Laird Superfood Aktie

Hello, everyone. Thank you for joining us, and welcome to Laird Superfood, Inc. First Quarter 2026 Financial Results. [Operator Instructions]

I will now hand the conference over to Trevor Rousseau, Head of Investor Relations. Trevor, please go ahead.

Thank you, and good afternoon. Welcome to Laird Superfood First Quarter 2026 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 our earnings release, which was filed today after market close. It's available on the Investor Relations section of our website at 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 involve risks and uncertainties that could cause actual results to differ materially from those described. 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.

Good afternoon, everyone, and thank you for joining us on today's call to discuss Laird Superfood's First Quarter 2026 Financial Results. I'm Jason Vieth, President and Chief Executive Officer. With me today is Anya Hamill, our Chief Financial Officer. We issued our earnings press release and filed our Form 10-Q after market close today, and both are available on our Investor Relations website.

The first quarter of 2026 marked a transformative milestone for Laird Superfood. On March 12, we completed the acquisition of Navitas Organics, 1 of the most trusted and established names in the premium organic superfood category. Founded in 2003, Navitas brings high-quality organic superfoods with strong presence across natural and conventional grocery, club and e-commerce channels. We acquired Navitas to expand our product portfolio, broaden our distribution reach and accelerate our strategy of building a scaled positive nutrition platform.

Just weeks after quarter end on April 21, we closed the acquisition of Terrasoul Superfoods. Terrasoul is a vertically integrated branded superfoods platform, offering nuts, seeds, dried fruits, powders, baking ingredients and functional beverage mix-ins. It sources globally, processes and packages in-house and distributes through e-commerce, food service and retail channels. This acquisition further expands our product assortment, strengthens our supply chain capabilities and broadens our footprint across multiple channels.

Both transactions were funded through our partnership with Nexus Capital Management. The initial $50 million Series A preferred stock issuance in March funded the Navitas acquisition and the subsequent $60 million issuance in April funded the Terrasoul acquisition. These investments not only provided the capital to execute but also brought strategic expertise as we build a larger, more diversified super food company.

Following these transactions, Nexus now holds approximately 73.8% of our common stock on a fully diluted as-converted basis, and we are operating as a controlled company under NYSE American rules.

Strategically, these moves are about creating a comprehensive superfood platform that can compete more effectively in a rapidly evolving category. Consumers continue to shift toward clean, minimally processed functional foods with recognizable ingredients. By combining Laird's functional coffee solutions and performance focus, Navitas' premium organic superfood leadership, and Terrasoul's vertically integrated ingredient expertise, we are building a differentiated portfolio that spans daily use products, functional beverages and broad superfood ingredients.

As we have stated previously, these 2 acquisitions represent just the beginning of our roll-up strategy in the Superfoods and positive nutrition space and we expect to make additional acquisitions in the years to come as we continue to scale the platform.

Through these transactions, we have created a much stronger enterprise that is positioned to generate positive EBITDA and cash flow in the future. Given these improvements, we expect to use our balance sheet to attain some combination of debt and equity financing to support those future acquisitions.

We are already executing our integration playbook across the 3 businesses. For Navitas, which was with us for the final 19 days of the quarter, we are laser-focused on aligning supply chain finance and commercial operations while also preserving the brand's authentic identity and strong consumer relationships.

The early contribution from Navitas in both e-commerce and wholesale channels validates the strategic fit. We have already integrated the Navitas organization into Laird Superfood and I'm pleased to report that we are attaining the expected synergies across the combined organization. Our team is now focused on delivering the COGS, distribution and brokerage savings that we had planned for the second half of this year and beyond.

And with Terrasoul now part of the family, we are applying the same disciplined approach, leveraging shared capabilities in sourcing, co-manufacturing optimization and omnichannel distribution to drive efficiencies and accelerate growth.

The addition of Terrasoul is particularly meaningful. Its vertical integration provides greater control over quality and cost, while its broad product line in nuts, seeds and powders, complements our existing offerings and opens new doors in foodservice and ingredient channels.

At the same time, Terrasoul delivers delayered superfood and enhanced online marketplace capability, which we believe will greatly benefit our entire business in the future.

Together, these 2 acquisitions significantly increase our overall scale which we believe will improve our ability to invest in innovation, expand our consumer awareness and distribution footprint and deliver better economics over time.

Looking forward, we are confident that this platform positions us to capture a larger share of the growing positive nutrition market. We will continue to focus on driving repeat usage expanding our customer base across both e-commerce and wholesale, optimizing our supply chain and delivering innovative new products that align with consumer demand for functional clean label solutions.

With regards to Q1, I am pleased to report that all of our brands achieved growth well in excess of the industry. Anya will share more details in a moment, but I can proudly report that our Q1 company growth was 20% versus last year, driven by the wholesale channel in our Amazon platform and including more than 2 weeks of Navitas Organics post acquisition.

Even as we integrate 2 businesses, our supply chain continues to perform remarkably well. And while we had some margin pressure in Q1 related to inventory that was costed at higher commodity prices and with tariffs, we expect that to mitigate as we move forward through the balance of the year since the commodity prices have already come down and tariffs are now removed from our products.

And I would be remiss if I did not mention that we are also leveraging AI in a very aggressive fashion and across our entire business. We now have AI supporting our team in forecasting, planning and execution activities across all of our functions, including supply chain, finance and marketing. We are already reaping the benefits of this technology in the organization as we transition the Navitas business to the Laird team with very little incremental headcount.

I also want to share that we are making important shifts in our commercial engine. I am pleased to announce that Andy Judd has returned to the company to lead our marketing efforts. Andy was most recently at Poppi where he led the marketing activities as the brand rapidly scaled to more than $500 million in revenue and to an eventual sale to Pepsi. Under Andy's leadership, we will be pivoting more work in-house to drive greater efficiency, creativity and speed to market. This transition will involve some near-term ramp-up investment but we are confident that it will deliver both better ROI and stronger brand storytelling and consumer activation across our portfolio.

On the sales side, we are bringing in new leadership to accelerate our wholesale momentum, particularly in conventional grocery and club, where we see substantial runway. We'll be able to share more on that appointment during our next call.

While the near term will involve integration costs and complexity, we are energized by the strategic position that we have built and the long-term value creation opportunity ahead for our customers, our team and our shareholders.

I'll now turn the call over to Anya to provide greater detail on the first quarter financial results. Anya?

Thank you, Jason, and good afternoon, everyone. I will now provide additional detail on our first quarter 2026 financial results.

As Jason highlighted, Q1 was a foundational quarter for our platform. Now I will walk you through what drove our Q1 results and then spend some time on how we're thinking about the full year picture for the combined 3 brand business.

Net sales for the first quarter of 2026 was $13.9 million, up 20% compared to $11.7 million in the first quarter of 2025. Navitas Organics contributed $1.6 million of net sales in the quarter, representing its first partial period contribution following the March 12 close.

Wholesale was again the primary growth engine, growing 37% year-over-year to $7.5 million and representing 54% of total net sales. This was driven by the addition of Navitas wholesale revenues as well as continued distribution expansion, product assortment wins in grocery and club and strong velocities at shelf.

Our e-commerce channel grew 4% to $6.5 million or 46% of total net sales, driven by the addition of Navitas e-commerce revenues and continued strength on Amazon.com, partially offset by softness in Laird's direct-to-consumer channel.

Gross margin in the first quarter was 33.3% compared to 41.9% in the prior year period, a contraction of 8.6 percentage points. I want to give you a clear breakdown of what drove this. Approximately 3.2 percentage points of the contraction was driven by a timing-related inventory cost and benefit in the first quarter of 2025 that did not recur in '26. This was a prior year item, not a reflection of current period performance. The remaining approximately 5.4 percentage points reflects a combination of unfavorable channel and product mix, inflationary commodity costs, particularly in coffee and the impact of import tariffs on certain input costs. These are real pressures that we are actively managing.

The total operating expenses were $7.7 million in Q1 of 2026 compared to $5.1 million in the prior year period, an increase of 50%, which I will explain was largely driven by onetime acquisition cost.

General and administrative expenses increased by 73% to $3.9 million. The increase was driven primarily by $1.3 million of Navitas acquisition and integration related professional fees, which are onetime in nature as well as planned increases in personnel costs as we build the team to support a scaled multibrand platform.

Sales and marketing expenses increased 33% to $3.8 million, driven by higher media spend agency fees and increased selling costs on higher sales volume.

GAAP net income for first quarter of 2026 was $1.8 million or $0.12 per basic share compared to a net loss of $0.2 million in the prior year period. I want to be transparent about what drove this. The GAAP net income figure includes $4.7 million discrete nonrecurring income tax benefit resulting from the release of a deferred tax valuation allowance acquired in connection with Navitas transaction. This reflects the recognition of deferred tax liabilities assumed an acquisition, a onetime accounting benefit, not a reflection of operating performance.

Stripping out that nonrecurring item and looking at adjusted EBITDA, which we believe is a better representation of our underlying business performance, Q1 2026 adjusted EBITDA was $1.1 million loss compared to positive $0.4 million in the prior year period. The year-over-year decline reflects the gross margin pressures that I described earlier, such as commodity cost, tariffs and unfavorable product and channel mix as well as higher marketing and selling investments to support our growth strategy.

As we integrate Navitas and Terrasoul and begin to realize procurement and operational synergies we expect our adjusted EBITDA to improve meaningfully through the balance of the year.

Turning to the balance sheet. As of March 31, 2026, we had $10.5 million of cash, cash equivalents and restricted cash and no outstanding debt. Net working capital was $25.7 million, up from $11.1 million at the year-end 2025, reflecting the inclusion of Navitas working capital acquired in a transaction.

Inventory increased to $17.3 million from $7.8 million at year-end 2025, reflecting the addition of Navitas inventory.

Cash used in operating activities was $3.8 million in Q1 of 2026 compared to $1.3 million in the prior year period. The increase was driven primarily by payment of Navitas acquisition-related costs and changes in net working capital related to timing of receivables collections and payables.

I also want to give you an important post-quarter data point on liquidity. On April 21, we completed Terrasoul acquisition for $48 million, funded by the $60 million subsequent issuance of Series A preferred stock to our Nexus Capital Management partners. After funding the acquisition, the remaining proceeds are available to support the payment of certain liabilities related to the acquisition as well as combined enterprise working capital needs. As of April 30, 2026, the combined company had approximately $24 million of cash and restricted cash. We believe this provides a solid liquidity position as we execute our integration plans.

Now turning to 2026 outlook, and let me walk you through our 2026 guidance for the combined platform. For fiscal year 2026, the company expects consolidated net sales in the range of $138 million to $148 million, reflecting full year of Laird Superfood and the post-acquisition contributions of Navitas and Terrasoul. Adjusted EBITDA is expected to be in the range of $8 million to $12 million for fiscal 2026, reflecting full year of Laird Superfood and the post-acquisition contributions of Navitas and Terrasoul businesses, driven by top line growth and early synergy realization. Adjusted EBITDA excludes transaction and integration costs, which are onetime in nature.

I want to reiterate 1 more time that this guidance does not include the periods of 2026 that we did not own each of the Navitas and Terrasoul businesses. We will provide updated guidance as integration milestones are achieved and our visibility improved.

We also want to help dimensionalize how the entire business is growing in 2026, but that is difficult given that Terrasoul has not yet been audited on the GAAP principles. So for illustrative purposes only, on a pro forma full year basis, as of Navitas and Terrasoul were acquired on January 1, 2026, aggregating all 3 businesses and comparing 2026 to 2025 using the same account and methodology as each company utilized in 2025, we would expect full year 2026 net sales to grow in the range of 8% to 12%.

In closing, first quarter was a transitional quarter by design. We absorbed the cost of building the platform, acquisition fees, working capital investment and integration spending while continuing to deliver healthy top line growth.

Our focus for the balance of the year is clear: integrate effectively, capture synergies across procurement and operations, continue to grow the top line across all 3 brands and convert that growth into meaningful adjusted EBITDA improvement.

And with that, I'll turn the call back to Jason.

Thank you, Anya. 2026 will go down as another pivotal year of transformation for Laird Superfood. With the successful acquisitions of Navitas Organics and Terrasoul Superfoods now complete, we have significantly expanded our scale diversified our portfolio and strengthen our position in the fast-growing positive nutrition category. We've brought together 3 strong complementary brands with leading positions across functional beverage, premium organic superfoods, made with close to the earth, minimally processed ingredients, creating a powerful platform that is far greater than the sum of its parts.

While the near term includes integration costs and some associated margin pressure, the long-term opportunity is clear and compelling. We are building a scaled, diversified superfood company with improved economics, stronger innovation capabilities and multiple levers for sustainable growth. We remain confident in our ability to deliver positive EBITDA and cash flow as we execute our roll-up strategy and continue to pursue additional strategic acquisitions.

I want to thank our entire team for their tremendous work and dedication during this transformative period, our new partners at Nexus Capital for their strategic support and all of you for your continued interest in Laird Superfood. We look forward to updating you on our progress throughout the remainder of 2026.

Thank you again for joining us today. This concludes our call. Operator, we are now open for questions.

[Operator Instructions] Your first question comes from the line of Eric Des Lauriers with Craig-Hallum Capital Group.

Congrats on another acquisition here and the strong integration so far. My first question here is just on Terrasoul. Just wondering if you could please expand on the vertical integration capabilities specifically. You mentioned greater controls on quality and cost and then opening up new channels in foodservice and ingredients. Just wondering if you could expand on that a bit for us?

Eric, great question. Thank you. It's nice to hear from you. Yes, we're really excited about this Terrasoul acquisition. This is really a full circle moment for us at Laird Superfood, because when I first came here 4 years ago, we were self-manufactured. We had a facility up in Oregon, and we were distributing out of it. And we were just very subscale and not ready to be undertaking those activities. So we ultimately had to shut that down, move to a co-pack 3PL outsourced manufacturing and distribution system. And frankly, that's what's save the company at the time. We were able to flip gross margins from 15% to over 40% and to really take control of our business.

And so that was a move that we undertook just around 3 years ago now and to come full circle to this position, as I mentioned, where we are with Terrasoul. We're really excited because what it really is indicating from our perspective is that we now have the manufacturing scale and size of business that warrants having our own facility.

