Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 29, 2024 | Jun. 30, 2023 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Entity Registrant Name | Zevia PBC | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001854139 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity File Number | 001-40630 | ||
Entity Tax Identification Number | 86-2862492 | ||
Entity Address, Address Line One | 15821 Ventura Blvd. | ||
Entity Address, Address Line Two | Suite 135 | ||
Entity Address, City or Town | Encino | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 91436 | ||
City Area Code | 855 | ||
Local Phone Number | 469-3842 | ||
Title of 12(b) Security | Class A common stock, par value $0.001 pershare | ||
Trading Symbol | ZVIA | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Voluntary Filers | No | ||
Audit Report | false | ||
Documents Incorporated by Reference | Portions of the Registrant ’ s definitive proxy statement for use in connection with its 2024 Annual Meeting of Stockholders, which is to be filed no later than 120 days after December 31, 2023 , are incorporated by reference into Part III of this Annual Report on Form 10-K. | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Location | Los Angeles, California | ||
Auditor Firm ID | 34 | ||
Entity Public Float | $ 204.3 | ||
Document Financial Statement Error Correction [Flag] | false | ||
Common Class A [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 54,566,858 | ||
Common Class B [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 17,283,177 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | |||
Cash and cash equivalents | $ 31,955 | $ 47,399 | |
Accounts receivable, net | 11,119 | 11,077 | |
Inventories | 34,550 | 27,576 | |
Prepaid expenses and other current assets | 5,063 | 2,607 | |
Total current assets | 82,687 | 88,659 | |
Property and equipment, net | 2,109 | 4,641 | |
Right-of-use assets under operating leases, net | 1,959 | 708 | |
Intangible assets, net | 3,523 | 4,385 | |
Other non-current assets | 579 | 539 | |
Total assets | 90,857 | 98,932 | |
Current liabilities: | |||
Accounts payable | 21,169 | 8,023 | |
Accrued expenses and other current liabilities | 5,973 | 8,408 | |
Current portion of operating lease liabilities | 575 | 715 | |
Total current liabilities | 27,717 | 17,146 | |
Operating lease liabilities, net of current portion | 1,373 | 0 | |
Total liabilities | 29,090 | 17,146 | |
Commitments and contingencies (Note 9) | |||
Stockholders' equity | |||
Preferred Stock, $0.001 par value. 10,000,000 shares authorized, nos shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively. | 0 | 0 | |
Class A Common Stock, $0.001 par value. 550,000,000 shares authorized, 54,220,017 and 47,774,046 shares issued and outstanding as of December 31,2023 and December 31,2022, respectively | 54 | 48 | |
Class B Common Stock, $0.001 par value. 250,000,000 shares authorized, 17,283,177 and 21,798,600 shares issued and outstanding as of December 31,2023 and December 31,2022, respectively | 17 | 22 | |
Additional paid-in capital | 191,144 | 189,724 | |
Accumulated deficit | (101,337) | (79,843) | |
Total Zevia PBC stockholders' equity | 89,878 | 109,951 | |
Noncontrolling Interests | (28,111) | (28,165) | |
Total Equity | 61,767 | 81,786 | $ 104,559 |
Total liabilities and equity | $ 90,857 | $ 98,932 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 550,000,000 | 550,000,000 |
Common stock shares issued | 54,220,017 | 47,774,046 |
Common stock shares outstanding | 54,220,017 | 47,774,046 |
Common Class B [Member] | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 250,000,000 | 250,000,000 |
Common stock shares issued | 17,283,177 | 21,798,600 |
Common stock shares outstanding | 17,283,177 | 21,798,600 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net sales | $ 166,424 | $ 163,181 |
Cost of goods sold | 91,666 | 93,160 |
Gross profit | 74,758 | 70,021 |
Operating expenses: | ||
Selling and marketing | 62,312 | 52,869 |
General and administrative | 31,495 | 36,793 |
Equity-based compensation | 8,279 | 26,880 |
Depreciation and amortization | 1,615 | 1,347 |
Total operating expenses | 103,701 | 117,889 |
Loss from operations | (28,943) | (47,868) |
Other income, net | 673 | 286 |
Loss before income taxes | (28,270) | (47,582) |
Provision for income taxes | 52 | 65 |
Net loss and Comprehensive loss | (28,322) | (47,647) |
Loss attributable to noncontrolling interest | 6,828 | 13,790 |
Net loss attributable to Zevia PBC | $ (21,494) | $ (33,857) |
Net loss per share attributable to common stockholders, basic | $ (0.41) | $ (0.81) |
Net loss per share attributable to common shareholders, diluted | $ (0.41) | $ (0.81) |
Weighted average common units outstanding, basic | 50,618,758 | 43,469,383 |
Weighted average common units outstanding, diluted | 50,618,758 | 43,469,383 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Common Stock [Member] Common Class A [Member] | Common Stock [Member] Common Class B [Member] |
Beginning Balance (in shares) at Dec. 31, 2021 | 34,463,417 | 30,113,152 | ||||
Beginning Balance at Dec. 31, 2021 | $ 104,559 | $ 174,404 | $ (45,986) | $ (23,923) | $ 34 | $ 30 |
Vesting and release of common stock under equity incentive plans, net (in shares) | 4,749,662 | |||||
Vesting and release of common stock under equity incentive plans, net | (2,130) | 2,136 | $ (6) | |||
Exchange of Class B common stock for Class A common stock (in shares) | 8,314,552 | (8,314,552) | ||||
Exchange of Class B common stock for Class A common stock | (9,548) | 9,548 | $ 8 | $ (8) | ||
Exercise of stock options | 124 | 124 | ||||
Exercise of stock options Shares | 246,415 | |||||
Equity-based compensation | 26,880 | 26,880 | ||||
Net loss | (47,647) | (33,857) | (13,790) | |||
Ending Balance at Dec. 31, 2022 | 81,786 | 189,724 | (79,843) | (28,165) | $ 48 | $ 22 |
Ending Balance (in shares) at Dec. 31, 2022 | 47,774,046 | 21,798,600 | ||||
Vesting and release of common stock under equity incentive plans, net (in shares) | 1,848,288 | |||||
Vesting and release of common stock under equity incentive plans, net | 0 | 1 | $ (1) | |||
Exchange of Class B common stock for Class A common stock (in shares) | 4,454,900 | (4,454,900) | ||||
Exchange of Class B common stock for Class A common stock | (6,883) | 6,883 | $ 5 | $ (5) | ||
Disposition of cost method investment in redemption of Class B common stock, Shares | (60,523) | |||||
Disposition of cost method investment in redemption of Class B common stock | (1) | (1) | ||||
Exercise of stock options | $ 25 | 25 | ||||
Exercise of stock options Shares | 142,783 | 142,783 | ||||
Equity-based compensation | $ 8,279 | 8,279 | ||||
Net loss | (28,322) | (21,494) | (6,828) | |||
Ending Balance at Dec. 31, 2023 | $ 61,767 | $ 191,144 | $ (101,337) | $ (28,111) | $ 54 | $ 17 |
Ending Balance (in shares) at Dec. 31, 2023 | 54,220,017 | 17,283,177 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating activities: | ||
Net loss | $ (28,322) | $ (47,647) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Non-cash lease expense | 567 | 653 |
Depreciation and amortization | 1,615 | 1,347 |
Loss on disposal of property, equipment and software, net | 480 | 3 |
Amortization of debt issuance cost | 76 | 64 |
Equity-based compensation | 8,279 | 26,880 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (42) | (2,030) |
Inventories | (6,974) | 3,925 |
Prepaid expenses and other assets | (2,573) | 846 |
Accounts payable | 13,640 | (5,850) |
Accrued expenses and other current liabilities | (2,435) | 1,703 |
Operating lease liabilities | (585) | (672) |
Net cash used in operating activities | (16,274) | (20,778) |
Investing activities: | ||
Proceeds from maturities of short-term investments | 0 | 30,000 |
Purchases of property, equipment and software | (1,624) | (2,593) |
Proceeds from sales of property and equipment | 2,429 | 0 |
Net cash provided by investing activities | 805 | 27,407 |
Financing activities: | ||
Payment of debt issuance costs | 0 | (334) |
Minimum tax withholding paid on behalf of employees for net share settlement | 0 | (2,130) |
Proceeds from exercise of stock options | 25 | 124 |
Net cash provided by (used in) financing activities | 25 | (2,340) |
Net change from operating, investing, and financing activities | (15,444) | 4,289 |
Cash and cash equivalents at beginning of period | 47,399 | 43,110 |
Cash and cash equivalents at end of period | 31,955 | 47,399 |
Non-cash investing and financing activities | ||
Capital expenditures included in accounts payable | 12 | 506 |
Conversion of Class B common stock to Class A common stock | 6,883 | 9,548 |
Operating lease right-of-use assets obtained in exchange for lease liabilities | 1,818 | 1,150 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 79 | 64 |
Cash paid for income taxes | $ 127 | $ 69 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |||
Pay vs Performance Disclosure | ||||||||||
Net Income (Loss) | $ (9,151) | [1] | $ (11,250) | [1] | $ (5,009) | $ (2,912) | $ (6,170) | $ (9,196) | $ (14,796) | $ (17,485) |
