Industry Overview - The Zacks Beverages – Soft Drinks industry is facing challenges due to rising costs, tariff uncertainty, and supply-chain disruptions, which are negatively impacting margins and profitability [1][5][9] - The industry is currently ranked 184 out of over 250 Zacks industries, placing it in the bottom 25% and indicating dull near-term prospects [9][10][11] - The industry has underperformed compared to the Consumer Staples sector and the S&P 500 Index, with a collective loss of 8.6% over the past year [12] Consumer Trends - There is a growing demand for healthier beverages with natural ingredients, reduced sugar, and functional benefits, leading companies to pivot away from sugary sodas [2][6] - Plant-based beverages and functional drinks that promote hydration, energy, and mood support are gaining traction among health-conscious consumers [6] Digital Transformation and Innovation - The industry is leveraging digital transformation to enhance consumer engagement and capture evolving demand through investments in e-commerce and subscription models [3][7][8] - Companies are optimizing fulfillment strategies and expanding digital offerings to boost customer loyalty and secure recurring revenues [7][8] Company Performance - PepsiCo is expected to benefit from its strong global beverage and convenience food businesses, with a focus on cost-management and revenue-management initiatives amid inflationary pressures [19][20] - Zevia, focused on zero-sugar, naturally sweetened drinks, has seen a stock increase of 166.7% in the past year, with strong growth estimates for sales and earnings [23][24] - Coca-Cola is positioned for long-term growth through strategic transformation and digital investments, with a focus on the rapidly growing RTD category [27][28] - Monster Beverage continues to perform well in the energy drinks category, with a stock increase of 28.2% in the past year and positive growth estimates [30][31] - Keurig Dr Pepper is benefiting from momentum in the Refreshment Beverages segment, with growth estimates for sales and earnings, despite a stock decline of 22.4% in the past year [34][35]

Zevia PBC (ZVIA) FY Conference Summary Company Overview - **Company Name**: Zevia PBC (ZVIA) - **Industry**: Beverage, specifically the better-for-you soda category - **Founded**: February 2008 by a husband and wife concerned about harmful additives in traditional sodas [3][4] Core Business Insights - **Market Position**: Positioned at the intersection of health and taste, with a focus on zero sugar, zero calories, and no artificial ingredients [4][6] - **Consumer Loyalty**: Strong consumer loyalty with repeat purchase rates; household penetration is only 5.1%, indicating significant growth potential [5][31] - **Distribution**: Over 37,000 distribution points, with plans for expansion in grocery, club, and mass channels [13][27] Financial Performance - **Recent Growth**: Achieved 10% top-line growth compared to Q2 last year and reached positive adjusted EBITDA for the first time as a public company [15][31] - **Cost Savings**: Identified $20 million in cost savings, with $15 million expected to be realized by year-end [30] Market Trends - **Consumer Preferences**: Shift towards reducing sugar intake and a focus on natural, high-quality ingredients; better-for-you soda is growing at five times the rate of conventional soda [16][17] - **Market Size**: The total carbonated soft drink market is valued at $57 billion, with better-for-you soda driving growth [17] Marketing and Brand Strategy - **Marketing Spend**: Increased marketing budget from 6% to 12% of revenue, focusing on brand awareness and engagement [34][19] - **Recent Campaign**: National ad campaign featuring artist Jelly Roll generated 2.4 billion positive media impressions [20][19] - **Brand Positioning**: Emphasizes authenticity and accessibility, aiming to appeal to a broad demographic [6][8] Product Innovation - **Product Line**: Focus on nostalgic flavors and a nascent energy drink line; recent successful launches include Strawberry Lemon Burst and Orange Creamsicle [11][22] - **Taste Profile Improvement**: Enhanced stevia blend to minimize aftertaste, leading to positive consumer feedback [24][52] - **Limited Time Offerings (LTOs)**: Seasonal flavors like Salted Caramel have driven excitement and engagement [23] Distribution Expansion - **Retail Partnerships**: Recently expanded presence in retailers like Walgreens and Costco; significant opportunities in convenience and foodservice channels [28][29] - **Modern Soda Sets**: Retailers are increasingly adopting modern soda sets, creating favorable conditions for Zevia's growth [28][41] Profitability Goals - **Path to Profitability**: Aiming for accelerated growth and profitability by 2026, leveraging marketing, product innovation, and distribution strategies [31][30] Additional Insights - **Consumer Demographics**: Better-for-you soda shoppers tend to be younger, more affluent, and health-conscious, willing to pay a premium for healthier options [17][18] - **Competitive Pricing**: Priced at a slight premium to traditional sodas but significantly lower than other better-for-you brands, maintaining accessibility [36][37] Conclusion - **Future Outlook**: Zevia is well-positioned in a high-growth category with a distinct market position, strong consumer loyalty, and multiple growth levers to drive profitable growth [31][31]

Core Viewpoint - Zevia reported a quarterly loss of $0.01 per share, outperforming the Zacks Consensus Estimate of a loss of $0.05, marking an earnings surprise of +80.00% [1] - The company has shown consistent revenue growth, with Q2 2025 revenues of $44.52 million, exceeding the Zacks Consensus Estimate by 7.26% [2] Financial Performance - Over the last four quarters, Zevia has surpassed consensus EPS estimates three times [2] - The company reported a revenue increase from $40.43 million in the same quarter last year to $44.52 million this year [2] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $41.13 million, and for the current fiscal year, it is -$0.17 on revenues of $160.92 million [7] Market Position - Zevia shares have declined approximately 21.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The Zacks Industry Rank for Beverages - Soft drinks places it in the top 41% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of Zevia's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The estimate revisions trend for Zevia was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting expected underperformance in the near future [6]

Financial Data and Key Metrics Changes - For the second quarter, net sales grew by 10.1% to $44.5 million, marking a significant increase compared to the previous year [7][18] - Adjusted EBITDA improved by $4.6 million to $200,000, representing the first profitable quarter since going public [21] - Gross margin increased to 48.7%, up from 41.9% in the same quarter last year, reflecting lower product costs and improved inventory management [18][19] - Net loss was reduced to $700,000 from $7 million in the prior year, showing a substantial improvement [20] Business Line Data and Key Metrics Changes - The marketing campaign "Get the Fake Out of Here" contributed to double-digit growth, with notable engagement and impressions [8] - New flavor launches, particularly strawberry lemon burst and orange creamsicle, have driven excitement and sales velocities [9][10] - Distribution surpassed historical peak levels, with strong performance in key retail accounts [11][12] Market Data and Key Metrics Changes - Strong performance was noted at Walmart, with the first variety pack being the top-selling SKU [12] - Positive scan data in the grocery channel indicated strong performance across key retailers [12] - In the club channel, Zevia returned to rotation in key Costco regions, exceeding expectations [13] Company Strategy and Development Direction - The company is focused on three strategic growth pillars: marketing, product innovation, and distribution [5][14] - Continued emphasis on expanding distribution and enhancing brand visibility through innovative marketing strategies [6][14] - The company aims to capitalize on the growing "better for you" soda category, positioning itself for long-term profitable growth [24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism due to an uncertain macro environment but remains focused on executing strategic initiatives [22] - The outlook for full-year net sales is maintained at $158 million to $163 million, with adjusted EBITDA loss expected to range from $7 million to $9 million [22][23] - Management highlighted the importance of balancing short-term marketing investments with long-term brand building [56] Other Important Information - The company identified an additional $5 million in cost savings expected to be realized in 2026, bringing total anticipated savings to $20 million [17] - A one-time charge of $500,000 related to packaging redesign will impact Q3 adjusted EBITDA [23] Q&A Session Summary Question: What drove the strong sales in the quarter? - Management noted balanced growth from new distribution at Walmart and positive momentum in grocery channels, with new items contributing to incremental distribution [25][28] Question: Can you elaborate on the productivity initiative and the $5 million in gains? - Management indicated that efficiencies are being found within the supply chain and product portfolio simplification, with savings expected to begin in Q4 of this year [31][32] Question: What is the outlook for Q4 given the current guidance? - Management expressed caution due to a substantial Walmart pipeline fill in the previous year, which may lead to flat growth in Q4 [35][38] Question: How should tariffs be considered moving forward? - Management confirmed an estimated 200 basis point impact on gross margins due to tariffs, with more material impacts expected starting in Q3 [39][42] Question: What factors contributed to the increase in household penetration and purchase frequency? - Increased visibility in the marketplace and successful new flavor launches were cited as key contributors to the uptick in consumer metrics [45][46] Question: How is the company balancing improved EBITDA with marketing reinvestment? - Management emphasized the importance of both long-term brand building and short-term velocity driving tactics, aiming for sustainable growth [54][56]

1 2 Confidential & Proprietary – Do not distribute. © 2024 Zevia PBC 3 Source: Confidential & Proprietary – Do not distribute. © 2024 Zevia PBC 4 1Numerator Shopper Metrics Report for 12M ending 06/30/2025 which incorporates expanded scope of BFY Soda Brands in 2Q25 4 • • • • • | 2025 | Net Sales | Gross Margin | Net Loss | Adjusted EBITDA¹ | | --- | --- | --- | --- | --- | | 02 | $44.5 million +10.1% vs. PY | 48.7% +680 basis points vs. PY | -$0.7 million +$6.3 million vs. PY | +$0.2 million +$4.6 million ...

