Gross Margin of 43.3%(1), up 90 basis points
sequentially
37.8% sequential improvement in Net Loss and
67.7% sequential improvement in Adjusted EBITDA(2)
Resetting 2022 Net Sales outlook
Zevia PBC (“Zevia” or the “Company”) (NYSE: ZVIA), the company
disrupting the liquid refreshment beverage industry with great
tasting, zero sugar beverages made with simple, plant-based
ingredients, today reported results for the third quarter ended
September 30, 2022.
Third Quarter 2022 Highlights
- Net sales increased 13.6% year over year to $44.2 million
- Unit volume increased 2.3% year over year to 3.6 million
equivalized cases
- Gross profit margin of 43.3%(1)
- Net loss was $9.2 million, including $6.8 million of non-cash
equity-based compensation expense
- Loss per share was $0.17 per diluted share to Zevia’s Class A
Common stockholders
- Adjusted EBITDA loss was $2.1 million(2), a $1.5 million
improvement year over year
“This quarter Zevia delivered strong sequential improvement in
key metrics, including 90 basis points of gross margin expansion, a
67.7% reduction in our Adjusted EBITDA loss, and a 37.8% reduction
in our net losses, demonstrating meaningful progress on our path to
profitability and in improving cash flow. Our top line has been
impacted by new pressures of inventory management at select
customers, which we expect to be transitory but to continue through
2022,” said Amy Taylor, President and Chief Executive Officer of
Zevia.
Taylor continued “We have tempered our 2022 net sales outlook
considering these customer dynamics and the broader macroeconomic
environment, and as we reset our operating model for sustainable
profitable growth. Our brand and consumer metrics remain strong,
leading category trends in dollars and volume as reflected in scan
data across all channels, which underscores Zevia’s brand strength
and long-term growth trajectory.”
(1) Gross margin presented is after reclassification of
repackaging and handling costs from cost of goods sold to selling
and marketing expenses during the period. The Company believes this
classification change better portrays the financial impacts of the
fulfillment activities conducted by the Company. The Company made
this change in classification during the third quarter of 2022 as a
result of an increasing trend in the occurrence of such fulfillment
costs in the business. See the supplementary schedules in this
press release for further information around the impact of the
reclassification. (2) Adjusted EBITDA is a non-GAAP financial
measure. See the supplementary schedules in this press release for
a discussion of how we define and calculate this measure and a
reconciliation thereof to the most directly comparable GAAP
measure.
Third Quarter Results
Net sales increased 13.6% to $44.2 million in the third quarter
of 2022 compared to $39.0 million in the third quarter of 2021.
Growth in net sales was primarily driven by higher price
realizations and volumes that increased 2.3% versus the
year-earlier period.
Gross profit improved to $19.2 million for the third quarter of
2022, a 7.9% increase compared to $17.8 million in the third
quarter of 2021, reflecting net sales growth partially offset by
higher cost of goods sold. Gross profit margin of 43.3% was up 90
basis points on a sequential basis and compared to 45.6% in the
year earlier period. The year-over-year decline in gross profit
margin was primarily due to the impact of inflationary pressures
partially offset by price increases.
Selling and marketing expense was $12.9 million, or 29.2%, of
net sales in the third quarter of 2022 compared to $13.6 million,
or 34.9%, of net sales in the third quarter of 2021. The decrease
was primarily due to lower freight and warehousing costs and a
reduction of non-working marketing expenses.
General and administrative expense was $8.3 million, or 18.8%,
of net sales in the third quarter of 2022 compared to $7.7 million,
or 19.8%, of net sales in the third quarter of 2021. The increase
was due to increased headcount and personnel to support growth,
partially offset by a $0.5 million decrease in public company costs
due to expense optimization initiatives.
Equity-based compensation, a non-cash expense, was $6.8 million
in the third quarter of 2022, of which $3.8 million was
attributable to restricted stock unit awards which were accelerated
upon retirement of a legacy senior management employee.
Net loss for the third quarter of 2022 was $9.2 million,
compared to net loss of $49.8 million in the third quarter of 2021
and net loss of $14.8 million in the second quarter of 2022.
Loss per share for the third quarter of 2022 was $0.17 per
diluted share to Zevia’s Class A Common stockholders, compared to
loss per share of $0.75 in the third quarter of 2021.
