Q4 Gross Margin of 44.3%, up 1 point
sequentially and year-over-year
Provides 2023 Net Sales Guidance of $180 to
$190 Million
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 fourth quarter and
fiscal year ended December 31, 2022.
Fourth Quarter 2022 Highlights
- Net sales increased 3.5% year-over-year to $35.4 million
- Unit volume decreased 8.7% year-over-year to 2.7 million
equivalized cases
- Gross profit margin of 44.3%, the strongest gross margin
percent in 2022
- Net loss was $6.2 million, including $3.1 million of non-cash
equity-based compensation expense
- Adjusted EBITDA loss was $2.9 million(1)
- Loss per share was $0.10 per diluted share to Zevia’s Class A
common stockholders
Full Year 2022 Highlights
- Net sales increased 18.1% year-over-year to $163.2 million
- Unit volume increased 10.7% year-over-year to 13.6 million
equivalized cases
- Gross profit margin of 42.9%
- Net loss was $47.6 million, including $26.9 million of non-cash
equity-based compensation expense
- Adjusted EBITDA loss was $19.6 million(1)
- Loss per share was $0.81 per diluted share to Zevia’s Class A
common stockholders
“We are pleased to have delivered solid fourth quarter 2022
results, including net sales above the top end of our guidance with
significant improvements in margins and profitability,” said Amy
Taylor, President and Chief Executive Officer. “Our team’s diligent
execution against our operational and strategic priorities, along
with strong cash management, improvement on the Adjusted EBITDA
line and step-changes in cost containment in the back half of the
year, positions us well to deliver continued strong growth and a
faster path towards profitability.”
“In syndicated data, we saw continued double-digit growth at
retail in the quarter,” Taylor added. “Over the last 12 months,
Zevia added another 1.4 million households to the brand, with
households again increasing their brand spend in that same period.
More consumers are buying more Zevia than ever, and we look forward
to Zevia's brand refresh rolling out into the market in peak
beverage season this summer.”
(1) 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.
Fourth Quarter 2022 Results
Net sales increased 3.5% to $35.4 million in the fourth quarter
of 2022 compared to $34.2 million in the fourth quarter of 2021.
Growth in net sales was driven by higher price realizations
partially offset by volume and mix factors.
Gross profit improved to $15.7 million for the fourth quarter of
2022, a 5.8% increase compared to $14.8 million in the fourth
quarter of 2021, reflecting net sales growth partially offset by
higher cost of goods sold. Gross profit margin of 44.3% was up 1
point on a sequential basis and compared to the fourth quarter of
2021. The year-over-year improvement in gross profit margin was
primarily due to pricing increases, partially offset by higher
manufacturing costs as a result of inflationary pressures.
Selling and marketing expenses were $10.0 million, or 28.3%, of
net sales in the fourth quarter of 2022 compared to $11.9 million,
or 34.8%, of net sales in the fourth quarter of 2021. The decrease
was due to a $0.9 million reduction in freight and warehousing
costs and a $1.0 million decline in non-working marketing
costs.
General and administrative expenses were $8.5 million, or 24.1%,
of net sales in the fourth quarter of 2022 compared to $8.2
million, or 23.9%, of net sales in the fourth quarter of 2021. The
increase was due to increased headcount and personnel costs to
support growth, partially offset by a $1.3 million decrease in
public company costs due to expense optimization initiatives.
Equity-based compensation, a non-cash expense, was $3.1 million
in the fourth quarter of 2022, compared to $31.9 million in the
fourth quarter of 2021. The decrease was primarily due to
restricted stock units ("RSUs") and restricted phantom stock awards
that vested over six months following the Company's initial public
offering ("IPO") in the prior year period.
Net loss for the fourth quarter of 2022 was $6.2 million,
compared to net loss of $37.4 million in the fourth quarter of
2021.
Loss per share for the fourth quarter of 2022 was $0.10 per
diluted share to Zevia’s Class A common stockholders, compared to
loss per share of $0.59 in the fourth quarter of 2021.
Adjusted EBITDA loss was $2.9 million in the fourth quarter of
2022, compared to an Adjusted EBITDA loss of $5.3 million in the
fourth quarter of 2021. 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.