The operators that were running Terrasoul, the owner, Dennis Botts and his team were doing a fantastic job at the size that they already were. They were operating pretty much, I think -- actually everything being produced inside of Terrasoul, in fact, producing for other brands at different times as well in order to achieve scale and cost benefits. And so now with the addition of Navitas and Laird and the opportunity to bring those brands into Terrasoul to capture that vertical integration capability that they've built, I think, is really exciting for us.

At this point, the Terrasoul facility is running really well, but it's not fully utilized. It's currently running really just 1 shift throughout the week. There's opportunity over time to add additional shifts but also to add additional lines to the shift that's there.

So in Terrasoul, we have a group of very efficient and proficient operators that really know how to run these particular products, which are very similar, as you know, to the Navitas and the Laird products.

So we're not going to jump into that too quickly. We have a lot on our plate right now just integrating the Navitas business. Our integration strategy is essentially to integrate Navitas while we let Terrasoul operate on its own -- in its own facility. And as we bring Navitas and get that topped in fully over the next couple of months, we'll put in place that plan to start looking at Navitas and Laird into Terrasoul as well.

So we'll take it in steps. We're going to do it very thoughtfully. We've seen others that have made messes of acquisitions. I've done a lot of acquisitions over the years, WhiteWave, Sovos, et cetera. I've seen the good and the bad we're going to be very careful and thoughtful, and we have a really great team down there that I think we'll be able to handle once we make that transition.

So -- sorry, and then just to flesh that out a little bit more. So they are producing out of that facility, as I mentioned, they're also distributing out of that. And in the distribution, they're distributing to Amazon, to other online marketplaces, to foodservice operators and to a smaller retail business as well. And so we -- in Terrasoul, we have operators that really understand how to run omnichannel manufacturing and distribution. And so we're really excited and optimistic about what that will look like as we combine the businesses, not only from a cost perspective, but enabling new capabilities as well.

Regarding the channels, you asked about the channels, so I'll hit that. Terrasoul really interesting business and very complementary to the other 2 brands that we already had in the portfolio. Terrasoul has a much larger food service component than either of the other 2 businesses. So with that, we pick up over 3,000 distribution points that are being drop shipped out of the facility and right now are servicing Terrasoul to those product sites or to those consumer sites.

As we go forward, we obviously have 2 more brands with very complementary and interesting products for that same channel. So we're really excited about what that can look like. Those are facilities we don't currently get to, retail facilities, so we don't currently service in the other 2 brands. So it's completely additive to our existing footprint.

We also -- with Terrasoul acquisition, we also get a very proficient Amazon and marketplace operator that I think will help us to bring our other 2 business, other 2 brands to an even greater height in those channels as well.

So we would tell you that it fits really, really well with the other 2 businesses. There is some crossover in products, not as much as you would expect, but very similar products that are made the same way with the same type of equipment in the same type of facility that get distributed on the same trucks, but to different locations and with an additive online capability that we're really going to harness as well.

Awesome. That's great color, and really great to hear. Looking forward to what you guys can do with that over the coming quarters here.

And then just overall on M&A. So you mentioned you guys are still active, not stopping here. Of course, you're going to have some integration time. Just wondering if you could kind of give us a high level sort of outlook here. How should we think about overall pacing of acquisitions? Is it sort of 1 or 2 a year? Or just any sort of framing on either timing or size of acquisitions would be helpful.

Yes, Eric. This is -- I'll just say this is not a strategy that is set in fully set concrete at this point. We're still working through that and really assessing not only what our appetite is, but what our aptitude is for being able to integrate and continue to move, obviously, keeping an eye on the existing businesses. So we'll learn more as we work our way through Navitas and then Terrasoul.

But I think you're pretty safe if you say 1 to 2 per year. But again, like I mentioned last time around when we completed Navitas and I was asking them, would you do another 1 this year. We would. So at the right property became available over the course of the 2026 calendar year or any time in the next year. Would we make a third? I think we would absolutely look at it. We would need -- obviously, we would need to be able to buy it right -- buy it at the right price. And believe that there is a nice synergy play or accretive play to the business that we have today.

But we -- I would say we have a nice muscle in this space that we that we're developing and proving out here with Navitas right now. And we have really great partners over at Nexus that help support that acquisitive strategy that we have.

So this is going to be a roll-up. We're going to continue to add additional brands, but we're going to be very thoughtful in the brands that we add. They're going to fit into this health and wellness space as close to the earth as we possibly can get. Minimally processed, real food type of brands. And those -- don't -- when they come available, we want to make sure that we're ready to take a hard look at those. So I think 1 to 2 is a pretty safe assumption, but in this particular case where we've already done 2. Maybe you could kick off -- start that year anew right now and say 1 to 2 in the next year might be a goal for us.

That's very helpful. Excited to see what's to come with you guys, and congrats again.

Your next question comes from the line of Nicholas Sherwood with Maxim Group.

I'm kind of thinking about how you're -- how are you going to be managing and facilitating the best practices across the 3 organizations you have? How you're sharing the e-commerce and logistics specialties from Terrasoul versus maybe some of the more the wholesale specialties at Navitas and just making sure that lines of communication are clear.

Yes, it's a great question. The reality is we're still very -- in terms of the organizational science, we're still very small and nimble organization. We're leveraging AI very heavily. You heard me say that in the prerecord. We're leveraging AI very heavily, and it's really amazing how we're able to add on and really double our business with very few required additional resources. And I think that's going to continue to be the case as we go forward.

Terrasoul is different for us because it is its own manufacturing facility, and we need to have an organization down there that's leading that facility. So you don't have the same capability with that as you have with the same opportunity, I should say, as you have with Navitas in terms of being able to really consolidate.

But as we go forward and we make additional acquisitions and we fit more manufacturing into Terrasoul and we fit more brands into the overall holdco, I think that you'll see that we can continue to stay very nimble, very small.

As a result, we don't have a lot of communication barriers between the companies. So what we've done thus far is we've integrated the Navitas folks that ultimately we're going to stay with the business. They're working side by side with our team. It's -- we don't have all the same geographical benefit. We do have teams split between California, really California, Oregon and Colorado at this point. There are a few others, but we certainly are able to leverage the online tools that became available during the COVID time really effectively. And so I would say that the teams are really well integrated already. They understand the swim lanes, responsibilities that have been set very clearly. As I mentioned, we brought on a new wholesale leader that will be joining in the next couple of weeks and more of the sales leader that will be joining in the next couple of weeks that we'll be able to talk about. And we brought on Andy Judd to run marketing. And each 1 of those 2 leaders is obviously going to be setting up the right processes and controls across the entire system to make sure that from a commercial perspective, we're coming to market with all 3 brands.

Jared Larkin, who leads our supply chain doing the same thing across the entire supply chain. So it was an outsourced. Supply chain now has a very large plant that's producing by far, our largest producer that's producing over 50% of all of the unit volume. So he needs to stay very close with that team and make sure that they're fully integrated.

But it's really not a challenge. I think we were built to be able to do that by virtue of having a couple of locations already. And we're not siloed. We're a very flat organization. And so I think we're going to see that that's not a problem at all.

Okay. Perfect. I appreciate that detail. And then thinking about the foodservice opportunity, what sort of foodservice locations should we be thinking about talking about fast casual restaurants, hospital cafeterias, university dining halls, airlines, how should we sort of frame that new part of the business?

Yes, I know that question. That is very early development for us by virtue of these 3 brands. We think we have an opportunity in all of those channels. However, we will be prioritizing those. And obviously, with somewhat limited resource to a relatively limited resource, making sure that we prioritize and attack them appropriately.

To start, Terrasoul has a tremendous business that they've already built out and think of it as kind of that health and wellness-oriented space, 2 shops in particular, we'll be looking at all of the coffee shops with the Laird lineup, but also all of the great products that Terrasoul and Navitas bring to the same operators. We think that, that portion where health and wellness really lives in a strong way is a great opportunity.

But you hit it on the head. I mean hospitals, if you keep spending time in a hospital, it's 1 of the biggest kind of quagmires. I think we try and send people that are sick to the hospital to get healthy and they don't eat well and neither does anyone that goes in to see them. And I think that, that is a really great opportunity for us again, with those lesser processed close to the earth foods that we think we can get after over the next couple of years.

And CNU is really important as well. You really have an opportunity to get to the younger generation that's proving they care a lot more about health and wellness than anyone my age did at that age.

And so we'll be prioritizing all of those. We already have a capability that I mentioned with Terrasoul to be able to drop ship directly to location that we think creates a real competitive advantage for that entire channel.

Your next question comes from the line of George Kelly with ROTH Capital Partners.

A few for you. First, maybe a follow-up to 1 of the prior questions about your M&A pipeline. Curious where you think there's still opportunity or maybe it's within your product portfolio or capabilities? Like where else might it make sense to look for future M&A?

Great. George, always a pleasure to take your questions. So this is a good one, and we are looking -- we have a view towards additional brands that fit really nicely into this portfolio that we're building in the superfood space. But exactly, as you said, also looking at various capabilities that we can leverage to take our existing brands to new locations. And that's -- Terrasoul really checked both of those for us, to be honest, that capability, really, we were interested because of the products, and then we realized really this incredible set of capabilities that I've been talking about today was there as well. So when you get the 2 for 1, you get even more excited. But I think you're exactly right. We'll be looking at both of those areas as we go forward.

Our focus is domestic. Looking at the U.S., maybe North America in general, but the U.S. has really our geographic kind of hub or main location. And I think within that, the product space, the brands that are bringing new products, especially in those 2 areas that we've already highlighted in the Q that being coffee solutions and functional foods, there are a tremendous amount of brands that are in that space that are let's say, $40 million to $80 million, give or take, 10% or 20% to that, which is kind of the sweet spot of where we want to be looking. I wouldn't say we wouldn't look at something larger that can anchor the portfolio. But we really believe if we can take a handful of $50 million, $60 million, $70 million brands and take them up to $100 million and then $150 million and beyond, build a portfolio of those in the healthy space -- healthy food space. So we'll have a really unique portfolio of products here.

And so that's kind of the strategy on the product side. Capability-wise, I just mentioned the foodservice space and our interest in getting there. If we found a particular product that was able to take us into a channel, for instance, foodservice, but into a channel where it can bring real leverage that we could utilize for the other brands. I think that would be something we'd really need to look at as well.

But you want -- if you're going to do that, I think we don't want to buy a brokerage. So really what you want is you want a product that's been proven into that space. And so that's where you get yourself back to another Terrasoul type of acquisition, which is really the sweet spot. We would love to do 5 more Terrasouls, to be honest with you.

Okay. That's helpful. And then other questions just around your guide -- the full year guide. I know the first half is just a little messy because you're doing these acquisitions and they're layering in. But if we look at the back half, what's baked into your guide, is it fair to say that you'll be doing like a low 30s percent gross margin and around a 10% EBITDA margin in the back half of the year? So that's the first part. And then second part of the question is if I'm ballpark with those ranges, are there a lot of synergies that are not sort of fully baked into those numbers or longer-term synergies, maybe they'll be more fully realized in 2027. Is that a fair statement? So if you could cover those 2 questions, that would be great.

George, this is Anya. Thanks for the question. So I'll kick it off, especially on margin and then Jason jump in. So yes, in terms of the gross margin, we certainly have acceleration plan then for the balance of the year to be in the range that's probably low to mid-30s. And there's really 4 drivers to that acceleration. One is the top line build that we're anticipating from new distribution, reduced promotional spend as well as slot in charges that we incurred in Q1 for this new distribution. Then there's some commodity favorabilities as well. In Q1, we're still going through higher cost commodities that were purchased last year with tariffs. The channel mix and product mix becomes more favorable in the balance of the year as well as tariff refunds that are anticipated. And then, of course, the fourth driver is addition of Terrasoul that wasn't reported in our Q1 numbers since we didn't complete the acquisition until Q2.

So -- and then early synergy realization, to your point, is that we're early in the acquisition, and we feel like we are on track with our synergies expectation. And it won't be a full year. This year, it will be partial. But we are -- we feel good about it, like I mentioned, on track, and that will be reflected in the back half numbers as well.

Maybe just a follow-up. Is the 10-ish percent EBITDA margin in the back half realistic?

I think that's a little high, especially with just putting those businesses together. So I think that's -- maybe mid. It would be mid-single digits would be more appropriate.

Yes. I think high single digits. So George, the way I think about it is that we expect to be a double-digit EBITDA business, but we need to get through the full synergy play. So exactly as you asked, there are synergies that we won't get to in 2026, moving the production into the Terrasoul facility is a great example, as I was talking about previously. We know that there are dollars that will be in play, quite a lot of dollars that will be in play when we do that. But that's staged for beyond 2026 or maybe to start later in 2026 and then bleed into '27.

So I think that it would be a little bit aggressive to expect that we're going to be all the way to 10% plus EBITDA in the back half of the year. We'd love to. It doesn't mean we won't be pushing for it. But I think it would be a little bit aggressive just because the timing of some of these synergies as we work our way through the integration, just won't allow us to get all the way there.

[Operator Instructions] There are no further questions at this time. I will now turn the call back to Jason for closing remarks.

Great. Thank you. Thanks to all of you for joining us again today and for your continued interest in the company. We appreciate your time and all the thoughtful questions that came at us again today and we look forward to updating you on our progress next quarter where we'll have even more to share on the Navitas and Terrasoul acquisitions. This concludes our earnings call. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to Laird Superfood, Inc. Fourth Quarter 2025 Financial Results. [Operator Instructions] I will now hand the conference over to Trevor Rousseau, Head of Investor Relations. Trevor, please go ahead.

Thank you, and good afternoon. Welcome to Laird Superfood's Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. On today's call are Jason Zith, 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 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 involve risks and uncertainties that could cause actual results to differ materially from those described. Please refer to today's press release and other filings with the SEC for a detailed discussion of these risks and uncertainties. And with that, I'll turn the call over to Jason.

Good afternoon, everyone, and thank you for joining us today. I'm Jason Vieth, CEO of Laird Superfood, and I'm joined by our CFO, Anya Hamill. We appreciate you taking the time as we review our fourth quarter and full year 2025 results, which we released earlier today. Fiscal 2025 was a pivotal and transformative year for Laird Superfood. We delivered record net sales of $49.9 million, up 15% versus the prior year and in line with our revised guidance. In the fourth quarter alone, net sales rose 15% to $13.3 million.

