Earnings call transcript Q1 2023

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Operator

Hello and welcome to the LSF First Quarter 2023 Financial Results. My name is Elliot, and I’ll be coordinating your call today. [Operator Instructions]

I would now like to hand over to Steve Richie. Floor is yours. ahead. go Please

Steve Richie

good XXXX and to Superfood’s Laird Thank conference afternoon. call quarter earnings and first you, Welcome webcast.

and our On today’s Chief Financial Commercial Hamil, and Superfood’s Laird our Officer; Officer. Chief call are Executive Jason Officer; Vieth, Andy Chief Judd, President Anya

everyone on the first By website section Laird the earnings Investor should quarter close. market at access today Superfood’s filed Relations release after have www.lairdsuperfood.com. It XXXX to now, company’s press is available of

call, statements this may that the expectations during those on risks the statements cause in that involve Before the make management’s forward-looking and and we begin, within could from of forward-looking described these actual please note federal course securities are current management meaning to of results materially uncertainties statements. beliefs laws. and These based differ

press any statements today’s that the of and materially from or release detailed with those results differ other risks a for the to forward-looking to expressed refer made in Please today. SEC discussion could actual cause filings implied

now, And call Jason. to over turn I’ll the

Jason Vieth

everyone. and today. us Steve. Hello joining for Thank you Thanks, welcome

challenging cost taste food behind making structure, portfolio our that it. innovation. that strategic it growing results strategic team have first brand, executing the wholesale, strong brand improving capable quarter we report in of environment operating the packaging growing for I be a demonstrate that mid-size our of nevertheless our goals built our am we plan progress improving the are a business Our pleased remains to to and is right key against our and and Though and

when chain third-party model than operated operating far our able facilities we Oregon. beginning the like that is achieve of were manufacturing to own we efficiencies in a year, distribution just In at asset weeks greater we transition to supply our an short able in were already what with to few the

across those costs running a only increased flexibility not are and and responsiveness lower are and up of and packaging with greater sizes producing we volumes facilities, formats. in wider but range We already

and true word. new to Our have every the proven partners in partners supportive and sense adaptive of be highly

As increased the associated margin continued our costs one-time time, Anya eight At dramatic to year-over-year. we our have gross progress in in already reducing we make by have will our detail to product more DTC a marketing points shortly our continue spend, higher same withdrawal, And than excluding a a structure. a QX margin result, cost vastly lower return acquisition the channel. significantly consumer spend ad as see improved on and with

able contracts were largely believe been we We is shift more first this last customer that have way years in and the strategies QX. the restore were our A the now our in and marketplace. will time have over set impact to in to of have where great meaningful up worked for our we that of our retargeting existing database a marketing growth inefficient subscription finally tactics over the out against example to the during investment able year

pricing channels. out progress the during This packaging shelf. growth fueled branding new quarter, and both our seeing and sales for we dollar sales conventional liquid the remains growth and and by by improving is the and that creamers same-store largely natural first in being Within our velocity powder strong our our the where are growth grocery the in conventional rolled natural availability channel, positive continued at in and

the products issue raw a suppliers withdraw tasting and our experienced the quality poor material fourth of to creamer call, on from due received multiple decided our from one mentioned market. quarter to As we

to distribution outsized our withdrawal had warehouses they have as inventory reached from clear begin consumers. identified did to the majority While sell after products platform Amazon an the on impact all soon we again. could relatively to we on production and of the were their the issue able retrieve This before before we business

we net speeded this quarter. full levels. already this and back XX Thankfully, As we a setback, to prior seeing are are behind points extremely we promoter an customer our goals quality a now business satisfaction X.X business a to withdrawal result, to scale. score our remains pre Despite point Amazon is our healthy Amazon five the our for score continue strengthen and at on metrics. fell year metrics return Financially, versus our

marketing gross key time working share we improved will project to to will comes. of strides we events. quarter the continue point, into cash recoup our have to this XXXX, the we supplier at report help with pleased is to while loss go-forward that quality to a operating much today’s financial and QX be least expenses I Anya At position. second As reducing we flow cash margin when operate increased our achieving business make a a capital that that us be ingredient call, am toward able will and have to our costs, of significantly from, positive And to raise during that in and which we from position our

has in doubt our want There turning and these improvements. Laird dedicated their talented this our ingenuity company progress thank that team made to employees Superfood and is delivering tremendous in I around persistence no for and

