Sow Good Inc.(SOWG) - 2025 Q2 - Quarterly Results

Sow Good Reports Second Quarter 2025 Results Sow Good's Q2 2025 results reflect operational stabilization and strong demand despite temporary revenue impacts from production delays and increased competition Management Commentary Management highlights operational stabilization and strong demand in Q2 2025, despite temporary revenue impacts from production delays and labor shortages - Operations have stabilized, but revenue was temporarily impacted by production delays and labor shortages, even as demand accelerated[3] - The company deepened partnerships with key retailers like Five Below and Albertsons, expanding both SKU counts and order volumes[3] - Sow Good successfully launched in the UAE, with results exceeding expectations, validating global demand for its products[3] - The company's forward-looking strategy focuses on disciplined execution, cost optimization, innovation, and reaccelerating growth in the second half of 2025[3] Second Quarter 2025 Highlights Sow Good's financial performance declined significantly in the second quarter of 2025 compared to the same period in 2024, driven by reduced revenue and a shift to net loss Q2 2025 Financial Highlights vs. Q2 2024 | Metric | Q2 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | | Revenue | $1.9 million | $15.6 million | | Gross Profit (Loss) | $(0.1) million | $9.0 million | | Gross Margin | (7%) | 58% | | Operating Expenses | $3.9 million | $4.1 million | | Net Income (Loss) | $(4.2) million | $3.3 million | | EPS (Diluted) | $(0.36) | $0.29 | | Adjusted EBITDA | $(2.7) million | $6.2 million | - The decline in revenue was primarily driven by softer demand due to increased competitive pressure and, to a lesser extent, production delays[4] - Cash and cash equivalents stood at $1.0 million as of June 30, 2025, down from $3.7 million at the end of 2024[5] Financial Statements Sow Good's financial statements for Q2 2025 show significant declines in revenue and net income, leading to reduced assets and equity compared to the prior year Condensed Balance Sheets As of June 30, 2025, Sow Good's total assets decreased to $50.0 million from $54.7 million, primarily due to a significant drop in cash and cash equivalents, resulting in a decline in total stockholders' equity Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $0.96 million | $3.72 million | | Total current assets | $22.80 million | $25.08 million | | Total assets | $49.99 million | $54.70 million | | Total current liabilities | $5.38 million | $7.36 million | | Total liabilities | $21.41 million | $22.71 million | | Total stockholders' equity | $28.57 million | $31.99 million | Condensed Statements of Operations For Q2 2025, Sow Good reported a significant revenue decrease to $1.9 million from $15.6 million in Q2 2024, resulting in a net loss of $4.2 million compared to a $3.3 million net income in the prior-year period Statement of Operations - Three Months Ended June 30 | Metric | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Revenues | $1,856,312 | $15,648,046 | | Gross Profit (Loss) | $(129,709) | $9,007,129 | | Net Operating Income (Loss) | $(4,073,905) | $4,885,096 | | Net Income (Loss) | $(4,186,512) | $3,335,142 | | Net Income (Loss) per Share - Diluted | $(0.36) | $0.29 | Statement of Operations - Six Months Ended June 30 | Metric | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Revenues | $4,333,234 | $27,054,369 | | Gross Profit | $973,014 | $13,636,571 | | Net Operating Income (Loss) | $(6,489,093) | $5,814,353 | | Net Income (Loss) | $(6,757,566) | $3,845,730 | | Net Income (Loss) per Share - Diluted | $(0.59) | $0.41 | Statements of Changes in Stockholders' Equity For the six months ended June 30, 2025, total stockholders' equity decreased from $32.0 million to $28.6 million, primarily due to the net loss incurred during the period - Total stockholders' equity decreased from $31,988,061 at the beginning of the year to $28,570,587 at June 30, 2025[22] - The primary driver for the decrease in equity was the net loss of $6,757,566 for the six-month period[22] Condensed Statements of Cash Flows For the six months ended June 30, 2025, Sow Good experienced a net cash outflow of $2.8 million, primarily from operating activities, resulting in a reduced cash balance Cash Flow Summary - Six Months Ended June 30 | Activity | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,514,884) | $(939,534) | | Net cash used in investing activities | $(249,140) | $(2,228,050) | | Net cash provided by financing activities | $0 | $15,130,582 | | Net change in cash | $(2,764,024) | $11,962,998 | | Cash at end of period | $959,416 | $14,373,035 | Non-GAAP Financial Measures The company's non-GAAP Adjusted EBITDA significantly declined in Q2 2025, reflecting operational challenges, with management using this metric for performance evaluation despite its limitations Reconciliation of Net Income (Loss) to Adjusted EBITDA Sow Good's Adjusted EBITDA for Q2 2025 was $(2.7) million, a significant negative shift from $6.2 million in Q2 2024, reflecting operational challenges Adjusted EBITDA Reconciliation | Period | Net Income (Loss) (USD) | Adjusted EBITDA (USD) | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | $(4,186,512) | $(2,694,394) | | Three Months Ended June 30, 2024 | $3,335,142 | $6,216,642 | | Six Months Ended June 30, 2025 | $(6,757,566) | $(3,485,112) | | Six Months Ended June 30, 2024 | $3,845,730 | $8,684,628 | Definition and Use of Non-GAAP Measures Sow Good defines Adjusted EBITDA as a non-GAAP measure, used by management to assess core operating performance and business strategies, while acknowledging its inherent limitations - The company uses Adjusted EBITDA as a supplemental measure to GAAP, defining it as net income (loss) adjusted for items like depreciation, amortization, interest, taxes, and share-based compensation[9] - Management uses Adjusted EBITDA to evaluate business strategies, make budgeting decisions, and compare performance against peers[11] - The company acknowledges limitations of Adjusted EBITDA, such as the exclusion of significant recurring non-cash expenses like stock-based compensation and depreciation[14] Company and Report Information Sow Good Inc. is a U.S.-based freeze-dried snack manufacturer, and the report includes standard forward-looking statements subject to various business risks About Sow Good Inc. Sow Good Inc. is a U.S.-based manufacturer specializing in freeze-dried candy and snacks, leveraging proprietary technology for innovation and manufacturing excellence - Sow Good is a U.S.-based manufacturer of innovative freeze-dried candy and treats, utilizing proprietary technology[8] Forward-Looking Statements This section contains a standard safe harbor statement advising that the press release includes forward-looking statements concerning future results, business strategy, and growth plans, which are subject to various risks and uncertainties - The report contains forward-looking statements regarding future financial position, business strategy, expected growth, and other operational plans[13] - These statements are subject to risks and uncertainties, including competition, supply chain issues, and the ability to retain customers, as detailed in SEC filings[13][15]