Sow Good Reports Fourth Quarter 2024 Results
IRVING, Texas, March 21, 2025 (GLOBE NEWSWIRE) -- Sow Good Inc. (Nasdaq: SOWG) ("Sow Good" or "the Company"), a trailblazer in the freeze-dried dried candy and treat industry, is reporting financial and operating results for fourth quarter and the full year ended December 31, 2024.
"2024 was a pivotal year for Sow Good," said CEO Claudia Goldfarb. "Building an entirely new category from the ground up presents its fair share of challenges, and as with many entrepreneurial, innovation-driven companies, we faced the inevitable growing pains of introducing a truly unique offering to the market.
"Among the most pressing challenges we encountered were product integrity issues, particularly around melting, and intensifying competitive pressures. We've responded to the first by enhancing our packaging to improve product resilience, and by implementing temperature-controlled shipping where needed to ensure quality. As competition grew, particularly with major global candy companies entering the freeze-dried candy space, we adapted by expanding our retail footprint, opening new doors, and reinforcing our presence in key markets. At the same time, we remain focused on innovation, continuously evolving our product portfolio to keep it fresh, exciting, and aligned with consumer demand.
"At our core, Sow Good is a company of innovators and food production experts, and we are leveraging that expertise to diversify into adjacent categories with strong growth potential, such as jerky and yogurt melts, which are set to launch in the second half of this year. As we begin to see sales recover, our strategic priorities are clear: drive candy distribution, optimize manufacturing efficiency, reduce costs, and launch new product lines that resonate with consumers. These efforts are integral to our long-term strategy, and we are confident that they will position us to drive sustainable growth and deliver long-term value to our shareholders."
Fourth Quarter 2024 Highlights vs. Same Year-Ago Quarter
-- Revenue in the fourth quarter of 2024 was $1.4 million compared to $9.5
million for the same period in 2023. The decrease was largely due to
increased competitive pressure and the spillover effect from product
shipment pauses in the third quarter of 2024 due to quality concerns amid
extreme summer heat, as well as increased promotional activity and
customer allowances.
-- Gross profit for the fourth quarter of 2024 was a loss of ($1.2) million
compared to gross profit of $3.4 million in the previous year's quarter.
Gross margin was (88)% in the fourth quarter of 2024 compared to 36% in
the prior year period. The decline was primarily due to an approximate
$1.7 million inventory reserve expense taken during the quarter as well
as higher costs related to the company's new facility and the impact of
lower sales. Excluding this reserve, gross profit was $0.4 million
representing a gross margin of roughly 31.8%.
-- Operating expenses in the fourth quarter of 2024 were $2.9 million
compared to $1.6 million for the same period in 2023. The increase was
primarily due to an increase in share compensation expense related to the
amortization of performance options granted in December 2023, and other
operating expense increase related to the Company's rapid growth.
-- GAAP net loss for the 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, for the same period in 2023. The decline reflects the
lower level of gross profit and higher operating expenses in the fourth
quarter of 2024.
-- Adjusted EBITDA (a non-GAAP financial measure defined and reconciled
herein) for the fourth quarter was $(2.8) million compared to income of
$2.3 million for the same period in 2023. For a reconciliation of
Adjusted EBITDA to the nearest comparable GAAP metric, net income, please
see the tables below.
Year to Date 2024 Highlights
-- Revenue for the twelve months ended December 31, 2024, increased
significantly to $32.0 million compared to $16.1 million in 2023. The
increase primarily reflects the Company's transition to selling freeze
dried candy in the first quarter of 2023, the growing market for freeze
dried candy and its expanded production capacity after adding three new
freeze driers in 2024 and addition of new retail customers.
-- Gross profit for the year ended December 31, 2024, increased
significantly to $13.0 million compared to $3.3 million in 2023. Gross
margin was 41% compared to 20% in 2023. The increase was primarily due to
the strong revenue growth.
-- Operating expenses for the year ended December 31, 2024, were $14.5
million compared to $4.5 million in 2023. The increase was primarily due
to the strong revenue growth.
-- Net loss for the year ended December 31, 2024, 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.
-- Adjusted EBITDA (a non-GAAP financial measure defined and reconciled
herein) for the year ended December 31, 2024 was $4.1 million compared to
$0.1 million in 2023.
-- Cash and cash equivalents were $3.7 million at December 31, 2024,
compared to $2.4 million at December 31, 2023.
Conference Call
Sow Good will conduct a conference call today at 12:00 P.M. Eastern time to discuss its results for the fourth quarter ended December 31, 2024.
Date: Friday, March 21, 2025
Time: 12:00 p.m. Eastern time
Registration Call Link: https://register-conf.media-server.com/register/BI548a3ea1d1af4e189ff37d9b1afbb000
To access the call by phone, please register via the registration link above and you will be provided with dial-in instructions and details. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and on the Company's website at www.sowginc.com.
About Sow Good Inc.
