Zevia PBC (ZVIA) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $40.4 million, down 4.3% year-over-year but slightly above guidance, impacted by volume declines, distribution delays, and club channel losses.

• Gross margin declined to 41.9%, down 4.7 percentage points year-over-year, due to inventory write-downs, higher unit costs, and increased promotional spend.

• Net loss widened to $7.0 million from $5.0 million in Q2 2023; Adjusted EBITDA loss was $4.4 million, compared to $2.6 million last year.

• Productivity Initiative targets $12 million in annualized savings, with $0.9 million in Q2 restructuring costs and benefits expected over the next 3–5 quarters.

• Retail scan sales showed double-digit growth, with food channel leading and new product launches supporting revenue and margin.

Financial highlights

• Q2 2024 net sales: $40.4 million (down 4.3% YoY); gross profit: $16.9 million; gross margin: 41.9%.

• Net loss: $7.0 million (vs. $5.0 million prior year); Adjusted EBITDA loss: $4.4 million (vs. $2.6 million prior year).

• Cash and equivalents: $28.9 million as of June 30, 2024; no outstanding debt and $20 million undrawn credit line.

• Selling and marketing expenses: $13.6 million; general and administrative expenses: $7.7 million.

• First half 2024 net sales: $79.2 million (down 7.4% YoY); gross margin: 43.7%.

Outlook and guidance

• Full-year 2024 net sales guidance reaffirmed at $158–$166 million, with expectations to finish at the low end.

• Q3 2024 net sales expected at $37–$40 million, reflecting club distribution losses and timing of new distribution.

• Gross margins expected to return to mid-40s in Q3 and improve sequentially.

• Productivity Initiative expected to deliver $8–12 million in annualized cost savings, with additional restructuring charges possible.

• Management remains optimistic on long-term growth, citing strong consumer demand and marketing efficacy.