Achieves Record Net Sales of $34.4 Million
Zevia PBC (“Zevia” or the “Company”) (NYSE: ZVIA), the company
disrupting the liquid refreshment beverage industry with great
tasting, zero sugar beverages made with simple, plant-based
ingredients, today reported results for the second quarter ended
June 30, 2021.
Second Quarter 2021 Highlights
- Net sales grew to $34.4 million, a record for the Company and a
24% increase versus Q2 2020
- Gross profit increased to $16.2 million, or 47% of net
sales
- Net loss was $0.7 million, or $0.30 per common share
- Adjusted EBITDA loss was $0.4 million (1)
“Zevia’s top-line momentum remained strong in the second
quarter, achieving 24% net sales growth and record net sales of
$34.4 million, despite cycling pantry loading activity in at-home
consumption channels in the second quarter of 2020,” said Paddy
Spence, Chair and Chief Executive Officer of Zevia. “We continue to
capture share gains, and our Soda business increased at six times
the overall category growth rate for the 12-week period ending
mid-June, reflecting our expanding distribution and increasing
velocity.
“Our recent initial public offering solidified our balance
sheet, fueling our next phase of growth, helping to build on the
32% compound annual net sales growth we’ve delivered for the past
10 years,” continued Mr. Spence. “With a powerful brand,
asset-light business model and high gross margins, Zevia is well
positioned for future growth in the global beverage industry. The
Company is committed to improving global public health by reducing
consumers’ intake of sugar, replacing single-use plastic beverage
packaging with sustainable alternatives, and providing
better-for-you products that are affordable for households across a
broad range of income brackets.”
Zevia was incorporated as a Delaware public benefit corporation
on March 23, 2021, and prior to the consummation of the
reorganization and our initial public offering (“IPO”), did not
conduct any activities other than those incidental to our formation
and the IPO. In connection with the completion of the IPO on July
26, 2021, the Company became the holding company of Zevia LLC, and
its sole material asset is a controlling equity interest in Zevia
LLC. As the sole managing member of Zevia LLC, the Company operates
and controls all of the business and affairs of Zevia LLC and,
through Zevia LLC, conducts its business and subsequent to July 26,
2021, consolidated the results of Zevia LLC and recorded a
non-controlling interest reflected for the portion of Zevia LLC not
owned by the Company. Zevia LLC became the predecessor of the
Company for financial reporting purposes. For more information
about our reorganization, see the section “Organizational
Structure—The Reorganization” in the prospectus dated July 21, 2021
and filed with the U.S. Securities and Exchange Commission (“SEC”)
on July 23, 2021.
Second Quarter Results
Net sales increased 24% to $34.4 million in the second quarter
of 2021, a record for the Company, compared to $27.7 million in the
second quarter of 2020. The growth in net sales was primarily a
result of increased cases sold, partially offset by higher trade
discounts.
Gross profit improved to $16.2 million for the second quarter, a
17% increase compared to $13.8 million in the prior year period. As
a percentage of revenues, gross margin was 47% in the second
quarter of 2021 compared to 50% in the second quarter of 2020 due
to consumer pantry-loading as a result of the COVID-19 pandemic, a
decrease of approximately 300 basis points reflecting lower net
price realization as a result of higher trade discounts.
Selling and marketing expense was $10.7 million compared to $5.7
million for the second quarter of 2020, primarily due to higher
transportation costs driven by higher freight rates and overall net
sales growth, as well as increased marketing spend compared to low
levels in 2020, which were largely associated with the COVID-19
pandemic.
General and administrative expense was $6.0 million compared to
$4.6 million for the second quarter 2020, primarily due to
increased staff, equipment and support services in connection with
our growth and in preparation to become a public company.
Net loss for the second quarter of fiscal 2021 was $0.7 million,
or $0.30 of diluted loss per share, compared to net income of $3.1
million, or $0.10 of diluted earnings per share in the second
quarter of 2020.
Adjusted EBITDA loss was $0.4 million in the second quarter of
fiscal 2021, compared to Adjusted EBITDA income of $3.5 million in
the second quarter of fiscal 2020. Adjusted EBITDA is a non-GAAP
financial measure. See the supplementary schedules in this press
release for a discussion of how we define and calculate this
measure and a reconciliation thereof to the most directly
comparable GAAP measure.
ESG Metrics and developments
In addition to financial metrics, the Company also reports ESG
metrics regarding sugar reduction, plastic packaging reduction, and
affordability. In the second quarter, Zevia estimates it eliminated
3 thousand metric tons of sugar from consumers’ diets by selling
its zero sugar, naturally sweetened products and replacing legacy
sugary sodas.
The Company also estimates that it eliminated 44 million plastic
bottles from littering roadways, waterways, and communities by
selling beverages only in aluminum packaging.
