Laird Superfood Reports Q4 & FY2020 Financial Results

FY20 Net Sales Increase Nearly 100% Year Over Year to $26.0 Million

Online Sales Contribute 56% of FY20 Net Sales, with Direct To Consumer Sales from Lairdsuperfood.com Up 143% Year Over Year

SISTERS, Ore.–(BUSINESS WIRE)–Laird Superfood today reported financial results for its fourth quarter and fiscal year ended December 31, 2020.

Fourth Quarter 2020 Highlights

  • Net Sales increased to $7.3 million, an increase of 75% year over year.
  • Online sales contributed 61% of net sales, with lairdsuperfood.com sales growing 170% year over year, and subscribers growing 184%.
  • Black Friday saw single-day sales grow 474% year over year.
  • Wholesale sales contributed 37% of net sales, increasing 45% year over year, as retail door expansion reached approximately 7,100 locations.
  • Gross profit was $1.5 million and gross margin was 20.3% compared to gross profit of $1.4 million and gross margin of 34.7% in the prior year quarter.
  • Net loss attributable to common stockholders was $4.5 million, or $0.51 per diluted share, compared to net income attributable to common stockholders of $5.3 million, or $0.96 per diluted share, in the prior year period, which included a deemed contribution from the redemption of preferred stock of $7.4 million.
  • The Company’s active innovation slate included seven new product introductions, including the launch of Boost Coffee, the first ever coffee with Vitamin D from plant-based whole food sources, as well as Activate Prebiotic Daily Greens supplements, Harvest Pili Nuts and Dates, and Renew Protein.

Paul Hodge Jr., Co-founder, President and Chief Executive Officer of Laird Superfood, commented, “We finished 2020 with an exceptional fourth quarter of 75% year over year revenue growth, completing a full year that saw our revenue nearly double from 2019. Thank you to our incredible team for their tireless work in a year where flexibility and creativity was key to further penetrating the multi-billion-dollar addressable markets we are pursuing. Through all the challenges presented by the pandemic, our supply chain was intact, and we successfully delivered our high quality, innovative products to a record number of customers and consumers, including over 100,000 new customers who came straight to our online platform and over 176,000 repeat orders during the year.”

“We couldn’t be more excited to enter 2021 with considerable resources – including our enhanced senior leadership team, and with over $57.2 million in cash – to execute on our growth strategy centered on maximizing market penetration in our existing product lines, developing new products that conform to both our quality and value standards and further developing our vertically integrated business model. Mahalo to our dedicated team who achieved so much this year and stayed focused on our operating goals and true to our mission to provide healthy, sustainable plant-based products.”

For the Three Months Ended December 31, 2020

Three Months Ended December 31,

2020

2019

$ % of Total $ % of Total
Coffee Creamers

$ 5,191,752

71%

$ 3,397,040

81%

Hydration and Beverage Enhancing Supplements

1,006,066

14%

547,219

13%

Coffee, Tea, and Hot Chocolate Products

1,794,091

25%

620,910

15%

Other

306,357

4%

124,885

3%

Gross Sales

8,298,266

114%

4,690,054

112%

Shipping income

27,783

0%

135,209

3%

Returns and discounts

(1,024,780)

(14%)

(654,177)

(16%)

Sales, net

$ 7,301,269

100%

$ 4,171,086

100%

Three Months Ended December 31,

2020

2019

$ % of Total $ % of Total
Online

$ 4,452,666

61%

$ 2,321,968

56%

Wholesale

2,672,231

37%

1,845,083

44%

Food Service

176,372

2%

4,035

0%

Sales, net

$ 7,301,269

100%

$ 4,171,086

100%

Net sales increased 75% to $7.3 million in the fourth quarter of 2020 compared to $4.2 million in the fourth quarter of 2019. Growth in net sales in the fourth 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. Black Friday single-day sales were up 474% year-over-year which also contributed to the increase of net sales.

Gross profit was $1.5 million which is slightly higher compared to the prior year period of $1.4 million. Gross margin was 20.3% of net sales in the fourth quarter of 2020, compared to 34.7% of net sales in the prior year period. The 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, elevated labor costs as we built out our team to support our second manufacturing line, and increased co-packing and disposal costs related to the production and distribution of our liquid creamer product line.

