LSF Q3 2026 earnings call transcript, November 12, 2026

our brand equity. And what we found was very consistent. We were seen as being one of the absolute top brands that consumers recognized and trusted when they knew us. But we also found we were very much not known whether that was Laird or Navitas or Terasol amongst consumers. And so they're going in and purchasing our brands. They like our products. They see the package, but we just don't have that name recognition. And so we're setting out to change that and really, you know, leverage those high NPS and brand affinity. scores with more consumers as we go forward. That's very helpful. And then on the recent wins with Walmart, the last quarter talked about the launch of new SKUs. It was in about a thousand Walmart doors. And then for Navitas, some expanded shelf space at Target. What's your early take on how those are performing? How do you think about, you know, potential paths to continue distribution gains? With those customers?

Yeah, it's great.

Great question. I mean, it's early still, you know, we're in the first quarter and obviously this is a big jump for us as a natural oriented brand in Laird to take that brand to Walmart and even frankly for. Navitas to be expanding into Target in a bigger way. So I'd tell you they're both going well. We're monitoring, we're putting a lot of pressure into those stores. So we are, we're currently running various campaigns, not only with those two regions, but we're currently running various campaigns. retailers where we can, but we're running social campaigns around the local stores for those retailers where we have distribution as well as leveraging Instacart and other vehicles that are proving to be very. Effective. So I tell you, the read is still early. It's positive and it's been growing, frankly, week after week, pretty much since we launched. So we're, we still have a little bit of headroom to where we want to get that to, but we're still really confident about where we. are so far. Okay, great. Um, and then this last one for me, just kind of, just kind of want to take your temperature on, on M&A. I mean, obviously still, um, you know, some meaningful wood to chop on the pterosol, um, integration. So. You know, I would, I would assume, uh, you know, we shouldn't be necessarily holding our breath for, for, for another acquisition here. You know, it's probably a second half 27 thing if I were to just kind of guess myself, but, um, anyway, uh, if you could just kind of.

Talk about, I guess, one, your sort of appetite in the near term for continued MNA, and then, um, just more broadly and the kind of timing aside, like how has the inflationary commodity cost environment impacted your. MNA pipeline, uh, if at all. Thanks. Yeah. Well, a couple of things in there, so I'll try, I'll try and hit them all and you can tell me if I miss anything. So, um, so I think your intuition is right. We have some work to do right now. Move Navitas was a fairly simple integration and we were frankly able to bring the business in, uh, and operate it within, within the existing layered, uh, infrastructure, uh, across systems, processes, people, et cetera. And, um, and I want really. They, I think really smoothly, uh, pterosol is a different beast. You know, we have a facility down in Fort Worth and there is certainly going to be a lot of opportunity for us, uh, as we think about expanding, uh, additional products down into that, you know, whether that's pulling Laird and Navitas volume. Some of those volumes down there out of, um, existing network or launching new products, uh, you know, we have some network designed to do, uh, so that we're really thinking holistically about an in-house facility and then, um, some really strong Copac relationships that we may balance. That's the entire business across. So there's a lot of work to do there in terms of getting to the best cost efficiency across now with the in-source outsource network, as well as putting in a combined ERP system. I think I've mentioned before that we have an ERP system down in Terrasol that

really can't handle additional expansion and we're going to have to bring them into a similar, if not the same, instance of ERP that we have today. So there's quite a bit of work to do there. We're starting that work really in earnest right now. We've had a kickoff. We've had first discussions, but we just brought on a new supply chain leader and a new CFO, and those are really the two folks where the rubber is going to meet the road. So we'll be wrapping our arms around that here in the next couple of weeks and putting in place the plan for next year to get that. up and running and as we do that ultimately to put ourselves back in position a better position for future M&A. I would tell you we're not we're not taking ourselves out of the market from an M&A perspective but we would be much more cautious and careful and it would take something pretty special right now. Given some of the other priorities that we have in the business. With regards to the pipeline, look the pipeline is still robust by virtue of Nexus being so integrated into this business. From, you know, a strategy and board governance perspective, we see a lot more opportunities than we ever used to. The level of opportunities has grown exponentially and as a result. As you might imagine, we can be a lot more discerning with regards to what we want to do, and we're very confident that we have a coffee and, you know, coffee solutions platform as well as a functional health and wellness ingredients platform.

