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Laird Superfood Reports Third Quarter 2020 Financial Results

·18 min read

Net Sales Increased to $7.6 Million, up 118% Year-Over-Year

Completed Initial Public Offering, Raising $64.1 Million of Net Cash

National Roll Out of Laird Superfood Liquid Creamer in Q320

Laird Superfood, Inc. (NYSE American: LSF) ("Laird Superfood"), today reported financial results for its third quarter ended September 30, 2020.

Third Quarter 2020 Highlights

  • Net Sales increased to $7.6 million, an increase of 118% year over year.

  • Online sales contributed 49% of net sales, with lairdsuperfood.com sales growing 115% year over year.

  • Wholesale sales contributed 50%, increasing 223% year over year, as retail door expansion reached approximately 7,200 locations.

  • Liquid creamer rolled out to more than 1,200 locations, including Whole Foods and Kroger.

  • Gross profit was $1.9 million and gross margin was 24.7%, compared to gross profit of $1.5 million and a gross margin of 41.9% in the prior year period.

  • Net loss attributable to common stockholders was $4.0 million, or $0.86 per diluted share, compared to net loss of $2.4 million, or $0.66 per diluted share in the prior year period.

Paul Hodge Jr., Co-founder, President and Chief Executive Officer of Laird Superfood, commented, "The third quarter of 2020, our first quarter as a publicly traded company, was a record quarter for us with 118% year over year revenue growth, reflecting continued strength across the business. Our plant-based superfood products appeal to the growing desire for high quality, all-natural whole food ingredients that are also sustainably sourced and packaged."

Hodge Jr. continued, "We are in the early stages of a long-term growth strategy built on market penetration into billion dollar-plus addressable markets like creamer, coffee and hydration. As a native digital platform, our loyal customer community continues to grow, reflecting the authenticity associated with the Laird Superfood brand. Mahalo to our dedicated team who achieved so much so far this year, despite adapting quickly through the pandemic, while staying focused on our operating goals and true to our culture and values."

For the Three Months Ended September 30, 2020

Three Months Ended September 30,

2020

2019

$

% of Total

$

% of Total

Coffee Creamers

$

5,223,724

69

%

$

2,224,596

64

%

Hydration and Beverage Enhancing Supplements

1,031,834

14

%

633,264

18

%

Coffee, Tea, and Hot Chocolate Products

2,188,022

29

%

578,379

16

%

Other

168,720

2

%

139,096

4

%

Gross Sales

8,612,300

114

%

3,575,335

102

%

Shipping income

25,737

0

%

132,033

4

%

Returns and discounts

(1,024,964

)

-14

%

(220,033

)

-6

%

Sales, net

$

7,613,073

100

%

$

3,487,335

100

%

Three Months Ended September 30,

2020

2019

$

% of Total

$

% of Total

Online

$

3,713,773

49

%

$

2,229,878

64

%

Wholesale

3,773,285

50

%

1,168,306

34

%

Food Service

126,015

1

%

89,151

2

%

Sales, net

$

7,613,073

100

%

$

3,487,335

100

%

Net sales increased 118% to $7.6 million in the third quarter of 2020 compared to $3.5 million in the third quarter of 2019. Growth in net sales in the third quarter of 2020 was driven primarily by a combination of growth in online and wholesale channels, primarily caused by an increase in sales volume across product lines.

Gross profit was $1.9 million compared to $1.5 million in the prior year period. Gross margin was 24.7% of net sales in the third quarter of 2020, compared to 41.9% of net sales in the prior year period. The decrease in gross margin was primarily due to disposal costs related to the early production and distribution of the liquid creamer product line, elevated outbound shipping costs, and increased co-packing costs primarily associated with the liquid creamer product line.

Operating expenses of $5.3 million compared to $3.9 million in the year ago period reflect General and Administrative expense increases of $843,000, primarily related to the Company’s Initial Public Offering, as well as Sales and Marketing expense increases of $554,000, primarily related to a stock option modification expense.

