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Laird Superfood Reports Third Quarter 2022 Financial Results

11/10/2022

Gross Margin improved 520 basis points sequentially to 23.4% Reaffirming Full Year 2022 Guidance

SISTERS, Ore.--(BUSINESS WIRE)-- Laird Superfood, Inc. (NYSE American: LSF) (“Laird Superfood,” “we” and “our”), today reported financial results for its third quarter ended September 30, 2022.

Third Quarter 2022 Highlights

  • Net Sales of $8.8 million compared to $8.7 million in the second quarter of 2022 and $10.9 million in the prior year period.
  • Online contributed 66% of total Net Sales and decreased 8.3% year-over-year reflecting lower direct-to-consumer (“DTC”) revenues due to planned reductions in marketing spend partially offset by double-digit growth in sales via Amazon.com.
  • Wholesale Net Sales contributed 34% of total Net Sales and revenue decreased 32% year-over-year, primarily due to lower sales in the Club channel.
  • Gross Margin was 23.4%, a 520-basis point improvement sequentially versus the second quarter of 2022 reflecting lower discounts, labor costs and freight. Relative to the prior year period, Gross Margin was down 600 basis points due primarily to fixed costs deleverage on lower volume and inflationary freight costs.
  • Net Loss was $5.7 million, or $0.63 per diluted share compared to a Net Loss of $4.9 million, or $0.54 per diluted share, in the second quarter of 2022 and a Net Loss of $5.4 million, or $0.59 per diluted share, in the prior year period.
  • Adjusted Net Loss, which is a non-GAAP financial measure, of $5.6 million, or $0.61 per diluted share, improved sequentially versus Adjusted Net Loss of $6.2 million, or $0.68 per diluted share, in the second quarter of 2022. In the prior year period Adjusted Net Loss was $5.4 million, or $0.59 per diluted share. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP financial measures section of this press release.

“We drove a significant sequential improvement in our Gross Margin during the third quarter and now have clear line of sight to our longer-term target of 35% as we pivot to an outsourced manufacturing model,” said Jason Vieth, President and Chief Executive Officer. “We also made solid progress optimizing marketing investments, which is improving our underlying economics and strengthening our competitive position as we continue to build out a true omnichannel business. While the operating environment remains very challenging, our efforts to create a leaner, nimbler organization continue gaining traction, enabling us to maximize the potential of our most profitable commercial growth opportunities. We remain confident in our direction and ability to drive significant improvements in sales growth and profitability in the future, supported by our loyal customer base and strong balance sheet with $21 million of cash and no debt.”

For the Three Months Ended September 30, 2022

 

 

Three Months Ended September 30,

 

 

2022

 

2021

 

 

$

 

% of Total

 

$

 

% of Total

Coffee creamers

 

$

4,716,650

 

 

 

53

%

 

$

6,489,895

 

 

 

60

%

Hydration and beverage enhancing supplements

 

 

1,061,136

 

 

 

12

%

 

 

1,541,418

 

 

 

14

%

Harvest snacks and other food items

 

 

1,935,812

 

 

 

22

%

 

 

1,866,710

 

 

 

17

%

Coffee, tea, and hot chocolate products

 

 

1,455,888

 

 

 

16

%

 

 

1,724,919

 

 

 

16

%

Other

 

 

437,210

 

 

 

5

%

 

 

241,489

 

 

 

2

%

Gross sales

 

 

9,606,696

 

 

 

108

%

 

 

11,864,431

 

 

 

109

%

Shipping income

 

 

289,505

 

 

 

3

%

 

 

195,085

 

 

 

2

%

Returns and discounts

 

 

(1,051,356

)

 

 

(11

)%

 

 

(1,193,602

)

 

 

(11

)%

Sales, net

 

$

8,844,845

 

 

 

100

%

 

$

10,865,914

 

 

 

100

%

 

 

 

 

 

 

 

 

 

Online

 

 

5,808,186

 

 

 

66

%

 

 

6,331,003

 

 

 

58

%

Wholesale

 

 

3,004,875

 

 

 

34

%

 

 

4,415,867

 

 

 

41

%

Food service

 

 

31,784

 

 

 

0

%

 

 

119,044

 

 

 

1

%

Sales, net

 

$

8,844,845

 

 

 

100

%

 

$

10,865,914

 

 

 

100

%

Net Sales decreased 18.6% to $8.8 million in the third quarter of 2022 compared to $10.9 million in the third quarter of 2021. Wholesale channel revenue decreased 32%, driven primarily by lower volumes in Club, while Online sales declined 8.3% due to lower DTC sales partially offset by strong double-digit growth in our Amazon.com channel, reflecting continued momentum with our marketing optimization strategies. The decline in DTC reflected a decrease in new customer orders due to planned reductions in marketing spend, price increases implemented at the end of the second quarter and the removal of free shipping for orders under $40, as well as overall pressures on consumer spending stemming from inflationary concerns.