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Zevia PBC's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, are presented with detailed notes [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Zevia PBC's balance sheet shows a decrease in total assets and total equity from December 31, 2024, to June 30, 2025, while total liabilities remained relatively stable Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $26,301 | $30,653 | $(4,352) | | Accounts receivable, net | $13,120 | $10,795 | $2,325 | | Inventories | $15,740 | $18,618 | $(2,878) | | Total current assets | $56,914 | $61,909 | $(4,995) | | Total assets | $62,450 | $67,951 | $(5,501) | | Total current liabilities | $24,297 | $24,222 | $75 | | Total liabilities | $24,755 | $25,006 | $(251) | | Total equity | $37,695 | $42,945 | $(5,250) | | Noncontrolling interests | $(15,324) | $(21,934) | $6,610 | [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) For the three and six months ended June 30, 2025, Zevia PBC significantly reduced its net loss and improved gross profit and operating loss compared to the prior year, driven by increased net sales and lower cost of goods sold Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net sales | $44,524 | $40,426 | 10.1% | $82,547 | $79,225 | 4.2% | | Cost of goods sold | $22,834 | $23,484 | (2.8)% | $41,822 | $44,564 | (6.2)% | | Gross profit | $21,690 | $16,942 | 28.0% | $40,725 | $34,661 | 17.5% | | Loss from operations | $(1,016) | $(7,069) | (85.6)% | $(7,403) | $(14,352) | (48.4)% | | Net loss attributable to Zevia PBC | $(697) | $(5,891) | (88.2)% | $(5,923) | $(11,715) | (49.5)% | | Basic EPS | $(0.01) | $(0.10) | (90.0)% | $(0.09) | $(0.20) | (55.0)% | [Condensed Consolidated Statements of Changes in Equity (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)) Zevia PBC's total equity decreased from $42.945 million at January 1, 2025, to $37.695 million at June 30, 2025, primarily due to net loss and exchanges of Class B for Class A common stock, partially offset by equity-based compensation Condensed Consolidated Statements of Changes in Equity (Unaudited) | Metric (in thousands) | Balance at January 1, 2025 | Balance at June 30, 2025 | Change | | :-------------------- | :------------------------- | :----------------------- | :----- | | Class A Common Stock | $61 | $67 | $6 | | Class B Common Stock | $12 | $8 | $(4) | | Additional Paid-in Capital | $186,148 | $180,209 | $(5,939) | | Accumulated Deficit | $(121,342) | $(127,265) | $(5,923) | | Noncontrolling interests | $(21,934) | $(15,324) | $6,610 | | Total Equity | $42,945 | $37,695 | $(5,250) | - Net loss for the six months ended June 30, 2025, was **$(5.226) million (Q1)** and **$(697) thousand (Q2)**, totaling **$(5.923) million**[24](index=24&type=chunk) - Equity-based compensation added **$731 thousand (Q1)** and **$982 thousand (Q2)** to additional paid-in capital[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) For the six months ended June 30, 2025, Zevia PBC used $4.312 million in operating activities, $45 thousand in investing activities, and generated $5 thousand from financing activities, resulting in a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(4,312) | $(2,920) |\n| Investing activities | $(45) | $(93) |\n| Financing activities | $5 | $0 |\n| Net change | $(4,352) | $(3,013) |\n| Cash and cash equivalents at end of period | $26,301 | $28,942 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed context for Zevia PBC's financial statements, covering business operations, accounting policies, and specific financial components [Note 1. Description of Business](index=10&type=section&id=Note%201.%20Description%20of%20Business) Zevia PBC is a Delaware public benefit corporation and Certified B Corporation, focused on developing, marketing, selling, and distributing zero sugar, zero calorie, naturally sweetened beverages across the U.S. and Canada. The company is a holding company, controlling Zevia LLC - Zevia PBC is a "better-for-you" beverage company offering zero sugar, zero calorie, naturally sweetened products (Soda, Energy Drinks, Organic Tea)[30](index=30&type=chunk) - Products are Non-GMO Project verified, gluten-free, Kosher, and vegan[30](index=30&type=chunk) - Distribution channels include grocery, drug, warehouse club, mass, natural, convenience, and e-commerce in the U.S. and Canada[30](index=30&type=chunk) - Zevia PBC is a holding company, with its sole material asset being a controlling equity interest in Zevia LLC[31](index=31&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting, consolidating Zevia PBC and its subsidiary Zevia LLC. The company, as an emerging growth company, has elected to use the extended transition period for new accounting standards - Financial statements are prepared in accordance with U.S. GAAP for interim reporting, consolidating Zevia PBC and Zevia LLC[32](index=32&type=chunk)[33](index=33&type=chunk) - Management makes significant estimates for net sales, inventory, useful lives of assets, lease liabilities, credit losses, deferred tax assets, and equity instruments[37](index=37&type=chunk) - As an emerging growth company, Zevia PBC uses the extended transition period for new accounting standards, which may affect comparability[38](index=38&type=chunk) - The company is evaluating the impact of ASU No. 2023-09 (Income Tax Disclosures) and ASU No. 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods after December 15, 2025, and December 15, 2026, respectively[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 3. Revenues](index=11&type=section&id=Note%203.%20Revenues) Zevia PBC disaggregates its net sales by channel (retail and online/e-commerce) and geographic location (U.S. and Canada), showing growth in both online sales and U.S. sales for the three and six months ended June 30, 2025 Net Sales by Channel (in thousands) | Channel | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Retail sales | $39,063 | $36,757 | $71,516 | $70,658 | | Online/e-commerce | $5,461 | $3,669 | $11,031 | $8,567 | | **Total Net Sales** | **$44,524** | **$40,426** | **$82,547** | **$79,225** | Net Sales by Region (in thousands) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | U.S. | $39,946 | $35,925 | $74,698 | $71,226 | | Canada | $4,578 | $4,501 | $7,849 | $7,999 | | **Total Net Sales** | **$44,524** | **$40,426** | **$82,547** | **$79,225** | [Note 4. Inventories](index=12&type=section&id=Note%204.%20Inventories) Inventories decreased from $18.618 million at December 31, 2024, to $15.740 million at June 30, 2025, primarily driven by a reduction in finished goods Inventories (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Raw materials | $187 | $600 | | Finished goods | $15,553 | $18,018 | | **Inventories**| **$15,740** | **$18,618** | - Total inventories decreased by **$2.878 million (15.5%)** from December 31, 2024, to June 30, 2025[44](index=44&type=chunk) [Note 5. Property and Equipment, Net](index=12&type=section&id=Note%205.%20Property%20and%20Equipment,%20Net) Property and equipment, net, decreased from $1.261 million at December 31, 2024, to $1.004 million at June 30, 2025, due to accumulated depreciation Property and Equipment, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Gross Carrying Amount | $4,232 | $4,288 | | Less accumulated depreciation | $(3,228) | $(3,027) | | **Property and equipment, net** | **$1,004** | **$1,261** | - Property and equipment, net, decreased by **$0.257 million (20.4%)** from December 31, 2024, to June 30, 2025[45](index=45&type=chunk) - Depreciation expense for the three months ended June 30, 2025, was **$0.2 million**, down from $0.3 million in 2024. For the six months, it was **$0.4 million**, down from $0.6 million[45](index=45&type=chunk) [Note 6. Intangible Assets, Net](index=12&type=section&id=Note%206.%20Intangible%20Assets,%20Net) Intangible assets, net, decreased from $3.179 million at December 31, 2024, to $3.053 million at June 30, 2025, primarily due to amortization of finite-lived assets, while trademarks (indefinite life) remained stable Intangible Assets, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Software | $17 | $43 | | Customer relationships | $36 | $136 | | Trademarks | $3,000 | $3,000 | | **Intangible assets, net** | **$3,053** | **$3,179** | - Total intangible assets, net, decreased by **$0.126 million (4.0%)** from December 31, 2024, to June 30, 2025[46](index=46&type=chunk) - Amortization expense for the three and six months ended June 30, 2025, was **$0.1 million** and **$0.1 million**, respectively[46](index=46&type=chunk) [Note 7. Debt](index=13&type=section&id=Note%207.%20Debt) Zevia LLC has a $20 million Secured Revolving Line of Credit maturing in February 2027, with no outstanding balance as of June 30, 2025. The company was in compliance with its financial covenant - Secured Revolving Line of Credit has a **$20 million commitment**, maturing February 22, 2027[48](index=48&type=chunk) - No amount outstanding on the Secured Revolving Line of Credit as of June 30, 2025[48](index=48&type=chunk) - Company was in compliance with its financial covenant (minimum fixed charge coverage ratio of **1.00 to 1.00**) as of June 30, 2025[50](index=50&type=chunk) [Note 8. Leases](index=13&type=section&id=Note%208.%20Leases) Zevia PBC leases its corporate office space, with a remaining lease term of 18 months as of June 30, 2025. The company subleased a portion of its office space in September 2024, generating sublease income - Remaining lease term for corporate headquarters is **18 months** as of June 30, 2025[53](index=53&type=chunk) - Sublease income for the three and six months ended June 30, 2025, was **$52 thousand** and **$103 thousand**, respectively[52](index=52&type=chunk) Lease Liabilities (in thousands) | (in thousands) | June 30, 2025 | | :------------- | :------------ | | Remainder of 2025 | $364 | | 2026 | $756 | | Total lease payments | $1,120 | | Less imputed interest | $(34) | | Present value of lease liabilities | $1,086 | [Note 9. Commitments and Contingencies](index=15&type=section&id=Note%209.