Business Context and Reporting Period
Zevia PBC, a Delaware public benefit corporation and Certified B Corporation, manufactures and distributes zero-sugar, naturally sweetened beverages (Soda and Energy drinks) primarily in the U.S. and Canada. This Form 10-Q covers the quarterly period ended March 31, 2026. The Company operates as a single segment and is classified as an emerging growth company and an accelerated filer.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $46.1 million | $38.0 million |
| Gross Profit | $22.3 million | $19.0 million |
| Gross Margin | 48.4% | 50.1% |
| Operating Loss | $(2.4) million | $(6.4) million |
| Net Loss (GAAP) | $(2.4) million | $(6.4) million |
| Net Loss Attributable to Zevia PBC | $(2.3) million | $(5.2) million |
| Adjusted EBITDA | $0.9 million | $(3.3) million |
| Cash and Cash Equivalents | $26.6 million | $27.7 million (end of period) |
| Operating Cash Flow | $1.6 million | $(2.9) million |
| Debt Outstanding | $0 | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 21.2% year-over-year, driven by a 20.4% increase in equivalized cases sold (3.6 million vs. 3.0 million). Growth was fueled by expanded distribution in the club channel and higher volumes in mass and e-commerce channels.
- Margin Compression: Gross margin decreased 1.7 percentage points to 48.4%. This was primarily due to unfavorable unit costs driven by tariffs on steel and aluminum, higher inventory write-downs related to new packaging, and channel mix, partially offset by lower promotional spend.
- Operating Expenses: Total operating expenses decreased slightly to $24.7 million from $25.4 million.
- Selling & Marketing: Decreased 5.1% to $14.5 million, largely due to timing of marketing campaigns.
- General & Administrative: Increased 29.9% to $9.1 million, primarily due to a $2.3 million litigation settlement reserve.
- Restructuring: No restructuring costs were incurred in Q1 2026, compared to $2.1 million in Q1 2025.
- Profitability: The operating loss narrowed significantly to $2.4 million from $6.4 million, and the Company achieved positive Adjusted EBITDA of $0.9 million, compared to a loss of $3.3 million in the prior year.
Guidance, Outlook, and Risks
- Productivity & Restructuring: The Company completed its initial "Productivity Initiative" restructuring by year-end 2025. In Q2 2026, a new warehouse optimization plan was initiated with estimated costs of $0.9 million, expected to yield $2.4 million in annualized savings.
- Product Strategy: The Company plans to discontinue its Tea product line in 2026 to focus on core Soda and Energy categories.
- Macro Risks: Management highlights significant risks from tariffs (specifically on steel and aluminum), inflation, and geopolitical conflicts (Middle East) which are increasing cost of goods sold and supply chain volatility.
- Liquidity: The Company holds $26.6 million in cash and has a $20 million secured revolving credit facility (currently undrawn). Management believes this is sufficient for operations beyond the next 12 months.
- Legal Contingency: A tentative settlement was reached in April 2026 regarding misleading label claims, with a $1.9 million reserve recorded in Q1 2026.
Investor Verification Checklist
- Tariff Impact: Verify the extent to which aluminum and steel tariffs are being passed through to consumers versus absorbed in margins.
- Litigation Settlement: Confirm the final approval of the $1.9 million settlement regarding product labeling claims and any potential for additional costs.
- Inventory Management: Review the rationale for inventory write-downs related to new packaging designs and the effectiveness of inventory reduction strategies.
- Warehouse Transition: Monitor the execution and cost realization of the new warehouse footprint optimization planned for Q2 2026.
- TRA Liability: Assess the potential future cash outflow related to the Tax Receivable Agreement (TRA), which could total approximately $59.2 million if tax benefits are fully realized.