Zevia PBC — FY2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing also reports unaudited fourth-quarter results. Zevia develops and sells zero-sugar beverages, principally in the U.S. and Canada; Soda generated approximately 88% of 2022 net sales. Financial statements are audited by Deloitte & Touche LLP.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net sales | $163.2 million | $138.2 million |
| Gross profit / margin | $70.0 million / 42.9% | $63.9 million / 46.3% |
| Operating loss | $47.9 million | $87.4 million |
| Net loss, consolidated | $47.6 million | $87.7 million |
| Net loss attributable to Zevia PBC | $33.9 million | $46.0 million |
| Adjusted EBITDA, non-GAAP | $(19.6) million | $(8.7) million |
| Cash used in operating activities | $20.8 million | $17.8 million |
Net sales rose 18.1%; equivalized cases sold increased 10.7% to 13.6 million. Sales growth included $14.3 million from organic growth, $6.3 million from expanded distribution and $4.5 million from pricing. Inflation contributed $11.0 million of higher cost of goods sold. The resulting gross-margin contraction was 3.4 percentage points.
At year-end, cash and cash equivalents were $47.4 million, with no short-term investments (versus $30.0 million at year-end 2021). Current assets were $88.7 million and current liabilities $17.1 million. Total liabilities were $17.1 million; the company reported no borrowings under its revolving facility. Total equity was $81.8 million. Capital expenditures were $2.6 million.
Quarterly sales were $35.4 million in Q4 2022, versus $34.2 million in Q4 2021. Q4 2022 gross profit was $15.7 million; operating loss was $6.3 million and net loss was $6.2 million. Q4 loss per share was $0.09.
Material changes and notable items
- Operating loss and consolidated net loss narrowed year over year, partly reflecting equity-based compensation expense falling to $26.9 million from $77.7 million. 2022 included $8.2 million of accelerated compensation expense following three senior employees’ retirements.
- Sales and marketing expense increased 17.1% to $52.9 million, including higher freight, warehousing and repacking costs. General and administrative expense increased 33.7% to $36.8 million, primarily from personnel and public-company costs.
- Operating cash outflow increased by $3.0 million year over year. The 2022 cash balance also reflects $30.0 million of maturities from short-term investments.
- Management reclassified repackaging and handling costs from cost of goods sold to selling and marketing expense; comparative 2021 figures were adjusted. The filing also revised 2022 Q1–Q3 loss per share for vested but unreleased RSUs, describing the changes as immaterial.
Outlook, risks and contingencies
- Management expects inflationary pressures on inputs, logistics, manufacturing and labor to continue into 2023, affecting margins and operating results. Pricing actions could reduce sales volumes. The filing provides no specific numerical revenue, earnings or margin guidance.
- Management stated that cash, operating activities and available revolving-credit borrowings should fund ongoing operations, planned capital expenditures and other investments beyond the next 12 months. This outlook depends on sales, margins, working capital and access to financing.
- The $20 million asset-based revolving facility, maturing in 2027, was undrawn at year-end. It requires at least $7 million of defined liquidity through December 31, 2023; the company reported compliance at year-end. Substantially all company assets secure the facility.
- Principal risks include sustained losses and inability to reach profitability; inflation and price sensitivity; competition and retailer/customer concentration (largest customer 15% of sales; top ten 73%); dependence on third-party manufacturers and suppliers; and concentrated stevia sourcing, predominantly from one supplier and region. Climate, regulatory, product-quality, cybersecurity and consumer-demand risks are also described.
- The company reported a full $72.7 million valuation allowance against deferred tax assets. It disclosed a potential $55.8 million Tax Receivable Agreement liability if related tax benefits become realizable; that liability was not recorded at year-end. The TRA generally requires payment of 85% of specified tax savings and may accelerate in certain circumstances.
- No material legal proceedings were reported. Management concluded disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not provide an internal-control attestation because Zevia qualified as an emerging growth company.
Important facts for investors to verify
- Whether revenue growth and distribution gains can continue without further material gross-margin erosion, and whether pricing will weigh on volume.
- Cash-burn trends, working-capital needs, and headroom under the credit facility’s liquidity covenant.
- Progress in reducing dependence on concentrated stevia supply and third-party manufacturing and distribution.
- The assumptions, timing and potential liquidity effects of TRA payments, including possible acceleration or tax-benefit challenges.
- How reported performance compares with management’s subsequent guidance and results; this filing contains no numerical forward guidance.