankly, on the Navitas business in some key categories, even than what we anticipated when we bought the business. So we feel really good. Consumption, latest consumption for us, measured in the teens for both Laird and Navitas. So we feel like the businesses are going really well. And I'll put a caveat on that. That is the Laird business excluding refrigerated steamers. We've talked about some of those challenges. So when you remove refrigerated creamers, you look at Laird and Navitas, we're cranking along in double digits consumption-wise. Pterosol is doing really great and cranking, you know, growing at a similar rate. So I don't see that we're looking to change our guidance as we go forward, but, you know, we're going to see some lumpiness. And there's certainly right now some consumer attrition, especially from a volume perspective and then on some of the premium products. Consumers are pulling back with their wallets. We're seeing it. We see it in some of the pricing actions on those online marketplaces. We see it with some of our competitors at retail. And we feel it ourselves as well. But we have so many robust opportunities across these channels that we feel like we can, certainly with the marketing investment that we're looking at, that we can keep that algorithm cranking along.

Okay, very, very helpful. And then, I guess, just, you know, thinking about EBITDA and the guide and maybe trying to take a little bit more of a longer term lens here, but, you know, very helpful on the sort of 2 million marketing step up. I guess just anything else, as we think about kind of the bridge to the EBITDA midpoint reduction, that would be persistent as we think about next year, you know, have synergies amounted to maybe a little bit less than you would have expected, kind of just trying to get at, like, as you think about longer term EBITDA margin, you know, is that high single digit? It has that kind of narrowed lower anything you can share about kind of longer term perspective of the operating model.

Yeah, hi, this is Mark. I'll take a shot at it, and then I'll turn it over to Jason for adding on. As far as the synergies go, we are a little slow in starting on some of them. We are seeing, we're having a lot of success on the G&A synergies and plan on exceeding them. From a cost of goods sold standpoint, those were a little slow coming about with the environment we're in, but we do expect those to pick up going forward in Q4. And so that's really the big driver there. And then the marketing piece was the additional. Impact on the call down for the balance of the year. Jason, you want to add anything to that?

Yeah, no, I think, Mark, I think you got it pretty well. I think, to repeat, the thing I'd really be thinking about there, you know, you asked a great question, you know, with regards to what's going to stick around in the 27 and what's not. And we did an excellent job of grabbing the G&A synergies out of the business when we acquired Navitas. We've had to add back a little bit of cost since then as we've built the marketing organization. So, you know, we don't have – we got full realization, and then we gave back a little bit, frankly, in a very different strategic decision. But that's why you don't see as much flowing through as we probably anticipated earlier in the year. But we look at that as a structural investment into the business, and you think that's going to pay dividends next year and for years to come. So I'm not worried about that at all. What Mark's alluding to with some of the timing on other synergies, we thought when we bought this business that we'd be able to procure less expensive commodities by the end of this year. And we basically have predicated that on some inflation that we saw in cacao and in particular. That's a big part of our business, of course. But then in other commodities as well, from goji berries to chia to heft, et cetera. And the reality is that those commodities have been, the higher costs have been stickier than what we expected. And it's a function, we very firmly believe, of an environment where you have A, uncertainty, but B, a lot of incremental fuel costs. Those fuel costs are hitting us in a couple of ways, in fact, not only in the commodity themselves. Keep in mind, most of our commodities are coming from other countries. There's a lot of foreign exchange change in there. But then we have a lot of fuel miles that we're having to transport those products as well from Asia, Africa, South America. We get hit again, by the way, in our outbound distribution once we make those goods. And then we get freight surcharges from a number of retailers as well. And we're just not in an environment right now where retailers are interested in letting you take price. So we've been, like a lot of other companies, we've been cutting costs where we can, being as efficient as possible, and holding our breath for some of those costs to come back down. So will they be transient enough to come down next year? I think that's what we're trying to determine right now. And, you know, our crystal ball would say at some point next year, we ought to see some relief. The timing of that, we're not exactly sure of yet, though. So there will be some persistent challenge to gross margin for at least the first quarter and maybe second quarter of next year, and then we'll kind of see where we are at that point. But we have cost opportunities within our network. We're going after those. I mentioned a new head of supply chain. He's done this before many times. He led procurement over at Horizon, most recently Horizon Family Brands, and has worked in continuous improvement and on cost reduction opportunities at Danone and White Wave and other very large and successful. Supply chains, and so we're setting up programs that will do the same and go after all the dollars that are in play, because there certainly are quite a few of those.

Great. Very, very helpful. I appreciate you guys taking my questions. That's a lot.

Yep. Thanks, JP.

Your next question comes from the line of Thomas McGovern with Maxim Group, LLC. Thomas, your line is open.

