Q2 2025 Laird Superfood Inc Earnings Call

Speaker #1: Good afternoon. Thank you attending today's Laird Superfood, Inc. second quarter 2025 financial results. My name is Jayla, and I'll your moderator for today. All lines will be muted during the presentation portion of the call.

Speaker #1: With the opportunity for questions and answers at the end. I would now like turn the conference over to our host, Trevor Rousseau. Please proceed.

Speaker #2: Thank you and good noon. Welcome to Laird Superfood's 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #3: Thank you, Trevor. And good afternoon, everyone. Welcome to Laird Superfood's second quarter 2025 earnings conference call. I'm ason Vieth, CEO of Laird Superfood, and I'm joined today by our CFO, Anya Hamill.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Driven by distribution gains, velocity growth, and grocery and club channels, our e-commerce channel also helped steady with positive 2% growth in a very challenging digital market.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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 ts.

Speaker #3: This is in line with our intent to ome 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.

Speaker #3: 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 impacts, our margin level remains among the best in the industry.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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 use from operations year-to-date.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: The consumer landscape is dynamic. But our focus on clean, plant-based superfoods, backed by Laird Hamilton's legacy and our commitment to quality, positions us to capture share.

Speaker #3: 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.

Speaker #3: Anya.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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, then contributed 52% of total net sales, led by continued growth on Amazon platform.

Speaker #1: 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 two 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 and our key raw materials such as coffee and coconut milk powder and increased tariff costs.

Speaker #1: 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.

Speaker #1: Our supply chain team continues to drive efficiencies by directly partnering with key raw materials suppliers and co-packing partners to find cost savings to offset rising commodities costs.

Speaker #1: Operating expenses increased by $0.7 million in the second quarter compared to the same quarter last year, driven primarily by two reasons. One, increased marketing, advertising, and selling expenses due to sales volume growth.

Speaker #1: And two, slightly increased general and administrative expenses, driven primarily by stock-based compensation which is a non-cash expense, and largely offset by broad cost reduction measures.

Speaker #1: Net loss for the second quarter was 0.4 million, compared to 0.2 million lost in the prior year period and adjusted EBITDA was positive 0.1 million, compared to a loss of 0.1 million.

Speaker #1: In the same quarter prior year. This $200,000 improvement in adjusted EBITDA was driven by top-line growth, margin management, and disciplined around cost control as we are well on the ay to break-even and profitability.

Speaker #1: 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-stock experience 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.

Speaker #1: 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.

Speaker #1: In addition, during the second quarter, our account receivables balance was elevated due to timing of shipments, which resulted in shift in payments received from Q2 to Q3.

Speaker #1: 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 break-even and profitability.

Speaker #1: And we also have an asset back line of credit available for our use, should we need it. We exited the second quarter with a strong momentum in our core categories, exciting innovation and confidence in our team and our brand.

Speaker #1: 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 the range of 20 to 25%.

Speaker #1: Gross margins to hold in the upper 30s and break-even adjusted EBITDA. We expect full year operating cash usage to be approximately $2 million dollars.

Speaker #1: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Thank you for joining us again today. And thank you for your continued interest in Laird Superfood. This concludes our second quarter 2025 prepared marks.

Speaker #3: And we are now ready open the call to questions.

Speaker #1: At this time, if you would like to k a question, it is star followed by 1 or your telephone keypad. The friendly reason you would like to remove that question, it is star followed by 2.

Speaker #1: Again, to ask a question, it is star 1. As a reminder, if you're ing a speakerphone, please remember to pick up your headset before asking a question.

Speaker #1: I'll pause briefly here as questions are registered. Our first question comes from George Kelly. Roth Capital Partners. George, our line is now open.

Speaker #4: Hey, everybody. Thanks taking my estions. A first one for you is just about your revenue guide for the year. If I just kind play that through in the back half, bakes in a pretty significant kind of step up versus the revenue performance in the first half.

Speaker #4: So I was just wondering what you're seeing that gives you confidence that you'll be able hit on that two-half step up.

Speaker #3: Hey, George. It's ason, and I'll jump in, I'll let Anya add any color that she'd like to as well. It's a good estion, and obviously something that we've scrutinized quite a lot as well.

Speaker #3: And you know 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.

Speaker #3: Our projection 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.

Speaker #3: 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.

Speaker #3: To the tune of, we estimated over a million dollars' worth of sales. Secondly, there was a really significant Q2 event that took place when UNFI was hacked with a cyber attack.

Speaker #3: And so we lost shipments for a number of weeks then as well. So you know, and that's a large part of our business, of course.

Speaker #3: You know, we primarily have two distributors to the natural and mineral portions of our business that being UNFI and KD. And so when half of that goes down, it really makes a dent.