progress we each same of forward from more expect as steady goal far profitability complete, go has Our we here. our from breakeven journey but against quarter and the of is demonstrated

hand over will to I that, Andy. With it

Andy Judd

journey want and to year had our to up brand Thank you, do see When transformation rebuild for entire incredible into brand our come. the to year, of changes scale the their to set dedication Jason. that years future we I’m to success significant for have details, before pleased A the diligence we jump we foundation. work last to we executed. organization of for go-to-market later, thank And knew I began our I

few improved on in updated brand and we these our reposition packaging a to velocities daily Superfood fueling months, for better been executed and already Laird the only conversion in market In seeing quarter, changes website. optimal new performance. we retail a first our launched around are campaign Though have sales

inefficient what of we launched also called we have innovation and adaptogenic have to We To marketing completely daily date most out new successful behind our model. overhauled spending some levels, historical address greens. protein as bars prebiotic our

In spend have on QX total return our DTC XXX%. simultaneously in while by ad spend by improving XX% our year versus reduced business, we ago,

we each of subscribers are XXXX simultaneously customers. for from decreased returned QX. cost DTC Importantly, positive our margin the high ROI lifetime have our delivering consumer such first positive gross acquisition we time and a also month growth improvement in with our and We’ve net to sequential value that since with improvements now

our of to note important rebalanced all It discussed to repeat value despite As is and of subscription proposition our offerings. withdrawal the we’ve drove was product achieved that Jason this earlier. that conversion consumers the

largest impact in Amazon, a the Jason that week to of As which led obviously products had withdrawal slowed QX mentioned, channel. blackout our nearly which on Amazon, its powdered our growth XX product on creamer

report to we rate to model spend expensive that drive XXXX. channel. back return I’m in assessing levels currently planned had Nevertheless, are to Amazon levels the on the happy However, are Amazon we and through seeing our that business of and growth stock right pay-to-play has that an this and now we for conversion we are become

have opportunity taking is model still go-to-market place distribution. we expand in business to our in change biggest significant our where wholesale The

our few placements This starting and both all with place incremental months, key added the retail efforts great Sprouts QX. channels velocity partners produce across have distribution in Target. confirmed and are taking important Whole like During last doors new seeing Foods, we growth and with leadership at is capability retailers and

total dollar increase XXXX, March XX and channels saw weeks the in in during for business consumption for liquid creamer measured XX% channel Superfood ending XX% we velocity and all XX, was natural up a period. Laird in our In growth this items the

for balance excited of we this have expansion ready about Looking the year. forward, innovation I’m that the

Our the Laird’s continued expansion the plan our the a launch platforms to hydration of of include launch Reserve adaptogens milk beverage oat creamers growth our super during [ph]. innovation called products retail our XXXX of functional products, new line footprint, and like reformulated of premium new includes

looking Pumpkin forward Instant Spice adaptogens. a the of We to with our Superfood with lineup program Latte seasonal execution products are of new including to also date best

We also of our surgical creamer. our and enhance a actions margin drive to growth, pricing and brand sales further grow have aseptic liquid awareness launch velocity initiatives underway our continued through

indeed been XXXX very by at a Superfood, first pleased busy already months we are has of and few it seeing. are we Laird summary, the In progress that

success never stronger, commercial initiatives future has looking continuing and to calls. been for resolve to behind team’s details I’m quarterly forward on Our our share subsequent

call Now to let further first me to results. quarter the turn discuss over Anya

Anya Hamil

quarter $X.X decreased prior in and plan, to of with sales year the in Net as annual our Andy. million in of the XXXX million $X.X line compared first you, were XX.X% period. operating Thank

channels. was expected Given our marketing the volume sales spent, level lower club in fullback in by e-commerce driven this and decline of

we driven in sales order and as sustainable e-commerce in and a by year-over-year improve a to XX% our direct-to-consumer in Specifically, more decline due costs got inefficient was DTC profitability our channel. business reduced primarily reduction build spent to this our customer acquisition media

in velocities in and expansion higher channel and the in DTC liquid creamers decline by both channel. offset was in The by growth our driven partially distribution retail shelf-stable natural