Operating expenses were $6.0 million compared to $3.7 million in the year ago period and reflect General and Administrative expense increases of $1.7 million, primarily related to elevated personnel costs, professional fees, and insurance expense, as well as Sales and Marketing expense increases of $621,000, primarily related to elevated marketing expenses.

Loss from operations was $4.5 million in the fourth quarter of 2020, compared to a loss of $2.2 million in the prior year period.

Net loss attributable to common stockholders was $4.5 million, or $0.51 per diluted share, in the fourth quarter of 2020, compared to net income attributable to common stockholders of $5.3 million, or $0.96 per diluted share, in the prior year period, which included a deemed contribution from the redemption of preferred stock of $7.4 million.

Valerie Ells, Chief Financial Officer, commented, “We are thrilled with our net sales performance in the fourth quarter, which furthers our conviction in the strength of our brand and the compelling addressable market opportunities in front of us. We remain confident that our business is set on a path for a strong 2021. This growth will be determined by a few key successful initiatives in the coming year including, but not limited to, timely and innovative new product introductions and a continued strong online performance. We also aim to add more wholesale doors using our liquid creamer as a means for creating these opportunities. 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.”

For the Twelve Months Ended December 31, 2020

Years Ended December 31,

2020

2019

$ % of Total $ % of Total
Coffee Creamers

$ 18,433,345

70%

$ 9,330,678

71%

Hydration and Beverage Enhancing Supplements

3,887,198

15%

2,022,269

15%

Coffee, Tea, and Hot Chocolate Products

5,961,254

23%

1,930,434

15%

Other

675,339

3%

471,097

4%

Gross Sales

28,957,136

111%

13,754,478

105%

Shipping income

248,865

1%

464,551

4%

Returns and discounts

(3,199,603)

(12%)

(1,115,301)

(9%)

Sales, net

$ 26,006,398

100%

$ 13,103,728

100%

Years Ended December 31,

2020

2019

$ % of Total $ % of Total
Online

$ 14,501,706

56%

$ 7,646,864

59%

Wholesale

10,996,517

42%

5,295,024

40%

Food Service

508,175

2%

161,840

1%

Sales, net

$ 26,006,398

100%

$ 13,103,728

100%

Net sales increased 98% to $26.0 million for the twelve months ended December 31, 2020 compared to $13.1 million in the prior year period. This increase was primarily driven by a significant expansion of our customer base in both online and traditional wholesale channels.

Gross profit was $6.8 million, or 26.2% of net sales, for the twelve months ended December 31, 2020, compared to $5.1 million, or 38.8% 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 outbound shipping costs combined with the launch of a free shipping initiative for direct online purchases made on lairdsuperfood.com, increased co-packing costs primarily associated with our liquid creamer product line, disposal costs related to the initial production and distribution of our liquid creamer product line, and elevated labor costs.

Operating expenses were $19.7 million compared to $13.8 million in the prior year and reflect General and Administrative expense increases of $3.6 million, primarily related to the Company’s Initial Public Offering related expenses including accelerated stock option vesting, discretionary bonuses, and professional fees, as well as an asset impairment recorded during the second quarter of 2020. The change from the prior year further reflects Sales and Marketing increases of $2.1 million to $10.4 million from $8.3 million in the prior year period, primarily related to elevated advertising and marketing expenses and personnel costs.

Loss from operations was $12.9 million for the twelve months ended December 31, 2020, compared to $8.8 million in the prior year period.

Net loss attributable to common stockholders was $14.5 million, or $2.61 per diluted share, for the twelve months ended December 31, 2020 compared to $1.1 million, or $0.29 per diluted share, in the prior year period.

Balance Sheet and Cash Flow Highlights

The Company’s current assets include cash and cash equivalents of $57.2 million as of December 31, 2020. Total outstanding debt was $51,000 as of December 31, 2020. Net cash used in operating activities was $14.7 million in the twelve months ended December 31, 2020, compared to $9.4 million in the prior year period.

Capital expenditures totaled $1.1 million for the twelve months ended December 31, 2020, compared to $2.4 million in the prior year period.