%20Commitments%20and%20Contingencies) Zevia PBC has no material purchase commitments for raw materials and is not subject to any legal proceedings that would have a material impact on its financial statements - No material agreements with suppliers for minimum raw material purchase quantities as of June 30, 2025[55](index=55&type=chunk) - Not subject to any material legal proceedings; no material loss is reasonably possible[56](index=56&type=chunk) [Note 10. Balance Sheet Components (Accrued Expenses and Other Current Liabilities)](index=15&type=section&id=Note%2010.%20Balance%20Sheet%20Components%20(Accrued%20Expenses%20and%20Other%20Current%20Liabilities)) Accrued expenses and other current liabilities increased from $8.340 million at December 31, 2024, to $9.228 million at June 30, 2025, primarily due to higher accrued employee compensation benefits and customer paid bottle deposits Accrued Expenses and Other Current Liabilities (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Accrued employee compensation benefits | $2,778 | $1,548 | | Accrued direct selling costs | $1,347 | $1,376 | | Accrued customer paid bottle deposits | $3,136 | $2,895 | | Accrued marketing expenses | $663 | $1,775 | | Accrued other | $1,304 | $746 | | **Total** | **$9,228** | **$8,340** | - Total accrued expenses and other current liabilities increased by **$0.888 million (10.6%)** from December 31, 2024, to June 30, 2025[57](index=57&type=chunk) [Note 11. Equity-Based Compensation](index=15&type=section&id=Note%2011.%20Equity-Based%20Compensation) Equity-based compensation expense decreased for the three and six months ended June 30, 2025, primarily due to the completion of the service period for certain IPO-related equity awards. The company has approximately 4.5 million shares available for future grants under the 2021 Plan - Equity-based compensation expense decreased by **$0.445 million (31.2%)** for the three months ended June 30, 2025, and by **$1.203 million (41.3%)** for the six months ended June 30, 2025[124](index=124&type=chunk)[134](index=134&type=chunk) - The decrease is primarily due to the completion of the service period for certain IPO-related equity awards in Q1 2025[124](index=124&type=chunk) - As of June 30, 2025, **2.659 million stock options** were outstanding with a weighted average exercise price of **$3.22**[65](index=65&type=chunk) - Total unrecognized compensation expense for unvested stock options was **$1.3 million** (over 1.7 years) and for unvested RSUs was **$7.0 million** (over 3.0 years)[66](index=66&type=chunk)[68](index=68&type=chunk) [Note 12. Segment Reporting](index=16&type=section&id=Note%2012.%20Segment%20Reporting) Zevia PBC operates as a single operating and reporting segment, with the CEO acting as the Chief Operating Decision Maker (CODM) who assesses performance and allocates resources at the company level using net loss - The Company has one operating and reporting segment[69](index=69&type=chunk) - The CEO is the CODM, assessing performance using net loss and budget-to-actual variances[70](index=70&type=chunk) - Direct selling expenses for the six months ended June 30, 2025, were **$17.8 million** (down from $21.6 million in 2024), and marketing expenses were **$10.9 million** (up from $7.1 million in 2024)[71](index=71&type=chunk) [Note 13. Major Customers, Accounts Receivable and Vendor Concentration](index=18&type=section&id=Note%2013.%20Major%20Customers,%20Accounts%20Receivable%20and%20Vendor%20Concentration) Zevia PBC has significant customer concentration, with several customers accounting for over 10% of net sales and accounts receivable. The company also relies on a few key vendors for raw materials and finished goods - **Major Customers (over 10% of net sales):** * Customer A: **16% (Q2 2025)**, 12% (Q2 2024), **14% (H1 2025)** * Customer C: **12% (Q2 2025)**, **13% (H1 2025)**, 10% (H1 2024) * Customer J: **15% (Q2 2025)**, **14% (H1 2025)**[72](index=72&type=chunk) - **Major Customers (over 10% of accounts receivable):** * Customer C: 10% (Dec 31, 2024) * Customer J: **12% (June 30, 2025)**, 12% (Dec 31, 2024) * Customer K: **14% (June 30, 2025)**[72](index=72&type=chunk) - **Major Vendors (over 10% of raw material and finished goods purchases):** * Vendor D: **31% (Q2 2025)**, 33% (Q2 2024), **31% (H1 2025)**, 38% (H1 2024) * Vendor E: **32% (Q2 2025)**, 23% (Q2 2024), **32% (H1 2025)**, 28% (H1 2024) * Vendor F: **37% (Q2 2025)**, 27% (Q2 2024), **36% (H1 2025)**, 23% (H1 2024)[72](index=72&type=chunk) [Note 14. Loss Per Share](index=18&type=section&id=Note%2014.%20Loss%20Per%20Share) Basic and diluted loss per share for Zevia PBC improved for both the three and six months ended June 30, 2025, compared to the prior year, reflecting the reduction in net loss - Basic and diluted loss per share for Class A common stock was **$(0.01)** for Q2 2025, an improvement from $(0.10) in Q2 2024[74](index=74&type=chunk) - Basic and diluted loss per share for Class A common stock was **$(0.09)** for H1 2025, an improvement from $(0.20) in H1 2024[74](index=74&type=chunk) - Weighted-average common shares outstanding (basic) increased to **66.3 million** for Q2 2025 (from 58.7 million in Q2 2024) and to **64.7 million** for H1 2025 (from 57.3 million in H1 2024)[21](index=21&type=chunk)[74](index=74&type=chunk) - Class B Common Units, stock options, and RSUs were anti-dilutive and excluded from diluted EPS calculation[77](index=77&type=chunk) [Note 15. Restructuring](index=20&type=section&id=Note%2015.%20Restructuring) Zevia PBC incurred $0.03 million and $2.2 million in restructuring costs for the three and six months ended June 30, 2025, respectively, primarily due to workforce reduction and facility exits as part of its Productivity Initiative. These costs are substantially complete - Restructuring expenses were **$31 thousand** for Q2 2025 (down from $0.9 million in Q2 2024)[125](index=125&type=chunk) - Restructuring expenses were **$2.2 million** for H1 2025 (up from $0.9 million in H1 2024), primarily for employee termination and facility exit costs[135](index=135&type=chunk) - Accrued restructuring costs of **$0.8 million** are included in current liabilities as of June 30, 2025, expected to be paid by end of 2025[78](index=78&type=chunk) [Note 16. Income Taxes and Tax Receivable Agreement](index=20&type=section&id=Note%2016.%20Income%20Taxes%20and%20Tax%20Receivable%20Agreement) Zevia PBC, as a C corporation, pays corporate taxes on income allocated from Zevia LLC (a pass-through entity). The company has a full valuation allowance against its deferred tax assets, meaning recent tax law changes are not expected to significantly impact financial statements. The Tax Receivable Agreement (TRA) liability, if fully realizable, would be $58.6 million as of June 30, 2025 - Zevia PBC is taxed as a C corporation on income allocated from Zevia LLC (pass-through entity)[79](index=79&type=chunk) - The Company's economic interest in Zevia LLC was **89.8%** as of June 30, 2025[79](index=79&type=chunk) - A full valuation allowance is maintained against deferred tax assets, so recent tax law changes (One Big Beautiful Bill Act) are not expected to have a significant effect[80](index=80&type=chunk)[81](index=81&type=chunk) - The TRA liability, if fully realizable, totaled **$58.6 million** as of June 30, 2025 (up from $56.5 million at Dec 31, 2024)[86](index=86&type=chunk) - Payments under the TRA are expected to be substantial and are dependent on future taxable income and exchanges of Class B units[142](index=142&type=chunk)[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations)) Management discusses Zevia PBC's financial condition and results, including key events, comparative performance, liquidity, and accounting policies [Overview](index=23&type=section&id=Overview) Zevia PBC is a "better-for-you" beverage company offering zero sugar, zero calorie, naturally sweetened products, distributed across the U.S. and Canada - Zevia PBC develops, markets, sells, and distributes naturally delicious, zero sugar beverages[88](index=88&type=chunk) - The company is a Delaware public benefit corporation and Certified B Corporation, addressing global health challenges from excess sugar consumption[88](index=88&type=chunk) - Products are made with simple, plant-based ingredients, no artificial sweeteners, and are Non-GMO Project verified, gluten-free, Kosher, and vegan[88](index=88&type=chunk) [Key Events During the First Half of 2025](index=23&type=section&id=Key%20Events%20During%20the%20First%20Half%20of%202025)) Zevia continued its multi-year Productivity Initiative in the first half of 2025, which included a workforce reduction, aiming to realign cost structure, accelerate route-to-market evolution, and build the Zevia® Brand - Productivity Initiative began in Q2 2024, focusing on cost structure realignment, growth in high-margin carbonated beverages, brand investment, and operational excellence[89](index=89&type=chunk) - A workforce reduction occurred in Q1 2025 as part of the initiative[90](index=90&type=chunk) - Restructuring charges related to the initiative were substantially complete as of June 30, 2025[90](index=90&type=chunk) - The initiative is expected to yield estimated annualized benefits of approximately **$20.0 million**, with savings realized in H2 2024 and continuing through 2025 and 2026[95](index=95&type=chunk) - Savings are being reinvested into brand marketing and promotional activity to drive future growth and achieve profitability[95](index=95&type=chunk) [Factors Affecting Our Performance](index=23&type=section&id=Factors%20Affecting%20Our%20Performance)) Zevia's performance is influenced by macroeconomic conditions, including inflation, tariffs, and global trade policies, which lead to supply chain challenges, commodity cost volatility, and potential reductions in consumer spending and product volume due to pricing increases - Macroeconomic trends like key ingredient inflation, tariffs, and global trade policies adversely affect net sales and profitability[91](index=91&type=chunk) - Increased supply chain challenges, commodity cost volatility, and consumer uncertainty are anticipated[91](index=91&type=chunk) - Pricing increases in response to inflation may lead to future reductions in volume[91](index=91&type=chunk) [Components of Our Results of