This growth was broad-based and especially strong in our wholesale channel, which surged more than 40% in both Q4 and for the full year. That momentum came from meaningful distribution expansion paired with continued strong velocities in grocery and club outlets. Retail consumption data through the latest quad week ending February 22, 2026, confirms the health of that wholesale acceleration. Across measured natural and MULO channels, coffee posted the strongest full year performance of any Laird Superfood product group, plus 45% dollar growth on plus 18% TDP growth over the last 52 weeks.

Shelf-stable creamers delivered plus 15% dollar growth for the year, maintaining the largest share of our portfolio at 28% I am also excited to report a very successful relaunch of our refrigerated creamers during late Q4 into early Q1, which included reformulation to what we believe is the cleanest and best tasting liquid creamer product in the market.

In addition, we repositioned our creamer to an extended shelf life refrigerated product packed in a post-consumer recycled plastic bottle. We believe that these changes to a cleaner formula and an already recycled bottle improve our positioning with both our retailers and our consumers. And after a challenging 2025 for this product, we are already seeing strong momentum in the latest 4 weeks, up 7% in the natural channel versus the same period last year. I want to be clear that these results are no accident. They are direct proof that our strategy to win in coffee solutions, which includes coffee, creamers and lattes is working.

Consumers are responding to our complete ecosystem of functional better-for-you coffee and coffee companions, and that is translating into outsized velocity and distribution gains in our core categories. E-commerce remained resilient at roughly half of total sales in Q4. Softness in our direct-to-consumer platform was partially offset by strong continued growth on amazon.com, further reinforcing the power of our coffee solutions portfolio with the everyday convenience shopper.

While we appreciate the core set of consumers that come to our DTC site to explore and purchase our Laird Superfood products, we harbor no illusion that Amazon will not continue to win online volume in the future. For this reason, we will continue to leverage Amazon as the growth engine for our e-commerce sales. I also want to give a heartfelt acknowledgment to the entire Laird team for the outstanding job they did of managing through the chaos of sharp commodity inflation, new tariff pressures and ongoing supply chain volatility.

Throughout 2025, they proactively secured strategic inventory ahead of tariff increases, built safety stock to protect service levels and avoid out of stocks and maintained tight operational discipline across procurement, logistics and cost control. That level of foresight and agility under pressure is exactly what allowed us to deliver top line growth while keeping the business running smoothly, and I couldn't be more proud of how this team showed up every day.

Now on to the other big news that we have shared over the last couple of months. Just 2 weeks ago, on March 12, we closed the acquisition of Navitas Organics, funded by the $50 million investment that we completed with Nexus Capital. This transaction is perfectly on strategy and represents a major step in our vision of building a scaled Superfood platform. Navitas brings to Laird Superfood a premium purpose-driven brand with more than 20 years of history, $45.3 million in 2025 net sales and a 31.8% gross margin.

It adds complementary products, stronger reach in conventional grocery and club channels, new customers and greater geographic diversity. Together, Laird and Navitas instantly become a larger, more diversified platform with enhanced scale, cross-selling opportunities and supply chain efficiencies we expect will drive both revenue growth and profit expansion in the years to come. The financing structure itself underscores our confidence in this path.

Nexus invested $50 million upfront through the purchase of Series A preferred stock. Importantly, the investment agreement also gives us the option to call an additional $60 million from Nexus anytime within the next 270 days after closing or up to 360 days if we're actively in discussions on another strategic transaction. These proceeds are earmarked for an acquisition or other growth initiative with any remainder available for general corporate purposes. This financial structure gives us tremendous flexibility to move on additional opportunities should they arise.

Of course, this investment did result in meaningful dilution to our common equity. On an as-converted basis, Nexus' stake represents approximately 56.2% of the company today. We are very transparent about that dilution because it is being exchanged for something that we believe is far more valuable. The immediate addition of a profit-accretive business that we expect will strengthen our overall earnings power and cash flow generation going forward. In short, we expect to be trading some ownership percentage today for a much larger, higher-quality earnings stream tomorrow.

We are genuinely excited about the potential for additional acquisitions as we build out the leading superfood business in the country. With the capital access provided by Nexus and the integration playbook we now have, we see a clear runway to continue consolidating within the superfood and functional food space. Our goal is to keep building scale, broaden our product portfolio, deepen our retailer partnerships and ultimately create a category leader that delivers sustainable, profitable growth for years to come. Looking ahead, our priorities remain clear: drive continued wholesale momentum, protect and expand gross margins through synergies with Navitas and execute a seamless integration while staying opportunistic on further M&A.

With our strengthened balance sheet, expanded platform and talented combined team, I have never been more optimistic about Laird Superfoods' future. Before I turn it over to Anya for the detailed financial review, I want to thank every single Laird teammate, our retail partners, our consumers and now our new Navitas Organics colleagues. 2025 proved we can grow through turbulence and 2026 is going to be the year that we show what a true scaled Superfood platform can achieve. Anya, over to you.

Thank you, Jason, and good afternoon, everyone. I will now provide additional detail on our fourth quarter and full fiscal year 2025 financial results. As Jason highlighted, we closed the year with record net sales of $49.9 million, which was up 15% year-over-year and Q4 net sales of $13.3 million, also up 15% versus prior year. I'll build on those headlines with the underlying financial details.

Our wholesale channel was the primary growth driver, increasing 44% year-over-year to $7.0 million in the fourth quarter and representing 52% of total Q4 net sales. For the full year, wholesale grew 41% to $24.9 million, representing 50% of total net sales. This channel mix shift is a direct reflection of our strategy to transition Laird Superfood to wholesale-led business, and the numbers confirm we are executing against that plan. E-commerce contributed $6.4 million or 48% of Q4 net sales, reflecting a 6% decline year-over-year as softness in our direct-to-consumer platform was partially offset by continued growth on amazon.com.

For the full year, e-commerce contributed $25.0 million or 50% of net sales, down 3% versus 2024. As Jason noted, we are focused on Amazon as a growth engine within e-commerce. and our DTC channel continues to benefit from a highly loyal repeat customer base. Gross margins in the fourth quarter was 34.1% compared to 38.6% in the corresponding prior year period. This contraction was driven primarily by increased product costs from inflationary commodity prices and the residual impact of tariffs that have now largely been canceled for our raw materials as well as the settlement recoveries recognized in the fiscal year 2024 that did not reoccur in 2025.

For the full fiscal year, gross margin was 37.9% compared to 40.9% in 2024. This year-over-year decline was driven by the same dynamics as in Q4, commodity and tariff pressures alongside the nonrecurrence of prior year settlement benefits. Despite these headwinds, we delivered full year gross margins in the upper 30% range, consistent with our stated expectations. Our supply chain team continues to drive efficiency through direct partnerships with key raw material suppliers and co-packing partners, and we remain confident in our ability to sustain gross margins at levels competitive with best-in-class CPG companies.

Total operating expenses for fiscal year 2025 were $22.3 million compared to $19.9 million in the prior year, reflecting planned investments in sales and marketing to support our top line growth. partially offset by continued discipline in general and administrative costs. Net loss for the fourth quarter was $1.8 million or $0.16 per diluted share compared to a net loss of $0.4 million or $0.04 per diluted share in the prior year period. This year-over-year increase in loss was driven primarily by $0.9 million in professional fees incurred in connection with the Navitas acquisition as well as higher commodity and tariff-related procurement costs.

For the full fiscal year 2025, net loss was $3.3 million or $0.31 per diluted share compared to $1.8 million or $0.18 per diluted share in 2024, a year-over-year increase of $1.5 million. Let me be clear about what drove that. The $0.9 million in Navitas acquisition-related fees and $0.7 million in Picky Bar's intangible assets impairment charge. Together, those account for $1.6 million, essentially the entirety of the year-over-year change in net loss. Excluding these 2 discrete nonrecurring items, our core business net loss was essentially flat year-over-year, even as we absorbed significant commodity inflation and tariff headwinds. That is a result we are proud of, and it reflects the underlying earnings progress of our business.

I also want to highlight our adjusted EBITDA performance, which I believe is an important measure of our underlying business progress. For the full fiscal year 2025, we delivered positive adjusted EBITDA of $0.3 million, which is a significant improvement from $0.7 million loss in 2024 and consistent with our commitment to achieve at least a breakeven adjusted EBITDA for the full year. This represents $1.0 million year-over-year positive swing and reflects the operating leverage that we're beginning to generate as our top line scales.

Now turning to our balance sheet. We ended fiscal year 2025 with $5.3 million in cash and no debt. Account receivables increased to $3.9 million from $1.8 million at year-end 2024, reflecting the timing of large wholesale shipments at year-end of 2025, which was subsequently collected in the first quarter of 2026. Inventory ended the year at $7.8 million, down from its peak of approximately $11 million in the second quarter of 2025, consistent with our strategy to draw down the forward purchases we made earlier in the year in order to mitigate the impact of tariff-related cost increases.

Cash used in operating activities was $2.8 million for fiscal year 2025 compared to $0.9 million provided by operations in 2024. The year-over-year change was primarily driven by working capital dynamics, specifically the inventory build in the first half of the year and the timing of year-end wholesale receivables. As those receivables have since been converted to cash and inventory levels continue to normalize, we expect operating cash flow to improve throughout 2026. Now on to 2026 outlook.

While we are not providing detailed formal guidance for fiscal year 2026 at this time, I do want to share our directional expectations for the combined business. As a starting point and for context, Navitas generated net sales of $45.3 million and gross profit of $14.4 million, reflecting a gross margin of approximately 31.8% for fiscal year 2025 and reported net income of approximately $1.6 million for that period.

These results are on a historical stand-alone basis and were not included in Laird Superfood's consolidated 2025 financial statements. Combined with Laird Superfood's $49.9 million in 2025 net sales, we are building from a meaningful combined revenue base. Looking ahead, we expect net sales for the combined business to grow by at least high single digits in 2026. and we expect adjusted EBITDA to increase driven by top line growth and the realization of integration synergies across procurement, supply chain and operations.

We will provide specific full year 2026 guidance in connection with our first quarter 2026 earnings release, and we look forward to sharing more details at that time. And with that, I'll turn the discussion back over to Jason for any closing remarks.

Thank you, Anya. In closing, fiscal 2025 was a year that tested our resilience and proved our conviction. We delivered record revenue, strengthened our wholesale momentum, successfully relaunched our refrigerated creamers and most importantly, took a transformative step forward with the acquisition of Navitas Organics and our partnership with Nexus Capital. We are no longer just a promising coffee and creamer brand. We are now a scaled, diversified super food platform with greater reach, enhanced capabilities and a clear runway for accelerated growth and margin expansion. The foundation we've built, combined with the talent and dedication of our combined teams, positions us exceptionally well for what's ahead.

To our shareholders, thank you for your continued belief in our vision. To our retail partners, your support and partnership have been instrumental. To our consumers, your loyalty and enthusiasm for better-for-you functional products inspire us every day. And to every member of the Laird and Navitas teams, thank you for your hard work, creativity and unwavering commitment through a year of significant change. We enter 2026 with tremendous momentum and optimism. This is just the beginning of what we believe will be a multiyear journey to build the leading super food company in North America. Thank you again for joining us today. We look forward to updating you on our progress when we report first quarter 2026 results. Operator, we are now happy to take questions.

[Operator Instructions] Your first question comes from the line of Nicholas Sherwood of Maxim Group LLC.

My first question is how much crossover in retail locations exist between Laird products and the Navitas products? And has there been a substantial improvement in average items carried?

Nicholas, this is Jason. I got the first part of your question, what was the last part?

The last part was has there been a substantial improvement in average items carried with the combined portfolio?

Yes. So let me dimensionalize the portfolio a little bit. So where it is. So in the case of Navitas, if you think about this business, a pretty similarly sized business to Laird Superfood. They have more exposure to the wholesale channel than we do. So they don't have as large of an online business than we do. There is a significant amount of crossover when you consider retailers similar to Laird Superfood. They are predominantly natural channel. They've grown up through the natural channel and largest accounts being.

So very similar to the Laird Superfood portfolio that exists coming into this transaction. In terms of average assortment, we'll be working on both of these brands. So we're surviving both brands. So I want to be really clear on that. This is a play as we go forward where we will be managing multiple brands under the LSF ticker symbol, but we'll have it as a house of brands.

[indiscernible] being equally important, equally sized at this time Superfood is a great portfolio of products that they compete in different categories, but also in very similar temperature state and shelf stable bag or pouch products that very much like what you see with the Superfood. So there's not really a consolidation of items that take place. This is actually an expansion of items as you consider both brands, but there is quite a lot of overlap, and we're working through that now with the combined sales organization, which will really allow us to go to market in a more impactful way with all of those retailers that I mentioned as well as just giving us additional to go to approach retailers in the space where we've long indicated that as being the largest go-forward opportunity for us.

Now we can go in with 2 exceptional brands and really play a much more important role to those retailers as well. So we're really excited about the assortment opportunities that this should create being able to leverage one brand for the next brand. Those relationships are super important and being able to utilize those across the 2 brands. We expect to see some really nice distribution gains in the years ahead.

Okay. And then kind of switching gears, what have commodity prices looked like in the last month? Are you -- oil prices higher. Are some of your suppliers having to raise their prices due to increased shipping costs and the like?

Yes, it's a good question. We're not seeing a lot of impact some small cost increases on the margin thus far. But we're largely in contracts that we entered the year with where we have strong pricing buys that we made. And as we look at those relative to what's going on, there's very little product that's impacted those routes are not really impacting our products. So it ends up being more fuel and distribution related.

And that has not shown up in our cost structure at this point. So we're cautiously optimistic that the routes that we run are inputs, which are largely Asia, South America, we'll be able to -- and a bit of that especially in the West side of Africa, we'll be able to kind of miss most of what's happening with regards to any inflation.

Okay. And then my last question is, what sort of efficiencies can we see with the consolidation of Laird Superfood's and Navitas' logistics? Is there going to be warehouse consolidation, better -- like more freight cost savings? Can you kind of talk about that?

Yes, it's a great question and one that we obviously spend time on in diligence, and we'll spend a lot more time as we go forward. We essentially have both a structure here in both of the businesses rather that is an asset-light model. We're using co-packers and third-party distributors for really all of our logistics, our manufacturing logistics. So there will be opportunities, certainly to combine those.

We're working our way through the supply chain to identify not only cost but capability opportunities, but you'll see us optimize costs the broad portfolio, leveraging the scale that we have, we become a $100 million business and doubling that obviously is the opportunity for the various suppliers to our business. And so we have some great partners and we have some great partners, and we're working our way through both sides of that ledger to business in the future. And certainly, we expect to see some opportunity there for our business.

