Zevia(ZVIA) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For 2025, the company achieved net sales growth of 4% and improved adjusted EBITDA threefold to -$4.7 million [4][19] - In Q4 2025, net sales decreased 4% to $37.9 million, impacted by a shift in Costco rotation and lapping the pipeline fill to Walmart from the previous year [4][15] - Adjusted EBITDA for Q4 reached break even, exceeding expectations [4] - Gross margin for Q4 was 47.7%, a decline of 150 basis points from 49.2% in the previous year [16] - Net loss improved to $1.3 million from $6.8 million in the prior year [18][19] Business Line Data and Key Metrics Changes - The company introduced new flavors such as Strawberry Lemon Burst and Orange Creamsicle, which resonated well with consumers [5][10] - The new Costco national rotation program is expected to drive trial and visibility, particularly in regions where Zevia was previously underrepresented [25][41] Market Data and Key Metrics Changes - The company is expanding its presence in Walmart Canada and is focused on gaining distribution at Walmart's top competitor in the U.S. [12] - E-commerce sales are accelerating, with new smaller packaging options driving sales growth [12] Company Strategy and Development Direction - The company is focusing on amplified marketing, product innovation, and expanded distribution to drive growth [20] - In 2026, the company plans to broaden its consumer base and expects net sales to range from $169 million to $173 million, reflecting a 6% growth at the midpoint [20] - The company is positioned uniquely in the market as a zero sugar, clean label offering at an accessible price point [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capitalize on favorable trends in the better-for-you beverage category [23] - The company anticipates a shift in quarterly net sales volumes, with higher volumes expected in the first and third quarters of 2026 [21] - Management highlighted the importance of the Costco program and its potential for future national rotations based on strong initial performance [25] Other Important Information - The company announced the appointment of Andy Ruben as Chair of the Board and welcomed Suzanne Ginestro as a new Director [13][14] - The company is implementing a rolling launch for new packaging and taste improvements, with significant marketing campaigns planned for spring and summer [34] Q&A Session Summary Question: Can you explain the Costco rotation program? - The Costco program is a national rotation that enhances brand visibility and penetration in previously underserved regions, with strong initial velocities expected [25] Question: How is the company mitigating tariff exposure? - The company is implementing price increases and leveraging cost savings from productivity initiatives to offset increased aluminum costs [29] Question: What caused the shortfall in Q4 top line guidance? - The shortfall was primarily due to the timing shift of the Costco program from Q4 to Q1 [32] Question: When will the new packaging be fully in market? - The new packaging is rolling out now, with a significant marketing campaign planned for Q2 [33] Question: What is the expected gross margin trend for the year? - Gross margins are expected to dip in Q1 due to the Costco program but should return to the upper forties range starting in Q2 [57]