Zevia(US:ZVIA)2025-05-07 20:15PART I Financial Information Condensed Consolidated Financial Statements (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) 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) 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) 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 million24 Condensed Consolidated Statements of Cash Flows (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) 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 sales73 - The company initiated a Productivity Initiative, resulting in a $2.1 million restructuring charge in Q1 2025, primarily for employee termination expenses79 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Productivity Initiative's impact, a slight sales decline, significant gross margin improvement, and adequate liquidity Key Events and Performance Factors 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 activity96 - The company is monitoring macroeconomic trends, including inflation and tariffs, which may create a challenging retail environment and impact consumer spending92 Results of Operations 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 increases116 - 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 Initiative120121 Liquidity and Capital Resources 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, 2025127 - A $20 million revolving credit facility is available, with no amount outstanding as of March 31, 2025136138 - 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 2040131 Non-GAAP Financial Measures 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 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 tax159160 - The company has diversified its stevia sourcing to a second supplier to mitigate price and supply risks159 - Inflation has had a material effect on the business, and the company may not be able to fully offset higher costs through price increases164 Controls and Procedures 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, 2025166 - No changes occurred during the quarter that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting167 Part II. Other Information Legal Proceedings The company reports that it is not subject to any material legal proceedings - The company is not subject to any material legal proceedings169 Risk Factors 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 tariffs170171 - 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 costs171173 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None174 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None175 Mine Safety Disclosures This item is not applicable to the company - Not applicable176 Other Information 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 quarter177 Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files