Sow Good Inc.(SOWG)

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Sow Good Inc.(SOWG) - 2025 Q1 - Earnings Call Transcript
2025-05-14 15:02
Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% year-over-year [8] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [9] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [9] - Cash and cash equivalents at the end of Q1 2025 were $1.6 million, down from $3.7 million at the end of 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024 to Q1 2025, indicating a recovery trend [4] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [5] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [26] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [28][30] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [11] - Strategic actions include reducing overhead costs, implementing automation in packaging, and postponing certain production activations to align with demand [12][13] - The company is also pursuing international expansion, having launched products in the Middle East with positive initial orders [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a gradual recovery in sales, expecting Q2 to show modest improvement over Q1 [21] - The company is focused on maintaining quality and innovation while navigating a competitive landscape with both large and small competitors [22] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in the recovery plan [10][13] - The management team is actively evaluating strategies to improve cash position, including converting inventory to cash [50] Q&A Session Summary Question: Can you share insights on consumer enthusiasm and retail inventory? - Management noted a slow increase in sell-through data, with a return to normal reorder cadences as consumers return to the brand after trying competitors [26][30] Question: What is the current number of retail doors? - The company is currently in approximately 1,900 to 2,000 retail doors [34] Question: How is the quality of the inventory and plans for working it down? - Management indicated that most heat-affected inventory has been identified and removed, with a focus on working through remaining inventory strategically [35][36] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, while larger CPGs are not performing as expected, indicating room for improvement in product quality [38][40] Question: What are the plans for spare capacity in production? - The company is exploring opportunities for private labeling and home manufacturing to utilize spare capacity effectively [46] Question: What strategies are in place to improve cash position? - Management is focused on converting inventory to cash and evaluating all strategies to enhance cash flow [50]
Sow Good Inc.(SOWG) - 2025 Q1 - Earnings Call Transcript
2025-05-14 15:00
Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $2.5 million, a significant decrease from $11.4 million in Q1 2024, primarily due to softening demand and increased competitive pressure [7] - Gross profit in Q1 2025 was $1.1 million compared to $4.6 million in the same period last year, with a gross margin improvement to 45% from 41% due to lower cost of goods sold [8][10] - Net loss for Q1 2025 was $2.6 million, or a loss of $0.23 per diluted share, compared to net income of $511,000, or $0.06 per diluted share, in Q1 2024 [10] - Adjusted EBITDA for Q1 2025 was negative $800,000, down from $2.5 million in Q1 2024 [10] - Cash and cash equivalents decreased to $1.6 million from $3.7 million as of December 31, 2024 [10] Business Line Data and Key Metrics Changes - The company reported a 79% increase in revenue from Q4 2024, indicating a recovery trend despite the overall decline year-over-year [5] - The freeze-dried candy line has seen renewed consumer enthusiasm, although competitive pressure from larger CPG companies remains a challenge [6] Market Data and Key Metrics Changes - The company is experiencing a slow increase in sell-through data, with units per door rising from 12-13 to 16 over recent weeks [27] - Retail partners like Five Below and Ace Hardware are showing positive initial demand and reorders, indicating a return to normal reorder cadences [29][31] Company Strategy and Development Direction - The company is focusing on cost savings, cash conservation, and expanding candy distribution while exploring new category opportunities [12] - Strategic actions include reducing overhead costs, enhancing operational efficiency through automation, and postponing certain production activations to align with demand [13][14] - The company plans to enter new categories such as beef jerky and freeze-dried yogurt snacks, emphasizing clean label ingredients [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, expecting modest improvement in Q2 over Q1 as new partnerships take hold [23] - The company acknowledges ongoing challenges but believes it is positioning itself to emerge stronger through innovation and category expansion [24] Other Important Information - The company has entered into exchange agreements with noteholders to extend maturities by five years, reflecting confidence in its recovery plan [11][14] - Initial orders from the Middle East market exceeded expectations, presenting a significant growth opportunity [20] Q&A Session Summary Question: What is the trend in weekly or monthly velocities and retail inventory position? - Management noted a slow increase in sell-through data, with units per door rising to 16, and excess inventory at Five Below is being worked through successfully [27][29] Question: How does the company view its inventory quality and expectations for the next quarters? - Management indicated that most heat-affected inventory has been identified and removed, and they have a two-year shelf life on most products, allowing time to work through remaining inventory [37][38] Question: What are the competitive dynamics with larger CPG companies? - Management observed that smaller competitors have exited the space, and while larger CPGs have entered, they are not performing as expected, with significant declines in their sell-through rates [41][43]
Sow Good Inc.(SOWG) - 2025 Q1 - Quarterly Report
2025-05-14 12:55
PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 financial statements show a shift from $0.51 million net income to a $2.57 million net loss, driven by a 78% revenue decline and indicating a going concern risk [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2025, total assets slightly decreased to $52.7 million, primarily due to a $2.1 million reduction in cash, while inventory increased and equity declined due to net loss Condensed Balance Sheet Data (in USD) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,615,108 | $3,723,440 | | Inventory, net | $21,142,831 | $20,313,315 | | Total current assets | $24,625,698 | $25,076,140 | | Total assets | $52,723,185 | $54,695,731 | | Total current liabilities | $6,750,942 | $7,364,541 | | Total liabilities | $21,934,075 | $22,707,670 | | Total stockholders' equity | $30,789,110 | $31,988,061 | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) Q1 2025 saw a net loss of $2.57 million, a significant reversal from Q1 2024's $0.51 million net income, primarily due to a 78% revenue decrease Statement of Operations Summary (in USD) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $2,476,922 | $11,406,320 | | Gross Profit | $1,102,723 | $4,629,438 | | Total Operating Expenses | $3,517,911 | $3,700,181 | | Net Operating Income (Loss) | ($2,415,188) | $929,257 | | Net Income (Loss) | ($2,571,054) | $510,588 | | Basic Net Loss per Share | ($0.23) | $0.08 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2025 was $2.0 million, a reversal from Q1 2024's $1.3 million provided, leading to a $2.1 million decrease in cash and equivalents Cash Flow Summary (in USD) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($2,000,542) | $1,297,651 | | Net cash used in investing activities | ($107,790) | ($630,332) | | Net cash provided by financing activities | $0 | $3,737,999 | | Net change in cash and cash equivalents | ($2,108,332) | $4,405,318 | [Notes to the Condensed Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements%20(Unaudited)) Notes detail the company's freeze-dried candy business, accounting policies, a 'Going Concern' warning due to a $65 million deficit, high customer/supplier concentration, and a $2.8 million debt restructuring - The company's business is now entirely focused on its freeze-dried candy and ice cream product lines, having discontinued its previous smoothie, snack, and granola products, with production capacity expanded to six freeze driers operational[29](index=29&type=chunk) - There is substantial doubt about the Company's ability to continue as a going concern, given its accumulated deficit of **$65 million** and a net loss of **$2.57 million** for the quarter, with management outlining plans for recovery including debt restructuring, cost reductions, and exploring new markets[60](index=60&type=chunk)[61](index=61&type=chunk) - The company exhibits significant customer and supplier concentration, with the top three customers accounting for **83.2% of revenues** and the top three suppliers for **76% of purchases** in Q1 2025[47](index=47&type=chunk)[48](index=48&type=chunk) - Subsequent to the quarter end, on April 28, 2025, the company restructured **$2.8 million** of outstanding and accrued debt into new senior convertible promissory notes maturing in 2030[126](index=126&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 78% Q1 2025 revenue decline and $2.6 million net loss to intense competition and reduced demand, highlighting liquidity concerns and a $2.8 million debt restructuring - The company operates as a freeze-dried candy and snack manufacturer with **21 candy SKUs** and **3 ice cream SKUs**, sold through an omnichannel strategy in approximately **3,000 retail outlets**[128](index=128&type=chunk) - A key challenge is competition from larger players with greater resources, which has led to the loss of significant customers and a substantial reduction in revenue[135](index=135&type=chunk) Results of Operations Comparison (in USD) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $2,476,922 | $11,406,320 | (78%) | | Gross profit | $1,102,723 | $4,629,438 | (76%) | | Net income (loss) | ($2,571,054) | $510,588 | (604%) | - The **78% decrease in revenue** was driven by significantly reduced demand due to increased competitive and market pressure by large competitors[150](index=150&type=chunk) - As of March 31, 2025, the company had working capital of **$17.9 million** but only **$1.6 million** in cash and cash equivalents, down from **$3.7 million** at year-end 2024[162](index=162&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company anticipates no significant commodity or interest rate risk, but expects foreign currency risk to increase with international expansion into Mexico, Colombia, and China - The company does not anticipate significant exposure to commodity price or interest rate risk[176](index=176&type=chunk)[177](index=177&type=chunk) - Foreign currency risk is expected to increase with the growth of international operations, particularly in Mexico, Colombia, and China[178](index=178&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[179](index=179&type=chunk) - No material changes were made to the company's internal control over financial reporting during the first quarter of 2025[180](index=180&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company does not anticipate any current legal proceedings to materially adversely affect its financial position, results, or cash flows - The company does not expect any current legal proceedings to have a material adverse effect on its financials[183](index=183&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential tariffs impacting costs and margins, and substantial doubt about the company's ability to continue as a going concern due to its $65 million accumulated deficit and insufficient cash - Significant tariffs could materially increase costs, decrease margins, and adversely affect the business[184](index=184&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern, with cash of **$1.6 million** and an accumulated deficit of **$65 million** noted as insufficient to fund operations without additional financing as of March 31, 2025[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[187](index=187&type=chunk) [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 arrangements during the period - None of the Company's directors or officers adopted or terminated any Rule 10b5-1 plans[190](index=190&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and various corporate and financial agreements
Sow Good Reports First Quarter 2025 Results
Globenewswire· 2025-05-14 12:00
IRVING, Texas, May 14, 2025 (GLOBE NEWSWIRE) -- Sow Good Inc. (Nasdaq: SOWG) ("Sow Good" or "the Company"), a trailblazer in the freeze dried candy and treat industry, is reporting financial and operating results for first quarter ended March 31, 2025. "We're encouraged by the progress we made in the first quarter of 2025, particularly the successful everyday launches at Winn-Dixie, Ace Hardware, and Orville Hardware, as well as Holiday launches at Albertsons" said Claudia Goldfarb, CEO of Sow Good. "While ...
