Laird Superfood Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
LSF$2.22-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001437749-24-015379
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001437749-24-025205
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 65 previous paragraphs and 82 current paragraphs.
52 unchanged; 13 reworded; 11 added; 0 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 15 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Entry into an Accounts Receivable Factoring Agreement
Current report
On May 7, 2024, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). The Factoring Agreement allows the Company to access up to $2 million on a revolving basis. The upfront purchase price for factored accounts is up to 70% of their face value, with the remainder payable to the Company upon collection by the Purchaser. The proceeds will be used to fund general working capital needs. The Company will pay fees, including a funds usage fee (prime rate + 1.5%, minimum 10% per annum) and a collateral monitoring fee (0.05% per month). The Purchaser can require repurchase of uncollectable or ineligible accounts.
Current report
The Factoring Agreement has an initial term of 12 months and will renew annually, unless terminated in accordance with the Factoring Agreement. The Company may terminate the Factoring Agreement at any time upon 30 days prior written notice and payment to Purchaser of an early termination fee equal to 2.0% of the Maximum Amount if terminated during the first 12 months and 1.0% of the Maximum Amount during the subsequent terms.
Current report
The Company has granted a security interest it's personal property to secure the payment and performance of all obligations under the Factoring Agreement. The Factoring Agreement includes customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, and the exercise of remedies upon a breach or default. Such description is qualified in its entirety by reference to the full text of the Factoring Agreement, a copy of which is attached as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Current report
Cost of goods sold was flat at approximately $5.8 million in Q2 2024 and Q2 2023, in a period of sales growth reflecting the full benefit realization of the transition to a variable cost third-party co-manufacturing business model.
Current report
Comparison of the six months ended June 30, 2024* ("YTD 2024”) and June 30, 2023**** (“YTD 2023”)***
Current report
Cash Flows
Current report
The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023
Current report
Cash provided by operating activities in FY2024 was enabled by our greatly improved margins and lower overhead enabled by our transition to a third-party co-manufacturing business model which we executed in 2023, reduced selling, marketing, and administrative spend, and efficient working capital management.
Current report
Cash used in investing activities in FY2024 consists of purchases of office equipment. The cash generated in FY2023 was due to the sale of property and equipment related to the Sisters, Oregon exit.
Current report
Cash used in financing activities consists of common stock related costs. The increase in FY2024 was driven by common stock registration costs incurred, offset in part by stock option exercises.
Reworded paragraphs (13)
Previous wording
Net sales were $9.9 million and $8.1 million, respectively, for the three months ended March 31, 2024 and 2023, representing 22% year-over-year growth. E-commerce channel sales increased by 33% in the first quarter of 2024 compared to the same period last year despite a significant, planned reduction in media spend in the channel. Sales throughAmazon.com increased by 48% year-over-year building on the strong performance in the fourth quarter of 2023, as compared to reduced sales volume during the first quarter of 2023 stemming from out-of-stocks associated with the quality event last year. Direct-to-Consumer ("DTC") sales, onlairdsuperfood.comandpickybars.com, increased by 25% year-over year driven by strong performance in both subscription and repeat customers, average order value, and improved discounts rates due to strategic shifts in our promotional strategies. Wholesale channel net sales increased by 10% compared to the first quarter of 2023 driven by sales growth in club stores, as well as velocity improvement and distribution expansion in grocery, and more efficient promotional spend across the channel.
Current wording
Net sales were $10.0 million and $7.7 million, respectively, for the three months ended June 30, 2024 and 2023, representing 30% growth. For the six months ended June 30, 2024 and 2023, net sales were $19.9 million and $15.8 million, respectively, representing 26% growth. E-commerce channel sales increased by 47% in the second quarter of 2024 and 40% in year-to-date ("YTD") 2024 compared to the same periods in 2023 despite significant, planned reductions in media spend in the e-commerce channel. Sales through Amazon.com increased by 80% in Q2 2024 compared to Q2 2023, and by 63% comparing the 2024 and 2023 year-to-date periods, driven by growth in subscription revenue as well as new customer sales. Direct-to-Consumer ("DTC") sales, on lairdsuperfood.com and pickybars.com, increased by 32% comparing Q2 2024 to Q2 2023 and by 29% comparing YTD periods, driven by strong performance in both subscription and repeat customers, increasing average order value, and improved discount rates due to strategic shifts in promotional strategies. Wholesale channel net sales increased by 9% in both Q2 2024 and YTD 2024 as compared to the corresponding prior year periods, driven by sales growth in club stores, as well as velocity improvement and distribution expansion in grocery, and more efficient promotional spend across the wholesale channel.
