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spk07: Thank you for standing by and welcome to the first quarter 2021 earnings conference call and webcast for Laird Superfood. I would now like to turn the call over to Mr. Reed Anderson of ICR to begin.
spk02: Thank you. Good afternoon and welcome to Laird Superfood's first quarter 2021 earnings conference call and webcast. On today's call are Paul Hodge, Chief Executive Officer, Valerie Els, Chief Financial Officer, and Scott McGuire, Chief Operating Officer, By now, everyone should have access to the company's first 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 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 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 Paul Hodge, Chief Executive Officer of Laird Superfoods.
spk06: Thank you, Reid, and aloha, everybody. It's a pleasure to be speaking with you in regards to our first quarter 2021 earnings report. Let me again start by giving you a brief summary of who we are and what we do, as well as provide a review of Q1 highlights and our key growth drivers. I'll then hand it over to Scott McGuire, our COO, followed by Valerie Els, our CFO, leaving plenty of time for Q&A. Laird Superfood is a mission-driven, high-growth, plant-based natural food manufacturer positioned to be a leader among better-for-you brands in the $759 billion grocery industry. Our business is online channel, but with a best-in-class native online platform. In the first quarter, online accounts for 59% of our net sales, with a balanced spread across wholesale, grocery, mass, drug, and food service accounts. At WERD, we believe better food leads to a better world because when people are healthier and feel good, they make better decisions. Our products provide sustained energy, nutrition, and hydration that we need to perform from sunup to sundown as part of our daily ritual, starting with our superfood coffee and creamer and recently added whole food breakfast products. In addition to delivering great taste and great quality, our products are convenient, easy to use, and affordable, incorporating sustainable and ethical practices through all phases of our supply chain from farm to fork. Now let me hit on some of the Q1 highlights. Improving margins were a key takeaway from Q1 results, as our gross margin reached 25.1%, a 480 basis point sequential increase from the fourth quarter. Margins benefited from several factors, including liquid improvements, strong shelf losses, shipping, and manufacturing efficiencies. Laird has a growth story and driving top line is a primary focus, but we are equally committed to improving profitability. Results in the first quarter demonstrated meaningful progress toward our longer term 40% margin goals, and we expect further gains toward that goal as 2021 unfolds. Scott and Val will expand on this further. First quarter net sales increased 35% over the last year to $7.4 million, and we continue to see broad-based gains across all our key categories. Importantly, we saw momentum build steadily throughout the quarter, and March was a record month with strong run rates across all channels. Despite timing factors pushing some wholesale revenue into Q2, a reminder as to why we guide annually instead of quarterly. Now I'd like to focus on some of the key growth drivers, starting with online. Our online platform continues to be best in class. We believe one of the strongest online food and beverage platforms in the industry. Online sales were up 65% on a year-over-year basis, including DTC growth of 135%. As a percent of the total online account for 59% of Laird's Q1 net sales compared to 48% a year earlier, reinforcing the competitive strength of our brand and digitally native model. During the first quarter, customer acquisition growth was up 29% and new subscriptions grew 153% versus a year ago. Customer retention is also up with repeat purchases of the 2020 cohort being 27% higher in Q1 21 than the 2019 cohort was in Q1 of 20. Our email list continues to aggressively grow with the low industry average turn. Our online conversion rates are twice those of the industry average. and our customer acquisition costs continue to demonstrate the effectiveness and efficiency of our strategy. In the first quarter, we also made strong progress toward balancing the impact of free shipping, and we were happy to announce that we were able to get both our freight expenses as a percentage of DTC sales and average order values to return to their 2020 pre-free shipping levels. Combined with our lowest quarter of discounts since Q1 of 20, our online machine has continued to be an industry-leading example for the CPG space. As far as wholesale growth drivers, although we actually had a strong performance this quarter in wholesale, which I'll explain, the year-over-year metric here doesn't look overly exciting, and not terribly surprising given the timing of COVID and the pantry loading the wholesale world experienced in February and March of 2020. There are three things I'd like to point out here. Q1 of last year was a big wholesale quarter due to COVID stocking. And because we're vertically integrated, we were able to seize the opportunity and meet the elevated demand last year, including a massive quarter, $1.7 million with Costco. And in result, we saw Q1 2020 wholesale grow 48% over Q4 of 2019. When you really break down Q1 of this year, you'll see that the base wholesale non-club sales were actually elevated due to having nearly double the door count. Wholesale base sales last year, excluding Costco, was about $970,000, whereas this year, excluding Costco, was approximately $1.8 million, showing strong 85% growth in our base wholesale sales