Zevia(US:ZVIA)2023-05-15 03:30Financial Data and Key Metrics Changes - In Q1 2023, Zevia reported net sales of $43.3 million, reflecting a 13.8% increase year-over-year, despite a 2.7% decline in volume [9][24] - Gross margin improved to 46.4%, marking a 4.7 percentage point increase compared to the same quarter last year, driven by pricing and lower promotional spend [25][29] - The net loss for Q1 2023 was $2.9 million, a significant improvement from a net loss of $17.5 million in Q1 2022, representing an 83.3% reduction [28] Business Line Data and Key Metrics Changes - The growth in net sales was primarily driven by higher price realization, with volume down 2.7% to $3.3 million [25] - The singles business is experiencing strong growth, with new item distribution accounting for 78% of growth in Q1 [16][17] - Zevia's household penetration stands at 6.4%, with households increasing their brand spend by over 12% in the past year [11] Market Data and Key Metrics Changes - Zevia's retail dollar sell-through reached its highest Q1 on record, with strong performance in e-commerce [13] - The company gained 2,700 new stores selling soda in the quarter, with 64% of shoppers in club stores being new to the brand [18] - The consumer shift to larger pack sizes continues, with larger packs now accounting for over 50% of business in measured channels [20] Company Strategy and Development Direction - Zevia is focusing on profitable growth and has made strategic shifts since mid-2022 to enhance distribution and trial [6][7] - The company plans to invest in marketing and supply chain improvements to support a brand refresh and growth [23][30] - A brand refresh is expected to enhance visibility and consumer resonance, with a new logo and packaging design [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving continued double-digit growth for the year, supported by the brand refresh and supply chain transformation [23] - The company anticipates challenges in the supply chain transition but expects long-term benefits from these changes [39][45] - Management noted that the pricing strategy is in line with market trends, and early indicators suggest consumers are adjusting to new price points [48] Other Important Information - Adjusted EBITDA loss improved to $0.5 million from a loss of $8.3 million in Q1 2022, indicating progress towards profitability [29] - The company maintains a strong balance sheet with $56 million in cash and no outstanding debt [29] Q&A Session Summary Question: Did you ship any of the brand refresh during Q1? - Yes, some products are already in stores, including new flavors and packaging [31] Question: Should we expect volume growth in Q2 due to the brand refresh? - Anticipated growth will largely be price-driven, with the brand refresh expected to impact business in late Q2 [32] Question: What are the expected impacts of the supply chain changes on profitability? - There will be one-time costs associated with transitioning the supply chain, but these changes are expected to benefit long-term profitability [39][40] Question: How do you expect to achieve the higher end of your sales guidance? - Smooth operational execution, continued consumer demand, and effective management of stock levels are crucial for reaching the higher end of guidance [46] Question: What is the outlook for the club channel? - The club channel continues to grow, with significant opportunities for increased distribution and sales of various product categories [70][72]