Operations](index=23&type=section&id=Components%20of%20Our%20Results%20of%20Operations)) This section details Zevia's results of operations components, including net sales, cost of goods sold, gross profit, and operating expenses [Net Sales](index=23&type=section&id=Net%20Sales) Net sales are generated from zero-sugar beverages sold across various retail and e-commerce channels in the U.S. and Canada. Future growth is expected from new distribution, organic sales, innovation, and pricing strength, but may be impacted by seasonality, competition, and inventory management - Net sales are derived from Soda, Energy Drinks, and Organic Tea drinks sold to various retailers and e-commerce channels in the U.S. and Canada[93](index=93&type=chunk) - Sales incentives and discounts are deducted from gross sales to arrive at net sales[94](index=94&type=chunk) - Future growth drivers include new distribution, increased organic sales, package/product innovation, and pricing strength[96](index=96&type=chunk) - Sales levels can be impacted by seasonality, competition, customer inventory management, and fulfillment ability[96](index=96&type=chunk) - Increased promotional activity at key accounts is expected to continue throughout 2025[97](index=97&type=chunk) [Cost of Goods Sold](index=25&type=section&id=Cost%20of%20Goods%20Sold) Cost of goods sold includes all costs to acquire and manufacture products, subject to price fluctuations in raw materials (e.g., aluminum, stevia) and production. Tariffs on steel and aluminum are expected to increase costs, though Canadian production is believed to be exempt under USMCA - Costs include ingredients, packaging, in-bound freight, logistics, and third-party production fees[98](index=98&type=chunk) - Subject to price fluctuations in aluminum, raw materials, production, packaging, and freight[99](index=99&type=chunk) - Tariffs on steel and aluminum (**25% from March-June, 50% starting June 2025**) are increasing cost of goods sold[99](index=99&type=chunk) - Canadian production is believed to be exempt from U.S. tariffs under USMCA[100](index=100&type=chunk) - Expected to decrease as a percentage of net sales over time due to Productivity Initiative and scale benefits[102](index=102&type=chunk) [Gross Profit](index=25&type=section&id=Gross%20Profit) Gross profit is net sales less cost of goods sold, influenced by distribution channel mix, discounts, and promotions. It is expected to be favorably impacted by the asset-light model, increased direct distribution, scale, and the Productivity Initiative - Gross profit is affected by distribution channel mix and the level of discounts/promotions[104](index=104&type=chunk) - Expected to be favorably impacted by leveraging the asset-light business model, increased direct distribution, business scale, and the Productivity Initiative[104](index=104&type=chunk) [Selling and Marketing Expenses](index=25&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses primarily cover warehousing, distribution, advertising, and marketing. Selling expenses are expected to decrease as a percentage of sales due to the Productivity Initiative, while marketing expenses are projected to increase to build brand awareness - Consist of warehousing, distribution, advertising, and marketing expenses, including sales commissions[105](index=105&type=chunk) - Selling expenses are expected to decrease as a percentage of sales due to the Productivity Initiative and cost improvements[106](index=106&type=chunk) - Marketing expenses are expected to increase, funded by Productivity Initiative savings, to drive brand awareness, trial, and customer conversions[107](index=107&type=chunk) [General and Administrative Expenses](index=27&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses include personnel costs for various functions and are expected to remain relatively flat as a percentage of net sales over time - Include salary and personnel expenses for management, marketing, sales, product development, quality control, accounting, and IT[109](index=109&type=chunk) - Expected to remain relatively flat as a percentage of net sales over time[109](index=109&type=chunk) [Equity-Based Compensation Expenses](index=27&type=section&id=Equity-Based%20Compensation%20Expenses) Equity-based compensation expense is recorded for employee grants using fair value models. It is expected to remain consistent in absolute dollars but decline as a percentage of net sales over time - Expense is recorded using grant date fair value for RSUs or Black-Scholes model for stock options[110](index=110&type=chunk) - Expected to remain relatively consistent in absolute dollars but decline as a percentage of net sales over time[110](index=110&type=chunk) [Depreciation and Amortization](index=27&type=section&id=Depreciation%20and%20Amortization) Depreciation relates to computer, quality control, and marketing equipment, and leasehold improvements. Amortization applies to customer relationships and software, while trademarks are non-amortizable. These expenses are expected to increase with business growth and capital expenditures - Depreciation covers computer, quality control, marketing equipment, and leasehold improvements[111](index=111&type=chunk) - Amortizable intangible assets include customer relationships and software; trademarks are non-amortizable[111](index=111&type=chunk) - Expected to increase in line with ongoing capital expenditures as the business grows[111](index=111&type=chunk) [Restructuring Expenses](index=27&type=section&id=Restructuring%20Expenses) Restructuring expenses, primarily from employee severance and facility exits under the Productivity Initiative, were substantially complete as of June 30, 2025 - Include employee severance, consulting services, asset impairment, and contract termination costs[112](index=112&type=chunk) - Charges related to the Productivity Initiative were substantially complete as of June 30, 2025[112](index=112&type=chunk) [Other income, net](index=27&type=section&id=Other%20income,%20net) Other income, net, primarily consists of interest income (expense) and foreign currency (loss) gains - Comprises interest income (expense) and foreign currency (loss) gains[113](index=113&type=chunk) [Results of Operations (Comparative Analysis)](index=27&type=section&id=Results%20of%20Operations%20(Comparative%20Analysis)) This section provides a detailed comparative analysis of Zevia PBC's financial performance for the three and six months ended June 30, 2025, versus 2024 [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=29&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030,%202024)) For the three months ended June 30, 2025, Zevia PBC saw increased net sales and gross profit, driven by higher volumes and favorable unit costs, while operating expenses generally decreased or remained stable, leading to a significant reduction in net loss [Net Sales](index=29&type=section&id=Net%20Sales_Q2) Net sales increased by 10.1% to $44.5 million, driven by a 14.3% increase in equivalized cases sold due to expanded distribution, partially offset by higher promotional activity - Net sales: **$44.524 million (2025)** vs. $40.426 million (2024), an increase of **$4.098 million (10.1%)**[116](index=116&type=chunk) - Equivalized cases sold increased by **14.3%** (**3.5 million** in 2025 vs. 3.1 million in 2024)[116](index=116&type=chunk) - Increase driven by expanded distribution at mass and drug channels and pricing increases (**$0.3 million**), partially offset by higher incentives/discounts (**$2.0 million**)[116](index=116&type=chunk) [Cost of Goods Sold](index=29&type=section&id=Cost%20of%20Goods%20Sold_Q2) Cost of goods sold decreased by 2.8% to $22.8 million, primarily due to lower inventory write-downs and favorable unit costs from the Productivity Initiative, despite increased volumes - Cost of goods sold: **$22.834 million (2025)** vs. $23.484 million (2024), a decrease of **$0.650 million (2.8%)**[117](index=117&type=chunk) - Decrease largely due to lower write-downs (**$2.0 million**) and favorable unit costs (**$1.7 million**) from Productivity Initiative, partially offset by increased volumes (**$3.1 million**)[117](index=117&type=chunk) [Gross Profit and Gross Margin](index=29&type=section&id=Gross%20Profit%20and%20Gross%20Margin_Q2) Gross profit increased by 28.0% to $21.7 million, and gross margin improved to 48.7% from 41.9%, driven by higher volumes, favorable unit costs, and lower inventory write-downs, partially offset by increased promotional activity - Gross profit: **$21.690 million (2025)** vs. $16.942 million (2024), an increase of **$4.748 million (28.0%)**[118](index=118&type=chunk) - Gross margin: **48.7% (2025)** vs. 41.9% (2024), an increase of **6.8 percentage points**[118](index=118&type=chunk)[119](index=119&type=chunk) - Improvement due to lower inventory write-downs, favorable unit costs, and selling price increases, partially offset by increased promotional activity and channel mix[119](index=119&type=chunk) [Selling and Marketing Expenses](index=30&type=section&id=Selling%20and%20Marketing%20Expenses_Q2) Total selling and marketing expenses slightly decreased by 1.8% to $13.4 million. Marketing expenses increased by 9.6% due to brand awareness investments, funded by a 7.1% decrease in selling expenses from the Productivity Initiative - Total selling and marketing expenses: **$13.375 million (2025)** vs. $13.622 million (2024), a decrease of **$0.247 million (1.8%)**[120](index=120&type=chunk) - Marketing expenses increased by **$0.4 million (9.6%)** to **$4.7 million**, driven by brand awareness investments[120](index=120&type=chunk)[121](index=121&type=chunk) - Selling expenses decreased by **$0.6 million (7.1%)** to **$8.7 million**, primarily due to lower freight transfer and warehousing costs from the Productivity Initiative[120](index=120&type=chunk)[122](index=122&type=chunk) [General and Administrative Expenses](index=30&type=section&id=General%20and%20Administrative%20Expenses_Q2) General and administrative expenses increased by 5.0% to $8.1 million, mainly due to higher variable compensation and outside services, partially offset by lower headcount from the Productivity Initiative - General and administrative