Sow Good Inc. is a trailblazing U.S.-based freeze dried candy and snack manufacturer dedicated to providing consumers with innovative and explosively flavorful freeze dried treats. Sow Good has harnessed the power of our proprietary freeze-drying technology and product-specialized manufacturing facility to transform traditional candy into a novel and exciting everyday confectionaries subcategory that we call freeze dried candy. Sow Good is dedicated to building a company that creates good experiences for our customers and growth for our investors and employees through our core pillars: (i) innovation; (ii) scalability; (iii) manufacturing excellence; (iv) meaningful employment opportunities; and (v) food quality standards.
Non-GAAP Financial Measures
This press release contains "non-GAAP financial measures" that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with GAAP. Specifically, we make use of the non-GAAP financial measure "Adjusted EBITDA." Adjusted EBITDA has been presented in this prospectus as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. We define Adjusted EBITDA as net loss before depreciation, interest expense, net and income tax benefit, adjusted to eliminate non-cash intangible asset impairment, goodwill impairment, inventory write-down and stock-based compensation. The most directly comparable GAAP measure is net loss. Adjusted EBITDA is not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. The presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Because not all companies use identical calculations, the presentations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.
We present this non-GAAP measure because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.
There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. Some of these limitations are:
-- Adjusted EBITDA excludes stock-based compensation expense as it has
recently been, and will continue to be for the foreseeable future, a
significant recurring non-cash expense for our business;
-- Adjusted EBITDA excludes depreciation and amortization expense and,
although this is a non-cash expense, the assets being depreciated and
amortized may have to be replaced in the future;
-- Adjusted EBITDA does not reflect the cash requirements necessary to
service interest on our debt which affects the cash available to us;
-- Adjusted EBITDA does not reflect the monies earned from our investments
since it does not reflect our core operations;
-- Adjusted EBITDA does not reflect change in fair value of financial
instruments since it does not reflect our core operations and is a
non-cash expense;
-- Adjusted EBITDA does not reflect income tax expense that affects cash
available to us; and
-- the expenses and other items that we exclude in our calculations of
Adjusted EBITDA may differ from the expenses and other items, if any,
that other companies may exclude from Adjusted EBITDA when they report
their operating results.
In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
Forward-Looking Statements
This press release contains forward-looking statements. Statements other than statements of historical facts contained in this press release may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the offering, expected growth, and future capital expenditures, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "plan, " "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Forward-looking statements contained in this press release include, but are not limited to statements about: (a) our ability to compete successfully in the highly competitive industry in which we operate; (b) our ability to maintain and enhance our brand; (c) our ability to successfully implement our growth strategies related to launching new products; (d) the effectiveness and efficiency of our marketing programs; (e) our ability to manage current operations and to manage future growth effectively; (f) our future operating performance; (g) our ability to attract new customers or retain existing customers; (h) our ability to protect and maintain our intellectual property; (i) the government regulations to which we are subject; (j) our ability to maintain adequate liquidity to meet our financial obligations; (k) failure to obtain sufficient sales and distributions for our freeze dried product offerings; (l) the potential for supply chain disruption and delay; (m) the potential for transportation, labor, and raw material cost increases; and (n) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024. All information provided in this release is as of the date hereof and we undertakes no duty to update this information except as required by law.
Sow Good Investor Inquiries:
Cody Slach
Gateway Group, Inc.
1-949-574-3860
SOWG@gateway-grp.com
Sow Good Media Inquiries:
Sow Good, Inc.
1-214-623-6055
pr@sowginc.com
SOW GOOD INC.
BALANCE SHEETS
December 31, December 31,
2024 2023
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,723,440 $ 2,410,037
Accounts receivable, net 460,147 2,578,259
Inventory, net 20,313,315 4,123,246
Prepaid inventory 55,796 563,131
Prepaid expenses 523,442 703,966
----------- -----------
Total current assets 25,076,140 10,378,639
----------- -----------
Property and equipment, net 11,802,420 6,701,483
Security deposit 1,357,956 346,616
Right-of-use asset 16,459,215 4,061,820
----------- -----------
Total assets $ 54,695,731 $ 21,488,558
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 1,368,006 $ 853,535
Accrued interest - 860,693
Accrued expenses 976,153 648,947
Current portion of operating lease
liabilities 2,599,102 550,941
Current maturities of notes payable,
related parties, net of $304,500
and $431,854 of debt discounts at
December 31, 2024 and 2023,
respectively 2,195,500 2,543,146
Current maturities of notes payable,
net of $13,470 and $86,062 of debt
discounts as of December 31, 2024
and 2023, respectively 225,780 313,938
----------- -----------
Total current liabilities 7,364,541 5,771,200
Operating lease liabilities 15,193,129 3,671,729
Notes payable, related parties, net
of $0 and $1,448,858 of debt
discounts as of December 31, 2024
and 2023, respectively - 4,171,142
Notes payable, net of $0 and
$135,962 of debt discounts as of
December 31, 2024 and 2023,
respectively 150,000 594,038
----------- -----------
Total liabilities 22,707,670 14,208,109
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
20,000,000 shares authorized, no
shares issued and outstanding - -
Common stock, $0.001 par value,
500,000,000 shares authorized,
11,300,624 and 6,029,371 shares
issued and outstanding as of
December 31, 2024 and 2023 11,300 6,029
Additional paid-in capital 94,418,972 66,014,415
Accumulated deficit (62,442,211) (58,739,995)
----------- -----------
Total stockholders' equity 31,988,061 7,280,449
----------- -----------
Total liabilities and stockholders'
equity $ 54,695,731 $ 21,488,558
=========== ===========
SOW GOOD INC.