Sow Good Unveils New Freeze Dried Caramel and Raw Caramel at Sweets & Snacks Expo
Globenewswire· 2025-05-13 20:15
Core Insights - Sow Good Inc. is launching two new products: Freeze Dried Caramel and Raw Caramel at the 2025 Sweets & Snacks Expo [3] - The new products will be available for purchase starting June 2025 through the company's website and retail partners [4] - Sow Good Inc. focuses on innovative freeze drying techniques to transform traditional confections, aiming to deliver unique textures and flavors [5] Product Details - Freeze Dried Caramel: A product designed to offer a unique texture and flavor experience [3] - Raw Caramel: Another innovative offering that complements the freeze dried variant [3] - Seasonal SKUs will also be launched at the end of the second quarter [3] Company Background - Sow Good Inc. is based in Dallas, TX, and is dedicated to reimagining classic treats through innovative techniques [5] - The company emphasizes the production of its confections in the USA [4]
Sow Good to Hold First Quarter 2025 Conference Call on Wednesday, May 14, 2025 at 10:00 a.m. ET
Globenewswire· 2025-04-30 20:05
Core Viewpoint - Sow Good Inc. is set to hold a conference call on May 14, 2025, to discuss its Q1 2025 financial results, showcasing its commitment to transparency and investor engagement [1][2]. Company Overview - Sow Good Inc. is a U.S.-based manufacturer specializing in freeze dried candy and snacks, utilizing proprietary freeze-drying technology to create innovative and flavorful treats [4]. - The company focuses on five core pillars: innovation, scalability, manufacturing excellence, meaningful employment opportunities, and food quality standards [4]. Conference Call Details - The conference call will take place at 10:00 a.m. Eastern time, with registration required for phone access [2]. - The call will be broadcast live and available for replay on the company's website [3]. Investor and Media Inquiries - For investor inquiries, Cody Slach from Gateway Group, Inc. can be contacted at 1-949-574-3860 or via email [5]. - Media inquiries can be directed to Sow Good, Inc. at 1-214-623-6055 or through their press email [5].
