Net Sales of $40.4 million, exceeding
guidance
Productivity Initiative now expected to deliver
$12 million of annualized savings
Zevia PBC (“Zevia” or the “Company”) (NYSE: ZVIA), the Company
bringing naturally delicious, zero sugar, clean-label beverages
across usage occasions today reported results for the second
quarter ended June 30, 2024.
Second Quarter 2024 Highlights
- Net sales of $40.4 million, exceeding guidance
- Gross profit margin was 41.9%, impacted by inventory
write-downs
- Net loss was $7.0 million, including $1.4 million of non-cash
equity-based compensation expense
- Adjusted EBITDA loss was $4.4 million(1)
- Loss per share was $0.10 per diluted share to Zevia’s Class A
Common stockholders
(1) 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.
“We delivered net sales above our guidance in the second
quarter, and scan sales reflect accelerating retail growth trends
through the quarter and into July,” said Amy Taylor, President and
Chief Executive Officer. “Demand is healthy, and Zevia shopper
spending levels continue to increase. Recent 4-week retail scan
growth for Zevia soda was double-digits and ahead of the Carbonated
Soft Drinks category in dollars and in units in a competitive
environment.”
“Our new regional distribution partners are driving same-store
sales improvement and opening outlets in new channels in their
first weeks in market as expected, and we see proof of our
increasing marketing efficacy as retail sales from key focus metros
significantly outperform,” Taylor continued. “With a healthy brand,
strong consumer demand, and an evolving route-to-market strategy,
coupled with increased marketing and product innovation in the
pipeline, we remain bullish on our long-term growth
opportunities.”
Second Quarter 2024 Results
Net sales decreased 4.3% to $40.4 million in the second quarter
of 2024 compared to $42.2 million in the second quarter of 2023,
primarily driven by a delay in the recovery of SKU level
distribution at retailers, a lag effect from customer fulfillment
issues in 2023, and lost distribution in our club channel,
resulting in reduced volumes of 5.9%, partially offset by higher
price realizations which is inclusive of greater promotional levels
at retailers.
Gross profit decreased 14.0% year-over-year to $16.9 million for
the second quarter of 2024 compared to $19.7 million in the second
quarter of 2023, and gross profit margin of 41.9% decreased 4.7
percentage points compared to the second quarter of 2023. The
decline in gross profit margin was primarily driven by inventory
write-downs related to club specific excess inventory as a result
of lost distribution, unfavorable cost of goods sold from higher
unit costs largely from investments in enhanced visuals to improve
on-shelf visibility, and a return to more competitive promotional
levels.
Selling and marketing expenses were $13.6 million, or 33.7%, of
net sales in the second quarter of 2024 compared to $16.1 million,
or 38.1%, of net sales in the second quarter of 2023. The decrease
was primarily due to a decrease in freight transfers as a result of
the impact of supply chain logistics challenges in the prior year,
a decrease in repackaging costs due to automation, a decrease in
freight costs due to lower volume, and a decrease in warehousing
costs due to the consolidation of warehouses. These decreases were
partially offset by investments made in marketing to drive brand
awareness.
General and administrative expenses were $7.7 million, or 19.0%,
of net sales in the second quarter of 2024 compared to $6.2
million, or 14.7%, of net sales in the second quarter of 2023. The
increase of $1.5 million was primarily driven by the benefit in the
prior year of an accrual reversal, as well as higher employee
costs, partially offset by a decrease in costs as a result of our
Productivity Initiative.
Restructuring expenses were $0.9 million in the second quarter
of 2024 which primarily includes employee related severance costs
as well as costs to exit two of our third-party warehouse and
distribution facilities.
Equity-based compensation, a non-cash expense, was $1.4 million
in the second quarter of 2024, compared to $2.4 million in the
second quarter of 2023. The decrease of $0.9 million was largely
due to the accelerated method of expense recognition on certain
equity awards issued in connection with the Company’s IPO in 2021,
partially offset by equity-based compensation expense related to
new equity awards granted.
Net loss for the second quarter of 2024 was $7.0 million,
compared to net loss of $5.0 million in the second quarter of
2023.
Loss per share for the second quarter of 2024 was $0.10 per
diluted share to Zevia’s Class A Common stockholders, compared to
loss per share of $0.08 in the second quarter of 2023.
Adjusted EBITDA loss was $4.4 million in the second quarter of
2024, compared to an Adjusted EBITDA loss of $2.6 million in the
second quarter of 2023. 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.
