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Sow Good Reports Strong Second Quarter 2024 Results
Источник: Nasdaq GlobeNewswire / 14 авг 2024 16:05:01 America/New_York
- Q2 Revenue Increased 37% Sequentially to $15.6 Million, Driving Net Income of $3.3 Million or $0.29 per Diluted Share -
IRVING, Texas, Aug. 14, 2024 (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 the second quarter ended June 30, 2024.
“The momentum in our business continued to accelerate in the second quarter,” said Claudia Goldfarb, CEO of Sow Good. “Q2 revenue grew sequentially by an impressive 37%, driving net income to a remarkable $3.3 million or $0.29 per share. Adjusted EBITDA was also up substantially to $6.2 million compared to $(2.1) million in Q2 last year. This exceptional performance is a testament to our innovative and disruptive products, coupled with our enhanced production capacity and strong retail launches.
“We reached several critical milestones in Q2 that are setting the stage for our long-term success as a public company. Highlights include our Nasdaq listing, an underwritten public offering that generated $12.8 million in proceeds net of underwriting costs, and our addition of a state-of-the-art 324,000 square foot production and distribution facility, poised to significantly boost our production capabilities once fully operational.
"Despite a slower start to the third quarter due to seasonal factors and a deliberate pause in shipping to protect product quality during extreme heat, we are poised to drive extraordinary growth through three bold strategic objectives. First, we are aggressively expanding our in-house production capacity, ensuring that we not only meet but exceed the strong demand for our products. Second, we are fortifying and diversifying our distribution partnerships, positioning ourselves to seamlessly navigate any market fluctuations while amplifying our market reach. Third, we are revolutionizing the candy category with groundbreaking treats that continue to redefine consumer expectations.
“At the heart of this strategy is our unwavering commitment to owning and controlling our product manufacturing—from sourcing the finest raw materials through the freeze-drying process. To propel these ambitions, we launched a pivotal initiative in the second quarter to bring chew candy production in-house. This strategic move sets us apart from competitors who rely on external, overseas suppliers and costly branded candies. By producing our own candies, optimized specifically for freeze-drying, we are eliminating supply chain vulnerabilities and crafting a product that is unparalleled in quality and innovation. This initiative is a game-changing advantage that will widen our competitive moat and solidify our leadership in the industry.
“Given the stellar results we’ve already achieved and the vast opportunities that lie ahead, we are more confident than ever that 2024 will continue to be a transformative year for creating significant shareholder value. We are not just aiming for growth; we are engineering a future where we dominate the market and redefine industry standards."
Second Quarter 2024 Highlights vs. Same Year-Ago Quarter
- Revenue in the second quarter of 2024 increased significantly to $15.6 million compared to $1.3 million for the same period in 2023 and increased 37% compared to the first quarter of 2024. The increase was driven by the Company’s pivot to selling freeze dried candy in the prior year period, as well as the growing market for freeze dried candy. The increase also reflects the benefits of the Company’s expanded production capacity.
- Gross profit in the second quarter of 2024 increased significantly to $9.0 million compared to $(1.6) million for the same period in 2023. Gross margin was 57.6% in the second quarter of 2024, up considerably from 40.6% in the first quarter of 2024. The sequential margin expansion was driven by strong revenue growth but also raw material cost improvements, favorable product mix and price optimization.
- Operating expenses in the second quarter of 2024 were $4.1 million compared to $0.9 million for the same period in 2023. The increase was primarily driven by higher compensation and professional services expenses as Sow Good scaled its business and invested in system and process improvements as well as executed on its Nasdaq listing and underwritten public offering.
- Net income in the second quarter of 2024 increased substantially to $3.3 million, or $0.29 per diluted share, compared to a net loss of $(3.3) million, or $(0.68) per diluted share, for the same period in 2023. The improvement reflects the higher level of gross profit generated during the quarter.
- Adjusted EBITDA (a non-GAAP financial measure defined and reconciled herein) in the second quarter of 2024 improved to $6.2 million compared to $(2.1) 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.
