LSF - Earnings call 3 2023 | Laird Superfood, Inc.

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Operator

Good afternoon. Thank you for attending today's Laird Superfood Third Quarter 2023 Financial Results Conference Call. My name is Cole, and I'll be the moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Trevor Russo. Please go ahead.

Unknown Executive

afternoon. good and you, Thank Welcome to and Earnings Call Quarter Superfood Third Webcast. XXXX Conference Laird call Laird Financial On Chief Jason are today's Vieth, and Hamill, Executive Superfood's Anya our Chief Officer. Officer; and President have access filed release market By now, after everyone to company's XXXX today third the close. earnings quarter should Laird It of Relations is www.lairdsuperfood.com. at Investor the website available on section Superfood

laws. results risks based within today's Before described management may in call, management's press we and I'll of the of turn uncertainties. actual detailed and to the these involve to course context this other from and beliefs begin, are please a that risks the refer note These with federal With expectations current filings that, and Please differ securities to forward-looking on over release SEC it could that materially statements these forward-looking Jason. of statements those during and make for cause statements. discussion uncertainties

Jason Vieth

in for to Thanks, our everyone, Hello our us step report represent to be QX Trevor. am change you results that performance a and all proud business. the of able fundamental to joining today. in thank I

ago. And X years, costs discuss the the of in improvement executed of For the are we that the both year net prior of exceed to just an more improvements, we by year, prior back of first we margin QX during the against time, last utilized time the which At growth half year points the than our time period and business quarter. we basis the XXXX goal XXXX, the same SG&A shortly. a sales will this same these XXX reporting achieved since we XX% gross and marketing fraction as is versus

dive let's sales. net First, into

as results to X, than distribution XX% quarter. Natural Spin positive by for that shared total QX taken which to profitable a channel brand the XX% combination growing announce the data become in order nearly effort as increases channel I'm create XX during XXXX, reshape our grew driven reported result showed by a growth Superfood more and X/X During wholesale in the the this being that this ending quarters expansion. we pleased with compete. is Laird would our we to were of last in velocity of of category sales This October business. to algorithm every consumption growth our need I year-over-year for sales growth, a in by weeks unit healthy previous growth XXXX, price business

to channels, comprised of by As expected, XX.X% contracted our goals. profitability Amazon as in and the of we media business, which spend is DTC online support continued scale our back

is have moved that media managing this social driving during our QX. this across media The are us, marketing For QX employ able have awareness XX to we PR started. restacked I their and towards result reductions been activations existing of profitability unproductive media to unprofitable spend from the through model marketing and months, past we an inefficient, significant subscription. by business customers top-of-funnel actively converting now and in challenges we report pleased behind also just now get media. In that and am getting alone, Amazon products our as impressions, more organic garnered than billion platform X.X we to to we inventory are podcasts, were paid

a to expect year. event, of looking during stemming at inventory significant While lack and opportunity have we this a from tailwind channel over due the now constrained our channel has are been to the quality from that XXXX next QX

a in it increase an hat chain asset-light we to our our that year my was was and that flexibility XXXX. out facilities and to our the Next, efficiencies, distribution manufacturing supply to in our to transition our organization. I'm to achieve that only Sisters, It we're set managed Oregon, lower going that ago and aggressive down costs. them to cost-saving determined improve we tip shut model going target for Remember

were the vision from this decreased percent in in that most to recent results XX.X% XX.X% Our a quarter. realization gross as product of QX of we sales costs our as landed

our with strong XX% During proud developed of this as and and both the time, mutually continued them our last do we during our beneficial have logistics has relationships than QX time, G&A and co-manufacturer organization the year At chain. in less. expense supply with have to to of more partners are was same lower

were We largely just that of and versus have While and match insurance savings programs the will to all $XXX,XXX headcount able our recently report we than to fully current successfully successfully reduction. proud litigation last that cost its economy to announcing are expense including to on completed business, work, us, recognized to I'm other renegotiated which state impact and more and we companies begin the policy, QX. save year's outstanding close be discretionary during also against downsizing

excited our that toward has solid into to and profitability extremely past our reduction had results, entire of proud drive breakeven which have year where go for a materialize during what organization earnings this our While what leadership of during savings accomplished, but in will become these to positive. I our how help short come by of am and have from flow still far amount the more have goal even to to us X we'll flow QX now XXXX, years, cash I for am here. begun LSF team will midterm I'm and becoming we they grateful and

that in to XXXX G&A cash wholesale now a continues continue reduce we growth to our line CPG to expansion we can that to effective positioned rate LSF our companies, XX best-in-class XX in further structure achieve our cost we activities be expenses, marketing with chip focus as months. positive our at next we to flow run come away least can beyond. And turn believe topline the Now restoring and in through to