year over year. We did receive Costco orders in Q1 of this year, but much of it was pushed out to Q2, And this is a perfect example of why we guide annually versus quarterly, as there will be lumpiness from quarter to quarter due to this dynamic. But having said that, we still firmly believe we'll meet or exceed our annual guidance, which means the rest of this year is set for strong revenue growth. And three, we still have never lost a major retail partner in wholesale. And we have an expanding platform of products. that we're just starting to sell into our existing doors, new doors across the country, and most recently, new doors in Canada. We built a very strong base and a much improved base from a year ago, which we expect to see results from the rest of the year. Now to talk about a few wholesale wins this quarter. First, at the end of Q1, we expanded our refrigerated creamers into new doors with key retailer launches at Target, Harris Teeter, and Wake Fern. It's important to note that our refrigerated creamer growth is not solely driven by distribution gains, as we're also increasing velocities at key retailers like Whole Foods, where our weekly non-promoted velocities have increased more than 3x when compared to Q4 of 2020. Second, we're also very excited about our innovative fourth wave functional coffees. That grower coffee business is 156% Q1 of this year versus Q1 of 2020. We feel our coffee products are well positioned to disrupt the vast coffee sea of sameness by introducing added functional benefits to this daily ritual enjoyed by over 200 million people in the U.S. every day. At the end of Q1 and then the Q2, we finalize our wholesale packaging for new functional coffees Focus and Boost, and we place our functional coffees into more than 500 existing doors with key retail launches at Sprouts and Natural Grocers. The Safeway Seattle division will be adding our whole line of functional coffees to their 200-plus stores in Q2. We've secured a major cost reduction in our coffee cogs since May 1st, reduced our functional coffee line pricing to $12.95 in wholesale, which we believe positions us for mass market adoption on these innovative products. And finally, in addition to our progress in the U.S., we officially entered the Canadian market as we launched three items – so it's two self-stable creamers and one instant fuel into 150 Loblaws stores in late January. They've already confirmed expansion into an additional 120 stores in June. As we think about the future growth opportunities, this was a great initial step with strong acceptance that we hope to build upon in the future. Additionally, in growth drivers, on May 4th, we announced the acquisition of Vicki Bars, an important strategic milestone complementing our strong organic growth. Picky had revenues of approximately $4 million in 2020 and has been growing rapidly. The deal is materially additive to revenue and supports our pursuit of an improving margin profile. We built the way our business to be a powerful brand platform that can support multiple growth drivers, and the Picky acquisition is an ideal transaction for us to prove our M&A capabilities. We believe we can drive revenue synergies under our platform in 2022 to at least $10 million, which would prove the value in finding these unique and complimentary M&A opportunities. From an organizational standpoint, the two companies are closely aligned philosophically as it pertains to products and market opportunities, as well as culturally. PICCI is also founder-led, and we've known the principles for many years and have a high degree of respect for their business, for them personally, and their athletic accomplishments. Their core product is a functional bar, uniquely positioned to provide balanced fuel for sustained energy and performance, one that we consider to be the best whole food bar in the world. Picky also has several performance granola products and a line of performance oatmeal products, a perfect supplement to our already strong daily morning ritual routine. The Picky Bar products are an amazing incremental, non-cannibalistic addition to our catalog, They offer new ready-to-eat options for customers, which we know they love from the early success of our Harvest Peewee Nuts, and a new layer of price points to enhance our cart bundling opportunities and wholesale expansion opportunities. While both companies are targeting similar customers and markets, we have less than 1% of existing customer overlap. The addition to PICCI definitely provides Laird with broader exposure to mixed-diet customers, as well as looking at delicious, functional, ready-to-eat products for their daily ritual. The synergy here is tremendous when we think about the sales targets these products can achieve when layered onto the Laird Superfood online channel platform. The picky customer is online, loyal, and highly recurring, very similar to ours. We know they are highly engaged, and we know their repeat rates are exceptional. So with shared priorities on functional foods and the highest quality ingredients, we believe these products will resonate strongly with the Laird Superfood audience. The distribution and reach will be accelerated under our brand platform, our online business, which comparatively is best in class in the CPG industry. And of course, under our marketing leadership, which quarter after quarter demonstrates the leadership and results in the form of D2C revenue contribution, customer value, repeat rates, and retention. And finally, regarding key growth drivers, I'd like to discuss new product launches. While there are limited new product launches in Q1, We did see continued strong performance online from new products