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Laird Superfood Reports Second Quarter 2021 Financial Results

Net Sales Increase 64% Year Over Year to $9.2 Million

Direct-To-Consumer Sales Up 94% Year Over Year

Laird Superfood, Inc. (NYSE American: LSF) (“Laird Superfood”, “we” and “our”), today reported financial results for its second quarter ended June 30, 2021.

Second Quarter 2021 Highlights

  • Net Sales increased to $9.2 million, an increase of 64% year over year.
  • Online sales contributed 63% of net sales, increasing 57% year over year with direct-to-consumer up 94%.
  • Wholesale sales contributed 35% of net sales, increasing 77% year over year, and included continued traction in grocery and liquid creamer gains.
  • Gross profit was $2.2 million and gross margin was 23.9% compared to gross profit of $1.3 million and gross margin of 23.6% in the prior year quarter.
  • Net loss attributable to common stockholders was $6.3 million, or $0.70 per diluted share, compared to net loss attributable to common stockholders of $4.0 million, or $0.93 per diluted share, in the prior year period.

“Broad-based growth was a key theme from our second quarter results as we delivered solid gains across all major channels and categories,” said Paul Hodge Jr., Co-founder, President and Chief Executive Officer of Laird Superfood. “Our direct-to-consumer sales were up 94% reflecting our strong metrics around attracting, converting and retaining customers. Wholesale increased 77% as we continued to make solid progress expanding our presence in the grocery channel. We introduced several new innovative products during the quarter and are very pleased with the early results from the acquisition of Picky,” concluded Hodge. “Our powerful omnichannel platform remains a key point of differentiation enabling multiple growth drivers for new and existing products. During the second quarter, approximately one-third of our revenue growth was attributable to products introduced over the past year. As we continue gaining share in our legacy categories and expanding our total addressable market via new offerings, Laird Superfood’s long-term vision of delivering better for you, plant-based alternatives for every moment of consumers’ daily ritual comes closer to reality.”

For the Three Months Ended June 30, 2021

Three Months Ended June 30,

2021

 

2020

$

 

% of Total

 

$

 

% of Total

Coffee creamers

$

5,078,739

 

55%

$

4,005,430

 

71%

Hydration and beverage enhancing supplements

 

1,511,630

 

16%

 

981,471

 

17%

Coffee, tea, and hot chocolate products

 

1,661,130

 

18%

 

1,222,617

 

22%

Harvest snacks and other food items

 

1,344,802

 

15%

 

-

 

0%

Other

 

317,422

 

3%

 

173,607

 

3%

Gross sales

 

9,913,723

 

108%

 

6,383,125

 

114%

Shipping income

 

40,750

 

0%

 

43,793

 

1%

Returns and discounts

 

(758,687

)

(8%)

 

(818,088

)

(15%)

Sales, net

 

9,195,786

 

100%

 

5,608,830

 

100%

 

Three Months Ended June 30,

2021

 

2020

$

 

% of Total

 

$

 

% of Total

Online

$

5,799,104

 

63%

$

3,684,526

 

66%

Wholesale

 

3,235,230

 

35%

 

1,823,188

 

33%

Food service

 

161,452

 

2%

 

101,116

 

2%

Sales, net

$

9,195,786

 

100%

$

5,608,830

 

100%

Net sales increased 64% to $9.2 million in the second quarter of 2021 compared to $5.6 million in the second quarter of 2020. Growth in net sales in the second quarter of 2021 was due primarily to solid gains in DTC, including two months of newly acquired Picky Bars.

Gross profit was $2.2 million, a 66% increase compared to the prior year period of $1.3 million. Gross margin was 23.9% of net sales in the second quarter of 2021, compared to 23.6% of net sales in the prior year period. The year over year increase in gross margin was primarily due to optimization of direct-to-consumer shipping costs and improvements in liquid creamer distribution and disposals.

