Zevia(US:ZVIA)2024-03-06 21:17Financial Performance - Net sales for the year ended December 31, 2023, were $166.4 million, a 2.0% increase from $163.2 million in 2022[248]. - The net loss attributable to Zevia PBC was $21.5 million in 2023, an improvement from a net loss of $33.9 million in 2022[246]. - Adjusted EBITDA for 2023 was $(19,049) thousand, compared to $(19,641) thousand in 2022, indicating a slight improvement year-over-year[283]. - The net loss for 2023 was $(28,322) thousand, a decrease from $(47,647) thousand in 2022, reflecting a reduction in overall losses[283]. Sales and Marketing - The number of equivalized cases sold decreased to 12.7 million in 2023 from 13.6 million in 2022, primarily due to supply chain logistics challenges[248]. - Selling and marketing expenses rose to $62.3 million in 2023, up from $52.9 million in 2022, reflecting increased warehousing and distribution costs[246]. - Selling and marketing expenses rose to $62.3 million in 2023, up $9.4 million or 17.9% from $52.9 million in 2022, mainly due to higher freight transfer and warehousing costs[252]. Cost Management - Cost of goods sold decreased by $1.5 million, or 1.6%, to $91.7 million in 2023, attributed to a 6.9% decrease in shipments and higher inventory losses[249]. - General and administrative expenses decreased to $31.5 million in 2023 from $36.8 million in 2022, while remaining a smaller percentage of net sales[246][247]. - General and administrative expenses decreased to $31.5 million in 2023, down $5.3 million or 14.4% from $36.8 million in 2022, driven by reduced employee-related costs and cost productivity initiatives[253]. - Equity-based compensation expense significantly decreased to $8.3 million in 2023, down $18.6 million or 69.2% from $26.9 million in 2022, primarily due to changes in equity award vesting[254]. Profitability - Gross profit increased to $74.8 million in 2023, up from $70.0 million in 2022, resulting in a gross margin of 45% compared to 43% in the previous year[246][247]. - Gross profit for the year ended December 31, 2023, was $74.8 million, an increase of $4.7 million or 6.8% from $70.0 million in 2022, primarily driven by pricing increases[250]. - Gross margin improved to 44.9% in 2023 from 42.9% in 2022, attributed to pricing increases, partially offset by higher inventory losses[251]. Liquidity and Capital Resources - As of December 31, 2023, the company had $32.0 million in cash and cash equivalents, which, along with operating activities and available borrowings, is expected to provide adequate liquidity for ongoing operations[258]. - Net cash used in operating activities was $16.3 million in 2023, influenced by a net loss of $28.3 million, partially offset by non-cash expenses and changes in operating assets and liabilities[273]. - Future capital requirements will depend on revenue growth, gross margin, and expenditures, with potential needs for additional financing if existing resources are insufficient[260]. - The company had a revolving credit facility with a commitment of $20 million, with no amounts drawn as of December 31, 2023[267]. Supply Chain and Manufacturing - A strategic change in manufacturing will take effect in Q1 2024, with contract manufacturers responsible for raw material procurement, aimed at optimizing the supply chain[230]. - The brand refresh initiative included a new logo and discontinuation of selected SKUs to focus on high-potential products[229]. - The Company has entered into a two-year agreement effective October 15, 2023, with a supplier for stevia extract, which includes fixed pricing[306]. - The Company is diversifying its sources of supply for raw materials to mitigate potential supply disruptions, although there is no assurance of securing alternative sources[306]. Tax and Deferred Tax Assets - As of December 31, 2023, the company has a full valuation allowance against deferred tax assets totaling $75.5 million, indicating potential challenges in realizing these tax benefits[295]. - The company did not record any unrecognized tax benefits as of December 31, 2023, indicating no significant tax disputes or uncertainties[297]. - As of December 31, 2023, the Company has not recorded a liability related to the tax savings from its Deferred Tax Assets (DTAs) subject to the TRA, as it is more likely than not that these DTAs will not be realized[303]. - The TRA liability, if the associated tax benefits were fully realizable, would total $56.2 million as of December 31, 2023, up from $55.8 million in 2022, primarily due to Class B to Class A exchanges[303]. Economic and Market Conditions - The company expects continued inflationary pressures to impact operating costs and margins into 2024[231]. - Inflation has had a material effect on the Company's business, and further significant inflationary pressures could harm its financial condition[310]. - 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 higher pricing[311]. - Foreign exchange gains and losses were not material for the years ended December 31, 2023, and 2022, as the majority of sales and costs are in U.S. dollars[309].