XX.X% was the prior gross reported, XXXX to in margin As XX.X% period. in year the fourth compared quarter of X.X% and negative

which margins achieved charges, that gross were quarter to talked quarter. that and both withdrawal a a I period. the negatively model the over first to earlier. prior one-time product pleased co-manufacturing of quarter as points came fulfillment and of beginning and to am improvement an Excluded is we adjusted was sequential related This third-party year Jason First those by impacted supply result from Andy the margin, cost expansion our about one-time report completed chain in transformation eight of margin XX% that

transition. the the in of gross half for continue cost benefit the that other to to as our to line for second year, of our variable we the transformation throughout model was as improve as as well year. see margin expect initiatives expectation planned And improvement the margin full I

of expenses million assets million totaled quarter general exit The costs contributed a the in the XXXX. decrease of of million well in a Marketing $X $X.X the period. the million, first quarter and $X.X lapping as XXXX, expenses to reduction following expenses in reduced activities of fourth operating and in decrease million as $XX.X also $X.X expenses. people primarily goodwill of compared other overall administrative intangible and ago to due impairment was year Operating

period. is and was release. driven On the year net expanded A than net adjusted lower of Net marketing by included loss non-GAAP a a margin million, an lower basis, earnings our ago, million detailed reported $X in approximately of loss and loss million as $X.X $X.X adjusted spent. which year versus gross was G&A was decrease million, prior $XX reconciliation

quarter during the with and conservative operating QX receivables bonus manage we to compared a million cash payments Turning delayed cash our and The no and was We $X.X continue $X.X sheet. elevated million activities severance timing to of and was flow. account in facility and QX. use million $XX.X of to this driven collections, quarter exit in balance sheet as quarter and one-time Sisters, lease cash by related burn our and of XXXX. early ended resulted balance Cash to debt, the was which Oregon, payments

For our quarter. the year, per be the million reduced balance million to to expect $X burn ongoing cash of to we $X

environment year. Moving economic historically will into uncertain to balance although of outlook, consumer on continue spending impacting inflation our the the high we rates that an anticipate was

encouraged this taken took last and are to strategic results we quarter as by We take hold. continue actions our a first are year year

and net for reaffirm excess digits anticipate charges of As growth. in margins XX% any guidance such, our for one-time single mid-to-high the gross sales year, excluding we

With to turn back call that, I’ll Jason. the

Jason Vieth

are Thanks, ready our concludes Anya. to to open we the questions. remarks. call now Operator, prepared This

Operator

Instructions] [Operator you. We Partners. Thank JP question Roth from from Wollam have a Capital

is open. line Your

JP Wollam

at of sounds talk may high the the taking it the just we question. if like where the the troughed to to, sales relative sort remainder the QX how the on if we and upward kind the point. could some as performance but thinking the we issue has through confidence at during have end think are for Maybe from you’re here we gives a Thanks year? you guidance and if that thinking quarter, of whether maintained year, about Maybe go Amazon just about slope last Great. just maybe what and cost of you about level, start, the demand of could this of is of around sort

Jason Vieth

we’re here massive with JP. as pretty do lot. quite know you what we we last and hey, place. moved DTC midst transformation really one those a months, we the through of of well, of pull rear spend. as now, number that back in question business a and and wrestle right a of is XX did in it’s well the reality view that XX very the over really months It’s to Yes, that And has strategically majority taken the others as The great was a media

been today. executed like LTV space, the as last And other industries. an that inefficient become for that just particular the companies ours don’t because heard we QX, of some a most DTC incredibly pullback significant consumer goods that’s You in that quarters ongoing but large and channel’s are in especially had that few for have companies operating for as

by pulled to opportunity back asked, not pivots towards about we’ve within question that a that strategically QX. – issue wholesale quality very Amazon on Amazon. so and play the in. feel in and pursuant made the inexpensive was your Amazon to our And hit and you channel We an to bullish It’s

sales But Amazon less came spend as media to do that grow we’ll in. the had priority so been which and of continue lot, a really frankly really this are hone returned. year well. that for to support than model, when organization a to all a a ago give Superfood channel not as forward go see we opportunity the our we at to significant until to And the sometime we that we And relative team business, continue that Laird our look our

and we’ll that that pulling, at market. looking we’re itself took and signs we strategically, a important us, the we’re important that in continue is has assessing of a really a monitor can. that And that, in products But way and And most are changed to our Apple for some that frankly, few ago. and the categories. review spend So available are wholesale where that investments getting where various the type the and that the the we taking and place until have of corrects fish course Amazon next where natural in The here it is – most are half been of as make watch game DTC conventional of throttling really cycle imperative. the others, changes year to see going for iOS And months the within the retailers from their about then to we channels, that see place back resettle strategic getting brands through to a is strategy. finding fish model Facebook

marketplace and are are to in that number coming up those over We driving in of be have that a out meetings space. continuing months the for expansion

is towards especially we’re, – So channel for But what more think consumers, and to new as placement that’s a clear, really us, it’s I repeat lower to retail looking consumers DTC to and consumers the bigger probably to way you were think for. our cost than has use it’s answer on to acquire which the Amazon is, about hold it buy. acquire eyeballs then through and remarketing our subscribers very for