Your next question comes from the line of George Kelly of ROTH Capital Partners.

Maybe to start, I was hoping you could break down a little bit your growth, just the directional guidance you provided of high single-digit growth. I was hoping you could give us a little more just on sort of expectations around each business, if possible? And are there certain product categories at each business that maybe you're going to deprioritize and that's also factored into your guide? Just any context around that would be helpful. Did that go through?

Ladies and gentlemen, thank you for holding. The call will begin again shortly.

[Technical Difficulty]

George, are you still there?

I am. Yes, Jason, I can repeat the question if that would be helpful.

Yes. Thanks, George. We had a technical issue over on this side. If you don't mind repeating that, that would be great.

Not at all. Yes, happy to. So I guess the question was if you could give a little more detail on your revenue guide for the year, the high single-digit growth. And I guess what I'm trying to understand is, does that account for the partial -- it just -- it looks like a decel from what both businesses have been doing. And so just trying to understand the dynamics, maybe if you could give like a business level growth expectation? Or does it not account for the kind of partial year contribution of Navitas or maybe there's sort of a deprioritization of certain product categories at each business? Just any more context would be great around the high single-digit growth guide.

Yes, that's right. Thanks, George, for asking on that. It certainly something that we wanted to make sure we hit. So look, I mean, you hit it on head with the portfolio evaluation that needs to take place here to make sure that we're in all the right products. We certainly across the business have some opportunity as we put the 2 businesses together to put focus from a profitability perspective against the right SKUs and make those the SKUs that -- and categories, frankly, that we look to grow as we go forward.

So we're in the midst of that right now. I believe that there could be a little bit of deceleration for that reason as we go through this year. But the target list is still being identified. We still have some work to do as we consolidate the 2 portfolios. And so as a result, we're calling out that high single-digit growth as a number that we feel confident that we should be able to do as we push the 2 business forward -- businesses forward together as one portfolio.

Okay. Okay. And then I guess a follow-up to that. through the process, do you imagine that gross margin -- gross margin was kind of fluid, I guess, a lot of tariff all the different complications in 2025 with the core business. What kind of gross margin expectations with tariffs going away and the prioritization, I would imagine those are lower-margin categories. Like can you get the core business back in the high 30s? And should there be an uplift at Navitas as well? Or how should we think about gross margin in '26?

Yes. So I'll kick that off, George, and then I'll let Anya jump in as well. So you're exactly right. The margins on the Navitas business are not as strong, have not historically been as strong as they have been on Laird Superfood over the last number of years. We see opportunity by virtue of combining these businesses and working our way through the portfolio to really highlight and grow those those businesses and those SKUs that have higher margins. We see other opportunities as well to improve gross margin as we combine the 2 businesses, as I just mentioned, putting the footprints together.

And then on the sourcing side, there's some opportunity as well. So our expectation is indeed to get back into the upper 30 percentages as we go forward. It's just going to take a couple of months to shake that out here, a couple of quarters rather to shake that out and also to get through some of the procurement contracts that we've been in a singular businesses so that we can start to get to better volumes and better pricing as a result on the combined business. So we will head back towards the upper 30s. We just need a little bit of time to let the digestion process take place here.

Okay. And that's on a consolidated basis, do you think you can get back there?

George, this is Anya. I think I would just add to what Jason said. I think once we complete the -- internalize the acquisition fully, then on a run rate basis by the end of the 2026 with the help from synergies, which will partially come from supply chain, we can get back to kind of the high 30s on the gross margins where Laird core business has been.

Okay. Okay. That's great. And then last one for me is just on some of Laird's innovation items. You mentioned the liquid creamer. You're pleased with the launch. And I know there was the coffee product, distinct coffee product. Curious if you could just talk high level about the performance of each and maybe the distribution plan or sort of medium-term expectations for the liquid product. Do you think you have the right product now to take it more broadly? And that's all I had.

Yes, of course. Yes, we're really excited about the liquid relaunch. As you know, you've been following us for quite some time, and we've been through a few stops and starts on that liquid product. We're now in, I would tell you, the best package that we've ever been in, and I would say most preferred by consumers and retailers. So it's a beautiful plastic bottle, but it's post recycle content. So it's a bottle that's already lived life, which is really important not only with consumers, but especially in the natural channel with the buyers there. So we're really excited about that packaging.

And inside of that, we've got now the cleanest formula we've ever had. And in fact, I think it's safe to say it's the cleanest on the market. We've taken out the -- by going away from the long shelf life processing, the aseptic processing and getting to a formula that really is incredibly clean with no more stabilizers in there and the fiber in fact, to hold it together, every ingredient is one that you know. So this is a great product, George, that we have now.

And we expect that -- and we're putting it in front of retailers, we expect to see some significant distribution gains over the next years. And we've held on to that product. As you know, it's not a sizable part of the portfolio, but it's such an incredible addressable market, full of products that really aren't very healthy. And so we see that this is an opportunity for us that we have to continue to grind against until we get it right, and we think we just did. So we're really excited about that.

Beyond that, we did launch the protein coffee product that you were alluding to as well that had a nice launch with one of the natural channel retailers that we gave exclusivity to. We're still working through the data on that and now starting to take that out to additional retailers. So we should see some expansion coming against that product over the next quarters as well. It's a great product, obviously, hitting on the big protein trend with 10 grams per serving, and I think it tastes like nothing else in the market.

So we see a lot of opportunity for that product. And that's just on the Laird side. Over on the Navitas side, we've had some really great success recently with the trail mix product that went into club, and now we're starting to see some further expansion on that online, and we'll look to take that more broad as well as the BITES products, which is just a wonderful superfood, great tasting, super Bite across now a number of SKUs and a growing portfolio, and it's starting to see nice uplift with retailers. And we see opportunity there and frankly, across a lot of the Navitas portfolio. There's just so much white space for both of these brands, especially in that MULO world of conventional grocery. And so as we go forward with now a sales team that's twice as large as it was previously, we think that there's just incredible opportunity for us to expand distribution on all those products.

There are no further questions at this time. I will now turn the call back to Jason Vieth for closing remarks.

Thank you, operator. Sorry, we're having some technical difficulties over on our side today. Thanks for staying with us, guys. And thanks to all of you for joining us again today. We're extremely proud of everything that our team has achieved in 2025. We delivered strong results through focused execution and through relentless innovation. And as we look ahead, we're genuinely excited about the transformative opportunities that lie in the combined future with Navitas. We appreciate your continued support and your interest in the journey, and we look forward to updating you all on the progress throughout the year ahead. Thank you, and wishing you all a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, everyone, and thank you for joining today's Laird Superfood acquisition announcement. My name is Regan, and I'll be your moderator for today's call.

[Operator Instructions]

I would now like to pass the conference over to our host, Jason Vieth, CEO of Laird Superfood. Please proceed.

Good afternoon, everyone. My name is Jason Vieth, and I'm the CEO of Laird Superfood. Thank you for joining me today as I share some exciting news about the future of our company. Today, we're thrilled to announce that Laird Superfood has entered into an agreement to acquire Navitas LLC, the company behind the renowned Navitas Organics brand. This acquisition valued at $38.5 million in cash is a pivotal step in our ongoing strategy to build a scaled and diversified platform in the functional nutrition space.

We're funding this acquisition through a $50 million convertible preferred equity instrument from Nexus Capital Management with the option to draw up to an additional $60 million for future strategic opportunities. Both the acquisition and the investments are expected to close in the first quarter of 2026, pending customary approvals, including from our shareholders.

Let me tell you a bit about Navitas Organics. Founded in 2003, Navitas has been a true pioneer in the superfoods category for over 20 years. Navitas specializes in high-quality organic nutrient-dense products like Cacao powder, Chia Seeds, Goji berries and other plant-based superfoods that appeal to health-conscious consumers. With annual revenues of nearly $36.4 million in 2024, Navitas has built a strong presence across natural and conventional grocery stores, clubs and e-commerce channels. Their commitment to premium, minimally processed organic ingredients perfectly aligns with our own mission at Laird Superfood to deliver clean real food products that fuel everyday performance and wellness. This deal makes tremendous strategic sense for us.

At Laird, we grew our business to more than $43 million in net sales during fiscal year 2024. Our strong momentum continued into 2025, with expected net sales growth of 15% versus the prior year. By bringing Navitas into the fold, we're not only adding a complementary portfolio that broadens our product lineup but we are also adding a business growing double digits with 32.7% gross margin in 2024 and which will be immediately accretive to our Laird Superfood business with a combined pro forma annual revenue base of approximately $80 million during 2024. This scale strengthens our position in the rapidly expanding super foods and wellness markets, where consumers are increasingly seeking out functional nutrient-dense foods and beverages.

Beyond the numbers, the synergies here are compelling. Our supply chains and sourcing networks are highly complementary, allowing us to optimize costs and improve efficiency. We'll expand our reach across shared distribution channels including e-commerce platforms and retail partners, driving greater accessibility for our products. And perhaps most exciting is that this combination opens up new opportunities for innovation. Think cross-portfolio product development that leverages Navitas expertise in raw organic super foods with our focus on performance-enhancing functionals like adaptogens and mushrooms.

Together, we'll be better equipped to meet evolving consumer demand for sustainability, wellness and authentic ingredients. We're also excited to welcome the talented Navitas team led by their CEO, Ira Haber and to integrate their team's passion for health and wellness into our culture. And with the support from our new partners at Nexus Capital, we share our vision for long-term growth within the multichannel superfood market. This transaction provides the capital that we need to accelerate these initiatives and pursue even more opportunities in the future.

In closing, this acquisition is about much more than just growth. It's about strengthening our ability to deliver clean, real nutrition to increasingly health-conscious consumers. We're building a powerhouse in functional foods, and I couldn't be more optimistic about what lies ahead for Laird Superfood, Navitas Organics and our combined community. And while we could hardly be more excited about this acquisition, we do view this as just the first step in a journey to put together a portfolio of the best health and wellness brands on the market.

Thank you for your continued support. We look forward to sharing more updates soon, including more financial information and an investor presentation around the time that we filed a proxy in January. If you have any questions, please reach out to our Investor Relations team. From Laird Superfood and Navitas Organics, wishing you all a safe and wonderful holiday season.

We'll now move on to our Q&A session. [Operator Instructions] Our first question is from the line of Eric Des Lauriers of Craig-Hallum.

Congrats on this transformative transaction here. It seems very exciting and a clear fit. So as you look at the combined product portfolio and distribution channel depth of the combined company here, where do you see the biggest opportunities for organic growth? And where do you see the biggest opportunities for M&A to fill the gap? Just kind of wondering how you're looking at the landscape strategically over the next couple of years here.

This is Jason. Thanks for your question. It's a great one. Obviously, 1 that we've spent a lot of time considering as well. And the reality is we now have 2 really dynamic brands, really strong brands that we feel we have a lot of growth opportunity on both of them. And so with Laird Superfood, we've been talking about that for quite some time. With Navitas, if we're at the point, where we're able to really run this business, we feel like we can continue the strong growth that they've had. As I mentioned in that prerecord, they're growing double digits. They have strong gross margin. They've done a really nice job of expanding out into the natural channel. They have similar to us, some strong conventional business but just a tremendous amount of opportunity as they go forward. And so we're really excited. We think that the playbook looks very similar for those 2 brands across both online and then the wholesale business with retail and Club.

Outside of those 2 brands, we mentioned that we now have a partner in Nexus Capital and that we expect to put another $60 million of potential investment to work and there are a number of brands that we're really excited about in the superfood space. This has been a long-time strategic discussion with our Board. With regards to building out a portfolio of superfood brands because this is where the consumer is going. The consumer -- frankly, has been going there for a while, and it's only accelerated in the last years, especially coming out of COVID as people realize that they need to eat better and what they eat ultimately determines what their health is.

And so we think we're playing into that really well with both Navitas and Laird but there are many other brands that we feel could fit in a similar situation and play a similar role for us as we look to expand our reach to consumers and across the various retail channels, again, including both wholesale and online. So I think you'll see us be very active in growing our business and also very active in considering other opportunities.

Excellent. That's very helpful. If I could double click into that a little bit. As we look at just the combination of Navitas and Laird, as you look at the opportunity, let's just say, over the next -- the initial 12 months, where should we see -- or I guess, expect more synergies to come from? Is this more on the -- on the cost side, supply chain sourcing, overhead? Is it more on the revenue side of the opportunity in terms of cross-selling or perhaps there's some distribution or retailers there in that you're not that you sort of have a sort of low-hanging fruit, cross-selling opportunity? If you could kind of just expand on how we should think of sort of cost versus revenue synergies in this kind of initial phase of integration?

Yes. I'm sure I'm not going to surprise you, when I say the answer is, yes. We see opportunities on both sides of that ledger, and the cost synergies are always a little bit easier to estimate and to go execute. And we absolutely see a lot of opportunity there. We -- similar to Laird Superfood, Navitas is also co-manufactured and has 3PLs and the opportunity to put those 2 supply chains together is very compelling, and we'll be able to come back and talk more about that in the future. But we certainly see that the businesses are highly complementary and yet at the same time, there's very little overlap in actual products.

So back to your question on the -- in the commercial side, we have very few products that are in competition with Navitas and so we think that there's really a compelling opportunity to introduce our brands to one another's consumers to take our brands to market together as a superfood platform for retailers to cross-market our brands and potentially even collaborate with the 2 brands to create new products that would be Navitas inside of Laird or vice versa. So we're really excited about both the commercial and the operational synergy opportunities.

Yes. No, it certainly seems like plenty of opportunities for you guys to get some nice synergies there. If I could try 1 more on the M&A opportunity. Just as you look at the combined product portfolio here, are there any gaps in either product types, use cases for products that we should be thinking about as you kind of analyze the superfood landscape? Are there any specific areas that we should sort of be on the lookout for in terms of what you're looking at for M&A? Just help us kind of understand the product portfolio of the superfood landscape, how you see this combined portfolio fitting in and where you see opportunity to expand your depth with some more M&A?

Yes, of course. Thanks, Eric. Yes. I mean, look, the reality is we're going to take -- we're going to have a pretty wide aperture as we take a look at the various superfood players that are in the market. We're very interested in functional foods in general. The beauty of both Navitas and Laird is that we have long demonstrated to consumers and to our retail partners and to manufacturers as well that we are going to play in the premium space, with value-added foods that provide functional benefits back to consumers. And that means that we can have quite a wide lens that we look through as we evaluate other brands that can fit into our portfolio.