expenses: **$8.082 million (2025)** vs. $7.694 million (2024), an increase of **$0.388 million (5.0%)**[123](index=123&type=chunk) - Increase driven by higher variable compensation and outside services, partially offset by lower headcount from the Productivity Initiative[123](index=123&type=chunk) [Equity-Based Compensation Expenses](index=30&type=section&id=Equity-Based%20Compensation%20Expenses_Q2) Equity-based compensation expenses decreased by 31.2% to $1.0 million, primarily due to the completion of the accelerated expense recognition for certain IPO-related equity awards - Equity-based compensation: **$0.982 million (2025)** vs. $1.427 million (2024), a decrease of **$0.445 million (31.2%)**[124](index=124&type=chunk) - Decrease primarily due to a **$0.5 million** reduction from the completion of accelerated expense recognition on IPO-related equity awards[124](index=124&type=chunk) [Restructuring Expenses](index=30&type=section&id=Restructuring%20Expenses_Q2) Restructuring expenses significantly decreased by 96.4% to $31 thousand, reflecting that most employee severance costs related to the Productivity Initiative were incurred in the prior period - Restructuring expenses: **$31 thousand (2025)** vs. $0.865 million (2024), a decrease of **$0.834 million (96.4%)**[125](index=125&type=chunk) - Primarily includes employee related severance costs[125](index=125&type=chunk) [Six months Ended June 30, 2025, Compared to Six months Ended June 30, 2024](index=30&type=section&id=Six%20months%20Ended%20June%2030,%202025,%20Compared%20to%20Six%20months%20Ended%20June%2030,%202024)) For the six months ended June 30, 2025, Zevia PBC experienced growth in net sales and gross profit, driven by increased volumes and cost efficiencies from the Productivity Initiative, leading to a substantial reduction in net loss despite increased restructuring expenses [Net Sales](index=30&type=section&id=Net%20Sales_H1) Net sales increased by 4.2% to $82.5 million, driven by higher equivalized cases sold and pricing increases, partially offset by increased promotional activity - Net sales: **$82.547 million (2025)** vs. $79.225 million (2024), an increase of **$3.322 million (4.2%)**[126](index=126&type=chunk) - Equivalized cases sold increased to **6.5 million (2025)** from 6.0 million (2024)[126](index=126&type=chunk) - Increase due to expanded distribution (**$5.8 million**) and pricing increases (**$2.0 million**), partially offset by higher incentives/discounts (**$4.5 million**)[126](index=126&type=chunk) [Cost of Goods Sold](index=31&type=section&id=Cost%20of%20Goods%20Sold_H1) Cost of goods sold decreased by 6.2% to $41.8 million, primarily due to favorable unit costs from the Productivity Initiative and lower inventory write-downs, despite increased volumes - Cost of goods sold: **$41.822 million (2025)** vs. $44.564 million (2024), a decrease of **$2.742 million (6.2%)**[127](index=127&type=chunk) - Decrease largely due to favorable unit costs (**$3.5 million**) from Productivity Initiative and lower write-downs (**$2.4 million**), partially offset by increased volumes (**$3.1 million**)[127](index=127&type=chunk) [Gross Profit and Gross Margin](index=31&type=section&id=Gross%20Profit%20and%20Gross%20Margin_H1) Gross profit increased by 17.5% to $40.7 million, and gross margin improved to 49.3% from 43.8%, driven by higher volumes, favorable unit costs, and lower inventory write-downs, partially offset by increased promotional activity - Gross profit: **$40.725 million (2025)** vs. $34.661 million (2024), an increase of **$6.064 million (17.5%)**[128](index=128&type=chunk) - Gross margin: **49.3% (2025)** vs. 43.8% (2024), an increase of **5.5 percentage points**[128](index=128&type=chunk)[129](index=129&type=chunk) - Improvement due to lower inventory write-downs, favorable unit costs, and selling price increases, partially offset by increased promotional activity and channel mix[129](index=129&type=chunk) [Selling and Marketing Expenses](index=31&type=section&id=Selling%20and%20Marketing%20Expenses_H1) Total selling and marketing expenses remained flat at $28.7 million. Marketing expenses increased by 54.5% due to brand awareness investments, funded by a 17.7% decrease in selling expenses from the Productivity Initiative - Total selling and marketing expenses: **$28.698 million (2025)** vs. $28.692 million (2024), a slight increase of **$0.006 million (0.0%)**[130](index=130&type=chunk) - Marketing expenses increased by **$3.8 million (54.5%)** to **$10.9 million**, driven by brand awareness investments[130](index=130&type=chunk)[131](index=131&type=chunk) - Selling expenses decreased by **$3.8 million (17.7%)** to **$17.8 million**, primarily due to lower freight transfer and warehousing costs from the Productivity Initiative[130](index=130&type=chunk)[132](index=132&type=chunk) [General and Administrative Expenses](index=31&type=section&id=General%20and%20Administrative%20Expenses_H1) General and administrative expenses decreased by 4.7% to $15.1 million, primarily due to lower headcount and other cost reductions from the Productivity Initiative, partially offset by higher variable compensation - General and administrative expenses: **$15.060 million (2025)** vs. $15.809 million (2024), a decrease of **$0.749 million (4.7%)**[133](index=133&type=chunk) - Decrease primarily due to lower headcount (**$1.2 million**) and other cost reductions from the Productivity Initiative, partially offset by higher variable compensation[133](index=133&type=chunk) [Equity-Based Compensation Expenses](index=33&type=section&id=Equity-Based%20Compensation%20Expenses_H1) Equity-based compensation expenses decreased by 41.3% to $1.7 million, primarily due to a reduction from the accelerated expense recognition for certain IPO-related equity awards - Equity-based compensation: **$1.713 million (2025)** vs. $2.916 million (2024), a decrease of **$1.203 million (41.3%)**[134](index=134&type=chunk) - Decrease primarily due to a **$1.2 million** reduction from accelerated expense recognition on IPO-related equity awards[134](index=134&type=chunk) [Restructuring Expenses](index=33&type=section&id=Restructuring%20Expenses_H1) Restructuring expenses increased by 150.8% to $2.2 million, primarily due to employee severance costs and expenses for exiting two third-party warehouse and distribution facilities - Restructuring expenses: **$2.169 million (2025)** vs. $0.865 million (2024), an increase of **$1.304 million (150.8%)**[135](index=135&type=chunk) - Primarily includes employee severance costs and costs to exit two third-party warehouse and distribution facilities[135](index=135&type=chunk) [Seasonality](index=33&type=section&id=Seasonality) Zevia typically experiences higher demand and net sales during the warmer second and third fiscal quarters, a trend expected to continue as the business grows - Greater demand and net sales are experienced during the second and third fiscal quarters (warmer months)[136](index=136&type=chunk) - Seasonality effects are expected to continue as the business grows[136](index=136&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources)) Zevia PBC had $26.3 million in cash and cash equivalents as of June 30, 2025, and believes existing cash, operating activities, and available credit will provide adequate liquidity for the next 12 months. The company is dependent on distributions from Zevia LLC and faces potential substantial payments under the Tax Receivable Agreement (TRA) - Cash and cash equivalents: **$26.3 million** as of June 30, 2025[138](index=138&type=chunk) - Believes current liquidity sources (cash, operations, Secured Revolving Line of Credit) are adequate for the next 12 months[138](index=138&type=chunk) - Future capital requirements depend on revenue growth, gross margin, and expenditures; may seek additional financing[140](index=140&type=chunk) - Dependent on distributions from Zevia LLC to pay taxes, TRA obligations, and other expenses[141](index=141&type=chunk) - Expected TRA payments could aggregate to approximately **$58.6 million** through 2040, assuming sufficient taxable income[142](index=142&type=chunk) - Actual TRA payments are uncertain and depend on various factors, including exchanges of Class B units and future income[143](index=143&type=chunk)[144](index=144&type=chunk) - Anticipates funding TRA payments from cash flows generated from operations, with a significant portion payable over 15 years[145](index=145&type=chunk)[146](index=146&type=chunk) [Credit Facility](index=35&type=section&id=Credit%20Facility) Zevia LLC has a $20 million Secured Revolving Line of Credit, maturing in February 2027, with no outstanding balance as of June 30, 2025. The company was in compliance with all financial covenants - Secured Revolving Line of Credit: **$20 million commitment**, matures February 22, 2027[147](index=147&type=chunk) - No outstanding amount as of June 30, 2025[147](index=147&type=chunk) - Company was in compliance with its financial covenant (minimum fixed charge coverage ratio of **1.00 to 1.00**) as of June 30, 2025[149](index=149&type=chunk) [Cash Flows](index=35&type=section&id=Cash%20Flows) For the six months ended June 30, 2025, Zevia used $4.3 million in operating activities, primarily due to net loss, partially offset by non-cash expenses and inventory reduction. Investing activities used minimal cash, while financing activities provided a small amount from stock option exercises - **Net Cash Used in Operating Activities:** * Used **$4.312 million** in H1 2025 (vs. $2.920 million in H1 2024) * Driven by net loss (**$7.0 million**), partially offset by non-cash expenses (**$2.5 million**) and a net increase from changes in operating assets/liabilities (**$0.2 million**) * Key changes: **$2.9 million decrease** in inventories, **$2.3 million increase** in accounts receivable, **$0.2 million net decrease** in accounts payable/accrued liabilities[151](index=151&type=chunk)[153](index=153&type=chunk) - **Net Cash Used in Investing Activities:** * Used **$45 thousand** in H1 2025 (vs. $93 thousand in H1 2024) * Primarily for purchases of computer and quality control equipment[151](index=151&type=chunk)[155](index=155&type=chunk) - **Net Cash