[1] (1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses. (2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2023 | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Description of Business | 1. DESCRIPTION OF BUSINESS Organization and operations Zevia PBC (the “Company,” “we,” “us,” “our”), is a growth beverage company that develops, markets, sells, and distributes great tasting, zero sugar beverages made with simple, plant-based ingredients. We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,” and are focused on addressing the global health challenges resulting from excess sugar consumption by offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages. All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium and include a variety of flavors across Soda, Energy Drinks, Organic Tea, and Kids drinks. Our products are distributed and sold principally across the United States (“U.S.”) and Canada through a diverse network of major retailers in the food, drug, warehouse club, mass, natural and e-commerce channels and in grocery and natural product stores and specialty outlets. The Company’s products are manufactured and maintained at third-party beverage production and warehousing facilities located in both the U.S. and Canada. The Company completed its initial public offering (“IPO”) of 10,700,000 shares of its Class A common stock at an offering price of $ 14.00 per share on July 26, 2021. Its Class A common stock is listed on the New York Stock Exchange trading under the ticker symbol “ZVIA.” In connection with the IPO, the Company also completed certain reorganization transactions (the “Reorganization Transactions”), pursuant to which Zevia LLC became the predecessor of the Company for financial reporting purposes. The Company is a holding company, and its sole material asset is its controlling equity interest in Zevia LLC. As the sole managing member of Zevia LLC, the Company operates and controls all of the business and affairs of Zevia LLC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP” ). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary, Zevia LLC, that it controls due to ownership of a majority equity interest. All intercompany transactions and balances have been eliminated in consolidation. The Company owns a majority economic interest in, and operates and controls all of the businesses and affairs of, Zevia LLC. Accordingly, the Company has prepared these consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation . On January 1, 2022, the Company and Zevia LLC entered into a service agreement to transfer the services of all employees of the Company to Zevia LLC. Under terms of the service agreement between the entities, the payroll costs of employees are borne by Zevia LLC while certain other non-payroll costs, such as those associated with stock compensation arrangements, remain with the Company. In addition, pursuant to the Thirteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC, dated as of July 21, 2021, Zevia LLC shall reimburse the Company for certain expenses for overhead, administrative, and other expenses, at the Company’s discretion. For the years ended December 31, 2023 and 2022 , it was determined that the majority of such costs will be retained by the Company, with certain costs directly attributable to Zevia LLC being borne by that entity. These costs impacted the amount of net loss reported by Zevia LLC and consequently impacted the amount allocated to noncontrolling interest. Use of estimates The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amount of net sales and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by the Company relate to: net sales and associated cost recognition; the useful lives assigned to and the recoverability of property and equipment; adjustments recorded for inventory obsolescence and adjustments made for net realizable value; the incremental borrowing rate for lease liabilities; allowance for doubtful accounts; the useful lives assigned to and the recoverability of intangible assets; realization of deferred tax assets; and the determination of the fair value of equity instruments, including restricted unit awards, and equity-based compensation awards. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of its assets and liabilities. At December 31, 2023 , the Company’s operations continued to be impacted by higher manufacturing, freight, and labor costs as a result of the short-term supply chain logistics challenges during 2023, which the Company does not expect to continue in 2024, as well as increased operating costs as a result of the global economy and political and economic uncertainties, which the Company expects to continue in 2024. The Company will continue to monitor the economic environment, including any impact from current and future global events, and their effects on its business and operations. Cash, cash equivalents and investments Cash and cash equivalents include cash and investments in short-term, highly liquid securities, with original maturities of three months or less. Investments with original maturities at the date of acquisition of more than three months are classified as short-term investments or long-term investments based on the remaining contractual maturity of the security at the reporting date. As of December 31, 2023 and 2022 , the Company did no t hold any investments. The Company maintains cash deposits with high credit quality financial institutions. The deposits with these financial institutions may exceed the federally insured limits; however, these deposits typically are redeemable upon demand. The Company has not experienced any loss because of these deposits and does not expect to incur any losses in the future. Fair value of financial instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions, and credit risk. The three-level hierarchy for disclosure of fair value measurements is as follows: • Level 1. Quoted prices in active markets for identical assets or liabilities. • Level 2. Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or market-corroborated inputs. • Level 3. Unobservable inputs for the asset or liability. The Company’s material financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their fair values at December 31, 2023 and 2022 due to the short period of time to maturity or repayment. As of December 31, 2023 and 2022, all cash and cash equivalents were considered Level 1. As of December 31, 2023 and 2022 , the Company did no t have any assets or liabilities measured on a recurring basis without observable market values that would require a high level of judgment to determine fair value (Level 3). The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. For the years ended December 31, 2023 and 2022 , there were no transfers between levels of the fair value hierarchy. Other comprehensive loss The nature of the Company’s operations does not give rise to consequential other comprehensive loss. Accounts receivable and allowance for doubtful accounts Trade receivables are recorded at net realizable value, which includes an appropriate allowance for doubtful accounts. Credit is extended to customers based on an evaluation of their financial condition, credit rating, and trade references. The Company monitors exposure to credit losses and maintains an allowance for anticipated losses based on each customer’s credit condition and payment behavior. The Company’s accounts receivable balance is net of an allowance for doubtful accounts. The allowance for doubtful accounts was not material at December 31, 2023 and 2022 . Changes in the Allowance for Doubtful Accounts were as follows: Year Ended December 31, 2023 2022 Balance, beginning of the year $ — $ 10 Recovery of bad debt — ( 10 ) Balance, end of the year $ — $ — Inventories Inventories consist of raw materials and finished goods. Raw materials include costs for the Company’s ingredients and packaging inventories. The costs of finished goods inventories include production fees from third-party manufacturers. Inventories are stated at the lower of average cost or net realizable value. The Company regularly reviews whether the net realizable value of its inventory is lower than its carrying value. Indicators that could result in inventory write downs include age of inventory, damaged inventory, slow moving products, and products at the end of their life cycles. While management believes that inventory is appropriately stated at the lower of average cost or net realizable value, judgment is involved in determining the net realizable value of inventory. Prepaid expenses Prepaid expenses represent amounts paid in advance for products or services to be delivered in the future and are included within prepaid expenses and other current assets in the accompanying consolidated balance sheets. Prepaid expenses are expensed as incurred and were $1.8 million and $2.3 million as of December 31, 2023 and 2022, respectively. Property and equipment, net Property and equipment are recorded at cost. Additions, replacements, and leasehold improvements are capitalized, while maintenance and repairs that do not extend the useful life of an asset are expensed as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvement. When assets are retired or otherwise disposed, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized. Depreciation and amortization are computed using the following estimated useful lives of the assets: Asset Years Leasehold improvements Shorter of lease term or estimated useful life Computer equipment 3 Furniture and equipment 4 - 7 Vehicles 5 Quality control equipment 2 - 5 Buildings and improvements 7 - 30 The Company periodically reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In order to assess recoverability, the Company compares the estimated undiscounted future pre-tax cash flows from the use of the group of assets, as defined, to the carrying amount of such assets. Measurement of an impairment loss is based on the excess of the carrying amount of the group of assets over the long-lived asset’s fair value. The Company did no t recognize any impairment charges associated with long-lived assets during the years ended December 31, 2023 and 2022 . Leases The Company leases office space. Right of use (“ROU”) lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments. Both the ROU lease asset and liability are recognized as of the lease commencement date based on the present value of the lease payments over the lease term. The Company’s leases do not provide an implicit borrowing rate that can readily be determined. Therefore, the Company applies a discount rate based on the