Q4 2024 Laird Superfood Inc Earnings Call
Good afternoon. Thank you for attending today's lyrics Superfood, Inc. Fourth quarter 2024 financial results Conference call. My name is <unk> and I will be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if he would like to ask a question.
Please press star one on your telephone keypad I would like to pass the conference over to your host Trevor would lead Superfood you May proceed.
Trevor: Thank you and good afternoon.
Welcome to <unk>.
Fourth quarter and fiscal year 2024 earnings conference call and webcast.
Speaker Change: On today's call are adjacent fee rates, you could reach Chris Beckett Chief Executive Officer.
Speaker Change: Our Chief Financial Officer.
Speaker Change: By now everyone should have access to the company's earnings release, which was filed.
Speaker Change: Please.
Speaker Change: It is available on the Investor Relations section May typically its website at www dot.
Speaker Change: Dot com.
Speaker Change: Before we begin please note that during this call management may make forward looking statements within the context of federal Securities laws.
Speaker Change: These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those.
Speaker Change: Right.
Speaker Change: Please refer to today's press release and other filings.
Speaker Change: A detailed discussion of these risks and uncertainties.
Jason: And with that I'll turn it over to Jason Thank you Trevor and Hello to everyone on the call.
Jason: I'm thrilled to share with you today, what has been an exceptional close to 2024 for large super food.
Jason: A year that truly underscores our transformation into a high growth premium brand with strong margins and unlimited potential.
Jason: For the full year 2024.
Jason: Achieved a remarkable 27% topline growth with net sales, reaching $43 3 million.
Jason: Up from $34 2 million in 2023.
Jason: In the fourth quarter alone net sales grew to $11 6 million.
Jason: 26% increase over Q4 2023.
Jason: This growth rate isn't just impressive in isolation.
Jason: Inefficiently outpaces, the consumer goods and food industry averages, where top line growth typically hovers around 3% to 5% annually according to industry benchmarks.
Jason: We're not just keeping up.
Jason: We're leading the pack.
Jason: Equally exciting is our improvement in profitability metrics for.
Jason: For the full year.
Jason: Maintained gross margins at nearly 41%.
Jason: This is a roughly 11 point lead from that 31%, we reported for 2023, driven by strategic sourcing a shift to a variable cost manufacturing model and disciplined trade spend management.
Jason: To put this in perspective, the average gross margin for food companies often sits in 'twenty is the low thirties.
Jason: And at 25% to 35% for many of our most premium peers.
Jason: Our ability to sustain these margins while growing at nearly 30% demonstrates the strength of our business model and our strategic focus on operational efficiency and premium positioning.
Jason: This success has been driven by two key strategic pillars that we outlined in previous calls.
Jason: Rapid growth in e-commerce, particularly on Amazon and significant strides in expanding our wholesale distribution.
Jason: Let's start with e-commerce.
Jason: In 2020 for our E Commerce channel grew by 32% year over year led by our Amazon platform that not only recover lost ground from our 2022 quality event, but exceeded our internal expectations by a significant margin.
Jason: Q4 was no exception with Amazon delivering its strongest quarter ever for leveraged superfood fueled by improved inventory management targeted marketing and growing consumer demand for our plant based creamers coffee and hydration products.
Jason: Amazon makes up more than 40% of our E Commerce channel and we expect that share to continue to grow in 2025 and beyond.
Jason: Our direct to consumer business also saw a healthy increase for the year.
Jason: Bolstered by a shift toward a subscription model, which now accounts for nearly half of our DTC sales and serves as a testament to the loyalty and trust that our consumers place in our brand.
Jason: On the wholesale front, we've made tremendous progress expanding our retail footprint.
Jason: In Q4, we secured new distribution with major retailers like Kroger and Safeway Albertsons building on earlier and ongoing wins with partners like whole foods and sprouts.
Jason: Full year wholesale net sales grew 19% year over year contributing 41% of our total company revenue.
Jason: This expansion reflects not just broader reach but also improved dollar sales velocity at existing accounts.