Provided By Financing Activities:** * Provided **$5 thousand** in H1 2025 (vs. $0 in H1 2024) * Due to proceeds from stock option exercises, offset by financing costs[151](index=151&type=chunk)[156](index=156&type=chunk) [Non-GAAP Financial Measures (Adjusted EBITDA)](index=37&type=section&id=Non-GAAP%20Financial%20Measures%20(Adjusted%20EBITDA))) Zevia uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance by excluding certain non-operating and non-cash items. Adjusted EBITDA improved significantly for both the three and six months ended June 30, 2025, compared to the prior year - Adjusted EBITDA is calculated as net loss adjusted for other income (expense), income taxes, depreciation and amortization, equity-based compensation, and restructuring expenses[158](index=158&type=chunk) - Used by management for assessing business health, incentive compensation, operating performance, and internal planning[159](index=159&type=chunk) Adjusted EBITDA (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(651) | $(6,961) | $(7,022) | $(14,160) | | Adjusted EBITDA | $233 | $(4,374) | $(3,033) | $(9,840) | - Adjusted EBITDA improved by **$4.607 million** for Q2 2025 and by **$6.807 million** for H1 2025[161](index=161&type=chunk) [Commitments](index=37&type=section&id=Commitments) Zevia's commitments include long-term operating leases for office space and short-term inventory purchase commitments. No material changes from the Annual Report were noted, and commitments are expected to be satisfied through cash on hand and operations - Lease for corporate headquarters extended through December 31, 2026, with a portion subleased[162](index=162&type=chunk) - Inventory purchase commitments are short-term, aligned with forecasts, and do not extend beyond a year[164](index=164&type=chunk) - No material changes to commitments from the Annual Report[165](index=165&type=chunk) - Commitments expected to be satisfied through cash on hand and cash generated from sales[165](index=165&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates)) The preparation of financial statements requires management to make estimates and assumptions, and there have been no material changes to critical accounting policies from those discussed in the Annual Report - Financial statements require estimates and assumptions affecting reported amounts[166](index=166&type=chunk) - No material changes to critical accounting policies from the Annual Report[167](index=167&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements)) Zevia refers to Note 2 for a discussion of recently issued accounting pronouncements - Refer to Note 2 for details on recently issued accounting pronouncements[169](index=169&type=chunk) [Emerging Growth Company Status](index=39&type=section&id=Emerging%20Growth%20Company%20Status)) Zevia maintains its "emerging growth company" status, allowing it to take advantage of certain exemptions, including an extended transition period for new accounting standards, until December 31, 2026, or earlier if specific thresholds are met - Zevia is an "emerging growth company" (EGC) under the JOBS Act[170](index=170&type=chunk) - Elects to use the extended transition period for new accounting standards, which may affect comparability[170](index=170&type=chunk) - EGC status will cease by December 31, 2026, or if annual revenue exceeds **$1.235 billion**, market value of Class A common stock exceeds **$700 million**, or non-convertible debt securities exceed **$1.0 billion** over three years[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk)) Zevia is exposed to market risks including raw material and finished goods prices, foreign exchange, inflation, and commodities. Tariffs on aluminum and potential tariffs on Canadian imports are expected to increase costs, while the company is diversifying stevia suppliers - **Raw Material and Finished Goods Risk:** * Profitability depends on managing raw material costs, especially stevia extract and aluminum cans * Stevia extract is sourced from a single large multi-national ingredient company with fixed pricing until October 2025, and a second supplier was approved in 2024 for diversification * Tariffs on steel and aluminum (**25% from March-June, 50% starting June 2025**) have increased operating costs and are expected to continue to increase cost of goods sold * Canadian production is believed to be exempt from U.S. tariffs under USMCA, but this is evolving[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - **Foreign Exchange Risk:** * Majority of sales and costs are in U.S. dollars, limiting foreign exchange risk * Canadian sales are invoiced in Canadian dollars, and some international sourcing by contract manufacturers creates exposure * Foreign exchange gains and losses were not material for the periods presented[175](index=175&type=chunk) - **Inflation Risk:** * Inflation has materially affected business, results, and financial condition * Inability to fully offset higher costs through price increases could harm the business[176](index=176&type=chunk) - **Commodity Risk:** * Subject to market risks for commodities like aluminum, diesel fuel, cartons, and corrugate * Ability to recover increased costs through pricing may be limited by competition[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures)) Zevia's management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and determined they were effective. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and determined to be effective at the reasonable assurance level as of June 30, 2025[178](index=178&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[179](index=179&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) Zevia PBC is not currently subject to any material legal proceedings - The Company is not subject to any material legal proceedings[181](index=181&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Zevia's business is exposed to risks from disruptions in the worldwide economy, including changes to trade policies and governmental tariffs, which can adversely affect demand, supply chain costs, and consumer purchasing behavior - Adverse economic conditions, inflation, trade policies, and tariffs may impact demand for products[183](index=183&type=chunk) - U.S. government imposed tariffs on steel and aluminum (**25% in March, 50% in June 2025**) and other imports, leading to increased costs[183](index=183&type=chunk)[185](index=185&type=chunk) - Tariff changes can cause uncertainty, retaliatory measures, and negatively affect affordability and consumer demand[183](index=183&type=chunk)[184](index=184&type=chunk) - Consumers may shift to lower-priced alternatives during economic downturns and high inflation[184](index=184&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds)) There were no unregistered sales of equity securities or use of proceeds to report for the period - None to report[186](index=186&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities)) There were no defaults upon senior securities to report for the period - None to report[187](index=187&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures)) This item is not applicable to Zevia PBC - Not applicable[188](index=188&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information)) No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers during Q2 2025[189](index=189&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, articles of incorporation, bylaws, and XBRL documents - Includes certifications of Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32)[191](index=191&type=chunk) - Includes Inline XBRL Instance Document and Taxonomy Extension Schema (Exhibits 101.INS, 101.SCH, 104)[191](index=191&type=chunk) [Signatures](index=44&type=section&id=Signatures) The Quarterly Report was signed on behalf of Zevia PBC by Amy E. Taylor (President and CEO) and Girish Satya (CFO and Principal Accounting Officer) on August 6, 2025 - Signed by Amy E. Taylor, President and Chief Executive Officer[196](index=196&type=chunk) - Signed by Girish Satya, Chief Financial Officer and Principal Accounting Officer[198](index=198&type=chunk) - Date of signing: August 6, 2025[196](index=196&type=chunk)[198](index=198&type=chunk)

Executive Summary [Q2 2025 Performance Highlights](index=1&type=section&id=Q2%202025%20Performance%20Highlights) Zevia announced strong Q2 2025 results, exceeding net sales and Adjusted EBITDA guidance, driven by significant volume growth and improved profitability Key Financial Highlights | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change YoY (USD) | Change YoY (%) | | :-------------------- | :------------ | :------------ | :--------------- | :------------- | | Net Sales | $44.5 million | $40.4 million | +$4.1 million | +10.1% | | Gross Profit Margin | 48.7% | 41.9% | +6.8 percentage points | | | Net Loss | $0.7 million | $7.0 million | -$6.3 million | -90.0% | | Loss per Share | $0.01 | $0.10 | -$0.09 | -90.0% | | Adjusted EBITDA | $0.2 million | -$4.4 million | +$4.6 million | | - Volume growth of **14.3%** contributed to the net sales increase[1](index=1&type=chunk)[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO expressed satisfaction with Q2 performance, highlighting successful execution of strategic growth pillars, including brand sharpening, foundation strengthening, and accelerated growth through marketing, innovation, and distribution expansion - Strategic growth pillars advanced: sharpen the Zevia brand, strengthen the foundation, and accelerate growth[2](index=2&type=chunk) - Growth drivers include distinctive marketing, resonating product innovation, and distribution building beyond historical peak levels with strong sell-through[2](index=2&type=chunk) Second Quarter 2025 Financial Results [Net Sales](index=1&type=section&id=Net%20Sales) Net sales improved by 10.1% year-over-year, reaching $44.5 million, primarily due to higher volumes from expanded distribution and improved price realization Net Sales Performance | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change YoY (USD) | Change YoY (%) | | :-------- | :------------ | :------------ | :--------------- | :------------- | | Net Sales | $44.5 million | $40.4 million | +$4.1 million | +10.1% | - The