Adjusted EBITDA loss was $2.1 million in the third quarter of
2022, compared to an Adjusted EBITDA loss of $3.5 million in the
third quarter of 2021 and an Adjusted EBITDA loss of $6.4 million
in the second quarter of 2022. Adjusted EBITDA is a non-GAAP
financial measure. See the supplementary schedules in this press
release for a discussion of how we define and calculate this
measure and a reconciliation thereof to the most directly
comparable GAAP measure.
Balance Sheet and Cash Flows
As of September 30, 2022, the Company had $49.2 million in cash
and cash equivalents and short-term investments and no outstanding
debt. During the first nine months of fiscal 2022, cash used in
operating activities was $19.3 million compared to $13.1 million of
cash used in the first nine months of 2021. During the three months
ended September 30, 2022, cash provided by operating activities was
$0.2 million compared to cash used in operating activities of $8.2
million and $11.4 million in the three months ended June 30, 2022,
and March 31, 2022, respectively, representing sequential
improvement. The Company spent $2.2 million on capital expenditures
during the first nine months of fiscal 2022 to support its growth
initiatives compared to capital expenditures of $2.3 million during
the first nine months of 2021.
2022 Guidance
The Company is updating its guidance for the full year of 2022
to reflect recent results, management's outlook, and the current
macroeconomic environment. Net sales are expected to be in the
range of $158 million to $160 million, an increase of 14.2% to
15.7% versus 2021. For the fourth quarter of 2022, net sales are
expected to be in the range of $30 million to $32 million.
Webcast
The Company will host a conference call today at 8:30 a.m.
Eastern Time to discuss this earnings release. Investors and other
interested parties may listen to the webcast of the conference call
by logging on via the Investor Relations section of Zevia’s website
at https://investors.zevia.com/ or directly here. A replay of the
webcast will be available for approximately thirty (30) days
following the call.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or
achievements, and may contain words such as “believe,”
“anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,”
“seek,” “pursue,” "will", or words or phrases with similar meaning.
Forward-looking statements should not be read as a guarantee of
future performance or results and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements contained in
this press release relate to, among other things, statements
regarding anticipated growth, strategic direction, operating
environment, distribution, velocity, pricing and costs.
Forward-looking statements are based on current expectations,
forecasts and assumptions that involve risks and uncertainties,
including, but not limited to, the ability to develop and maintain
our brand, our ability to successfully execute on our cost
reduction initiatives, change in consumer preferences, pricing
factors, the impact of inflation on our sales growth and cost
structure such as increased commodity, packaging, transportation
and freight, warehouse, labor and other input costs and other
economic, competitive and governmental factors outside of our
control, such as the impact of the effects of the COVID-19 pandemic
and adverse global macroeconomic conditions and geopolitical events
or conflicts, that may cause our business, strategy or actual
results to differ materially from the forward-looking statements.
We do not intend and undertake no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
law. Investors are referred to our filings with the U.S. Securities
and Exchange Commission for additional information regarding the
risks and uncertainties that may cause actual results to differ
materially from those expressed in any forward-looking
statement.
About Zevia
Zevia PBC, a Delaware public benefit corporation designated as a
“Certified B Corporation,” is focused on addressing the global
health challenges resulting from excess sugar consumption by
offering a broad portfolio of zero sugar, zero calorie, naturally
sweetened beverages. All Zevia® beverages are made with a handful
of simple, plant-based ingredients, contain no artificial
sweeteners, and are Non-GMO Project verified, gluten-free, Kosher,
vegan and zero sodium. As of the third quarter of 2022, Zevia is
distributed in more than 31,000 retail locations in the U.S. and
Canada through a diverse network of major retailers in the food,
drug, mass, natural and ecommerce channels.