Previous wording
Our e-commerce business is two-pronged and consists of DTC (lairdsuperfood.com andpickybars.com) and the use of third-party platforms, such asAmazon.com. For the three months ended March 31, 2024 and 2023, the e-commerce business made up 59% and 55% of our net sales, respectively.Lairdsuperfood.com andpickybars.com are platforms that provide an authentic brand experience for our consumers that drive engagement through educational content and provide feedback for future product development. We view our proprietary database of customers ordering directly from our website as a strategic asset, as it enhances our ability to develop a long-term relationship with these customers. We believe the content on our websites allows Laird Superfood to educate consumers on the benefits of our products and ingredients, while providing a positive customer experience. We believe this experience leads to higher retention rates among repeat users and subscribers, as evidenced by repeat users and subscribers accounting for over three quarters of DTC sales for the three months ended March 31, 2024 and 2023.
Current wording
Our e-commerce channel is comprised of DTC (lairdsuperfood.com and pickybars.com) and Amazon.com. For the three and six months ended June 30, 2024, the e-commerce channel made up 61% and 60% of our net sales, respectively, compared to 54% for the three and six months ended June 30, 2023. Amazon.com accounted for 39% and 38%, respectively, of e-commerce channel sales, as compared to 32% for the corresponding 2023 periods. Lairdsuperfood.com and pickybars.com are platforms that provide an authentic brand experience for our consumers that drive engagement through educational content and provide feedback for future product development. We view our proprietary database of customers ordering directly from our website as a strategic asset, as it enhances our ability to develop a long-term relationship with these customers. We believe the content on our websites allows Laird Superfood to educate consumers on the benefits of our products and ingredients while providing a positive customer experience. We believe this experience leads to higher retention rates among repeat users and subscribers, as evidenced by repeat users and subscribers accounting for over three quarters of DTC sales for the three and six months ended June 30, 2024 and 2023.
Previous wording
For the three months ended March 31, 2024 and 2023, wholesale made up 41% and 45% of our net sales, respectively. Laird Superfood products are sold through a diverse set of retail channels, including conventional, natural, and specialty grocery stores, and club stores. The diversity of our retail channel represents a strong competitive advantage for Laird Superfood and provides us with a larger total addressable market than would be considered normal for a food brand that is singularly focused on the grocery market.
Current wording
For the three and six months ended June 30, 2024, the wholesale channel made up 39% and 40% of our net sales, respectively, compared to 46% for the three and six months ended June 30, 2023. Laird Superfood products are sold through a diverse set of retail channels, including conventional, natural, and specialty grocery stores, and club stores. The diversity of our retail channel represents a strong competitive advantage for Laird Superfood and provides us with a larger total addressable market than would be considered normal for a food brand that is singularly focused on the grocery market.
Previous wording
We accrue substantial economic value from repeat customers of our products who consistently re-order our products. The pace of our growth will be affected by the repeat usage dynamics of existing and newly acquired customers.
Current wording
We accrue substantial economic value from repeat customers who consistently re-order our products. The pace of our growth will be affected by the repeat usage dynamics of existing and newly acquired customers.
Previous wording
The following table summarizes our results of operations for the periods indicated:
Current wording
The following tables summarize our results of operations for the periods indicated:
Previous wording
Net sales increased to $9.9 million in Q1 2024 from $8.1 million in Q1 2023, representing 22% growth year-over-year. The increase was primarily driven by a 33% increase in the e-commerce channel in sales through both platforms,Amazon.com and DTC, as well as reductions in promotional spend in DTC, as compared to reduced sales volume in Q1 2023 from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 10% driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Current wording
Net sales increased to $10.0 million in Q2 2024 from $7.7 million in Q2 2023, representing 30% growth year-over-year. The increase was primarily driven by a 47% increase in sales in the e-commerce channel through both platforms, Amazon.com and DTC, despite a planned reduction in promotional spend in DTC, as compared to reduced sales volume in the 2023 period from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 9% driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Previous wording
General and administrative expenses decreased to $2.2 million in Q1 2024 from $3.1 million in Q1 2023, primarily driven by lower personnel costs and broad, strategic reductions in spending.
Current wording
General and administrative expenses decreased to $2.1 million in Q2 2024 from $2.7 million in Q2 2023, primarily driven by lower personnel costs and broad, strategic reductions in spending.
Previous wording
Cost of goods sold decreased to $5.9 million in Q1 2024 from $6.2 million in Q1 2023, a reduction of 5%, which reflects the full benefits realization of the transition to a variable cost third-party co-manufacturing business model, which was partially offset by higher sales volume.
Current wording
Cost of goods sold decreased to $11.8 million in YTD 2024 from $12.1 million in YTD 2023, which reflects the full benefits realization of the transition to a variable cost third-party co-manufacturing business model, which was partially offset by higher sales volume.
Previous wording
Gross profit increased to $4.0 million in Q1 2024 from $1.9 million in Q1 2023. Gross margin improved to 40.0% in Q1 2024 from 23.1% in Q1 2023. This improvement reflects increased net sales as well as the full benefits of the transition to a variable cost third-party co-manufacturing business model and a reduction in trade discounts due to improved promotional efficiencies and elevated trade spend in the prior year associated with the quality event that occurred in Q1 2023.