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

Anya Hamill

the program the in compared $X.X growth prior compared to in third in period million as XXXX. second of natural increased million as $X.X year of conventional launched partially quarter quarter and XX% sales and club, expansion increased velocity in gains behind Net year. This of $X.X Jason. X.X% in The seasonal channels, the as million actions XXXX you, driven Thank e-commerce year-over-year by new earlier offset improvements campaign by lower pricing rebranding channels. the sales this distribution the well as was was and packaging to in

most decline and our pullback and customer costs these profitability This of level Amazon marketing in XX% our the were expected. acquisition media, was improve spend cut marketing the e-commerce strategic cost and business to was year-over-year order in across in Given reduce in work spend, which our DTC this inefficient in nature reduction sustainable channels. to build

issue we as a compared the the take plant transformation even incremental versus year. improvement achieving behind see third made full $X.X the allow a company's sequentially year, expansion our actions quarter, with of year, the to strategic Additionally, residual XX%, other expansion stronger of decrease hold. Operating year. QX way the of margin the by be last year the third QX spend in previously except XXX board. basis we firmly of to fully XXXX, us versus was quarter which expect stocks Every the inefficient pullback happy million high XX% million loss year wholesale quarter we inventory improvement history, to us. This on awareness more of period. have been on trade gross reduction the lower In sales year restructuring related is quarter to costs issue of cuts year-over-year activities and that negatively in we promotions loss, XXXX now $X.X success by a strategic from million, million to expansion QX, investment puts XXs. and from saw was decrease $X.X QX the initiatives over same quarter the implemented for to basis margin-driving in reaching resulting have points our long-term QX Amazon expansion to will back is margins expenses continue cost of and quarter margin XX% the this was of other ago is of in the same supply the model. period. QX million and in the trade across the ramp margin channel. Starting costs versus in this strategic margin general In continue we goal period prior gross pull in driven of lowest points product Net gross impacted in quality to end I and versus sales would discussed milestone up as in driven $X.X this XXX lower achieved our and spend, to benefit chain drive shift QX. I'm net experienced of as was the expenses a even prior say build due resolved for by at co-packing of spending year was by as margin this third It last elevated supply well out half the post-IPO in people improvement $X.X begin following third-party the trial the marketing that reported, to first totaled year, to XXXX. to margin administrative and of driven the third prior consistent of the chain for which

strong progress lower than last in we quarter pushing quarters. made costs in the Our the QX and SG&A future million have breakeven was business demonstrating same the year, $X.X and profitability towards managing

quarter as to balance the was million third million our this planned QX to in debt communicated demand, sequentially no flow. cash to conservatively meet last we balance in we sheet Cash cash build quarter. burn elevated on $X.X as with and from and up to to steppe in continue of Turning the quarter as manage $X.X our $X.X sheet. ended We call due inventory million compared

cash our on plans. year-end operating is with track Our forecast

range expect one now to to left to the XXs, are in our fourth sales extraordinary of year, Moving million prepared to and in quarter ready on margins Operator, be the we any $X onetime call questions. outlook. the to net high open million we excluding charges. This remarks. mid- gross more in to our With $X.X concludes quarter

Operator

[Operator Instructions]

is first with Genuity. Our from Burleson Canaccord Bobby question

Bobby Burleson

you hear can Sorry, you me? can me? guys sorry, hear I'm

Jason Vieth

hear Yes, Bobby. we you, can

Bobby Burleson

I second. for a hung up Great. guys thought you Okay. on I

I media again activity how is pickup growth move and wanted then tailwind the wanted here. of type just of turning congratulations first maybe to want type between that, What add of could Amazon And in XXXX? a and and making do the to long progress that a you on lag think made. towards into to -- understand in your from on I your so experience corner impressions DTC? just So persist maybe the just of all, I there comment much kind to