2021 Outlook

The Company’s guidance assumes that there are no significant disruptions to the supply chain, or its customers or consumers, including any disruptions from adverse macroeconomic factors. In addition, the Company’s guidance reflects management’s expectation that it will continue to execute on the following core strategies: a) the optimized roll out of liquid creamer, b) expansion into additional wholesale channels, c) timely and innovative new product introductions, and d) continuation of strong online performance coupled with the optimization of DTC shipping expenses.

Given the uncertainty regarding the ultimate duration, magnitude and effects of the COVID-19 pandemic, management does not have certainty on the timing or execution of such strategies.

For the full year 2021, management feels confident the business is on a path for strong, double digit growth and expects net revenue of at least $42 million. The Company has a full year 2021 margin goal of 28-30%, which they plan to achieve via the liquid packaging update, optimizing DTC shipping, and continuing to maximize fixed cost leverage available via vertical integration.

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 5471648. 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.

LAIRD SUPERFOOD, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended
December 31,
For the Years Ended
December,

2020

2019

2020

2019

Sales, net

$

7,301,270

$

4,171,086

$

26,006,398

$

13,103,728

Cost of goods sold

(5,819,762)

(2,722,605)

(19,204,642)

(8,019,094)

Gross profit

1,481,508

1,448,481

6,801,756

5,084,634

General and administrative
Salaries, wages and benefits

880,979

664,925

3,533,478

2,423,005

Stock-based compensation

835,203

263,388

1,424,803

700,384

Professional fees

316,368

129,331

963,791

491,465

Insurance expense

519,848

51,330

666,045

132,637

Office expense

139,300

110,085

503,817

416,160

Occupancy

62,151

61,711

229,303

157,697

Merchant service fees

127,437

46,054

375,792

157,737

Netsuite subscription expense

35,425

45,194

125,916

157,752

Impairment on asset held for sale

239,734

Other expense

260,737

119,365

765,600

564,347

Total general and administrative expenses

3,177,448

1,491,383

8,828,279

5,201,184

Research and product development
Salaries, wages and benefits

70,318

83,966

225,305

216,657

Product Development Expense

67,769

41,880

209,275

80,724

Stock-based compensation

3,567

2,192

10,261

7,741

Other expense

2,526

9,834

63,329

19,162

Total research and product development expenses

144,180

137,872

508,170

324,284

Sales and marketing
Salaries, wages and benefits

611,868

679,340

2,669,384

2,609,825

Stock-based compensation

30,570

106,536

661,026

207,686

Advertising

1,116,621

714,854

4,457,213

3,131,332

General marketing

696,263

296,880

1,592,180

1,157,920

Amazon selling fee

168,668

154,361

743,981

541,009

Travel expense

5,276

63,142

84,148

330,121

Other expense

37,634

30,727

186,546

333,244

Total sales and marketing expenses

2,666,900

2,045,840

10,394,478

8,311,137

Total expenses

5,988,528

3,675,095

19,730,927

13,836,605

Operating loss

(4,507,020)

(2,226,614)

(12,929,171)

(8,751,971)

Other income (expense)
Interest and dividend income

13,423

89,843

64,943

239,175

Gain on sale of available-for-sale securities

7,664

13,927

7,664

Interest expense

(29,988)

(48,816)

Grant income

50,000

Total other income

13,423

67,519

78,870

248,023

Loss before income taxes

(4,493,597)

(2,159,095)

(12,850,301)

(8,503,948)

Benefit from income taxes

Net loss

$

(4,493,597)

$

(2,159,095)

$

(12,850,301)

$

(8,503,948)

Add deemed contribution from the redemption of preferred stock

7,448,879

7,448,879

Less deemed dividend of beneficial conversion feature

(825,366)

Less deemed dividend on warrant discount

(825,366)

Net loss attributable to Laird Superfood, Inc. common stockholders

$

(4,493,597)

$

5,289,784

$

(14,501,033)

$

(1,055,069)

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

$

(0.51)

$

1.31

$

(2.61)

$

(0.29)

Diluted

$

(0.51)

$

0.96

$

(2.61)

$

(0.29)

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

8,876,431

4,045,056

5,546,078

3,668,050

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

8,876,431

5,532,032

5,546,078

3,668,050

LAIRD SUPERFOOD, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,

2020

2019

Cash flows from operating activities
Net loss

$

(12,850,301)

