Fiscal Year 2024 Gross Revenue of Approximately $73.0 Million and Net Revenue of $58.7 Million
Company Reached Profitability Threshold on an Adjusted EBITDA Basis
Reduced Fourth Quarter 2024 Operating Expenses by 61% and Annual Operating Expenses by 25%, Excluding Non-Cash Expenses
Distribution Growth and New Roll Outs Pave the Way for Expansion and EBITDA Growth in Fiscal Year 2025
SANTA MONICA, Calif., April 18, 2025--(BUSINESS WIRE)--Starco Brands, Inc. (the "Company" or "Starco Brands") (OTCQB: STCB), developer and acquirer of behavior-changing technologies and brands that spark excitement in the everyday, is providing a business update in conjunction with the filing of its form 10-K for the full year ended December 31, 2024.
Management Comments
Starco Brands Chairman & CEO Ross Sklar said: "Our fourth quarter capped off a transformative year as we deepened our acquisitions integrations and streamlined headcount, logistics and marketing costs, positioning ourselves for profit and further scale. What began as a vision for a unified operational platform has materialized into tangible results and a streamlined machine. With this optimization, the Company expanded retail distribution channels, launched new products, and implemented a financial plan that allows us to turn our inventory with better predictability and quicker. The groundwork we’ve methodically laid out over this past year has established a robust foundation that drastically lowered our fixed costs that is already creating liquidity and is now driving our next phase of growth."
Mr. Sklar continued, "We are strongly positioned in 2025 and for 2026 to capitalize on these accomplishments through our robust new product pipeline and targeted distribution expansion. Along with our US based manufacturing partners and with the operational integration work behind us, we've established the infrastructure necessary to support topline growth that delivers improved margins and free cash."
Fourth Quarter of 2024 Financial Results
Reported net revenue for the fourth quarter of 2024 was $12.1 million, compared to $18.5 million in the fourth quarter of 2023. A large portion of this year-over-year decline was due to year-end one-time reconciliations of balance sheet accounts. While demand remained, the additional decrease in reported net revenue was driven by supply chain pressure and out of stocks predominantly impacting e-commerce sales. Furthermore, we experienced lower retail volumes due to a large retailer merging an entire set in ready-to-drink meal replacement category at a key retailer. Lower Whipshots sales also contributed to the year-over-year decline due to higher inventory stocking orders in the prior year period combined with lower alcohol sales nationally causing distributors to reduce their 2025 inventory plans. These decreases were partially offset by continued growth for the Winona Popcorn Spray line and Art of Sport, our men’s personal care and nutraceutical line.
Gross profit was $1.8 million for the fourth quarter of 2024, compared to $5.7 million in the fourth quarter of 2023. A portion of the decline was also the result of one-time balance sheet reconciliations, as well as slightly lower revenue, but more attributable to an unfavorable product mix weighted toward lower-margin products.
Marketing, General and Administrative expenses were $4.8 million, or 40% of reported net revenue in the fourth of 2024, compared to $6.9 million, or 37% of reported net revenue in the fourth quarter of 2023. Compensation expense was $1.8 million in the fourth quarter of 2024, compared to $10.6 million in the fourth quarter of 2023. Professional fees were $0.8 million in the fourth quarter of 2024, compared to $1.7 million in the fourth quarter of 2023. The decrease in operating expenses reflects successful integrations, benefits from our shared services platform and operational efficiency initiatives, which have enabled us to identify and remove approximately $3.0 million in cost optimization opportunities across the organization allowing free cash generation.
Reported unadjusted net profit for the fourth quarter of 2024 was $4.8 million, compared to a net loss of $41.1 million in the fourth quarter of 2023. Contributing to this net gain were non-cash items such as a $26.2 million gain for fair value share adjustment and a $14.3 million expense for goodwill impairment.
Fiscal Year 2024 Financial Results
Reported net revenue for the full year of 2024 was $58.7 million, compared to $63.6 million for the full year of 2023, primarily due to unavoidable periods of out of stocks on key items that has been rectified. Gross profit was $20.9 million for the full year of 2024, compared to $26.0 million for the full year of 2023.
Marketing, General and Administrative expenses for the full year of 2024 decreased to $18.9 million, or 32% of reported net revenue, compared to $19.8 million, or 31% of reported net revenue for the full year of 2023. Compensation expense was $9.0 million for the full year of 2024, compared to $15.9 million for the full year of 2023. Professional fees were $3.5 million for the full year of 2024, compared to $5.9 million for the full year of 2023.
Reported unadjusted net loss for the full year of 2024 was $17.3 million, as compared to net loss of $46.4 million for the full year of 2023.
