Zevia PBC (ZVIA) Bundle
Understanding Zevia PBC (ZVIA) Revenue Streams
Understanding Zevia PBC’s Revenue Streams
The primary revenue sources for Zevia PBC consist of retail sales and online/e-commerce sales. The following table summarizes the net sales for the three and nine months ended September 30, 2024, compared to the same periods in 2023.
| Period | Retail Sales (in thousands) | Online/E-commerce Sales (in thousands) | Total Net Sales (in thousands) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $31,523 | $4,843 | $36,366 |
| Three Months Ended September 30, 2023 | $39,533 | $3,556 | $43,089 |
| Nine Months Ended September 30, 2024 | $102,180 | $13,411 | $115,591 |
| Nine Months Ended September 30, 2023 | $114,525 | $14,105 | $128,630 |
Year-over-year revenue growth shows a decline in total net sales. For the nine months ended September 30, 2024, net sales decreased by 10.1%, dropping from $128.6 million in 2023 to $115.6 million in 2024. The three-month period reflected a decrease of 15.6%, from $43.1 million in 2023 to $36.4 million in 2024.
The decline in net sales was primarily driven by a decrease in the number of equivalized cases sold, which fell from 9.9 million in the first nine months of 2023 to 8.9 million in 2024. This was attributed to lost distribution in both the club and mass channels, which resulted in an approximately $13.9 million lower net sales. Pricing increases contributed an additional $0.8 million to the revenue.
The contribution of different business segments to overall revenue is significant. Retail sales accounted for the majority of net sales, while online/e-commerce sales provided a smaller, yet essential, contribution. The following table illustrates the geographical breakdown of net sales for the same periods.
| Period | U.S. Sales (in thousands) | Canada Sales (in thousands) | Total Net Sales (in thousands) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $32,584 | $3,782 | $36,366 |
| Three Months Ended September 30, 2023 | $38,499 | $4,590 | $43,089 |
| Nine Months Ended September 30, 2024 | $103,809 | $11,782 | $115,591 |
| Nine Months Ended September 30, 2023 | $115,686 | $12,944 | $128,630 |
Overall, the revenue analysis indicates a challenging fiscal landscape for Zevia PBC, with significant drops in both retail and online sales, primarily due to distribution losses and market dynamics. The historical trends indicate a need for strategic adjustments to regain lost market share and improve sales performance going forward.
A Deep Dive into Zevia PBC (ZVIA) Profitability
Profitability Metrics
In analyzing the profitability of the company for the year 2024, the following key metrics are highlighted:
- Gross Profit (Nine Months Ended September 30, 2024): $52,511,000
- Gross Profit (Nine Months Ended September 30, 2023): $59,369,000
- Gross Margin (2024): 45.4%
- Gross Margin (2023): 46.2%
The gross profit for the nine months ended September 30, 2024, decreased by 11.6% compared to the same period in 2023, primarily due to lower volumes and unfavorable unit costs.
Operating Profit and Loss
For the same period, the operating loss metrics are as follows:
- Loss from Operations (Nine Months Ended September 30, 2024): $(17,316,000)
- Loss from Operations (Nine Months Ended September 30, 2023): $(20,048,000)
This indicates an improvement in operational performance, with a reduction in loss from operations by 13.7%.
Net Profit Margin
The net profit metrics are summarized as follows:
- Net Loss (Nine Months Ended September 30, 2024): $(17,002,000)
- Net Loss (Nine Months Ended September 30, 2023): $(19,171,000)
The net loss attributable to the company for the nine months ended September 30, 2024, reflects a decrease of 6.1% compared to 2023.
Trends in Profitability Over Time
The following table illustrates the profitability trends over the last two years:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $52,511,000 | $59,369,000 | -11.6% |
| Gross Margin | 45.4% | 46.2% | -0.7% |
| Loss from Operations | $(17,316,000) | $(20,048,000) | +13.7% |
| Net Loss | $(17,002,000) | $(19,171,000) | +6.1% |
Comparison with Industry Averages
Comparing these profitability ratios with industry averages:
- Industry Average Gross Margin: 50%
- Industry Average Net Margin: -5%
The company’s gross margin is below the industry average, indicating potential challenges in cost management.
Analysis of Operational Efficiency
The operational efficiency can be assessed through the following metrics:
- Selling and Marketing Expenses (Nine Months Ended September 30, 2024): $40,673,000
- Selling and Marketing Expenses (Nine Months Ended September 30, 2023): $48,467,000
- General and Administrative Expenses (2024): $23,186,000
- General and Administrative Expenses (2023): $23,102,000
The decrease in selling and marketing expenses by 16.1% reflects improved cost management strategies.
| Expense Type | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Selling and Marketing | $40,673,000 | $48,467,000 | -16.1% |
| General and Administrative | $23,186,000 | $23,102,000 | +0.4% |
Overall, the focus on reducing selling and marketing expenses demonstrates the company's commitment to enhancing profitability.