Loss from operations was $3.4 million in the third quarter of 2020, compared to a loss of $2.4 million in the prior year period.

Net loss attributable to common stockholders was $4.0 million, or $0.86 per diluted share, in the third quarter of 2020, compared to a loss of $2.4 million, or $0.66 per diluted share, in the prior year period.

Valerie Ells, Chief Financial Officer, commented, "We are thrilled with our record net sales performance in the third quarter, which furthers our conviction in the strength of our brand and the compelling addressable market opportunities in front of us. Market share and customer growth are our major priorities and this quarter demonstrated that our authentic brand, and meeting consumers where they are across our omnichannel platform, resonates with today’s consumer seeking healthy, plant-based and sustainable products. We remain confident in our ability to leverage our fixed cost structure as we focus on driving the top line while taking steps toward long-term profitability."

For the Nine Months Ended September 30, 2020

Nine Months Ended September 30,

2020

2019

$

% of Total

$

% of Total

Coffee Creamers

$

13,241,592

71

%

$

5,933,639

66

%

Hydration and Beverage Enhancing Supplements

2,881,132

15

%

1,475,051

16

%

Coffee, Tea, and Hot Chocolate Products

4,167,163

22

%

1,309,524

15

%

Other

368,983

2

%

346,210

4

%

Gross Sales

20,658,870

110

%

9,064,424

101

%

Shipping income

221,082

1

%

329,342

4

%

Returns and discounts

(2,174,824

)

-11

%

(461,124

)

-5

%

Sales, net

$

18,705,128

100

%

$

8,932,642

100

%

2020

2019

$

% of Total

$

% of Total

Online

$

10,049,039

54

%

$

5,325,768

60

%

Wholesale

8,324,286

45

%

3,449,941

39

%

Food Service

331,803

1

%

156,933

1

%

Sales, net

$

18,705,128

100

%

$

8,932,642

100

%

Net sales increased 109% to $18.7 million for the nine months ended September 30, 2020 compared to $8.9 million in the prior year period.

Gross profit was $5.3 million, or 28.4% of net sales, for the nine months ended September 30, 2020, compared to $3.6 million, or 40.7% of net sales, in the prior year period. The increase in gross profit was primarily due to sales growth. The decrease in gross margin was primarily due to elevated inbound freight expenses in response to an unanticipated increase in demand associated with COVID-19, elevated disposal costs related to the early production and distribution of the new liquid creamer product line and increased co-packing costs primarily associated with the liquid creamer product line.

Operating expenses of $13.7 million compared to $10.2 million in the year ago period reflect General and Administrative expense increases of $1.9 million, primarily related to the Company’s Initial Public Offering and an asset impairment recorded during the second quarter, as well as Sales and Marketing increases of $1.5 million, primarily related to stock option modification expense and increased advertising and payroll expenses.

Loss from operations was $8.4 million for the nine months ended September 30, 2020, compared to $6.5 million in the prior year period.

Net loss attributable to common stockholders was $10.0 million, or $2.26 per diluted share, for the nine months ended September 30, 2020 compared to $6.3 million, or $1.79 per diluted share, in the prior year period.

Balance Sheet and Cash Flow Highlights

The Company’s cash and cash equivalents were $72.9 million as of September 30, 2020 and total outstanding debt was $51,000. Cash and cash equivalents as of September 30, 2020 includes the net proceeds from the Company’s IPO. Net cash used in operating activities was $7.1 million in the nine months ended September 30, 2020, compared to $6.9 million in the prior year period.

Capital expenditures totaled $875,000 for the nine months ended September 30, 2020, compared to $1.6 million in the prior year period.