Jason: And by existing promotional strategy and strong consumer pull for our products.
Jason: During the 12 weeks ending December 29th we grew our retail sales across the Mueller universe by approximately 35%.
Jason: Which included strong growth in both distribution points as well as dollar sales velocity.
Jason: During Q4, we were also able to initiate the upsizing of our liquid cream or to a 750 milliliter package, which is aligned with the category norm and represents a 50% volume upsizing for our product.
Jason: At the same time, we were able to improve the nutritional benefits in taste profile of our formula.
Jason: I am pleased to report that this transition has been completed now and has seemingly gone well with a minimal amount of out of stocks and very little excess inventory of the discontinued size.
Jason: In the past I've seen these types of product transitions go off the rails that much larger companies with far more resources. So I am extremely proud of the <unk> superfood team for its execution of this important initiative.
Jason: Taking a look at supply chain.
Jason: I am pleased to report a strong quarter and a very solid year for the operation of our business.
Jason: Despite persistent commodity pressure in coffee decal and coconut milk powder, our team has been extremely resourceful and establishing and cultivating supplier relationships across our ingredients manufacturing and distribution partners.
Jason: We were able to largely mitigate the cost impact during this period.
Jason: We have repeatedly stated that our goal is to achieve a gross margin in the upper thirties, and we finished 2024 at nearly 41% with Q4 coming in at nearly 39% despite the aforementioned cost pressures.
Jason: Speaking of which by now it is no secret that there continues to be persistent inflation in the food industry.
Jason: It is our belief that many of the recent commodity increases have been opportunistic in trader driven and we believe there could be a correction in some it's not many of these costs over the course of 2025 and beyond.
Jason: We have manage the procurement of our ingredients very carefully.
Jason: And we're also finding efficiencies in our operation to offset a portion of the cost increases.
As a result, we intend to take price only when and if necessary, preferring to maintain our strong volume growth whenever possible.
Jason: That means that we may choose to temporarily trade away gross margin points for gross margin dollars.
Jason: So that when some of these costs again normalize to lower levels. We can have a bigger business with a strong gross margin profile.
Jason: In this way, we believe that we can optimize the future size and profitability of our business in order to maximize long term shareholder value.
Jason: When you have a business growing as rapidly as ours it can be challenging for the supply chain to keep pace.
Jason: As has been the case for us over the last months as the sales of our Creamers and instant lottery products have repeatedly outrun the sales forecast and thereby created out of stock situations for some of our most popular skus.
Jason: If not for these out of stock issues, we estimate that we would have captured more than $1 million of additional net sales during Q4.
Jason: As we've worked to resolve these issues. Our team has successfully identified additional raw material supply and supplemental suppliers, which should help us to mitigate future product shortages and to control input costs.
Jason: We have already begun bringing these products back in stock over the past weeks and expect to have outrun. These shortages very soon after Q1 is complete.
Jason: He is out of stock products will have an impact on our sales during Q1 that we remain on pace for strong growth during 2025 and have confidence in the overall trajectory of our business.
Speaker Change: Now, let me hand, it over to <unk> to dive into the financial details for the quarter and for the full year.
Speaker Change: Thank you, Jason and good afternoon, everyone today, I am pleased to share our fourth quarter and full year 'twenty 'twenty four financial results.
Speaker Change: Coming off a record high net sales in the third quarter, we delivered another nearly equally strong quarter of topline growth in Q4.
Speaker Change: Net sales grew 26% to $11 6 million compared to $9 2 million in the prior year period.
Speaker Change: This quarter, our wholesale channel led the company's growth, increasing by 52% year over year and accounting for 42% of our total net sales.
Speaker Change: This growth was driven by distribution expansion in grocery and velocity acceleration that shelf in both retail and club.
Speaker Change: E Commerce sales increased by 12% year over year and contributed 58% of total net sales.
Speaker Change: With significant improvements in media efficiency in this channel the.