Gross Profit was $2.1 million, a 35% decrease compared to the prior year period of $3.2 million. Gross Margin was 23.4% of Net Sales, a 520-basis point improvement sequentially versus the second quarter and compared to 29.4% of Net Sales in the prior year period. The year-over-year decrease in Gross Margin was attributable to deleverage of fixed manufacturing costs on lower volumes as we focused on optimizing inventory balances as well as higher costs for inbound shipping and outbound freight partially offset by lower labor stemming from cost reduction initiatives.

Operating Expenses were $7.9 million compared to $8.5 million in the year ago period, an 8.6% decline, primarily driven by lower Sales and Marketing expenses along with reduced spending on Research and Product Development.

Loss from operations was $5.8 million in the third quarter of 2022, compared to a loss of $5.3 million in the prior year period, a 9.5% increase versus a year ago.

Net Loss was $5.7 million, or $0.63 per diluted share, in the third quarter of 2022, compared to a net loss of $5.4 million, or $0.59 per diluted share, in the prior year period.

Adjusted Net Loss, which excludes the impact of certain non-recurring items, was $5.7 million, or $0.62 per diluted share, in the third quarter of 2022 compared to $5.3 million, or $0.59 per diluted share, a yearearlier.

For the Nine Months Ended September 30, 2022

 

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

 

$

 

% of Total

 

$

 

% of Total

Coffee creamers

 

$

14,866,032

 

 

 

55

%

 

$

16,590,542

 

 

 

60

%

Hydration and beverage enhancing supplements

 

 

3,815,346

 

 

 

14

%

 

 

3,907,111

 

 

 

14

%

Harvest snacks and other food items

 

 

5,336,043

 

 

 

20

%

 

 

3,353,178

 

 

 

12

%

Coffee, tea, and hot chocolate products

 

 

4,840,215

 

 

 

18

%

 

 

5,286,882

 

 

 

19

%

Other

 

 

1,094,924

 

 

 

4

%

 

 

987,076

 

 

 

4

%

Gross sales

 

 

29,952,560

 

 

 

111

%

 

 

30,124,789

 

 

 

109

%

Shipping income

 

 

829,107

 

 

 

3

%

 

 

261,495

 

 

 

1

%

Returns and discounts

 

 

(3,922,803

)

 

 

(14

)%

 

 

(2,942,890

)

 

 

(10

)%

Sales, net

 

$

26,858,864

 

 

 

100

%

 

$

27,443,394

 

 

 

100

%

 

 

 

 

 

 

 

 

 

Online

 

 

16,410,956

 

 

 

61

%

 

 

16,492,512

 

 

 

60

%

Wholesale

 

 

10,141,518

 

 

 

38

%

 

 

10,529,594

 

 

 

38

%

Food service

 

 

306,390

 

 

 

1

%

 

 

421,288

 

 

 

2

%

Sales, net

 

$

26,858,864

 

 

 

100

%

 

$

27,443,394

 

 

 

100

%

Net Sales decreased 2.1% to $26.9 million in the first nine months of 2022 compared to $27.4 million in the first nine months of 2021. The decline in year-to-date Net Sales was primarily due to lower sales in the DTC channel reflecting the planned reduction in media spend and elevated discounts as well as lower club sales. This was partially offset by double-digit growth in Amazon.com, new wholesale distribution and the acquisition of Picky Bars.

Gross Profit was $5.6 million, a decrease of 22.3% compared to the prior year period of $7.2 million. Gross Margin was 20.8% of Net Sales in the first nine months of 2022, compared to 26.3% of Net Sales in the prior year period. The year-over-year decline in Gross Margin was primarily due to elevated promotional activity, inflationary pressures on raw materials, packaging, and freight, as well as fixed cost deleverage on lower production volumes, partially offset by lower labor expenses stemming from cost reduction initiatives.

Operating Expenses were $30.3 million compared to $24.2 million in the first nine months of 2022 and reflect General and Administrative expense increases of $6.8 million, primarily due to $8.0 million of non-cash charges for goodwill and intangible asset impairment. Excluding the non-cash impairment charges, General and Administrative expenses decreased by $1.2 million reflecting lower personnel costs, including stock-based compensation related to executive departures earlier in the year.

