Summary of Zevia PBC (ZVIA) Conference Call - May 13, 2025 Company Overview - Zevia is an emerging nonalcoholic beverage company that went public about four years ago, offering a variety of zero sugar, zero calorie beverages sweetened with stevia, including soda, energy drinks, and organic tea [1][2] Key Industry Insights - The beverage industry is shifting towards "better for you" options, with Zevia positioned as a leader in this segment [8][32] - The company has expanded its distribution significantly, particularly with Walmart, moving from 800 to 4,300 stores, which is part of a broader trend in grocery towards healthier beverage options [8][9] Financial Performance - Q1 results showed top line growth that was down but better than market expectations, with guidance for FY 2025 maintained at modest growth of 2% to 5% [6][7] - The company expects a healthy acceleration in the second half of the year, projecting growth of about 7% [13] Growth Drivers - Key growth drivers include expanded distribution, increased shelf space, and new distribution channels such as Walgreens [12][13] - The introduction of new flavors, including Strawberry Lemon Burst, is expected to support growth [11][28] - The company is optimistic about achieving growth targets despite macroeconomic uncertainties [19] Risks and Challenges - The primary risk to guidance is macroeconomic conditions, including potential recessionary impacts [19] - The company has lost some club distribution but is working to regain it, which represents an upside opportunity [21][22] Strategic Initiatives - Zevia is focused on profitable growth, with a goal to become EBITDA profitable by the end of 2026 [29][30] - The company is investing in brand marketing, doubling its marketing spend in 2025 compared to 2023 [56][60] - A strong innovation pipeline is in place, with a focus on bringing new products to market more rapidly [40][41] Market Positioning - Zevia is positioned as an affordable option within the "better for you" beverage category, appealing to health-conscious consumers [33][34] - The company emphasizes its clean label and simple ingredient profile, which aligns with current consumer trends [31][32] Financial Metrics - Q1 gross margins reached a record 50.1%, with expectations for high 40s margins for the rest of the year, impacted by aluminum tariffs [68][70] - The company has achieved $15 million in annualized cost savings through productivity initiatives, ahead of initial expectations [74][76] Consumer Behavior - There is an expectation of resilience among health-conscious consumers, who view Zevia products as essential rather than discretionary [85][86] - The company anticipates benefiting from trade-down behavior within the "better for you" category [86] Investor Insights - Zevia's household penetration is currently in the single digits, indicating significant growth potential as consumer preferences shift towards healthier options [88] - The company believes it is well-positioned to capitalize on the growing demand for clean label products, supported by its distribution and innovation strategies [89][90] Conclusion - Zevia is at a critical juncture with strong growth potential driven by strategic distribution expansion, innovative product offerings, and a commitment to brand marketing, all while navigating macroeconomic challenges [35][36][89]

Core Viewpoint - Zevia reported a quarterly loss of $0.06 per share, outperforming the Zacks Consensus Estimate of a loss of $0.10, marking a 40% earnings surprise [1][2] Financial Performance - The company achieved revenues of $38.02 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 3.04%, although this represents a decline from $38.8 million in the same quarter last year [2] - Over the last four quarters, Zevia has surpassed consensus EPS estimates three times and topped revenue estimates three times as well [2] Stock Performance - Zevia shares have declined approximately 51.8% since the beginning of the year, contrasting with the S&P 500's decline of 4.7% [3] - The current Zacks Rank for Zevia is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $43.17 million, and for the current fiscal year, it is -$0.24 on revenues of $160.21 million [7] - The trend of estimate revisions for Zevia is currently mixed, which may change following the recent earnings report [6] Industry Context - The Beverages - Soft drinks industry, to which Zevia belongs, is currently ranked in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - First quarter net sales were $38 million, a decrease of 2% compared to the same period last year, primarily due to increased promotional activity [20] - Gross margin reached a record high of 50.1%, an increase of 440 basis points from 45.7% in the first quarter of last year, reflecting lower product costs and improved inventory management [20] - Adjusted EBITDA loss improved by $2.2 million to a loss of $3.3 million compared to a loss of $5.5 million in the prior year period [22] Business Line Data and Key Metrics Changes - Selling and marketing expenses were $15.3 million or 40.3% of net sales, compared to $15.1 million or 38.8% of net sales in the first quarter of the previous year [21] - General and administrative expenses decreased to $7 million or 18.4% of net sales from $8.1 million or 20.9% of net sales in the prior year [22] - The company achieved record customer fulfillment rates during the quarter, indicating operational improvements [21] Market Data and Key Metrics Changes - The company expanded distribution through existing and new retail partners, including nearly 8,000 Walgreens stores and a strong performance at Walmart [15][19] - The better-for-you beverage category is projected to have robust growth, with the company positioned uniquely with its zero sugar soda offerings [9] Company Strategy and Development Direction - The company is focused on three strategic growth pillars: marketing, product innovation, and distribution [9][18] - Marketing efforts include engaging campaigns to raise brand awareness, such as the "Get the Fake Out of Here" campaign featuring Jelly Roll [10] - Product innovation is emphasized with new flavors and improved taste profiles, including the launch of strawberry lemon butter and orange creamsicle [12][13] - The company aims to capitalize on the growing demand for healthier beverage options while maintaining competitive pricing [80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's competitive position and the potential for growth in the better-for-you beverage category despite macroeconomic uncertainties [18] - The productivity initiative is expected to yield annualized cost savings of $15 million, supporting future growth investments [23] - The company maintains its full-year net sales guidance in the range of $158 million to $163 million, with an adjusted EBITDA loss range of $8 million to $11 million [23][24] Other Important Information - The company ended the quarter with approximately $28 million in cash and cash equivalents and an undrawn revolving credit line of $20 million [23] - The company is actively working to offset impending tariff costs through operational efficiencies and pricing strategies [23][74] Q&A Session Summary Question: Guidance and Growth Drivers - Management reiterated confidence in maintaining full-year guidance, citing strong execution and productivity initiatives as key drivers for growth [26][27] Question: Performance at Walmart - Management reported positive early sell-through performance at Walmart, with the variety pack being the top seller among Zevia SKUs [30][33] Question: Gross Margin Sustainability - Management believes gross margins in the upper forties are sustainable, despite anticipated tariff headwinds [38][39] Question: Distribution Rollout - Walgreens expansion will primarily impact the second and third quarters, while the Albertsons rollout is ongoing [68][70] Question: Consumer Behavior Changes - Management noted that it is too early to see significant changes in consumer behavior but believes the company is well-positioned to capture market share as consumers become more price-conscious [80]

Zevia PBC (ZVIA) Q1 2025 Earnings Call May 07, 2025 04:30 PM ET Speaker0 Greetings, and welcome to the ZBF PBC First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jean Fontana, Senior Managing Director with ADDO Investor Relations. Thank you. You may begin. Speaker1 Thank you, and welcome ...

Financial Performance - Net sales reached $38 million[10], a 2% increase compared to the previous year[10] - Gross margin improved to 50.1%[10], a 440 basis points increase compared to the previous year[10] - Net loss was -$6.4 million[10], an improvement of $0.8 million compared to the previous year[10] - Adjusted EBITDA loss was -$3.3 million[10], an improvement of $2.2 million compared to the previous year[10] Strategic Growth Pillars - The company focuses on amplifying marketing[11], driving product innovation[11], expanding distribution[11], and delivering profitability[11] Marketing Impact - The "Get the Fake Outta Here" campaign generated 2.4 billion positive consumer press impressions[12] - The campaign resulted in the most engagements ever on Zevia social media[12]