Non-GAAP Adjusted EBITDA
Adjusted EBITDA, which is net loss adjusted for stock-based compensation, gain on disposal of property and equipment, one-time expenses that the Company reasonable believes will not gain on settlements, interest and other expense, net, depreciation of property and equipment, amortization of intangible assets, (recovery) provision for doubtful accounts, and provision for income taxes and certain other items that impact the periods presented. Adjusted EBITDA is provided so that investors have the same financial data that management uses to assess the Company’s operating results with the belief that it will assist the investment community in properly assessing the ongoing performance of the Company for the periods being reported and future periods. The presentation of this additional information is not meant to be considered a substitute for measures prepared in accordance with U.S. GAAP. Because Adjusted EBITDA excludes some, but not all, items that affect net income (loss) and is defined differently by different companies, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. For reconciliation of GAAP Net Income (loss) to Adjusted EBITDA, see our reports we file from time-to-time with the SEC, which are available to read at www.sec.gov.
Adjusted EBITDA was approximately $1.3 million for the full year of 2024, compared to approximately $6.2 million for the full year of 2023.
Adjusted EBITDA is a non-GAAP financial measure. See the supplementary schedules in this press release for a reconciliation thereof to the most directly comparable GAAP measure.
Net Income
(17,334,549.00
)
Interest expense
961,588.00
Other expense (income)
1,966,320.84
Depreciation & Amortization
2,847,001.12
Fair value share adjustment loss (gain)
(10,544,263.00
)
Goodwill Impairment
14,327,871.00
Stock Compensation
1,733,167.76
Non-Recurring Expenses
4,823,474.17
One-Time Integration Expenses
2,555,094.45
Adjusted EBITDA
1,335,705.34
Balance Sheet
As of December 31, 2024, the Company had approximately $1.2 million of cash, and approximately $8.2 million of inventory on its balance sheet compared to $1.8 million of cash, and approximately $10.7 million of inventory on its balance sheet as of December 31, 2023.
Full Year 2024 Segment Review
Starco Brands: Starco Brands’ segment includes AOS, Whipshots and Winona Popcorn Spray. Segment gross revenues of $12.1 million for the full year of 2024, compared to $16.3 million for the full year of 2023. Segment gross profit of $6.8 million for the full year of 2024, compared to $12.4 million for the full year of 2023. The decline in gross profit dollars and percent in this segment was driven by the mix impact of lower revenue from higher margin Whipshots offset by the increase in revenue from Winona. Whipshots revenue declined as a result of inventory stocking orders in the prior year period. Winona revenue increased due to distribution adds at Walmart and other retailers and increased velocity on shelf.
Skylar: Segment gross revenues of $10.5 million for the full year of 2024, compared to $10.7 million for the full year of 2023. Segment gross profit of $6.2 million for the full year of 2024, compared to $6.1 million for the full year of 2023.
Soylent: Segment gross revenues of $36.1 million for the full year of 2024, compared to $36.7 million for the full year of 2023. Segment gross profit of $7.8 million for 2024, compared to $7.4 million for the full year of 2023. The Company does not report results for Soylent for the full year of 2023 as Soylent was not a subsidiary of the Company until the acquisition of Soylent on February 15, 2023.
Forward-Looking Statements
Any statements in this press release about the Company's future expectations, plans and prospects, including statements about our financing strategy, future operations, future financial position and results, market growth, new product launches and product growth, total revenue, as well as other statements containing the words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," or "would" and similar expressions, constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The Company may not achieve the plans, intentions or expectations disclosed in the Company's forward-looking statements, and you should not place undue reliance on the Company's forward-looking statements. All forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time. Therefore, readers are cautioned that actual results could differ materially from those expressed in forward-looking statements. The Company undertakes no obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law. This cautionary statement entirely qualifies all forward-looking statements in this document.
Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward- looking statements the Company make as a result of a variety of risks and uncertainties, including risks related to the Company's estimates regarding the potential market opportunity for the Company's current and future products and services, the impact of the COVID-19 pandemic, the competitive nature of the industries in which we conduct our business, general business and economic conditions, our ability to acquire suitable businesses, our ability to successfully launch new products and seize market share, the Company's expectations regarding the Company's sales, expenses, gross margins and other results of operations, and the other risks and uncertainties described in the "Risk Factors" sections of the Company's public filings with the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2023. Copies of our SEC filings are available on our website at www.starcobrands.com. In addition, the forward-looking statements included in this press release represent the Company's views as of the date hereof. The Company anticipates that subsequent events and developments may cause the Company's views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date after the date hereof.
About Starco Brands
Starco Brands (OTCQB: STCB) invents consumer products with behavior-changing technologies that spark excitement in the everyday. Today, its disruptive brands include Whipshots®, the world’s only vodka-infused whipped cream; Art of Sport, the body care brand designed for athletes and co-founded by Kobe Bryant; Winona® Pure, the first indulgent theater-popcorn spray powered by air; Skylar, the only fragrance that is both hypoallergenic and safe for sensitive skin; and Soylent, the complete non-dairy nutrition brand. A modern-day invention factory to its core, Starco Brands identifies whitespaces across consumer product categories. Starco Brands publicly trades on the OTCQB stock exchange so that retail investors can invest in STCB alongside accredited individuals and institutions. Visit starcobrands.com for more information.