Full Year 2022 Results
Net sales increased 18.1% to $163.2 million in the full year of
2022 compared to $138.2 million in the full year of 2021. Growth in
net sales was primarily driven by volume, reflecting higher
velocities as well as expanded distribution, along with higher
price realizations.
Gross profit improved to $70.0 million for the full year of
2022, a 9.5% increase compared to $63.9 million in the full year of
2021, reflecting net sales growth partially offset by higher cost
of goods sold. Gross profit margin of 42.9% was down from 46.3% in
the prior year period, reflecting higher manufacturing costs as a
result of inflationary pressures, partially offset by pricing
increases.
Selling and marketing expenses were $52.9 million, or 32.4%, of
net sales in the full year of 2022 compared to $45.1 million, or
32.7%, of net sales in the full year of 2021. The increase was due
to higher freight and warehousing costs and higher repacking fees
partially offset by a reduction of non-working marketing costs.
General and administrative expenses were $36.8 million, or
22.5%, of net sales in the full year of 2022 compared to $27.5
million, or 19.9%, of net sales in the full year of 2021. The
increase was primarily due to higher headcount and personnel costs
to support growth along with incremental public company costs.
Equity-based compensation, a non-cash expense, was $26.9 million
in the full year of 2022, compared to $77.7 million in the full
year of 2021. The decrease was primarily due to RSU and restricted
phantom stock awards that vested over six months following the IPO
in the prior year.
Net loss for the full year of 2022 was $47.6 million, compared
to net loss of $87.7 million for the full year of 2021.
Loss per share for the full year of 2022 was $0.81 per diluted
share to Zevia’s Class A common stockholders, compared to loss per
share of $1.33 for the full year of 2021.
Adjusted EBITDA loss was $19.6 million in the full year of 2022,
compared to an Adjusted EBITDA loss of $8.7 million in the full
year of 2021. 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 December 31, 2022, the Company had $47.4 million in cash
and cash equivalents and no outstanding debt, as well as an unused
credit line of $20 million. During the full year of 2022, cash used
in operating activities was $20.8 million compared to $17.8 million
in the full year of 2021. The Company spent $2.6 million on capital
expenditures during the full year of 2022 to support its growth
initiatives compared to capital expenditures of $3.1 million during
the full year of 2021.
2023 Guidance
The Company expects net sales for the full year of 2023 to be in
the range of $180 million to $190 million, an increase of 10% to
16% compared to 2022. For the first quarter of 2023, net sales are
expected to be in the range of $40 million to $43 million, an
increase of 5% to 13% compared to the first quarter of 2022.
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 "guidance," “believe,”
“anticipate,” “expect,” “consider,” “contemplate,” “continue,”
“would,” “could,’” “may,” “potential,” “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, branding, 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 rebranding strategy and 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 pandemics or epidemics,
including the impact of the effects of the COVID-19 pandemic, and
adverse global macroeconomic conditions, including rising interest
rates and a recessionary environment, 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. Zevia is distributed in more than 32,000
retail locations in the U.S. and Canada through a diverse network
of major retailers in the food, drug, warehouse club, mass, natural
and ecommerce channels.
(ZEVIA-F)
ZEVIA PBC
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
(in thousands, except share and
per share amounts)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Net sales
$
35,366
$
34,170
$
163,181
$
138,172
Cost of goods sold
19,713
19,373
(1)
93,160
74,231
(1)
Gross profit
15,653
14,797
(1)
70,021
63,941
(1)
Operating expenses:
Selling and marketing
10,025
11,893
(1)
52,869
45,130
(1)
General and administrative
8,536
8,165
36,793
27,516
Equity-based compensation
3,099
31,919
26,880
77,724
Depreciation and amortization
342
284
1,347
997
Total operating expenses
22,002
52,261
117,889
151,367
Loss from operations
(6,349
)
(37,464
)
(47,868
)
(87,426
)
Other income (expense), net
222
44
286
(207
)
Loss before income taxes
(6,127
)
(37,420
)
(47,582
)
(87,633
)
Provision for income taxes
(43
)
16
(65
)
(34
)
Net loss and comprehensive loss
(6,170
)
(37,404
)
(47,647
)
(87,667
)
Net loss attributable to Zevia LLC prior
to the Reorganization Transactions
—
—
—
1,913
Loss attributable to noncontrolling
interest
1,785
17,241
13,790
39,768
Net loss attributable to Zevia
PBC
$
(4,385
)
$
(20,163
)
$
(33,857
)
$
(45,986
)
Net loss per share attributable to common
stockholders
Basic
$
(0.10
)
$
(0.59
)
(2)
$
(0.81
)
$
(1.33
)
(2)
Diluted
$
(0.10
)
$
(0.59
)
(2)
$
(0.81
)
$
(1.33
)
(2)
Weighted average common shares
outstanding
Basic
45,731,318
34,457,684
41,739,061
34,450,409
Diluted
45,731,318
34,457,684
41,739,061
34,450,409
(1) Included in the accompanying results
for the three months and year ended December 31, 2021, are $1.0
million and $2.7 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) 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 December 31,
2021, the period following the Reorganization Transactions and
IPO.
