Zevia Announces First Quarter 2024 Results
Zevia announced its first quarter 2024 results, highlighting a 10.4% decrease in net sales and unit volume, a gross profit margin of 45.7%, and a net loss of $7.2 million. The company reported a focused productivity initiative targeting cost benefits of $8-$12 million annually, amidst challenges faced in 2023. Zevia aims to re-energize growth in the latter part of the year by launching regional direct-store-delivery partnerships and driving towards profitability.
Zevia reported strong gross margins and successful price increase implementation in Q2.
The company launched a direct-store-delivery roll out to drive growth and improve in-store presence, positioning itself well for acceleration in the convenience channel.
Zevia has a scalable supply chain and a strong balance sheet, providing a solid foundation for growth and innovation in its highest margin products.
Net sales and unit volume saw a decline of 10.4% year over year, attributed to fulfillment challenges faced in 2023.
Gross profit margin decreased 0.8 percentage points year over year due to competitive promotional levels and unfavorable cost of goods sold.
Adjusted EBITDA loss was $5.5 million in the first quarter of 2024, a significant increase from the previous year's loss of $0.5 million.
Insights
Examining Zevia's Q1 2024 financials, the 10.4% decline in net sales to
The reported net loss widening to
Despite these headwinds, the company has a strong balance sheet with
Zevia's push into direct-store-delivery (DSD) partnerships is an intriguing development in their route-to-market strategy. This move could enhance their presence in the convenience channel and potentially improve margins through single-serving sales. However, the effectiveness of this strategy will depend on execution and market response and is therefore speculative at this point.
The emphasis on the growth of the soda category signals a strategic focus on a market segment where they are gaining traction—their leadership in growth in scan data is an encouraging sign. Yet, if the overall unit volume is decreasing, this raises questions about the broader appeal of their products or competitive pressures.
The initiative to improve operational excellence and foster innovation could attract investors interested in long-term company health, though the impact on immediate financial performance might be limited. The projected full-year net sales indicate optimism but considering the Q1 performance, investors should weigh the risks of Zevia's ability to rebound in a highly competitive beverage market.
Launches regional direct-store-delivery partnerships in first phase of route-to-market evolution
Announces productivity initiative targeting annualized cost benefits of
First Quarter 2024 Highlights
-
Net sales decreased
10.4% year over year to$38.8 million -
Unit volume decreased
10.4% year over year to 3.0 million equivalized cases -
Gross profit margin was
45.7% , down 0.8 percentage points year over year but up 5.0 percentage points from prior quarter -
Net loss was
, including$7.2 million of non-cash equity-based compensation expense$1.5 million -
Adjusted EBITDA loss was
(1)$5.5 million -
Loss per share was
per diluted share to Zevia’s Class A Common stockholders$0.10
(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. |
“First quarter results were in line with our expectations as we continued to encounter top-line headwinds stemming from the fulfillment challenges we faced in 2023,” said Amy Taylor, President and Chief Executive Officer. “Demand is healthy as velocity is growing and accelerating each period. Scan data shows Zevia is now leading the soda category in growth in recent periods. Our business fundamentals are improving based upon strong gross margins and a successful implementation of a price increase in Q2.”
“I am also excited to announce the first phase of our direct-store-delivery roll out. DSD will enable our acceleration into the convenience channel as well as the margin-accretive and trial-driving singles distribution, while improving in-store presence in our existing footprint. We are launching in a strong Zevia market in the Pacific Northwest this week with best-in-class partners. Coupled with broader productivity initiatives, as well as our scalable supply chain and strong balance sheet, we are well positioned to re-energize growth in the back half of the year, and drive towards profitability.”
