Good afternoon. Thank you for attending today’s Laird Superfood, Inc. Second Quarter 2024 Financial Results. My name is Jaelynn. I’ll be your moderate for today. [Operator Instructions] I would now like to pass the conference over to our host, Trevor Rousseau. You may proceed.

Thank you and good afternoon. Welcome to Laird Superfood’s second quarter 2024 earnings conference call and webcast. On today’s call are Jason Vieth, Laird Superfood’s President and Chief Executive Officer; and Anya Hamill, our Chief Financial Officer. By now, everyone should have access to the company’s second quarter earnings release, which was filed today after 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 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.

Thank you, Trevor. Good afternoon, and thank you to all of our investors that continue to follow and support us and a kind welcome to those of you who are just joining the journey. Today, I am thrilled to share that the Laird Superfood growth story has once again put up results that should be the envy of the industry. During the second quarter, we grew the net sales of our business by an impressive 30% versus the same period 1 year ago, which marks an 8 point acceleration versus the 22% sales growth that we had reported during Q1 of this year. Net sales growth during the second quarter was once again led by our E-commerce segment, which grew by 47% year-over-year. Our sales through Amazon once again led the way with an eye-popping 80% growth rate in Q2, driven by our continued improvement in product availability, marketing effectiveness and inventory management. We had our most successful Prime Days event in the history of Laird Superfood this year and are excited for the opportunity that we now have to build on that success with new consumers that just entered our franchise. During Q2, our DTC business grew by an impressive 32%, which you’ll recognize as an acceleration from the already strong 25% growth that we had reported in this channel during the first quarter. With approximately half of our DTC sales now coming from subscriptions, we have built a predictable revenue model that fosters stronger customer relationships and increased brand affinity by our consumers. Beginning in 2024, we have focused our DTC channel in providing cultivated content, unique products and programming from Laird in Gabby, and our consumers are demonstrating that they value it. On the wholesale side of our business, we grew net sales by 9% year-over-year during…

Thank you, Jason, and good afternoon, everyone. As Jason noted, in the second quarter, we have continued to make progress executing the strategy we articulated earlier in the year, which is to return the business to growth while improving profitability. I am pleased to share with you that our second quarter results have exceeded our operating plan on every key metrics. Net sales grew 30% to $10.0 million compared to $7.7 million in the prior year period, and were up by $0.1 million sequentially versus the first quarter of 2024. E-commerce channel led the company growth, increasing by 47% year-over-year and accounted for 61% of our total net sales. Amazon platform had the best ever quarter in the company’s history, delivering an impressive 80% growth, driven by increase in revenue from both subscriptions and new customers, and also lapping last year inventory out of stocks related to the quality event that took place in Q1 of 2023. DTC platform also grew 32%, driven by a steady increase in subscribers and repeat orders, higher order to value and lower discount rates due to strategic shifts in promotional spend. Wholesale net sales increased by 9% year-over-year and contributed 39% of total net sales, driven by growth in retail channel of 26% due to new distribution and velocity acceleration, as well as more efficient promotional spend. This was partially offset by timing of club channel orders shifting into the third quarter. Gross margin came in at 42% in the second quarter, which is more than a 17 point improvement on a year-over-year basis. I’m pleased to highlight that this is the third consecutive quarter where we have achieved gross margin above the 40% threshold. This consistency underscores the effectiveness of margin improvement initiatives we have implemented over the last 18 months, which are…

Thank you, Anya, and thank you to everyone on the call and to all of those that are supporting our journey. We are in an exciting moment for Laird Superfood, one that is now squarely focused on expansion and growth as we introduce our brand and products to more consumers across every class of trade. This concludes our prepared remarks. Operator, we are now ready to open the call to questions.

[Operator Instructions] Our first question comes from JP Wollam with the company ROTH Capital Partners. JP, your line is now open.

Thanks and good afternoon. Hi, guys. Maybe if we could just start on the revenue and the guidance. If I think about kind of the lower end of guidance and I sort of run rate this Q2 number, it gets us just about there. And so maybe if you guys could just talk about what gives you confidence in raising the guidance and whether you sort of see everything in place to hit that lower bound or if there is anything in the back half of the year that you’re really counting on to accelerate in the last two quarters? And then maybe just if there’s anything that you think is worth pointing out in terms of risk to that guidance number.

Yes. JP, I’ll start, and then I’ll hand it over to Anya to give you a few more details. But the way to think about our business is there’s a bit of seasonality in the second half. There are a couple of big events to take place. One, being the general back from school, I’m sorry, back from summer vacation, back to school period, that generally has a very positive outcome for us, especially at retail. Typically, what you see is a lot of people that have been away on vacation, leaving some of their healthier habits, enjoying summer, come back and buckle down, and the start to school seems to be the time that they do that. And so, in most of the wellness brands, there is a similar type of trend. The other thing that happens for us in the second half that really plays a large role is the startup of our seasonal programs. So we have a couple of seasonal queues that perform very well for us. We do get additional displays at retail with a number of those items. We’re really excited about the seasonal program again this year and what we have been able to accomplish in terms of now and in preparation from all the channels. And really, what’s happening in the second half is just a continuation of some of these trends. Amazon is performing incredibly well for us. We continue to build a new cohort. What we’re seeing is kind of that the gift that keeps giving behind that because once the cohorts are established, and you’re able to market to them, you provide the product, obviously, it becomes a lot less expensive to continue to distribute product to them and further build awareness against your brand. So, all of that happens. And then finally, we get to the seasonal period with Black Friday coming in, which is very important to us in DTC and in Amazon, the online shopping behavior really accelerates during that period. So we’re very bullish. We’re pretty conservative crew by nature. I think you guys probably have come to appreciate that. For us to take up guidance is fairly significant. Anya, anything you want to add?

