Laird Superfood, Inc.

Good afternoon. Thank you for attending the Laird Superfood Inc. Four Quarter 2023 Financial Results Call. My name is Matt and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I'll now have to pass the conference over to our host, Steve Ritchie, General Counsel with Laird. Steve, please go ahead.

Thank you, and good afternoon. Welcome to Laird Superfood's fourth quarter and full year 2023 earnings conference call and webcast. On today's call are Jason Beeth, Laird Superfood's president and chief executive officer, and Anya Hamel, our chief financial officer. By now, everyone should have access to the company's fourth quarter and full year 2023 earnings release filed after today's market close. It is available on the investor relations section of Laird Superfood's website at www.lairdsuperfood.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 with the SEC for a detailed discussion of these risks and uncertainties. With that, I'll turn the call over to Jason.

Thanks, Keith. Good afternoon and thank you to everyone who has joined us today. Now that you have all seen our Q4 2023 results, I hope that you will agree that it is not an overstatement to say that Laird Superfood had a tremendous quarter. During Q4, we hit our team's goal of a financial trifecta. Positive sales growth, positive profitability, and positive cash flow, the latter two of which were a first time ever for our company while trading as a public entity. These results represent just the latest step in what has been a rather steady path of improvement since I first spoke with all of you two years ago. And I am proud to say that these improvements have allowed us to remove the going concern disclosure from our financials. This is a significant vote of confidence in our financial position and outlook and further motivation for our team to ensure that we operate the business as professionally and confidently as possible. I'll start with what might be our most noteworthy accomplishment in a quarter full of them. During Q4 2023, we were able to return our DTC business to plus 10% growth versus the same quarter in 2022. This was accomplished despite decreasing our marketing spend by 54% during the same comparative periods, which obviously means that our marketing effectiveness metrics surged once again during Q4. This represents our first quarter of growth in this channel since almost two years ago after the changes to iOS upended the DTC industry and was accomplished through more effective targeting and messaging and by highlighting our most relevant products and creating better offerings for bundles and cross-sellings. One key to this accomplishment was the increase of our revenue from subscriptions to 46% of our total DTC net sales base. which I would assert demonstrates that consumers are recognizing the benefits from consistently attending to their health through their nutrition, and that our coffee, creamers, greens, and adaptogenic mushroom products are a perfect fit for consumers to create what we at Laird Superfood have referred to as the healthy daily ritual. In addition to converting more of our customers to subscribers, We were also successful in Q4 in increasing our net sales from new DTC customers by 76% year-over-year, driven by our partnership with the Sean Ryan Show and other well-executed top-of-funnel marketing activities. I am also pleased to report that our average DTC order size reached more than $57 in Q4. Given these metrics, it should not be surprising that our brand affinity remains extremely strong with our consumers. with our net promoter score still hovering in the mid-70s and our customer satisfaction score at 4.9 out of 5.0. A large portion of our e-commerce business is also conducted on Amazon, and here I am happy to report that we have continued to make steady progress in returning this business to growth after the challenges created by the quality event that we encountered approximately a year ago. Out of that event, it took approximately six months to fully withdraw and replenish our coffee creamers on the Amazon platform, during which time we saw a significant reduction in sales. But in Q4, with our in-stock inventory levels restored to normal, we were able to execute our marketing plan on this platform and to restore our path to growth. During Q4, our net sales through Amazon reached $1.76 million, a 38% increase over Q3 of 23, despite a 22% pullback in direct media spend on Amazon during that time. This is a testament to the cohorts that we have established on this platform, which was further aided by a 26% increase in revenue from subscriptions, which now represents nearly a quarter of Laird's Superfood net sales on Amazon. Given the lapping of those 2023 challenges during the first half of this year, we expect to see strong layers of superfood growth through Amazon throughout 2024. Turning to our wholesale business, I am pleased to share that we continue to make steady progress in expanding our distribution in this important and strategic channel. To date, our wholesale business has been largely concentrated in the natural channel, but we have continued to make great strides to build out our brand among consumers that are motivated by health and wellness. During 2023, our points of distribution in natural finished the year up 24% versus the end of 2022, given by wins in large national retailers as well as across smaller independents that are vital to consumers in this channel. Specific to Q4, I am pleased to announce that we were successful in securing national distribution with Whole Foods by four shelf-stable items, which will complement the full national distribution that we had recently attained on a four-item liquid creamer portfolio. Those items began shipping a few weeks ago and bring us to eight items in distribution within all Whole Foods stores across the country. I'm equally pleased to share that we have also had continued success at Sprouts Farmers Market, who has been a great partner to our brand, and where we now have 22 items in distribution, representing one of our most complete build-outs of any retailer in the country. I am also pleased to share that during Q4, we became the number one brand within the coffee category of Sprouts, charging ahead of the likes of Beats, Bulletproof, Meltdown, Death Wish, and all the other brands in this category. We believe that this is just the start of the exciting things to come as we continue to build our brand strength and share our health and wellness portfolio with consumers across the country. As we look forward from here, we will execute an expansion strategy to additional categories in the natural channel and begin to put emphasis on growing our distribution in the conventional channel, where we currently have very little distribution and a very large market. Along with the success that we are having commercially comes the recognition that we couldn't achieve any of this if we didn't have a supply chain that was as flexible, responsive, and adaptive as we do. Last year, our supply chain was able to shut down our own facility in Oregon, identify COPAX and distribution partners, and move our entire business over the span of just around two months. Our supply chain team operated nearly flawlessly through a quality event in the first half of last year, quickly replenishing our raw material inventories and keeping most of our key suppliers supplied throughout that challenging stretch. And now, with our powder products fully transitioned to an asset-light supply chain model, and with our liquid creamer transition behind us, we were able to achieve over a 40% gross margin during Q4. Our supply chain is flexible and agile, and is built to support our future growth. Going forward, we continue to expect our gross margin to remain in the high 30s. Our focus on cost management extends beyond the supply chain to our operational expenses as well. During Q4, we reduced our total year-over-year adjusted OpEx from $6.1 million to $3.7 million, representing a decrease of 38% in Q4 of 2023. This was accomplished by a broad-based reduction in our OpEx spend, which we will continue to manage tightly as we go forward. I want to share a few thoughts on our cash position, which increased in Q4 2023 by $280,000. Based on our working capital needs and planned investments, we do not anticipate generating positive cash flow in every quarter from here. However, we do believe that with our planned growth rate in 2024 and beyond, we may soon be generating cash to support our operations. I also want to reiterate that we were able to remove the going concern disclosure from finance. We are proud of this recent change and believe that with our forecasted growth profile and gross margin outlook, the Laird Superfood business is now in position to carry an improved financial profile in the future years. And now let me turn the call over to Anya to discuss the fourth quarter results in more detail.