Speaker Change: The growth was driven by strong sales on Amazon Dot Com building on the momentum over the previous three quarters and due to an outstanding commercial execution.
Speaker Change: Full year 2024, net sales grew 27% to $43 6 million compared to $34 2 million in prior year periods, posting strong growth across all channels.
Speaker Change: E Commerce sales increased by 32% year over year.
Contributed 59% of total net sales.
Sales on both Amazon Dot Com and the DTC platform contributed to this outstanding result, driven by growth in subscription revenue and repeat customer purchases as well as higher order values.
Speaker Change: Beginning with this reporting period, we will be reporting net sales from Amazon and <unk> platforms and their combined E Commerce channel to reflect the fact that this is how we manage our business internally as we have structured ourselves to be agnostic to consumer shopping on whatever digital platform. They prefer.
Speaker Change: Wholesale sales increased by 19% year over year and contributed 41% of total net sales driven by velocity improvements in retail and distribution expansion in grocery as well as more efficient promotional spend.
Speaker Change: Gross margin for the fourth quarter came in at 38, 6% compared to 44 in the corresponding prior year period.
Speaker Change: Margin contraction was driven by increased gross to net sales in the retail channel related to prior periods and not related to the fourth quarter activity Slotting expenses were also higher driven by new distribution expansion.
Speaker Change: Contributed to increased trade spend in the quarter.
Speaker Change: Sequentially gross margin contracted four four points versus the third quarter of 'twenty 'twenty four due to the benefit of supplier settlement recognized in the third quarter and higher trade spend in Q4.
Speaker Change: On a full year basis gross margin was 49%.
Speaker Change: As compared to 31% and a corresponding prior year period.
Speaker Change: This represents 10 points seven points of expansion driven by lower raw material costs do you just shift to direct procurement of key ingredients full realization of co manufacturing model benefit.
Speaker Change: And planned reductions in promotional trade spend.
Speaker Change: We are confident in our ability to sustainably achieve gross margins.
Speaker Change: And the high thirties, and a common quarters.
Speaker Change: Operating expenses increased $1 3 million in the fourth quarter compared to the same period last year, driven by slightly higher marketing investment broker and Amazon selling fees related to volume growth.
Speaker Change: People related costs, such as stock based compensation, which is a noncash expense.
Net loss for the fourth quarter.
Speaker Change: 0.4 million compared to net income of 0.1 million in the prior year period.
Speaker Change: On a full year basis net loss was 1.8 million compared to net loss of $10 2 million in the prior year period, representing 82% improvement driven by top line growth gross margin expansion and lower operating costs.
Speaker Change: Turning to our balance sheet, we ended the quarter with $8 5 million in cash and no debt.
Speaker Change: I'm, particularly pleased to report that for the third consecutive quarter. We have delivered a positive quarterly cash flow, which were 312000 in Q4 and totaled 807000 for the year, reflecting our improved performance and disciplined management of our working capital which decreased year over year.
Speaker Change: Year, excluding cash while driving year to date revenue growth of 27%.
Speaker Change: 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 towards breakeven and profitability.
Speaker Change: We also have an asset backed line of credit available for our use should we need it.
Speaker Change: Looking ahead to 2025, we expect continued growth in our core business segments and channels.
Speaker Change: We remain focused on executing our strategic priorities.
Speaker Change: As such we are reaffirming the guidance, we gave last quarter and expect net sales to grow in 20% to 25% range for the full year 2025, and gross margins to hold an upper thirties, despite commodity cost pressures.
Speaker Change: The first quarter net sales growth to be below the full year target due to out of stocks and toxin a claim of business early in the quarter.
Speaker Change: We are well on our way of resolving this issue and expect a full recovery by the end of Q1 or early Q2.
Speaker Change: I expect net sales to accelerate growth in the second part of the year relative to your full year guidance.
Speaker Change: We will target our adjusted EBITDA breakeven on a full year basis, and reinvest any surplus in traditional topline growth.