Hey, guys. Thanks for taking my question. And I'll apologize in advance. I was hopping from another call. So I asked anything that's already been addressed. But the first thing I wanted to talk about was there was a sequential decline in both the coffee and the wholesale segments of the business. I'm just trying to understand how much of this is related to seasonality versus underlying weakness. And then, you know, I think you guys touched in the Q&A section on the Walmart, you know, the thousand stores that were launched. But are you expecting to see a rebound in the wholesale as you get a, you know, full quarter with those five skews and, you know, those thousand stores?

Yeah. Hey, Thomas. How are you doing? So we covered a little bit of this, but I'm going to – this is a great question. It'll let me go into a little bit more depth. I really appreciate that. So the coffee decline that you're referencing, I mentioned we had a year-over-year club challenge. It's just – it's a timing, you know, and it's timing and rotational programs as well. So we've been in and out, as you all know, we've been in and out of creamers in a couple of regions. We've been in and out of coffee in a couple of regions. And so we're lapping a Q3 coffee club deal last year that we didn't have this year. When you look at the wholesale business, oh, and I should mention, too, just to reiterate on the Walmart question that you have, Walmart was a great launch for us. We put five SKUs in about 1,000 stores, and we're really happy so far with where they are. We're still working to bring those velocities even further up to where our expectations are, but I tell you that we're hitting some really good thresholds and milestones as we continue to increase each week since launch, almost sequentially every single week. So looking good and really excited about that distribution as well. And then with regards to just kind of general retail business, not only Walmart, we talked about the Target business specifically for Navitas, but we have had some good success with Walmart SKUs, perhaps with Target SKUs of Laird as well. So seeing really nice business growth in both Walmart and Target with our Laird business also. And retail, excluding liquid creamers. It looks really solid. So the latest consumption I was indicating is in the teens, and we feel really great about that. It gives me a minute, though. I will take that, Thomas, that introduction, just to talk a little bit more about the liquid creamers. You know, this is a business that we've been in now for probably six or seven years, and it's been a tough go. It's the only business that we have that is not a powder product or some kind of dry product, I should say, shipping in an ambient temperature state, and it's going to a completely different buyer and, frankly, hitting a lot of different consumers than the rest of our business. We've stayed with it during that time, even though it's been a challenge, really because of the promise. You know, it's a large addressable market. It's a very unique SKU. Our retail customers have asked us to continue to push it. So we've got a decision we'll have to figure out over the course of the next 12 months or so as to whether this is really a strategic place for us to be playing or if we should really focus on the rest of our business. It's been a challenge for us this year. We've talked about this a couple of times on previous calls, and it's been a declining piece of the business. You just heard me reference that with regards to consumption. So I think that we'll be looking to make a decision on where we want to be with that business. Sometime in the next one to two quarters, and we'll come back and give you guys an update against that.

Awesome. I really appreciate that in-depth response. And this is something I know you discussed, but I just want to pry a little bit deeper on this. Obviously, the commodity cost, the fuel cost, that's out of your control. It sounds like you guys are just kind of getting your bearings on the Terrace Hall ERP and how that's going to progress. But just at a high level, you guys are very close to the commodity pricing. You guys probably have more insight than any of us do. Can you tell us what your general expectations are as we close out the year in terms of margins and, you know, enter 2027? I know nobody has a crystal ball, but just any type of insight you'd give us directionally would be helpful.

Yeah, you bet. And Mark, feel free to jump in. I mean, what I would tell you is I've been pleasantly surprised, Thomas, by how well we've managed it. We've taken a number of ingredients direct over the course of this year, and we were able to save substantial – we were able to find substantial savings relative to last year. I think we just didn't get all the way to our expectations. We expected to see a declining commodity price market, and we haven't really seen that. Some of these commodities that inflated over the last couple of years, like coffee and cacao, have just been more stubborn. And keep in mind on the cacao side, conventional did collapse as we expected it would. We're in the organic cacao business. And in fact, most of our cacao is regenerative organic cacao. So you get to a more limited market. It's certainly not as, I would say, not as efficient as a traditional commodity market. And so we're just seeing some stubbornness that we've not been able to get to the numbers that we had hoped to get to. So as we look forward, I think, you know, we're seeing Similar to this year, we've been able to procure a number of our ingredients, set up contracts on a number of our ingredients that keep us at a fairly flat level as we start next year, and we're being cautiously optimistic that we'll see better cost levels in the back half, and as a result, we're going to wait and watch the market a little bit on a few of those.

Awesome. I appreciate you taking the time to answer all my questions.

Yeah, my pleasure.

We have reached the end of our Q&A portion. I will now pass the call back to the Laird Superfood Management Team for any closing remarks. Please go ahead.

I'll just say once again, thank you all for joining us today and for all your thoughtful questions. We always appreciate your interest in Laird Superfood, and while we're encouraged by the progress we're making on integrating and across the business, we're going to be looking to go even faster. We see so many opportunities in front of us, and we look forward to updating you on continued progress against that next quarter. Thanks a lot.

This concludes today's call. Thank you for attending. You may now disconnect.