Laird Superfood, Inc.

Thank you for standing by and welcome to the second quarter 2022 earnings conference call and webcast for Laird Superfood Incorporated. I would now like to turn the call over to Mr. Reed Anderson of ICR to begin. Mr. Anderson, please proceed.

Thank you. Good afternoon and welcome to Laird Superfood's second quarter 2022 earnings conference call and webcast. On today's call are Jason V, Chief Executive Officer, Anya Hamel, Interim Chief Financial Officer, and Andy Judd, Chief Commercial 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. 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 Jason Deeth, Chief Executive Officer of Laird Superberg.

Thanks, Reid. Welcome, everyone, and thank you for joining us today. I'm going to begin today's meeting by providing a high-level overview of our second quarter results and an update on our key strategic initiatives. I'll then turn it over to Andy for a deeper dive into sales, channels, and products, followed by Anya, who will cover the financials in detail. We'll then open up the call to your questions. But before I jump into our quarterly results, I want to take a moment to recognize and thank the Laird Superfood Leadership Team, most of whom are still within the first few months of their new roles. This team has taken the reins during a challenging time for both Laird Superfood and the broader economy and market, and are doing a phenomenal job of reorienting the business and company to our biggest opportunities across both the commercial and operational aspects of the business. In just a few short months, we've been able to completely overhaul our sales and marketing organizations and agency ecosystems and to streamline our operations to deliver meaningful cost and cash savings. The fruits of much of this labor are yet to be realized, and I'm as excited as ever for the prospects of expanding the reach of our Laird Superfood daily ritual and doing so with a much better cost structure than in the past. Our second quarter results reflect some early progress on cost savings initiatives and efforts to drive wholesale channel growth against the backdrop of what has become a challenging operating environment. We continue to face headwinds to our online business due to the ongoing impact from changes in Apple's security features, the result being that we are seeing less consumer engagement on our site, especially at the lower order values. We also incurred greater promotional expenses than forecast in support of our DTC business. On the positive side, we continue to see customer metrics improve and made further inroads to expanding our presence on Amazon.com, which is a significant piece of our long-term growth strategy. Our NPS score in Q2 was an 82, and both our customer lifetime value and average order value continued to rise. I'm also pleased to share that we were able to deliver growth in the wholesale channel, and we made solid progress activating new retail customers which Andy will cover in more detail in a few minutes. Because many of our products are self-manufactured in our Oregon facility, a slowdown in our sales creates pressure on our gross margin. We experienced that in the second quarter, as slowing DTC sales led to more than two points of deleverage at fixed costs in our facility versus Q221. This deleveraging would have been significantly more severe had we not already moved to reorganize our operations team earlier in the year. On the distribution side, we were able to offset an increase in our shipping rates through increased internal efficiency in our warehouse and shipping operations. For a company of our size in the current market situation, there is no doubt that protecting cash is the paramount strategic initiative. As I shared on the first quarter call, we are taking aggressive steps to moderate our own cash burn, including cost improvement initiatives and balance sheet management activities. To this end, I am pleased to share that we were able to improve our Q2 free cash flow burn by 38% versus both prior period and prior year to just $2.7 million for the quarter, leaving our cash balance at $24.5 million as we began Q3. As I mentioned earlier, our new leadership team is making significant progress in executing our strategic plan. Recall that at the time of the first quarter call, we had just completed a review of our new three-year strategic plan, which created a strong alignment between our goals, tactics, and strategies for re-accelerating growth and right-sizing our cost structure. While it's still very early, we have a solid start on this plan, and over the near term, we will remain focused on the following key areas. One, re-accelerating growth by targeting and retaining online customers while expanding retail customers to drive our wholesale channel expansion And two, improving our gross margin through strict cost reductions in our product and processes. Three, enhancing core capabilities within our commercial and operation teams. And four, reducing cash burn by optimizing working capital accounts and implementing operational efficiencies. We made significant headway against these strategic imperatives in Q2, including the elimination of free shipping on orders below $40. the implementation of a list price increase that just recently went into effect, the addition of more than 1,600 doors of new distribution in wholesale, the launch of four new items, and the overhaul of our entire wholesale brokerage team across every channel of trade, just to name a few activities. As we go forward, we will continue to take the steps necessary to improve the business and lay the track for further improvement across our P&L and our balance sheet. In summary, despite a challenging environment, we are executing our plan and I am pleased by the early progress that this team is making to structure our business for restored sales growth and improved profitability. But we are still only at the beginning of this journey. In future quarters, I expect to be able to discuss our continued build out of a true omnichannel business with a more balanced revenue mix, emphasizing the daily ritual. I'm excited about the foundational marketing insights and branding and packaging work that is underway, and we expect that this will help us to better target, engage, and convert consumers into layered superfood customers as we go forward in the second half of 2022. And as I mentioned previously, we will continue to attack costs and simplify all aspects of our business to improve our competitiveness and our profitability and to sell our cash burn rates. We remain confident in our direction and growth outlook and continue to believe that we are poised to capture significant market share and achieve our long-term vision to become one of the leading players in the natural food and beverage space. With that, I will hand it over to our Chief Commercial Officer, Andy Jett.