Between the 2 brands today, we're largely going to be a shelf-stable portfolio will mostly be in bags of product and so anything that is playing in that space is obviously a hand in glove type of opportunity. But we do have a liquid creamer product as well, and we are interested, as we've mentioned before, in the functional beverage space. So I think you'll see that we take a very broad look at what's in the market. And as we go forward, we'll stay true to our strategy but be very open to looking at various other brands that make sense.

Our next question comes from the line of George Kelly of ROTH Capital Partners.

First for you, I'm not sure how much you're wanting to give here but just a couple of questions on the financials. Can you be more specific on the growth. I think you said double digits. Just wondering, if you can give any more on that? And is the business profitable?

Yes. So thanks, George. Good to hear from you. Yes, I think really all that we've released at this point is that the business is growing double digits. We -- yes, it's a tough moment right now because we have 9 months of financials and we don't have the full year. And so we still have some work to do to get ready with the proxy financials. And -- so that will all be coming soon. I would anticipate that over the course of the next few weeks, we'll be ready to release that.

The gross margin is very strong in the business. We're not really sharing below that line right now. We will but the gross margin is quite strong as well in the -- right around 33% in the most recent reported period. And I'll just say that we're -- as we put the businesses together, we do expect that it will be attractive financials relative to where we are today.

Okay. Okay. And then second question for me just on the channel mix. Is their channel mix quite a bit different than yours? Like how big is their online business? And it sounds like they have a decent price Club business. Just curious sort of how that contrasts with yours? And is there a big opportunity, if that's the case for you to just to sort of better cross-sell into each other's respective customer bases.

Yes, George, I love that question. It's really important to us. So what we found with Navitas is that they have an even more established wholesale business than our -- and with obviously, a stated strategy on there, superfood to drive more business to that channel and to really grow in that channel. We feel like there's quite a lot of learning from Navitas and strong relationships that we believe we can leverage to grow the Laird Superfood business in that space. And then on the flip side -- and let me not take away too from the tremendous opportunities that are still available to grow Navitas especially in the conventional channel and with new products being launched into the natural channel right now. So a lot of opportunity on Navitas but I would say probably even more on the Laird Superfood side to catch up to where they are.

On the flip side, on the -- in the e-com channels, we do have a more established business at Laird Superfood, especially within DTC, and that's probably not a surprise by benefit of having Laird and Gabby really front and center on the brand and helping to launch that brand in the early days and really leveraging that what was a digitally native environment for us, when we birth the business I think we just had a head start on that.

So to your point, absolutely, we see opportunities to leverage what we've done in the DTC space. We see cross selling opportunities to introduce our consumers to Navitas and frankly, we don't have to introduce them. Our consumers are going to overlap in a very large way just by virtue of the foods that they're selling in the foods that we're selling and where we're selling them. So I think that's going to be a really nice opportunity for us. And then similarly, at Amazon, they have a nice business but it is still, I would say, a bit more nascent than is Laird Superfood. And we have a whole lot of really great experience and learnings that we'll apply back to the Navitas side as well.

So it really is from -- in terms of commercial synergies, we really do have a couple of strikes that are different on each one of the brands where we should be able to leverage for really nice growth as we go forward.

Okay. Okay. And then maybe just one more back to Eric was asking questions just about your go-forward acquisition strategy. And maybe to ask a slightly different version. And not to get too granular on kind of areas you're targeting or anything like that but just high level, maybe longer term, this is a big transaction and that second sort of slug of equity that you're contemplating these are big numbers.

And so I guess the question is, it seems like -- is this really sort of a central focus? Is this really sort of a management priority is just scaling up quickly? How aggressive should we think like I guess maybe the direct question is just what is your medium kind of longer term or longer-term goals with respect to size and how quickly you want to get there. Was that clear -- I don't know, if that's clear.

Yes. I understand.

just trying to kind of set expectations, I guess, around how quickly you want to keep doing similar deals?

Yes. That's a great question. And we obviously just put blood, sweat and tears into this deal. So there's going to be a little bit of a pause for sure, George, as we finish this off and digest. But the reality is we do believe that this is the moment one of the most opportune moments to be aggressive in the space. There is a tremendous number of brands that are emerging that -- and a good number of them that are interesting to us. And so I don't know that we are dictating a specific pace at this point. We want to be discerning. But at the same time, we feel like there are brands that fit what we would call our ethos really well and that would fit in with our supply chain and commercial teams really well.

And so I think you'll see us being pretty active and looking for that third pillar or third stool of the chair pretty quickly. Obviously, we need to make sure that we first are able to put the 2 businesses together and to drive that forward. And feel comfortable that we've got that we're in a position to do that. And then at that point, I think as we see the right property emerge, we'd be open at any point to doing that. So all that to say, I think you'll see that this is a core part of our strategy. We have our operational teams deadlocked on what they need to do to deliver the results for Laird Superfood and Navitas.

But as we go forward, the time -- the executive time against the other opportunities combined with -- I mentioned we have a partner here with Nexus Capital that's supporting us to go look at these opportunities. So I think you'll see that combination taking a hard look at the market.

[Operator Instructions] Our next question is from the line of Anthony Vendetti of Maxim Group.

Jason, maybe just following up on the M&A question, then I just have a couple of questions regarding Navitas. So when you mentioned that, obviously, you're going to take a pause, obviously, makes sense, but are you going to wait until you fully integrate the acquisition before pulling the trigger on another one? Or how long do you think this integration will take? And maybe just talk about what the steps are, whether it's back office or warehousing to integrate that, maybe their HR or ER system, whatever they have just maybe give a little bit of a time line there, if you could.

Yes. Anthony, nice to hear from you. We are -- I mean, look, just to play that out a little bit more. I think we're probably unwilling at this point to box ourselves into a timeline because, again, if we're going to be discerning if the right property were the right brand were to show up, I think we'd be very interested in having those -- those discussions. These aren't big businesses. It's important to keep in mind in the case of Laird and Navitas were very similarly sized businesses, both pushing up towards that $50 million mark right now.

So these -- and we have supply chain lights as we call them, right, with co-pack and distributor third parties. And so putting the businesses together, they're not overly complicated businesses, putting them together is not an overly complicated transaction either. But to your point, our expectation is we will merge the backbones together. So yes, we have IT work to do, systems work to do to make sure that we can platform these businesses and run them efficiently and effectively and able to run reports across the 2 platforms, et cetera.

So there is some work to be done for certain. But they -- right now, they're stand-alone businesses that operate pretty well and with pretty similar dynamics. They're growing, but growing at a level that the team is able to support. We both have small teams, kind of small teams, but I think very strong teams. And so yes, I wouldn't want to timebox us into anything. We're very happy where we are right now though, I'll say we're going to take this moment and get to know each other's teams as we move into the new year and then we'll figure out from there.

Okay. And then just in terms of the number of storefronts that Navitas is in and/or the number of SKUs that they currently have? And then if in terms of the SKUs. Are there any that you think don't make sense going forward? Or you're like, hey, this is all additive and we'll look to use that as a platform to grow.

Yes, I think -- I'll come back to you with the actual accounts. But as you dimensionalize it, what I'd say, Anthony, is they have Navitas has less SKUs than we do, Laird Superfood and they're in more stores than we are in. So they have, I think, a really nice mix or really nice revenue per SKU mix, and we're really excited about that. So we'll come back to you with more detail on all of that as we get a little bit more time with the business and understand really at a more detailed level the products and the retail assortment and what we think ultimately makes sense or not, especially as we combine the businesses.

And maybe just last question, and then I'll jump back in the queue. Just -- in terms of your current customers, have you spoken to any of them about what they would think about the combined companies and how they would view it. And just in terms of they would look at this as a positive and if so, what do you think the business benefit other than, obviously, you're adding in a category that makes sense. What are those cross-selling opportunities, if you've had those conversations with customers so far?

No. I think the sales team is just starting to have those conversations, obviously, until the deal was announced, we couldn't do any of that. So I think what you hear if you spoke with customers on either 1 of the brands is really positive remarks about how the team is to work with and the pace of innovation and the support that is provided back to those retail partners.

So I think that putting the 2 together, it's not like 1 has a bad reputation and the other 1 does not. And something is really going to change. I think what you're going to hear is expectation more of the same. And generally, a lot of excitement because ultimately, what we're doing here is to roll up a number of brands to build a portfolio to help those brands live in a more sustainable fashion over time than if they were all stand-alone. That should be exciting for all these retailers that are supportive of the superfood products, which are, a, great for consumers and really trending positively with consumers but also premium and at attractive price points for those retailers. So I think you'll hear very positive remarks and we'll be able to share more on that once those conversations have taken place.

There are currently no questions waiting at this time.

[Operator Instructions] There seem to be no questions waiting at this time. So I'll pass it back over to management for the closing remarks.

Yes. I really don't have much more to share at this point other than to say thank you to everyone who's been here on the ride. This is something we've spoken about in the past with regards to beginning to put together a few superfood businesses. We've always said that M&A was going to play a role for us. We just didn't have the balance sheet to be able to support that. And now with a new partner with Nexus Capital, we feel like we are in a position to really be able to put together a couple of powerhouse businesses. And this is the start, I believe, of something very exciting. I hope you all will agree, and we look forward to coming back and sharing more details in the near future.

So thanks much, everyone. Happy holidays to you and talk to you in the new year.

Thank you. That concludes today's call. Thank you for your participation. You may now disconnect your lines.

Good afternoon. Thank you for attending the Laird Superfood, Inc. Third Quarter 2025 Financial Results Call. My name is Matt, and I'll be a moderator for today's call. [Operator Instructions] I'd now like to pass the conference over to our host, Trevor Rousseau, Head of Investor Relations with Laird Superfood. Trevor, please go ahead.

Thank you, and good afternoon. Welcome to Laird Superfood's Third Quarter 2025 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 earnings release, which is 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 involve risks and uncertainties that could cause actual results to differ materially from those described. Please refer to today's press release and other filings with the SEC for a detailed discussion of these risks and uncertainties.

And with that, I'll turn the call over to Jason.

Thank you, Trevor, and good afternoon, everyone. Thank you for joining us today for our third quarter 2025 earnings call. I'm pleased to report another quarter of solid top line growth as we continue to execute on our strategy to build Laird Superfood into a leading player in the premium plant-based functional food space.

Net sales for the third quarter increased 10% year-over-year to $12.9 million, driven primarily by strong performance in our wholesale channel. For the first 9 months of 2025, net sales were up 15% to $36.5 million. Our wholesale channel continues to be a standout with net sales up 39% in the quarter and 40% year-to-date.

This growth reflects our focused efforts on expanding distribution, particularly in grocery and club stores, where we've seen robust velocity gains and increased shelf space. We're seeing strong consumer demand for our core products like coffee creamers, hydration enhancers and functional beverages, as shoppers increasingly seek out clean, functional ingredients that align with healthier lifestyles.

The wholesale channel contributed 53% of net sales during Q3 and through the first 3 quarters of 2025, represented 49% of our total net sales. This is well aligned to our strategic intent of transitioning Laird Superfood to being a wholesale-led company.

In our e-commerce channel, which represented 47% of net sales in the quarter, we experienced an 11% decline year-over-year, primarily due to softness in our direct-to-consumer platform from lower new customer acquisition. However, this was partially offset by continued growth on Amazon.com. Year-to-date, e-commerce was relatively flat and we remain optimistic about this channel's potential as we refine our digital marketing strategy and leverage our loyal repeat customer base, which accounted for about 88% of DTC sales in the quarter.

Gross profit for the quarter was $4.7 million, down 7% from the prior year, with gross margin contracting to 36.5% from 43% last year. This was fully expected and largely due to commodity cost inflation and channel mix shifts towards wholesale, but also due to the nonrecurrence of a onetime supplier settlement benefit that we recorded in Q3 of last year, which impacted margins by about 3 points.

Year-to-date, gross profit increased 9% to $14.4 million, as we have managed to offset a good portion of the commodity and tariff impacts that have swept the national headlines. Anya will provide more details on our financials in a moment, but overall, these results demonstrate the progress that we're making in scaling our business while navigating a dynamic market environment.

Turning to business highlights. We're excited about the momentum in our wholesale expansion. We've continued to add distribution points at major retailers and our velocities in core categories like shelf-stable creamers continue to outperform our expectations. This validates our focus on premium functional ingredients that resonate with consumers shifting away from sugar laden and artificial options.

On the innovation front, we're continuing to invest in product development to diversify our portfolio and drive repeat usage. We are excited to be launching our new protein coffee in the next month, and we have already begun shipping our new liquid creamer products.

On liquid creamers, this marks an enormous improvement to our existing formulation. We've now replaced the coconut oil with organic coconut cream, increased the level of adaptogenic mushrooms and replaced cane sugar with lower glycemic index coconut sugar. The resulting taste and texture are far superior to our previous products, and I would dare say the best tasting and healthiest products on the market.

We are relaunching these creamers as organic formulations and packaging them in a post-consumer recycled plastic bottle that will be really attractive on the retailer shelves.

Now back to protein coffee. We have high expectations for this launch. This marks Laird Superfood's first foray into dairy products, a market which is somewhere around 10x as large as the plant-based market that we have been participating in to date. And the product that we are launching is Dynamite. It's a high-quality freeze-dried coffee, blended with 10 grams of dairy protein per serving, perfect for anyone looking to add protein to their diet.

And with low calories and no sugar, it's also a perfect fit with today's health and wellness trends and great support for anyone taking GLP-1s. As part of our strategy to streamline operations and focus resources on our highest growth opportunities and Laird Superfood brand, we've made the decision to discontinue the Picky Bars brand in the second quarter of 2026.

This will allow us to redirect investments toward the core Laird Superfood brand, which we believe has the strongest potential for scale. In connection with this, we recorded a $661,000 impairment charge in the quarter related to Picky Bars intangible assets.

From an operational standpoint, we were able to reduce our inventory by more than $1 million in the third quarter. You'll recall that we had strategically built our inventory through the first half of 2025 in order to meet rising demand without the out of stocks that we experienced last year and to mitigate the impact of tariffs on imported raw materials, particularly from Southeast Asia.

