Category: LSF

SISTERS, Ore.–(BUSINESS WIRE)–Laird Superfood, Inc. (NYSE American: LSF) (“Laird Superfood” or the “Company”) today announced that the Company will participate in two upcoming virtual investor conferences. Founders Laird Hamilton and Gabrielle Reece will take part in a fireside chat as well.

Tomorrow, December 3, 2020, Paul Hodge, Co-Founder and Chief Executive Officer, and Valerie Ells, Chief Financial Officer, will present at the Canaccord Genuity AgriFood Tech Innovation Virtual Forum at 11:00 a.m. ET, or 8:00 a.m. PT. The presentation can be accessed live at the “Events & Presentations” section of the Laird Superfood Investor Relations site at https://investors.lairdsuperfood.com. The replay will be archived online for 7 days.

On Friday, December 11, 2020, Hodge, Ells, and Founders Laird Hamilton and Gabrielle Reece will take part in a fireside chat on Plant-Based Food at 1:15 p.m. ET, or 10:15 a.m PT, at the Roth Virtual Deer Valley Consumer Event. Company management will also host investor meetings throughout the day. For more information, please contact your Roth representative, or visit the event website here.

About Laird Superfood (NYSE American: LSF)

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.

Laird Superfood, Inc. (LSF) recently launched its IPO, raising $67 million for its portfolio of plant-based packaged beverage and nutritional supplements. The company was founded in 2015 by Big Wave pro-surfing pioneer Laird Hamilton and his wife Gabby Reece, a former professional volleyball player. The pair are recognized for their social media presence as nutritional experts and an embodiment of the healthy lifestyle the brand represents. Strong sales momentum, a growing product lineup, distribution expansion opportunities, and an already loyal customer following support a positive long-term outlook for the company. We are bullish on shares of LSF which offer targeted exposure to a segment of food products benefiting from strong demand for healthy alternatives in key categories.

(Seeking Alpha)

LSF Background

Laird Superfoods priced its IPO at $22.00 on September 22^nd, issuing a total of 3,047,500 shares. The stock surged by as much as 90% on the debut and is already up over 110% from the offering price in just the past 2 months. Momentum is being supported by impressive growth with sales reaching $22.9 million over the past year, climbing 106% through Q3 compared to the period in 2019. While the company remains unprofitable with a negative EPS loss of $0.86 per share during the last quarter, the focus is on continued investments towards manufacturing and distribution to support the growing demand.

(Source: Company IR)

Currently, the company has three product categories including “Coffee Creamers,” “Hydration and Beverage Enhancing Supplements” and “Coffee, Tea, and Hot Chocolate Products” across 34 unique retail SKUs. The creamers are made with plant-based ingredients like turmeric, cocoa, coconut, and mushrooms designed to add nutritional value and enhance the taste of beverages. These can work in conjunction with the company’s own line of organic Peruvian ground coffee which is touted for being ethically and sustainably sourced. Supplements like the company’s plant-based protein powders and freeze-dried fruit mixes are marketed as a healthy alternative to traditional sugar derived sports drinks.

(Source: Company IR)

Currently, the coffee creamers represent about 70% of the business, with sales of $5.2 million in Q3, up 136% y/y. Hydration and beverage supplements did $1 million in sales in Q3, up from $0.6 million in Q3 2019. The coffee, tea, and hot chocolate products represented the strongest growth with sales up 267% y/y in the last quarter. The company continues to launch new products including flavored “Pili nuts” which are an exotic nut native to Southeast Asia.

(Source: Company IR)

A big part of the success and growth momentum has been based on the distribution channels and nationwide availability in the United States. The products are available on Amazon.com (AMZN) and select Whole Foods grocery stores along with The Kroger Co. (KR) stores. The products are currently found at 7.2k retail locations. Sales from the company’s own website, Lairdsuperfood.com, grew 122% y/y in Q3 and feature a subscription program that facilitates repeat orders.