increase was driven by improved volumes of **14.3%**, largely from expanded distribution at Walmart and a drug channel customer, and higher price realization, partially offset by increased promotional activity[3](index=3&type=chunk) [Gross Profit](index=1&type=section&id=Gross%20Profit) Gross profit margin significantly improved by 6.8 percentage points to 48.7%, driven by lower product costs and better inventory management Gross Profit Margin | Metric | Q2 2025 | Q2 2024 | Change YoY | | :---------------- | :------ | :------ | :--------- | | Gross Profit Margin | 48.7% | 41.9% | +6.8 percentage points | - The improvement was primarily due to lower product costs and improved inventory management, partially offset by higher promotional activity and channel mix[4](index=4&type=chunk) [Operating Expenses](index=1&type=section&id=Operating%20Expenses) Total operating expenses decreased year-over-year, primarily due to reductions in selling and restructuring expenses, despite an increase in marketing and general and administrative costs [Selling and Marketing Expenses](index=1&type=section&id=Selling%20and%20Marketing%20Expenses) Selling expenses decreased due to productivity initiatives, while marketing expenses increased to drive brand awareness, funded by the selling expense savings Selling and Marketing Expense Breakdown | Expense Category | Q2 2025 (USD) | % of Net Sales (Q2 2025) | Q2 2024 (USD) | % of Net Sales (Q2 2024) | Change (USD) | Change (%) | | :-------------------- | :------------ | :----------------------- | :------------ | :----------------------- | :----------- | :--------- | | Selling and Marketing | $13.4 million | 30.0% | $13.6 million | 33.7% | -$0.2 million | -1.5% | | Selling | $8.7 million | 19.4% | $9.3 million | 23.0% | -$0.6 million | -7.1% | | Marketing | $4.7 million | 10.6% | $4.3 million | 10.7% | +$0.4 million | +9.6% | - The decrease in selling expenses was primarily due to savings in freight and warehousing costs as a result of the Productivity Initiative[8](index=8&type=chunk) - The increase in marketing expenses was driven by investments made to drive brand awareness, funded by the savings in direct selling expenses[8](index=8&type=chunk) [General and Administrative Expenses](index=2&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses saw a slight increase, mainly due to higher compensation and outside services, partially offset by reduced headcount General and Administrative Expenses | Metric | Q2 2025 (USD) | % of Net Sales (Q2 2025) | Q2 2024 (USD) | % of Net Sales (Q2 2024) | Change (USD) | | :-------------------------- | :------------ | :----------------------- | :------------ | :----------------------- | :----------- | | General and Administrative | $8.1 million | 18.2% | $7.7 million | 19.0% | +$0.4 million | - The increase was primarily driven by higher compensation expense resulting from accrued bonuses as well as higher use of outside services, partially offset by lower headcount[9](index=9&type=chunk) [Equity-based Compensation and Restructuring](index=2&type=section&id=Equity-based%20Compensation%20and%20Restructuring) Equity-based compensation decreased due to the accelerated recognition method for IPO awards, and restructuring expenses were significantly lower compared to the prior year Equity-based Compensation and Restructuring Expenses | Expense Category | Q2 2025 (USD) | Q2 2024 (USD) | Change (USD) | | :----------------------- | :------------ | :------------ | :---------- | | Equity-based Compensation | $1.0 million | $1.4 million | -$0.4 million | | Restructuring | < $0.1 million | $0.9 million | -$0.8 million | - The decrease in equity-based compensation was largely due to the accelerated method of expense recognition on certain equity awards issued in connection with the Company's IPO in 2021[10](index=10&type=chunk) [Net Loss and EPS](index=2&type=section&id=Net%20Loss%20and%20EPS) The company significantly reduced its net loss to $0.7 million and improved loss per share to $0.01, primarily driven by higher gross profit and lower selling expenses Net Loss and Earnings Per Share | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Improvement YoY (USD) | | :-------------- | :------------ | :------------ | :-------------------- | | Net Loss | $0.7 million | $7.0 million | $6.3 million | | Loss per Share | $0.01 | $0.10 | $0.09 | - The improvement in net loss was primarily due to higher gross profit and lower selling expenses versus the same period last year[11](index=11&type=chunk) [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Zevia achieved positive Adjusted EBITDA of $0.2 million in Q2 2025, a substantial improvement of $4.6 million year-over-year from a loss position Adjusted EBITDA Performance | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Improvement YoY (USD) | | :-------------- | :------------ | :------------ | :-------------------- | | Adjusted EBITDA | $0.2 million | -$4.4 million | $4.6 million | Balance Sheet and Cash Flows As of June 30, 2025, Zevia maintained a healthy liquidity position with $26.3 million in cash and cash equivalents, no outstanding debt, and an available credit line Key Liquidity Metrics | Metric | As of June 30, 2025 (USD) | | :------------------------- | :------------------------ | | Cash and Cash Equivalents | $26.3 million | | Outstanding Debt | None | | Unused Credit Line | $20 million | Outlook [Full Year 2025 Outlook](index=2&type=section&id=Full%20Year%202025%20Outlook) The company reaffirmed its full-year net sales guidance while improving its Adjusted EBITDA loss expectation, reflecting benefits from cost-savings initiatives despite anticipated tariff impacts Full Year 2025 Guidance | Metric | Full Year 2025 Guidance (USD) | | :------------------ | :---------------------------- | | Net Sales | $158 million to $163 million | | Adjusted EBITDA Loss | $7 million to $9 million | - Adjusted EBITDA outlook reflects continued benefit from cost-savings initiatives and includes the impact of higher costs associated with tariffs, which the Company expects to mitigate[14](index=14&type=chunk) [Third Quarter 2025 Outlook](index=2&type=section&id=Third%20Quarter%202025%20Outlook) For Q3 2025, Zevia anticipates net sales between $38.0 million and $40.0 million, with an Adjusted EBITDA loss inclusive of a charge for package redesign Third Quarter 2025 Guidance | Metric | Q3 2025 Guidance (USD) | | :------------------ | :--------------------- | | Net Sales | $38.0 million to $40.0 million | | Adjusted EBITDA Loss | $3.4 million to $3.9 million | - The Adjusted EBITDA loss for Q3 2025 is inclusive of a **$500 thousand** charge within cost of goods sold related to a package redesign[15](index=15&type=chunk) Company Information [About Zevia](index=5&type=section&id=About%20Zevia) Zevia PBC is a Certified B Corporation offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages made with simple, plant-based ingredients, distributed across over 37,000 retail locations in the U.S. and Canada - Zevia PBC is a Delaware public benefit corporation designated as a 'Certified B Corporation,' focused on addressing global health challenges from excess sugar consumption[19](index=19&type=chunk) - All Zevia® beverages are zero sugar, zero calorie, naturally sweetened, made with simple, plant-based ingredients, contain no artificial sweeteners, and are Non-GMO Project verified, gluten-free, Kosher, and vegan[19](index=19&type=chunk) - Zevia is distributed in more than **37,000** retail locations in the U.S. and Canada through a diverse network of major retailers[19](index=19&type=chunk) [Investor Relations and Webcast](index=3&type=section&id=Investor%20Relations%20and%20Webcast) Zevia hosted a conference call and webcast to discuss its Q2 2025 results, with replay information available on its investor relations website - The Company hosted a conference call to discuss its results at **4:30 p.m. Eastern Time** on **August 6, 2025**[17](index=17&type=chunk) - Investors can listen to the webcast via the Investor Relations section of Zevia's website, where a replay will also be available[17](index=17&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section provides a disclaimer regarding forward-looking statements, outlining the inherent risks and uncertainties that could cause actual results to differ materially from projections, and states no obligation to update these statements - The 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[18](index=18&type=chunk) - Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties, including tariffs, brand development, supply chain, consumer preferences, and macroeconomic conditions[18](index=18&type=chunk) - The Company does not intend and undertakes no obligation to update any forward-looking statements, except as may be required by applicable law[18](index=18&type=chunk) Non-GAAP Financial Measures [Explanation and Rationale](index=9&type=section&id=Explanation%20and%20Rationale) Zevia uses Adjusted EBITDA as a non-GAAP measure to provide supplemental information on operating performance, facilitate internal comparisons, and aid management in assessing business health and planning, while acknowledging its limitations - Adjusted EBITDA is a non-GAAP financial measure used to provide meaningful supplemental information regarding operating performance and facilitate internal comparisons[25](index=25&type=chunk) - Management uses Adjusted EBITDA for assessing business health, determining incentive compensation, evaluating operating performance, and for internal planning and forecasting[25](index=25&type=chunk) - Adjusted EBITDA is calculated as net income (loss) adjusted to exclude other income (expense), income taxes, depreciation and amortization, equity-based compensation, and restructuring expenses[26](index=26&type=chunk) [Reconciliation to GAAP](index=10&type=section&id=Reconciliation%20to%20GAAP) The company provides a reconciliation of net loss (the most directly comparable GAAP measure) to Adjusted EBITDA (non-GAAP) for both the three and six months ended June 30, 2025 and 2024 Adjusted EBITDA Reconciliation | Metric | Three Months Ended June 30, 2025 (USD in thousands) | Three Months Ended June 30, 2024 (USD in thousands) | Six Months