As we continue to sell through this inventory in the coming quarters, we expect cash flows to improve as a result. And speaking of tariffs, I am also pleased to be able to report that we recently were informed that our coconut milk products will not be subject to additional tariffs, reducing the impact on our go-forward costs and improving our 2026 financials by more than $1 million.

For the balance of 2025, we're focused on optimizing our supply chain managing costs and driving efficiencies to expand margins over time. We'll also continue to monitor the macroeconomic factors like commodity inflation and potential trade policies, but we're well positioned to navigate them as we close out this year and head into 2026.

Q3 was another step forward in our journey to build a scalable, profitable business. We're executing on our plan, and I'm excited about the opportunities ahead.

With that, I'll turn it over to Anya for a more detailed review of our financials.

Thank you, Jason, and good afternoon, everyone. I will now provide you with some additional details on the third quarter of 2025 financial results and our outlook for the full year performance.

I am pleased to report another robust quarter for Laird Superfood highlighted by double-digit top line growth, healthy gross margins, positive adjusted EBITDA and $1.1 million of positive operating cash flow.

Net sales grew 10% to $12.9 million compared to $11.9 million in the prior year period and $12.0 million last quarter. And excluding Picky Bar products, net sales increased 14% in the third quarter. Although net sales growth came in softer than anticipated, primarily due to the timing of large wholesale customer orders, our underlying fundamentals remain strong and unchanged.

Our wholesale channel continued to deliver exceptional momentum, increasing 39% year-over-year and representing 53% of total net sales, driven by ongoing distribution gains in both grocery and club. E-commerce sales declined 1% year-over-year, reflecting softness in DTC though this was primarily offset by continued growth on Amazon. Overall, the e-commerce channel contributed 47% of total net sales.

Gross margin in the third quarter delivered robust 36.5 points compared to 43.0 points in the corresponding prior year period. It is worth noting that prior year Q3 margins have benefited from onetime favorable supplier settlement that accounted for approximately 3 points of gross margin. Excluding that onetime benefit, Q3 gross margins were about 3.5 points lower than corresponding prior year period and 3.4 points lower than the second quarter of 2025.

These results are in line with our expectations given commodity inflation in our key raw materials, such as coffee and coconut milk powder and increased tariff costs. We are confident in our ability to hold gross margins in upper 30s for full year 2025 and beyond, which is at the level of best-in-class CPGs, despite inflationary pressures and even without using pricing as a lever.

Our supply chain team continues to drive efficiencies by directly partnering with key raw material suppliers, and co-packing partners to find cost savings to offset rising commodity costs. Operating expenses increased $0.4 million in the third quarter compared to the same quarter last year, driven by increased marketing investment and advertising costs as well as increased selling costs due to higher sales volume.

General and administrative expenses were relatively flat during Q3 of 2025 with Picky impairment charges, largely offset by decreased personnel costs and professional fees. Net loss for the third quarter was $1.0 million compared to $0.2 million loss in the prior year period. The increase in net loss was primarily due to $0.7 million impairment charge of long-lived intangible assets related to the Picky Bar's brand as well as higher marketing and selling costs on higher top line sales. This was offset in part by decreased personnel costs.

Adjusted EBITDA was positive $0.2 million compared to $0.1 million in the same quarter prior year. The improvement in adjusted EBITDA was driven by top line growth and discipline around cost control as we are well on the way to breakeven and profitability. Now turning to our balance sheet. We ended the quarter with $5.3 million in cash and no debt. As we discussed last quarter, we made targeted forward purchases of certain raw materials earlier this year to mitigate tariff-related cost increases.

During the third quarter, we began drawing down this inventory, reducing our position from approximately $11 million to $10 million while increasing our cash balance by $1.1 million quarter-over-quarter. We expect to continue building our cash position in the fourth quarter and into early 2026, as inventory continues to convert to cash.

We exited the third quarter with solid momentum in our core categories, a strong innovation pipeline and continued confidence in our team and our brands. While macroeconomic uncertainty, particularly with e-commerce channel and the timing of large customer orders are impacting our near-term top line, our underlying fundamentals remain strong.

Reflecting year-to-date trends and these time and effects, we are updating our full year 2025 net sales growth expectation to approximately 15% growth. We continue to expect gross margin to hold in the upper 30s range and to achieve breakeven adjusted EBITDA for the full year. We also remain confident in our ability to deliver a strengthened cash position, supported by our disciplined execution and positive operating cash flow in the third quarter.

And now I will turn the discussion back to the operator and open it up for questions.

[Operator Instructions] First question is from the line of Eric Des Lauriers with Craig-Hallum.

Great. First one for me, I just wanted to zero in a little bit more on the guidance. So let me understand the volatility and size and timing of some key customer orders in the wholesale channel. I guess I was just a little confused if this negatively impacted Q3 results or Q4 or maybe both? If you could just give bit more color on perhaps where this timing shifted to, would be helpful?

Yes. Eric, good to hear from you again, and thanks for that question. Yes, I mean the reality is that you hit it on the head and this is a timing issue related to reorders and new orders of pretty substantial orders, by the way, for new regions in Club space. That's primarily what drove this. Similar, because we only have a couple of customers that we ship to that distribute then to the rest of the retail space, that being, of course, UNFI and KeHE, we did experience a little bit of a timing issue there, too.

What we're seeing is we have really healthy sell-through, and we just had a timing issue that kind of caught us a little bit off. I think we're getting a little bit as we go into Q4, we're also being a little bit cautious looking at timing there, too. And everything is just -- it's turning well, and the results look great.

It's just moving a little bit slower than we expected with regards to when replenishment schedules come and the inventories that are being carried. And I think there's some rebalancing of inventories that took place also especially with the retail distributors. So we're taking a cautious eye towards that. It's -- for us, it's impacting Q3, Q4, but we don't believe that there's long-term impact from -- in any of those to the long-term health of the business.

We think that the business is still exactly as it was. In fact, we continue to gain momentum, especially in that Club space. So we think we're exactly where we thought we'd be, just off by -- broadly exactly what we thought it'd be just off with a little bit of timing.

Yes. Yes. No, that certainly makes sense to me. And yes, I mean, at this size and the size of the orders, certainly, this dynamic isn't unique to you guys. I just wanted to sort of zero in on Q3 versus Q4, but I got I need now.

Next question, I suppose is some more related. Last quarter, the 750-milliliter product Refresh had some nice impact on shelf space and velocities. I just wanted to sort of check in and see how those sales are trending? And any sort of early indications on how you might think of this protein beverage as well? Obviously, not out on shelves yet, but just curious how you're looking at that as well?

Yes. Yes. Great question. I'll take that one again and probably trying to hand everything to Anya from here, she can work out her vocal cords. So on the first piece with regards to the 750 ml, the upsizing worked about as we expected. When I look at the data now, what I can see are a decline in units and a commensurate increase in dollar sales relative to the resizing that took place.

Recall, we went from 500 ml to 750 ml, so up 25%. And we saw units shrink down just about that much on a velocity basis and sales basically hold from a velocity perspective. So it's kind of -- give that one -- maybe I'd grade data, a checkmark at this point, don't really get to an A to F scale because we're going to go right back into it again.

We -- that was a 9-month exercise essentially. And as we mentioned, we're leading that co-packer completely and moving to just an incredible formulation in a better package that's 100% organic that we think is really poised to make wave. So we did what we had to on that one. We had to play some catch up, as you guys know, because we had lost some distribution of small accounts right out of the gates and put a lot of pressure on our broker to make that up.

We're just getting to where they've made it up and then we're going through the transition again. But we've got all the battle scars on our backs, and we're going to make sure, as we go forward, that those lessons get applied so that we don't relive Groundhog Day on that one. We feel like we know exactly what we need to do. Our broker is very clear.

The communication is there. We're into that transition now. In fact, you can find us on a couple of selves already with the new post-consumer recycled plastic bottles, 100% organic formula, great tasting, super healthy creamer at Whole Foods and a few other retailers already.

And we think -- we don't have any returns on that yet. It just hit the shelf in the last week, but we think that's going to be dynamite. So where we expect it to be, when I look at, if I look at the scanner data, we're right on it, in fact. And so kudos to the team for its forecasting. It just took us longer to get here than we thought it would take. So we finally kind of got caught up, and we'll hold that from here.

Great. I appreciate that color. Next one just a bit of like a high-level question. So coffee prices obviously at record highs right now. On the 1 hand, I could see that having a negative impact to volumes of coffee-adjacent products like creamers. On the other hand, it may have a tailwind to coffee alternatives like your mushroom-based coffee and a functional copy. So just curious what you're seeing from a sort of macro impacts on your different product types here? And just kind of how to think about the impact of elevated coffee prices on your business?

Yes. It's -- this is on our mind pretty constantly probably, everybody in the category. We have done a nice job of acquiring our coffee throughout 2025 to put us in a position to be able to hold the line on price so far. And so we've not -- we've taken in total, I think, $1 at retail in the last few years.

And so we're in a position where if coffee continues to climb like this, and we have to make purchases into that headwind, we may need to touch price. But by holding -- and we were a little bit premium price coming in. But by holding price to that time, I think we've been able to capture a lot of volume, and we've been able to gain nice distribution points as well by partnering with retailers to be a strong premium yet not ridiculously priced play for them.

And so it's been good for us. I think on the creamer side, we've certainly seen creamer slowdown. We know volumetrically, there's got to be a slowdown that's obvious, but there's still so much share for us on the coffee in the coffee category for us to be able to take and we think we have just an incredible proposition with a high altitude Peruvian organic coffee with functional mushrooms at the price point that we're at. And so far, what we're seeing is we're being rewarded for that.

That's great. Congrats on the continued strong wholesale growth, and I appreciate taking my questions.

Thanks, Eric.

Next question is from the line of Nicholas Sherwood with Maxim Group.

Can you talk about some -- what you've seen in limited time offer products? I've seen the pumping spice creamer on the shelves, I was kind of just want to see what you've been seeing from retailers and consumers when it comes to those products?

Yes, what we've seen is that there's -- it's been a pretty good pumped in year, it looks like across the category. We got a late start with one of our key retailers, just kind of a weird operational but we've done really well. We're catching up on that as well. So for us, it will end up being a pretty typical year.

It's not a big part of our business. In fact, I think in the future, it's an opportunity for us, and we are selling aggressively as we move from this year in that space. But we sold out early in almost all retailers. I think we call it a really successful year.

Okay. Perfect. And then switching gears, looking at e-commerce. How -- what is the strategy for the Amazon sales to start replacing some of those lost DTC sales? And is that something that we can kind of expect to see more in 2026? Can you kind of just walk me through what kind of strategy you're seeing there right now?

Yes. Yes, great question. So the 2 key strategies that we have from a sales perspective are: one, to take our products to retail. When I got here a couple of years ago, we were a very small portion of retail business. And we're now about running around 50-50. And we expect over the next couple of years that to grow and approach 2/3, 1/3 retail to online business or wholesale to online and then only grow from there.

So our expectation is that we become more wholesale-driven over each year as we go forward or at least over the period of a couple of years. Within online, we expect that we become more Amazon than we do wholesale and -- I'm sorry, more Amazon than we do DTC. The problem with Amazon from an overall growth and pricing perspective is, you really have to watch to make sure that you're priced in line with the rest of retail.

So we've done that. As a result, we've seen strong growth over the last couple of years. It slowed down most recently, and we hear that that's pretty much an industry issue right now that Amazon has slowed across the food space for most brands. We have some good strategies that we're tweaking right now to implement against that, reapportioning spend across various top and bottom funnel drivers at the site and then driving -- using our awareness to drive folks back to Laird when they get to the Amazon site as well.

So we feel good about the future of Amazon. For us, DTC is really intended to be a place where consumers can go to find a full breadth of product, they can sign up for the broadest offering of subscriptions and they can get education, especially as it relates to Laird and Gabby and what they eat and how they -- basically, how they run their lives from a health and wellness position across the, I think, physical, emotional, spiritual dietary spectrum.

And that's what it's played out for us -- over the year for us, rather. So if you think about the next, I would call, a couple of years, we would expect DTC to be fairly flat. We had a great year last year. This year is a little bit more challenged over the course of the 2 years. I think it's close to flat. And as we go forward, that's really our intent. The growth driver of online should be Amazon and then the wholesale business for the entire company. So for us, DTC plays a more marginal role as time goes on.

Understood. And then my last question is talking about this new protein coffee. It looks like a really big opportunity for the company. Can you sort of walk me through what you're thinking for the strategy on activating that new product? Are there specific regions, specific types of consumers that you're looking to reach or specific retailers that you're partnering in the early stages of this product activation? And are there any early learnings that you've already had kind of in the early stages of bringing this to market?

Yes. Great question, and I apologize at the same time to Eric, I forgot to answer that when you asked that earlier as well. We're really excited about this product. This is our first foray into the dairy. I think you guys have heard us in the past talk about Laird and Gabby's diet being in nature. This is an area that we've always intended to go as a company. It also happens to be the 90% to the 10% that is plant-based. So it just opens up an incredible market for us. .

This protein coffee product, this has been a really big trend on TikTok for a long time, putting the protein powder into the coffee, and we're excited to bring it to market. We've basically taken the highest quality freeze-dried coffee -- cold-brewed freeze-dried coffee that I've ever tasted. It is so smooth and fantastic, put it together with a pretty unique blend of dairy proteins, I won't go more into details for competitive reasons, but it's pretty unique and the ability to get it to blend and froth as a cold beverage is really unique.

And it tastes great. It's a product that is great for anyone seeking protein, but it's really on trend right now with what's going on with GLP-1. And as folks are having to find high protein products to supplement their loss of protein and overall calories. So we feel like we're right on trend with this product. We've got a really -- we have a partner for a very early big launch, so we'll be putting shippers on their floor and the retail space will come back and talk about that next quarter.

So coming out of the gates really strong there and then seeing some good pickup for permanent placement as well. This will be a product that we launch online simultaneously to putting it into the stores, so you'll see it in DTC on Amazon and out at retail. We're going to support it with some third-party social influencer groups that help to really get the brand out and run a 360-degree campaign on this, where we'll bring in retail activations with that influencer work that I just mentioned, some organic marketing that Laird and Gabby will execute, we'll put onto our website, and then we have strong TikTok execution behind it as well.

So you'll really see bring probably our strongest launch effort in my tenure here at Baird to this product. And hopefully, we'll see consumers respond in kind. So we'll make a big deal out of the fact that we're getting into dairy. We think that, that will be really well received. It's very clean product as it always is for us. And I think it's a real market-changer with regards to delivering a great taste with that nutritional profile in this category.