First Quarter 2024 Results
Net sales decreased
Gross profit decreased
Selling and marketing expenses were
General and administrative expenses were
Equity-based compensation, a non-cash expense, was
Net loss for the first quarter of 2024 was
Loss per share for the first quarter of 2024 was
Adjusted EBITDA loss was
Balance Sheet and Cash Flows
As of March 31, 2024, the Company had
Productivity Initiative
The Company recently began executing a multi-year, broad-based Productivity Initiative designed to realign our cost structure in order to accelerate our route-to-market evolution and build the Zevia brand. We expect estimated annualized benefits in the range of
Guidance
The Company expects net sales for the full year of 2024 to be in the range of
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
About Zevia
Zevia PBC, a
(ZEVIA-F)
ZEVIA PBC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (in thousands, except share and per share amounts) |
||||||||
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
38,799 |
|
|
$ |
43,300 |
|
Cost of goods sold |
|
|
21,080 |
|
|
|
23,195 |
|
Gross profit |
|
|
17,719 |
|
|
|
20,105 |
|
Operating expenses: |
|
|
|
|
|
|
||
Selling and marketing |
|
|
15,070 |
|
|
|
11,912 |
|
General and administrative |
|
|
8,115 |
|
|
|
8,645 |
|
Equity-based compensation |
|
|
1,489 |
|
|
|
2,380 |
|
Depreciation and amortization |
|
|
328 |
|
|
|
419 |
|
Total operating expenses |
|
|
25,002 |
|
|
|
23,356 |
|
Loss from operations |
|
|
(7,283 |
) |
|
|
(3,251 |
) |
Other income, net |
|
|
97 |
|
|
|
340 |
|
Loss before income taxes |
|
|
(7,186 |
) |
|
|
(2,911 |
) |
Provision for income taxes |
|
|
13 |
|
|
|
1 |
|
Net loss and comprehensive loss |
|
|
(7,199 |
) |
|
|
(2,912 |
) |
Loss attributable to noncontrolling interest |
|
|
1,375 |
|
|
|
821 |
|
Net loss attributable to Zevia PBC |
|
$ |
(5,824 |
) |
|
$ |
(2,091 |
) |
|
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders |
|
|
|
|
|
|
||
Basic |
|
$ |
(0.10 |
) |
|
$ |
(0.03 |
) |
Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
||
Weighted average common shares outstanding |
|
|
|
|
|
|
||
Basic |
|
|
55,890,168 |
|
|
|
49,372,874 |
|
Diluted |
|
|
55,890,168 |
|
|
|
72,250,338 |
|
ZEVIA PBC CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) |
||||||||
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
28,720 |
|
|
$ |
31,955 |
|
Accounts receivable, net |
|
|
14,048 |
|
|
|
11,119 |
|
Inventories |
|
|
30,621 |
|
|
|
34,550 |
|
Prepaid expenses and other current assets |
|
|
3,965 |
|
|
|
5,063 |
|
Total current assets |
|
|
77,354 |
|
|
|
82,687 |
|
Property and equipment, net |
|
|
1,902 |
|
|
|
2,109 |
|
Right-of-use assets under operating leases, net |
|
|
1,812 |
|
|
|
1,959 |
|
Intangible assets, net |
|
|
3,435 |
|
|
|
3,523 |
|
Other non-current assets |
|
|
560 |
|
|
|
579 |
|
Total assets |
|
$ |
85,063 |
|
|
$ |
90,857 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
|
19,045 |
|
|
$ |
21,169 |
|
Accrued expenses and other current liabilities |
|
|
8,153 |
|
|
|
5,973 |
|
Current portion of operating lease liabilities |
|
|
592 |
|
|
|
575 |
|
Total current liabilities |
|
|
27,790 |
|
|
|
27,717 |
|
Operating lease liabilities, net of current portion |
|
|
1,216 |
|
|
|
1,373.0 |
|
Total liabilities |
|
|
29,006 |
|
|
|
29,090 |
|
|
|
|
|
|
|
|
||
Stockholders’ equity |
|
|
|
|
|
|
||
Class A common stock |
|
|
58 |
|
|
|
54 |
|
Class B common stock |
|
|
14 |
|
|
|
17 |
|
Additional paid-in capital |
|
|
187,366 |
|
|
|
191,144 |
|
Accumulated deficit |
|
|
(107,161 |