Jason Vieth

We this us, impressions thanks. that's the and strategy would asking, through as impressions, to years your of still that will by this points really DTC, of appreciate here I and point, marketing for of in really front QX. to all hear of and funnel be of into certainly X really of In that to be long you're of Good back shifting media think you're again have XXXX yes, as as the understand, the Yes. a a important. it and well, again to One, it's year, nice we it's our it's more we that been all lot culmination now place in efforts. on been course. here has our I the important to to top we now X business, started awareness. And and progress And the was see -- the voice heightened of made hitting but recognition here QX to will run the great the in DTC lot those a of get of move are on take team say case benefit certainly right are that

a more of already working Shawn we're we're and in our make working partnership that Ryan to unpaid, hopefully one very that our we're right right and that paid soon. And podcast spending and dollars on concerted and with a heightened now. phenomenal agency we're established have show. we marketing so another to excited now PR the that doing closing, well we're effort with about And for generate us both supporting these And work impressions, really as they're

has the become pay-to-play, have past of here in these impact. we know benefit media a results that And of why and of of we're certain back for so to, did in and is level the got it as same all about very QX, to alluding -- going so immediate we without us, be the level these marketing see one-to-one won't longer-term that this some growth doing social that's results we we a to And been you're that inefficient type we because excited after spend.

it multiple we say, better right I quarters you're model I then the flipping we that with just we're headwind to start while able the through to would quarter. would back right the anticipated regards of for inventory to -- So of to had were do in, conventional than we a get we builds, one X/X QX, way get model Amazon, I fruit position bears the bit on come. And seeing to we even more, of and now, out as We're tell as believe years time, that Amazon, a you, we over in a still with probably band. on actually, and results say, a alluding more would that gate, and marketing to a awareness in

down in We executions that year. more those we some since at all And last had buy time. would the of I at knocking had lack And to some of stocks the have look we're we've all back challenges say and other result the year to cleanest of continue that throughout winning really ] Amazon were getting that with boxes that fashion. this [ this

starting back significantly. we're back So the pulled to channel. spend We into spend

and despite to position good pullback, this because that's a channels of spend manner to chance we efficient go growth supercharge quarter, in have back in we're to we some an know it from put as now. the these So so that feels again, in to here, we right growth report in, able be that why

Bobby Burleson

I talked a burn it margins QX. end is you're of you're pulling And trade of gross I things you what just elevated follow-on. guess, positive there outcome in to is how then think And on back from that guess, that that in and did watching affect QX going Great. from, sounds you reached? a that swings range? to quick Are Okay. help XX It is like cash flow goal from the slow, what But XX spend months then October? with to either you really could particular the soon about should

Jason Vieth

our the margin -- exceeded question. at you, we Good I gross gross tell the Yes. of Bobby, XX%. margin as beginning had year, planned

of we a made driver down X. G&A the marketing breakeven towards into to continued only model. the close part -- marketing G&A. We've the now full year. that, of similarly, the move, that obviously, as we course are And get in more the the that We are a go on And next we lacked we to on we've strategy then that have starting we we'll moves of skin have -- mentioned that over year. spend add the And the we'll traditional as of of on X-plus to of the profit of line compressing there side, the to points to. big One big that trickle that, I moved top do really number CPG course driver next start is as mentioned. The towards the for us forward, our benefit

to a do So that obviously, I year to with you'll that. generated our see and team regards have great ability will us more marketing next and to efficiently, few market has allow but insights that on here bets come a we some better think down making that

And is years, lower grow last increased story So smaller that coupled and we topline of had business an what able faster bigger it's the believe and we declining costs, have were with X positive that wholesale that to will increasingly really just a because business. on the flipped. about G&A gross the than combination our margin for become we online marketing

it's online. is now, business we XX-XX about a mentioned, is As online wholesale And our growing our to wholesale business than business currently faster declining.

flywheel And so for our that that, really favor. a becomes excited what in can about to us starts year. work We're next that obviously, mean