- Cash and cash equivalents were $14.4 million at June 30, 2024, compared to $2.4 million at December 31, 2023. The Company received proceeds of $12.8 million, net of underwriting costs from an underwritten public offering of common stock in May of 2024.
Conference Call
Sow Good will conduct a conference call tomorrow at 10:00 A.M. Eastern time to discuss its results for the second quarter ended June 30, 2024.
Date: Thursday, August 15, 2024
Time: 10:00 a.m. Eastern time
Registration Link: https://register.vevent.com/register/BI872fa16af1de41499069a97407c5405cTo 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 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 press release 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 income (loss) before depreciation, interest expense, net and income tax benefit, adjusted to eliminate loss on early extinguishment of debt and stock-based compensation. The most directly comparable GAAP measure is net income (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 income (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 or disruptions (including as a result of seasonal factors); 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, 2023 and our most recent Quarterly Reports on Form 10-Q. 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.comSow Good Media Inquiries:
Sow Good, Inc.
1-214-623-6055
pr@sowginc.comSOW GOOD INC.
CONDENSED BALANCE SHEETSJune 30, December 31, 2024 2023 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 14,373,035 $ 2,410,037 Accounts receivable, net 6,197,037 2,578,259 Inventory 10,319,489 4,123,246 Prepaid inventory 1,150,132 563,131 Prepaid expenses 170,081 563,164 Total current assets 32,209,774 10,237,837 Property and equipment: Construction in progress 1,886,721 1,522,465 Property and equipment 8,151,216 6,287,422 Less accumulated depreciation (1,334,386 ) (967,602 ) Total property and equipment, net 8,703,551 6,842,285 Security deposit 1,357,956 346,616 Right-of-use asset 17,918,843 4,061,820 Total assets $ 60,190,124 $ 21,488,558 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,781,925 $ 853,535 Accrued interest 330,894 860,693 Accrued expenses 1,378,807 648,947 Income tax payable - current 257,918 - Current portion of operating lease liabilities 1,701,079 550,941 Current maturities of notes payable, related parties, net of $47,053 and $431,854 of debt discounts at June 30, 2024 and December 31, 2023, respectively 632,084 2,543,146 Current maturities of notes payable, net of $38,558 and $86,062 of debt discounts as of June 30, 2024 and December 31, 2023, respectively 200,692 313,938 Total current liabilities 6,283,399 5,771,200 Operating lease liabilities 16,783,997 3,671,729 Notes payable, related parties, net of $542,918 and $1,448,858 of debt discounts as of June 30, 2024 and December 31, 2023, respectively 1,957,082 4,171,142 Notes payable, net of $0 and $135,962 of debt discounts as of June 30, 2024 and December 31, 2023, respectively 150,000 594,038 Total liabilities 25,174,478 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, 10,245,388 and 6,029,371 shares issued and outstanding as of June 30, 2024 and December 31, 2023 10,245 6,029 Additional paid-in capital 89,899,666 66,014,415 Accumulated deficit (54,894,265 ) (58,739,995 ) Total stockholders' equity 35,015,646 7,280,449 Total liabilities and stockholders' equity $ 60,190,124 $ 21,488,558 SOW GOOD INC.