) |
|
|
(101,337 |
) |
Total Zevia PBC stockholders’ equity |
|
|
80,277 |
|
|
|
89,878 |
|
Noncontrolling interests |
|
|
(24,220 |
) |
|
|
(28,111 |
) |
Total equity |
|
|
56,057 |
|
|
|
61,767 |
|
Total liabilities and equity |
|
$ |
85,063 |
|
|
$ |
90,857 |
|
ZEVIA PBC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) |
||||||||
|
|
Three Months Ended March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(7,199 |
) |
|
$ |
(2,912 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
147 |
|
|
|
142 |
|
Depreciation and amortization |
|
|
328 |
|
|
|
419 |
|
Gain on disposal of property, equipment and software, net |
|
|
(12 |
) |
|
|
— |
|
Amortization of debt issuance cost |
|
|
19 |
|
|
|
19 |
|
Equity-based compensation |
|
|
1,489 |
|
|
|
2,380 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
(2,929 |
) |
|
|
(3,239 |
) |
Inventories |
|
|
3,929 |
|
|
|
(1,374 |
) |
Prepaid expenses and other assets |
|
|
1,098 |
|
|
|
546 |
|
Accounts payable |
|
|
(2,112 |
) |
|
|
14,589 |
|
Accrued expenses and other current liabilities |
|
|
2,180 |
|
|
|
(1,025 |
) |
Operating lease liabilities |
|
|
(140 |
) |
|
|
(148 |
) |
Net cash (used in) provided by operating activities |
|
|
(3,202 |
) |
|
|
9,397 |
|
Investing activities: |
|
|
|
|
|
|
||
Purchases of property, equipment and software |
|
|
(33 |
) |
|
|
(862 |
) |
Net cash used in investing activities |
|
|
(33 |
) |
|
|
(862 |
) |
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 |
|
|
(3,235 |
) |
|
|
8,558 |
|
Cash and cash equivalents at beginning of period |
|
|
31,955 |
|
|
|
47,399 |
|
Cash and cash equivalents at end of period |
|
$ |
28,720 |
|
|
$ |
55,957 |
|
Use of Non-GAAP Financial Information
We use Adjusted EBITDA, a financial measure that is not calculated in accordance with
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, and (4) equity-based compensation. Also, Adjusted EBITDA may in the future 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. 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 comparative measures. 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 March 31, |
|
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
||
Net loss and comprehensive loss |
|
$ |
(7,199 |
) |
|
$ |
(2,912 |
) |
|
Other income, net* |
|
|
(97 |
) |
|
|
(340 |
) |
|
Provision for income taxes |
|
|
13 |
|
|
|
1 |
|
|
Depreciation and amortization |
|
|
328 |
|
|
|
419 |
|
|
Equity-based compensation |
|
|
1,489 |
|
|
|
2,380 |
|
|
Adjusted EBITDA |
|
$ |
(5,466 |
) |
|
$ |
(452 |
) |
|
* 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/20240508927488/en/
Investors
Greg Davis
Zevia PBC
424-343-2654
Gregory@zevia.com
Reed Anderson
ICR
646-277-1260
Reed.Anderson@icrinc.com
Source: Zevia PBC
FAQ
<p>What were Zevia's net sales for the first quarter of 2024?</p>
Zevia's net sales for the first quarter of 2024 were $38.8 million, reflecting a 10.4% decrease from the same period in 2023.
<p>What was Zevia's gross profit margin in the first quarter of 2024?</p>
Zevia's gross profit margin was 45.7% in the first quarter of 2024, down 0.8 percentage points year over year.
<p>Did Zevia experience a net loss in the first quarter of 2024?</p>
Yes, Zevia reported a net loss of $7.2 million in the first quarter of 2024, including $1.5 million of non-cash equity-based compensation expense.
<p>What is Zevia's stock symbol?</p>
Zevia's stock symbol is ZVIA.
<p>What is Zevia's guidance for net sales in 2024?</p>
Zevia expects net sales for the full year of 2024 to be in the range of $158 million to $166 million.