Regarding affordability, the Company’s products are priced at an
average retail price per ounce of $0.07, representing the 37th
percentile within all non-alcoholic, ready-to-drink beverages,
excluding dairy and non-dairy protein. Among non-alcoholic
beverages offered by companies that are certified B Corps, like
Zevia, the Company’s products are at the 20% percentile on price,
meaning that 80% of these products are more expensive than Zevia on
a price per ounce basis.
As of August 1, 2021, Mr. Spence will forgo his $306,820 annual
salary and 100% target bonus and move to $1 of cash compensation,
reflecting his confidence in Zevia’s future, and his commitment to
allocating financial resources to drive shareholder value. “We are
in an environment in which we believe CEO compensation is moving in
the wrong direction relative to worker pay, and in so many
successful companies, rewards are not being shared broadly across
the employee base. Income inequality is a top-of-mind concern for
me, and our leadership team, and we are committed to making a
change, starting now,” said Mr. Spence.
Balance Sheet and Cash Flows
As of June 30, 2021, prior to completion of our initial public
offering, the Company had $6.4 million in cash and no outstanding
debt. During the first half of fiscal 2021, the cash flow from
operations was essentially breakeven and the Company invested $2.0
million net capital expenditures.
Initial Public Offering
On July 26, 2021 the Company completed the IPO of 10,700,000
shares of its Class A common stock at a public offering price of
$14.00 per share. Total net proceeds for the offering were
approximately $139.7 million, net of underwriters’ discounts and
commissions of $10.1 million. The Company used approximately $25.5
million of the net proceeds to purchase Class B units from certain
of Zevia LLC’s unitholders, including certain members of our senior
management, approximately $0.4 million of the net proceeds to
cancel and cash-out outstanding options held by certain of Zevia
LLC’s option holders, including certain members of our senior
management and approximately $23.7 million of the net proceeds to
pay the cash consideration to certain institutional investors in
connection with the blocker mergers. The remaining proceeds of
$90.1 million were retained by the Company. The underwriters may
also exercise an option to purchase up to an additional 1,605,000
shares of our Class A common stock from the Company, at the public
offering price of $14.00 per share, less the underwriting discount,
until August 20, 2021.
Webcast and Conference Call
The Company will host a conference call today at 5:00 p.m.
Eastern Time to discuss this earnings release. Investors and other
interested parties may listen to the webcast of the conference call
by logging on via the Investor Relations section of Zevia’s website
at https://investors.zevia.com/ or directly here
https://link.edgepilot.com/s/894526dd/0o12kLFVFEa19QQ6pPCFvw?u=https://www.incommglobalevents.com/registration/q4inc/8446/zevia-q2-2021-earnings-call/.
Participants calling from the U.S. may dial in using the toll-free
phone number (844) 200-6205 or local number (646) 904-5544.
Participants calling from outside the U.S. may dial in using the
phone number +44 208 0682 558. The conference access code is
919375. A replay of the webcast will be available for approximately
thirty (30) days following the call at Zevia’s website at
https://investors.zevia.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or
achievements, and may contain words such as “believe,”
“anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or
words or phrases with similar meaning. Forward-looking statements
should not be read as a guarantee of future performance or results
and will not necessarily be accurate indications of the times at,
or by, which such performance or results will be achieved.
Forward-looking statements contained in this press release relate
to, among other things, statements regarding the anticipated
growth, distribution and velocity. Forward-looking statements are
based on current expectations, forecasts and assumptions that
involve risks and uncertainties, including, but not limited to, the
ability to develop and maintain our brand, change in consumer
preferences, and other economic, competitive and governmental
factors outside of our control, that may cause our business,
strategy or actual results to differ materially from the
forward-looking statements. We do not intend and undertake no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required by applicable law. Investors are referred to our
filings with the SEC for additional information regarding the risks
and uncertainties that may cause actual results to differ
materially from those expressed in any forward-looking
statement.
(1) Adjusted net loss and Adjusted EBITDA are non-GAAP financial
measures. See the supplementary schedules in this press release for
a discussion of how we define and calculate these measures and a
reconciliation thereof to the most directly comparable GAAP
measures.
About Zevia
Zevia PBC, a public benefit corporation designated as a
“Certified B Corporation,” is focused on addressing the global
health challenges resulting from excess sugar consumption by
offering a broad portfolio of zero sugar, zero calorie, naturally
sweetened beverages. All Zevia beverages are made with a handful of
simple, plant-based ingredients, contain no artificial sweeteners,
and are Non-GMO Project verified, gluten-free, Kosher, vegan and
zero sodium. As of 2020, Zevia is distributed in more than 25,000
retail locations in the U.S. and Canada through a diverse network
of major retailers in the food, drug, mass, natural and ecommerce
channels.
