Laird Superfood, Inc.

Thank you for standing by and welcome to the Second Quarter 2021 Earnings Conference Call and Webcast for Laird Superfood, Inc. I would now like to turn the call over to Mr. Reed Anderson of ICR to begin.

Thank you. Good afternoon and welcome to Laird Superfood's Second Quarter 2021 Earnings Conference Call and Webcast. On today's call are Paul Hodge, Chief Executive Officer, Valerie Ells, Chief Financial Officer, and Scott McGuire, Chief Operating Officer. By now, everyone should have access to the company's second 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 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.

Thank you, Reid. Aloha, everybody. It's a pleasure to be speaking with you in regards to our second quarter. Before we begin the discussion of second quarter results, I'd like to start by taking a few minutes to address the upcoming leadership transition that was announced concurrent with earnings release this afternoon. After careful consideration, I've decided now is appropriate time for the company, my family, and me for me to start transitioning to a non-executive role. And I will be stepping down as president and CEO once we have identified my successor. After the transition, I'll remain on the board of directors and remain a major shareholder keeping me closely involved in realizing our long-term vision for the company. Most of you know my deep, unwavering passion and commitment to making Laird Superfood successful for everyone involved, shareholders, employees, friends, including my close friends and co-founders Laird and Gabby, my family, and the town of Sisters, Oregon, where we've become an integral part of the local economy. It has been a privilege to lead this company for the past six years, and I'm extremely proud of all we've accomplished together in such a short period of time. By bolstering the expertise of our team, it only enhances our competitive position and makes the long-term potential even more compelling in my view. Okay, so now I'll start with a brief summary of who we are and what we do as well as provide a review of Q2 highlights and our key growth drivers. I'll then turn the call over to Scott McGuire, our Chief Operating Officer, and Valerie Ells, our Chief Financial Officer, 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 the Better For You brands in the $759 billion grocery industry. Our business is omnichannel, but with a best-in-class native online platform. At Laird, we believe that better food leads to a better world because when people are healthier and feel good, they make better decisions. Our products provide the sustained energy, nutrition, and hydration that we need to perform from sunup to sundown as part of our daily ritual. In addition to delivering great taste, 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 on to second quarter results. Total sales increased 64% to $9.2 million, driven by continued momentum in our DTC business, plus strong results in grocery and a solid contribution from our newly acquired Vicky Bars. Online sales were at 57%, or 2.1 million, reflecting 94% growth in B2C year over year, despite the prior year period including a meaningful consumer shift to online purchasing in the height of COVID. As you know, we are native digital, and our strength in this channel continues to prove itself with 63% of total net sales in the second quarter attributable to this best-in-class online platform. Key metrics in our online business remain very positive, underscoring the competitive strength of our model, Conversion rate remains two times the CPG industry average, and over two-thirds of our D2C business is recurring. Items on subscription increased 77%, and unique active subscribers increased 57% from the year-ago period. Retention metrics continued to climb with a 15% improvement from Q2 of 2020 for all of our company's history, and we've seen a 20% improvement in second-order rate and our 2020 cohort reorder rate compared to the 2019 cohort. Finally, average order value, or AOV, continued to improve as well, rising 30% year-over-year, now on par with our pre-free shipping AOVs. Results in wholesale illustrate the growing strength and solid base we continue to build in our grocery business. In the second quarter, wholesale in total increased 77%, or $1.4 million, despite our club business remaining level and despite the lack of industry trade shows, which have historically been a key source of opportunity creation for our company. Club sales are lumpy, and we're seeing strong momentum leading into Q3. Liquid sales increased 271% on a year-over-year basis and accounted for approximately 60% of the dollar increase in wholesale revenues. In addition to strong demand seen both product turns on shelf and need order wins from the prior year period, we also saw continued improvement in spoils and waste for refrigerated product, reducing VC spoils by over 80% since the prior year and improving fill rates to the mid-90s, in late Q2, which is dramatically above the 30% to 60% fill rates we experienced prior to taking over logistics for that product. New door ads for refrigerated liquid creamer in the second quarter included raisin yolks, and we are now on approximately 2,600 total doors from this product line. Equally important to new doors was the placement of additional flavors in our existing doors, such as our turmeric flavor and 340 sprouts locations, improving on our points of distribution, expanding our shelf presence and prominence, And finally, not to be overlooked, is the continued growth of our