introducing Q4, including our Activate Prebiotic Greens, Renew Protein, and Functional Coffees. In Q2, we are very excited for the launch of Oat Mac Creamer, which will be rolling out online starting in June. Within the plant-based beverage ecosystem, oat is the fastest growing probably by a factor of 5X. Our product will be unique, hitting on the strengths of oat and macadamia milks combined, plus including the functional benefits of avocado, and Aquaman. This is our first creamer product that falls outside our core coconut base, and we feel it will be an accretive addition to our product lineup targeting non-coconut consumers. In addition to expanding our product offering and growing sales, the addition of the Oatmac Creamer also serves to advance other core strategies, including manufacturing efficiency, as it will be produced under existing production lines, which have ample capacity, and also supply chain diversification. Before I hand off to Scott, I'd like to share two great ESG cause initiatives that we've recently kicked off. First, we're working with Feeding America to donate 1.5 million meals to help fight food insecurity. During the past year, over 42 million Americans have lived life not knowing where or when their next meal will come from, 13 million of them being children. Second, we've set the foundation for what we're calling our carbon-neutral last mile, ensuring that orders placed at LairdsFuture.com have their greenhouse gas impact offset. It's been a great year for online business, and we want to be mindful of what that means to the world around us. We've enlisted First Environment to provide comprehensive, transparent audits for our last-mile e-commerce impact, and we're working with Eden Reforestation Projects as our tree-planting partner. These are two new initiatives that we are excited to add to our existing efforts for a very minimal cost, and we look forward to expanding and discussing more in the future. To summarize, in Q1, we again demonstrate our ability to continue executing across all of our strategic priorities. While driving top-line growth perhaps gets the most attention from investors, we equally prioritize profitability as a core element in our mission of building a sustainable business for the long term. To that end, efficiency gains in Q1 that manifested in improving gross margins should serve as a clear indicator of our level of commitment as well as optimism for the future. Now I'd like to hand off to Scott to talk about our stellar operational performance this quarter.
spk05: Thanks, Paul. You will hear me refer back to several topics I outlined in the fourth quarter earnings announcement, which highlighted areas of notable progress as well as priorities for the first quarter. As it should be, during the pandemic, our top priorities remain keeping people safe, keeping our customers' orders filled, and positioning ourselves to handle greater but welcome complexity that comes with exciting new products and greater revenues. We did it. People's safety, every way you measure it, was a home run. Customer service was excellent. We greatly reduced out-of-stock challenges in 2020, and Q1 only had one out-of-stock of our greens product for 13 days. And we procured, planned, and project managed every facet of the supply chain to set up our multi-year strategy of growing revenues and our margins. This was driven by our simple but effective priorities I spoke to last quarter, the three M's. Manufacture more ourselves, make it more efficiently, move it smarter and faster. So for manufacturing more ourselves, I want to stress that we don't do this blindly. We evaluate all costs, including capital, labor, and transportation. However, we have a strong bent towards our amazing team being able to produce better than anyone. We also value being malleable and having the ability to call scheduling and fulfillment audibles as customer needs and supply chains demand. This was just demonstrated when we received a very large order with short lead time. We had 100% control of every aspect of the process, and we got the job done and done very well. And frankly, done faster than requested. So like the fourth quarter, we converted more COPAQ items to in-house, and one of our largest, most exciting new products was successful during in-house trial runs. Make it more efficiently. This can be seen in our margin improvements. And as noted last quarter, again, we improved our throughput on our original line, and our newest line is now at parity in capacity, capability, and instantaneous output. This has enabled us to keep our safety stops at levels that ensure orders are filled, and it's given us the flexibility to respond to customer needs like I mentioned earlier. Additionally, we continue best practices I spoke to in the fourth quarter, such as refinement of our sales and operations planning process, execution of our production master scheduling and sequencing algorithm, continued enhancements to our preventive maintenance, and leveraging automated controls, creating visibility to real-time results. Of course, you can't make things more efficiently if you don't have the raw materials. As we all know, the pandemic and poor congestion have created supply chain havoc across most industries. But through Tyler's work by our procurement team, we are at our targeted inventory levels on all core materials, all of them stateside. And then for moving it smarter and faster, several big wins here in terms of liquid, master production schedule optimization, master delivery schedule alignment, and raw material strategy. All of this positions us well for flawless execution as we see exciting developments in the liquid channel. Direct-to-consumer