Financial Information
The tables below present financial results for the three and six
months ended June 30, 2021 and 2020:
ZEVIA LLC CONDENSED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands,
except for per unit and weighted average common units
outstanding) For the Three Months Ended June 30,
For the Six Months Ended June 30,
2021
2020
2021
2020
Net sales
$
34,352
$
27,677
$
65,046
$
50,167
Cost of goods sold
18,112
13,842
34,618
27,300
Gross profit
16,240
13,835
30,428
22,867
Operating expenses: Selling and marketing expenses
10,703
5,717
18,691
12,638
General and administrative expenses
6,014
4,643
11,727
8,976
Depreciation and amortization
230
250
474
473
Total operating expenses
16,947
10,610
30,892
22,087
Income (loss) from operations
(707
)
3,225
(464
)
780
Other expense, net
(42
)
(118
)
(38
)
(267
)
Net income (loss) and comprehensive income (loss)
$
(749
)
$
3,107
$
(502
)
$
513
Net income (loss) attributable to common unit holders
$
749
$
460
$
(502
)
$
79
Net income (loss) per unit attributable to common unit holders,
basic
$
(0.30
)
$
0.10
$
(0.20
)
$
0.02
Net income (loss) per unit attributable to common unit holders,
diluted
$
(0.30
)
$
0.10
$
(0.20
)
$
0.02
Weighted average common units outstanding, basic
2,476,386
4,549,828
2,469,518
4,549,828
Weighted average common units outstanding, diluted
2,476,386
30,747,747
2,469,518
29,607,836
ZEVIA LLC CONDENSED BALANCE SHEETS (UNAUDITED)
(in thousands, except unit and per unit amounts)
June 30, 2021 December 31, 2020 ASSETS Current
assets: Cash
$
6,380
$
14,936
Accounts receivable, net
9,417
6944
Inventories, net
22,544
20,800
Prepaid expenses and other current assets
5,979
1,492
Total current assets
44,320
44,172
Property and equipment, net
2,653
991
Right-of-use assets under operating leases, net
498
773
Intangible assets, net
3,838
3,939
Other non-current assets
82
81
Total assets
$
51,391
$
49,956
LIABILITIES AND REDEEMABLE CONVERTIBLE PREFERRED UNITS
AND MEMBERS’ DEFICIT Current liabilities: Accounts payable
$
10,806
$
7,770
Accrued expenses
3,689
3,429
Operating lease liabilities
548
623
Other current liabilities
3,781
2,251
Total current liabilities
18,824
14,073
Operating lease liabilities, net of current portion
10
238
Total liabilities
18,834
14,311
Commitments and contingencies Redeemable convertible preferred
units: No par values. Authorized units of 34,410,379 and
34,410,379; 26,322,803 and 26,322,803 units issued and outstanding
as of June 30, 2021 and December 31, 2020, respectively; and
aggregate liquidation preference, $329,753 and $329,753 as of June
30, 2021 and December 31, 2020, respectively.
232,457
232,457
Members’ deficit: Common units: No par value. Authorized units of
7,274,742 and 7,274,742; 2,476,386 and 2,438,812 units, issued and
outstanding on June 30, 2021 and December 31, 2020, respectively.
976
966
Additional paid-in capital
73
—
Accumulated deficit
(200,949
)
(197,778
)
Total members’ deficit
(199,900
)
(196,812
)
Total liabilities, redeemable convertible preferred units and
members’ deficit
$
51,391
$
49,956
ZEVIA LLC CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED) (in thousands) For the Six
Months Ended June 30,
2021
2020
Operating activities: Net income (loss)
$
(502
)
$
513
Adjustments to reconcile net income (loss) to net cash used in
operating activities: Non-cash lease expense
275
242
Depreciation and amortization
474
448
Loss on sale of equipment
8
—
Amortization of debt issuance cost
17
25
Unit-based compensation expense
73
58
Changes in operating assets and liabilities: Accounts receivable,
net
(2,473
)
(2,625
)
Inventories, net
(1,744
)
(7,117
)
Prepaid expenses and other current assets
380
318
Other non-current assets
(30
)
(21
)
Accounts payable
3,036
3,464
Accrued expenses
(778
)
724
Operating lease liabilities - current
(75
)
32
Other current liabilities
1,530
1,529
Operating lease liabilities, net of current portion
(228
)
(293
)
Net cash used in operating activities
(37
)
(2,703
)
Investing activities: Purchases of property and equipment
(2,031
)
(489
)
Net cash used in investing activities
(2,031
)
(489
)
Financing activities: Proceeds from exercise of common units
10
5
Proceeds from revolving line of credit
64,308
51,384
Repayment of revolving line of credit
(64,308
)
(48,660
)
Proceeds from PPP loan
—
1,429
Payment of deferred IPO costs
(3,829
)
—
Distribution to unitholder for tax payments
(2,669
)
—
Net cash (used in) provided by financing activities
(6,488
)
4,158
Net change from operating, investing, and financing activities
(8,556
)
966
Cash at beginning of period
14,936
3,243
Cash at end of period
$
6,380
$
4,209
Use of Non-GAAP Financial Information
We use financial measures that are not calculated in accordance
with U.S. generally accepted accounting principles (“GAAP”),
Adjusted EBITDA, and Adjusted Net Income (Loss). The Company’s
management believes that Adjusted EBITDA and Adjusted Net Income
(Loss), when taken together with our financial results presented in
accordance with GAAP, provide meaningful supplemental information
regarding our operating performance and facilitates internal
comparisons of our historical operating performance on a more
consistent basis by excluding certain items that may not be
indicative of our business, results of operations or outlook. In
particular, we believe that the use of Adjusted EBITDA and Adjusted
Net Income (Loss) are helpful to our investors as they are measures
used by management in assessing the health of our business,
determining incentive compensation and evaluating our operating
performance, as well as for internal planning and forecasting
purposes.