Successful Initial Public Offering

On September 25, 2020, the Company completed its initial public offering ("IPO"), in which it issued and sold 3,047,500 shares of common stock at a public offering price of $22.00 per share for net proceeds to the Company of approximately $62.1 million, after deducting underwriting discounts, commissions and estimated offering expenses. Danone Manifesto Ventures purchased $2.0 million of the Company’s common stock in a private placement immediately subsequent to the consummation of the IPO, at a price per share of $22.00. The Company continues to expect to use the net proceeds from the IPO for working capital and general corporate purposes, including operating expenses and capital expenditures. Additionally, the Company may use a portion of the net proceeds to acquire businesses or products. On September 30, 2020, subsequent to the IPO, there were 8,874,890 shares of common stock outstanding.

Conference Call and Webcast Details

The Company will host a conference call and webcast at 5:00 p.m. ET today to discuss the results. The live conference call can be accessed by dialing (833) 772-0381 from the U.S. or (236) 384-2050 internationally and using access code 1754637. Alternatively, participants may access the live webcast on the Laird Superfood Investor Relations website at https://investors.lairdsuperfood.com under "Events."

About Laird Superfood

Laird Superfood, Inc. creates award-winning, plant-based superfood products that are both delicious and functional. The Company's products are designed to enhance your daily ritual and keep consumers fueled naturally throughout the day. The Company was co-founded in 2015 by the world's most prolific big-wave surfer, Laird Hamilton. Laird Superfood's offerings are environmentally conscientious, responsibly tested, and made with real ingredients. Shop all products online at lairdsuperfood.com and join the Laird Superfood community on social media for the latest news and daily doses of inspiration.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding Laird Superfood’s future financial performance, including our outlook for fiscal year 2020. These forward-looking statements are based on Laird Superfood’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Laird Superfood’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to: (1) the effects of the current COVID-19 pandemic, or of other global outbreaks of pandemics or contagious diseases or fear of such outbreaks, including on our supply chain, the demand for our products, and on overall economic conditions and consumer confidence and spending levels; (2) our expectations regarding our revenue, expenses and other operating results; (3) our ability to acquire new customers and successfully retain existing customers; (4) our ability to attract and retain our suppliers, distributors and co-manufacturers; (5) our expectations regarding real or perceived quality with our products or other issues that adversely affect our brand and reputation; (6) our ability to innovate on a cost-effective basis, predict changes in consumer preferences and develop successful new products and marketing strategies in response; (7) expectations regarding prices and availability of raw materials and other inputs, a substantial amount of which come from a limited number of suppliers outside the United States, including in areas which may be adversely affected by climate change; (8) effects of changes in the tastes and preferences of our consumers and consumer preferences for natural and organic food products; (9) the financial condition of, and our relationships with, our suppliers, co-manufacturers, distributors, retailers and foodservice customers, as well as the health of the foodservice industry generally; (10) effects of real or perceived quality or health issues with our products or other issues that adversely affect our brand and reputation; (11) the ability of ourselves, our suppliers and co-manufacturers to comply with food safety, environmental or other laws or regulations; (12) our plans for future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; (13) the costs and success of our marketing efforts, and our ability to promote our brand; (14) our reliance on key personnel and our ability to identify, recruit and retain skilled and general working personnel; (15) our ability to effectively manage our growth; (16) our ability to compete effectively with existing competitors and new market entrants; (17) the impact of adverse economic conditions; and (18) the growth rates of the markets in which we compete.

LAIRD SUPERFOOD, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

2020

2019

2020

2019

Sales, net

$

7,613,073

$

3,487,335

$

18,705,128

$

8,932,642

Cost of goods sold

(5,734,144

)

(2,026,930

)

(13,384,880

)

(5,296,485

)