free shipping, one of our greatest quote-unquote capital investments, which attracts new customers and more trial and thus more revenue, has an obvious and frequently discussed cost to it. We continue to mitigate those costs through increasing average order value. We reduced our costs as a percent of revenue, and we had our best quarter ever in parcel ship for peat flowers. And then there's more to look forward to as we continue to build out our new customer fulfillment center, which is designed to maximize velocity, further enable growth, and amaze our customers by executing perfect orders. This is the best place to comment on the picky bar acquisition. Beyond the fact more of the world will be exposed to their game-changing, delicious products, we get to combine our supply chains, further improve our average order values, and improve every aspect of moving smarter and faster. And finally, I'd like to add a fourth M, my company. From day one, we have always been about authenticity, values, our culture, and our people. Our people are one of our greatest assets, and we want everyone to say and truly believe this is my company. And with every one of our teammates acting like an owner, contributing to the culture, and in turn driving safety, quality, service, and efficiency gains, nothing can stop a great outcome for the other three M's. So we will frequently speak to the four M's. With that, I will hand it over to our CFO, Valerie Ellis.
spk08: Thanks, Scott. From a financial performance perspective, as you've been hearing, solid year-over-year top-line growth as well as better-than-expected growth margins were the big story in Q1. Net sales grew 35% year-over-year to $7.4 million, fueled by 135% growth in our LarrySuperfood.com platform. So the first half of Q1 is historically a softer sales period for our business coming out of the holiday season. We exited the first quarter with very strong run rates across channels, fueling our confidence and achieving our annual targets. which is a good reminder on why we look at our business and why we encourage others to look at our business in terms of the annual period and not quarter to quarter. Given our size and our stage of growth, quarter to quarter can be lumpy, especially related to the timing of significant wholesale orders. In terms of channel performance, online we saw continued improvement in our AOV and retention metrics, and our repeat and subscription business continued its strong performance, delivering 69% of DTC sales. In wholesale, despite lower club sales compared to the prior year, which included COVID-related pantry loading, our grocery business showed solid growth given our nearly double the door count and the launch of our refrigerated liquid creamer products, expanding our reach to the previously untapped 90% of the creamer TAM. Additionally, our first Canadian doors showed solid early results, paving the way for potential expansion in that country moving forward. Our gross margin for the quarter was 25.1%, up 480 basis points in the fourth quarter, and our highest quarterly margin in the past 12 months. Key factors contributing to sequential improvement in gross margin included improving liquid creamer spoils rates, shelf life, and waste, optimizing our DTC shipping expenses while also driving AOV improvements, and driving efficiencies in our manufacturing processes. Operating expenses were $7.2 million in the first quarter of 2021 compared to $4.1 million in the first quarter of 2020, with the current quarter inclusive of approximately $1 million in non-cash stock-based compensation, approximately $160,000 of transaction-related expenses, and ongoing public company costs. As a reminder, we are building a large CPG platform, and investment into our SG&A cost is required to build a best-in-class and much larger business than we are today. However, we remain very confident in our ability to leverage SG&A costs as our top line continues to expand in future periods. Our balance sheet remains strong, with over $60 million in cash and investments on March 31 of 2021, and essentially no debt. Subsequent to the quarter end, approximately $10 million of cash was used to complete the PICCI acquisition, leaving us substantial liquidity to operate and grow our business as planned for the foreseeable future. In terms of guidance, as you know, we have committed to only providing annual guidance. However, given the mid-year acquisition of PICCI Bars, we do anticipate generating incremental revenues from the expanded product lines and customer base. and so we have increased our previous 2021 net sales estimate of $42 million to $46 million, given the unique transaction. The incremental $4 million of net sales is primarily expected as a result of the strong organic growth that Picky Bars has been experiencing on its own, anticipated to represent approximately $3 million of the total $4 million incremental revenue. We further anticipate driving the remaining 1 million of revenues in 2021 by exposing our much larger online customer base to the newly acquired lines of bars, oatmeal, and granola, as well as exposing the existing picky customer base to our core layered lineup, given that we share less than 1% of online customers. We feel this represents a very modest adoption rate both ways and further anticipates that we start seeing the benefits of wholesale opportunities in 2022. As noted on the acquisition call last week, we are not making any update to our margin guidance of 28% to 30% for the annual period and expect that incremental sales driven by the new product lines acquired in the Picky Bars deal will be supportive of our past to 40% margins over time. Paul, I'll pass it back to you.
