Laird Superfood, Inc. ($LSF)

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.