Laird Superfood, Inc.

Thank you for standing by, and welcome to the fiscal third quarter 2020 conference call and webcast for Laird Superfood, Inc. I would now like to turn the call over to Ms. Ashley DeSimone, Managing Director at ICR, to begin.

Thank you. Good afternoon, everyone, and welcome to Laird Superfood's third quarter 2020 earnings conference call and webcast. On today's call are Paul Hodge, Chief Executive Officer and Valerie Ells, Chief Financial Officer. By now, everyone should have access to the company's third quarter earnings press release filed today after market close. This is available on the investor relations section of Laird Superfoods website at www.LairdSuperfoods.com. Before we begin, please note that all the 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 these 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, the company's quarterly report on Form 10-Q for the quarter ended September 30th, 2020, filed with the SEC 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 Paul Hodge, Chief Executive Officer of Laird Superfood. Paul?

Paul Hodge, Chief Executive Officer of Laird Superfood Thank you, Ashley, and aloha, everyone. It's a pleasure to be speaking with you on our first earnings call as a public company. On today's call, I'll briefly provide an overview of who we are and the business model, then review some highlights from our third quarter, and discuss the reasons why we believe Laird Superfood is well-positioned for long-term growth. Valerie Ells, our Chief Financial Officer, will then review our third quarter financial results in more detail before we open the call to Q&A. Laird Superfood is a high-growth, plant-based natural food manufacturer with an open-ended growth opportunity in the $695 billion grocery industry. At Laird Superfood, we believe better food leads to a better world, because when people are healthier and feel good, they make better decisions. Our products provide daily sustained energy, nutrition, and hydration that we need to excel throughout our days, from sunup to sundown. It's part of our daily ritual, starting with our superfood creamer and coffee. Our mission is simple. We make products that deliver great taste and great quality. We want our products to be convenient, easy to use, affordable, and available to all. We're proud to have Danone as an investor. Danone is a global leader in the food industry who shares our vision of a world of healthy and sustainable foods and provides us incredible expertise. Our flagship product line is our line of functional superfood coffee creamers, where in a short amount of time, we established the number one natural powder creamer in the United States. Our products are designed around daily use, and we're building a broad-based natural food platform reflecting the authenticity of our founders. And that authenticity and trust in our brand is a critical differentiator driving our revenue growth. So our omnichannel sales strategy allows us to reach our customers where they are, We primarily sell online and wholesale, but also have a young food service division with tremendous promise in the long term. We are native digital, and our online business accounts for around half of our total revenue today. The online presence is a powerful customer engagement tool, and the online revenue is highly recurring, with approximately two-thirds of our direct website sales coming from repeat or subscription orders. Despite our significant new customer growth, all indicating a unique level of trust in our brand. In wholesale, our customers span major grocery chains as well as Costco and CVS, and we expect our presence to grow to multiples of the 7,200 retail doors we are in today. In our wholesale channel this quarter, we witnessed better than expected shelf turns on our beta launch of liquid creamer, up to six turns per week for a vanilla creamer, and we really consider this to be outstanding, especially in the early trajectory for that product, and it's a further nod to the resonance of the Laird brand. Consumers love our brand for its authenticity, synonymous with high performance and healthy living, combined with a great taste for our products. And it's no surprise that we continue to see evidence of this across both the online and wholesale channels. So in wholesale, we grew 223% Q3 this year over Q3 of 2019, a growth impact in both adding total door count as well as adding more SKUs in the existing doors with our valued wholesale customers. Online, our Q3 new customer acquisition rate increased 149% year-over-year. We're really pleased with the improvement year-over-year in converting first-time customers to repeat customers. We saw a 40% improvement there, which we attribute to a number of things, including effective marketing. We're using our trusted brand platform to roll out new products and families new products, addressing large total addressable markets, or CAMs. So this includes coffee, an $89 billion total addressable market where we've been working on a deep pipeline of highly innovative functional coffee products, which we'll continue to release in the coming quarters. We have solid data from wholesale partners and online sales supporting this expanded functional coffee launch, and the early read on our initial blend is very strong. Functional coffee is an adjacent line to our already established presence in creamer, expanding our reach out to consumers who don't use whitener And so we're really excited about the opportunity to address and innovate even larger coffee market. And also Better For You Snacks, addressing the $101 billion snack category. In early fourth quarter, we released our first ever snack product, Peely Nuts. This was an intentionally limited launch, and the results were eye-opening. We quickly sold out at the day of launch, and we think the sell-through results and adoption by our customers were indicators of how we can eventually expand sales of food products and the overall platform. The third quarter was another record quarter for us. Net sales increased 118% to $7.6 million relative to last year. We drove a significant expansion of our customer base in both online and traditional wholesale channels. We were and remain hyper-focused on the launch of our liquid creamer. which contributed more than half a million of gross revenue in the quarter. Our liquid creamers are now in more than 1,200 retail locations, and our initial read is that our highly differentiated liquid creamers are on trend and selling up to our expectations. We are hearing from customers that this product is a game changer for them. They love the added functionality, the uniqueness, and the true clean label. There's great shelf loss here. Customers love it. Stores love it. So we talked during the roadshow about the supply demand mismatch that we're solving to increase margins. And since we have also learned that the shelf life in our current packaging is just too short for the distributors to manage effectively. And this ultimately means high spoilage rates, which in the quarter undermine our gross margins. So the good news is we believe we have a solution for a packaging change that will extend our shelf life from 45 days to four to six months to solve this issue. And we anticipate having the updated version on shelf by mid 2021 as pilot runs are underway currently. The much longer shelf life has many advantages. It makes it far easier to manage supply and demand. It gives the distributors ample time to deal with the logistics. And it also improves the customer experience by giving them longer to use the product before spoilage. So the same solution with some minor tweaks will also enable us to sell the creamer in a shelf-stable format which gives us the upside next year for D2C and Amazon sales to further balance margins. This is a really exciting solution for Laird Superfood. We are learning all the time, and in real time, how to optimize our business, and particularly the liquid creamer business. That said, this was a record-breaking revenue quarter, and we could not be more excited about what lies ahead for us. We have strong confidence that the Laird brand can operate at world-class margins and profitability, and we are constantly analyzing, evaluating, and executing the path to get us there. Helping us on that path, I'm delighted to announce our new Chief Operating Officer, Scott McGuire, who joins our team next Monday and brings many years of operating, manufacturing, and supply chain experience to Laird. Scott has led operating roles at CPG and fresh food companies, including Nestle, PepsiCo, and Bondwell Fresh Americas. We're so excited to welcome Scott to the Laird team. In summary, our third quarter was record-breaking, revenues in all channels are up, and we've made great strides in identifying specifically where we can continue to improve our operating efficiencies and have projects in motion to take Laird Superfood to the next level. I want to give a huge mahalos to our amazing team who remain focused and true to our mission, and I'd like to now turn the call over to Val, who will walk you through our financial highlights.