Speaker Change: We expect $1 million to $2 million negative operating cash flow in order to invest into inventory to support topline growth and minimize out of stocks.
Jason: And now I will turn the discussion back over to Jason for any closing remarks.
Jason: Thank you Ron and thank you once again to all of you who are supporting our journey.
Jason: In a crowded feed market, they're super food is carving out a unique space with our whole food functional ingredient portfolio.
Jason: 27% sales growth how pieces nearly all of the household names in our industry and our 40% gross margin surpasses even longer established players.
Jason: What's more.
Jason: Channel success across retail and Amazon gives us the versatility that many competitors like.
Jason: We're not just a DTC darling.
Jason: Brick and mortar relic, we're thriving in both worlds and meeting consumers, where they prefer to shop.
Jason: It has been an exceptional couple of years for our brand and our business, but we really do believe that we are just getting started.
Jason: I couldnt be more proud of our team for what we have already accomplished or more excited for our continued expansion as we go forward.
Speaker Change: Operator. This concludes our prepared remarks, and we're now ready to open the call to questions.
Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Any reason at all you would like to move that question. Please press star followed by two again to ask a question. Please press star one.
Speaker Change: As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking a question.
Speaker Change: The first comes from Alex Fuhrman with Craig Hallum Capital Group You May proceed.
Alex Fuhrman: Hey, guys. Thanks, very much for taking my question you mentioned, having some stock outs that you've been dealing with lately.
Speaker Change: Did those impact Q4 at all or is that really more of a Q1 issue.
Speaker Change: And then can you give us a timeline of when you think that will be resolved and what what exactly the inventory investments you're making this year to help to alleviate that.
Speaker Change: Okay.
Speaker Change: Hey, Alex it's Jason Thanks for that question. It's one that we want to make sure that we address really clearly here yeah. I mean, the reality is what happened last year as we were rolling into Q4, I think in a number of folks on this call probably saw we started to have products that were out of stock.
Speaker Change: In DTC in particular and.
Speaker Change: Sometimes at retail as well and the reality is when you started moving through at a pace even faster than we expected on especially on the coconut milk.
Speaker Change: <unk> related products and so what we did is we started to prioritize where we put that product. We took care of our subscribers are ahead of any new customers and it's slowed down some of our marketing as a result, and then at the same time, we made sure that we were able to.
Speaker Change: Keep our main customers.
Speaker Change: In stock as much as possible, which was which was mostly in stock in total yes.
Yeah.
Speaker Change: It ended up probably costing us I would guess based on our estimates somewhere close to $1 million of sales to the top line.
Speaker Change: Which is a two edged sword you know hey, we would've loved to have reported didn't have those sales, but on the flip side. It just demonstrates the demand.
Speaker Change: Even growing almost 30%.
Speaker Change: Had another million or so that we could have been stocked. So we're sorry that we could have sold if we had been in stock and so this is a top priority for us. The reality, though is you have to remember unlike a lot of our peers.
Speaker Change: Who can simply throw more more ingredients and chemicals et cetera.
Speaker Change: Into parts and spit out new quote unquote food or food is all just a couple of ingredients. So and we're short on coconut milk powder products, we need more coconut milk powder and it takes time it comes in from Asia. So it just puts a little crimp into your supply chain. We've gone out we've identified a couple of new suppliers. So we have a more robust supply than we've ever.
Speaker Change: We're very as you guys know we are very quality oriented.
Speaker Change: So those suppliers have been vetted very very carefully they are all direct relationships for us as well.
Speaker Change: And they give us the ability to really expand our supply from here, which will work out nicely as as we're seeing demand really really kick up here.
Speaker Change: We've got to your question in Q1, there will be some impact we still expect robust growth here and and as you saw in the.
Speaker Change: In the earnings release, we are still we are reiterating our call for the year, we believe that we have 20% to 25% growth.
Yeah.
Speaker Change: In the year despite.
Speaker Change: Despite some early challenges and so we're really actually.
Speaker Change: Two edged sword as I say, we're excited about the demand we're in position to be able to increase our supply. It just takes a minute to work.