(ZEVIA-F)
ZEVIA PBC CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (in
thousands, except share and per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net sales
$
44,239
$
38,956
$
127,815
$
104,002
Cost of goods sold
25,071
21,189
(1)
73,445
(2)
54,858
(1)
Gross profit
19,168
17,767
(1)
54,370
(2)
49,144
(1)
Operating expenses:
Selling and marketing
12,916
13,597
(1)
42,845
(2)
33,237
(1)
General and administrative
8,310
7,698
28,257
19,352
Equity-based compensation
6,837
45,731
23,781
45,804
Depreciation and amortization
326
239
1,005
713
Total operating expenses
28,389
67,265
95,888
99,106
Loss from operations
(9,221
)
(49,498
)
(41,518
)
(49,962
)
Other (expense) income, net
26
(213
)
64
(251
)
Loss before income taxes
(9,195
)
(49,711
)
(41,454
)
(50,213
)
Provision for income taxes
(1
)
(50
)
(23
)
(50
)
Net loss and comprehensive loss
(9,196
)
(49,761
)
(41,477
)
(50,263
)
Net loss attributable to Zevia LLC prior
to the Reorganization Transactions
—
1,411
—
1,913
Loss attributable to noncontrolling
interest
1,712
22,527
12,005
22,527
Net loss attributable to Zevia
PBC
$
(7,484
)
$
(25,823
)
$
(29,472
)
$
(25,823
)
Net loss per share attributable to common
stockholders
Basic
$
(0.17
)
$
(0.75
)(3)
$
(0.73
)
$
(0.75
)(3)
Diluted
$
(0.17
)
$
(0.75
)(3)
$
(0.73
)
$
(0.75
)(3)
Weighted average common shares
outstanding
Basic
44,072,985
34,440,982
40,393,978
34,440,982
Diluted
44,072,985
34,440,982
40,393,978
34,440,982
(1) Included in the accompanying results for the three months
and nine months ended September 30, 2021, are $0.8 million and $1.7
million of expenses, respectively, previously recorded as cost of
goods sold that the Company has reclassified to selling and
marketing expenses to conform to the current presentation. (2)
Included in the accompanying results for the nine months ended
September 30, 2022, are $3.2 million of expenses previously
recorded as cost of goods sold during the six months ended June 30,
2022 that the Company has reclassified to selling and marketing
expenses to conform to the current presentation. (3) Represents
earnings per share of Class A common stock and weighted-average
shares of Class A common stock outstanding for the period from July
22,2021 through September 30, 2021, the period following the
Reorganization Transactions and IPO.
ZEVIA PBC CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (in thousands)
September 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
49,236
$
43,110
Short-term investments
—
30,000
Accounts receivable, net
13,538
9,047
Inventories
37,283
31,501
Prepaid expenses and other current
assets
3,356
3,421
Total current assets
103,413
117,079
Property and equipment, net
4,933
3,664
Right-of-use assets under operating
leases, net
878
211
Intangible assets, net
3,588
3,738
Other non-current assets
558
301
Total assets
$
113,370
$
124,993
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
19,685
$
13,492
Accrued expenses and other current
liabilities
7,950
6,705
Current portion of operating lease
liabilities
698
236
Total current liabilities
28,333
20,433
Operating lease liabilities, net of
current portion
186
1
Total liabilities
28,519
20,434
Stockholders' equity
Class A common stock
45
34
Class B common stock
24
30
Additional paid-in capital
189,426
174,404
Accumulated deficit
(75,458
)
(45,986
)
Total Zevia PBC stockholder's
equity
114,037
128,482
Noncontrolling interests
(29,186
)
(23,923
)
Total equity
84,851
104,559
Total liabilities and equity
$
113,370
$
124,993
ZEVIA PBC CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Nine Months Ended September
30,
2022
2021
Operating activities:
Net loss
$
(41,477
)
$
(50,263
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Non-cash lease expense
483
417
Depreciation and amortization
1,005
713
Loss on sale of equipment
3
9
Amortization of debt issuance cost
45
94
Equity-based compensation
23,781
45,804
Changes in operating assets and
liabilities:
Accounts receivable, net
(4,491
)
(7,563
)
Inventories
(5,782
)
(4,127
)
Prepaid expenses and other assets
97
(3,637
)
Accounts payable
6,248
4,010
Accrued expenses and other current
liabilities
1,245
1,910
Operating lease liabilities
(503
)
(461
)
Net cash used in operating activities
(19,346
)
(13,094
)
Investing activities:
Proceeds from maturities of securities
30,000
—
Purchases of property and equipment
(2,182
)
(2,308
)
Net cash provided by (used in) investing
activities
27,818
(2,308
)
Financing activities:
Proceeds from revolving line of credit
—
74,721
Repayment of revolving line of credit
—
(74,721
)
Payment of debt issuance costs
(334
)
—
