Zevia(ZVIA) - 2024 Q4 - Annual Report

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]