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 - Earnings Call Transcript