Operating expenses were $8.5 million compared to $4.3 million in the year ago period and reflect General and Administrative expense increases of $2.3 million, primarily due to stock-based compensation, personnel costs, insurance expense, reserves against prepaid assets, and professional fees, as well as Sales and Marketing expense increases of $1.5 million, primarily due to advertising and marketing fees.

Loss from operations was $6.3 million in the second quarter of 2021, compared to a loss of $3.0 million in the prior year period.

Net loss attributable to common stockholders was $6.3 million, or $0.70 per diluted share, in the second quarter of 2021, compared to net loss attributable to common stockholders of $4.0 million, or $0.93 per diluted share, in the prior year period.

Valerie Ells, Chief Financial Officer, commented, “In addition to delivering strong top-line growth, we’ve made significant strides operationally through the first half of 2021 putting us firmly on track toward our long-term goals around margins and profitability. Continued optimization of our direct-to-consumer shipping expenses, driven by an improvement in our average order value, aided our gross margin this quarter. Similarly, continued improvements related to our liquid creamer products, including an extended shelf life and logistical enhancements, resulted in significant improvement in manufacturing waste and spoils. With over $43 million of cash and investments and essentially no debt, our balance sheet remains strong providing the capacity and flexibility to pursue multiple growth drivers on our path to scale and profitability.”

For the Six Months Ended June 30, 2021

Six Months Ended June 30,

2021

2020

$

% of Total

$

% of Total

Coffee creamers

$

10,100,647

 

61%

$

8,024,792

 

72%

Hydration and beverage enhancing supplements

 

2,576,206

 

15%

 

1,840,177

 

17%

Coffee, tea, and hot chocolate products

 

3,561,962

 

21%

 

1,963,189

 

18%

Harvest snacks and other food items

 

1,487,705

 

9%

 

-

 

0%

Other

 

533,838

 

3%

 

233,197

 

2%

Gross sales

 

18,260,358

 

110%

 

12,061,355

 

109%

Shipping income

 

66,410

 

0%

 

195,345

 

2%

Returns and discounts

 

(1,704,729

)

(10%)

 

(1,164,645

)

(10%)

Sales, net

 

16,622,039

 

100%

 

11,092,055

 

100%

 
Six Months Ended June 30,

2021

2020

$

% of Total

$

% of Total

Online

$

10,161,510

 

61%

$

6,335,267

 

59%

Wholesale

 

6,158,286

 

37%

 

4,551,000

 

41%

Food service

 

302,243

 

2%

 

205,788

 

1%

Sales, net

$

16,622,039

 

100%

$

11,092,055

 

100%

 

Net sales increased 50% to $16.6 million in the first six months of 2021 compared to $11.1 million in the first six months of 2020. Year-to-date growth in net sales was due to growth in both online and wholesale channels, and broad based with all categories showing strong double-digit increases. In addition, we completed the acquisition of Picky Bars in early May, which significantly increased our business in Harvest snacks and other food products.

Gross profit was $4.1 million, an increase of 18% compared to the prior year period of $3.4 million. Gross margin was 24.4% of net sales in the first six months of 2021, compared to 31.0% of net sales in the prior year period. The year over year decrease in gross margin was primarily due to elevated outbound shipping costs combined with the launch of a free shipping initiative for direct online purchases made on lairdsuperfood.com, increased personnel costs and costs associated with our liquid creamer product line.

Operating expenses were $15.7 million compared to $8.5 million in the first six months of 2021 and reflect General and Administrative expense increases of $4.4 million, primarily due to stock-based compensation, personnel costs, insurance expense, reserves against prepaid assets, and professional fees, as well as Sales and Marketing expense increases of $2.5 million, primarily due to advertising and marketing fees.

Loss from operations was $11.6 million in the first six months of 2021, compared to a loss of $5.0 million in the prior year period.

Net loss attributable to common stockholders was $11.6 million, or $1.30 per diluted share, in the first six months of 2021, compared to net loss attributable to common stockholders of $6.0 million, or $1.40 per diluted share.