Debt vs. Equity: How Zevia PBC (ZVIA) Finances Its Growth
Debt vs. Equity: How Zevia PBC Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Zevia PBC had total liabilities amounting to $24.1 million. This included current liabilities of $23.2 million, which comprised accounts payable of $14.9 million and accrued expenses of $7.7 million.
The company operates a Secured Revolving Line of Credit with a borrowing capacity of up to $20 million, secured by its assets. As of September 30, 2024, there was $0 outstanding on this credit facility, although $8 million was drawn during the first quarter of 2024 and subsequently repaid.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Zevia PBC as of September 30, 2024, stands at 0.49, calculated using total liabilities of $24.1 million and total equity of $48.7 million. This ratio is relatively favorable when compared to the industry average, which typically ranges from 0.5 to 1.0 for similar beverage companies.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In February 2022, Zevia PBC established a revolving credit facility with Bank of America. There have been no recent credit rating changes reported, and the company has maintained compliance with its financial covenants.
How the Company Balances Between Debt Financing and Equity Funding
Zevia PBC has primarily funded its operations through a combination of equity financing and debt instruments. The total equity as of September 30, 2024, was reported at $48.7 million, which reflects a decrease from $61.8 million in the same period of the previous year. This decline in equity is attributed to net losses, which amounted to $17 million for the nine months ended September 30, 2024.
| Debt Type | Amount ($ millions) | Notes |
|---|---|---|
| Secured Revolving Line of Credit | 20.0 | Available credit limit |
| Outstanding Credit | 0.0 | No amount drawn as of September 30, 2024 |
| Current Liabilities | 23.2 | Includes accounts payable and accrued expenses |
| Total Liabilities | 24.1 | Overall debt profile |
| Total Equity | 48.7 | Equity financing as of September 30, 2024 |
Overall, the company's strategy involves leveraging its credit facilities while managing equity to sustain its growth and operational needs in a competitive market environment.
Assessing Zevia PBC (ZVIA) Liquidity
Assessing Zevia PBC's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 3.44, calculated using current assets of $40.5 million and current liabilities of $11.8 million.
Quick Ratio: The quick ratio stands at 2.86, with quick assets of $37.3 million and current liabilities of $11.8 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is calculated as current assets of $40.5 million minus current liabilities of $11.8 million, resulting in a working capital of $28.7 million. This represents an increase from $24.5 million in the previous year.
Cash Flow Statements Overview
The following table summarizes the cash flow activities for the nine months ended September 30:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $971 | $(9,668) |
| Investing Activities | $(238) | $786 |
| Financing Activities | $0 | $25 |
Operating cash flow has significantly improved, with a net cash provided of $971,000 for the nine months ended September 30, 2024, compared to a negative $9.7 million in the prior year. This improvement is driven by a net increase in cash related to changes in operating assets and liabilities.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $32.7 million in cash and cash equivalents, indicating strong liquidity. The principal sources of liquidity include cash generated from operations and borrowing capacity under the Secured Revolving Line of Credit, which has a maximum borrowing limit of $20 million. There were no amounts outstanding on the line of credit as of the reporting date.
Is Zevia PBC (ZVIA) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company indicate a mixed picture regarding its market position. Below are the key financial ratios:
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | −34 |
| Price-to-Book (P/B) Ratio | 0.89 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | −19.5 |
Over the past 12 months, the stock price has experienced significant fluctuations. Here are the stock price trends:
| Date | Stock Price (Close) |
|---|---|
| January 2023 | $2.90 |
| April 2023 | $2.50 |
| July 2023 | $1.80 |
| October 2023 | $1.36 |
| January 2024 | $1.50 |
Currently, the company does not pay dividends, reflecting a dividend yield of 0.0% and a payout ratio of 0%.
Analysts have a consensus rating concerning the stock valuation:
| Analyst Rating | Count |
|---|---|
| Buy | 1 |
| Hold | 4 |
| Sell | 1 |
In summary, the analysis of the company's valuation metrics suggests that it is trading at a low P/B ratio compared to its peers, but the negative P/E and EV/EBITDA ratios indicate potential concerns about profitability and operational efficiency.
Key Risks Facing Zevia PBC (ZVIA)
Key Risks Facing Zevia PBC
Understanding the risk factors that impact a company’s financial health is crucial for investors. For Zevia PBC, several internal and external risks could affect its operations and profitability.
Industry Competition
The beverage industry is highly competitive, with numerous established brands and emerging players. This competition can lead to price wars, increased marketing expenditures, and a potential loss of market share. As of September 30, 2024, the company's net sales were $36.4 million, a decrease of 15.6% from $43.1 million in the same period in 2023.
Regulatory Changes
Changes in food and beverage regulations can impact product formulations, labeling requirements, and marketing practices. Compliance with these regulations can lead to increased costs and operational challenges. The company has faced operational challenges due to regulatory scrutiny, which can delay product launches or alter marketing strategies.