ZEVIA PBC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
December 31, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
47,399
$
43,110
Short-term investments
—
30,000
Accounts receivable, net
11,077
9,047
Inventories
27,576
31,501
Prepaid expenses and other current
assets
2,607
3,421
Total current assets
88,659
117,079
Property and equipment, net
4,641
3,169
Right-of-use assets under operating
leases, net
708
211
Intangible assets, net
4,385
4,233
Other non-current assets
539
301
Total assets
$
98,932
$
124,993
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
8,023
$
13,492
Accrued expenses and other current
liabilities
8,408
6,705
Current portion of operating lease
liabilities
715
236
Total current liabilities
17,146
20,433
Operating lease liabilities, net of
current portion
—
1
Total liabilities
17,146
20,434
Stockholders' equity
Class A common stock
48
34
Class B common stock
22
30
Additional paid-in capital
189,724
174,404
Accumulated deficit
(79,843
)
(45,986
)
Total Zevia PBC stockholder's
equity
109,951
128,482
Noncontrolling interests
(28,165
)
(23,923
)
Total equity
81,786
104,559
Total liabilities and equity
$
98,932
$
124,993
ZEVIA PBC
CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED)
(in thousands)
Year Ended December
31,
2022
2021
Operating activities:
Net loss
$
(47,647
)
$
(87,667
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Non-cash lease expense
653
562
Depreciation and amortization
1,347
997
Loss on sale of equipment
3
(4
)
Amortization of debt issuance cost
64
94
Equity-based compensation
26,880
77,724
Changes in operating assets and
liabilities:
Accounts receivable, net
(2,030
)
(2,062
)
Inventories
3,925
(10,701
)
Prepaid expenses and other assets
846
(2,481
)
Accounts payable
(5,850
)
4,396
Accrued expenses and other current
liabilities
1,703
1,960
Operating lease liabilities
(672
)
(624
)
Net cash used in operating activities
(20,778
)
(17,806
)
Investing activities:
Proceeds from maturities of short-term
investments
30,000
—
Payments for purchases of short-term
investments
—
(30,000
)
Purchases of property and equipment
(2,593
)
(3,143
)
Net cash provided by (used in) investing
activities
27,407
(33,143
)
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
124
—
Proceeds from exercise of common units
—
10
Exercise of stock options
(178
)
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
(2,340
)
79,123
Net change from operating, investing, and
financing activities
4,289
28,174
Cash and cash equivalents at beginning of
period
43,110
14,936
Cash and cash equivalents at end of
period
$
47,399
$
43,110
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 December
31,
Year Ended December
31,
2022
2021
2022
2021
Net loss and comprehensive loss
$
(6,170
)
$
(37,404
)
$
(47,647
)
$
(87,667
)
Other (income) expense, net*
(222
)
(44
)
(286
)
207
Provision for income taxes
43
(16
)
65
34
Depreciation and amortization
342
284
1,347
997
Equity-based compensation
3,099
31,919
26,880
77,724
Adjusted EBITDA
$
(2,908
)
$
(5,261
)
$
(19,641
)
$
(8,705
)
* 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/20230228005359/en/
Media Annie Samuelson Edelman 713-299-4115
Annie.Samuelson@edelman.com
Investors Reed Anderson ICR 646-277-1260
Reed.Anderson@icrinc.com
Zevia PBC (NYSE:ZVIA)
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