Balance Sheet and Cash Flow Highlights

The Company’s current assets include cash, cash equivalents, and restricted cash of $34.9 million and investment securities of $8.7 million as of June 30, 2021. Total outstanding debt was $51,000 as of June 30, 2021. Net cash used in operating activities was $11.0 million in the six months ended June 30, 2021, compared to $4.6 million in the comparative prior year period.

Capital expenditures totaled $0.5 million for the six months ended June 30, 2021, compared to $0.3 million in the comparative prior year period.

Leadership Transition

Also announced today, Paul Hodge, Jr. will be transitioning to a non-executive role and stepping down as President and Chief Executive Officer. The Company’s Board of Directors has commenced a search for his successor. Additional details on this transition can be found in a separate media release issued this afternoon.

Conference Call and Webcast Details

The Company will host a conference call and webcast at 5:00 p.m. ET today to discuss results. The live conference call can be accessed by dialing (833) 772-0381 from the U.S. or (236) 384-2050 internationally. The conference I.D. code is 3667069. 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 2021. 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. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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, including shipping expenses, and other operating results; (3) our ability to acquire new direct and wholesale customers and successfully retain existing customers; (4) our ability to attract and retain our suppliers, distributors and co-manufacturers, and effectively manage their costs and performance; (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 timely and cost-effective basis, predict changes in consumer preferences and develop successful new products, or updates to existing products, and develop innovative marketing strategies; (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 our executive team and other 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
 

For the Three Months Ended

June 30,

For the Six Months Ended

June 30,

2021

2020

2021

2020

Sales, net

$

9,195,786

 

$

5,608,830

 

$

16,622,039

 

$

11,092,055

 

Cost of goods sold

 

(6,998,695

)

 

(4,285,128

)

 

(12,558,194

)

 

(7,650,736

)

Gross profit

 

2,197,091

 

 

1,323,702

 

 

4,063,845

 

 

3,441,319

 

 
General and administrative
Salaries, wages and benefits

 

1,019,845

 

 

804,903

 

 

2,225,698

 

 

1,621,075

 

Stock-based compensation

 

955,369

 

 

116,249

 

 

1,854,604

 

 

299,452

 

Professional fees

 

609,448

 

 

191,130

 

 

953,070

 

 

373,177

 

Insurance expense

 

500,821

 

 

25,866

 

 

1,023,221

 

 

57,061

 

Office expense

 

206,448

 

 

108,883

 

 

393,279

 

 

222,248

 

Occupancy

 

62,957

 

 

56,343

 

 

119,478

 

 

109,774

 

Merchant service fees

 

151,882

 

 

89,014

 

 

258,257

 

 

145,049

 

Netsuite subscription expense

 

74,117

 

 

30,923

 

 

129,138

 

 

57,318

 

Impairment on asset held for sale

 

-

 

 

239,734

 

 

-

 

 

239,734

 

Other expense

 

582,024

 

 

169,397

 

 

847,235

 

 

307,124

 

Total general and administrative expenses

 

4,162,911

 

 

1,832,442

 

 

7,803,980

 

 

3,432,012

 

 
Research and product development
Salaries, wages and benefits

 

116,187

 

 

72,931

 

 

186,548

 

 

147,833

 

Stock-based compensation

 

5,385

 

 

2,192

 

 

8,952

 

 

4,384

 

Product development expense

 

249,948

 

 

40,175

 

 

412,792

 

 

97,917

 

Other expense

 

3,332

 

 

2,499

 

 

7,247

 

 

10,977

 

Total research and product development expenses

 

374,852

 

 

117,797

 

 

615,539

 

 

261,111

 

 
Sales and marketing
Salaries, wages and benefits

 

630,328

 

 

697,547

 

 

1,264,079

 

 

1,443,556

 

Stock-based compensation

 

55,706

 

 

35,938

 

 

97,095

 

 

110,434

 

Advertising

 