Market Conditions
Fluctuations in consumer demand, economic downturns, and changes in consumer preferences can significantly impact sales. In the nine months ended September 30, 2024, the company reported net sales of $115.6 million, down 10.1% from $128.6 million in 2023.
Operational Risks
Operational risks include supply chain disruptions, production inefficiencies, and reliance on third-party manufacturers. The company has indicated challenges with supply chain logistics, which have previously impacted operational performance. For instance, the cost of goods sold for the three months ended September 30, 2024, was $18.5 million, down 21.3% from $23.5 million in the prior year.
Financial Risks
Financial risks include liquidity concerns and reliance on debt financing. As of September 30, 2024, the company reported total liabilities of $24.1 million, with total assets of $72.9 million. The company had $32.7 million in cash and cash equivalents, which it believes will support ongoing operations.
Strategic Risks
Strategic risks arise from the company's ability to execute its business plan and adapt to market changes. The company has initiated a restructuring effort, incurring $1.0 million in restructuring expenses in the nine months ended September 30, 2024. Such initiatives are aimed at reducing costs and improving efficiency, but they also carry execution risk.
Mitigation Strategies
To address these risks, the company is focusing on improving operational efficiencies through its Productivity Initiative, which aims to streamline costs and enhance supply chain management. Additionally, the company is actively monitoring regulatory changes to ensure compliance and mitigate potential impacts on operations.
| Risk Factor | Description | 2024 Data |
|---|---|---|
| Net Sales | Decrease in sales due to competitive pressures and market conditions. | $36.4 million (Q3 2024) |
| Cost of Goods Sold | Reduction in costs due to lower volumes and improved efficiencies. | $18.5 million (Q3 2024) |
| Total Liabilities | Total liabilities reflecting financial risk exposure. | $24.1 million (Q3 2024) |
| Cash and Cash Equivalents | Liquidity available for operations and growth. | $32.7 million (Q3 2024) |
| Restructuring Expenses | Costs related to restructuring efforts to improve operational efficiency. | $1.0 million (Q3 2024) |
Future Growth Prospects for Zevia PBC (ZVIA)
Future Growth Prospects for Zevia PBC
Analysis of Key Growth Drivers
The company's growth opportunities are driven by several key factors, including product innovations, market expansions, and strategic partnerships. As of September 30, 2024, the company reported net sales of $115.6 million, a decrease from $128.6 million in the same period in 2023, indicating challenges that can be addressed through strategic initiatives.
Product Innovations
Product innovation remains critical for maintaining market relevance. The company has focused on enhancing its product line, including new flavor introductions and packaging improvements aimed at increasing on-shelf visibility. Investments in enhanced package-specific designs have aimed to improve brand awareness and drive sales.
Market Expansions
The company is actively pursuing market expansion strategies both domestically and internationally. As of the latest report, net sales in the U.S. were $103.8 million, while sales in Canada reached $11.8 million. Expanding distribution channels, particularly in e-commerce, is also a focal point, with online sales growing to $13.4 million.
Acquisitions
While there have been no recent acquisitions reported, the company remains open to strategic partnerships that could enhance its product offerings and market reach. The potential for acquisitions in the beverage space could provide access to new technologies and customer segments.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be driven by a recovery in sales as distribution channels stabilize. Analysts estimate that the company could achieve a compound annual growth rate (CAGR) of approximately 5% to 7% over the next five years, contingent on successful implementation of growth strategies.
Strategic Initiatives and Partnerships
Strategic initiatives include the recently launched Productivity Initiative, aimed at reducing costs and improving efficiency. This initiative is expected to result in $1.0 million in savings by optimizing operations. Partnerships with major retailers are also in place to bolster market presence and enhance promotional activities.
Competitive Advantages
The company holds several competitive advantages that position it for future growth. These include a strong brand identity and a commitment to natural ingredients, aligning with consumer trends towards healthier beverage options. As of September 30, 2024, total stockholders’ equity stood at $72.5 million, reflecting a solid financial foundation for future investments.
| Metric | 2024 | 2023 | Change | Percentage Change |
|---|---|---|---|---|
| Net Sales | $115.6 million | $128.6 million | $(13.0 million) | (10.1%) |
| Gross Profit | $52.5 million | $59.4 million | $(6.9 million) | (11.6%) |
| Gross Margin | 45.4% | 46.2% | (0.7%) | - |
| Adjusted EBITDA | $(11.3 million) | $(12.2 million) | $(0.9 million) | - |
| Cash and Cash Equivalents | $32.7 million | - | - | - |
The financial metrics and strategic initiatives outlined above indicate potential growth avenues for the company. With a focus on innovation, market expansion, and operational efficiency, the company is poised to navigate current challenges and capitalize on future opportunities for growth.
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Updated on 16 Nov 2024
Resources:
- Zevia PBC (ZVIA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Zevia PBC (ZVIA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Zevia PBC (ZVIA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.