Next question is from the line of George Kelly with ROTH Capital Partners.

A few questions for you. Just to follow up on that prior question related to the protein coffee that you're launching. Do you anticipate launching additional dairy products as soon as next year and what might those look like?

Yes. Great question, George. Thanks for that. We do. We're working on a platform right now to make this much broader than just a singular product that we bring out. We think that there's opportunity across a number of products that we're probably not ready to go into at this point, George, but you can imagine that there are really 2 vectors to that.

One is in the dry category space where we see additional opportunity to expand this line and potentially take it into very close but adjacent lines that we're in today. So you can probably surmise a pretty good guess against that. And we also see the opportunity to take this into liquid products. And so we've been working to develop both of these. We think that protein is very important.

We believe that we can bring a cleaner protein, not only the protein source, but the ingredients that surround it than what you see at market today and that we have the brand to do that. So you will absolutely see additional dairy products. And yes, we would expect them to come to market over the course of the next 15 months.

Okay. Okay. That's helpful. And then the conversation in response to one of the questions just about the sort of how you're going about the instant the protein coffee launch. I was hoping you could do some kind of similar with the new liquid product. And I guess what I'm trying to understand, it's just so hard for me to try to quantify what the ramp could look like and the implications on the model and consolidated growth for the next few years, et cetera.

It's just such a big category and such an important category and you've had kind of varying success there historically. So I guess if you could help at all, just with what the distribution plan is? Have you lost any distribution points versus the prior formulation? And do you anticipate a lot of promotion behind it? Or just any kind of context you can give about that launch?

Yes. Yes. Thanks, George. That's a very good question that I wanted to speak to a bit more. So yes, what I would tell you is this, we lost some distribution early on in that transition, as I mentioned. We've largely recovered that. I think we're just about right back to where where we expected to be and regained what we had lost.

I don't think we've had the right product or proposition in the past. At the 500 ml, we were a little bit too small. We went to 750 ml, I think there was a self-inflicted wound there, if I'm honest, in that we went to 750 ml, and we really didn't capture the consumers didn't really highlight plus 50% more now at a better price.

And so there was a value question. I think people just got confused as we made that transition in general. And so what you'll see now is a very different product that's appearing. I mentioned that plastic bottle that is already recycled and lived one life, which is very important to our consumers. We're highlighting that story. It's 100% organic. That's very important to our consumers, especially in the Natural channel, we're highlighting that story.

There's no more cane sugar in there. It's now all coconut sugar. There's no more coconut oil. It's now all coconut cream and the product tastes unbelievable. And so -- and we've added more mushrooms as well. So it's a more efficacious dose of the adaptogens. So there's a lot there to tell and it takes to -- exactly to your point, it's going to take a bigger marketing activation to do that. So that is absolutely underway.

We haven't started to execute, we're letting some of the distribution rollout before we do, but you'll start to see that come out very soon with activations, specifically linked to where we picked up the distribution already. That -- all those transitions take place over the course -- most of them over the course of the next 2 months, so into January. Just a couple of small laggards after that. But retailers are really excited. They wanted to get on board, a couple of them cut in ahead of their planned changeovers.

And so we -- I think we are really in a fortunate position to be able to turn on marketing in a big way here as we close out this year at the start of January. So you'll start to see that very similar to what I described with the protein coffee you'll really start to see that come to life here over the course of the next few weeks. And relative to the size, you're exactly right.

I was having this discussion earlier today with an investor in, the reality -- or actually, it was with our Board. The reality is this is a category that's over $6 billion. It's largely comprised of products that contain 4 ingredients. The only healthy one of which is water. We're mostly transporting water and the rest is sugar, your oil, hydrogels and chemicals.

And there's this incredible opportunity to reinvent it. We just haven't had the right proposition, and I think we do now. So we'll activate early, get the early reads, figure out where we are. And then I hope that we're able to really press this 1 in a big way based on the feedback that we get in the marketplace.

Okay. That's helpful. And then 2 last questions for me. Tariffs, what's the impact this year and the expectation for next year? And then the second question is on Club. I was curious if you have any significant promotions planned in the next quarter or 2. And that's all I had.

George, this is Anya. So I'll take the questions on tariffs and Club and then Jason, feel free to add anything. So the tariff situation is very dynamic, and we are assessing those kind of as it unfolds. I think Jason mentioned earlier or maybe on the prerecord that we have some favorable developments as far as some of our key raw materials now being excluded from the tariffs such as coconut milk powder, so that was good news.

We -- but it's still very much kind of unfolding and emerging. We started seeing the tariffs impact in Q3 and so you see that reflected in our gross margins. Anticipate kind of similar dynamic to continue into Q4. And then we are developing our plans for next year and evaluating what the action items that we need to take and pricing could be on the table if we need to, but our intent and goal is to continue holding the margins in the upper 30s.

So even with the additional tariffs and the commodity costs. So that's on tariffs. And then with regards to Club, we had a great success in club this year, and we have strategy, a rollout strategy with -- to support the new regions, distribution and new products, and we intend to continue executing on the strategy in Q4 and into next year.

There are no additional questions waiting at this time. So I'll pass the call back to the management team for any closing remarks.

Yes. So look, it's -- I think we all know the headwinds that are in the consumer and overall in the consumer economy right now and the challenges that others are facing throughout this year and kind of only magnifying more recently.

We're really excited to still be growing this business in the double digits. And we believe we're in a position to continue to do that next year and for future years to come for quite some time. We have a lot of white space. We have an incredible portfolio of products. And as we -- and an incredible team. And as we look to the balance of this year and into next year, we're still incredibly optimistic that despite any headwinds that have emerged and will continue to emerge that we're going to fight our way through and stay at the top of it.

So thanks again to everybody for being a part of the journey and listening to the story again today, and we look forward to quarter.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.

Good afternoon. Thank you for attending today's Laird Superfood, Inc. Second Quarter 2025 Financial Results. My name is [ Jay ], and I'll be your moderator for today.

[Operator Instructions]

I would now like to turn the conference over to our host, Trevor Rousseau. Please proceed.

Thank you, and good afternoon. Welcome to Laird Superfood Second Quarter 2025 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 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 involve risks and uncertainties that could cause actual results to differ materially from those described. Please refer to today's press release and other filings with the SEC for a detailed discussion of these risks and uncertainties.

And with that, I'll turn the call over to Jason.

Thank you, Trevor, and good afternoon, everyone. Welcome to Laird Superfood's Second Quarter 2025 Earnings Conference Call. I'm Jason Vieth, CEO of Laird Superfood, and I'm joined today by our CFO, Anya Hamill.

Let me start by saying how proud I am of our team's performance this quarter. In a challenging environment with ongoing economic pressures, commodity inflation and shifting consumer preferences, we once again delivered impressive financial results that underscore the resilience and appeal of the Laird Superfood brand. Net sales grew 20% year-over-year to $12 million in Q2, marking another quarter of robust top line expansion. This growth was fueled by our strategic focus on wholesale, which surged 47% and now represents just under half of our total net sales, driven by distribution gains and velocity growth in grocery and club channels.

Our e-commerce channel also held steady with positive 2% growth in a very challenging digital market, contributing 52% of total sales, thanks to continued strength on Amazon. This quarter obviously marked an acceleration in our stated strategy to intentionally grow wholesale to become the largest percentage of our total business, and I am proud that we are succeeding in making that transition.

Looking at our product categories, coffee creamers led the way with 44% growth, making up 56% of gross sales in Q2 as consumers increasingly seek out our plant-based functional creamer options. Coffee, tea and hot chocolate products grew 44% as well, driven by strong growth in our coffee products. This is in line with our intent to become a powerhouse in functional coffee solutions and speaks to consumers' interest in turning their morning ritual into a healthy and nutritious way to start their day.

On the profitability front, we achieved a gross margin of 39.9%, while slightly down from last year due to higher trade spend, commodity costs and some small tariff impact, our margin level remains among the best in the industry. Operationally, we've demonstrated agility in managing our supply chain even amid tariff pressures, allowing us to deliver positive adjusted EBITDA of nearly $150,000 this quarter, a meaningful improvement from prior year's slight loss. This marks our continued progress towards sustainable profitability with year-to-date adjusted EBITDA at just over $500,000.

Our balance sheet remains solid with $4.2 million in cash and no debt, though we strategically invested in inventory this quarter to support demand and mitigate tariff costs and supply chain risks, leading to $4.1 million in cash used from operations year-to-date. We expect to normalize this in the coming quarters as we convert our inventory into cash. These results position us as one of the fastest-growing food companies in the public markets, outpacing many peers in the healthy nutrition space. For context, we've seen mixed performances across the industry this quarter, and these announcements reflect a sector that's navigating inflation and softer demand in certain channels, yet rewarding brands with innovation and execution, brands like ours.

We expect tariffs to remain a wildcard for the back half of this year and beyond, but our team continues to make headway in our cost structure through key strategies such as direct sourcing of our materials and freight optimization. We are proud to not have taken any tariff-related price increases while still delivering our gross margin targets, thereby delivering our highest quality health and wellness food products to consumers at the best value possible. We believe that this gives us a strategic advantage versus many of our competitors while also leaving open the opportunity to increase our price at a later date if the conditions necessitate.

The economic environment may feel overall shaky right now, but we are building on tremendous momentum and are cautiously optimistic as we head into the second half. The consumer landscape is dynamic, but our focus on clean plant-based Superfood backed by Laird Hamilton's legacy and our commitment to quality positions us to capture share. Going forward, we'll continue to invest in brand building, innovation and operational efficiency to drive long-term value.

With that, I'll turn it over to Anya for more financial details. Anya?

Thank you, Jason, and good afternoon, everyone. I will now provide you with some additional details on the second quarter of 2025 financial results and our outlook for the full year. I am pleased to share that we have delivered another strong quarter of high-growth top line, robust gross margins and disciplined spend management. Net sales grew 19.9% to $12.0 million compared to $10.0 million in the prior year period and $11.7 million in the last quarter. Similar to the first quarter, our wholesale channel led the company's growth in the second quarter, increasing by 47% year-over-year and accounting for 48% of our total net sales. This growth was driven by distribution expansion and velocity acceleration at shelf in grocery and club stores.

E-commerce sales increased by 2% year-over-year and contributed 52% of total net sales, led by continued growth on Amazon platform. Gross margin in the second quarter delivered robust 39.9% compared to 41.8% in the corresponding prior year period. Although Q2 gross margins were about 2 points lower than in the first quarter of 2025 and in the corresponding period a year ago. We are very pleased with these results given commodity inflation in our key raw materials such as coffee and coconut milk powder and increased tariff costs. These results show resiliency in our ability to hold gross margins in high 30s, which is at the level of best-in-class CPGs despite the inflationary pressures and even without using pricing as a lever.

Our supply chain team continues to drive efficiencies by directly partnering with key raw material suppliers and co-packing partners to find cost savings to offset rising commodities costs.

Operating expenses increased $0.7 million in the second quarter compared to the same quarter last year, driven primarily by 2 reasons: one, increased marketing, advertising and selling expenses due to sales volume growth; and two, slightly increased general and administrative expenses, driven primarily by stock-based compensation, which is a noncash expense and largely offset by broad cost reduction measures. Net loss for the second quarter was $0.4 million compared to $0.2 million loss in the prior year period, and adjusted EBITDA was positive $0.1 million compared to a loss of $0.1 million in the same quarter prior year.

This $200,000 improvement in adjusted EBITDA was driven by top line growth, margin management and discipline around cost control as we are well on the way to breakeven and profitability. Now regarding our balance sheet. We ended the quarter with $4.2 million in cash and no debt. The increase in cash usage in the second quarter relative to the first quarter was primarily driven by our decision to bolster our inventory in order to meet higher demand for our products, address out-of-stocks experienced early in the year as well as forward purchase of raw materials in anticipation of potential tariffs on the import of raw materials that we source outside of the United States, particularly in Southeast Asia.

As we sell through this forward purchase inventory during the second half of 2025, we expect our cash balance to normalize and increase by the end of the 2025 fiscal year. In addition, during second quarter, our account receivables balance was elevated due to timing of shipments, which resulted in shift in payments received from Q2 to Q3. We continue to project that we have sufficient cash to fund our operations as we grow our business and make operating improvements that drive us forward to breakeven and profitability. And we also have an asset-backed line of credit available for our use should we need it.

We exited second quarter with a strong momentum in our core categories, exciting innovation and confidence in our team and our brand. Despite ongoing macroeconomic uncertainty, particularly within the e-commerce landscape, we remain confident in our ability to deliver on our full year growth plans. Based on the strength of our first half performance, the continued momentum in wholesale channel and strong execution across our organization, we are reaffirming our full year 2025 net sales growth guidance in a range of 20% to 25% gross margin to hold in the upper 30s and breakeven adjusted EBITDA. We expect full year operating cash usage to be approximately $2 million, driven by an incremental investment in inventory to support top line growth and minimize out of stocks.

And now I will turn the discussion back over to Jason for any closing remarks.

Thank you, Anya. Our 20% sales growth is among the best in our industry and speaks to the demand for our healthy functional foods. I want to reiterate our confidence in our mission and our team and in the long-term opportunity for Laird Superfood. Our brand is strong in health and wellness, and our balance sheet remains attractive and with no debt. Despite the challenges presented by tariffs and a less confident consumer, we are optimistic in our team's ability to navigate these issues and deliver long-term value for our shareholders.

Thank you for joining us again today, and thank you for your continued interest in Laird Superfood. This concludes our second quarter 2025 prepared remarks, and we are now ready to open the call to questions.

[Operator Instructions]

Our first question comes from George Kelly, ROTH Capital Partners.

First one for you is just about your revenue guide for the year. If I just kind of play that through in the back half, it bakes in a pretty significant kind of step-up versus the revenue performance in the first half. So I was just wondering what you're seeing that gives you confidence that you'll be able to hit on that 2 half step-up?

George, it's Jason, and I'll jump in, and I'll let Anya add any color that you'd like to as well. It's a good question and obviously something that we've scrutinized quite a lot as well. And the climate right now is not a high-growth climate for most companies. So we feel really great that we're able to affirm that guidance and that we are still growing at a 20% or more clip. Or projecting to grow at that clip over the course of this year. So remember, a couple of things happened in the first half of the year that we don't anticipate happening in the second half.