STATEMENTS OF OPERATIONS
For the Three Months
Ended For the Year Ended
December 31, December 31,
2024 2023 2024 2023
----------- ---------- ----------- -----------
Revenues $ 1,383,985 $9,522,445 $31,992,511 $16,070,924
Cost of goods
sold 2,601,529 6,116,530 19,017,498 12,795,754
---------- --------- ---------- ----------
Gross profit (1,217,544) 3,405,915 12,975,013 3,275,170
---------- --------- ---------- ----------
Operating
expenses:
General and
administrative
expenses:
Salaries and
benefits 1,374,959 863,943 7,824,030 2,314,047
Professional
services 305,927 283,767 1,589,287 688,023
Other general
and
administrative
expenses 1,206,990 430,509 5,086,342 1,389,726
---------- --------- ---------- ----------
Total general
and
administrative
expenses 2,887,876 1,578,219 14,499,659 4,391,796
Depreciation and
amortization 8,584 9,420 31,644 104,058
---------- --------- ---------- ----------
Total operating
expenses 2,896,460 1,587,639 14,531,303 4,495,854
---------- --------- ---------- ----------
Net operating
loss (4,114,004) 1,818,276 (1,556,290) (1,220,684)
---------- --------- ---------- ----------
Other income
(expense):
Interest income 95,156 - 138,795 -
Interest expense (221,212) (490,260) (1,464,640) (1,839,749)
Loss on early
extinguishment
of debt - - (696,502) -
---------- --------- ---------- ----------
Total other
expense (126,056) (490,260) (2,022,347) (1,839,749)
---------- --------- ---------- ----------
Loss before
Loss on early extinguishment of
debt 696,502 -
Decrease (increase) in current
assets:
Accounts receivable 1,930,749 (2,387,237)
Prepaid expenses 180,524 (425,472)
Inventory (17,339,998) (4,112,386)
Security deposits (1,011,340) (322,616)
Increase (decrease) in current
liabilities:
Accounts payable 514,471 400,929
Accrued interest (761,943) 634,118
Accrued expenses 327,205 490,494
----------- ----------
Net cash used in operating activities (9,426,745) (4,845,640)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (3,269,332) (2,266,635)
Cash paid for construction in
progress (2,658,544) -
----------- ----------
Net cash used in investing activities (5,927,876) (2,266,635)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock
offerings, net of offering costs
of $1,110,013 17,929,554 6,445,848
Proceeds from the exercise of
warrants and options 373,857 -
Proceeds received from notes
payable, related parties - 2,400,000
Proceeds received from notes
payable - 400,000
Repayments of borrowings (1,635,387) -
----------- ----------
Net cash provided by financing
activities 16,668,024 9,245,848
----------- ----------
NET CHANGE IN CASH AND CASH
EQUIVALENTS 1,313,403 2,133,573
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,410,037 276,464
----------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 3,723,440 $ 2,410,037
=========== ==========
SUPPLEMENTAL INFORMATION:
Interest paid $ 667,293 $ 30,017
=========== ==========
Interest received $ 43,639 -
=========== ==========
Income taxes paid $ 130,000 -
=========== ==========
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Non-cash exercise of warrants $ 5,299,113 -
=========== ==========
Repayment of interest $ 98,750 -
=========== ==========
Repayments of borrowings $ (5,200,363) -
=========== ==========
Reclassification of construction
in progress to property and
equipment $ 3,269,332 $ 965,208
=========== ==========
Value of debt discounts
attributable to warrants $ - $ 247,880
=========== ==========
SOW GOOD INC.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND
ADJUSTED EBITDA
Three Months Ended Year Ended
December 31, December 31,
2024 2023 2024 2023
----------- ---------- ----------- -----------
Net income
(loss) $(4,168,036) $1,328,016 $(3,702,216) $(3,060,433)
Depreciation and
amortization 243,992 153,253 826,939 459,345
Interest
expense, net 126,056 490,260 1,325,845 1,839,749
Provision for
income tax (72,024) - 123,579 -
---------- --------- ---------- ----------
EBITDA (3,870,012) 1,971,529 (1,425,853) (761,339)
Share-based
payments 1,116,910 311,601 4,807,305 836,267
Loss on early
extinguishment
of debt - - 696,502 -
---------- ----------
Adjusted EBITDA $(2,753,102) $2,283,130 $ 4,077,954 $ 74,928
========== ========= ========== ==========
(END) Dow Jones Newswires
March 21, 2025 08:00 ET (12:00 GMT)
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