Balance Sheet and Cash Flows
As of June 30, 2024, the Company had $28.9 million in cash and
cash equivalents and no outstanding debt, as well as an unused
credit line of $20 million.
Guidance
The Company is reaffirming its guidance for the full year of
2024 and continues to expect net sales to be in the range of $158
million to $166 million. For the third quarter of 2024, net sales
are expected to be in the range of $37 million to $40 million.
Webcast
The Company will host a conference call today at 8:30 a.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. A replay of the
webcast will be available for approximately thirty (30) days
following the call.
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 “anticipate,”
“believe,” “consider,” “contemplate,” “continue,” “could,’”
“estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “on
track,” “outlook,” “plan,” “potential,” “predict,” “project,”
pursue,” “seek,” “should,” “target,” “will,” “would,” or the
negative of these words or other similar words, terms or
expressions with similar meanings. 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 2024 Guidance,
expected benefits of and annualized cost savings from the
Productivity Initiative, long-term growth opportunities, future
results of operations or financial condition, strategic direction,
and plans and objectives of management for future operations,
including marketing and product innovation. 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, our
ability to successfully execute on our rebranding strategy, cost
reduction initiatives, and to compete effectively, our ability to
maintain supply chain service levels and any disruption of our
supply chain, product demand, changes in the retail landscape or in
sales to any key customer, change in consumer preferences, pricing
factors, our ability to manage changes in our workforce, future
cyber incidents and other disruptions to our information systems,
failure to comply with personal data protection and privacy laws,
the impact of inflation on our sales growth and cost structure such
as increased commodity, packaging, transportation and freight,
warehouse, labor and other input costs and other economic
conditions, our reliance on contract manufacturers and service
providers, competitive and governmental factors outside of our
control, such as pandemics or epidemics, adverse global
macroeconomic conditions, including relatively high interest rates,
instability in financial institutions and a recessionary
environment, any potential shutdown of the U.S. government, and
geopolitical events or conflicts, including the military conflicts
in Ukraine and the Middle East and trade tensions between the U.S.
and China, failure to adequately protect our intellectual property
rights or infringement on intellectual property rights of others,
potential liabilities and costs from litigation, claims, legal or
regulatory proceedings, inquiries or investigations, 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 U.S. Securities and Exchange Commission for
additional information regarding the risks and uncertainties that
may cause actual results to differ materially from those expressed
in any forward-looking statement.
About Zevia
Zevia PBC, a Delaware 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. Zevia is distributed in more than 34,000
retail locations in the U.S. and Canada through a diverse network
of major retailers in the food, drug, warehouse club, mass, natural
and ecommerce channels.
(ZEVIA-F)
ZEVIA PBC CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (in
thousands, except share and per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net sales
$
40,426
$
42,241
$
79,225
$
85,541
Cost of goods sold
23,484
22,549
44,564
45,744
Gross profit
16,942
19,692
34,661
39,797
Operating expenses:
Selling and marketing
13,622
16,100
28,692
28,012
General and administrative
7,694
6,207
15,809
14,852
Equity-based compensation
1,427
2,358
2,916
4,738
Depreciation and amortization
403
404
731
823
Restructuring
865
—
865
—
Total operating expenses
24,011
25,069
49,013
48,425
Loss from operations
(7,069
)
(5,377
)
(14,352
)
(8,628
)
Other income, net
142
403
239
743
Loss before income taxes
(6,927
)
(4,974
)
(14,113
)
(7,885
)
Provision for income taxes
34
35
47
36
Net loss and comprehensive loss
(6,961
)
(5,009
)
(14,160
)
(7,921
)
Loss attributable to noncontrolling
interest
1,070
1,078
2,445
1,899
Net loss attributable to Zevia
PBC
$
(5,891
)
$
(3,931
)
$
(11,715
)
$
(6,022
)
Net loss per share attributable to common
stockholders
Basic
$
(0.10
)
$
(0.08
)
$
(0.20
)
$
(0.11
)
Diluted
$
(0.10
)
$
(0.08
)
$
(0.20
)
$
(0.11
)
Weighted average common shares
outstanding
Basic
58,653,413
50,094,096
57,285,039
49,735,478
Diluted
58,653,413
50,094,096
57,285,039
49,735,478
ZEVIA PBC CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (in thousands)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