1,699,865

 

 

1,154,060

 

 

3,381,209

 

 

2,090,423

 

General marketing

 

1,260,489

 

 

261,662

 

 

1,971,012

 

 

570,884

 

Amazon selling fee

 

210,842

 

 

208,317

 

 

413,118

 

 

395,889

 

Travel expense

 

11,604

 

 

3,950

 

 

20,360

 

 

73,964

 

Other expense

 

67,658

 

 

34,227

 

 

116,698

 

 

103,368

 

Total sales and marketing expenses

 

3,936,492

 

 

2,395,701

 

 

7,263,571

 

 

4,788,518

 

Total expenses

 

8,474,255

 

 

4,345,940

 

 

15,683,090

 

 

8,481,641

 

Operating loss

 

(6,277,164

)

 

(3,022,238

)

 

(11,619,245

)

 

(5,040,322

)

 
Other income (expense)
Interest and dividend income

 

11,623

 

 

8,171

 

 

25,525

 

 

31,025

 

Loss on sale of fixed assets

 

-

 

 

-

 

 

(2,325

)

 

-

 

Gain on sale of available-for-sale securities

 

-

 

 

7,677

 

 

-

 

 

7,677

 

Total other income (expense)

 

11,623

 

 

15,848

 

 

23,200

 

 

38,702

 

Loss before income taxes

 

(6,265,541

)

 

(3,006,390

)

 

(11,596,045

)

 

(5,001,620

)

Income tax expense

 

(36,718

)

 

-

 

 

(36,718

)

 

-

 

Net loss

$

(6,302,259

)

$

(3,006,390

)

$

(11,632,763

)

$

(5,001,620

)

Less deemed dividend of beneficial conversion feature

 

-

 

 

(825,366

)

 

-

 

 

(825,366

)

Less deemed dividend on warrant discount

 

-

 

 

(179,427

)

 

-

 

 

(179,427

)

Net loss attributable to Laird Superfood, Inc. common stockholders

$

(6,302,259

)

$

(4,011,183

)

$

(11,632,763

)

$

(6,006,413

)

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

$

(0.70

)

$

(0.93

)

$

(1.30

)

$

(1.40

)

Diluted

$

(0.70

)

$

(0.93

)

$

(1.30

)

$

(1.40

)

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted

 

8,967,797

 

 

4,325,265

 

 

8,931,736

 

 

4,303,305

 

 
LAIRD SUPERFOOD, INC.
STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

2021

2020

Cash flows used in operating activities
Net loss

$

(11,632,763

)

$

(5,001,620

)

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

 

302,261

 

 

229,284

 

Amortization

 

103,803

 

 

5,048

 

Loss on disposal of equipment

 

2,325

 

 

-

 

Stock-based compensation

 

2,100,077

 

 

471,320

 

Provision for inventory obsolescence

 

18,266

 

 

-

 

Reserve for prepaid assets

 

179,000

 

 

-

 

Restricted stock awards

 

-

 

 

62,431

 

Impairment on asset held for sale

 

-

 

 

239,734

 

Gain on sale of investment securities available-for-sale

 

-

 

 

7,677

 

Changes in operating assets and liabilities:
Accounts receivable

 

98,534

 

 

(324,211

)

Accrued investment income receivable

 

513

 

 

-

 

Inventory

 

(3,778,699

)

 

(1,048,010

)

Prepaid expenses and other current assets

 

729,881

 

 

(371,883

)

Deferred rent

 

179,503

 

 

180,677

 

Deposits

 

2,602

 

 

10,941

 

Accounts payable

 

208,131

 

 

568,088

 

Payroll liabilities

 

129,397

 

 

167,576

 

Accrued expenses

 

367,209

 

 

155,943

 

Deferred taxes

 

36,718

 

 

-

 

Net cash from operating activities

 

(10,953,242

)

 

(4,647,005

)

 
Cash flows used in (provided by) investing activities
Purchase of property, plant, and equipment