Loss from operations was $24.7 million in the first nine months of 2022, compared to a loss of $16.9 million in the prior year period.

Net Loss was $24.8 million, or $2.71 per diluted share, in the first nine months of 2022, compared to net loss of $17.0 million, or $1.90 per diluted share, in the prior year period.

Adjusted Net Loss, which excludes the impact of certain one-time items, was $18.4 million, or $2.01 per diluted share, in the first nine months of 2022 compared to $16.8 million, or $1.87 per diluted share in the prior year period.

Balance Sheet and Cash Flow Highlights

The Company had $21.0 million of cash and cash equivalents as of September 30, 2022, and no outstanding debt. Net cash used in operating activities was $11.1 million for the nine months ended September 30, 2022, compared to $14.2 million in the prior year period.

Capital Expenditures totaled $1.1 million for the nine months ended September 30, 2022, compared to $1.0 million a year earlier.

2022 Outlook

We anticipate that uncertain economic environment with historically high inflation rates impacting consumer spending will continue into the next quarter. However, we reaffirm our estimated net sales for 2022 will be in a range of $36 million to $38 million and gross margin for the full year 2022 is forecast to be approximately 20%. The gross margin guidance excludes any one-time charges associated with the closure of our manufacturing operation in Sisters, Oregon and other one-time actions.

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) 470-1428 from the U.S. or (404) 975-4839 internationally. The conference I.D. code is 468459. 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 conference 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 and growth. 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) volatility 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) effects of real or perceived quality or health issues 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) adverse developments 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) the ability of ourselves, our suppliers and co-manufacturers to comply with food safety, environmental or other laws or regulations; (11) our plans for future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements; (12) the costs and success of our marketing efforts, and our ability to promote our brand; (13) our reliance on our executive team and other key personnel and our ability to identify, recruit and retain skilled and general working personnel; (14) our ability to effectively manage our growth; (15) our ability to compete effectively with existing competitors and new market entrants; (16) the impact of adverse economic conditions; and (17) the growth rates of the markets in which we compete.

LAIRD SUPERFOOD, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2022

 

2021

 

2022

 

2021

Sales, net

 

$

8,844,845

 

 

$

10,865,914

 

 

$

26,858,864

 

 

$

27,443,394

 

Cost of goods sold

 

 

(6,773,029

)

 

 

(7,667,075

)

 

 

(21,259,300

)

 

 

(20,225,269

)

Gross profit

 

 

2,071,816

 

 

 

3,198,839

 

 

 

5,599,564

 

 

 

7,218,125

 

General and administrative

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

1,766,450

 

 

 

2,191,477

 

 

 

4,511,546

 

 

 

6,299,262

 

Professional fees

 

 

770,478

 

 

 

551,368

 

 

 

2,042,709

 

 

 

1,504,438

 

Insurance expense

 

 

590,369

 

 

 

537,174

 

 

 

1,703,382

 

 

 

1,560,395

 

Impairment of goodwill

 

 

 

 

 

 

 

 

6,486,000

 

 

 

 

Impairment of long-lived intangible assets

 

 

 

 

 

 

 

 

1,540,000

 

 

 

 

Impairment of assets held-for-sale

 

 

 

 

 

 

 

 

100,426

 

 

 

 

Gain on sale of assets held-for-sale

 

 

(3,240

)

 

 

 

 

 

(577,058

)

 

 

 

Other expense

 

 

1,259,811

 

 

 

974,105

 

 

 

3,041,032

 

 

 

2,696,334

 

Total general and administrative expenses

 

 

4,383,868

 

 

 

4,254,124

 

 

 

18,848,037

 

 

 

12,060,429

 

Research and product development

 

 

115,077

 

 

 

242,604

 

 

 

335,377

 

 

 

858,143

 

Sales and marketing

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

386,233

 

 

 

655,382

 

 

 

1,939,785

 

 

 

2,016,556

 

Advertising

 

 

1,832,172

 

 

 

1,954,377

 

 

 

5,191,374

 

 

 

5,313,881

 

General marketing

 

 

824,747

 

 

 

1,131,023

 

 

 

2,983,417

 

 

 

3,079,181

 

Other expense

 

 

347,705

 

 

 

273,971

 

 

 

1,000,923

 

 

 

824,147

 

Total sales and marketing expenses

 

 

3,390,857

 

 

 

4,014,753

 

 

 

11,115,499

 

 

 