28,942
$
31,955
Accounts receivable, net
11,351
11,119
Inventories
22,254
34,550
Prepaid expenses and other current
assets
2,952
5,063
Total current assets
65,499
82,687
Property and equipment, net
1,709
2,109
Right-of-use assets under operating
leases, net
1,662
1,959
Intangible assets, net
3,363
3,523
Other non-current assets
541
579
Total assets
$
72,774
$
90,857
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
12,129
$
21,169
Accrued expenses and other current
liabilities
8,456
5,973
Current portion of operating lease
liabilities
610
575
Total current liabilities
21,195
27,717
Operating lease liabilities, net of
current portion
1,056
1,373
Total liabilities
22,251
29,090
Stockholders’ equity
Class A common stock
59
54
Class B common stock
14
17
Additional paid-in capital
187,969
191,144
Accumulated deficit
(113,052
)
(101,337
)
Total Zevia PBC stockholders’
equity
74,990
89,878
Noncontrolling interests
(24,467
)
(28,111
)
Total equity
50,523
61,767
Total liabilities and equity
$
72,774
$
90,857
ZEVIA PBC CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Six Months Ended June
30,
2024
2023
Operating activities:
Net loss
$
(14,160
)
$
(7,921
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Non-cash lease expense
297
281
Depreciation and amortization
731
823
(Gain) loss on disposal of property,
equipment and software, net
(9
)
3
Amortization of debt issuance cost
38
38
Equity-based compensation
2,916
4,738
Changes in operating assets and
liabilities:
Accounts receivable, net
(232
)
(5,860
)
Inventories
12,296
(10,020
)
Prepaid expenses and other assets
2,111
554
Accounts payable
(9,109
)
20,171
Accrued expenses and other current
liabilities
2,483
(1,447
)
Operating lease liabilities
(282
)
(289
)
Net cash (used in) provided by operating
activities
(2,920
)
1,071
Investing activities:
Purchases of property, equipment and
software
(93
)
(1,532
)
Proceeds from sales of property, equipment
and software
—
69
Net cash used in investing activities
(93
)
(1,463
)
Financing activities:
Proceeds from revolving line of credit
8,000
—
Repayment of revolving line of credit
(8,000
)
—
Proceeds from exercise of stock
options
—
23
Net cash provided by financing
activities
—
23
Net change from operating, investing, and
financing activities
(3,013
)
(369
)
Cash and cash equivalents at beginning of
period
31,955
47,399
Cash and cash equivalents at end of
period
$
28,942
$
47,030
Use of Non-GAAP Financial Information
We use Adjusted EBITDA, a financial measure that is not
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). The Company’s management believes that
Adjusted EBITDA, when taken together with our financial results
presented in accordance with GAAP, provides 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 is helpful
to our investors as it is a measure 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 income (loss) adjusted to
exclude: (1) other income (expense), net, which includes interest
(income) expense, foreign currency (gains) losses, and (gains)
losses on disposal of fixed assets, (2) provision (benefit) for
income taxes, (3) depreciation and amortization, (4) equity-based
compensation, and (5) restructuring expenses (for 2024, in light of
our Productivity Initiative). 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.
Adjusted EBITDA is presented for supplemental informational
purposes only, has limitations as an analytical tool 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 (income) expense,
foreign currency (gains) losses and (gains) losses on disposal of
fixed assets, and restructuring. In addition, our use of Adjusted
EBITDA may not be comparable to similarly titled measures of other
companies because they may not calculate Adjusted EBITDA in the
same manner, limiting its usefulness as a comparative measure.
Because of these limitations, when evaluating our performance, you
should consider Adjusted EBITDA 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 loss, the
most directly comparable financial measure stated in accordance
with GAAP, to Adjusted EBITDA for the periods presented:
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands)
2024
2023
2024
2023
Net loss and comprehensive loss
$
(6,961
)
$
(5,009
)
$
(14,160
)
$
(7,921
)
Other income, net*
(142
)
(403
)
(239
)
(743
)
Provision for income taxes
34
35
47
36
Depreciation and amortization
403
404
731
823
Equity-based compensation
1,427
2,358
2,916
4,738
Restructuring
865
—
865
—
Adjusted EBITDA
$
(4,374
)
$
(2,615
)
$
(9,840
)
$
(3,067
)
* Includes interest (income) expense,
foreign currency (gains) losses, and (gains) losses on disposal of
fixed assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807949632/en/
Investors Greg Davis Zevia PBC 424-343-2654
Gregory@zevia.com
Reed Anderson ICR 646-277-1260 Reed.Anderson@icrinc.com
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