Speaker #3: 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 to next months.

Speaker #3: And feel like we're in really great position to expand with additional distribution gains that have been pitched and not yet awarded. So you know, we'll be watching those obviously very closely as we go forward.

Speaker #3: And then finally, George, I tell you the liquid business that went through a transition at the end of last year into the beginning of this year took a uple of months to really get fully back to where it had been.

Speaker #3: 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 is.

Speaker #3: 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.

Speaker #3: 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 of.

Speaker #5: Okay. That's all. That's really pful. Maybe just to follow up with a few more questions just on your explanation. Is there a way quantify the impact from that cyber attack?

Speaker #5: And then secondly, on the liquid, products, 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.

Speaker #5: 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?

Speaker #5: Are you pleased with what you're eing? Any more detail there would be helpful.

Speaker #3: Yeah. You bet. Good questions. And you ow with the UNFI, you know we can't obviously can't get to a perfect number on the UNFI outage.

Speaker #3: But our estimation George would be that it probably cost us somewhere in the neighborhood of 10 points at retail you know maybe 8 to 10 points at retail.

Speaker #3: Over the course of I would say of that quarter, so it all occurred in Q2 and is obviously been restored now. But that would be our best guess.

Speaker #3: And so I don't know. 're probably looking at a few hundred thousand dollars of sales that would have been lost in that case. So not a significant is what we saw with our out-of-stocks mostly because it didn't last as long.

Speaker #3: It was restored. They were restored on most products within a couple of weeks. With regards to liquid, yeah, that was the transition. Essentially what happened is we went from 16 ounces to 25,4 ounces, upsizing.

Speaker #3: And we had assumed that we would see pretty I would say pretty steady GDP with a little bit of bumpiness as you go through that transition.

Speaker #3: There always is some. And I ink we had spoken about that a couple of quarters ago. And it just endured a ittle bit longer than we expected.

Speaker #3: We had one retailer in that was not fully on board with the patent change when it came out. So it took probably an extra month to get them to bring the products in.

Speaker #3: They're all in now and they're owing and doing fine. But we were out of stock. At that retailer, probably more like six weeks actually in total.

Speaker #3: They're of our larger not the largest, but one of our larger retailers. So that was certainly impactful. I mentioned there were a of good lessons learned coming out of that.

Speaker #3: You know if I could do it all over again, we would have called out the upsizing of the t to the consumer. I think there was a value perception initially as consumers saw the price go up, but the package didn't work that different.

Speaker #3: You know, you assume that consumers see that you have 50% or just about 50% more or a little over 50% more product. But not everybody picks that up intuitively and so that we just you know a little bit of self-inflicted wounds in there, George, and then a little of market challenges.

Speaker #3: And it took us just a couple more months than we anticipated to get through that transition. But you know I'm happy say velocities are now up where we had modeled them to be pushing right up at about the conversion we expected.

Speaker #3: GDPs 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.

Speaker #3: But we're feeling really good about the closure that we made over the last six or eight weeks on that. And I feel like we'll get all the way to bright here the next couple of months.

Speaker #5: Okay. Great. And then just one last one for me. Innovation items, for the back half the year and then into 2026, where are you most focused?

Speaker #5: Where do you think you have most opportunity? And that's all I had. Thank you.

Speaker #3: Yeah. Yeah, you bet. So we're really excited about we got an incredible innovation spot. The hardest thing right is staging it in a metering it in a cadence that the team you know we're just all keen.

Speaker #3: So we have to make sure we meter it. And put it out to a ence that they can keep up with. So right now, we're working on a couple of things.

Speaker #3: Ironically, we're working on another transition of the 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 take out the last we had a dumb in there.

Speaker #3: Right 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 entirely coconut cream-based product.

Speaker #3: We're flipping it to organic. And we're putting it into a plastic bottle that will be a post-recycled plastic bottle. It's a very consumer-friendly right now.

Speaker #3: You know the irony is these paper packages that seem like they would be recyclable in the United States because you need a two-step system and very few communities have that.

Speaker #3: So we're really excited about where that goes. We're applying all those learnings that we had the last time around. Make sure that we don't have to have any of those hiccups as we go forward this time.

Speaker #3: That's a big piece of it. That would a very differentiated product in the marketplace. And 're getting great reception from the retailers that we've spoken with.

Speaker #3: And I ink 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.

Speaker #3: 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 the last summer.

Speaker #3: And we've had honing our formula. We're really excited recyclable are not actually about that. This will be our first foray into dairy products. So there'll be more on that.

Speaker #3: But you'll probably have heard from us before that dairy is an area that we've been excited about. We believe that there is a superfood entry into the dairy space.