Speaker Change: You know to work it through the supply chain and get it over here and put it in.
Speaker Change: In the bags and onto the shelves.
Speaker Change: Great. That's really helpful. Thanks for that explanation, Jason and then I guess.
Talking about some of your products that don't have the coconut in them.
Speaker Change: As impressed to see it looks like it looks like the coffee category. The beans grew something like 40% this year and more than 50% in the fourth quarter can you talk a little bit about what's driving that it looks like you've been having a lot of success with the functional coffees that that you have a lot of differentiation within the.
Speaker Change: Market place has that been the biggest driver of your wholesale growth I know you've had a really strong business in some key retailers with coffee beans.
Speaker Change: Yes, that's right Alex we've had really what we call a coffee solutions, which is our coffees ground and holding coffees as well as our Creamers plus our instant <unk> have all been doing exceptionally well over the last couple of years and we're seeing a lot of uptake with retailers.
Speaker Change: Coffee for us it has been a bit surprisingly strong again areas that we've been pleasantly surprised by demand wise.
Speaker Change: Just had some really strong uptake in not only in the wholesale segment, but also online.
Speaker Change: Amazon and DTC as well so it's an area obviously with escalating costs that we have underway.
Speaker Change: <unk> been watching closely.
Speaker Change: We bought I would say.
Speaker Change: Advantaged position.
Speaker Change: A lot of our coffee up until now and.
Speaker Change: We're watching it carefully and making choices I think that are very strong relative to our P&L we.
Speaker Change: We did take pricing recently on our coffee we announced.
Speaker Change: A small price increase of $1 per bag.
Speaker Change: Online channels, and then pass their commensurate.
Speaker Change: Two the commensurately to the retail trade.
Speaker Change: We've taken a position on price as I mentioned.
Speaker Change: We're really more interesting gross margin dollars than we are in gross margin percentages and we intend. So so very much intend to keep our gross margin in the high thirty's, but we're willing to trade away a couple of points in order to gain a couple of dollars of incremental sales because remember we're now versus our expectation we have opportunity to to sell products that we didn't expect to.
Speaker Change: Gain additional revenue and thereby additional gross profit dollars, which is very meaningful to our business and our cash position. So.
Speaker Change: That's the way we're managing it I think we're managing it very smartly, we got our eyes on all of this trackers.
Speaker Change: We're reviewing daily where we saw some relief in the coffee market recently.
Speaker Change: And we've taken advantage of that and.
Speaker Change: So I think we're in a really strong position to continue to grow that business and consumers want it. It's the functional coffee as you said, it's a function of a lot of case as well, where we put our performance mushrooms into these coffee so we have.
Speaker Change: Some innovation in both of those areas with with new products that have been doing well and we're really excited about that entire.
Speaker Change: That entire category of the business for us.
Speaker Change: Yeah.
Speaker Change: Okay, well, that's great to hear that you are seeing a lot of traction there I certainly agree.
Speaker Change: Not not a lot else out there in the marketplace with the functional benefits for coffee that that you guys have so I'm glad to see that that is doing well and appreciate the thorough explanation Jason.
Jason: You bet. Thanks Tyler.
Speaker Change: Yeah.
Speaker Change: Thanks, Tim.
Speaker Change: Our next question comes from George Kelly with Roth Capital Partners You May proceed.
George Kelly: Hi, everybody thanks for taking my questions.
George Kelly: First maybe a modeling question for Anya I was curious in the commentary around gross margin.
Speaker Change: Could you maybe be more specific about how much you're willing to kind of.
Speaker Change: Digest or give up in the early part of 2025 do you expect gross margins to step down a little bit from what you reported in Q4, and then what happened sort of throughout the year.
Speaker Change: Hi, George This is Dan. Thank you for your question, Yes, we are intending to hold our gross margins.
Speaker Change: All high 30.
Speaker Change: You know, obviously commodities are being inflationary and we are closely watching that dynamic as Jason mentioned, we have kicking some pricing in our coffee business.