incremental borrowing rate, which is determined using the Company’s synthetic credit rating and other information available as of the lease commencement date. ROU lease assets also include any lease payments made before their contractual due dates and exclude any lease incentives. The Company’s lease agreements may include options to extend the lease term or to terminate the lease early. The Company includes options to extend or terminate leases upon determination of the ROU lease asset and liability when it is reasonably certain the Company will exercise these options. Operating lease expense attributable to lease payments is recognized on a straight-line basis over the lease term and is included in general, and administrative expense on the consolidated statements of operations and comprehensive loss. The Company has lease arrangements that include lease and non-lease components. The non-lease components in the arrangements are not significant when compared to the lease components. For all leases, the Company accounts for the lease and non-lease components as a single component. The Company evaluates ROU assets for impairment consistent under the impairment of long-lived assets policy. The Company had no material finance leases as of December 31, 2023 and 2022 . Intangible assets, net Intangible assets subject to amortization consist of customer relationships, which were acquired and are amortized over their estimated useful life of 15 years and computer software costs which are amortized over their estimated useful life of three years . In accordance with Accounting Standard Codification ("ASC") Topic 350, Intangibles—Goodwill and Other , intangible assets with definite lives are treated as a long-lived asset and are evaluated for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. If impaired, the asset is written down to its estimated fair market value, which is generally measured by discounting future cash flows. Non-amortizable intangible assets consist of trademarks which represent the Company’s exclusive ownership of the Zevia® brand used in connection with the manufacture, marketing, and distribution of its carbonated beverages. The Company also owns several other trademarks in both the U.S. and in foreign countries. Intangible assets not subject to amortization are evaluated for impairment annually, or sooner if management believes such assets may be impaired. An impairment loss is recognized if the asset’s carrying amount exceeds its estimated fair market value. For the years ended December 31, 2023 and 2022 , no impairment losses were recorded. Certain external and internal computer software costs acquired for internal use are capitalized. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized costs are included within intangible assets, net. Debt issuance cost Costs incurred in connection with securing a revolving line of credit agreement are capitalized. These costs are amortized over the term of the credit agreement. Debt issuance costs are included in Other non-current assets in the accompanying consolidated balance sheets. Net debt issuance costs totaled $ 0.2 million and $ 0.3 million as of December 31, 2023 and 2022 , respectively. Customer incentives and allowances The Company offers its customers sales incentives that are designed to support the distribution of its products to consumers. These incentives and discounts include cash discounts, price allowances, volume-based rebates, product placement fees and certain other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance. These amounts are deducted from gross sales and are included under Net sales in the accompanying consolidated statements of operations and comprehensive loss. The Company maintains an allowance representing the estimated cost of certain customer incentives incurred but not yet realized as of the end of each respective year, which is recorded as an offset against customer accounts receivable, and is included under Accounts receivable, net in the accompanying consolidated balance sheets. The customer incentives and allowances were $ 4.1 million and $ 5.6 million as of December 31, 2023 and 2022 , respectively. Revenue recognition The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred either upon shipment or delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, net of accruals for customer incentives and allowances. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers. Customer incentives and allowances are estimated based on agreed upon terms as well as historical trends and current economic and market conditions, while cash discounts are based on trade terms and require management judgment with respect to estimating customer participation and performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. The Company accounts for costs associated with shipping and handling activities that occur after the transfer of control as a fulfillment activity, instead of a separate performance obligation. The Company excludes from the transaction price those amounts which relate to sales and other taxes that are assessed by governmental authorities and that are imposed and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. Cost of goods sold Cost of goods sold consists of all costs to acquire and manufacture the Company’s products including the cost of the various ingredients, packaging, in-bound freight and logistics, and third-party production fees—which are typically incurred at a flat rate per case produced—and all other costs incurred to bring the product to salable condition. The Company’s cost of goods sold is generally subject to price fluctuations in the marketplace for aluminum, logistics costs such as fuel, inbound freight, bottling tolling fees, as well as shifting product mix. Selling and marketing expenses Selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss include warehousing and distribution costs, shipping and handling costs, advertising, and marketing costs, which generally are expensed as incurred. Warehousing and distribution costs include storage, transfer, repacking and handling fees, and out-bound freight and delivery charges. The Company has elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss. Such costs amounted to approximately $ 14.2 million and $ 15.4 million for the years ended December 31, 2023 and 2022, respectively. The Company expenses sales and marketing costs as incurred. Advertising and marketing expenses represent costs associated with the promotion of the Zevia® brand and products as outlined in ASC Topic 730-25, Other Expenses – Advertising Costs , such as those for digital and other forms of advertising. Advertising and marketing expenses amounted to approximately $ 10.5 million and $ 11.1 million for the years ended December 31, 2023 and 2022 , respectively. General and administrative expenses General and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss include personnel-related expenses, including salaries, bonuses, and benefits, technology expenses, professional fees, facility costs, including insurance, utilities and rent relating to our headquarters, and overhead costs. These costs are expensed as incurred. Equity-based compensation expense The Company records equity-based compensation expense for employees and nonemployees under the provisions of ASC Topic 718, Compensation—Stock compensation (“ASC 718”), using a Black-Scholes-Merton option pricing model to calculate the fair value of stock options by date granted. The determination of the grant date fair value of stock options issued is affected by a number of variables, including the fair value of the Company’s common stock, the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and the expected dividend yield of the Company’s common stock. The Company derived its expected volatility for grants issued prior to July 21, 2023 (which is the two-year anniversary of the Company’s IPO) based on the average historical volatilities of several peer public companies over a period equivalent to the expected term of the awards, and its expected volatility for grants issued subsequent to July 21, 2023 based on historical volatility of the Company’s stock. The Company estimates the expected term based on the simplified method prescribed by guidance provided by the Securities and Exchange Commission. This decision was based on the lack of relevant historical data due to the Company’s limited experience for the Company’s common stock. The risk-free interest rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. Expected dividend yield is 0.0 % as the Company has not paid and does not anticipate paying dividends on its common stock. The fair value of stock options is recognized as expense on a straight-line basis over the requisite service period, which is typically four years. Equity-based compensation cost for restricted stock awards is measured based on the fair market value of the Company’s common stock at the date of grant and is recognized as expense over the requisite service period, which is the vesting period on a straight-line basis. Forfeitures are recognized as incurred. Depreciation and Amortization Depreciation is primarily related to building and related improvements, computer equipment, quality control and marketing equipment, and leasehold improvements. Intangible assets subject to amortization consist of customer relationships and software applications. Non-amortizable intangible assets consist of trademarks, which represent the Company’s exclusive ownership of the Zevia® brand used in connection with the manufacturing, marketing, and distribution of its beverages. The Company also owns several other trademarks in both the U.S. and in foreign countries. Foreign currency transactions The functional currency of the Company is the U.S. dollar. The Company sells and distributes its products to Canadian customers, who are invoiced and remit payment in Canadian dollars. All Canadian dollar transactions are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for net sales and expenses. Foreign currency transaction losses for the years ended December 31, 2023 and 2022 amounted to approximately $ 0.0 million and $ 0.2 million, respectively, and are included under other income, net in the accompanying consolidated statements of operations and comprehensive loss. Income Taxes The Company is the managing member of Zevia LLC and, as a result, consolidates the financial results of Zevia LLC in the consolidated financial statements. Zevia LLC is a pass-through entity for U.S. federal and most applicable state and local income tax purposes. As an entity classified as a partnership for tax purposes, Zevia LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Zevia LLC is passed through to its members, including the Company. The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on the Company’s economic interest in Zevia LLC, which was 75.8 % and 68.7 % as of December 31, 2023 and 2022, respectively. Subsequent changes in economic ownership in Zevia LLC of the Company can occur as Zevia LLC holders may convert their shares of Class B common stock into an equivalent number of shares of Class A common stock with income (loss) allocated to the Company based on the economic interest applicable during each reporting period. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and deferred tax liabilities (“DTAs” and “DTLs,” respectively) for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If we determine that we would be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize both accrued interest and penalties, when appropriate, in provision for income taxes in the accompanying consolidated statements of operations and comprehensive loss. Recent accounting pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recently Issued Accounting Pronouncements – Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU provides for a new impairment model that requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for private companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. The Company adopted ASU No. 2016-13 as of January 1, 2023. The adoption of ASU No. 2016-13 did not have a significant impact on the Company’s financial statements. In April 2021, the FASB issued ASU No. 2021-04, which included Topic 260, Earnings Per Share and Topic 718, Compensation - Stock Compensation . This guidance clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options due to a lack of explicit guidance in the FASB Codification. This ASU is effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company adopted ASU 2021-04 as of January 1, 2022. The adoption of ASU 2021-04 did not have a significant impact on the Company’s financial statements as the Company does not have freestanding equity-classified written call options. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes . This ASU improves areas of U.S. GAAP and reduces cost and complexity while maintaining usefulness. The main provisions remove certain exceptions, including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the amendments simplify income tax accounting in the areas such as income based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This ASU is effective for private companies for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. The Company adopted ASU 2019-12 as of January 1, 2022. The adoption of ASU 2019-12 did not have a significant impact on the Company’s financial statements. Recently Issued Accounting Pronouncements – Not Yet Adopted In November 2023, the FASB issues ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU requires entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance. In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures . The guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The ASU is effective for private companies for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of adopting this guidance while early adoption is permitted. Any other recently issued accounting pronouncements are neither relevant, nor expected to have a material impact on the Company’s financial statements. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 3. REVENUES Disaggregation of Revenue The Company’s products are distributed and sold principally across the U.S. and Canada through a diverse network of major retailers, including: grocery stores, natural products stores, specialty outlets, and warehouse clubs; and through online/e-commerce channels. The following table disaggregates the Company’s sales by channel: Year Ended December 31, (in thousands) 2023 2022 Retail sales $ 148,299 $ 145,041 Online/e-commerce 18,125 18,140 Net sales $ 166,424 $ 163,181 The following table disaggregates the Company’s sales by geographic location of the respective customers: Year Ended December 31, (in thousands) 2023 2022 U.S. $ 149,466 $ 145,180 Canada 16,958 18,001 Net sales $ 166,424 $ 163,181 Contract liabilities The Company did no t have any material unsatisfied performance obligations as of December 31, 2023 and December 31, 2022 , respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. INVENTORIES Inventories consist of the following as of: (in thousands) December 31, 2023 December 31, 2022 Raw materials $ 4,714 $ 7,527 Finished goods 29,836 20,049 Inventories $ 34,550 $ 27,576 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 5. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following as of: (in thousands) December 31, 2023 December 31, 2022 Land $ — $ 336 Leasehold improvements 1,167 463 Computer equipment and software 677 796 Furniture and equipment 785 544 Vehicles — 197 Quality control and marketing equipment 1,782 1,635 Buildings and improvements — 1,610 Assets not yet placed in service 101 1,128 4,512 6,709 Less accumulated depreciation ( 2,403 ) ( 2,068 ) Property and equipment, net $ 2,109 $ 4,641 For the year ended December 31, 2023 and 2022, depreciation expense, including the amortization of leasehold improvements, amounted to approximately $ 1.0 million and $ 0.7 million, respectively. These amounts are included under depreciation and amortization in the accompanying consolidated statements of operations and comprehensive loss. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets, Net | 6. INTANGIBLE ASSETS, NET The following table provides information pertaining to the Company’s intangible assets as of: December 31, 2023 (in thousands) Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Software 1.4 $ 1,164 $ ( 978 ) $ 186 Customer relationships 1.7 3,007 ( 2,670 ) 337 4,171 ( 3,648 ) 523 Trademarks N/A 3,000 — 3,000 Intangible assets, net $ 7,171 $ ( 3,648 ) $ 3,523 December 31, 2022 (in thousands) Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Software 2.0 $ 2,277 $ ( 1,429 ) $ 848 Customer relationships 2.7 3,007 ( 2,470 ) 537 5,284 ( 3,899 ) 1,385 Trademarks N/A 3,000 — 3,000 Intangible assets, net $ 8,284 $ ( 3,899 ) $ 4,385 For the years ended December 31, 2023 and 2022, total amortization expense amounted to $ 0.6 million and $ 0.7 million, respectively, including $ 0.4 million and $ 0.4 million, respectively, of amortization expense related to software. No impairment losses have been recorded on any of the Company’s intangible assets for the years ended December 31, 2023 and 2022. Amortization expense for intangible assets with definite lives is expected to be as follows: (in thousands) 2024 346 2025 170 2026 7 Expected amortization expense for intangible assets with definite lives $ 523 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | 7. DEBT ABL Credit Facility On February 22, 2022, Zevia LLC (the “Borrower”) obtained a revolving credit facility (the “Secured Revolving Line of Credit”) by entering into a Loan and Security Agreement with Bank of America, N.A. (the “Loan and Security Agreement”). The Borrower may draw funds under the Secured Revolving Line of Credit up to an amount not to exceed the lesser of (i) a $ 20 million revolving commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $ 2 million of the Secured Revolving Line of Credit may be used for letter of credit issuances and the Borrower has the option to increase the commitment under the Secured Revolving Line of Credit by up to $ 10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. As of December 31, 2023, no amounts were drawn under the Secured Revolving Line of Credit. The Secured Revolving Line of Credit is secured by a first priority security interest in substantially all of the Company’s assets. Loans under the Secured Revolving Line of Credit bear interest based on either, at the Borrower’s option, the Bloomberg Short-Term Bank Yield Index rate plus an applicable margin between 1.50 % to 2.00 % or the Base Rate (customarily defined) plus an applicable margin between 0.50 % to 1.00 % with margin, in each case, determined by the average daily availability under the Secured Revolving Line of Credit. Under the Secured Revolving Line of Credit, the Borrower is required to comply with certain covenants, including, among others, by maintaining Liquidity (as defined therein) of $ 7 million at all times until December 31, 2023. Thereafter, the Borrower must satisfy a financial covenant requiring a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of any fiscal quarter following the occurrence of certain events of default that are continuing or any day on which availability under the Secured Revolving Line of Credit is less than the greater of $ 3 million and 17.5 % of the borrowing base, and must again satisfy such financial covenant as of the last day of each fiscal quarter thereafter until such time as there are no events of default and availability has been above such threshold for 30 consecutive days. As of December 31, 2023 , the Company was in compliance with its liquidity covenant. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | 8. LEASES The Company leases its office space which has a remaining lease term of 36 months. In January 2023, the Company entered into an amendment to the lease for its corporate headquarters offices to extend the term through December 31, 2026. The Company’s recognized lease costs include: Year Ended December 31, (in thousands) 2023 2022 Statements of Operations and Comprehensive Loss Operating lease cost (1) $ 734 $ 705 (1) Operating lease cost is recorded within general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. Year Ended December 31, 2023 2022 Weighted-average remaining lease term (months) 36.0 12.0 Weighted-average discount rate 7.6 % 7.6 % The Company’s variable lease costs and short-term lease costs were not material. The Company is obligated under a non-cancelable lease agreement providing for office space that expires on December 31, 2026. Maturities of lease payments under the non-cancelable lease were as follows: (in thousands) December 31, 2023 2024 $ 702 2025 729 2026 756 Total lease payments 2,187 Less imputed interest ( 239 ) Present value of lease liabilities $ 1,948 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. COMMITMENTS AND CONTINGENCIES Purchase commitments As of December 31, 2023, the Company does not have any material agreements with suppliers for the purchase of raw material with minimum purchase quantities. Our contract manufacturers are obligated to fulfill against purchase orders that are aligned with our forecast based on terms and conditions of the contract. Our forecasts provided to our contract manufacturers are short term in nature and at no time extend beyond a year. Legal proceedings The Company is involved from time to time in various claims, proceedings, and litigation. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable, and the amount of loss can be reasonably estimated. Management does not believe that the resolution of these matters would have a material impact on the consolidated financial statements. The Company has not identified any legal matters where it believes a material loss is reasonably possible. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | 10. EMPLOYEE BENEFIT PLAN Employees of the Company may participate in the Zevia LLC 401(k) Plan (the “Plan”), a defined contribution plan which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute from 1 % to 90 % of their pre-tax earnings, up to the statutory limit. Effective January 1, 2020, the Company began offering matching contributions to the Plan of up to 4 % of employee pre-tax earnings. For the years ended December 31, 2023 and 2022, the Company incurred contribution expense of $ 0.5 million and $ 0.5 million, respectively. |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Balance Sheet Components | 11. BALANCE SHEET COMPONENTS Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following as of: (in thousands) December 31, 2023 December 31, 2022 Accrued employee compensation benefits $ 1,526 $ 3,409 Accrued direct selling costs 1,113 1,593 Accrued customer paid bottle deposits 1,734 1,253 Accrued other 1,600 2,153 Total $ 5,973 $ 8,408 |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Employee Benefit Plan | 12. EQUITY-BASED COMPENSATION In July 2021, prior to the IPO, the Company adopted the Zevia PBC 2021 Equity Incentive Plan (the “2021 Plan”) under which the Company may grant options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock awards, other equity-based awards and incentive bonuses to employees, officers, non-employee directors and other service providers of the Company and its affiliates. The number of shares available for issuance under the 2021 Plan is increased on January 1 of each year beginning in 2022 and ending with a final increase in 2031 in an amount equal to the lesser of: (i) 5 % of the total number of shares of Class A common stock outstanding on the preceding December 31, or (ii) a smaller number of shares determined by the Company’s Board of Directors. In October and November 2021, the Company’s Board of Directors approved an amendment to its equity-based compensation plans for a certain number of employees to allow immediate vesting upon retirement of all outstanding RSUs and stock options, and to extend the exercisability of outstanding stock options up to five years after retirement, if they meet certain conditions, including a resignation after the holder has reached 50 years of age with at least 10 years of service to the Company, so long as the holder provides advance notice of his or her resignation to the Company’s Board of Directors . During the year ended December 31, 2022, three employees, retired from the Company and all outstanding awards and related stock compensation expense of $ 8.2 million, respectively, were accelerated through their retirement dates. As of December 31, 2023, the 2021 Plan provides for future grants and/or issuances of up to approximately 2.7 million shares of our common stock. Equity-based awards under our employee compensation plans are made with newly issued shares reserved for this purpose. Stock Options The Company uses a Black-Scholes valuation model to measure stock option expense as of each respective grant date. Generally, stock option grants vest ratably over four years, have a ten-year term, and have an exercise price equal to the fair market value as of the grant date. The fair value of stock options is amortized to expense over the vesting period. The fair value of stock option awards granted during the period was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: Year Ended December 31, 2023 2022 Stock price $ 2.90 $ 3.40 Exercise Price 2.90 3.93 Expected term (years) (1) 6.25 6.25 Expected volatility (2) 65.4 % 62.7 % Risk-Free interest rate (3) 3.6 % 2.7 % Dividend yield (4) 0.0 % 0.0 % (1) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (2) Expected volatility for grants issued prior to July 21, 2023 (which is the two-year anniversary of the Company’s IPO) is based on the historical volatility of a selected peer group over a period equivalent to the expected term, and expected volatility for grants issued subsequent to July 21, 2023 is based on historical volatility of the Company’s stock. (3) The risk-free interest rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. (4) We have assumed a dividend yield of zero as the Company has no plans to declare dividends in the foreseeable future. The weighted average grant date fair values for stock options granted for the years ended December 31, 2023 and 2022 was $ 1.81 and $ 1.97 , respectively. The following is a summary of stock option activity for the year ended December 31, 2023: Shares Weighted average exercise price Weighted average remaining life Intrinsic value (in thousands) Outstanding Balance as of January 1, 2023 2,769,754 $ 3.36 Granted 1,472,639 $ 2.90 Exercised ( 142,783 ) $ 0.19 Forfeited and expired ( 1,018,707 ) $ 3.00 Balance as of December 31, 2023 3,080,903 $ 3.40 7.7 $ 1,230 Exercisable at the end of the period 1,111,816 $ 2.67 5.6 $ 1,230 Vested and expected to vest 3,080,903 $ 3.40 7.7 $ 1,230 The total intrinsic values of options exercised during the year ended December 31, 2023 was $ 0.4 million. As of December 31, 2023, total unrecognized compensation expense related to unvested stock options was $ 3.3 million, which is expected to be recognized over a weighted-average period of 2.8 years. Restricted Phantom Units and Restricted Stock Units In July 2021, the Company’s Board of Directors approved an amendment to 2,422,644 restricted phantom units (the “Restricted Phantom Units”) previously granted by Zevia LLC (the “Phantom Unit Amendment”). The Phantom Unit Amendment changed the settlement feature of all outstanding Restricted Phantom Units so that following vesting, each award of Restricted Phantom Units would be settled in shares of Class A common stock having a fair market value equal to (i) the number of Restricted Phantom Units subject to such award, multiplied by (ii) the difference between the fair market value of a share of Class A common stock and the grant date price per Restricted Phantom Unit. All other terms related to the Restricted Phantom Units remained unchanged. As a result of the Phantom Unit Amendment, the estimated fair value of the modified awards was $ 33.9 million and was recognized as an expense over the vesting period through January 2022 subsequent to the performance condition being met. In March 2021, the Company’s Board of Directors also approved an amendment to the RSUs granted by Zevia LLC in August 2020 (“the RSU Amendment”). The RSU Amendment changed the vesting of such RSUs to occur as follows: (i) in the event of a change of control, the RSUs shall vest effective as of such change of control or (ii) in the event of an initial public offering as in the case of the IPO, the RSUs shall vest in equal monthly installments over a 36 -month period following the termination of any lockup period and shall be subject to the participant’s continued employment through such vesting date. Additionally, settlement shall occur within 30 days following the vesting of the RSUs and the participant shall be entitled to receive one share of Class A common stock for each vested RSU. All other terms remained unchanged. As a result of the RSU Amendment, the estimated fair value of the modified awards was $ 48.9 million and are being recognized as expense over the vesting period subsequent to the performance condition being met. As of December 31, 2023 , the remaining service period of the awards is 13 months. The following is a summary of RSU activity for the year ended December 31, 2023: Shares Weighted average grant date fair value Aggregate Intrinsic Value (in thousands) Balance unvested shares at January 1, 2023 2,560,590 $ 3.90 Granted 1,276,876 $ 3.08 Vested ( 1,103,160 ) $ 3.92 Forfeited ( 560,253 ) $ 2.84 Balance unvested at December 31, 2023 2,174,053 $ 3.68 $ 4,370 Expected to vest at December 31, 2023 2,174,053 $ 3.68 $ 4,370 As of December 31, 2023, total unrecognized compensation expense related to unvested RSUs was $ 5.2 million, which is expected to be recognized over a weighted-average period of 2.2 years. As of December 31, 2023 and 2022, there wer e 593,672 and 1,345,800 , respectively, of RSUs outstanding which vested in 2022 but are subjected to a deferred settlement provision over the next two years and therefore have not been released. As a result, these RSUs are not included in the table above. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | 13. SEGMENT REPORTING The Company has one operating and reporting segment, and operates as a product portfolio with a single business platform. In reaching this conclusion, management considered the definition of the Chief Operating Decision Maker (“CODM”); how the business is defined by the CODM; the nature of the information provided to the CODM and how that information is used to make operating decisions; and how resources and performance are assessed. The Company’s CODM is the Chief Executive Officer. The results of the operations are provided to and analyzed by the CODM at the Company’s level and accordingly, key resource decisions and assessment of performance are performed at the Company’s level. The Company has a common management team across all product lines and does not manage these products as individual businesses and as a result, cash flows are not distinct. |
Major Customers, Accounts Recei
Major Customers, Accounts Receivable and Vendor Concentration | 12 Months Ended |
Dec. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Major Customers, Accounts Receivable and Vendor Concentration | 14. MAJOR CUSTOMERS, ACCOUNTS RECEIVABLE AND VENDOR CONCENTRATION The table below represents the Company’s major customers that accounted for more than 10 % of total net sales for the periods: Year Ended December 31, 2023 2022 Customer A 13 % 15 % Customer B 10 % * The table below represents the Company’s customers that accounted for more than 10 % of total accounts receivable, net as of: December 31, 2023 December 31, 2022 Customer B 13 % * Customer D * 10 % Customer E * 17 % Customer H * 12 % Customer I 18 % * The table below represents raw material vendors that accounted for more than 10 % of all raw material purchases for the periods: Year Ended December 31, 2023 2022 Vendor A 21 % 27 % Vendor B 15 % 18 % Vendor C 12 % 13 % Vendor E 16 % * * Less than 10 % of total net sales, accounts receivable, net or raw material purchases in the respective periods. |
Loss Per Share
Loss Per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Loss Per Share | 15. LOSS PER SHARE Basic loss per share of Class A common stock is computed by dividing net loss attributable to the Company for the period by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted loss per share of Class A common stock is computed by dividing net loss attributable to the Company by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities and assumed conversion of Class B common stock into shares of Class A common stock on a one-for-one basis using the if-converted method. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Year Ended December 31, 2023 2022 (in thousands, except for share and per share amounts) Net loss per share: Numerator: Net loss and comprehensive loss $ ( 28,322 ) $ ( 47,647 ) Less: net loss attributable to non-controlling interests 6,828 13,790 Add: adjustment to reallocate net loss to controlling interest 800 (1) ( 1,298 ) (1) Net loss to Zevia PBC - basic $ ( 20,694 ) $ ( 35,155 ) Denominator: Weighted-average shares of Class A common stock outstanding – basic 49,898,784 41,739,061 Add: weighted average shares of vested and unreleased RSUs 719,974 (2) 1,730,322 (2) Weighted-average basic and diluted shares 50,618,758 43,469,383 Loss per share of Class A common stock – basic $ ( 0.41 ) $ ( 0.81 ) Loss per share of Class A common stock – diluted $ ( 0.41 ) $ ( 0.81 ) (1) The numerator for the basic and diluted loss per share is adjusted for additional losses being attributed to controlling interest as a result of the impacts of vested but unreleased RSUs being included in the denominator of the basic and diluted loss per share. (2) The denominator for basic and diluted loss per share includes vested and unreleased RSUs as there are no conditions that would prevent these RSUs from being issued in the future as shares of Class A common stock except for the mere passage of time. Zevia LLC Class B Common Units, stock options and RSUs were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. The following weighted average outstanding shares were excluded from the computation of diluted loss per share available to Class A common stockholders as they were anti-dilutive: Year Ended December 31, 2023 2022 Zevia LLC Class B Common Units exchangeable to shares of Class A common stock 20,891,366 26,023,476 Stock options 3,407,679 2,239,025 Restricted stock units 2,647,975 3,473,655 |
Income Taxes And Tax Receivable
Income Taxes And Tax Receivable Agreement | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes And Tax Receivable Agreement | 16. INCOME TAXES AND TAX RECEIVABLE AGREEMENT Income Taxes The Company is the managing member of Zevia LLC and as a result, consolidates the financial results of Zevia LLC in the consolidated financial statements of Zevia PBC. Zevia LLC is a pass-through entity for U.S. federal and most applicable state and local income tax purposes following the Reorganization Transactions effected in connection with the IPO. As an entity classified as a partnership for tax purposes, Zevia LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Zevia LLC is passed through to its members, including the Company. The Company is taxed as a C corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on Zevia PBC’s economic interest in Zevia LLC, which was 75.8 % and 68.7 % , as of December 31, 2023 and 2022, respectively. Income tax expense consists of the following: Year Ended December 31, 2023 2022 Current Federal $ — $ — State 52 65 Total 52 65 Deferred Federal — — State — — Total — — Provision for income taxes $ 52 $ 65 A reconciliation between the Company’s effective tax rate and the applicable U.S. federal statutory income tax rate is summarized as follows: Year Ended December 31, 2023 2022 Tax computed at federal statutory rate 21.0 % 21.0 % State tax, net of federal tax benefit 1.0 % 0.8 % Permanent items and other ( 0.6 )% ( 0.8 )% Non-controlling interests ( 8.7 )% ( 5.8 )% Equity-based compensation ( 3.5 )% ( 9.2 )% Valuation allowance ( 9.5 )% ( 6.1 )% Effective Tax Rate ( 0.3 )% ( 0.1 )% Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. The components that comprise the Company’s net DTAs s consist of the following: Year Ended December 31, 2023 2022 Deferred tax assets Investment in Zevia LLC $ 53,081 $ 53,427 Net operating loss carryforwards 20,488 15,970 Equity-based compensation 1,795 3,161 Other temporary differences 177 104 Total deferred tax assets 75,541 72,662 Valuation allowance for deferred tax assets ( 75,541 ) ( 72,662 ) Net deferred tax assets $ — $ — The Company records a valuation allowance to reduce DTAs to the amount the Company believes is more likely than not to be realized. The determination of recording or releasing tax valuation allowances is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate sufficient future taxable income against which benefits of the DTAs may or may not be realized. This assessment requires management to exercise significant judgment and make estimates with respect to the Company’s ability to generate revenue, gross profits, operating income and taxable income in future periods. The Company has recorded a full valuation allowance of $ 75.5 and $ 72.7 million as of December 31, 2023 and 2022, respectively, as it cannot conclude that it is more likely than not that the DTAs will be realized primarily due to the generation of pre-tax book losses from its inception. The following table summarizes the activity related to the Company’s valuation allowance: Year Ended December 31, 2023 2022 Balance, beginning of the year $ 72,662 $ 58,940 Increases related to current year positions 2,879 13,722 Balance, end of the year $ 75,541 $ 72,662 As of December 31, 2023, the Company has federal and state net operating loss carryforwards of $ 83.7 million and $ 55.4 million, respectively. The federal net operating loss can be carried forward indefinitely but are limited to 80 % utilization against future taxable income each year in accordance with the Tax Cuts and Jobs Act of 2017. The state net operating loss carryforwards will begin to expire in 2031 unless previously utilized by the Company. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes that it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes. As of December 31, 2023 , the Company has no uncertain tax positions and does no t expect a significant change in unrecognized tax benefits during the next 12 months. The Company is subject to taxation in the U.S. and various states. The Company is currently under the audit examinations by Texas for taxable years 2019-2021. As of December 31, 2023, the Company believes there will be no change of significance in its recorded tax positions and accordingly, no liability for uncertain tax benefits has been recorded. The Company is not currently under examination by any other taxing authorities. Due to the carryover of tax attributes, the statute of limitations is currently open for tax years since inception for Zevia PBC. On March 27, 2020, the U.S. enacted the CARES Act. The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the U.S. economy and fund a nationwide effort to curtail the effect of COVID-19. The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are amending certain provisions of the previously enacted Tax Cuts and Jobs Act related to depreciable property and net operating losses, deferral of payroll taxes, and the Paycheck Protection program. At December 31, 2023 , the Company has no t booked any income tax provision or benefit for the impact for the CARES Act due to its recent incorporation and the pass-through treatment of Zevia, LLC. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (“IRA”), which includes a 15 % book-income alternative minimum tax on corporations with average applicable financial statement income over $ 1 billion for any three year period ending with 2022 or later and a 1 % excise tax on the fair market value of stock that is repurchased by publicly-traded U.S. corporations or their specified affiliates. The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. The IRA also includes provisions intended to mitigate climate change by, among others, providing tax credit incentives for reductions in greenhouse gas emissions. This legislation did not have a material impact on the consolidated financial statements. Tax Receivable Agreement The Company expects to obtain an increase in its share of tax basis in the net assets of Zevia, LLC when Class B units are exchanged by the holders of Class B units for shares of Class A common stock of the Company and upon certain qualifying transactions. Each change in outstanding shares of Class A common stock of the Company results in a corresponding change in the Company’s ownership of Class A units of Zevia, LLC. The Company intends to treat any exchanges of Class B units as direct purchases of LLC interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that Zevia PBC would otherwise pay in the future to various taxing authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA” ) with continuing members of Zevia LLC and the Direct Zevia Stockholders. In the event that such parties exchange any or all of their Class B units for Class A common stock, the TRA requires the Company to make payments to such holders for 85 % of the tax benefits realized, or in some cases deemed to be realized, by the Company by such exchange as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in the Mergers (including net operating losses and the Blocker Companies’ allocable share of existing tax basis), (ii) increases in tax basis resulting from Zevia PBC’s acquisition of continuing member’s Zevia LLC units in connection with the IPO and in future exchanges and, (iii) tax basis increases attributable to payments made under the TRA (including tax benefits related to imputed interest). The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits. The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. The TRA payments are not conditioned upon any continued ownership interest in Zevia, LLC or the Company. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Company generates each year and the tax rate then applicable. The Company calculates the liability under the TRA using a complex TRA model, which includes an assumption related to the fair market value of assets. Payments are generally due under the TRA within a specified period of time following the filing of the Company’s tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of the Secured Overnight Financing Rate plus 300 basis points from the due date (without extensions) of such tax return. The TRA provides that if (i) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur; (ii) there is a material uncured breach of any obligations under the TRA; or (iii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company’s obligations, or the Company’s successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any Class B units that have not been exchanged are deemed exchanged for the fair market value of the Company’s Class A common stock at the time of termination. As of December 31, 2023, the Company has concluded, based on applicable accounting standards, that it was more likely than not that its DTAs subject to the TRA would not be realized; therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such DTAs. The TRA liability that would be recognized if the associated tax benefits were determined to be fully realizable totaled $ 56.2 million and $ 55.8 million at December 31, 2023 and 2022, respectively. The increase in the TRA liability is primarily related to Class B to Class A exchanges during the year ended December 31, 2023. If utilization of the DTAs subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations. |
Unaudited Quarterly Information
Unaudited Quarterly Information | 12 Months Ended |
Dec. 31, 2023 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Information | 17. UNAUDITED QUARTERLY INFORMATION The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2023 (amounts may not sum due to rounding): (in thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 43,300 $ 42,241 $ 43,089 $ 37,794 Gross profit 20,105 19,692 19,572 15,389 (2) Loss from operations ( 3,251 ) ( 5,377 ) ( 11,420 ) (1) ( 8,895 ) (3) Loss before income taxes ( 2,911 ) ( 4,974 ) ( 11,255 ) (1) ( 9,130 ) (3) Net loss and comprehensive loss ( 2,912 ) ( 5,009 ) ( 11,250 ) (1) ( 9,151 ) (3) Net loss attributable to Zevia PBC ( 2,091 ) ( 3,931 ) ( 8,217 ) ( 7,255 ) Basic earnings per share ( 0.03 ) ( 0.08 ) ( 0.16 ) ( 0.14 ) Diluted earnings per share ( 0.04 ) ( 0.08 ) ( 0.16 ) ( 0.14 ) Weighted-average shares of Class A Common Stock - basic 49,372,874 50,094,096 50,754,470 52,220,804 Weighted-average shares of Class A Common Stock - diluted 72,250,338 50,094,096 50,754,470 52,220,804 (1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses. (2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2022 (amounts may not sum due to rounding): (in thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 38,034 $ 45,542 $ 44,239 $ 35,366 Gross profit 15,879 19,321 19,168 15,653 Loss from operations ( 17,555 ) ( 14,743 ) ( 9,221 ) ( 6,349 ) Loss before income taxes ( 17,473 ) ( 14,787 ) ( 9,195 ) ( 6,127 ) Net loss and comprehensive loss ( 17,485 ) ( 14,796 ) ( 9,196 ) ( 6,170 ) Net loss attributable to Zevia PBC ( 10,898 ) ( 11,090 ) ( 7,484 ) ( 4,385 ) Basic earnings per share ( 0.28 ) ( 0.27 ) ( 0.16 ) ( 0.09 ) Diluted earnings per share ( 0.28 ) ( 0.27 ) ( 0.16 ) ( 0.09 ) Weighted-average shares of Class A Common Stock - basic 38,371,713 42,051,987 45,938,507 47,368,849 Weighted-average shares of Class A Common Stock - diluted 38,371,713 42,051,987 45,938,507 47,368,849 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Basis of Presentation | Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP” ). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary, Zevia LLC, that it controls due to ownership of a majority equity interest. All intercompany transactions and balances have been eliminated in consolidation. The Company owns a majority economic interest in, and operates and controls all of the businesses and affairs of, Zevia LLC. Accordingly, the Company has prepared these consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation . On January 1, 2022, the Company and Zevia LLC entered into a service agreement to transfer the services of all employees of the Company to Zevia LLC. Under terms of the service agreement between the entities, the payroll costs of employees are borne by Zevia LLC while certain other non-payroll costs, such as those associated with stock compensation arrangements, remain with the Company. In addition, pursuant to the Thirteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC, dated as of July 21, 2021, Zevia LLC shall reimburse the Company for certain expenses for overhead, administrative, and other expenses, at the Company’s discretion. For the years ended December 31, 2023 and 2022 , it was determined that the majority of such costs will be retained by the Company, with certain costs directly attributable to Zevia LLC being borne by that entity. These costs impacted the amount of net loss reported by Zevia LLC and consequently impacted the amount allocated to noncontrolling interest. |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amount of net sales and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by the Company relate to: net sales and associated cost recognition; the useful lives assigned to and the recoverability of property and equipment; adjustments recorded for inventory obsolescence and adjustments made for net realizable value; the incremental borrowing rate for lease liabilities; allowance for doubtful accounts; the useful lives assigned to and the recoverability of intangible assets; realization of deferred tax assets; and the determination of the fair value of equity instruments, including restricted unit awards, and equity-based compensation awards. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of its assets and liabilities. At December 31, 2023 , the Company’s operations continued to be impacted by higher manufacturing, freight, and labor costs as a result of the short-term supply chain logistics challenges during 2023, which the Company does not expect to continue in 2024, as well as increased operating costs as a result of the global economy and political and economic uncertainties, which the Company expects to continue in 2024. The Company will continue to monitor the economic environment, including any impact from current and future global events, and their effects on its business and operations. |
