Zevia PBC (ZVIA) 6 Nov 24 2024 Q3 Earnings call transcript

In a recent earnings call, Zevia PBC, a leading company in the zero sugar clean label soda market, showcased significant progress in productivity initiatives and strategic growth plans. The call, hosted by President and CEO Amy Taylor and CFO Girish Satya, highlighted the company's improved financial performance and optimistic outlook for the future.

Productivity Initiatives and Financial Performance

Zevia PBC reported a substantial improvement in adjusted EBITDA loss, which is now at $1.5 million, marking a significant decrease from the third quarter of 2023. This achievement is attributed to enhanced efficiencies, cost savings, and better product costing, resulting in a record gross margin of 49%. The company also expects to achieve annual cost savings of $15 million, an increase from the previous estimate of $12 million. These improvements are a testament to Zevia's strong execution of its productivity initiatives.

Strategic Growth Plans and Distribution Expansion

Zevia PBC has set its sights on expanding its distribution in a strategic and intentional manner. The company's confidence is bolstered by the strong sell-through of its products in key strategic channels. For instance, scan data in the grocery channel showed dollar growth of 8% and unit growth of 9% for the third quarter. These positive trends continued into October, with dollar growth accelerating to 14% and unit growth reaching 17%.

A significant development in Zevia's growth strategy is its expansion into Walmart, with over 4,300 stores slated to carry Zevia products. This strategic move is expected to drive growth and enhance Zevia's presence in the market. Additionally, the company is making progress in its direct store delivery (DSD) initiative and building its presence in the convenience channel, with upcoming spring resets planned.

Brand Marketing Strategy and Product Innovation

Zevia PBC has been focusing on amplifying its brand marketing efforts, shifting towards emotionally-driven storytelling. This strategy has led to a 55% sequential increase in engagement and a more than 500% increase in organic views on social media. The company has also been investing in broad-reaching campaigns spanning digital and out-of-home media to drive awareness. Zevia's unique product offerings, including its latest limited-time e-commerce exclusive Salted Caramel flavor, continue to outperform, underscoring the company's commitment to innovation.

Future Outlook and Competitive Positioning

Zevia PBC is optimistic about its future prospects, particularly in the growing market for better-for-you soda. With a focus on product innovation, strategic distribution expansion, and amplified marketing efforts, the company is well-positioned to capitalize on the demand for healthier alternatives to traditional soda. By building a strong brand identity and fostering consumer loyalty, Zevia PBC aims to maintain its competitive edge and drive long-term growth.

In conclusion, Zevia PBC's Q3 2024 earnings call highlights the company's strategic initiatives and financial performance, underscoring its commitment to growth and innovation in the better-for-you soda market. With a strong focus on product development, distribution expansion, and brand marketing, Zevia PBC is well on its way to reaccelerating growth and delivering significant improvement in adjusted EBITDA.