Gross profit

1,878,929

1,460,405

5,320,248

3,636,157

General and administrative

Salaries, wages and benefits

1,031,425

637,913

2,652,500

1,758,080

Stock-based compensation

290,148

145,281

589,600

436,996

Professional fees

274,244

143,424

647,422

362,134

Office expense

142,269

125,594

364,518

306,075

Occupancy

57,378

52,095

167,151

95,985

Merchant service fees

103,306

44,100

248,355

111,683

Netsuite subscription expense

33,173

35,125

90,491

112,559

Impairment on asset held for sale

-

-

239,734

-

Other expense

286,876

192,770

651,061

526,289

Total general and administrative expenses

2,218,819

1,376,302

5,650,832

3,709,801

Research and product development

Salaries, wages and benefits

54,454

77,970

202,287

132,691

Stock-based compensation

2,310

2,045

6,694

5,549

Other expense

46,115

29,963

155,009

48,172

Total research and product development expenses

102,879

109,978

363,990

186,412

Sales and marketing

Salaries, wages and benefits

613,961

744,964

2,057,517

1,930,485

Stock-based compensation

520,022

70,271

630,456

101,150

General marketing

325,033

525,521

895,917

1,279,391

Advertising

1,250,169

730,912

3,340,592

1,998,131

Amazon selling fee

179,425

159,153

575,313

386,648

Travel expense

4,908

82,937

78,872

266,978

Other expense

45,543

71,322

148,911

302,517

Total sales and marketing expenses

2,939,061

2,385,080

7,727,578

6,265,300

Total expenses

5,260,759

3,871,360

13,742,400

10,161,513

Operating loss

(3,381,830

)

(2,410,955

)

(8,422,152

)

(6,525,356

)

Other income (expense)

Interest and dividend income

20,496

56,602

51,521

149,332

Gain on sale of available-for-sale securities

6,250

-

13,927

-

Interest expense

-

(18,829

)

-

(18,829

)

Grant income

-

-

-

50,000

Total other income

26,746

37,773

65,448

180,503

Loss before income taxes

(3,355,084

)

(2,373,182

)

(8,356,704

)

(6,344,853

)

Benefit from income taxes

-

-

-

-

Net loss

$

(3,355,084

)

$

(2,373,182

)

$

(8,356,704

)

$

(6,344,853

)

Less deemed dividend of beneficial conversion feature

-

-

825,366

-

Less deemed dividend on warrant discount

(645,939

)

-

(825,366

)

-

Net loss attributable to Laird Superfood, Inc. common stockholders

$

(4,001,023

)

$

(2,373,182

)

$

(8,356,704

)

$

(6,344,853

)

Net loss per share attributable to Laird Superfood, Inc common stockholders:

Basic

$

(0.86

)

$

(0.66

)

$

(1.89

)

$

(1.79

)

Diluted

$

(0.86

)

$

(0.66

)

$

(1.89

)

$

(1.79

)

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock

4,672,041

3,592,735

4,427,114

3,541,001

LAIRD SUPERFOOD, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

For the Nine Months Ended
September 30,

2020

2019

Cash flows from operating activities

Net loss

$

(8,356,704

)

$

(6,344,853

)

Adjustments to reconcile net loss to net cash from operating activities:

Depreciation

344,162

198,970

Loss on disposal of equipment

-

483

Stock-based compensation

1,382,864

546,475

Noncash conversion of note payable to grant income

-

(50,000

)

Impairment on asset held for sale

239,734

-

Gain on sale of investment securities available-for-sale

13,927

-

Changes in operating assets and liabilities:

Accounts receivable

(397,669

)

(214,122

)

Inventory

(1,441,766

)

(1,402,745

)

Prepaid expenses and other current assets

(1,582,315

)

(61,736

)

Deferred rent

270,731

163,365

Deposits

33,009

3,115

Other assets

7,599

3,528

Accounts payable

1,613,754

(166,799

)

Payroll liabilities

207,675

318,513

Accrued expenses

567,103

62,447

Net cash from operating activities

(7,097,896

)

(6,943,359

)

Cash flows from investing activities

Purchase of property, equipment, and software

(874,764

)

(1,645,800

)

Deposits on equipment to be acquired

-

(338,560

)

Sale of investment securities available-for-sale

516,459

-

Purchase of investment securities available-for-sale

-

(13,445,050

)