11,233,765

 

Total expenses

 

 

7,889,802

 

 

 

8,511,481

 

 

 

30,298,913

 

 

 

24,152,337

 

Operating loss

 

 

(5,817,986

)

 

 

(5,312,642

)

 

 

(24,699,349

)

 

 

(16,934,212

)

Other income (expense)

 

 

79,777

 

 

 

10,721

 

 

 

(77,008

)

 

 

36,246

 

Loss before income taxes

 

 

(5,738,209

)

 

 

(5,301,921

)

 

 

(24,776,357

)

 

 

(16,897,966

)

Income tax expense

 

 

 

 

 

(49,777

)

 

 

(5,774

)

 

 

(86,495

)

Net loss

 

$

(5,738,209

)

 

$

(5,351,698

)

 

$

(24,782,131

)

 

$

(16,984,461

)

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(24,782,131

)

 

 

(16,984,461

)

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

 

 

 

 

Depreciation

 

 

496,932

 

 

 

454,400

 

Amortization

 

 

349,424

 

 

 

243,578

 

(Gain) Loss on disposal of equipment

 

 

(279

)

 

 

5,600

 

Gain on sale of assets held-for-sale

 

 

(577,058

)

 

 

 

Stock-based compensation

 

 

284,980

 

 

 

3,142,517

 

Provision for inventory obsolescence

 

 

223,914

 

 

 

168,436

 

Provision for doubtful accounts

 

 

131,815

 

 

 

 

Reserve for prepaid assets

 

 

 

 

 

179,000

 

Impairment of goodwill

 

 

6,486,000

 

 

 

 

Impairment of long-lived intangible assets

 

 

1,540,000

 

 

 

 

Impairment of fixed assets held-for-sale

 

 

100,426

 

 

 

Deferred taxes

 

 

(7,534

)

 

 

86,495

 

Loss on sale of investment securities available-for-sale

 

 

182,310

 

 

 

8,317

 

Noncash lease costs

 

 

798,486

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

 

(417,670

)

 

 

(72,150

)

Inventory, net

 

 

1,179,416

 

 

 

(3,482,522

)

Prepaid expenses and other current assets

 

 

2,025,588

 

 

 

1,137,741

 

Operating lease liability

 

 

(556,597

)

 

 

267,787

 

Deposits

 

 

217,115

 

 

 

2,601

 

Accounts payable

 

 

(62,080

)

 

 

184,722

 

Payroll liabilities

 

 

175,295

 

 

 

81,694

 

Accrued expenses

 

 

1,078,271

 

 

 

333,246

 

Net cash from operating activities

 

 

(11,133,377

)

 

 

(14,242,999

)

Cash flows from investing activities

 

 

 

 

Purchase of property, plant, and equipment

 

 

(1,139,219

)

 

 

(1,039,350

)

Deposits on equipment to be acquired

 

 

 

 

 

(462,507

)

Proceeds on sale of property, plant, and equipment

 

 

13,093

 

 

 

700

 

Purchase of software

 

 

(2,713

)

 

 

(141,546

)

Acquisition of a business, net of cash acquired

 

 

 

 

 

(10,449,587

)

Proceeds from sale of assets held-for-sale

 

 

1,596,212

 

 

 

 

Proceeds from sale of investment securities available-for-sale

 

 

8,513,783

 

 

 

 

Net cash from investing activities

 

 

8,981,156

 

 

 

(12,092,290

)

Cash flows from financing activities

 

 

 

 

Common stock issuance costs

 

 

 

 

 

(82,043

)

Recovery of short-swing profits

 

 

28,555

 

 

 

 

Employee stock purchase plan shares issued

 

 

28,287

 

 

 

 

Withholding tax payments for share based compensation

 

 

 

 

 

(219,157

)

Stock options exercised

 

 

64,248

 

 

 

485,947

 

Net cash from financing activities

 

 

121,090

 

 

 

184,747

 

Net change in cash and cash equivalents

 

 

(2,031,131

)

 

 

(26,150,542

)

Cash and cash equivalents beginning of year

 

 

23,049,234

 

 

 

57,208,080

 

Cash and cash equivalents end of year

 

$

21,018,103

 

 

$

31,057,538

 

Supplemental disclosures of cash flow information

 

 

 

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

$

5,285,330

 

 

$

 

Supplemental disclosures of non-cash information

 

 

 

 

Noncash conversion of note payable to grant income

 

$

 

 

$

 

Unrealized loss on available-for-sale securities

 

$

 

 

$

(22,049

)