Yes. I’d just add to what you mentioned, Jason, in our e-commerce business, Black Friday and Prime days, additionally driving sequential increase in the sales rate versus the first half. And also, our marketing pressure was probably one of the lowest in Q2, and we’re expecting to have a stack up marketing pressure in the back half of the year.

Okay, great. That’s very helpful. And so maybe if I just switch over to the gross margin for a minute, obviously, you want to commend the job that’s been done so far to get all the way to 42%. And so maybe if we can kind of just talk about the margin management program that you highlighted, Jason. Am I right in kind of reading through that, maybe we have sort of reached a, at least a temporary ceiling for kind of the scale, call it, the $40 million run rate scale that we are sitting at right now, and that program is a way to kind of see where else we can get some margin expansion from, or do you think that there is more margin to be had even sort of just as the business is going today?

Yes. Great question, JP. I think it’s a little bit of both. So, this March TMM or HMM holistic margin, total margin management concept was created by 15 or so years ago. We executed it in past slides, Anya and I did at companies such as WhiteWave and Sovos, have a number of ideas that we can drive additional margin expansion behind. As does our supply chain, we have a phenomenal supply chain that really dug deep and figured out some very strong fulfillment strategies, co-manufacturing strategies, etcetera. We have gotten a lot of the low hanging fruit out. I think that’s what we see and get to a 40% plus brand gross margin, the minus brand including distribution. And so usually you start looking digging under the covers and see what else is there. We have identified actually quite a few levers still that we have to pull. But there are some offsets. We are seeing some continued inflation in a couple of commodities that are important to us. And at this point, as long as we can hold over 40%, as we have outlined, 40% is kind of the target that we hold ourselves to. We will be over that more in some quarters as we were this quarter, but we really don’t – we are not seeing a path that takes us under that, and we will – we recognize this inflation moves up significantly that will price for that. But right now, we don’t need to. We are very comfortable where we are. We have some additional levers in front of us and we will look doing that low-40s range as we go forward.

Okay. That sounds great. And maybe just to squeeze one last one and probably a bit more open-ended for you guys. But I just want to kind of think a little more high level and sort of think about some longer term growth and kind of what leverage they are available to really kind of stepping on revenue growth from here? Maybe if you want to kind of just talk about how you are thinking of the right mix of marketing going forward, if there is certain channels that you are seeing as effective marketing going forward, or really, if there is just kind of any new product innovation that you think is really kind of catching customers and you want to highlight for sort of the next stage here.

Yes. Well, JP, that really is a good high-level open-ended question, and I can probably talk for 20 minutes. So, I will try to be a little bit more concise. I mean look, the reality is, as we have said many times, we are in the very early innings at Laird Superfood. We have got products, you can pick up any of them, turn them over, read the ingredient label and realize not only are they the smallest number of ingredients of any product in their categories, but they are the best and most premium ingredients. They are all ingredients that you know by name. There are no fillers or additives or stabilizers or emulsifiers, we are really great at putting very healthy food into the packages. And so for us, we feel like we are just starting to get that message out to the consumers, even the consumers that know Laird and that know Gabby, a lot of them don’t know we have a food brand. So, marketing is key, we will continue to build awareness. Product placement is key, we have very low product placement still across both the natural and the conventional channels, even less so unconventional, of course. And so we will continue to make those calls out to retailers. We are building a branded portfolio of products that is healthier than any other that we know of in the industry. And we feel really great about that. We think we are right on the right trends, but it takes time. And so we are being patient. We are spending time with retailers, finding the right retailers that works with putting the marketing behind it, really leveraging Laird and Gabby into that marketing. That’s been just a tremendous. They are tremendous assets to us in so…

Great. That’s very helpful. Best of luck going forward.

Thank you.

At this time, there are no other questions registered in queue. [Operator Instructions] There are no questions registered in queue. At this time, I would like to pass the conference back over to our hosting team for closing remarks.

Well, I don’t have a whole lot more to say, and I think the numbers speak for themselves this quarter. We had a really great quarter. And frankly, are a lot more excited even about what the future has for us. We just completed our strategic growth plan process, shared that with the Board and have just an incredible number of levers in front of us in addition to those that we just outlined a moment ago. And we will be coming back over the next quarters to share more on that. Meanwhile, thanks to everybody for joining us on this journey. As I mentioned, it is early innings. We have a long way to go. We have got a great team, and we are excited to continue to share this with you. So, everybody, be well, and we will talk soon. Thank you.

That will conclude today’s conference call. Thank you for your participation and enjoy the rest of your day.