PART I Financial Information [Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company presents its unaudited interim financial statements for Q1 2025, showing a net loss of $6.4 million and a cash position of $27.7 million [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets decreased to $62.0 million, primarily due to reductions in cash and inventories, while total equity declined to $37.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $27,717 | $30,653 | | Inventories | $17,105 | $18,618 | | Total current assets | $56,334 | $61,909 | | **Total assets** | **$61,974** | **$67,951** | | Total current liabilities | $24,031 | $24,222 | | **Total liabilities** | **$24,669** | **$25,006** | | **Total equity** | **$37,305** | **$42,945** | [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) Net sales slightly decreased by 2.0% to $38.0 million in Q1 2025, while gross profit improved, and the net loss narrowed to $6.4 million Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $38,023 | $38,799 | | Gross profit | $19,035 | $17,719 | | Loss from operations | $(6,387) | $(7,283) | | Restructuring Costs | $2,138 | $0 | | **Net loss** | **$(6,371)** | **$(7,199)** | | Net loss per share (basic & diluted) | $(0.08) | $(0.10) | [Condensed Consolidated Statements of Changes in Equity (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Unaudited)) Total equity decreased by $5.6 million to $37.3 million, primarily driven by the quarterly net loss of $6.4 million - Total equity declined by $5.6 million during the first quarter of 2025, mainly due to the **net loss of $6.4 million**[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)) Net cash used in operating activities was $2.9 million, and the company's cash and cash equivalents ended the period at $27.7 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,925) | $(3,202) | | Net cash used in investing activities | $(11) | $(33) | | Net cash provided by financing activities | $0 | $0 | | **Net change in cash** | **$(2,936)** | **$(3,235)** | | **Cash at end of period** | **$27,717** | **$28,720** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Key disclosures include revenue disaggregation, details on the undrawn $20 million credit facility, customer concentration, and a $2.1 million restructuring charge Revenue by Channel & Geography - Q1 2025 (in thousands) | Channel | Revenue | Geography | Revenue | | :--- | :--- | :--- | :--- | | Retail sales | $32,453 | U.S. | $34,751 | | Online/e-commerce | $5,570 | Canada | $3,272 | | **Total Net Sales** | **$38,023** | **Total Net Sales** | **$38,023** | - In Q1 2025, **three major customers (A, C, and J) each accounted for 14% of total net sales**[73](index=73&type=chunk) - The company initiated a Productivity Initiative, resulting in a **$2.1 million restructuring charge in Q1 2025**, primarily for employee termination expenses[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Productivity Initiative's impact, a slight sales decline, significant gross margin improvement, and adequate liquidity [Key Events and Performance Factors](index=20&type=section&id=Key%20Events%20and%20Performance%20Factors) Performance is driven by a Productivity Initiative expected to yield $15.0 million in annualized savings, alongside macroeconomic headwinds like inflation - The Productivity Initiative is expected to result in **annualized benefits of approximately $15.0 million**, with savings being reinvested into brand marketing and promotional activity[96](index=96&type=chunk) - The company is monitoring macroeconomic trends, including inflation and tariffs, which may create a challenging retail environment and impact consumer spending[92](index=92&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2025 saw a 2.0% net sales decrease to $38.0 million but a 440 basis point gross margin expansion to 50.1% Q1 2025 vs Q1 2024 Results (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $38,023 | $38,799 | (2.0)% | | Gross Profit | $19,035 | $17,719 | 7.4% | | Gross Margin | 50.1% | 45.7% | 4.4% | | Selling and marketing expenses | $15,323 | $15,070 | 1.7% | | General and administrative expenses | $6,978 | $8,115 | (14.0)% | | Restructuring expenses | $2,138 | $0 | N/A | - The decrease in net sales was primarily due to a **$2.5 million increase in allowances for incentives and discounts**, partially offset by $1.6 million from pricing increases[116](index=116&type=chunk) - Marketing expenses increased by $3.5 million (125.6%), funded by a **$3.2 million (25.8%) decrease in selling expenses** (freight, warehousing) resulting from the Productivity Initiative[120](index=120&type=chunk)[121](index=121&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity with $27.7 million in cash and an undrawn $20 million credit facility - The company has **$27.7 million in cash and cash equivalents** as of March 31, 2025[127](index=127&type=chunk) - A **$20 million revolving credit facility is available**, with no amount outstanding as of March 31, 2025[136](index=136&type=chunk)[138](index=138&type=chunk) - The company is obligated under a Tax Receivable Agreement (TRA) which could result in substantial future payments, estimated at a **potential $58.2 million through 2040**[131](index=131&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA improved to a loss of $3.3 million from a $5.5 million loss in the prior-year period Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss and comprehensive loss | $(6,371) | $(7,199) | | Other income, net | $(57) | $(97) | | Provision for income taxes | $41 | $13 | | Depreciation and amortization | $252 | $328 | | Equity-based compensation | $731 | $1,489 | | Restructuring | $2,138 | $0 | | **Adjusted EBITDA** | **$(3,266)** | **$(5,466)** | [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from raw material costs, foreign exchange, inflation, and commodity prices - Profitability is dependent on raw material costs, particularly stevia and aluminum cans, with the price of aluminum expected to increase due to a **25% import tax**[159](index=159&type=chunk)[160](index=160&type=chunk) - The company has **diversified its stevia sourcing to a second supplier** to mitigate price and supply risks[159](index=159&type=chunk) - **Inflation has had a material effect on the business**, and the company may not be able to fully offset higher costs through price increases[164](index=164&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management concluded that the company's **disclosure controls and procedures were effective** at a reasonable assurance level as of March 31, 2025[166](index=166&type=chunk) - **No changes occurred during the quarter that materially affected** or are reasonably likely to materially affect the company's internal control over financial reporting[167](index=167&type=chunk) Part II. Other Information [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not subject to any material legal proceedings - The company is **not subject to any material legal proceedings**[169](index=169&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors highlight potential adverse effects from economic disruptions, trade policies, and tariffs on key materials - A new risk factor has been added concerning **disruptions in the worldwide economy**, including changes to trade policies and tariffs[170](index=170&type=chunk)[171](index=171&type=chunk) - The U.S. government imposed a **25% tariff on steel and aluminum imports** and a 10% tariff on other product imports, which could adversely impact operating costs[171](index=171&type=chunk)[173](index=173&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[174](index=174&type=chunk) [Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[175](index=175&type=chunk) [Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[176](index=176&type=chunk) [Other Information](index=32&type=section&id=Item%205.%20Other%20Information) The company states that none of its directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025 - No directors or executive officers adopted or terminated a **Rule 10b5-1 trading arrangement** during the quarter[177](index=177&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files

Exhibit 99.1 Zevia Announces First Quarter 2025 Results Delivers Net Sales at High End of Expectations, Improves Net Loss, Exceeds Adjusted EBITDA Outlook and Achieves Record Gross Margin Maintains 2025 Guidance LOS ANGELES – May 7, 2025 (BUSINESS WIRE) – Zevia PBC ("Zevia" or the "Company") (NYSE: ZVIA), the Company bringing naturally delicious, zero sugar, clean-label beverages, today reported results for the first quarter ended March 31, 2025. First Quarter 2025 Highlights "We are pleased to have deliver ...

Company Overview - Zevia PBC (NYSE: ZVIA) specializes in selling soda, energy drinks, and organic tea in the United States and Canada, emphasizing natural ingredients and zero sugar [1] Distribution and Market Presence - The company distributes the Zevia brand to a wide range of food retailers and other channels, indicating a strong market presence [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials, often revealed through a DCF model valuation [1]

Financial Performance - Net sales for 2024 were $155,049,000, a decrease of 6.5% from $166,424,000 in 2023[258] - The net loss attributable to Zevia PBC for 2024 was $20,005,000, compared to a loss of $21,494,000 in 2023, reflecting an improvement[258] - Net sales decreased to $155.0 million for the year ended December 31, 2024, down 6.8% from $166.4 million in 2023, primarily due to a reduction in equivalized cases sold[260] - Adjusted EBITDA for the year ended December 31, 2024, was $(15.2) million, compared to $(19.0) million for 2023, reflecting a net loss of $23.8 million in 2024 versus $28.3 million in 2023[296] Cost Management - Cost of goods sold decreased to $83,120,000 in 2024 from $91,666,000 in 2023, resulting in a gross profit of $71,929,000[258] - Cost of goods sold was $83.1 million in 2024, a decrease of 9.3% from $91.7 million in 2023, attributed to lower write-downs and a decrease in shipments[261] - Selling and