CONDENSED STATEMENTS OF OPERATIONSFor the Three Months Ended For the Six Months Ended June 30, June 30, 2024 2023 2024 2023 Revenues $ 15,648,046 $ 1,315,346 $ 27,054,369 $ 1,514,277 Cost of goods sold 6,640,917 2,896,259 13,417,798 2,980,262 Gross profit 9,007,129 (1,580,913 ) 13,636,571 (1,465,985 ) Operating expenses: General and administrative expenses: Salaries and benefits 2,123,572 319,608 4,474,130 831,197 Professional services 594,278 63,330 1,062,104 109,535 Other general and administrative expenses 1,399,244 500,381 2,271,507 884,491 Total general and administrative expenses 4,117,094 883,319 7,807,741 1,825,223 Depreciation and amortization 4,939 9,159 14,477 85,377 Total operating expenses 4,122,033 892,478 7,822,218 1,910,600 Net operating income (loss) 4,885,096 (2,473,391 ) 5,814,353 (3,376,585 ) Other income (expense): Interest income 4,130 - 4,130 - Interest expense (599,664 ) (847,509 ) (1,018,333 ) (1,345,845 ) Loss on early extinguishment of debt (696,502 ) - (696,502 ) - Total other income (expense) (1,292,036 ) (847,509 ) (1,710,705 ) (1,345,845 ) Income (loss) before income tax 3,593,060 (3,320,900 ) 4,103,648 (4,722,430 ) Provision for income tax (257,918 ) - (257,918 ) - Net income (loss) $ 3,335,142 $ (3,320,900 ) $ 3,845,730 $ (4,722,430 ) Weighted average common shares outstanding - basic 9,624,999 4,854,208 7,845,382 4,850,815 Net income (loss) per common share - basic $ 0.35 $ (0.68 ) $ 0.49 $ (0.97 ) Weighted average common shares outstanding - diluted 11,385,708 4,854,208 9,408,247 4,850,815 Net income (loss) per common share - diluted $ 0.29 $ (0.68 ) $ 0.41 $ (0.97 ) SOW GOOD INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYFor the Three Months Ended June 30, 2024 Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance, March 31, 2024 6,575,562 6,576 71,123,634 (58,229,407 ) 12,900,803 Common stock issued in public offering, net of offering costs 1,380,000 1,380 11,973,596 – 11,974,976 Common stock issued in private placement offering - - – - Common stock issued to directors for services 617 1 9,476 - 9,477 Proceeds from exercise of stock options and warrants 2,289,209 2,288 5,670,680 – 5,672,968 Common stock options granted to directors and advisors for services – – 28,962 – 28,962 Common stock options granted to officers and employees for services – – 1,093,318 – 1,093,318 Net income for the three months ended June 30, 2024 – – – 3,335,142 3,335,142 Balance, June 30, 2024 10,245,388 $ 10,245 $ 89,899,666 $ (54,894,265 ) $ 35,015,646 For the Three Months Ended June 30, 2023 Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance, March 31, 2023 4,847,384 $ 4,847 $ 59,484,859 $ (57,081,092 ) $ 2,408,614 Common stock issued to directors for services 20,699 21 125,208 – 125,229 Common stock options granted to directors and advisors for services – – 28,975 – 28,975 Common stock options granted to officers and employees for services – – 102,866 – 102,866 Common stock warrants granted to related party note holders pursuant to debt financing – – 1,075,904 – 1,075,904 Common stock warrants granted to note holders pursuant to debt financing – – 374,153 – 374,153 Net loss for the three months ended June 30, 2023 – – – (3,320,900 ) (3,320,900 ) Balance, June 30, 2023 4,868,083 $ 4,868 $ 61,191,965 $ (60,401,992 ) $ 794,841 For the Six Months Ended June 30, 2024 Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance, December 31, 2023 6,029,371 $ 6,029 $ 66,014,415 $ (58,739,995 ) $ 7,280,449 Common stock issued in public offering, net of offering costs 1,380,000 1,380 11,973,596 – 11,974,976 Common stock issued in private placement offering 515,597 516 3,737,484 – 3,738,000 Common stock issued to directors for services 31,211 32 295,616 – 295,648 Proceeds from exercise of stock options and warrants 2,289,209 2,288 5,670,680 – 5,672,968 Common stock options granted to directors and advisors for services – – 57,608 – 57,608 Common stock options granted to officers and employees for services – – 2,150,267 – 2,150,267 Net income for the six months ended June 30, 2024 – – – 3,845,730 3,845,730 Balance, June 30, 2024 10,245,388 $ 10,245 $ 89,899,666 $ (54,894,265 ) $ 35,015,646 For the Six Months Ended June 30, 2023 Additional Total Common Stock Paid-in Accumulated Stockholders' Shares Amount Capital Deficit Equity Balance, December 31, 2022 4,847,384 $ 4,847 $ 58,485,602 $ (55,679,562 ) $ 2,810,887 Common stock issued to directors for services 20,699 21 125,208 – 125,229 Common stock options granted to directors and advisors for services – – 57,633 – 57,633 Common stock options granted to officers and employees for services – – 201,044 – 201,044 Common stock warrants granted to related party note holders pursuant to debt financing – – 1,948,325 – 1,948,325 Common stock warrants granted to note holders pursuant to debt financing – – 374,153 – 374,153 Net loss for the three months ended June 30, 2023 – – – (4,722,430 ) (4,722,430 ) Balance, June 30, 2023 4,868,083 $ 4,868 $ 61,191,965 $ (60,401,992 ) $ 794,841 SOW GOOD INC.