Speaker Change: Breaking records in terms of our cost inflation.
Speaker Change: What's taken a price increase in our online channel.
Speaker Change: Wallis and wholesale and we're going to continue to monitor this situation.
Speaker Change: And but you know again as that Jason just talked about we are willing.
Speaker Change: Willing to trade off a couple of points of margin from web with them before in the 14th boss.
Speaker Change: In favor of market share and really growing the top line, but.
Speaker Change: But you know I've been a we don't really give quarterly guidance, but I'm going to stick without eating old guidance of our gross margins in high thirties.
Speaker Change: Okay Fair enough and then next question.
Speaker Change: With respect to the new.
Speaker Change: Sizing on the liquid product.
Speaker Change: Jason you mentioned in the prepared remarks that.
Speaker Change: I think your comment was that it had seemingly.
Speaker Change: Why shouldn't seemingly gone well I was just curious if you could give any more specifics.
Speaker Change: Note velocities or.
Speaker Change: Really just what you've seen since that that product has hit shelf.
Speaker Change: And maybe a secondary question on the same topic is just how are you incorporating the new liquid product in your 20% to 25% revenue growth target. It just seems like such a big category. You've got this product now that's more competitive and sort of how are you thinking that in us.
Speaker Change: Is it is it a material portion of the growth.
Speaker Change: Is that target or.
Speaker Change: When you kind of just letting it developing it could represent upside to that target if it's okay.
Speaker Change: A successful launch.
George Kelly: Yes, great questions George.
Speaker Change: Thanks by the way for those.
Speaker Change: I think that the way that I would think about it it's too early it's too early to tell and that's why I said, it's seemingly has gone well instead of.
Speaker Change: Outright, saying it had gone well.
Speaker Change: What I know has gone well is that we manage to.
Speaker Change: Complete the transition with very little inventory or waste. So we're very pleased with.
Speaker Change: How that transition with the retailers I don't know of any.
Speaker Change: Meaningful loss distribution I'm, not any loss distribution that certainly nothing meaningful.
Speaker Change: That excuse me that happened as a result of the upsizing, which is not always easy because youre dealing with different shelf heights et cetera, and we did not have any.
Speaker Change: Any challenges with that so as far as I know and then the production ran well so as far as I know, it's gone exceptionally well.
Speaker Change: Well now having said that we don't have any sales data yet so back to your question. Your real question here, which is.
Speaker Change: What do we know about sales.
Speaker Change: Our expectation.
Speaker Change: Is that there will be something less than a one to one translation, we've upsized the volume by 50%.
Speaker Change: But we're only expecting somewhere around 80% translation of volume units.
Speaker Change: Where you had product on shelf and then you have now larger product on shelf.
Speaker Change: Reality is a lot of times in consumer goods, you don't actually see a step down. So we're hopeful that that will be the case, we're prepared to support that demand should it materialize ahead of our expectation and then we are of course aggressively out selling additional volume I agree with you George very big category.
Speaker Change: We're actually holding our own nicely within a couple of key retailers in the natural channel and we've just started to make some of the expansion to the conventional channel as we discussed on previous calls so.
Speaker Change: Fingers crossed we think that this is the most likely product to really cross the rubicon.
Speaker Change: The conventional channel over the next couple of years and.
Speaker Change: Although quite frankly, a number of our other products are starting to show.
Real opportunity to do that as well so.
Speaker Change: We do have.
Speaker Change: I'd tell you we have high hopes for this product we anticipate that.
Speaker Change: There could be some outperformance this year, but it's just too early to call it.
Okay. That's helpful context. Thank you and then maybe just one last one.
Speaker Change: Sure.
Speaker Change: Any out of stocks.
Speaker Change: I guess the question is is there sort of a ceiling on.
Speaker Change: On these products that youre bumping into how much more supply out there is there for coconut milk powder.
Speaker Change: And I mean.
