Q2 Gross Margin of 46.6%, up 4.2 percentage
points year-over-year
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, 2023.
Second Quarter 2023 Highlights
- Net sales decreased 7.2% year over year to $42.2 million
- Unit volume decreased 16.8% year over year to 3.3 million
equivalized cases
- Gross profit margin of 46.6%, up 4.2 percentage points year
over year, and the strongest gross margin percentage of any
quarterly period to date as a public company
- Net loss was $5.0 million, including $2.4 million of non-cash
equity-based compensation expense
- Adjusted EBITDA loss was $2.6 million(1)
- Loss per share was $0.08 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.
“Demand and brand health remain strong even in the midst of
short-term service level disruption in the quarter, which we are
taking swift actions to address and resolve by or before year-end,”
said Amy Taylor, President and Chief Executive Officer. “Our order
book exceeded our expectations through the quarter and was
reflective of double-digit growth in velocity, bolstered by the
Zevia brand refresh, strong new flavors, and key initiatives to
expand our retail presence. Well-executed pricing actions
supporting our ‘premium-but-accessible’ positioning have been well
received and continue to deliver margin improvement. We remain
focused on delivering sustainable, profitable growth by
capitalizing on the strong demand for the Zevia brand, improving
profitability, stabilizing and optimizing our supply chain, and
ultimately, advancing our mission of impacting global health for
people and the planet.”
Second Quarter 2023 Results
Net sales decreased 7.2% to $42.2 million in the second quarter
of 2023 compared to $45.5 million in the second quarter of 2022, as
higher price realizations were more than offset by a decrease in
volumes due to short-term supply chain logistics challenges
hindering fulfillment.
Gross profit improved to $19.7 million for the second quarter of
2023, a 1.9% increase compared to $19.3 million in the second
quarter of 2022, primarily driven by pricing increases taken in
2022 and 2023, partially offset by lower volumes and slightly
higher manufacturing costs. Gross profit margin of 46.6% was up 4.2
percentage points compared to the second quarter of 2022 and up 20
basis points on a sequential basis compared to the first quarter of
2023. The year-over-year improvement in gross profit margin was
primarily due to pricing increases, partially offset by slightly
higher manufacturing costs as a result of inflationary pressures
and labor rates.
Selling and marketing expenses were $16.1 million, or 38.1%, of
net sales in the second quarter of 2023 compared to $15.9 million,
or 34.9%, of net sales in the second quarter of 2022. The increase
was primarily due to increases in freight and warehousing rates
associated with short-term supply chain logistics challenges, and
additional investments in marketing in the period due to the
planned brand refresh, partially offset by a reduction in
volume.
General and administrative expenses were $6.2 million, or 14.7%,
of net sales in the second quarter of 2023 compared to $9.8
million, or 21.6%, of net sales in the second quarter of 2022. The
decrease was primarily due to a $2.4 million decrease in employee
costs, and $1.3 million decrease in public company costs and
reductions in discretionary spend due to expense optimization
initiatives.
Equity-based compensation, a non-cash expense, was $2.4 million
in the second quarter of 2023, compared to $8.0 million in the
second quarter of 2022. The decrease of $5.7 million was primarily
driven by $3.8 million of lower equity-based compensation expense
due to the acceleration of vesting of restricted stock unit awards
upon retirement of a senior management employee in the second
quarter of 2022, and $1.0 million of expense relating to a senior
management employee who retired in the third quarter of 2022 and
therefore there was no related expense in the second quarter of
2023. The remaining $1.5 million decrease was largely related 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 2023 was $5.0 million,
compared to net loss of $14.8 million in the second quarter of
2022.
Loss per share for the second quarter of 2023 was $0.08 per
diluted share to Zevia’s Class A Common stockholders, compared to
loss per share of $0.27 in the second quarter of 2022.
Adjusted EBITDA loss was $2.6 million in the second quarter of
2023, compared to an Adjusted EBITDA loss of $6.4 million in the
second 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 June 30, 2023, the Company had $47.0 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 credit line of
$20 million as of December 31, 2022. As of June 30, 2023, the
Company had working capital of $70.4 million.
