Laird Superfood, Inc.

Good afternoon, and thank you for joining the Laird Superfood Incorporated Second Quarter 2023 Financial Results Conference Call. My name is Kate, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the call over to our host, Trevor Russo. You may proceed.

Thank you, and good afternoon. Welcome to Laird Superfood's Second Quarter 2023 Earnings Conference Call and Webcast. On today's call are Jason Beeth, LiveSuperfood's president and chief executive officer, and Anya Hamel, our chief financial officer. By now, everyone should have access to the company's second quarter 2023 earnings release filed today after market close. It is available on the investor relations section of LiveSuperfood's website at www.livesuperfood.com. Before we begin, please note that during the course of 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 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 of the SEC for a detailed discussion of these risks and uncertainties. With that, I'll turn the call over to Jason.

Thanks, Trevor. Hello and welcome, everyone. Thank you for joining us again today. Our results in the second quarter continue to demonstrate that we are successfully reining in spend and driving our business toward profitability. Our cash burn was a record low $1.4 million during Q2 and continues to decelerate both on an annual basis and sequentially versus prior periods. Our adjusted net loss in Q2 came in almost 50% lower than during Q2 of last year, benefited by improved gross margins, but also driven by lower marketing and G&A spend. This is the result of our success in improving our marketing effectiveness, where our ROAS has increased by 86% during the past year, as well as the leaning out of our organization and other G&A spend. On the commercial side, our strategy to drive business and wholesale continues to pay off. Our brand has always been a great fit for the natural channel, and in the 12 weeks ending June 18, 2023, Our layered superfood growth in the natural channel was plus 69%, driven by a combination of distribution expansion as well as strong increases in our dollar sales velocity behind rebranding activity that we outlined on prior calls. During Q2, we also made significant investments into wholesale trade, the majority of which was in support of new items and other distribution gains at key customers, but which also included the ongoing charges associated with the product quality event that we had discussed during our Q1 earnings call. We have an exciting lineup of products hitting shelves in Q3 this year with our biggest seasonal program to date, and we have a great digital program lined up and will continue to execute retail support programs with our top customers. We also have a series of initiatives underway to further grow our brand awareness and to drive continued sales velocity growth at the shelf. Our DTC business saw solid results on the relaunch of both our prebiotic daily greens and coconut water hydration product platforms. These two lines helped us to rebuild crucial gaps in our supplements portfolio, driving plus 48% sequential growth versus Q1 in that segment. Our greens products have quickly become a top seller on our DTC platform, and we are pleased with the repeat rates and reviews that we are seeing. In June, we relaunched our hydration platform which we believe is among the cleanest hydration products in the marketplace, harnessing the power of dried coconut water, now in convenient stick packs and with electrolytes. As in prior quarters, we strategically reduced our DTC media spend by 67% during Q2 by cutting inefficient spend, thereby improving our overall ROAS by 86%. The quality event that we discussed during our Q1 call led to unexpectedly long out of stocks on Amazon during Q2. Whereas we were able to quickly rebuild our inventory positions in both DTC and wholesale, it turned out to be far more challenging to do with Amazon, where we needed to first wait for Amazon to get the products fully withdrawn from all of their warehouses across the country before we were finally able to begin rebuilding our inventory. The result of this was approximately 12 weeks without any inventory of many of our top-selling SKUs. In fact, we are only now getting our inventory at Amazon back to full strength on a national basis. and we expect this issue to finally be fully resolved by the end of Q3. The upshot to this issue is that we were able to quickly pull back marketing spend on this platform, netting a positive return of contribution margin dollars to the P&L. Turning now to operations, we are now more than six months into our move to an asset-light supply chain, and we remain extremely satisfied with the relationships and results that we have so far achieved with our co-packing and distribution partners. Not only did our Q2 cost of goods sold improve by 12 points of gross sales versus just a year ago, but we also increased our production capacities by approximately three times that of the peak production in our own facility. At the same time, we have added incremental sensory and quality assurance checkpoints to our manufacturing processes to ensure that our product is the highest quality. Finally, I'm pleased to announce the continued evolution of our marketing model from a low ROI pay-to-play digital marketing approach to a focused celebrity and PR-led model that will seek to leverage Laird Hamilton and other like-minded health and wellness influencers to drive the awareness and trial of Laird's superfood. To that end, we just announced a large partnership with Sean Ryan and The Sean Ryan Show, which we expect to enable us to reach a largely untapped demographic for our products. The Sean Ryan Show reports an estimated 3 million listeners between Spotify and Apple podcast platforms. 1.75 million subscribers on YouTube, and nearly 1 million followers on TikTok. We believe that a majority of these consumers have had little to no awareness of Laird Superfood in the past and are excited to be working with Mr. Ryan to share the positive health benefits of our food with millions of new potential advocates of the brand. We look forward to being able to share other big marketing ideas in the near future. Now, let me turn the call over to Anya to discuss further the second quarter results.