Current wording
Gross profit increased to $8.1 million in YTD 2024 from $3.7 million in YTD 2023. Gross margin improved to 40.9% in YTD 2024 from 23.7% in YTD 2023. This improvement reflects increased net sales as well as the full benefits of the transition to a variable cost third-party co-manufacturing business model and a reduction in trade discounts due to improved promotional efficiencies and elevated trade spend in the prior year associated with the quality event that occurred in 2023.
Previous wording
Sales and marketing expenses were $2.9 million in Q1 2024 compared to $3.1 million in Q1 2023, driven by planned reductions in marketing and advertising spend.
Current wording
Sales and marketing expenses were $5.3 million in YTD 2024 compared to $5.9 million in YTD 2023, driven by planned reductions in marketing and advertising spend.
Previous wording
As of March 31, 2024, we have an accumulated deficit of $107.3 million, which includes operating losses of $1.1 million and $4.3 million for Q1 2024 and Q1 2023, respectively. We expect to incur additional operating losses as we continue efforts to grow our business. However, after taking several strategic steps in 2023 and 2022, we have significantly optimized spending, improved gross margins, and significantly reduced cash burn in an effort to bring the business closer to breakeven and profitability in future quarters, with the first quarter of net income and positive cash flows from operations realized in the fourth quarter of 2023. These steps included, among others, transitioning out of in-house manufacturing to a variable cost third-party co-manufacturing business model, closing manufacturing facilities and offices in Sisters, Oregon, several rounds of organizational restructuring to optimize our headcount costs, and reducing marketing and administrative investment through eliminating non-essential spending. We will continue to seek to optimize spending and expand gross margins. Additionally, our current business plan is to continue to utilize inventory management to reduce working capital. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering ("IPO"), lines of credit, and term loans. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.
Current wording
As of June 30, 2024, we had an accumulated deficit of $107.6 million, which includes operating losses of $1.4 million and $8.0 million for YTD 2024 and YTD 2023, respectively. While we expect to incur additional operating losses as we continue efforts to grow our business, the strategic business transformation that we have undertaken over the last two years has become evident in our significant gross margin expansion, optimized investments in trade and marketing, lower selling, general, and administrative spending, and reduced cash burn. We will continue to seek opportunities to optimize spending, expand gross margins, and free up cash flow through efficient working capital management. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering ("IPO"), lines of credit, and term loans. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.
Previous wording
As of March 31, 2024 and December 31, 2023, we had $7.3 million and $7.7 million, respectively, of cash-on-hand, and total net working capital of $11.3 million and $12.0 million for the same periods. We have no significant unused sources of liquid assets outside of our working capital.
Current wording
As of June 30, 2024 and December 31, 2023, we had $7.8 million and $7.7 million, respectively, of cash-on-hand, and total net working capital of $11.4 million and $12.0 million for the same periods. As of June 30, 2024, we had access to up to $0.8 million of advances under an accounts receivable factoring agreement, of which $0.1 million had been utilized and was due to the Purchaser. We have no significant unused sources of liquid assets outside of our working capital.
Previous wording
Based on our current business plans, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next eighteen months. In the future, we may raise funds by issuing debt or equity securities, or securities convertible into or exchangeable for our common stock. Such financing and other potential financing may result in dilution to stockholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all.
Current wording
Based on our current business plans, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the eighteen months following the date of this filing. In the future, we may raise funds by issuing debt or equity securities, or securities convertible into or exchangeable for our common stock. Such financing and other potential financing may result in dilution to stockholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Gross profit increased to $4.2 million in Q2 2024 from $1.9 million in Q2 2023. Gross margin improved to 41.8% in Q2 2024 from 24.3% in Q2 2023. This expansion of gross margin is driven by full benefit realization of the transition to a third-party co-manufacturing model and a reduction in trade discounts due to a pullback in inefficient trade spend and elevated trade spend in the prior year associated with the quality event that occurred in 2023.
Current report — wording carried from elsewhere
Sales and marketing expenses were $2.4 million in Q2 2024 compared to $2.8 million in Q2 2023, driven by planned reductions in marketing and advertising spend as we improve our media efficiency.
Current report — wording carried from elsewhere
Other income is composed of interest income and expense, rental income, and other non-operating gains and losses. The decrease in other income was driven by decreases in dividend income on money market funds as the amounts carried in those accounts decreased.
Current report — wording carried from elsewhere
The following tables summarize our results of operations for the periods indicated:
Current report — wording carried from elsewhere
Net sales increased to $19.9 million in YTD 2024 from $15.8 million in YTD 2023, representing 26% growth year-over-year. The increase was primarily driven by a 40% increase in the e-commerce channel in sales through both platforms, Amazon.com and DTC, as well as reductions in promotional spend in DTC, as compared to reduced sales volume in 2023 from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 9% in the six months ended June 30, 2024 as compared to the corresponding 2023 period, driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Current report — wording carried from elsewhere
General and administrative expenses decreased to $4.3 million in YTD 2024 from $5.8 million in YTD 2023, primarily driven by lower personnel costs and broad, strategic reductions in spending.