Sow Good Inc.(SOWG) - 2024 Q4 - Annual Report
2025-03-27 12:36
Product Development and Manufacturing - Sow Good launched its freeze dried candy product line in Q1 2023, with 21 SKUs as of December 31, 2024[42]. - The company operates a 20,945 square foot freeze drying facility in Irving, Texas, capable of producing up to 24 million units of freeze dried candy annually[25]. - Sow Good's Crunch Cream line, launched in October 2023, includes 3 SKUs of freeze dried ice cream products[43]. - The company has invested over $10 million in developing its manufacturing facility and freeze drying equipment[33]. - The company utilizes a proprietary freeze drying process that removes up to 99% of moisture, enhancing flavor and texture[24]. - The company has six operational freeze driers in its Irving, Texas facility, with plans to have an additional six operational by the end of 2025[61]. - The company plans to vertically integrate operations to enhance manufacturing efficiency and control quality[40]. - Sow Good is exploring adjacent product categories, such as yogurt snacks, to broaden its product offerings[44]. Market Presence and Distribution - Sow Good's products are available in approximately 3,000 retail outlets across the U.S., with less than 2% of sales coming from e-commerce as of December 31, 2024[23]. - The company estimates its products are available in approximately 3,000 retail locations across the United States, providing a strong competitive advantage and a larger total addressable market (TAM)[62]. - The company has a diverse omnichannel distribution strategy, including retailers, e-commerce, and distributors, enhancing its market reach[60]. - The company believes its existing treats could represent a multi-billion-dollar TAM, focusing on distribution expansion and increased marketing to drive growth[65]. Financial Performance and Projections - Revenue increased from approximately $88.4 thousand in 2021 to approximately $16.1 million in 2023, with a projected $32.0 million for 2024[115]. - Sow Good Inc. incurred net losses of approximately $3.6 million and $3.1 million for the years ended December 31, 2024 and 2023, respectively[109]. - Significant revenue declines were observed in the third and fourth quarters of 2024, attributed to increased competition and loss of significant customers[115][130]. - The company anticipates significant increases in operating expenses as it seeks to expand retail distribution and invest in brand awareness and production capacity[109]. Regulatory and Compliance Issues - The company operates under a comprehensive food safety plan compliant with the Food Safety Modernization Act (FSMA), ensuring rigorous food safety and quality management[54]. - Sow Good's operations are subject to extensive regulation by the FDA and other authorities, which may impact compliance and operational costs[106]. - The company has instituted audits to address allergen control and sanitation, ensuring compliance with food safety regulations[58]. - Noncompliance with food product quality regulations could result in enforcement actions, including product recalls and legal liabilities[160]. - The company is subject to numerous privacy and data security regulations, and failure to comply could result in significant liability and reputational harm[189]. Challenges and Risks - The retail food and non-chocolate confectionary segments are highly competitive, posing risks to the company's market position[106]. - The competitive landscape is intensifying, with new entrants potentially reducing market share and revenue[126][136]. - The company faces challenges in managing growth effectively, which could adversely affect financial results and operational execution[121][124]. - The company relies on a small number of suppliers for raw materials, which could disrupt its supply chain[106]. - The company may encounter challenges in successfully integrating newly acquired products or businesses, which could adversely affect profitability and operational efficiency[223]. Employee and Operational Considerations - The company has 86 full-time employees as of December 31, 2024, and provides a living wage, full benefits, and stock options to all employees[76]. - Labor costs are a significant component of operating expenses, and any increase in labor costs or shortages could adversely affect growth and financial results[176]. - The company relies heavily on the continued efforts of senior management, and loss of key personnel could severely disrupt operations[216]. Marketing and Brand Management - The company manages all marketing activities in-house, focusing on authentic engagement with its community through social media and its website[67]. - Brand visibility and reputation are critical for growth, with potential negative impacts from product quality issues and public perception[141][142]. - The effectiveness of the company's digital marketing strategy is crucial for brand positioning and customer retention, with risks associated with negative publicity and compliance with legal requirements[177]. Future Outlook and Capital Needs - Future growth depends on factors such as increasing sales and marketing efforts, expanding production capacity, and managing supply chain costs[116][122]. - Future capital needs may require raising additional funds, which could lead to dilution of existing stockholder equity[114]. - Economic conditions and consumer spending trends are critical, with potential declines in revenue during economic turmoil or uncertainty impacting the company's business strategy[220]. Miscellaneous - The company has not paid dividends on its common stock and does not intend to do so in the foreseeable future[106]. - The market price of Sow Good's common stock is likely to be highly volatile and subject to wide fluctuations[106]. - The company maintains a cybersecurity incident response plan to manage risks from cybersecurity threats, overseen by an internal IT specialist[231].