spk06: Thanks, Tom. Q1 was a solid quarter with year-over-year growth with major operational improvements, which were reflected in gross margin increase. and a successful close of our first M&A deal, which is so well aligned with the LSF brand that we expect to be highly creative to shareholders. Looking from the outside, it's easy to say, wow, Larrick Superfood has a lot going on. But let me assure you, with the benefit of being well capitalized and our capability of attracting top talent, we have an incredible team, highly capable of managing all the moving pieces, which will continue to enable and drive the rapid growth of our brand platform strategy. As we have said, we guide annually, not quarterly. The timing of significant wholesale orders can greatly influence quarterly results. Having said that, we fully expect to meet or exceed the annual guidance, which means we should expect strong revenue growth for the rest of the year ahead. We appreciate the support of all of our shareholders. Now to Q&A.
spk07: Thank you, Speaker Estes. Ladies and gentlemen, if you would like to ask a question, you may press star, then the number one on your telephone keypad. Once again, you may press star one to ask a question. Please stand by while we compile the Q&A roster. Your first question comes from the line of Bobby Burnison from Canaccord. Your line is open.
spk01: Hi. Thanks for taking the question. And congratulations on the gross margins. That's fantastic.
spk00: Thank you, Bobby.
spk01: So just curious, maybe sticking with the gross margins, I know you're not changing your guidance this year, but kind of curious, since we're already in May, what you think the additional expansion of gross margins going to be driven by if you can kind of break it down as what the major contributors are for the balance of the year to kind of getting to that target.
spk08: Yeah, no, of course, Bobby, happy to talk through it. So I think kind of looking at what changed. Hi, Bobby. What I think might be helpful is looking at what changed from the fourth quarter. And it's very similar to what we've been talking about. We have on the DTC side the lost shipping revenue and coupling that with optimizing our parcel costs. So from Q4 to Q1, optimizing our DTC shipping expense improved our margins by about 110 basis points. That was really the AOV improving. That was getting more dollar into every package. That was making sure we're using the right parcel cost, working with carriers, reducing single item orders, a laundry list of initiatives that are proving to be very successful. I don't think we're done there. I think there's still more room there. And as we look to, you know, to bridge the gap to where we're hoping to finish the year, as well as looking to get back to those 40% margins that we're targeting long term. We have more room to improve there and that we're going to keep the focus there. And that's something that Scott's working really diligently on. The other part, I think, is we still have a lot of room to continue to improve the liquid creamer product. That in the fourth quarter improved 140 basis points from Q4 to Q1, but we still have a long ways to go. We're still working on optimizing the shelf life. We still do have some distribution center chargebacks, and our goal is to get that way down from where we are today. The shelf life will help there, as are some distribution changes that we're putting into place. And then looking even longer term, a really big driver is going to be to continue leveraging the factory, that fixed cost that we've put into our factory here that's able to support really three to four times what we're running through our sister facilities today. So it's going to be the combination of those. Each one of those will contribute the rest of the year, and each one will continue to contribute as we move forward in the next couple of years to get to that 40% and beyond.
