Laird Superfood, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; selected fourth-quarter results are also summarized below. The company sells plant-based and functional foods through online, wholesale, and food-service channels.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net sales | $36.8 million | $25.8 million |
| Gross profit / margin | $9.4 million / 25.6% | $6.6 million / 25.5% |
| Operating loss | $24.0 million | $12.9 million |
| Net loss | $23.9 million | $12.9 million |
| Cash used in operating activities | $22.1 million | $14.7 million |
- Net sales rose 43%. Coffee creamers generated 59% of 2021 net sales, hydration and beverage supplements 16%, harvest snacks and other food 14%, and coffee, tea, and hot chocolate 19% (categories may not sum to 100% because of other items and net sales adjustments).
- Online sales increased to $22.7 million, or 62% of net sales, from $14.5 million, or 56%. Wholesale sales were $13.6 million, or 37%; food service was $0.5 million, or 1%.
- Operating expenses rose 71% to $33.4 million, including general and administrative expense of $16.5 million and sales and marketing expense of $15.9 million. Advertising and marketing expenditures totaled $12.1 million, versus $5.8 million in 2020.
- At December 31, cash, cash equivalents, and restricted cash were $23.0 million; available-for-sale investments were $8.6 million. The company reported $19.7 million of available borrowings and no amounts outstanding under its lines of credit. Current liabilities were $3.8 million.
- Cash used in investing activities was $12.6 million, primarily reflecting the Picky Bars acquisition. Financing activities provided $0.6 million, compared with $75.2 million in 2020, largely reflecting the prior-year IPO.
Fourth quarter: Net sales were $9.4 million versus $7.3 million in Q4 2020; gross profit was $2.2 million versus $1.5 million; operating loss was $7.0 million versus $4.5 million; and net loss was $6.9 million versus $4.5 million.
Material changes and notable developments
- The May 2021 acquisition of Picky Bars added healthy snack products. The purchase price included $11.1 million in cash and 53,133 shares, with total consideration reported at $12.9 million. Picky Bars contributed $3.5 million of sales and $0.2 million of net income after acquisition during 2021.
- Gross margin was broadly stable at 25.6%, compared with 25.5%. Management cited lower inbound freight costs and labor efficiencies, offset by higher outbound freight, co-packing costs, product mix, and inflation.
- Operating loss widened as spending increased, including public-company costs, personnel, insurance, professional fees, product development, and advertising and marketing.
- Cash, cash equivalents, and restricted cash declined from $57.2 million to $23.0 million during the year. Management expects continuing operating losses but stated available resources and expected financing and operating cash flows should meet requirements for at least 12 months under current plans.
Outlook, risks, and other disclosures
- Management plans to pursue growth through expanded retail distribution, repeat and subscription sales, new products, and potential acquisitions. It expects higher 2022 capital expenditures to support manufacturing and production capacity; no quantified earnings or revenue guidance is provided.
- Key risks include ongoing losses and cash burn; concentrated suppliers and international sourcing; commodity, freight, labor, and inflationary cost pressures; reliance on Costco, Amazon, and other distribution partners; competition and customer-acquisition costs; food safety, labeling, and regulatory exposure; and dependence on the founders’ brand and reputation.
- One supplier represented 48% of product purchases in 2021; suppliers in Indonesia, Sri Lanka, and Vietnam accounted for approximately 64% of raw-material and packaging purchases. Costco represented 13% of net sales, down from 23% in 2020; Amazon represented 16%, down from 21%.
- The company disclosed a 2019 recall of certain Performance Mushroom supplements due to overstated iron content. It reported no material legal proceedings. COVID-19 effects remain uncertain.
- Jason Vieth became President and CEO and joined the board on January 31, 2022, succeeding Paul Hodge. Management assessed disclosure controls and internal control over financial reporting as effective; the auditor did not provide an internal-control attestation, consistent with the company’s emerging-growth-company exemption.
Important facts for investors to verify
- Whether revenue growth can translate into improved gross and operating margins as marketing, overhead, freight, and production costs rise.
- Whether operating cash burn and inventory growth remain manageable relative to cash and investments, available credit, and management’s stated 12-month liquidity expectation.
- Whether the Picky Bars acquisition delivers expected growth and margin benefits, and whether goodwill or acquired intangible assets face impairment risk.
- Whether supplier concentration, international sourcing, and dependence on key retail and online channels affect product availability or sales.
- How the CEO transition, dilution from equity compensation, and the company’s continuing losses affect execution and shareholder value.