Minimum tax withholding paid on behalf of
employees for net share settlement
(2,130
)
—
Proceeds from exercise of stock
options
118
—
Proceeds from exercise of common units
—
10
Exercise of stock options
(115
)
Repurchase of Zevia LLC units
—
(17
)
Distribution to unitholders for tax
payments
—
(2,669
)
Proceeds from issuance of Class A common
stock sold in IPO, net of underwriting discounts and
commissions
—
139,689
Use of proceeds from issuance of Class A
common stock to purchase Zevia LLC Units
—
(49,609
)
Cancellation of options in IPO
—
2
Cancellation of options
—
(4
)
Payment of IPO costs
—
(8,101
)
Net cash (used in) provided by financing
activities
(2,346
)
79,186
Net change from operating, investing, and
financing activities
6,126
63,784
Cash and cash equivalents at beginning of
period
43,110
14,936
Cash and cash equivalents at end of
period
$
49,236
$
78,720
Use of Non-GAAP Financial Information
We use Adjusted EBITDA, a financial measure that is not
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). The Company’s management believes that
Adjusted EBITDA, when taken together with our financial results
presented in accordance with GAAP, provides meaningful supplemental
information regarding our operating performance and facilitates
internal comparisons of our historical operating performance on a
more consistent basis by excluding certain items that may not be
indicative of our business, results of operations or outlook. In
particular, we believe that the use of Adjusted EBITDA is helpful
to our investors as it is a measure used by management in assessing
the health of our business, determining incentive compensation and
evaluating our operating performance, as well as for internal
planning and forecasting purposes.
We calculate Adjusted EBITDA as net income (loss) adjusted to
exclude: (1) other income (expense), net, which includes interest
(income) expense, foreign currency (gains) losses, and (gains)
losses on disposal of fixed assets, (2) provision (benefit) for
income taxes, (3) depreciation and amortization, and (4)
equity-based compensation. Adjusted EBITDA may in the future also
be adjusted for amounts impacting net income related to the Tax
Receivable Agreement liability and other infrequent and unusual
transactions.
Adjusted EBITDA is presented for supplemental informational
purposes only, has limitations as an analytical tool and should not
be considered in isolation or as a substitute for financial
information presented in accordance with GAAP. Some of the
limitations of Adjusted EBITDA include that (1) it does not
properly reflect capital commitments to be paid in the future, (2)
although depreciation and amortization are non-cash charges, the
underlying assets may need to be replaced and Adjusted EBITDA does
not reflect these capital expenditures, (3) it does not consider
the impact of equity-based compensation expense, including the
potential dilutive impact thereof, and (4) it does not reflect
other non-operating expenses, including interest (income) expense,
foreign currency (gains) losses and (gains) losses on disposal of
fixed assets. In addition, our use of Adjusted EBITDA may not be
comparable to similarly titled measures of other companies because
they may not calculate Adjusted EBITDA in the same manner, limiting
its usefulness as comparative measures. Because of these
limitations, when evaluating our performance, you should consider
Adjusted EBITDA alongside other financial measures, including our
net loss or income and other results stated in accordance with
GAAP.
The following table presents a reconciliation of net loss, the
most directly comparable financial measure stated in accordance
with GAAP, to Adjusted EBITDA for the periods presented:
Three Months Ended
Nine Months Ended
September 30, 2022
June 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
Net loss and comprehensive loss
$
(9,196
)
$
(14,796
)
$
(49,761
)
$
(41,477
)
$
(50,263
)
Other expense (income), net*
(26
)
44
213
(64
)
251
Provision for income taxes
1
9
50
23
50
Depreciation and amortization
326
328
239
1,005
713
Equity-based compensation
6,837
8,043
45,731
23,781
45,804
Adjusted EBITDA
$
(2,058
)
$
(6,372
)
$
(3,528
)
$
(16,732
)
$
(3,445
)
* Includes interest (income) expense, foreign currency (gains)
losses, and (gains) losses on disposal of fixed assets.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221110005278/en/
Media Annie Samuelson Edelman 713-299-4115
Annie.Samuelson@edelman.com Investors Reed Anderson ICR
646-277-1260 Reed.Anderson@icrinc.com
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