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 $163
million to $168 million. For the third quarter of 2023, net sales
are expected to be in the range of $38 million to $41 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 2023 Guidance and
anticipated growth, supply chain service levels and our efforts to
resolve supply chain logistics challenges, 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, our
ability to restore supply chain service levels on the anticipated
timeline, product demand, 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, 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales
$
42,241
$
45,542
$
85,541
$
83,576
Cost of goods sold
22,549
26,221
(1)
45,744
48,376
(1)
Gross profit
19,692
19,321
(1)
39,797
35,200
(1)
Operating expenses:
Selling and marketing
16,100
15,875
(1)
28,012
29,928
(1)
General and administrative
6,207
9,818
14,852
19,947
Equity-based compensation
2,358
8,043
4,738
16,944
Depreciation and amortization
404
328
823
679
Total operating expenses
25,069
34,064
48,425
67,498
Loss from operations
(5,377
)
(14,743
)
(8,628
)
(32,298
)
Other income (expense), net
403
(44
)
743
38
Loss before income taxes
(4,974
)
(14,787
)
(7,885
)
(32,260
)
Provision for income taxes
35
9
36
21
Net loss and comprehensive loss
(5,009
)
(14,796
)
(7,921
)
(32,281
)
Loss attributable to noncontrolling
interest
1,078
3,706
1,899
10,293
Net loss attributable to Zevia
PBC
$
(3,931
)
$
(11,090
)
$
(6,022
)
$
(21,988
)
Net loss per share attributable to common
stockholders
Basic
$
(0.08
)
$
(0.27
)
$
(0.11
)
$
(0.56
)
Diluted
$
(0.08
)
$
(0.27
)
$
(0.11
)
$
(0.56
)
Weighted average common shares
outstanding
Basic
50,094,096
42,051,987
49,735,478
40,232,598
Diluted
50,094,096
42,051,987
49,735,478
40,232,598
(1) Included in the accompanying results for the three and six
months ended June 30, 2022, are $1.9 million and $3.2 million of
expenses, respectively, 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)
June 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
47,030
$
47,399
Accounts receivable, net
16,937
11,077
Inventories
37,596
27,576
Assets held-for-sale
2,224
—
Prepaid expenses and other current
assets
1,903
2,607
Total current assets
105,690
88,659
Property and equipment, net
2,874
4,641
Right-of-use assets under operating
leases, net
2,245
708
Intangible assets, net
4,082
4,385
Other non-current assets
651
539
Total assets
$
115,542
$
98,932
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
27,711
$
8,023
Accrued expenses and other current
liabilities
6,961
8,408
Current portion of operating lease
liabilities
578
715
Total current liabilities
35,250
17,146
Operating lease liabilities, net of
current portion
1,666
—
Total liabilities
36,916
17,146
Stockholders’ equity
Class A common stock
50
48
Class B common stock
21
22
Additional paid-in capital
193,752
189,724
Accumulated deficit
(85,865
)
(79,843
)
Total Zevia PBC stockholders’
equity
107,958
109,951
Noncontrolling interests
(29,332
)
(28,165
)
Total equity
78,626
81,786
Total liabilities and equity
$
115,542
$
98,932
ZEVIA PBC
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June
30,
2023
2022
Operating activities:
Net loss
$
(7,921
)
$
(32,281
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Non-cash lease expense
281
312
Depreciation and amortization
823
679
Loss on sale of equipment
3
3
Amortization of debt issuance cost
38
25
Equity-based compensation
4,738
16,944
Changes in operating assets and
liabilities:
Accounts receivable, net
(5,860
)
(8,068
)
Inventories
(10,020
)
(2,423
)
Prepaid expenses and other assets
554
1,371
Accounts payable
20,171
2,976
Accrued expenses and other current
liabilities
(1,447
)
1,242
Operating lease liabilities
(289
)
(334
)
Net cash provided by (used in) operating
activities
1,071
(19,554
)
Investing activities:
Proceeds from maturities of short-term
investments
—
30,000
Purchases of property, equipment and
software
(1,532
)
(1,557
)
Proceeds from sales of property, equipment
and software
69
—
Net cash (used in) provided by investing
activities
(1,463
)
28,443
Financing activities:
Payment of debt issuance costs
—
(328
)
Minimum tax withholding paid on behalf of
employees for net share settlement
—
(2,130
)
Proceeds from exercise of stock
options
23
107
Net cash provided by (used in) financing
activities
23
(2,351
)
Net change from operating, investing, and
financing activities
(369
)
6,538
Cash and cash equivalents at beginning of
period
47,399
43,110
Cash and cash equivalents at end of
period
$
47,030
$
49,648
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net loss and comprehensive loss
$
(5,009
)
$
(14,796
)
$
(7,921
)
$
(32,281
)
Other (income) expense, net*
(403
)
44
(743
)
(38
)
Provision for income taxes
35
9
36
21
Depreciation and amortization
404
328
823
679
Equity-based compensation
2,358
8,043
4,738
16,944
Adjusted EBITDA
$
(2,615
)
$
(6,372
)
$
(3,067
)
$
(14,675
)
* 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/20230808954375/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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