News Details

BOULDER, Colo.--(BUSINESS WIRE)-- Laird Superfood, Inc. (NYSE American: LSF) (“Laird Superfood,” “we” and “our”), today reported financial results for its fourth quarter and fiscal year ended December 31, 2022.

Jason Vieth, Chief Executive Officer, commented, "Fiscal year 2022 was a year of transition, beginning with the onboarding of a new leadership team and culminating in the successful transition of our in-house manufacturing and fulfillment center to 3rd party co-manufacturing and logistics partners at the end of the year. We expect this move to expedite our margin improvement agenda by moving our business to a variable cost model and dramatically reducing our overhead costs. Additionally, we recently unveiled a complete brand refresh across all products in our portfolio, which is already having a positive effect on retail performance. We believe that these momentous steps will position the business for growth and continued improvement in our gross margin throughout 2023."

Anya Hamill, Chief Financial Officer, commented, "We have completed cost cutting and cash optimization initiatives across multiple functions, even beyond manufacturing and supply chain, in order to aggressively curtail selling, general, and administrative expenses in the coming year and to eliminate inefficient marketing spend. We expect that the transformation of our supply chain to a variable cost model will drive gross margin improvement to over 30% in 2023, excluding any one time charges. In shutting down our Sisters facility and making this move to a third-party supply chain, we incurred $9.1 million of one-time charges in the fourth quarter of 2022, most of which were non-cash, as detailed in our Non-GAAP Financial Statement. Additionally, I am pleased to report that our operating cash burn was reduced by $7.8 million in 2022, and we are implementing a number of initiatives to further improve our cash burn rate in 2023."

Fourth Quarter 2022 Highlights

• Net Sales of $9.0 million compared to $8.8 million in the third quarter of 2022 and $9.4 million in the prior year period.
• E-commerce contributed 66% of total Net Sales and decreased 4.7% year-over-year reflecting lower direct-to-consumer (“DTC”) revenues due to a 52% reduction in marketing media spend partially offset by double-digit growth in sales via Amazon.com.
• Wholesale contributed 34% of total Net Sales and revenue decreased 3.3% year-over-year, primarily due to lower sales in the Club channel.
• Gross Margin was (4.6)%, compared to 23.4% in the third quarter of 2022 and 23.6% in the prior year period. This reduction is primarily due to exit and disposal costs relating to the transition to a co-manufacturing model and the product quality issue discovered in the first quarter of 2023.
• Adjusted Gross Margin, which is a non-GAAP financial measure, was 19.0% compared to 23.4% in the third quarter of 2022 and 23.6% in the fourth quarter of 2021. This margin compression reflects fixed cost deleverage on lower production volume due to inventory drawdown, increased costs associated with inventory reserves and disposals, and inflationary freight costs. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP financial measures section of this press release.
• Net Loss was $15.6 million, or $1.69 per diluted share compared to a Net Loss of $5.7 million, or $0.63 per diluted share, in the third quarter of 2022 and a Net Loss of $6.9 million, or $0.76 per diluted share, in the prior year period.
• Adjusted Net Loss, which is a non-GAAP financial measure, of $4.3 million, or $0.47 per diluted share, improved sequentially versus Adjusted Net Loss of $5.6 million, or $0.61 per diluted share, in the third quarter of 2022. In the prior year period Adjusted Net Loss was $6.9 million, or $0.76 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.

Fiscal Year 2022 Highlights

• Net Sales of $35.8 million compared to $36.8 million in the fiscal year 2021.
• E-commerce contributed 62% of total Net Sales in fiscal years 2022 and 2021, decreasing 1.7% 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 contributed 38% of total Net Sales in fiscal years 2022 and 2021, decreasing 4.3% year-over-year, primarily due to lower sales in the Club and Food Service channels.
• Shelf stable and liquid creamer consumption in the Natural channel increased by 24.5% compared to fiscal year 2021.
• Gross Margin was 14.5%, compared to 25.6% in fiscal year 2021. This reduction is primarily driven by exit and disposal costs relating to the transition to a co-manufacturing model and a product quality issue discovered in the first quarter of 2023.
• Adjusted Gross Margin, which is a non-GAAP financial measure, was 19.8% compared to 25.6% in fiscal year 2021. This reduction is due to fixed cost deleverage on lower volume, increased costs associated with inventory reserves and disposals, and inflationary freight costs. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP financial measures section of this press release.
• Net Loss was $40.3 million, or $4.41 per diluted share compared to a Net Loss of $23.9 million, or $2.66 per diluted share, in fiscal year 2021.
• Adjusted Net Loss, which is a non-GAAP financial measure, of $22.8 million, or $2.49 per diluted share, compared to Adjusted Net Loss was $23.4 million, or $2.56 per diluted share in fiscal year 2021. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP financial measures section of this press release.

Balance Sheet and Cash Flow Highlights

The Company had $17.8 million of cash and cash equivalents as of December 31, 2022, and no outstanding debt.

Net cash used in operating activities was $14.3 million for the year ended December 31, 2022, compared to $22.1 million in the prior year period. During fiscal 2022, net cash used in operating activities improved sequentially from the second to the third quarter by 8.6% and sequentially from the third to the fourth quarter by 11.7%.

2023 Outlook

We anticipate that uncertain economic environment with historically high inflation rates impacting consumer spending will continue into 2023. We believe that strategic actions we have taken in 2022, and continue to take in 2023, have positioned the business for net sales growth in the high single digits and gross margin in excess of 30%, excluding extraordinary events. Gross margin guidance excludes any one-time charges associated with the any non-recurring 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. 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 food service customers, as well as the health of the food service 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.

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 certain one-time costs defined in detail in the table to follow. 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.