CONDENSED STATEMENTS OF CASH FLOWSFor the Six Months Ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 3,845,730 $ (4,722,430 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Bad debts expense 20,760 185,485 Depreciation and amortization 366,784 155,416 Non-cash amortization of right-of-use asset and liability 405,383 9,556 Common stock issued to directors for services 295,648 125,229 Amortization of stock options 2,207,875 258,677 Amortization of stock warrants issued as a debt discount 777,704 1,054,822 Loss on early extinguishment of debt 696,502 - Decrease (increase) in current assets: Accounts receivable (3,639,538 ) (721,135 ) Prepaid expenses 393,083 17,849 Inventory (6,783,244 ) 1,053,910 Security deposits (1,011,340 ) (34,765 ) Increase (decrease) in current liabilities: Accounts payable 928,390 (76,257 ) Income tax payable 257,918 - Accrued interest (431,049 ) 265,338 Accrued expenses 729,860 7,045 Net cash provided by (used in) operating activities (939,534 ) (2,421,260 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (1,863,794 ) (362,180 ) Cash paid for construction in progress (364,256 ) - Net cash used in investing activities (2,228,050 ) (362,180 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from common stock offerings, net of offering costs of $859,024 15,712,976 - Proceeds from the exercise of warrants and options 373,855 - Proceeds received from notes payable, related parties - 2,400,000 Proceeds received from notes payable - 400,000 Repayments of borrowings (956,249 ) - Net cash provided by financing activities 15,130,582 2,800,000 NET CHANGE IN CASH AND CASH EQUIVALENTS 11,962,998 16,560 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,410,037 276,464 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,373,035 $ 293,024 SUPPLEMENTAL INFORMATION: Interest paid $ 770,428 $ 25,685 Interest received $ 4,130 - Income taxes paid - - 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 $ 1,651,305 - Value of debt discounts attributable to warrants - $ 2,322,478 SOW GOOD INC.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDAThree Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Net income (loss) $ 3,335,142 $ (3,320,900 ) $ 3,845,730 $ (4,722,430 ) Depreciation and amortization 199,789 79,198 366,784 155,416 Interest expense, net 595,534 847,509 1,014,203 1,345,845 Provision for income taxes 257,918 - 257,918 - EBITDA 4,388,383 (2,394,193 ) 5,484,635 (3,221,169 ) Share-based payments 1,131,757 257,070 2,503,523 383,906 Loss on early extinguishment of debt 696,502 - 696,502 - Adjusted EBITDA $ 6,216,642 $ (2,137,123 ) $ 8,684,660 $ (2,837,263 ) 
- Revenue in the second quarter of 2024 increased significantly to $15.6 million compared to $1.3 million for the same period in 2023 and increased 37% compared to the first quarter of 2024. The increase was driven by the Company’s pivot to selling freeze dried candy in the prior year period, as well as the growing market for freeze dried candy. The increase also reflects the benefits of the Company’s expanded production capacity.