Laird: “Unsteady” Progress in Turnaround, Q2 Net Loss at $3.5M

Laird Superfood reported a net loss of $3.5 million during its second quarter as it continues its long-term turnaround effort, a process CEO Jason Vieth described to investors as “by nature an unsteady progression.”

The Yakima, Washington-based plant-based food and powdered drink company reported net sales of $7.7 million for the quarter ending June 30, down from $8.7 million the year prior. The decline was heavily impacted by a 20.1% year-over-year drop in ecommerce sales, which accounted for 54% of total net sales in the quarter.

Meanwhile, wholesale revenue (down 2.6% year-over-year) made up 46% of net sales, driven by distribution gains in the retail channel, pricing increases, as well as velocity improvements behind new packaging and a re-branding campaign launched earlier this year.

“I am happy to share that we continued to make strong progress against our strategic initiatives and toward breakeven profitability during Q2,” said Vieth in a prepared statement. “As expected, our transition to an outsourced manufacturing and distribution model has already yielded strong improvements in our cost of goods sold, which fell by 18 points year-over-year as we fully overcome the raw material challenge we had reported during the first quarter results.”

Laird’s gross margin rose sequentially by 120 basis points and improved 6.1 points versus the same period last year. During a call with investors, CFO Anya Hamill said the year-over-year margin expansion was driven by the brand’s supply chain transition to an asset-light third-party co-manufacturing and fulfillment model.

With its supply chain now operating through a variable cost model – following the closing of its Sisters, Oregon production facility in October – Hamill told investors she expects Laird’s gross margin expansion to ramp up further into the 30% plus range in the back half of the year.

In the quarter, the plant-based food and powdered drink company reported a record low cash burn of $1.4 million, which continues to decelerate on both an annual basis and sequentially versus year prior periods. Since joining the company as CEO in January 2022, Vieth has been committed to slowing the burn rate and improving efficiency and market positioning.

Looking ahead, the company has an “exciting lineup” of products set to hit store shelves in Q3 as well as its biggest seasonal program to date. According to Vieth, Laird also has a series of initiatives in its pipeline to further grow brand awareness and drive continued sales velocity.

Separately, the company announced its new partnership with podcast host and former U.S. Navy Seal Shawn Ryan, which it believes will enable the brand to reach a “largely untapped demographic” for its products.

The podcast host made headlines in February when he was served a cease and desist letter from the Government of Canada, the Canadian Armed Forces (CAF) and the Department of National Defence (DND) after airing a podcast interview with former Canadian counterterrorism sniper Dallas Alexander, disclosing classified information. The letter demanded the episode be removed from all streaming platforms.

“We are excited to be working with Mr. Ryan to share the positive health benefits of our food with millions of new potential [consumers] for the brand,” said Vieth during the call. “We look forward to being able to share other big marketing ideas in the big future.”

Laird now expects FY 2023 net sales to be in the range of $34 million to $37 million compared to its previous guidance of $37 million to $39 million and gross margin in the range of 27% to 29% excluding any one-time extraordinary costs.

“We’re getting now to where we have a business that can return gross margin dollars as we’re selling incrementally in a way that starts to support the marketing,” Vieth told investors. “It’s an exciting opportunity for us to get back to you every quarter to share the progress we’re making and against that strategy that we outlined and really reducing our P&L.”