Speaker #3: 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 oking at organic and other attributes as our entry point.

Speaker #3: And this is a y hot category not only anymore online, but really moving into retail. So 're having some great discussions there as well.

Speaker #3: And I feel like we really make hay with that particular product. Those are the two largest that you'll see us looking at over the course of the next two quarters, George.

Speaker #3: And then, of course, next year that dairy platform will really start to expand with some exciting launches. But we've been foreshadowing for a while.

Speaker #5: Thank ou.

Speaker #3: You bet. Great to talk to you, George.

Speaker #1: Our next question comes from Nicholas Erwood with the Maxim Group. Nicholas, your line is now open.

Speaker #6: Thank you. Thank you for taking my questions. Can you first go into how the Amazon Day kind of promotional period went for the company?

Speaker #6: Hello?

Speaker #3: Sorry, Nicholas. We lost you there.

Speaker #6: Sorry. Yeah. Can you go into how the Amazon Day promotional period went for the company and any sort of customer acquisition metrics that you you have following that period?

Speaker #3: Yeah. Hey, Nicholas. So yeah, Prime Day went it went well for us. It went to plan. We had a couple of really strong days out of the gate.

Speaker #3: And then it tapered off a little bit in the last couple of days. It was a little bit of a 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.

Speaker #3: So we had a uple of really strong days out of the gate. And we came in, I think, Anya, we ame in right, I think right where we expected to be for our plan.

Speaker #3: You know Amazon in general, you guys could probably see with the -commerce numbers, e-commerce is slowing for us as it is for a number of other consumer brands.

Speaker #3: We're fine with that at end of the day. We've talked a lot on previous calls about how we really want to encourage our shop our consumers to shop wherever want to shop.

Speaker #3: We really try through our pricing and our margin structure to not tear to help them to not tear and for us to not tear.

Speaker #3: And so the way we've structured this, just as a inder 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 their dads, go to use their time to go to a grocery, then we feel like that should be the highest cost, you ow highest price products in our portfolio.

Speaker #3: 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.

Speaker #3: And then when you look at grocery, you find that those are our best prices. You know consumers are using their time, their gas, to go over and shop.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: We want to we want the consumer to shop where they want to shop, 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.

Speaker #3: And you really see that, I ink, 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 here.

Speaker #3: You know And so we're really excited to see the growth in the bricks-and-mortar side. We'd like, of course, we'd like to hold on to as much e-commerce sales as we can.

Speaker #3: 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.

Speaker #3: I think the results of this quarter really demonstrate that. And so you ow it's a little bit more information than ou're asking for with regards to Amazon but you know with Amazon, what I'd say is it is slowing a bit for us.

Speaker #3: It's slowing for a lot of other consumer brands that we speak with. They have reported recently. So is the DTC platform. We think we still have a tremendous amount of opportunity, though, in both of those platforms.

Speaker #3: But we're going to spend appropriately and you know the market to those in a cost-effective way just as we do across all the channels.

Speaker #3: And ultimately, let the oppers know where they want to go.

Speaker #6: Yeah. Thank you for all the detail. That makes sense. Focusing on the wholesale channel. Kind of talking about focusing the wholesale channel, a lot of your increased spending was in marketing and advertising while trade promotion was flat year over year.

Speaker #6: Do you have any plans to increase trade promotion? Because gross margin was in the kind of an upper range of 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?

Speaker #3: Yeah. Hi, icholas. This is Anya. Thanks for the question. Yeah, I think it's good one. It's starting to happen that we are discussing and we are looking into a second half and given the overall macroeconomic climate, I think consumers are certainly being somewhat price-sensitive.

Speaker #3: 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.

Speaker #3: As well as tariffs impact, that's you know we already ienced to some degree and it's rolling you know even at the higher rates in the back half.

Speaker #3: So we reaffirmed our gross margin targets for full year and you ow we are discussing what other supply chain efficiencies we can implement in order to offset those inflationary costs without increasing pricing.

Speaker #3: But promotional strategy is definitely something where we can lean into if we see the need in the back half.

Speaker #6: Yeah. Nicholas, I love that question. Because as Anya said, it's ething we've been kicking around. We do we do have the luxury of a strong gross margin and have the ability to invest into our categories and into our you know our channels and retail customers all customers.

Speaker #6: In fact, right now, when consumers are, as Anya pointed out, becoming more price-sensitive. So we feel like we're in a really you know a ally strong position given the gross margin structure that we have.

Speaker #6: And we're utilizing that as necessary to drive growth when we feel that we can win and take take share from competitors. Okay. That all makes sense to me.

Speaker #6: And I appreciate the thought, both of you gave into answering my question. And that's my last question and I'll return back to the queue.