$

(8,503,948)

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

474,621

300,561

Loss on disposal of equipment

483

Stock-based compensation

2,318,502

851,338

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

7,664

Changes in operating assets and liabilities:
Accounts receivable

(454,853)

(9,934)

Inventory

(3,859,933)

(1,253,732)

Prepaid expenses and other current assets

(2,256,511)

(136,669)

Deferred rent

360,786

(1,131,393)

Deposits

30,954

80,750

Other assets

10,151

2,598

Accounts payable

591,213

(60,741)

Payroll liabilities

231,823

307,911

Accrued expenses

403,497

161,881

Net cash from operating activities

(14,746,390)

(9,433,231)

Cash flows from investing activities
Purchase of property, equipment, and software

(1,059,858)

(2,423,965)

Deposits on equipment to be acquired

(14,699)

Purchase of investment securities available-for-sale

(8,171,129)

(12,493,099)

Proceeds from maturities of investment securities available-for-sale

4,950,000

7,000,000

Net cash from investing activities

(4,280,987)

(7,931,763)

Cash flows from financing activities
Payments on line of credit

(5,000,000)

Draw on line of credit

5,000,000

Issuance of common stock

66,110,517

9,698,296

Redemption of preferred stock

(7,503,195)

Issuance of preferred stock

10,000,006

Common stock issuance costs

(1,268,772)

(71,102)

Preferred stock issuance costs

(147,721)

Restricted capital contribution

298,103

Common stock issuance costs

(20,532)

(1,145,968)

Stock options exercised

259,747

51,049

Net cash from financing activities

75,231,348

1,029,080

Net change in cash, cash equivalents, and restricted cash

56,203,971

(16,335,914)

Cash,cash equivalents, and restricted cash beginning of period

1,004,109

17,340,023

Cash, cash equivalents, and restricted cash end of period

$

57,208,080

$

1,004,109

Supplemental disclosures of cash flow information
Interest paid

$

$

48,816

Supplemental disclosures of non-cash information
Deemed contribution from redemption of preferred stock

$

$

7,448,879

Conversion of preferred stock to common stock

$

16,575,236

$

Unrealized gain (loss) on available-for-sale securities

$

14,433

$

(226)

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
As of
December 31, 2020 December 31, 2019
Assets
Current assets
Cash and cash equivalents

$

57,208,080

$

1,004,109

Accounts receivable, net

839,659

384,806

Investment securities available-for-sale

8,706,844

5,485,209

Inventory

6,295,898

2,435,965

Prepaid expenses and other current assets

2,847,319

590,808

Deposits

97,674

143,327

Total current assets

75,995,474

10,044,224

Noncurrent assets
Property and equipment, net

3,263,488

3,153,286

Fixed assets held for sale

250,000

Licensing agreement – intangible

132,100

132,100

Deferred rent

2,696,646

3,057,432

Other assets

4,992

15,143

Total noncurrent assets

6,347,226

6,357,961

Total assets

$

82,342,700

$

16,402,185

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable

$

1,315,964

$

724,751

Payroll liabilities

722,915

491,092

Accrued expenses

704,543

301,046

Total current liabilities

2,743,422

1,516,889

Long-term liabilities
Note payable

51,000

51,000

Total long-term liabilities

51,000

51,000

Total liabilities

2,794,422

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 December 31, 2020 and December 31, 2019, respectively;
Series A-1 Preferred Stock, 0 shares authorized, issued, and outstanding
as of December 31, 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 December 31, 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
December 31 and December 31, 2019; 9,247,758 and 8,883,010
issued and outstanding at December 31, 2020, respectively; 4,551,950
and 4,188,558 issued and outstanding at December 31, 2019, respectively

8,893

4,188

Additional paid-in capital

111,452,346

27,184,250

Accumulated other comprehensive income (loss)

14,207

(226)

Accumulated deficit

(31,927,168)

(19,076,867)

Total stockholders’ equity

79,548,278

8,111,345

Total liabilities, convertible preferred stock and stockholders’ equity

$

82,342,700

$

16,402,185

Contacts

Investors:
Ashley DeSimone
Ashley.DeSimone@icrinc.com
646-677-1827