Proceeds from maturities of investment securities available-for-sale

4,475,000

7,004,232

Net cash from investing activities

4,116,695

(8,425,178

)

Cash flows from financing activities

Issuance of common stock

66,104,477

6,663,910

Issuance of preferred stock

10,000,006

-

Common stock repurchases

(20,532

)

(1,079,878

)

Stock options exercised

119,838

34,667

Common stock issuance costs

(1,131,291

)

-

Preferred stock issuance costs

(147,721

)

(52,073

)

Net cash from financing activities

74,924,777

5,566,626

Net change in cash and cash equivalents

71,943,576

(9,801,911

)

Cash and cash equivalents, beginning of period

1,004,109

17,340,023

Cash and cash equivalents, end of period

$

72,947,685

$

7,538,112

Supplemental disclosures of cash flow information

Interest paid

$

-

$

18,829

Supplemental disclosures of non-cash information

Unrealized gain on available-for-sale securities

$

924

$

56,081

Purchases of equipment included in deposits at the beginning of the period

$

14,699

$

4,577

Purchases of land included in prepaids and other current assets at the

beginning of the period

$

-

$

40,000

LAIRD SUPERFOOD, INC.

BALANCE SHEETS

(Unaudited)

As of

September 30, 2020

December 31, 2019

Assets

Current assets

Cash and cash equivalents

$

72,947,685

$

1,004,109

Accounts receivable, net

782,475

384,806

Investment securities available-for-sale

480,747

5,485,209

Inventory

3,877,731

2,435,965

Prepaid expenses and other current assets

2,173,123

590,808

Deposits

95,619

143,327

Total current assets

80,357,380

10,044,224

Noncurrent assets

Property and equipment, net

3,208,853

3,153,286

Fixed assets held for sale

250,000

-

Licensing agreement - intangible

132,100

132,100

Deferred rent

2,786,701

3,057,432

Other assets

7,544

15,143

Total noncurrent assets

6,385,198

6,357,961

Total assets

$

86,742,578

$

16,402,185

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

Current liabilities

Accounts payable

$

2,338,505

$

724,751

Payroll liabilities

698,767

491,092

Accrued expenses

868,149

301,046

Total current liabilities

3,905,421

1,516,889

Long-term liabilities

Note payable

51,000

51,000

Total long-term liabilities

51,000

51,000

Total liabilities

3,956,421

1,567,889

Commitments and contingencies (Note 9)

Convertible preferred stock

Preferred stock, $0.001 par value, 5,000,000 and 1,329,680 shares authorized

as of September 30, 2020 and December 31, 2019, respectively;

Series A-1 Preferred Stock, 0 shares authorized, issued, and outstanding

as of September 30, 2020; 1,177,426 shares authorized,162,340 issued and outstanding, and

609,078 undesignated as of December 31, 2019; Series A-2 Preferred Stock 0 shares

authorized, issued, and outstanding as of September 30, 2020; 152,253 shares

authorized, issued, and outstanding as of December 31, 2019

-

6,722,951

Total convertible preferred stock

-

6,722,951

Stockholders' equity

Common stock, $0.001 par value, 100,000,000 and 9,600,000 shares authorized as of

September 30, 2020 and December 31, 2019; 9,239,638 and 8,874,890

issued and outstanding at September 30, 2020, respectively; 4,551,950

and 4,188,558 issued and outstanding at December 31, 2019, respectively

8,875

4,188

Additional paid-in capital

110,210,155

27,184,250

Accumulated other comprehensive income (loss)

698

(226

)

Accumulated deficit

(27,433,571

)

(19,076,867

)

Total stockholders' equity

82,786,157

8,111,345

Total liabilities, convertible preferred stock and stockholders' equity

$

86,742,578

$

16,402,185

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005943/en/

Contacts

Investors:
Ashley DeSimone
Ashley.DeSimone@icrinc.com