Net Sales ahead of expectations for Q1 and
on-track for full-year
Q1 Gross Margin of 46.4%, up 4.7%
year-over-year and 2.1% sequentially
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 first quarter ended
March 31, 2023.
First Quarter 2023 Highlights
- Net sales increased 13.8% year-over-year to $43.3 million
- Unit volume decreased 2.7% year-over-year to 3.3 million
equivalized cases
- Gross profit margin of 46.4%, the strongest gross margin
percentage of any quarterly period to date as a public company
- Net loss was $2.9 million, including $2.4 million of non-cash
equity-based compensation expense, the strongest quarter to date as
a public company
- Adjusted EBITDA loss was $0.5 million(1), the strongest quarter
to date as a public company
- Loss per share was $0.04 per diluted share to Zevia’s Class A
common stockholders
“Margin and profitability improvements were defining
achievements in the first quarter, including a 470 basis point
increase in gross margin compared to the same quarter last year,
the strongest quarter since Zevia became a public company,” said
Amy Taylor, President and Chief Executive Officer. “Our team’s
sharp focus on cost management and execution were key factors
impacting our progress on our path to profitability. First quarter
results were aided by pricing actions last year which also helped
propel net sales ahead of our expectations.”
“Our first quarter results give us continued confidence in our
full-year outlook, as we enter the key spring and summer beverage
season from a position of strength,” Taylor continued. “Customer
reaction to our brand refresh has been overwhelmingly positive and
we expect the same from consumers as we begin to ramp up marketing
in support of the roll-out. We remain focused on expanding our
consumer base, driving trial and accelerating velocity as more
consumers are buying Zevia than ever. To support this continued
expansion, we plan to invest in marketing and our supply chain
optimization initiatives through the remainder of 2023.”
(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 2023 Results
Net sales increased 13.8% to $43.3 million in the first quarter
of 2023 compared to $38.0 million in the first quarter of 2022.
Growth in net sales was primarily driven by higher price
realizations partially offset by volume and mix factors.
Gross profit improved to $20.1 million for the first quarter of
2023, a 26.6% increase compared to $15.9 million in the first
quarter of 2022, reflecting net sales growth partially offset by
higher manufacturing costs as a result of inflationary pressures.
Gross profit margin of 46.4% was up 4.7% compared to the first
quarter of 2022 and up 2.1% on a sequential basis compared to the
fourth quarter of 2022. The year-over-year improvement in gross
profit margin was primarily due to growth in net sales driven by
pricing partially offset by slightly higher manufacturing costs as
a result of inflationary pressures.
Selling and marketing expenses were $11.9 million, or 27.5%, of
net sales in the first quarter of 2023 compared to $14.1 million,
or 36.9%, of net sales in the first quarter of 2022. The decrease
was primarily due to a $1.3 million reduction in freight and
warehousing costs and a $0.9 million decline in non-working
marketing costs.
General and administrative expenses were $8.6 million, or 20.0%,
of net sales in the first quarter of 2023 compared to $10.1
million, or 26.6%, of net sales in the first quarter of 2022. The
decrease was primarily due to a $1.2 million decrease in public
company costs due to expense optimization initiatives, and
decreased headcount and personnel costs.
Equity-based compensation, a non-cash expense, was $2.4 million
in the first quarter of 2023, compared to $8.9 million in the first
quarter of 2022. The decrease was primarily due to restricted stock
units and restricted phantom stock awards that vested over six
months following the Company's initial public offering in the prior
year period.
Net loss for the first quarter of 2023 was $2.9 million,
compared to net loss of $17.5 million in the first quarter of
2022.
Loss per share for the first quarter of 2023 was $0.04 per
diluted share to Zevia’s Class A common stockholders, compared to
loss per share of $0.28 in the first quarter of 2022.
Adjusted EBITDA loss was $0.5 million in the first quarter of
2023, compared to an Adjusted EBITDA loss of $8.3 million in the
first quarter of 2022. 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 March 31, 2023, the Company had $56.0 million in cash and
cash equivalents and no outstanding debt, as well as an unused
credit line of $20 million compared to $47.4 million in cash and
cash equivalents, no outstanding debt, and an unused line of credit
of $20 million as of December 31, 2022. As of March 31, 2023, the
Company had working capital of $73.3 million. The Company spent
$0.9 million on capital expenditures during the first quarter of
2023 to support its growth initiatives compared to capital
expenditures of $0.6 million during the first quarter of 2022.
2023 Guidance
The Company is maintaining its guidance for the full year of
2023 and continues to expect net sales to be in the range of $180
million to $190 million, an increase of 10% to 16% compared to
2022. For the second quarter of 2023, net sales are expected to be
in the range of $48 million to $51 million, an increase of 5% to
12% compared to the second quarter of 2022.