Speaker #3: That's great. Thanks, Nicholas.

Speaker #1: Our next question comes from Eric DeLaurie with the company CraigHolland. Eric, your line is now open.

Speaker #7: Everyone. This is Adam on for Eric. Thank you for taking our estions. I have only one question here. Can you expand on some of the distribution gains and grocery and club?

Speaker #7: 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 pful.

Speaker #7: Thank ou.

Speaker #3: Yeah. Hey, Adam. Well, listen. Yeah. So hey, a couple of things. Those are great questions. So in this and I'll talk quarter and then I'll talk the half a little bit too ause just to remind everyone about our business.

Speaker #3: Our business, our orders are little bit chunky. And what I mean by that is we have three three large customers two of which are distributing to a series of retailers.

Speaker #3: So as I mentioned a little while ago, UNFI and KD are two of our largest customers. Now we have our club business as well.

Speaker #3: And those are you know those three customers get direct shipped or picked up you know depending on their business model. Either we're shipping to them or they're riving trucks to pick up.

Speaker #3: And the way that our business works because we don't have direct shipments to retailers given size of our business right now, not very many at least.

Speaker #3: We do have a couple smaller ones. But because we go through distributors and then, of course, the club business, it ends that the orders and when they come in end up driving orders to look very different than yours.

Speaker #3: And so you get a large order you know on June 28th for shipment on June 28th. it really changes the dynamics of that quarter.

Speaker #3: Obviously, relative to you know if they'd come in a couple of days later in the third quarter in July. And so that's a little bit of what is happening Q2 though.

Speaker #3: 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.

Speaker #3: And we had what I would say was a sequential slowdown in our retail business. And that's not because a 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.

Speaker #3: Whereas it was the opposite. With our club business. And so we really have to look these things on a broader basis than just a quarter to understand the dynamic given the size of these orders relative to the ize of our business.

Speaker #3: 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 product.

Speaker #3: I think you guys heard from us in the past that we had I would say most of California some of the pack northwest and then regionally the San Diego region kind of carried all the way over to Colorado.

Speaker #3: 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.

Speaker #3: And in Q2, we did receive a rotation on the coffee business that has also performed very well. That is that's across the entire region.

Speaker #3: Within the Los Angeles region. So as we go to Q3 and Q4, we've expanded distribution already this year. That continue to you ow to bear fruit.

Speaker #3: And then we also anticipate oh, and I'm sorry. And I forgot to mention the creamer business also saw an expansion into the southeast region for club.

Speaker #3: 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.

Speaker #3: And then in the coffee business, I mentioned we had 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.

Speaker #3: And so that's all still in the works. You know nothing confirmed, but I would say looking very strong that we could e a growth in the club business as we go into the back half of this year.

Speaker #3: In the mulho and natural world, mulho we've continued to see steady gains. You know we haven't seen the monstrous full because you know we're not into mass in a major way at this point.

Speaker #3: We've done some work with Target. We have a couple of items in those stores. We have items in King Super, Safeway, Albertsons, HEB, Wagmans, Fresh Market, I think we're all signing or scanning into that we've talked about in the past.

Speaker #3: We continue to see expansion into those stores as well. So we pick up items as as we continue to perform with the items that we have in there already.

Speaker #3: 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.

Speaker #3: And we've talked about that. I know we've ked about that quite a lot. But we have significant expansion again that's taken some of which has taken place here over the last couple of months.

Speaker #3: And some of which has been confirmed but really doesn't hit until the back half of year. So it's pretty broad-based. I would tell you across mulho, natural, and club, we believe as we go forward, as I mentioned, this is the strategy for us.

Speaker #3: We intend to continue to grow distribution in the bricks-and-mortar space across all of these channels. We have a great sales engaged, a broker that's very supportive.

Speaker #3: And helping us make these calls. And we're just seeing a lot of success across the board right now.

Speaker #6: Great. Thank you so much. That was very helpful. Thank you.

Speaker #3: You bet.

Speaker #1: At this time, more questions raised in queue. Again, if you would like to ask a question, it is star followed by 1 on your telephone keypad.

Speaker #1: Again, that is star followed by 1. There no more questions registered in queue. 'd like to pass the conference over to our hosting team for closing remarks.

Speaker #3: 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 ward to talking to you again in three months.

Speaker #3: There's been a lot of progress made again. And we're really cited to be le to come in and reaffirm our guidance that we've given.

Speaker #3: And I feel like we have a lot of opportunity as we go forward from here with some of the innovation that we mentioned and expansion that we talked .

Speaker #3: And so we'll be excited to talk to you again about three months from now. So have a at day. Thank you all very much.