Navitas and Terasol really fit, and we'll look to build onto those two platforms as well as to set up a third leg on that stool. So that's not certainly not going away, but probably for the next six months, I'd say your intuition. is probably very similar to mine. Great. I appreciate you taking my questions.

Hey, JP.

Yeah, you know, it's I tell you that hasn't really changed. You know, as we go forward, we believe that that's where the business is. We're just going to have a little bit of lumpiness. We've talked about this. In the past, I know it won't be a surprise to you. The club business is lumpy. And so really in Q3, you know, if you look at that layered business, that's really what we saw taking place vis-a-vis last year in particular. And so we're going to go. through some of those lumps on the club side. You know, if I were telling you, you know, think about how these businesses project going forward, Terasol is doing great. You know, it's confined within a different position than some of the others. The other two businesses from a channel perspective, but it's just doing great within the channels that it operates. And we've seen a lot more strength, frankly, on the Navitas business in some key categories, even than what we anticipated when we bought the business. So we feel really good. Consumption, latest consumption for us measured in the teams for both Laird and Navitas. So we feel like the businesses are going really well. And I'll put a caveat on that. That is the Laird business excluding refrigerated creamers where we've talked about some of those challenges. So when you remove refrigerated creamers, you look at Laird and Navitas. We're cranking along in double digits consumption wise. Terasol is doing

really great and crank it, you know, growing at a similar rate. So I don't see that we're looking to change our guidance as we go forward, but you know, we're going to see some lumpiness and there's certainly right now some consumer attrition. especially, you know, from a volume perspective and then on some of the premium products. Consumers are pulling back with their wallets. We're seeing it. We see it in some of the pricing actions on those online marketplaces. We see it. With some of our competitors at retail, and we feel it, you know, ourselves as well, but we have so many robust opportunities across these channels that we feel like we can certainly with the marketing investment that we're looking at that we can keep. that algorithm cranking along. Okay, very, very helpful. And then I guess just, you know, thinking about EBITDA and the guide and maybe trying to take a little bit more of a longer term lens here, but, you know, very helpful on this. Sort of 2 million marketing step up, I guess just anything else as we think about kind of the bridge to the EBITDA midpoint reduction that would be persistent as we think about next year, you know. Have synergies amounted to maybe a little bit less than you would have expected? Kind of just trying to get at like, as you think about longer term EBITDA margin, you know, is that high single digit has that kind of narrowed lower? Anything you can share about kind of longer term perspective of the operating model?

Yeah, hi, this is Mark. I'll take a shot at it and then I'll turn it over to Jason for adding on.

Business that we'd be able to procure less expensive commodities by the end of this year, and we basically have predicated that on some inflation that we saw in cacao and in particular, that's a big part of our business, of course, but then in. Other commodities as well, from goji berries to chia to hemp, etc. And the reality is that those commodities have been, the higher costs have been sickier than what we expected. And it's a function we very firmly believe. Of an environment where you have A, uncertainty, but B, a lot of incremental fuel costs. Those fuel costs are hitting us in a couple of ways, in fact, not only in the commodity themselves. Keep in mind, most of our commodities are coming from other countries. There's a lot of foreign exchange change in there. But then we have a lot of fuel miles that we're having to transport those products as well from Asia, Africa, South America. We get hit again, by the way. And our outbound distribution once we make those goods. And then we get freight surcharges from a number of retailers as well. And we're just not in an environment right now where retailers are interested in letting you take price. So we've been, like a lot of other companies, we've been cutting costs where we can, being as efficient as possible, and holding our breath for some of those costs to come back down. So will they be transient enough to come down next year?

I think that's... That's what we're trying to determine right now. And, you know, our crystal ball would say at some point next year, we ought to see some relief. The timing of that, we're not exactly sure of yet, though. So there will be some persistent challenge to gross margin. For at least the first quarter and maybe second quarter of next year. And then we'll kind of see where we are at that point. But we have cost opportunities within our network. We're going after those. I mentioned a new head of supply chain. He's done this before many times. He led procurement over at Horizon, most recently Horizon Family Brands, and has worked in continuous improvement and on cost reduction opportunities at Danone. WhiteWave and other very large and successful supply chains. And so we're setting up programs that will do the same and go after all the dollars that are in play because there certainly are quite a few of those. Very, very helpful. I appreciate you guys taking my questions. Best of luck. Yep.

Thanks, JP.