Ended June 30, 2025 (USD in thousands) | Six Months Ended June 30, 2024 (USD in thousands) | | :------------------------- | :-------------------------------------------------- | :-------------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net loss and comprehensive loss | $(651) | $(6,961) | $(7,022) | $(14,160) | | Other income, net | $(382) | $(142) | $(439) | $(239) | | Provision for income taxes | $17 | $34 | $58 | $47 | | Depreciation and amortization | $236 | $403 | $488 | $731 | | Equity-based compensation | $982 | $1,427 | $1,713 | $2,916 | | Restructuring | $31 | $865 | $2,169 | $865 | | **Adjusted EBITDA** | **$233** | **$(4,374)** | **$(3,033)** | **$(9,840)** | Unaudited Financial Statements [Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Presents the unaudited consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2025 and 2024, detailing revenue, expenses, and net loss Consolidated Statements of Operations and Comprehensive Loss | Metric | Three Months Ended June 30, 2025 (USD in thousands) | Three Months Ended June 30, 2024 (USD in thousands) | Six Months Ended June 30, 2025 (USD in thousands) | Six Months Ended June 30, 2024 (USD in thousands) | | :----------------------- | :-------------------------------------------------- | :-------------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net sales | $44,524 | $40,426 | $82,547 | $79,225 | | Cost of goods sold | $22,834 | $23,484 | $41,822 | $44,564 | | Gross profit | $21,690 | $16,942 | $40,725 | $34,661 | | Total operating expenses | $22,706 | $24,011 | $48,128 | $49,013 | | Net loss attributable to Zevia PBC | $(697) | $(5,891) | $(5,923) | $(11,715) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, showing assets, liabilities, and equity Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (USD in thousands) | December 31, 2024 (USD in thousands) | | :--------------- | :------------------------------- | :----------------------------------- | | Total assets | $62,450 | $67,951 | | Total liabilities | $24,755 | $25,006 | | Total equity | $37,695 | $42,945 | [Condensed Consolidated Statement of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Details the unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2025, and 2024, categorizing cash flows from operating, investing, and financing activities Condensed Consolidated Statement of Cash Flows | Metric | Six Months Ended June 30, 2025 (USD in thousands) | Six Months Ended June 30, 2024 (USD in thousands) | | :------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net cash used in operating activities | $(4,312) | $(2,920) | | Net cash used in investing activities | $(45) | $(93) | | Net cash provided by financing activities | $5 | $0 | | Cash and cash equivalents at end of period | $26,301 | $28,942 |

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Summary: Zevia (ZVIA) - Zevia currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned for potential outperformance in the market [3] - Over the past week, ZVIA shares have increased by 17.42%, while the Zacks Beverages - Soft drinks industry remained flat [5] - In a longer timeframe, ZVIA's shares have risen by 38.5% over the past quarter and 364.05% over the last year, significantly outperforming the S&P 500, which increased by 16.66% and 14.76% respectively [6] - The average 20-day trading volume for ZVIA is 1,055,065 shares, indicating a bullish trend as the stock is rising with above-average volume [7] Earnings Outlook - In the past two months, three earnings estimates for ZVIA have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from -$0.24 to -$0.16 [9] - For the next fiscal year, three estimates have also moved upwards with no downward revisions, indicating positive sentiment regarding future earnings [9] Conclusion - Considering the strong momentum indicators and positive earnings outlook, ZVIA is recommended as a stock to watch for potential near-term gains [10][11]

Industry Overview - The Zacks Beverages – Soft Drinks industry is characterized by strong growth potential driven by rising consumer demand for healthier, functional, and eco-friendly beverages [1] - Companies are innovating and diversifying their portfolios to capture new market opportunities [1] - The industry is experiencing a digital transformation with brands adopting direct-to-consumer channels and subscription models to enhance customer relationships [1] Current Challenges - The industry faces persistent headwinds such as elevated input costs, supply-chain disruptions, and tariff-related uncertainties that pressure margins [2] - Rising packaging and freight expenses, along with volatile commodity prices, challenge profitability [2] - Newly imposed U.S. tariffs on imports from Canada and Mexico create additional financial pressure and uncertainty [6] Consumer Trends - There is a significant shift in consumer preferences towards healthier beverage options, including drinks made with natural ingredients and reduced sugar [4] - Plant-based beverages and functional drinks that promote hydration and energy are gaining popularity among health-conscious consumers [4] - Companies are expanding into adjacent categories, such as ready-to-drink alcoholic beverages, to capitalize on these trends [4] Digital Growth & Innovation - The industry is leveraging digital transformation to enhance consumer engagement and boost growth [5] - Brands are investing in direct-to-consumer platforms and subscription-based models to secure recurring revenue [5] - Product innovation remains a key growth driver, with companies refining their portfolios and launching new products [5] Financial Performance - The Zacks Beverages – Soft Drinks industry currently holds a Zacks Industry Rank of 63, placing it in the top 26% of over 250 Zacks industries, indicating bright near-term prospects [8] - The industry has underperformed the Consumer Staples sector and the S&P 500 Index over the past year, with a collective growth of 0.4% compared to the sector's 3.5% and the S&P 500's 11.9% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 18.68X, compared to the S&P 500's 21.97X and the sector's 17.75X [13] - Over the past five years, the industry's P/E ratio has ranged from a high of 23.8X to a low of 17.22X, with a median of 21.45X [13] Notable Companies - **Coca-Cola (KO)**: Positioned for long-term growth through strategic transformation and digital investments, with a projected sales growth of 2.4% and earnings growth of 2.8% for 2025 [17][18] - **Zevia (ZVIA)**: Focused on zero-sugar, naturally sweetened drinks, with a projected sales growth of 3.4% and earnings growth of 38.7% for 2025 [21][22] - **Monster Beverage (MNST)**: Continues to perform well in the energy drinks category, with projected sales growth of 5.9% and earnings growth of 14.8% for 2025 [24][25] - **Keurig Dr Pepper (KDP)**: Expected to benefit from growth in the Refreshment Beverages segment, with projected sales growth of 5.6% and earnings growth of 6.3% for 2025 [28][29] - **Primo Brands (PRMB)**: Specializes in healthy hydration with a projected sales growth of 145.6% and earnings growth of 52.5% for 2025 [33]

Zevia PBC (ZVIA) FY Conference Summary Company Overview - **Company**: Zevia PBC (ZVIA) - **Industry**: Beverage, specifically zero-calorie, naturally sweetened plant-based beverages - **Focus**: Growth strategy centered on distribution, channel expansion, and brand awareness [1][2] Key Points and Arguments Growth Strategy - **Robust Growth Strategy**: Emphasis on enhanced distribution and brand awareness to drive sales growth through 2025 [2] - **Category Tailwinds**: Increased interest in better-for-you beverages is positively impacting Zevia's market position [3][4] - **Productivity Initiatives**: Improved gross margins and increased marketing investments are expected to support growth [4][5] Market Dynamics - **Retailer Merchandising Changes**: Retailers are now featuring better-for-you sodas more prominently, benefiting Zevia [11] - **Consumer Behavior**: Despite macroeconomic uncertainties, consumers are increasingly willing to invest in health-oriented products [12][13] - **Competitive Landscape**: The beverage market is becoming more competitive with new entrants, but Zevia is well-positioned due to its established brand and product offerings [18][31] Distribution and Sales - **Expanded Distribution**: Significant increase in distribution from 800 to 4,300 Walmart locations, enhancing visibility and sales potential [27] - **Sales Performance**: The variety pack is the top-selling SKU, indicating successful consumer engagement [27] Product Innovation - **Taste Improvement**: Recent breakthroughs in flavor profiles are expected to attract new consumers and enhance repeat purchases [39][40] - **Increased Innovation Pace**: Plans to launch multiple new flavors and seasonal products to drive trial and expand the user base [43][44] Financial Performance - **Gross Margin Expansion**: Achieved gross margins exceeding 50% in Q1, driven by improved inventory management and cost optimization [46][48] - **Cost Management**: Ongoing initiatives to offset tariff impacts and improve margins through supply chain efficiencies [51][52] Future Outlook - **EBITDA Positive by 2026**: The company aims to transition to EBITDA positive status by focusing on moderate top-line growth and cost savings [56] - **Long-term Growth Potential**: Anticipated growth in household penetration and brand recognition, with a focus on becoming a household name in the beverage sector [72][73] Additional Important Insights - **Consumer Trends**: The shift towards clean-label products and lower sugar consumption is a significant trend that Zevia is capitalizing on [58][59] - **Brand Positioning**: Zevia aims to be recognized as a leading provider of great-tasting, zero-sugar beverages that are affordable and accessible [66][72] - **Marketing Strategy**: Increased marketing spend targeting brand awareness and consumer engagement, with a focus on authenticity and relatability [23][26] This summary encapsulates the key insights from the Zevia PBC FY Conference, highlighting the company's growth strategies, market dynamics, product innovations, financial performance, and future outlook.