Zevia(US:ZVIA)2024-02-27 15:49Financial Data and Key Metrics Changes - In Q4 2023, Zevia reported net sales of $37.8 million, an increase of 6.9% compared to the same period last year, driven by a price increase and a return to volume growth of 3.7% [32] - Gross margin decreased to 40.7%, down 3.6 percentage points year-over-year, primarily due to supply chain transition costs and inventory write-offs [33] - Net loss for Q4 was $9.2 million, compared to a net loss of $6.2 million in the previous year, reflecting supply chain challenges [35] - For the full year 2023, net sales reached $166.4 million, a 2% increase from 2022, with net losses reduced to $28.3 million from $47.6 million in 2022 [38] Business Line Data and Key Metrics Changes - Zevia's soda segment saw a 94% increase in same-store sales, indicating strong performance in the food channel [20] - New flavors, Creamy Root Beer and Vanilla Cola, were the top contributors to dollar growth in the quarter, with expectations for further distribution expansion [21] Market Data and Key Metrics Changes - Zevia households increased their annual brand spend by 9% and spend per trip by 7% over the past year, indicating strong consumer engagement [18] - E-commerce sales returned to growth, with a top customer posting 30% growth in December, reflecting recovery in supply chain and demand [22] Company Strategy and Development Direction - The company aims to take better-for-you beverages mainstream, leveraging competitive advantages such as taste, zero sugar, and affordability [17] - Zevia plans to launch a regional direct store delivery (DSD) approach to enhance distribution and merchandising capabilities [25] - A price increase of 4.5% to 5% is set to take effect on May 1st, reflecting brand strength and maintaining competitive pricing [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth in spring and summer, supported by strong velocities and a brand refresh [49] - The company is focused on stabilizing its supply chain and enhancing marketing efforts to drive growth in 2024 and beyond [28][45] Other Important Information - The company has a strong balance sheet with $32 million in cash and no outstanding debt as of the end of Q4 2023 [37] - Management is delaying full-year guidance until the Q1 earnings call to allow the new CFO to assess the situation [40] Q&A Session Summary Question: Thoughts on not providing full year guidance - Management expects a return to growth in spring and summer, with strong gross margins indicating the ability to invest in marketing and route-to-market strategies [51] Question: Insights on gross margins for the year - Management anticipates a return to mid-40s gross margins, with Q4 being an anomaly due to inventory write-offs and supply chain transitions [53] Question: Visibility on restocking timeline and volume recovery - Management noted improvements in restocking and strong velocity in key channels, with investments in merchandising to support recovery [59] Question: Economics of the DSD model - The DSD model is expected to enhance in-store merchandising and reduce out-of-stocks, with a focus on regional rollouts rather than national distribution [70] Question: Competitive landscape for Zevia - The natural soda category is growing, with Zevia positioned as the number one choice, benefiting from a rising consumer focus on better-for-you options [76]