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]

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.

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]

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 [19] - 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 [19] - Net loss improved to $6.4 million from $7.2 million in the prior year, while adjusted EBITDA loss improved to $3.3 million from $5.5 million [21][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 prior year [20] - Marketing expenses increased to $6.2 million, or 15.2% of net sales, from $2.7 million, or 7% of net sales in the prior year, due to higher marketing investments [20] Market Data and Key Metrics Changes - The company is seeing robust growth in the better-for-you beverage category, which comprises 25% of all carbonated soft drink growth [51] - The company has expanded its distribution significantly, now reaching 4,300 Walmart stores, up from 800, which is expected to enhance household penetration [49] Company Strategy and Development Direction - The company is focused on three strategic growth pillars: distinctive marketing, product innovation, and expanded distribution [16][82] - The marketing campaign featuring Jelly Roll has generated 2.4 billion earned impressions, indicating strong brand engagement [10] - The company plans to introduce new flavors and variety packs to drive trial and brand awareness [12][14] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future, citing a strong growth outlook for the better-for-you beverage category and the company's unique market positioning [7][22] - Despite macroeconomic uncertainties, the company is confident in its ability to drive growth through strategic initiatives and cost-saving measures [22][76] 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 [22] - The productivity initiative has led to annualized cost savings of $15 million, which will be reinvested to accelerate future growth [22] Q&A Session Summary Question: Guidance and Top Line Growth - Management expressed confidence in maintaining full-year guidance, citing strong execution and the impact of productivity initiatives [27][28] Question: Performance at Walmart - Management reported positive early sell-through performance at Walmart, with the variety pack being the top seller among Zevia SKUs [33][34] Question: Gross Margin Sustainability - Management believes gross margins in the upper forties are sustainable, despite anticipated tariff headwinds [39] Question: Convenience Distribution - The company is testing single cans in convenience stores, leveraging DSD relationships for distribution [40][42] Question: Tariff Exposure - Tariff exposure is primarily from aluminum, with some secondary impacts from sourcing costs [48] 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 as an affordable option [76]

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

Financial Performance - Net sales for Q1 2025 were $38.0 million, a decline of 2.0% from $38.8 million in Q1 2024[6] - Net loss for Q1 2025 was $6.4 million, an improvement of $0.8 million compared to a net loss of $7.2 million in Q1 2024[14] - Adjusted EBITDA loss was $3.3 million, an improvement of $2.2 million year over year, exceeding expectations[15] - Adjusted EBITDA for Q1 2025 was $(3,266) million, compared to $(5,466) million in Q1 2024, indicating an improvement of approximately 40.3%[31] Profitability Metrics - Gross profit margin improved to 50.1%, up 4.4 percentage points from 45.7% in Q1 2024, marking the highest quarterly gross margin as a public company[7] - Selling and marketing expenses increased to $15.3 million, or 40.3% of net sales, compared to $15.1 million, or 38.8% of net sales in Q1 2024[10] - General and administrative expenses decreased to $7.0 million, or 18.4% of net sales, down from $8.1 million, or 20.9% of net sales in Q1 2024[12] - Equity-based compensation for Q1 2025 was $731 million, down from $1,489 million in Q1 2024, a decrease of approximately 50.9%[31] - The company reported a non-cash lease expense of $138 million for Q1 2025, compared to $147 million in Q1 2024[27] - The restructuring expense for Q1 2025 was $2,138 million, with no such expense reported in Q1 2024[31] Guidance and Expectations - The company maintains its 2025 guidance, expecting net sales between $158 million and $163 million and an adjusted EBITDA loss of $8 million to $11 million[17] - For Q2 2025, the company anticipates net sales in the range of $40.5 million to $42.5 million and an adjusted EBITDA loss of $2.2 million to $2.9 million[18] Cash and Assets - As of March 31, 2025, the company had $27.7 million in cash and cash equivalents and no outstanding debt[16] - Cash and cash equivalents decreased from $30,653 million at the beginning of the period to $27,717 million at the end of the period, a decline of about 9.5%[27] - Total assets decreased from $67,951 million as of December 31, 2024, to $61,974 million as of March 31, 2025, representing a decline of approximately 8.7%[26] - Total current liabilities remained relatively stable, decreasing slightly from $24,222 million as of December 31, 2024, to $24,031 million as of March 31, 2025[26] Inventory and Receivables - Accounts receivable, net, decreased from $10,795 million to $8,797 million, a decline of approximately 18.5%[26] - Inventories decreased from $18,618 million to $17,105 million, representing a reduction of about 8.1%[26] Market Response - The new variety pack has become the best-selling Zevia SKU at Walmart, indicating strong market response to innovation and marketing strategies[5]