marketing expenses were $57,132,000 in 2024, down from $62,312,000 in 2023, while general and administrative expenses decreased to $30,024,000 from $31,495,000[258] - Selling and marketing expenses were $57.1 million in 2024, an 8.3% decrease from $62.3 million in 2023, mainly due to reduced freight and warehousing costs[264] - General and administrative expenses decreased to $30.0 million in 2024, down 4.7% from $31.5 million in 2023, driven by efficiency initiatives[265] - Equity-based compensation expenses fell to $5.0 million in 2024, a 40.1% decrease from $8.3 million in 2023, primarily due to changes in expense recognition methods[266] - Restructuring expenses amounted to $2.1 million in 2024, reflecting costs related to employee severance and asset impairments[267] Profitability and Growth Initiatives - The Productivity Initiative incurred costs of $2.1 million in 2024, with expected annualized benefits of approximately $15 million[242] - The company expects to balance reinvestment of cost savings into brand marketing while pursuing profitability[242] - Future growth is anticipated to be driven by new distribution, increased organic sales, and continued pricing strength despite competitive pressures[243] Liquidity and Cash Flow - As of December 31, 2024, the company had $30.7 million in cash and cash equivalents, indicating adequate liquidity for ongoing operations[271] - Cash used in operating activities was $(1.0) million in 2024, a significant improvement from $(16.3) million in 2023, reflecting better working capital management[284] - Net cash used in operating activities for the year ended December 31, 2024, was $1.0 million, driven by a net loss of $23.8 million, partially offset by non-cash expenses of $7.4 million and a net increase in cash from changes in operating assets and liabilities of $15.4 million[286] - Net cash used in investing activities for the year ended December 31, 2024, was $0.3 million, primarily due to the purchase of property, equipment, and software[288] - Net cash provided by financing activities for the year ended December 31, 2024, was less than $0.1 million, primarily from proceeds of $8 million from a Secured Revolving Line of Credit, which was repaid in the same period[290] Tax and Deferred Assets - The company has a full valuation allowance against deferred tax assets totaling $78.9 million as of December 31, 2024[309] - The Company expects to realize a tax benefit of approximately $56.5 million from the Tax Receivable Agreement (TRA) as of December 31, 2024, an increase from $56.2 million in 2023[316] - The TRA requires the Company to pay 85% of the tax benefits realized from exchanges of Class B units for Class A common stock, with the remaining 15% benefiting the Company[312] - The Company has not recorded a liability related to deferred tax assets (DTAs) as it believes it is more likely than not that these will not be realized as of December 31, 2024[316] Supply Chain and Commodity Risks - The Company has entered into a two-year agreement effective October 15, 2023, with a multi-national ingredient company for fixed pricing on stevia extract, while also sourcing from a second supplier to mitigate risks[319] - The Company is exposed to a 25% import tax on aluminum due to recent U.S. trade policies, which could increase operating costs[320] - During the year ended December 31, 2024, three vendors accounted for approximately 89% of the Company's total raw material and finished goods purchases[322] - Foreign currency transaction losses amounted to approximately $0.7 million for the year ended December 31, 2024, compared to $0.0 million in 2023[323] - The Company is subject to commodity risks related to purchases of aluminum, diesel fuel, cartons, and corrugate, which may limit its ability to recover increased costs through pricing[325] Market Conditions and Strategic Position - The company experienced reduced sales volumes in 2024 due to lost distribution at certain retailers and strategic exits from specific product categories[243] - The Company is classified as an "emerging growth company" and may take advantage of certain exemptions from reporting requirements until December 31, 2026[318] - The Company anticipates that inflation may materially affect its business and financial condition, potentially limiting its ability to offset increased costs through price increases[324]

Confidential & Proprietary – Do not distribute. © 2024 Zevia PBC 1 Q4 2024 FINANCIAL RESULTS Non-GAAP Financial Information Confidential & Proprietary – Do not distribute. © 2024 Zevia PBC 2 We use Adjusted EBITDA, a financial measure in this presentation and the related earnings press release that is not calculated in accordance with U.S. generally accepted accounting principles information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a ...