Speaker Change: As you look out over the next two to three years as Theyre. Just like is this going to be an ongoing challenge or is it really just sort of a timing issue.
Alex Fuhrman: Yes, great question George.
Speaker Change: I'd tell you were fairly dense the overall supply of coconut.
Speaker Change: With what we utilized so the reality is cocoanuts get used in a variety of ways you have coconut milk yogurt sugary of coconut oil.
Speaker Change: And as you have additional demand that comes up for one of those products. They could shift you can't you can only produce one of those three.
Speaker Change: With with the coconuts as they mature so you have to make a choice.
Speaker Change: But if we were to ramp up demand and require more there would be opportunity to shift from some of the lower value products over to the coconut milk powder anyhow.
Speaker Change: But we're barely scratching the surface. So we're not worried about that.
Speaker Change: The issue for us a little bit idiosyncratic to us is the level of quality that we demand from our coconut milk supply. It just means that we need to go over when you would qualify the suppliers we need to taste the products, we need to understand how they make their product.
Speaker Change: And so we're a little bit of a slower process. We thought we had all of our demand captured.
Speaker Change: By a single supplier for this year and then for next as well.
Speaker Change: Adding <unk>.
Speaker Change: Additional facilities, specifically for us, which ended up getting delayed and we just weren't able to pivot as quickly as we needed to and it was the perfect storm because demand also ramped up on those particular products at the same time and so it put us into an out of stock situation, which as you know it just takes some time to recover.
Speaker Change: From that we're filling everything Canada mouth.
And I think keeping everybody in these pretty.
Speaker Change: Pretty decent stock, but certainly there is additional opportunity and once we.
Speaker Change: Are you able to get all of this supply fully online, we anticipate being able to to to fulfill that demand as well and that as I mentioned in the prepared remarks, we anticipate that happening.
Speaker Change: Sometime right around the end of Q1, so we're not far away from it right now.
Speaker Change: It's not like we're out of stock we certainly are.
Speaker Change: It's just a little bit of whack, a mole, where youre out of Sweden creamy and then you might be out of Sweden agreement with <unk> and then you're out of turmoil.
Speaker Change: So you produce those as they come up as the additional coconut milk.
Speaker Change: <unk> is received and that's what we've been doing it's a tough tough came to be and certainly there are some lost sales, but we feel confident that we can recapture those and that will have the supply to do so over the course of the next call. It four to six weeks.
Speaker Change: Okay understood. Thank you.
Speaker Change: Yep.
Speaker Change: Thank you.
Speaker Change: There are currently no other questions can you sort of as a quick reminder, it is star one on your telephone keypad, if you'd like to ask a question.
Speaker Change: No more questions queued at this time I'll turn it back over for any closing remarks.
Speaker Change: Thank you yeah I just the only thing I would add really beyond the discussion that we've had is 2024 was a really exciting year for us at layered Super food, it's a year that we prove that.
Speaker Change: We came through the transition the turnaround that we had been talking about and were able to establish gross margins even in excess of what our target was so there was a little bit of an extra balance sheet that was that was there for us and we really anticipate as we go forward.
Speaker Change: Where it will be a high growth company with high 30% gross margins, which really puts us in a class with very few in there.
Speaker Change: We're really excited about that excited about where we go.
Speaker Change: These challenges that we have right now are.
Speaker Change: And to pass with.
Speaker Change: With the out of stocks I do believe the commodity pressures are going to pass as well as I mentioned I believe that these are these truly are transitory.
Speaker Change: Inflationary costs.
Speaker Change: Actually if we treat them as such.
Speaker Change: I do believe that we will see them back down from where they are right now and even where they are right now as we mentioned in our P&L can handle it so very exciting time for us and I think we're in great position to really be able to take advantage of the healthy food trends that are sweeping America right now our products are an incredible fit for those trends and.
Speaker Change: The demand increase that we're seeing is really proof of that so we're excited we'll be back in that long just a few more weeks to be able to talk about Q1 and look forward to giving an update then.
Speaker Change: Thank you all.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect your line.