shelf-stable business. Excluding club sales, our shelf-stable business saw a growth of 42% versus last year, reflecting our expanded base for both coffee products and powdered creamers. From a mixed standpoint, we experienced nice growth across all categories during the second quarter. Creamers grew 27% on a year-over-year basis, predominantly due to gains in refrigerated liquid creamers. Hydration and beverage-enhancing supplements increased 54%, led by our prebiotic Bailey Greens and a strong contribution from our Renew, Rest, and Recover product in May. Coffee, tea, and hot chocolate increased 36%, led by one of our foundational products, Insufuel, but this was followed closely by similar gains in our new functional coffees, as well as regular coffee. And finally, harvest snacks and other food items, our newest category drew up $1.3 million in incremental sales. Our harvest snacks and other food items include our peeling nuts and harvest dates, our recently launched brownie and cookie baking mixes, and of course our newly acquired Picky Bar product lines, bars, oatmeal, and granola. We view this new category's performance as strong evidence that our brand platform approach continues to take hold in our existing customers' daily ritual, as well as introducing new customers to the brand. Regarding the integration of Picky Bars, we are pleased that everything remains on track, We saw strong sales of the new products in second quarter, and we continue to make progress in our rebranding efforts and systems integrations. We are, of course, learning new lessons as we go, which we plan to implement in potential future acquisitions. But overall, at this point, we're very happy with our progress. Despite the significant progress across most top-line drivers, and despite delivering on our commitment to achieve shelf-life extensions and waste reductions for our refrigerated liquid creamer, we did encounter a step back related to our shelf-stable liquid creamer. which we viewed as an important revenue driver for the second half of 2021. At the very end of June and early July, we received new information from our co-packer that due to lack of industry capacity and strong demand from their existing customers, they would not be able to deliver our product in September as planned. It would now be pushed back until 2022. We were also informed that the co-packer would require us to modify our formula to include ingredients that are inconsistent with our values. compromising the authenticity and positioning of the Laird Superfood brand. Accordingly, we will see a delay in the launch of our shelf-stable liquid creamer until the co-packer capacity becomes available. In addition, we have pivoted to alternate flavor profiles where the formulations still meet our high standards. We had planned to move forward with our coconut-based creamer first, but given the new information, we will be pushing forward with our oat mac-based creamer as our first shelf-stable launch. We have seen really solid Oatmac performance since launching our powdered creamer in this high growth category, including a new customer acquisition. And we also believe we can produce this product more easily to our standards. We are still very optimistic that the shelf stable creamer will be a strong growth driver for us, both in wholesale and e-commerce. Unfortunately, with the facts we have today, it will most likely be delayed until 2022. While the delay in shelf stable creamer is frustrating, Remaining true to our mission and values is critical in maintaining the integrity of our brand and the strong barriers to entry that affords, along with driving long-term value for all our stakeholders. And on that note, a quick update on our ESG initiatives. The last time we discussed our ESG initiatives, we highlighted three incredibly exciting cause promises. Together, we committed to donating 1.5 million meals to Feeding America. reducing the impact of our online sales by building a carbon-neutral last mile of Eden projects and first environment, and supporting our critical care workers and first responders as they keep us safe through this pandemic with IED. Regarding Feeding America, we're on track with our pledge of donating 1.5 million meals to Americans facing food insecurity, with over 500,000 meals currently on deck. Regarding Eden projects, the process of planting 100,000 mangrove trees across 900 hectares in Kenya has begun, helping us sort our carbon neutral last mile goal for online orders. And with IDME, we've recently completed the first of our IDME activations by giving over 3,000 everyday hero bundles at no charge to the brave critical care workers and first responders who are keeping us safe, an effort financially supported by our partner, Danone. Beyond these larger cause projects, our internal sustainability team has been constantly working on many smaller ESG efforts which possibly affect every aspect of our company. These efforts record our company's mission values and something of which we are very proud. To summarize, in Q2, despite some challenges, we again delivered strong growth across multiple channels, broadened our portfolio with the introduction of new, innovative products, further expanded our customer base, and began to integrate PICCI into the organization. Our brand platform approach continued to demonstrate its power. And although that platform now covers multiple large TAMs, we believe we are barely scratching the surface of what Laird Superfood is capable of long-term. With that, I'll turn the call over to Scott to talk about operations.