 

(522,564

)

 

(312,746

)

Deposits on equipment to be acquired

 

(407,412

)

 

(319,174

)

Purchase of software

 

(109,795

)

 

-

 

Acquisition of a business, net of cash acquired (note 2)

 

(10,449,587

)

 

-

 

Sale of investment securities available-for-sale

 

-

 

 

513,544

 

Proceeds from maturities of investment securities available-for-sale

 

-

 

 

475,000

 

Net cash from investing activities

 

(11,488,658

)

 

356,624

 

 
Cash flows from financing activities
Issuance of common stock

 

-

 

 

1,997,665

 

Issuance of preferred stock

 

-

 

 

10,000,006

 

Common stock issuance costs

 

(82,043

)

 

-

 

Preferred stock issuance costs

 

-

 

 

(147,721

)

Withholding tax payments for share based compensation

 

(219,156

)

 

-

 

Restricted stock units issued

 

3

 

 

-

 

Repurchased common stock

 

-

 

 

(20,532

)

Stock options exercised

 

394,666

 

 

6,030

 

Net cash from financing activities

 

93,470

 

 

11,835,448

 

 
Net change in cash and cash equivalents

 

(22,348,430

)

 

7,545,067

 

Cash and cash equivalents beginning of period

 

57,208,080

 

 

1,004,109

 

Cash and cash equivalents end of period

$

34,859,650

 

$

8,549,176

 

 
Supplemental disclosures of non-cash information
Unrealized gain (loss) on available-for-sale securities

$

(24,001

)

$

17,345

 

 
LAIRD SUPERFOOD, INC.
BALANCE SHEETS

As of

June 30, 2021

December 31, 2020

Assets
Current assets
Cash and cash equivalents

$

34,859,650

 

$

57,208,080

 

Accounts receivable, net

 

789,642

 

 

839,659

 

Investment securities available-for-sale

 

8,682,330

 

 

8,706,844

 

Inventory

 

10,782,337

 

 

6,295,898

 

Prepaid expenses and other current assets, net

 

2,175,604

 

 

2,847,319

 

Deposits

 

508,484

 

 

97,674

 

Total current assets

 

57,798,047

 

 

75,995,474

 

 
Noncurrent assets
Property and equipment, net

 

3,786,144

 

 

3,513,488

 

Intangible assets, net

 

5,073,084

 

 

137,092

 

Goodwill

 

6,486,000

 

 

-

 

Deferred rent

 

2,517,143

 

 

2,696,646

 

Total noncurrent assets

 

17,862,371

 

 

6,347,226

 

Total assets

$

75,660,418

 

$

82,342,700

 

 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

1,571,418

 

$

1,315,964

 

Payroll liabilities

 

861,501

 

 

722,915

 

Accrued expenses

 

1,219,863

 

 

704,543

 

Total current liabilities

 

3,652,782

 

 

2,743,422

 

 
Long-term liabilities
Deferred tax liability, net

 

36,718

 

 

-

 

Note payable

 

51,000

 

 

51,000

 

Total long-term liabilities

 

87,718

 

 

51,000

 

Total liabilities

 

3,740,500

 

 

2,794,422

 

 
Stockholders' equity
Common stock, $0.001 par value, 100,000,000 shares authorized as of
June 30, 2021 and December 31, 2020; 9,365,085 and 8,999,381
issued and outstanding at June 30, 2021, respectively; 9,247,758
and 8,892,886 issued and outstanding at December 31, 2020, respectively

$

8,999

 

$

8,893

 

Additional paid-in capital

 

115,480,644

 

 

111,452,346

 

Accumulated other comprehensive income (loss)

 

(9,794

)

 

14,207

 

Accumulated deficit

 

(43,559,931

)

 

(31,927,168

)

Total stockholders' equity

 

71,919,918

 

 

79,548,278

 

Total liabilities and stockholders' equity

$

75,660,418

 

$

82,342,700

 

 

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