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01/11 03:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights positive developments such as a significant Walmart expansion, improved EBITDA losses, and increased gross margins. Despite a drop in full-year sales, Q4 showed growth, and the company is optimistic about future distribution gains. The Q&A reinforced positive sentiment, with management confident in maintaining gross margins and expanding customer engagement. However, the lack of shareholder return plans and potential risks like supply chain challenges and increased promotional spending are concerns. Overall, the positive aspects outweigh the negatives, suggesting a positive stock price movement.
Net Sales Q4 2024 $39.5 million, an increase of 4.4% year-over-year, driven by increased volumes from expanding Walmart locations from 800 to over 4,300.
Gross Margin Q4 2024 49.2%, an increase of 850 basis points from 40.7% in Q4 2023, due to improved inventory management and productivity initiatives, partially offset by increased promotional activities.
Selling and Marketing Expenses Q4 2024 $16.5 million, or 41.7% of net sales, compared to $13.8 million, or 36.6% of net sales in Q4 2023, primarily due to increased advertising investments.
General and Administrative Expenses Q4 2024 $6.8 million, or 17.3% of net sales, down from $8.4 million, or 22.2% of net sales in Q4 2023, largely driven by cost savings initiatives.
Net Loss Q4 2024 $6.8 million, an improvement of $2.4 million from a net loss of $9.2 million in Q4 2023.
Adjusted EBITDA Q4 2024 Loss of $3.9 million, improved from a loss of $6.9 million in Q4 2023.
Net Sales Full Year 2024 $155.1 million, a decrease of 6.8% year-over-year, driven by loss of distribution in select channels and increased promotional spend, partially offset by increased pricing.
Gross Margin Full Year 2024 46.4%, up from 44.9% in 2023, due to more effective inventory management.
Net Loss Full Year 2024 $23.8 million, improved from a net loss of $28.3 million in 2023.
Adjusted EBITDA Full Year 2024 Loss of $15.2 million, improved from a loss of $19.1 million in 2023.
Cash and Cash Equivalents Q4 2024 Approximately $30.7 million, with an undrawn revolving credit line of $20 million.
Operating Cash Flows Full Year 2024 Improvement of $15 million.
New Product Launches: Introduction of Strawberry Lemon Burst flavor in spring 2025, featuring a more sugar-like taste experience.
Product Innovation Pipeline: Launch of retailer exclusives like Orange Creamsicle at Sprouts and limited edition seasonal flavors.
Variety Pack Offerings: Scaling multiple variety pack offerings, including an eight-pack at Walmart and 12-pack variety packs across grocery and natural channels.
Market Expansion: Expanded presence from 800 to over 4,300 Walmart locations in the U.S.
Retailer Partnerships: Albertsons created a better-for-you set featuring Zevia prominently.
Direct Store Delivery (DSD) Initiative: Expansion of DSD pilot into the Southwest, starting with Crescent Crown in Arizona.
Cost Savings Initiatives: Achieved $15 million in annualized savings from productivity initiatives, with an additional $2 million expected.
Gross Margin Improvement: Gross margin reached a record high of 49.2%, up from 40.7% year-over-year.
Marketing Strategy: Increased marketing investments in 2025 to drive awareness and trial, leveraging successful campaigns.
Organizational Redesign: Completed workforce reduction to enhance efficiency and reduce costs.
Competitive Pressures: Zevia faces competitive pressures from both conventional soda and other brands in the better-for-you category, which could impact market share and pricing strategies.
Regulatory Issues: The company must navigate regulatory challenges related to food and beverage labeling and health claims, which could affect marketing and product development.
Supply Chain Challenges: Zevia has experienced supply chain challenges that may impact product availability and distribution, particularly as they expand into new retail locations.
Economic Factors: Economic factors, including consumer spending behavior and inflation, may affect sales and profitability, particularly in the context of cautious consumer behavior.
Promotional Spending: Increased promotional spending to drive sales may impact margins, as the company balances marketing investments with profitability goals.
Workforce Reduction: The recent workforce reduction, while aimed at cost savings, may lead to operational disruptions and impact employee morale.
Distribution Losses: Loss of distribution in select channels, particularly in the Mass and Club Channels, is expected to negatively impact sales in the short term.
Seasonality: Seasonal fluctuations in sales, particularly in the second and third quarters, may affect revenue consistency throughout the year.
Strategic Growth Pillars: Zevia is focusing on three strategic growth pillars: amplified marketing, product innovation, and focused distribution expansion.
Marketing Initiatives: Zevia plans to increase marketing investments in 2025, leveraging insights from previous campaigns to drive awareness and trial.
Product Innovation: New flavor launches, including Strawberry Lemon Burst and retailer exclusives, are set for 2025, alongside variety pack offerings.
Distribution Expansion: Zevia expanded its presence from 800 to over 4,300 Walmart locations and is enhancing distribution through direct store delivery initiatives.
2025 Net Sales Guidance: Estimated net sales in the range of $158 million to $163 million for fiscal 2025.
Adjusted EBITDA Loss Guidance: Expected adjusted EBITDA loss in the range of $8 million to $11 million for 2025.
Q1 2025 Net Sales Guidance: Expected net sales of between $36 million to $38 million for Q1 2025.
Q1 2025 Adjusted EBITDA Loss Guidance: Expected adjusted EBITDA loss between $5.6 million and $6 million for Q1 2025.
Shareholder Return Plan: Zevia has not announced any share buyback program or dividend program during the call.
The earnings call presented mixed signals: a 12% YoY increase in net sales and expanded distribution at Walmart are positives, but declining gross margins and unchanged net loss are concerns. The Q&A revealed optimism about future growth and profitability, but management's vague responses on brand awareness and 2026 profitability raise uncertainties. The market may react neutrally due to these offsetting factors.
The earnings report shows strong financial performance with a 10.1% increase in net sales and improved margins. The company has made significant progress in reducing its net loss and achieving a positive adjusted EBITDA. While there are concerns about tariffs and increased marketing expenses, the overall sentiment is positive due to strong sales growth, successful product launches, and productivity gains. The Q&A section highlights positive analyst sentiment, despite some unclear responses from management. Given these factors, the stock is likely to see a positive movement over the next two weeks.
Despite improved gross margins and distribution expansion, Zevia's financial performance shows a net loss and declining sales, with no share repurchase program. Competitive pressures and regulatory issues pose risks, while management's lack of clear guidance on tariffs and pricing strategy adds uncertainty. The positive outlook on distribution expansion and product innovation balances these concerns, resulting in a neutral sentiment.
The earnings call highlights positive developments such as a significant Walmart expansion, improved EBITDA losses, and increased gross margins. Despite a drop in full-year sales, Q4 showed growth, and the company is optimistic about future distribution gains. The Q&A reinforced positive sentiment, with management confident in maintaining gross margins and expanding customer engagement. However, the lack of shareholder return plans and potential risks like supply chain challenges and increased promotional spending are concerns. Overall, the positive aspects outweigh the negatives, suggesting a positive stock price movement.
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