spk01: That's great. Thank you for that. And then just one more from me. Obviously, with your multi-channel approach, you guys have a pretty good sense of what's happening dynamically with demand and your wholesale partners and kind of what they're planning. This was a big year last year for plant-based milk and plant-based dairy, and I think it surprised a lot of people in terms of the growth in some categories. It actually accelerated quite a bit over the previous year. And so I'm wondering just what are your partners telling you in terms of what they think the stickiness is of that elevated growth rate? Is this something that feels like it's sustainable, like it's going to last? Is there some permanence to it? I'm just curious, you know, any insights on, you know, how much you think those elevated growth rates could linger that we saw because of COVID?
spk06: Well, we think there's just going to be continued demand for plant-based products. I mean, we've been eating plant-based foods for eternity. Nothing's really changed. People are coming back around. There's more products available. And again, the you know it's not just the plant-based aspect of it it's really the functional food aspect of it so you may be seeing a lot of reports coming around now like oh mushrooms are going to be really you know a big play for us this year you know we've been we've had mushroom products for years and so we've kind of been ahead of that curve and our liquid creamer was really the first to come out with mushrooms in the in the in the creamer so we're already kind of a step ahead and as we look to the future it's just going to be continued focus on functional food products, which is really what consumers are starting to demand. They're eating something. To get a functional benefit from that is really the trend that we see that we don't think is going to go away.
spk01: Great. I know that food service is just a tiny contributor at this point, but things are reopening nicely where I live and it just seems like across the country. Are partners and customers there reengaging? Are there some things that could happen this year maybe that could take things a step function higher in terms of the revenue that you guys are collecting there?
spk06: Yeah, we still believe food service is just a major opportunity with our products in particular. And so we are doing some things. You know, we're testing with a bunch of corporate office environments that are opening back up. We've been working with a coffee retail partner and playing with, you know, various different recipes that has been proving to be very successful and And so we're now, you know, looking to start to expand that, and that's definitely going to be something that we're going to keep pressure on and look for those opportunities. The food service space is very relationship-driven. It takes a while to, you know, to build the business, but we have been working on it, building relationships, and we do think it's going to continue to grow, especially as things come back here, you know, post-COVID.
spk01: Great. Thanks for taking my questions.
spk07: Thank you. Your next question is from George Kelly of Roth Capital Partners. Your line is open.
spk03: Hey, everybody. Thanks for taking my questions. So just a couple for you. I'll start with the liquid creamer business. So curious just what the status is of the repackaging. Not sure if I missed it in your prepared remarks, but is that still planned for kind of middle of this year? And then Do you plan to launch an oat liquid product as well?
spk06: Yes, I'll start with the repackaging. So we've been talking repackaging with the liquid product, and where we really ended up coming out is sticking with the fresh product, but extending the shelf life of that fresh product. So we have a very unique product, and that's really the only fresh package plant-based creamer in the market. And we've had such incredible positive feedback from consumers. The shelf velocities are growing. I think we mentioned the script that our Whole Foods shelf velocity, for example, is 3x what it was in Q4. People really love the product, and it really is a unique offering being fresh. The key is how do we get it to extend the shelf life, and we've been making progress on that. So it has a longer shelf life than it did, and we're continually taking steps to work on that. Additionally, working on the supply chain by taking days off or even weeks off of how much time it takes to get, once it's manufactured, to the shelves. So, we're making progress on all fronts, and you saw that big improvement from Q4 to Q1, and we expect that to continue to show improvements as we go here. And so, we're really excited about that. We just have a really unique, differentiated product that just tastes great. People love it. And it's also differentiated, of course, with having performance mushrooms and acumen and other ingredients in it, and being very clean. in a recyclable fresh packaging compared to some packaging that's just not recyclable. So we are excited about that. And as far as the oat liquid creamer, that's not a product that we've announced yet. Of course, we're constantly experimenting and looking at various different formulas and being innovative and looking for functionality. And, you know, there's oats and other bases that we're constantly looking at, but nothing announced at this time.
