8-K: Zevia Reports Q4 and Full Year 2024 Results: Net Sales Rise in Q4, Gross Profit Margins Hit Record High

Zevia PBC announces improved Q4 and full year 2024 results, highlighting a return to top-line growth and progress towards profitability.

Summary

• Zevia PBC reported its fourth quarter and full year 2024 financial results on February 26, 2025.
• In Q4 2024, net sales increased by 4.4% year-over-year to $39.5 million, driven by an 11.6% increase in volume.
• The company achieved a record gross profit margin of 49.2% in Q4.
• Net loss for Q4 was $6.8 million, an improvement of $2.4 million year-over-year.
• Adjusted EBITDA loss for Q4 was $3.9 million, an improvement of $3.0 million year-over-year.
• For the full year 2024, net sales were $155.0 million, a decrease of $11.4 million year-over-year.
• Full year gross profit margin improved to 46.4%.
• Net loss for the full year was $23.8 million, an improvement of $4.5 million year-over-year.
• Adjusted EBITDA loss for the full year was $15.2 million, an improvement of $3.8 million year-over-year.
• The company expects net sales for full year 2025 to be in the range of $158 million to $163 million.
• The company expects adjusted EBITDA loss for full year 2025 to be in the range of $8 million to $11 million.
• For the first quarter of 2025, the company expects net sales to be in the range of $36 million to $38 million.
• For the first quarter of 2025, the company expects adjusted EBITDA loss to be between $5.6 million and $6.0 million.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the company still reports a net loss, there are significant improvements in key metrics like net sales growth in Q4 and improved gross profit margins. The guidance for 2025 suggests continued growth and reduced losses.

Positives

• Q4 net sales increased by 4.4% year-over-year.
• Q4 volume growth was 11.6%, driven by expanded distribution at Walmart.
• Gross profit margin improved to a record 49.2% in Q4.
• Net loss improved in both Q4 and full year 2024.
• Adjusted EBITDA loss improved in both Q4 and full year 2024.
• The company has $30.7 million in cash and cash equivalents with no outstanding debt and an unused credit line of $20 million as of December 31, 2024.

Negatives

• Full year 2024 net sales decreased by 6.8% year-over-year.
• The company experienced reduced volumes of 4.8% for the full year due to lost distribution in the club channel and with one customer in the mass channel.
• The company is still operating at a net loss and an adjusted EBITDA loss.

Risks

• The company faces risks related to maintaining its brand and competing effectively.
• Supply chain disruptions could negatively impact the business.
• Changes in consumer preferences could affect product demand.
• Inflation could increase commodity, packaging, transportation, and labor costs.
• Reliance on contract manufacturers and service providers poses a risk.
• Geopolitical events and conflicts could impact the business.
• Failure to protect intellectual property rights could lead to losses.
• Potential liabilities from litigation, claims, or regulatory proceedings could adversely affect the company.

Future Outlook

Zevia expects net sales for full year 2025 to be in the range of $158 million to $163 million and an adjusted EBITDA loss in the range of $8 million to $11 million. For the first quarter of 2025, the company expects net sales to be in the range of $36 million to $38 million and an adjusted EBITDA loss of between $5.6 million and $6.0 million.

Management Comments

• Amy Taylor, President and Chief Executive Officer of Zevia, stated that the company ended the year on a strong note with a return to top line growth and significant progress towards achieving profitability.
• Girish Satya, Chief Financial Officer of Zevia, stated that the company is pleased with the progress made in its strategic growth pillars and productivity initiative and expects to return to growth for the full year 2025.

Industry Context

Zevia operates in the better-for-you soda category, which is experiencing fast growth. The company aims to capitalize on its unique market position by building brand awareness, accelerating product innovation, and driving in-store visibility.

Comparison to Industry Standards

• It's difficult to provide a precise comparison to industry standards without specific competitor data.
• However, Zevia's focus on zero-sugar and natural ingredients aligns with the broader trend of health-conscious consumers seeking alternatives to traditional sugary drinks.
• Companies like La Croix and Spindrift are also competing in the flavored sparkling water space, while larger beverage companies like PepsiCo and Coca-Cola are investing in healthier beverage options.
• Zevia's gross profit margin of 49.2% in Q4 is relatively strong, suggesting effective cost management and pricing strategies.

Stakeholder Impact

• Shareholders may be encouraged by the improved financial performance and future outlook.
• Employees may benefit from the company's focus on growth and profitability.
• Customers will continue to have access to zero-sugar, naturally sweetened beverages.
• Suppliers and creditors will be impacted by the company's financial performance and growth plans.

Next Steps

• The company will host a conference call to discuss the earnings release.
• The company remains focused on building brand awareness, accelerating product innovation, and driving in-store visibility.
• The company plans to reinvest cost savings into future growth through increased marketing and promotional spend.

Key Dates