Zevia(US:ZVIA)2025-05-07 21:32Financial 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]