spk03: Okay, and then you also mentioned launching into Target and Harris Teeter. Could you tell us more about what you're doing there? Is it tests or how broadly distributed into each of those retailers are you?
spk06: Yeah, so Harris Teeter is in full Target. We launched into a couple hundred stores, primarily in the West Coast. It was more of a test. We had some positive early indications that our product was doing very well. And, you know, that just happened right at the end of Q1. And so it's still very new and something we're excited about. And so far, everything's looking strong.
spk03: Okay, very cool. And then last question for me about picky bars. So you mentioned hoping to get to 10 million in sales next year. And just curious, could you bridge the 4 million to 10 million next year? Is that all wholesale distribution or anything else you can point to?
spk08: Combination. So thinking about the $4 million of incremental that we are planning on generating in 2021, and $3 million of that we're expecting the picky, kind of historical picky business to be able to support on its own based on, you know, how it's done in the past, what its growth rate has looked like. That incremental $1 million we'd then be looking to generate through our much larger customer base on the Laird website and deploying those new products to that new base. And it's really rough. probably bad example math here, but if we were able to get 20% of our 2020 active customer list to buy two boxes of bars this year, that would on its own generate that $1 million, not to give any credit to an expanding customer base or the other products that we're able to offer as well. So we feel like that's a pretty low bar to clear this year, very confident in our ability to do so. When we look forward to the next year, Again, with the picky historical growth and how their business has been performing on its own, they could easily have handled $5 million of that on their own, of the $10 million total that we'd be looking to generate. So that would then take the incremental $5 million for the synergies to be developed. Again, really strong opportunity in DTC, but we would be looking at that point to have some new packaging and be ready to deploy some of the products into wholesale soon. most likely starting with bars, but all of those products we have a lot of confidence in, and we think that there's going to be a very strong reception.
spk06: And it also plays into food service. So as we're looking at expanding food service over the next year, this is another great product for, you know, office workers and people on the go.
spk03: Okay, great. I just plowed through about $45 worth of picky bars. We got a shipment a few days ago. So your strategy is? Is it already working? Thank you very much. Thank you.
spk07: Your next question is from the line of Alex Furman from Great Harlem Capital. Your line is open.
spk04: Great. Thanks very much for taking my question. Looks like a pretty dramatic shift in the online business in Q1 towards LairdsSuperfoods.com. It certainly seems like your own website has been growing faster than the overall business for Lairds. some time now, but really that's been pronounced the last couple of quarters. Can you talk a little bit about what's driving that strength? And then as the business continues to get bigger and you add more products and presumably more M&A over time, like Picky Bar, is there a point at which you reach an escape velocity where you don't really even need to have an online presence
spk06: on other channels just just curious you know how you think about that ecosystem given how quickly your own subscriptions and customer base is growing on your platform yeah i mean i think all of us probably want to answer that but i can start i mean we just you know we believe the future is online it's it's a it's a big part of our business it's just an area to where we can actually you know do a good job of educating your customers So videos of Laird and Gabby, influencers talking about the unique aspects of our products. So we are really excited for the online platform as far as You know, it's capability and potential. And we just have a great team that we consider a best-in-class team that's doing a great job working with influencers, getting content out there in a very efficient, organic way to really just continue to build that business. And we really see no end in sight on the online business. We still feel like we're just tapping the surface of the potential of online business.
spk04: Great. That's really helpful. Thanks, Paul.
spk07: Thank you. At this time, I would like to turn the call over back to Mr. Paul Hodge for closing remarks.
spk06: All right. Well, thanks, everyone. And, you know, we're excited about a lot of things. Our Q1 operational performance, you know, closing our first M&A deal, which we believe will be highly creative with shareholders, new product launches in Q2, and our ESG initiatives. You know, we're really excited about those as well. We're poised for growth the rest of the year, you know, and we've got strong execution, all of our strategic priorities. You know, the large CP brand is really on its way to become a powerful CPG brand platform in the food space, the first to come natively from a natural food foundation. So thanks for your support, and I'm really looking forward to talking to everybody next quarter about our continued strong performance.
spk07: Thank you so much, speakers. This concludes today's conference call. Thank you all for joining Community Connect.
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