Laird Superfood, Inc. (AMEX:LSF) Q3 2023 Earnings Call Transcript

So our advertising spend is quite a bit reduced, and yet we’re seeing really strong estimates from the existing sales. We have a tremendous opportunity still to convert a number of those — large number of those current consumers over into subscribers. And we’re working on that right now as well as the conquesting of our competitors now that we have full inventory in place. So really excited about that channel for next year. We’re excited about it. You recall for this year. That was going to be one of our big growth drivers. Unfortunately, it didn’t materialize with quality event that we had, but we were able to keep that product out of the hands of consumers. So there was really no downside except that we had basically to put a pause on for, call it, 7-ish — 7 or 8 months while we got everything back in stock and got our buybacks one and all of our — basically, all of our existing business put back in place.

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

Alex Fuhrman: Okay. That’s really helpful. And then just on the gross margin, I think you kind of touched on this a little bit with Bobby’s question, but mid to high 30s gross margin in Q4. That’s quite a bit more than you’ve done any quarter, this year or the last couple of years. Now that you’ve got your core shelf-stable creamer manufacturing being outsourced. I mean, is that a run rate we could expect to see throughout next year? Is there any reason why Q4 is maybe a little step up and maybe we should expect that to be a little bit lower in the first half of next year?

Jason Vieth: Yeah. Great question. Alex, I would tell you that you’re right where we are as we think about our margins through Q4. And as we go forward from here, we actually see more opportunity than we see risk. There are always commodity movements that may go against you, but given where we bought commodities thus far and where it looks like next year and with some of the cost savings initiatives that we have in place, we actually see opportunity to further improve from here. That being said, we are also looking at investments that we can make to gain market share online and retail. And so we’ll be balancing that as we go forward. But I would tell you no, we don’t really see a spike in Q4 that we won’t be able to hold on to. We really see the start of a long-term trend be sitting in that 35-plus range as we go forward.

Anya Hamil: And I’ll just add to it. Hi, Alex, this is Anya. So I’ll just add, is that quarterly wise, our margin is expected to trip, so just depending on the timing or the seasons, Q1, I expect it to be a little heavier because it’s back to how season for consumers, and we want to line up our promotions with that season to really drive the top line and then it kind of comes down in Q3 and Q4 — I’m sorry, in Q2 and Q3, and then we have the Black Friday event seasonally fluctuate somewhat with 3, but as far as our cost of sales, that’s going to be pretty steady throughout the quarters next year at Q4 or better levels.

Alex Fuhrman: That’s terrific. Thank you both very much and congratulations on the really improved results here in the third quarter.

Jason Vieth: Thanks, Alex.

Anya Hamil: Thank you.

Operator: There are no additional questions at this time. So I’ll pass the conference back to the management team for any closing remarks.