We calculate Adjusted EBITDA as net (loss) income adjusted to
exclude: (1) income tax expense, (2) depreciation and amortization
and (3) other income (expense), net, (4) interest expense, and (5)
equity-based compensation expense. Adjusted EBITDA may in the
future also be adjusted for amounts impacting net income related to
the Tax Receivable Agreement liability and other infrequent and
unusual transactions. We calculate Adjusted Net Income (Loss) as
net (loss) income adjusted to exclude equity-based compensation
expense.
Adjusted EBITDA and Adjusted Net Income (Loss) are presented for
supplemental informational purposes only, have limitations as
analytical tools and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. Some of the limitations of Adjusted EBITDA include that (1)
it does not properly reflect capital commitments to be paid in the
future, (2) although depreciation and amortization are non-cash
charges, the underlying assets may need to be replaced and Adjusted
EBITDA does not reflect these capital expenditures, (3) it does not
consider the impact of equity-based compensation expense, including
the potential dilutive impact thereof, and (4) it does not reflect
other non-operating expenses, including interest expense. Some of
the limitations of Adjusted Net Income (Loss) include that it does
not consider the impact of equity-based compensation expense,
including the potential dilutive impact thereof. In addition, our
use of Adjusted EBITDA and Adjusted Net Income (Loss) may not be
comparable to similarly titled measures of other companies because
they may not calculate Adjusted EBITDA or Adjusted Net Income
(Loss) in the same manner, limiting their usefulness as comparative
measures. Because of these limitations, when evaluating our
performance, you should consider Adjusted EBITDA and Adjusted Net
Income (Loss) alongside other financial measures, including our net
loss or income and other results stated in accordance with
GAAP.
The following table presents a reconciliation of net income
(loss), the most directly comparable financial measure stated in
accordance with US GAAP, to adjusted EBITDA for the periods
presented:
ZEVIA LLC Reconciliation of GAAP to Non-GAAP Measures
Net income (loss) to Adjusted EBITDA reconciliation (in
thousands) Three months ended June 30, Six
months ended June 30,
2021
2020
2021
2020
Net income (loss)
$
(749
)
$
3,107
$
(502
)
$
513
Add back: Income tax expense (benefit)
-
-
-
-
Other expense, net
42
118
38
267
Depreciation and amortization expense
230
250
474
473
Unit-based compensation expense
36
29
73
58
Adjusted EBITDA
$
(441
)
$
3,504
$
83
$
1,311
The following table presents a reconciliation of net income
(loss), the most directly comparable financial measure stated in
accordance with US GAAP, to adjusted net income (loss) for the
periods presented:
ZEVIA LLC Reconciliation of GAAP to Non-GAAP Measures
Net income (loss) to Adjusted net income (loss)
reconciliation (in thousands) Three months
ended June 30, Six months ended June 30,
2021
2020
2021
2020
Net income (loss)
$
(749
)
$
3,107
$
(502
)
$
513
Add back: Unit-based compensation expense
36
29
73
58
Adjusted net income (loss)
$
(713
)
$
3,136
$
(429
)
$
571
(ZEVIA-F)
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version on businesswire.com: https://www.businesswire.com/news/home/20210812005835/en/
Investors:
Stephanie Schonauer 714-313-7827 Steph@zevia.com
Reed Anderson ICR 646-277-1260 reed.anderson@icrinc.com
Media:
Sarah Kissko Hersh 646-283-8508 skisskohersh@percepture.com
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