Looking ahead, management sees several growth drivers that can maintain brand momentum. A continued expansion of the company’s distribution footprint will offer greater availability in different retail channels. The company intends to support brand awareness and increase market penetration. In terms of gross profit, the company highlights how it currently still has excess production capacity, which provides some flexibility to grow into and will drive higher margins going forward. There is an expectation that operating expenses will grow by less than sales as the company benefits from increased scale.

While the company does not issue official earnings guidance, longer-term the target is for gross margin to climb above 40%, from 28.4% in Q3. An EBITDA margin in the mid-teens would support potential profitability.

(Source: Company IR)

Finally, the company ended the quarter with $73 million in cash given the IPO proceeds against just $50k in long-term debt on the balance sheet. The company intends to use the cash to support general working capital and corporate purposes but has not ruled out the ability to make strategic acquisitions. Overall, it’s a lot of cash that supports the financial profile of the company and it will be interesting to see how it is utilized.

Analysis and Forward-Looking Commentary

The old business adage of “If you build it, they will come” is relevant here as it relates to Laird Superfood, which in a matter of a few years has transformed into a publicly-traded company with widescale distribution at major retailers. In many cases, the success of a business in this segment comes down to marketing and brand awareness which the company appears to be excelling at.

(S1 Filing)

The strategy of building off founder Laird Hamilton’s image and legacy as an athlete and fitness expert adds credibility to the product that helps it differentiate itself from just another corporate creation with the right buzzwords. People familiar with Laird and his wife Gabby as icons in their sport should recognize the product with their name on it as the ultimate endorsement of its quality and value.

The reality here is that if it tastes good and fills the market demand for healthy plant-based alternatives to traditional processed consumer staples, there is every reason to believe customers will remain loyal and make repeat purchases. Looking ahead, we expect the same level of brand traction and momentum to be replicated as the company expands into new markets.

While there is competition in these categories from other health-conscious brands and independent labels, in many ways Laird benefits from its visibility as a public company that supports brand awareness and enhances marketing opportunities. Just within the category of coffee creamers, Laird management highlights that this is currently a $3.6-billion addressable market, highlighting the growth opportunity if the company can just capture a fraction of that.

(Source: Company IR)

In terms of valuation, the stock is currently trading at a price to sales multiple of 18x, considering the market cap of $428 million on $22.9 million in sales over the past year. While this measure is objectively expensive, keep in mind that revenues were up 118% y/y in the last quarter which justifies a premium. Also, within the market cap, nearly 17% is the balance sheet cash position.

According to consensus estimates, LSF is on track to reach $24.3 million in revenues for the full-year 2020, representing an 85% growth compared to 2019. The sales growth trend is expected to remain elevated at 73% y/y growth in 2021, and 48.6% in 2022 based on an average of three published estimates for each year. By the end of 2023, if the company can approach the forecast for $93 million in sales that year, the stock would be trading at a more reasonable 4.6x sales. Again, it’s a long road to get there and Laird will still need to prove itself that it can execute its growth strategy but the market appears to be giving the company the benefit of the doubt.

(Seeking Alpha)

Final Thoughts

What we want to see over the next couple of quarters is the growth momentum being maintained and some improvement in the margins. To the upside, announcements related to new product launches or expanded global distribution could be positive catalysts for the stock. This risk here is that growth underperforms, and the brand loses its sales momentum. While not expected, significantly weaker-than-expected results could force a reassessment of the long-term outlook and pressure the stock with a bearish sentiment.

Considering the exceptional rally in shares thus far, our take is that it’s likely a bit too late to jump in but this isn’t a stock worth betting against. The market likes to reward high-growth stocks and the top-line momentum from LSF this year is among the strongest of any food and beverage or consumer staples stock. By this measure, we rate shares of LSF as a hold with a year-ahead price target of $50.00. The stock remains speculative and high-risk, given the valuation. Investors could consider sitting on the sidelines and waiting for a potential entry point on any dip under $40.00 per share which many offer a better risk-adjusted buying opportunity.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.