JP Wollam

Great.

but the coming to second trends relates very into but you as terms customer repeat that’s value and helpful. anything relative online can point more my your about, compare on think then higher whether maybe average side, clarity question, or little ago? out that’s new customers orders segues or you as I to it And there down of are orders, a just and year two see you that think that a any to both maybe also maybe getting maybe their in order

Andy Judd

JP. the for question, is This Andy. Thanks

AOV. protein new recently the Daily of a whether we most both spaces taste, gone quarter, mentioned, our the even of in at Prebiotic improve product. functionality, our the seeing a we’ve improving improvement Largely or across lot We to transformation our through a into launched adaptogenic and that’s and nice Greens board, products to rebuilt are as adding approach Jason bars portfolio launching like end

increases contributing and those the pieces are really of a repeat high in level All across AOV maintaining to board.

do seeing I nice a proposition. So, a think great behind we stabilization are product and

bolster which QXs in change subscription frequency repeat improve subscription into has a move stabilized a make will value did helped model, high offering, more help We overall. also promotion, our channel users that which

inefficient it the largely QX of and significant customers CAC to almost a was did the the reduce we quarter, in relates spend As XX% by commentary, which new against highly XXXX. to channel per

still consumers are ago, that been frequency and the a promotions by driven in of running. largely AOV good We come AOV new a than the reduction we of year a into consumers their new the is higher amount seeing portfolio the had of

in we a our components is where price earlier about there for of right historically Jason go than in retail. of reconciliation and channel. or our think moving the itself. cease the been overall, So lower model much are And much acquisition how progress proposition value some to we direction new Amazon from for CAC And and now efficiently has the DTC and mentioned overall look the more to model I going is where those lower the we’re

Jason Vieth

on what And one which the I’ll that our at down is, opportunity add, add while JP the Andy up gross just our to got taking indicated, we’re point our and margin LTV. more we’ve same just time cost I’ll acquisition up that, frame our AOV we’re and bringing just

So quarters that already where our more in in obviously quickly favorites, our we of equation’s where been. we’ve as in ago. and making that towards very going well to were to much favor working point terms our than pushing start work in breakeven focused favor But us headed, on relative it a profitability couple we’re working

JP Wollam

there. one That great. sounds I if could last helpful. quick And Very just in one slide

post make if little about wondering, kind give how Just around in comment of end, could rebrand, to that you you a that a was could velocities comments about want saw spike not I the was just trended whether during any following trended the us talk spike I quarter initial rebrand? the the more and following bit maybe color wondering even if you I how since would you more quarter, little but know terms of and sure not the made or you a just about

Andy Judd

pleased of or incremental Yes, of were course. accelerating the very velocities the Yes, that we immediacy with saw. we

the was with Our and liquid creamers out subsequently the towards rebrand Then it a out shelf-stable channel Costco started of then of products. then, roll natural to quarter. at primarily redo in our the And rebranding relative started end our first creamer our our by website. to followed to wholesale – online roll

issue came At back The each where across immediate acceleration was of marketplace, really of particularly out products. the did then of with windows, quality almost the saw we those products complication powdered they’ve segments and of some creamer, Jason in, an continuing. gone those back which shelf-stable referred we since each exciting. acceleration those growth seen the to immediately that return velocity creamer But pull that we’ve

So moments we’ve the direct did where shelf while of up two but of show the trending around to and both acceleration question happened it the had velocities your component consistent, not it instances. in

So, how trended. with we’re overall really pleased it’s

channel natural Our are creamer are and store the are liquid velocities on velocity a XX% sales over wholesale business – level are XX%. club up

really we’re this pleased at with overall brand So, point. performance the the of

JP Wollam

help. Really all luck of the Best forward. appreciate Great. going

Jason Vieth

JP. Thanks

Operator

questions. no have We further

So We’d call. conference like participation. your to today’s for thank this Q&A concludes and our

may You now disconnect your lines.

Laird Superfood (LSF) 10 May 232023 Q1 Earnings call transcript