Sow Good Inc.(SOWG) - 2024 Q4 - Earnings Call Transcript
2025-03-21 22:27
Financial Data and Key Metrics Changes - Revenue in Q4 2024 was $1.4 million, down from $9.5 million in Q4 2023, while full-year revenue increased to $32 million from $16.1 million in 2023 [13][14] - Gross loss for Q4 2024 was $1.2 million, compared to a gross profit of $3.4 million in Q4 2023, resulting in a gross margin of negative 88% versus 36% in the prior year [14][15] - Net loss in Q4 2024 was $4.2 million or negative $0.40 per diluted share, compared to net income of $1.3 million or $0.26 per diluted share in Q4 2023 [17] - Adjusted EBITDA for Q4 2024 was negative $2.8 million, compared to $2.3 million for the same period in 2023, while full-year adjusted EBITDA was $4.1 million compared to $0.1 million in 2023 [18] Business Line Data and Key Metrics Changes - The decline in Q4 revenue was attributed to increased competitive pressure, shipment pauses, and higher promotional activity [14] - Full-year gross profit increased significantly to $13 million from $4.5 million in 2023, with a gross margin for the year at 41% compared to 20% in 2023 [15] Market Data and Key Metrics Changes - The company faced challenges from low-quality imports from China and increased competition from major candy companies like Mars and Hershey [7][8] - Despite challenges, there are early signs of recovery in the sales pipeline for candy in Q1 2025 [9] Company Strategy and Development Direction - The company aims to expand its retail footprint, optimize manufacturing, and launch new product categories, including beef jerky and freeze-dried yogurt snacks [11][27] - Cost-saving initiatives and operational efficiencies are prioritized, with a focus on maintaining high food safety standards [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2024 but expressed confidence in navigating them and emphasized a strategic path forward in the freeze-dried candy market [9][11] - The company is optimistic about Q1 2025 being marginally better than Q4 2024, with expectations for Q2 to outperform Q1 [37] Other Important Information - The company ended 2024 with cash and cash equivalents of $3.7 million, up from $2.4 million at the end of 2023, primarily due to a public offering [18][19] - Inventory at year-end increased to $20.3 million from $19.4 million, driven by new production [19] Q&A Session Summary Question: Inquiry about new product categories - Management explained the attraction to freeze-dried yogurt and beef jerky due to existing expertise and market opportunities, with a feasible second-half launch timeline [40][42] Question: Signs of improvement in sales - Management noted recovery in key customers and stabilization in sales velocity, particularly in core retail channels [46][49] Question: Strategy for reducing inventory - Management confirmed that inventory has a minimum two-year shelf life and is stored in a temperature-controlled environment, with a focus on opening new retail doors to drive sales [55][58]
Sow Good Inc. (SOWG) Reports Q4 Loss, Lags Revenue Estimates
ZACKS· 2025-03-21 14:16
Company Performance - Sow Good Inc. reported a quarterly loss of $0.40 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.21, and compared to earnings of $0.23 per share a year ago, indicating a significant decline [1] - The company posted revenues of $1.38 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 71.17%, and down from $9.52 million in the same quarter last year [2] - Over the last four quarters, Sow Good has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Movement and Outlook - Sow Good shares have increased by approximately 34.8% since the beginning of the year, contrasting with a decline of 3.7% in the S&P 500 [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.11 on revenues of $6.5 million, and -$0.32 on revenues of $33.5 million for the current fiscal year [7] - The current Zacks Rank for Sow Good is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Consumer Products - Discretionary industry, to which Sow Good belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Sow Good's stock performance [5]
Sow Good Reports Fourth Quarter 2024 Results
Newsfilter· 2025-03-21 12:00
Core Insights - Sow Good Inc. reported significant challenges in 2024, including product integrity issues and increased competition, leading to a notable decline in fourth-quarter revenue and gross profit [2][3][7] - The company is focusing on innovation and expanding its product portfolio, including new categories like jerky and yogurt melts, to drive future growth [4][11] - Despite a challenging fourth quarter, Sow Good's annual revenue for 2024 increased significantly compared to 2023, reflecting the growing market for freeze-dried candy [7][13] Financial Performance - Fourth-quarter revenue for 2024 was $1.4 million, a decrease from $9.5 million in the same quarter of 2023, primarily due to competitive pressures and quality concerns [7] - Gross profit for the fourth quarter was a loss of $1.2 million, with a gross margin of (88)%, compared to a profit of $3.4 million and a margin of 36% in the prior year [7] - For the full year 2024, revenue increased to $32.0 million from $16.1 million in 2023, with gross profit rising to $13.0 million and a gross margin of 41% [7][13] Operating Expenses - Operating expenses in the fourth quarter of 2024 were $2.9 million, up from $1.6 million in the same period in 2023, driven by increased share compensation and other growth-related expenses [7] - For the year ended December 31, 2024, total operating expenses were $14.5 million compared to $4.5 million in 2023, reflecting the company's rapid growth [13] Net Loss and Adjusted EBITDA - The net loss for the fourth quarter of 2024 was $4.2 million, or $(0.40) per diluted share, compared to net income of $1.3 million, or $0.26 per diluted share, in the same quarter of 2023 [7][23] - Adjusted EBITDA for the fourth quarter was $(2.8) million, a decline from income of $2.3 million in the previous year [7][31] - For the full year, the net loss was $3.7 million, or $(0.40) per diluted share, compared to a net loss of $3.1 million, or $(0.59) per diluted share, in 2023 [13][23] Cash Position - Cash and cash equivalents at the end of 2024 were $3.7 million, an increase from $2.4 million at the end of 2023 [13] - The company reported a net cash used in operating activities of $(9.4) million for the year ended December 31, 2024 [29]