The first one occurred in Q1 where we had a significant out-of-stock issue that impacted sales of our powder creamer products and some other products as well, but predominantly our powder creamer products to the tune of -- we estimated over $1 million worth of sales.

Secondly, there was a really significant Q2 event that took place when UNFI was hacked with a cyber attack. And so we lost shipments for a number of weeks then as well. So -- and that's a large part of our business, of course. We primarily have 2 distributors to the natural portions of our business, that being UNFI and KeHE. And when half of that goes down, it really makes sense. So we don't anticipate having events of that magnitude in the back half of the year. And at the same time, we've picked up some additional distribution that will start to go live here over the course of the next weeks, the next months and feel like we're in a really great position to expand with additional distribution gains that have been pitched and not yet awarded. So we'll be watching those obviously very closely as we go forward.

And then finally, George, I'd tell you the liquid business that went through a transition at the end of last year to the beginning of this year, took a couple of months to really get fully back to where it had been. And we're just hitting our stride on that again right now. So you're seeing velocities back up to approximately where they were on a per ounce basis or total ounce basis and sales basically coming right back to where they were as well. So a little bit of pain as we went through that transition, a lot of great learnings, but a little bit of pain, and we think we're through that as well. So a lot of things going really well for us as we start the second half.

Okay. That's all. That's really helpful. Maybe just to follow up with a few more questions just on your explanation. Is there a way to quantify the impact from that cyberattack? And then secondly, on the liquid product, can you give more detail? Just -- I think you're talking about the transition in sizing. And I think I saw recently that there's a new and improved formula, at least it's one of the liquid products I saw was labeled that way. Is that part of the transition? And just generally, how is the liquid product performing? Are you pleased with what you're seeing? Any more detail there would be helpful.

Yes, you bet. Good questions. And with the UNFI, we can't -- obviously can't get to a perfect number on the UNFI outage. But our estimation, George, would be that it probably cost us somewhere in the neighborhood of 10 points at retail, maybe 8 to 10 points at retail over the course of I would say, of that quarter. So it all occurred in Q2, and it's obviously been restored now. But that would be our best guess. And so I don't know, you're probably looking at a few hundred thousand dollars of sales that would have been lost in that case. So not as significant as what we saw with our out of stocks, mostly because it didn't last as long. It was restored. They were restored on most products within a couple of weeks.

With regards to liquid, yes, that was a transition. Essentially, what happened is we went from 16 ounces to 25.4 ounces upsizing. And we had assumed that we would see pretty, I would say, pretty steady TDPs with a little bit of bumpiness as you go through that transition. There always is some, and I think we had spoken about that a couple of quarters ago. And it just endured a little bit longer than we expected. We had one retailer in particular that was not fully on board with the pack change when it came out. So it took probably an extra month to get them to bring the products in. They're all in now and they're flowing and doing fine. But we were out of stock at that retailer probably more like 6 weeks actually in total. They're one of our larger -- not the largest, but one of our larger retailers.

So that was certainly impactful. I mentioned there are a lot of good lessons learned coming out of that. If I could do it all over again, we would have called out the upsizing of the product to the consumer. I think there was a value perception initially as consumers saw the price go up, but the package didn't look that different. You assume that consumers see that it's 50% or just about 50% or a little over 50% more product. Not everybody picks that up intuitively. And so we just -- a little bit of self-inflicted wounds in there, George, and then a little bit of market challenges. It took us just a couple of more months than we anticipated to get through that transition. But I'm happy to say velocities are now up where we had modeled them to be, just pushing right up at about the conversion we expected.

TDPs are just about to where they were. We're still working on a few of the smaller accounts that are meaningful still when you add them all up in totality. But we feel really good about the closure that we made over the last 6 or 8 weeks on that and feel like we'll get all the way to bright here over the next couple of months.

Okay. Great. And then just one last one for me. Innovation items for the back half of the year and then into 2026, where are you most focused? Where do you think you have the most opportunity? And that's all I had.

Yes, you bet. So we're really excited about -- we've got an incredible innovation spot. The hardest thing right now is staging it in a -- or metering it in a cadence that the team -- a pretty small team. So we have to make sure we meter it and put out to a cadence that they can keep up with. So right now, we're working on a couple of things. Ironically, we're working on another transition of a liquid creamer. So it's great that we have all these lessons learned. We have been able to create a super optimized formula where we're going to be able to take out the last -- we have a gum in there right now that we're able to remove and we're able to take out -- move everything to coconut sugar, get rid of the coconut oil and make it an entirely coconut cream-based product. We're flipping it to organic, and we're putting it into a plastic bottle that will be a post-recycled plastic bottle, very consumer-friendly right now.

The irony is these paper packages that seem like they would be recyclable are not actually recyclable in the United States because you need a 2-step system and very few communities have that. So we're really excited about where that goes. We're applying all those learnings that we had the last time around to make sure that we don't have to have any of those hiccups as we go forward this time. So that's a big piece of it. That will be a very differentiated product in the marketplace, and we're getting great reception from the retailers that we've spoken with, and I think we've spoken with pretty much all of them at this point.

We have a protein-based coffee product that we're really excited about. There are a number of iced coffees with protein that have launched over the course of the last year to 18 months. We saw a concept like this last summer, and we've been honing our formula. We're really excited about that. This will be our first foray into dairy products. So there'll be more on that, but you probably have heard from us before that dairy is an area that we've been excited about. We believe that there is a super food entry into the dairy space where we can leverage the benefits of our functional mushrooms as well as a cleaner source of dairy. So we're looking -- you'll see we're looking at organic and other attributes as our entry point.

And this is a very hot category, not only anymore online, but really moving into retail. So we're having some great discussions there as well and feel like we really make hay with that particular product. Those are the 2 largest that you'll see us looking out over the course of the next 2 quarters, George. And then, of course, next year, that dairy platform will really start to expand with some exciting launches that we've been foreshadowing for a while.

Our next question comes from Nicholas Sherwood with company Maxim Group.

Can you first go into how the Amazon Day kind of promotional period went for the company?

Nicholas, sorry, we lost you.

Sorry, yes. Can you go into how the Amazon Day promotional period went for the company? And any sort of customer acquisition metrics that you have following that period?

Yes. So yes, Prime Day, it went well for us. It went to plan. We had a couple of really strong days out of the gate, and then it tapered off a little bit in the last couple of days. There's a little bit of a different pattern than what we've seen in the past where consumers shop for a while and then end up purchasing later in the Prime Days, at least that's been the behavior that we've seen in past years. So we had a couple of really strong days out of the gate, and we came in -- I think, we came in nice, I think right where we expected to be as per our plan.

Amazon in general, you guys probably see with the e-commerce numbers. E-commerce is slowing for us as it is for a number of other consumer brands. We're fine with that at the end of the day. We've talked a lot on previous calls about how we really want to encourage our consumers to shop wherever they want to shop. We really try through our pricing and our margin structure to not care -- to help them do not care and for us to not care. And so the way we've structured this, just as a reminder to everyone is DTC is our highest priced portfolio. And we do that because if consumers are interested in the brand, willing to shop here, interested in all of the education that we provide on that site, and they do it all from the comfort of their home and they don't have to really take any effort to go drive out, use the gas, go to use their time to go to a grocery, then we feel like that should be the highest cost, highest price products in our portfolio.

And Amazon on the flip side, while we'd like to run the same prices, ends up being a little bit more competitive just due to the marketplace nature of that platform. And then when you look at grocery, you find that those are best prices, consumers are using their time, their gas to go over and shop. And obviously, when you have all the physical products there, it's a very competitive marketplace. And so we want to make sure that we are as competitive as we can be. But when you look across our margin structure and the way that we leverage marketing into those various channels, what we try to do is make ourselves completely apathetic to where the consumer shops. We want the consumer to shop where they want to shop, but we want to not care. And so we've really tried to build a model that gets us to approximately the same margin across all the channels.

And you really see that, I think, in our results this quarter where we saw a significant shift towards that bricks-and-mortar business, which we've been saying is our strategy since the day I walked in the door here. And so we're really excited to see the growth in the bricks-and-mortar side. Of course, we'd like to hold on to as much e-commerce sales as we can. But at the end of the day, we feel the consumer will shop where they want to shop, and we want to be in the position to allow them to do that. And I think the results of this quarter really demonstrate that. And so it's a little bit more information than you're asking for with regards to Amazon. But with Amazon, what I'd say is it is slowing a bit for us. It's slowing for a lot of other consumer brands that we speak with that have reported recently. So is the DTC platform.

We think we saw a tremendous amount of opportunity, though, in both of those platforms, but we're going to spend appropriately and market to those in a cost-effective way, just as we do across all the channels and ultimately let the shoppers go where they want to go.

Yes. That makes sense, focusing on the wholesale channel. Kind of talking about focusing on the wholesale channel, a lot of your increased like spending was in marketing and advertising, while trade promotion was flat year-over-year. Do you have any plans to increase trade promotion because gross margin was in the kind of in the upper range of guidance? Or are you kind of not doing a ton of trade promotion as a wait-and-see thing on input costs related to tariffs?

Nicholas, this is Anya. Thanks for the question. Yes, I think it's a good one. It's certainly something that we are discussing as we are looking into second half and given the overall macroeconomic climate, I think consumers are certainly being somewhat price sensitive. As you perhaps noticed that we have not taken pricing so far. We have not increased our price given the commodity inflation that we experienced in our key raw materials as well as tariff impact that we already experienced to some degree and it's rolling out even at the higher rate in the back half.

So we reaffirmed our gross margin targets for full year, and we are discussing what other supply chain efficiencies we can implement in order to offset those inflationary costs without increasing pricing, but promotional strategy is definitely something where we can lean into if we see the need in the back half.

Yes. And I love that question because as Anya said, it's something we've been kicking around. We do have the luxury of a strong gross margin and have the ability to invest into our categories and into our channels and retail customers, all customers. In fact, right now when consumers are, as Anya pointed out, becoming more price sensitive. So we feel like we're in a really strong position given the gross margin structure that we have. And we'll utilize that as necessary to drive growth when we feel that we can win and take share from competitors.

Our next question comes from Eric Des Lauriers with the company, Craig-Hallum.

This is Adam on for Eric.

I only have one question here. Can you expand on some of the distribution gains in grocery and club? How broad-based are these gains? And should we think of one channel driving more growth than the other? And any color in terms of geographic regions would be very helpful.

Yes. Adam, Yes. So a couple of things. Those are great questions. So in this -- and I'll talk quarter and then I'll talk to half a little bit, too, because just to remind everyone about our business, our business, our orders are a little bit chunky. And what I mean by that is we have 3 large customers, 2 of which are distributing to a series of retailers. So as I mentioned a little while ago, UNFI and KeHE are 2 of our largest customers, and then we have our club business as well. And those are -- those 3 customers get direct shipped or picked up depending on their business model, either we're shipping to them or they're driving trucks to pick up. And the way that -- our business works because we don't have direct shipments to retailers given the size of our business right now, not very many, and we do a couple of smaller ones.

But because we go through distributors and then, of course, the club business, it ends up -- the orders and when they come in end up driving quarters to look very different than years. And so you get a large order on June 28 for shipment on June 28, and it really changes the dynamics of that quarter, obviously, relative to if it had come in a couple of days later into the third quarter in July. And so that's a little bit of what has happened in Q2. So -- and that's why I'll talk to the second quarter and then the first half.

In the second quarter, we did have a significant uptick in our club business. And we had what I would say was a sequential slowdown in our retail business. And that's not because of scanner data as much as it is because the distributors had placed significant orders in Q1 just before Q2 started. And so they were flush full of inventory as they started Q2, whereas it was the opposite with our club business. And so we really have to look at these things on a broader basis than just a quarter to understand the dynamic given the size of these orders relative to the size of our business.

So all that aside, I would tell you, yes, our club business has had very strong expansion. We have picked up additional regions of our creamer products. I think you guys heard from us in the past that we had, I would say, most of California, some of the Pac Northwest and then regionally, the San Diego region kind of carried all the way into Colorado. And so that was really our footprint on the creamer business. We tested coffee a while back. I had mentioned it had done really well. And in Q2, we did receive a rotation on the coffee business that has also performed very well. That's across the entire region within the Los Angeles region.

So as we go to Q3 and Q4, we've expanded distribution already this year. That will continue to bear fruit. And then we also anticipate -- and I'm sorry, and I forgot to mention the creamer business also saw an expansion into the Southeast region for club. So we're starting to pick up a footprint that is kind of West Coast all the way into Colorado and then the Southeast. And we're performing very well in all those regions. And then in the coffee business, I mentioned that we picked up that rotation in Los Angeles. It's very likely that we should see additional rotations picked up by other regions of coffee as well. And so that's all still in the works. Nothing confirmed, but I would say looking very strong that we can see some growth in the club business as we go into the back half of this year.

In the MULO and Natural world, MULO, we've continued to see steady gains. We haven't seen the Monster -- because we're not into mass in a major way at this point. We've done some work with Target. We have a couple of items in those stores. We have items in King Super, Safeway, Albertsons, H-E-B, Wegmans, Fresh Market, I think we're scanning into that we've talked about in the past. We continue to see expansion into those stores as well. So we pick up items as we continue to perform with the items that we have in there already. And that's been the case over the course of this year.

And then in the natural channel, Sprouts has just been an unbelievable customer for us for quite some time. We've talked about that. I know we've talked about that quite a lot, but we have significant expansion again, some of which has taken place here over the last couple of months and some of which has been confirmed, but really doesn't hit until the back half of this year. So it's pretty broad-based. I would tell you, across MULO, Natural and Club. We believe as we go forward, as I mentioned, this is the strategy for us. We intend to continue to grow distribution in the bricks-and-mortar space across all of these channels. We have a great sales team that's engaged, a broker that's very supportive in helping us make these calls, and we're just seeing a lot of success across the board right now.

[Operator Instructions]

There are no more questions registered in queue. I'd like to pass the conference over to our hosting team for closing remarks.

Well, thank you. And I think really, I'd just like to say thank you to everyone for joining our quarterly earnings call today. And we look forward to talking to you again in 3 months. There's been a lot of progress made again, and we're really excited to be able to come in and reaffirm our guidance that we've given and feel like we have a lot of opportunity as we go forward from here with some of the innovation that we mentioned, the expansion that we talked about. And so we'll be excited to talk to you in about 3 months from now. So have a great day. Thank you all very much.

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