Common stock issued in connection with the acquisition of a business

 

$

 

 

$

1,834,857

 

Sale of assets held-for-sale included in accrued expenses at the beginning of the period

 

$

(28,240

)

 

$

 

Amounts reclassified from accumulated other comprehensive loss

 

$

61,016

 

 

$

 

Amounts reclassified from property, plant, and equipment to fixed assets held-for-sale

 

$

100,000

 

 

$

 

Amounts reclassified from property, plant, and equipment to intangible assets

 

$

153,691

 

 

$

 

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

 

$

372,507

 

 

$

 

Property and equipment held-and-used reclassified to held-for-sale

 

$

947,394

 

 

$

 

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

As of

 

 

September 30,
2022

 

December 31,
2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash, cash equivalents, and restricted cash

 

$

21,018,103

 

 

$

23,049,234

 

Accounts receivable, net

 

 

1,554,573

 

 

 

1,268,718

 

Investment securities available-for-sale

 

 

 

 

 

8,635,077

 

Inventory, net

 

 

8,818,013

 

 

 

10,221,343

 

Prepaid expenses and other current assets, net

 

 

1,801,955

 

 

 

3,827,543

 

Deposits

 

 

90,297

 

 

 

679,919

 

Total current assets

 

 

33,282,941

 

 

 

47,681,834

 

Noncurrent assets

 

 

 

 

Property and equipment, net

 

 

4,213,404

 

 

 

4,512,935

 

Intangible assets, net

 

 

3,105,834

 

 

 

4,838,854

 

Goodwill

 

 

 

 

 

6,486,000

 

Right-of-use asset

 

 

6,958,803

 

 

 

2,327,752

 

Total noncurrent assets

 

 

14,278,041

 

 

 

18,165,541

 

Total assets

 

$

47,560,982

 

 

$

65,847,375

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

826,688

 

 

$

888,768

 

Payroll liabilities

 

 

989,458

 

 

 

814,163

 

Accrued expenses

 

 

3,133,121

 

 

 

2,083,090

 

Lease liability, current portion

 

 

743,109

 

 

 

 

Total current liabilities

 

 

5,692,376

 

 

 

3,786,021

 

Long-term liabilities

 

 

 

 

Deferred tax liability, net

 

 

 

 

 

7,534

 

Lease liability

 

 

4,129,831

 

 

 

 

Total long-term liabilities

 

 

4,129,831

 

 

 

7,534

 

Total liabilities

 

 

9,822,207

 

 

 

3,793,555

 

Stockholders’ equity

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 9,566,174 and 9,200,470 issued and outstanding at September 30, 2022, respectively; 9,460,243 and 9,094,539 issued and outstanding at December 31, 2021, respectively

 

 

9,201

 

 

 

9,095

 

Additional paid-in capital

 

 

118,309,419

 

 

 

117,903,455

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

(61,016

)

Accumulated deficit

 

 

(80,579,845

)

 

 

(55,797,714

)

Total stockholders’ equity

 

 

37,738,775

 

 

 

62,053,820

 

Total liabilities and stockholders’ equity

 

$

47,560,982

 

 

$

65,847,375

 

Non-GAAP Financial Measures

In this press release, we report adjusted net loss and adjusted net loss per diluted share, which are financial measures not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). Management uses adjusted net loss and adjusted net loss per diluted share to evaluate financial performance because adjusted net loss and adjusted net loss per diluted share allow for period-over-period comparisons of the Company’s ongoing operations before the impact of certain items described below. Management believes this information may also be useful to investors to compare the Company’s results period-over-period. We define adjusted net loss and adjusted net loss per diluted share to exclude (1) non-cash charges for goodwill and long-lived asset impairment, (2) forfeitures of unvested stock-based compensation, (3) non-recurring executive severance costs, (4) loss on sale of available-for-sale securities, (5) proceeds from an insurance settlement, (6) gain on sale of land held-for-sale, (7) restructuring costs, (8) the write off of prepaid inventory balances due to the bankruptcy of a supplier, (9) exit costs incurred related to the early termination of certain service contracts, and (10) acquisition costs of Picky Bars LLC. Please be aware that adjusted net loss and adjusted net loss per diluted share have limitations and should not be considered in isolation or as a substitute for net loss or diluted net loss per share. In addition, we may calculate and/or present adjusted net loss and adjusted net loss per diluted share differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the table that follows.

LAIRD SUPERFOOD, INC.

NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

For the Three Months Ended

 

Year-to-date

 

 

March 31,
2022

 

June 30,
2022

 

September 30,
2022

 

2022

Net loss

 

$

(14,139,402

)

 

$

(4,904,520

)

 

$

(5,738,209

)

 

$

(24,782,131

)

Adjusted for:

 

 

 

 

 

 

 

 

Impairment of goodwill and long-lived assets

(a)

 

8,026,000

 

 

 

100,426

 

 

 

 

 

 

8,126,426

 

Forfeitures of unvested stock-based compensation

(b)

 

(907,622

)

 

 

(1,023,637

)

 

 

 

 

 

(1,931,259

)

Executive severances

(c)

 

326,271

 

 

 

143,746

 

 

 

 

 

 

470,017

 

Loss on sale of available-for-sale securities

(d)

 

182,310

 

 

 

 

 

 

 

 

 

182,310

 

Proceeds from insurance settlement

(e)

 

(204,606

)

 

 

 

 

 

 

 

 

(204,606

)

Gain on sale of land held-for-sale

(f)

 

 

 

 

(573,818

)

 

 

 

 

 

(573,818

)

Restructuring costs

(g)

 

 

 

 

76,486

 

 

 

67,974

 

 

 

144,460

 

Write off of prepaid inventory balances from bankrupt supplier

(h)

 

 

 

 

 

 

 

51,400

 

 

 

51,400

 

Exit costs from the early termination of service contracts

(i)

 

 

 

 

 

 

 

45,000

 

 

 

45,000

 

Adjusted net loss

 

$

(6,717,049

)

 

$

(6,181,317

)

 

$

(5,573,835

)

 

$

(18,472,201

)

Adjusted net loss per share, diluted:

 

 

(0.74

)

 

 

(0.68

)

 

 

(0.61

)

 

 

(2.02

)

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

 

 

9,095,441

 

 

 

9,132,632

 

 

 

9,178,533

 

 

 

9,136,071

 

 

 

 

 

 

 

 

 

 

(a) Impairment charges to goodwill and long-lived intangible assets assumed in the acquisition of Picky Bars which occurred Q2 2021, in the amounts of $6.5 million and $1.5 million, respectively, as well as $0.1 million of impairment charges related to production machinery held-for-sale in Q2 2022.

(b) Reversals of stock-based compensation arising from the forfeitures of unvested awards following the resignation of certain executive officers.

(c) Compensation expense recognized for severances related to the resignations of certain executive officers.

(d) Realized losses on the liquidation of all of the Company's available-for-sale securities in Q1 2022.

(e) Recovery of costs incurred in connection with an insurance claim following loss of product during handling by a third party.

(f) Gains realized on the sale of excess lots of land adjacent to the Company's warehouses in Sisters, Oregon in Q2 2022.

(g) Costs incurred as part of the strategic downsizing of the Company's operations, including severances, reversals of PTO, and forfeitures of stock-based compensation.

(h) Losses incurred on prepaid inventories which were not recoverable following the bankruptcy of the supplier.

(i) Exit costs incurred as a result of the early termination of a long-term service contract as part of a strategic initiative to relieve future cash obligations.

 

LAIRD SUPERFOOD, INC.

NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

 

For the Three Months Ended

 

Year-to-date

 

 

March 31,
2021

 

June 30,
2021

 

September 30,
2021

 

2021

Net loss

 

$

(5,330,504

)

 

$

(6,302,259

)

 

$

(5,351,698

)

 

$

(16,984,461

)

Adjusted for:

 

 

 

 

 

 

 

 

Write off of prepaid inventory balances from bankrupt supplier

(a)

 

 

 

 

179,000

 

 

 

 

 

 

179,000

 

Acquisition costs

(b)

 

98,750

 

 

 

179,390

 

 

 

 

 

 

278,140

 

Adjusted net loss

 

$

(5,231,754

)

 

$

(5,943,869

)

 

$

(5,351,698

)

 

$

(16,527,321

)

Adjusted net loss per share, diluted:

 

 

(0.59

)

 

 

(0.66

)

 

 

(0.59

)

 

 

(1.81

)

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

 

 

8,894,495

 

 

 

8,967,797

 

 

 

9,001,912

 

 

 

9,136,071

 

 

 

(a) Losses incurred on prepaid inventories which were not recoverable following the bankruptcy of the supplier.

(b) Costs associated with the acquisition of Picky Bars LLC on May 3, 2021, including professional and legal fees.

 

ICR
Reed Anderson
646-277-1260
Reed.Anderson@icrinc.com

Source: Laird Superfood, Inc.

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