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 “on track,” “guidance,”
“outlook,” “believe,” “anticipate,” “expect,” “consider,”
“contemplate,” “continue,” “would,” “could,’” “may,” “potential,”
“estimate,” “intend,” “project,” “plan,” “seek,” “pursue,” “will,”
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 2023
Guidance and anticipated growth, strategic direction, branding,
operating environment, distribution, velocity, pricing and costs.
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 and cost reduction initiatives, change in consumer
preferences, pricing factors, 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, competitive and governmental factors outside of
our control, such as pandemics or epidemics, including the impact
of the effects of the COVID-19 pandemic, and adverse global
macroeconomic conditions, including rising interest rates,
instability in financial institutions and a recessionary
environment, and geopolitical events or conflicts, 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 32,000
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 March
31,
2023
2022
Net sales
$
43,300
$
38,034
Cost of goods sold
23,195
22,155
(1)
Gross profit
20,105
15,879
(1)
Operating expenses:
Selling and marketing
11,912
14,053
(1)
General and administrative
8,645
10,129
Equity-based compensation
2,380
8,901
Depreciation and amortization
419
351
Total operating expenses
23,356
33,434
Loss from operations
(3,251
)
(17,555
)
Other income, net
340
82
Loss before income taxes
(2,911
)
(17,473
)
Provision for income taxes
1
12
Net loss and comprehensive loss
(2,912
)
(17,485
)
Loss attributable to noncontrolling
interest
821
6,587
Net loss attributable to Zevia
PBC
$
(2,091
)
$
(10,898
)
Net loss per share attributable to common
stockholders
Basic
$
(0.03
)
$
(0.28
)
Diluted
$
(0.04
)
$
(0.28
)
Weighted average common shares
outstanding
Basic
49,372,874
38,371,713
Diluted
72,250,338
38,371,713
(1) Included in the accompanying results for the three months
ended March 31, 2022, are $1.3 million of expenses previously
recorded as cost of goods sold that the Company has reclassified to
selling and marketing expenses to conform to the current
presentation.
ZEVIA PBC CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (in thousands)
March 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
55,957
$
47,399
Accounts receivable, net
14,316
11,077
Inventories
28,950
27,576
Assets held-for-sale
2,157
—
Prepaid expenses and other current
assets
2,061
2,607
Total current assets
103,441
88,659
Property and equipment, net
2,655
4,641
Right-of-use assets under operating
leases, net
2,384
708
Intangible assets, net
4,222
4,385
Other non-current assets
520
539
Total assets
$
113,222
$
98,932
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
22,177
$
8,023
Accrued expenses and other current
liabilities
7,383
8,408
Current portion of operating lease
liabilities
577
715
Total current liabilities
30,137
17,146
Operating lease liabilities, net of
current portion
1,808
—
Total liabilities
31,945
17,146
Stockholders’ equity
Class A common stock
50
48
Class B common stock
21
22
Additional paid-in capital
191,402
189,724
Accumulated deficit
(81,934
)
(79,843
)
Total Zevia PBC stockholder’s
equity
109,539
109,951
Noncontrolling interests
(28,262
)
(28,165
)
Total equity
81,277
81,786
Total liabilities and equity
$
113,222
$
98,932
ZEVIA PBC CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Three Months Ended March
31,
2023
2022
Operating activities:
Net loss
$
(2,912
)
$
(17,485
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Non-cash lease expense
142
149
Depreciation and amortization
419
351
Amortization of debt issuance cost
19
—
Equity-based compensation
2,380
8,901
Changes in operating assets and
liabilities:
Accounts receivable, net
(3,239
)
(4,376
)
Inventories
(1,374
)
(920
)
Prepaid expenses and other assets
546
957
Accounts payable
14,589
1,645
Accrued expenses and other current
liabilities
(1,025
)
(456
)
Operating lease liabilities
(148
)
(166
)
Net cash provided by (used in) operating
activities
9,397
(11,400
)
Investing activities:
Purchases of property, equipment and
software
(862
)
(565
)
Net cash used in investing activities
(862
)
(565
)
Financing activities:
Payment of debt issuance costs
—
(213
)
Minimum tax withholding paid on behalf of
employees for net share settlement
—
(2,130
)
Proceeds from exercise of stock
options
23
16
Net cash provided by (used in) financing
activities
23
(2,327
)
Net change from operating, investing, and
financing activities
8,558
(14,292
)
Cash and cash equivalents at beginning of
period
47,399
43,110
Cash and cash equivalents at end of
period
$
55,957
$
28,818
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, and (4)
equity-based compensation. 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. 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,
2023
2022
Net loss and comprehensive loss
$
(2,912
)
$
(17,485
)
Other income, net*
(340
)
(82
)
Provision for income taxes
1
12
Depreciation and amortization
419
351
Equity-based compensation
2,380
8,901
Adjusted EBITDA
$
(452
)
$
(8,303
)
* 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/20230509005348/en/
Media Annie Thompson Edelman Smithfield 713-299-4115
Annie.Thompson@edelmansmithfield.com Investors Reed Anderson
ICR 646-277-1260 Reed.Anderson@icrinc.com
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