Financial Data and Key Metrics Changes - Net sales in Q3 2025 increased by 12% to $40.8 million compared to the prior year [4][13] - Adjusted EBITDA loss was $1.7 million, slightly worse than the adjusted EBITDA loss of $1.5 million in the prior year [16][17] - Gross margin decreased to 45.6%, down 350 basis points from 49.1% in Q3 2024, primarily due to inventory obsolescence and aluminum tariffs [14][17] - The company raised its full-year net sales guidance to a range of $162 million to $164 million, up from the previous guidance of $158 million to $163 million [17] Business Line Data and Key Metrics Changes - The company reported strong performance from new product launches, including Strawberry Lemon Burst and Peaches and Cream, which contributed to brand momentum [8][9] - Marketing expenses increased to $4.9 million, or 12.1% of net sales, compared to $3.5 million, or 9.7% of net sales in Q3 2024, reflecting increased investments in brand marketing [16] Market Data and Key Metrics Changes - The company noted an increase in household penetration, now over 5%, driven by new consumers, particularly higher-income millennials with children [27][28] - The natural soda category is operating around 20% household penetration, indicating significant growth potential for the company [28] Company Strategy and Development Direction - The company is focusing on three strategic growth pillars: high-impact brand marketing, accelerated product innovation, and expanded distribution [4][12] - The expansion into Walmart's Canadian stores is seen as a positive indicator for future growth opportunities [21] - The company plans to roll out new packaging across its legacy flavors in early 2026, which is expected to enhance brand visibility and consumer engagement [10][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's ability to capitalize on the shift towards better-for-you products, with strong consumer engagement and brand consideration [5][12] - The company anticipates a positive adjusted EBITDA in 2026, despite ongoing challenges such as aluminum tariffs [43] Other Important Information - The company ended the quarter with approximately $26 million in cash and cash equivalents and an undrawn revolving credit line of $20 million [17] - The company is committed to investing in customer acquisition while managing costs effectively to achieve profitability [43] Q&A Session Summary Question: Expansion with Walmart in Canada - Management confirmed that the expansion into over 400 Walmart stores in Canada is a positive indicator but not the primary driver of the raised sales outlook [21] Question: New Packaging Distribution - The new packaging is expected to be rolled out to the entire portfolio by early 2026, with initial positive indicators from consumer research [24] Question: Household Penetration and Market Opportunity - Management highlighted that new consumers, particularly millennials, are driving household penetration growth, with significant room for expansion in the better-for-you category [27][28] Question: Energy Drinks Category - Management acknowledged the potential in the energy drinks category but emphasized the current focus on soda, with plans to explore energy drinks in the future [30][31] Question: Brand Awareness and Marketing Impact - Management reported double-digit increases in purchase intent and consideration, indicating effective marketing strategies [33] Question: Seasonality and Revenue Guidance - Management noted that distribution gains and regional rotations are contributing to a less pronounced seasonal decline in Q4 compared to previous years [36] Question: Shelf Space Expectations - Management discussed ongoing improvements in shelf space at Walmart and other retailers, with a focus on driving velocity and expanding distribution [40][41] Question: Profitability Outlook - Management is optimistic about achieving positive adjusted EBITDA in 2026, balancing investments in growth with cost management [43]

Financial Data and Key Metrics Changes - For the second quarter, net sales grew by 10.1% to $44.5 million, marking a significant increase compared to the previous year [7][18] - Adjusted EBITDA improved by $4.6 million to $200,000, representing the first profitable quarter since going public [21] - Gross margin increased to 48.7%, up from 41.9% in the same quarter last year, reflecting lower product costs and improved inventory management [18][19] - Net loss was reduced to $700,000 from $7 million in the prior year, showing a substantial improvement [20] Business Line Data and Key Metrics Changes - The marketing campaign "Get the Fake Out of Here" contributed to double-digit growth, with notable engagement and impressions [8] - New flavor launches, particularly strawberry lemon burst and orange creamsicle, have driven excitement and sales velocities [9][10] - Distribution surpassed historical peak levels, with strong performance in key retail accounts [11][12] Market Data and Key Metrics Changes - Strong performance was noted at Walmart, with the first variety pack being the top-selling SKU [12] - Positive scan data in the grocery channel indicated strong performance across key retailers [12] - In the club channel, Zevia returned to rotation in key Costco regions, exceeding expectations [13] Company Strategy and Development Direction - The company is focused on three strategic growth pillars: marketing, product innovation, and distribution [5][14] - Continued emphasis on expanding distribution and enhancing brand visibility through innovative marketing strategies [6][14] - The company aims to capitalize on the growing "better for you" soda category, positioning itself for long-term profitable growth [24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism due to an uncertain macro environment but remains focused on executing strategic initiatives [22] - The outlook for full-year net sales is maintained at $158 million to $163 million, with adjusted EBITDA loss expected to range from $7 million to $9 million [22][23] - Management highlighted the importance of balancing short-term marketing investments with long-term brand building [56] Other Important Information - The company identified an additional $5 million in cost savings expected to be realized in 2026, bringing total anticipated savings to $20 million [17] - A one-time charge of $500,000 related to packaging redesign will impact Q3 adjusted EBITDA [23] Q&A Session Summary Question: What drove the strong sales in the quarter? - Management noted balanced growth from new distribution at Walmart and positive momentum in grocery channels, with new items contributing to incremental distribution [25][28] Question: Can you elaborate on the productivity initiative and the $5 million in gains? - Management indicated that efficiencies are being found within the supply chain and product portfolio simplification, with savings expected to begin in Q4 of this year [31][32] Question: What is the outlook for Q4 given the current guidance? - Management expressed caution due to a substantial Walmart pipeline fill in the previous year, which may lead to flat growth in Q4 [35][38] Question: How should tariffs be considered moving forward? - Management confirmed an estimated 200 basis point impact on gross margins due to tariffs, with more material impacts expected starting in Q3 [39][42] Question: What factors contributed to the increase in household penetration and purchase frequency? - Increased visibility in the marketplace and successful new flavor launches were cited as key contributors to the uptick in consumer metrics [45][46] Question: How is the company balancing improved EBITDA with marketing reinvestment? - Management emphasized the importance of both long-term brand building and short-term velocity driving tactics, aiming for sustainable growth [54][56]

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]