Anya Hamill

Hi, CFO. Bobby, more Anya, one to want thing is I add to just that. And this

improve another We of still our terms capital, to efficiencies. our looking in and we room we working up another area expand optimizing working free our think business. continue That's Our especially where we're grow as capital cash. is that have to inventory and the driver

Operator

is question from next Our Craig-Hallum. with Alex Fuhrman

Alex Fuhrman

you're can here less or really expect what would your you you what full you the more And QX be expected issue strength following powder had? that seeing through if when that from talk Wondering in to about important have Amazon? milk you would business be to channel coconut

Jason Vieth

anything had behind at in she now start is way we're add jump that we can has where afterwards. I'll I about year Yes. be. But if right planned looking and just Anya you a Amazon we're tell to to the

were to we we QX where we getting year just and our a rebuilding basically quality We from for knocked that's recall We're also us so had And more through year. QX a felt would cohorts, marketing than as [indiscernible] like were the were Amazon straight really last guys had coming much before. we're at spend. issue, time. I had next to maybe the and We built And had we're we we you what cohorts, back in, the back efficiently Lo QX coming now. We're say those year QX, ago. been growth we up and where heavied year. behold,

existing spend really a we're advertising reduced, sales. strong bit yet and quite is from our So seeing the estimates

that have competitors the We consumers number in large of current we place. conquesting right inventory we're convert as full as opportunity now now tremendous And those a subscribers. into on to our of a of still over well -- have number that those working

really year. So about We're for next that it. about excited channel excited

growth had, of keep big drivers. able recall hands one but year. consumers. to were product to materialize going we out the that quality it this of with for Unfortunately, event we that our You That didn't be of was

that in pause buybacks had place. to really except got -- all we call months our back X all and business got X-ish and it, our we no there basically, in one downside existing put basically on So back of was while X for, -- put stock a everything our of or

front driver should here, from really growth we in of So great have a us.

Alex Fuhrman

Okay. That's Bobby's years. last a this or high on bit really the bit the than on question, more QX. And any I touched gross mid- but helpful. That's of kind you then think XXs in this a couple margin margin, to little quite quarter, with just of done you've year gross

Now that we lower QX that shelf-stable to little could throughout first rate the in why there step bit to maybe I a be being manufacturing a run any you've year? got reason expect your half see and core outsourced. a is mean, creamer next is next Is little up we expect should of that maybe year?

Jason Vieth

bought thus to opportunity and market would Alex, And where through see place, see are next of risk. as may and looking that share margins think some right that we about opportunity we the investments Yes. we in it make with go year forward improve our see far that are initiatives commodities commodity movements here. That can cost you we at further we like actually always we have you're but also Great question. go here, that gain I to There as against tell we being we we you, said, savings online QX. and looks are from where actually than more we given retail. where from

in XX-plus that in tell long-term really QX But we we'll go won't the And forward. to. no, see start a as sitting we be We spike range go that able you I forward. see to a that be as hold we trend so don't we of balancing would really on be

Anya Hamill

Alex, to I'll And add just Hi, is Anya. it. this

on somewhat is really how it the going cost and quarters line so X, add with promotions levels. Friday in seasonally expected ] QX be for better sorry, to kind to but seasons, we or just heavier our depending far the it's the [ fluctuate ] consumers, a steady sales, of down to season the want QX, -- that timing and drive be it with is and quarterly our throughout QX in at of year I'll that event have the and [ comes top because just wise, season then to expect that's to to then our QX I as line next trip, little So as QX, margin up back I'm QX and pretty Black we or

Operator

time. There additional are no this questions at

closing conference any the pass I'll So for back to team management the remarks.

Jason Vieth

to well. us future for for when And just in gets Yes, growing investors gratifying with industry, fun leave for report our here, us, our excited for this I'll for everyone time, back for continued ] is. our think management meeting CPG many companies team to it margin Superfood just now some top that's [ we bright don't of our and business. turnaround. And since gross not joining -- really been line hopefully, to and future you of and the Laird say obviously want and as The It's with again, thanks all able team the exciting with as I in quite extremely as today. I've to this say get progress the frankly, is on exciting, can as not entire the I be

Operator

for That you your conference concludes call. today's participation. Thank

You may your now disconnect lines.

Laird Superfood (LSF) 8 Nov 232023 Q3 Earnings call transcript