Cash, cash equivalents and investments | Cash, cash equivalents and investments Cash and cash equivalents include cash and investments in short-term, highly liquid securities, with original maturities of three months or less. Investments with original maturities at the date of acquisition of more than three months are classified as short-term investments or long-term investments based on the remaining contractual maturity of the security at the reporting date. As of December 31, 2023 and 2022 , the Company did no t hold any investments. The Company maintains cash deposits with high credit quality financial institutions. The deposits with these financial institutions may exceed the federally insured limits; however, these deposits typically are redeemable upon demand. The Company has not experienced any loss because of these deposits and does not expect to incur any losses in the future. |
Fair value of financial instruments | Fair value of financial instruments Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions, and credit risk. The three-level hierarchy for disclosure of fair value measurements is as follows: • Level 1. Quoted prices in active markets for identical assets or liabilities. • Level 2. Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or market-corroborated inputs. • Level 3. Unobservable inputs for the asset or liability. The Company’s material financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their fair values at December 31, 2023 and 2022 due to the short period of time to maturity or repayment. As of December 31, 2023 and 2022, all cash and cash equivalents were considered Level 1. As of December 31, 2023 and 2022 , the Company did no t have any assets or liabilities measured on a recurring basis without observable market values that would require a high level of judgment to determine fair value (Level 3). The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. For the years ended December 31, 2023 and 2022 , there were no transfers between levels of the fair value hierarchy. |
Other comprehensive loss | Other comprehensive loss The nature of the Company’s operations does not give rise to consequential other comprehensive loss. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts Trade receivables are recorded at net realizable value, which includes an appropriate allowance for doubtful accounts. Credit is extended to customers based on an evaluation of their financial condition, credit rating, and trade references. The Company monitors exposure to credit losses and maintains an allowance for anticipated losses based on each customer’s credit condition and payment behavior. The Company’s accounts receivable balance is net of an allowance for doubtful accounts. The allowance for doubtful accounts was not material at December 31, 2023 and 2022 . Changes in the Allowance for Doubtful Accounts were as follows: Year Ended December 31, 2023 2022 Balance, beginning of the year $ — $ 10 Recovery of bad debt — ( 10 ) Balance, end of the year $ — $ — |
Inventories | Inventories Inventories consist of raw materials and finished goods. Raw materials include costs for the Company’s ingredients and packaging inventories. The costs of finished goods inventories include production fees from third-party manufacturers. Inventories are stated at the lower of average cost or net realizable value. The Company regularly reviews whether the net realizable value of its inventory is lower than its carrying value. Indicators that could result in inventory write downs include age of inventory, damaged inventory, slow moving products, and products at the end of their life cycles. While management believes that inventory is appropriately stated at the lower of average cost or net realizable value, judgment is involved in determining the net realizable value of inventory. |
Prepaid expenses and other current assets | Prepaid expenses Prepaid expenses represent amounts paid in advance for products or services to be delivered in the future and are included within prepaid expenses and other current assets in the accompanying consolidated balance sheets. Prepaid expenses are expensed as incurred and were $1.8 million and $2.3 million as of December 31, 2023 and 2022, respectively. |
Property and equipment, net | Property and equipment, net Property and equipment are recorded at cost. Additions, replacements, and leasehold improvements are capitalized, while maintenance and repairs that do not extend the useful life of an asset are expensed as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvement. When assets are retired or otherwise disposed, the cost and accumulated depreciation are removed from the respective accounts and any related gain or loss is recognized. Depreciation and amortization are computed using the following estimated useful lives of the assets: Asset Years Leasehold improvements Shorter of lease term or estimated useful life Computer equipment 3 Furniture and equipment 4 - 7 Vehicles 5 Quality control equipment 2 - 5 Buildings and improvements 7 - 30 The Company periodically reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In order to assess recoverability, the Company compares the estimated undiscounted future pre-tax cash flows from the use of the group of assets, as defined, to the carrying amount of such assets. Measurement of an impairment loss is based on the excess of the carrying amount of the group of assets over the long-lived asset’s fair value. The Company did no t recognize any impairment charges associated with long-lived assets during the years ended December 31, 2023 and 2022 . |
Leases | Leases The Company leases office space. Right of use (“ROU”) lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments. Both the ROU lease asset and liability are recognized as of the lease commencement date based on the present value of the lease payments over the lease term. The Company’s leases do not provide an implicit borrowing rate that can readily be determined. Therefore, the Company applies a discount rate based on the incremental borrowing rate, which is determined using the Company’s synthetic credit rating and other information available as of the lease commencement date. ROU lease assets also include any lease payments made before their contractual due dates and exclude any lease incentives. The Company’s lease agreements may include options to extend the lease term or to terminate the lease early. The Company includes options to extend or terminate leases upon determination of the ROU lease asset and liability when it is reasonably certain the Company will exercise these options. Operating lease expense attributable to lease payments is recognized on a straight-line basis over the lease term and is included in general, and administrative expense on the consolidated statements of operations and comprehensive loss. The Company has lease arrangements that include lease and non-lease components. The non-lease components in the arrangements are not significant when compared to the lease components. For all leases, the Company accounts for the lease and non-lease components as a single component. The Company evaluates ROU assets for impairment consistent under the impairment of long-lived assets policy. The Company had no material finance leases as of December 31, 2023 and 2022 . |
Intangible assets, net | Intangible assets, net Intangible assets subject to amortization consist of customer relationships, which were acquired and are amortized over their estimated useful life of 15 years and computer software costs which are amortized over their estimated useful life of three years . In accordance with Accounting Standard Codification ("ASC") Topic 350, Intangibles—Goodwill and Other , intangible assets with definite lives are treated as a long-lived asset and are evaluated for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. If impaired, the asset is written down to its estimated fair market value, which is generally measured by discounting future cash flows. Non-amortizable intangible assets consist of trademarks which represent the Company’s exclusive ownership of the Zevia® brand used in connection with the manufacture, marketing, and distribution of its carbonated beverages. The Company also owns several other trademarks in both the U.S. and in foreign countries. Intangible assets not subject to amortization are evaluated for impairment annually, or sooner if management believes such assets may be impaired. An impairment loss is recognized if the asset’s carrying amount exceeds its estimated fair market value. For the years ended December 31, 2023 and 2022 , no impairment losses were recorded. Certain external and internal computer software costs acquired for internal use are capitalized. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized costs are included within intangible assets, net. |
Debt issuance cost | Debt issuance cost Costs incurred in connection with securing a revolving line of credit agreement are capitalized. These costs are amortized over the term of the credit agreement. Debt issuance costs are included in Other non-current assets in the accompanying consolidated balance sheets. Net debt issuance costs totaled $ 0.2 million and $ 0.3 million as of December 31, 2023 and 2022 , respectively. |
Customer incentives and allowances | Customer incentives and allowances The Company offers its customers sales incentives that are designed to support the distribution of its products to consumers. These incentives and discounts include cash discounts, price allowances, volume-based rebates, product placement fees and certain other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance. These amounts are deducted from gross sales and are included under Net sales in the accompanying consolidated statements of operations and comprehensive loss. The Company maintains an allowance representing the estimated cost of certain customer incentives incurred but not yet realized as of the end of each respective year, which is recorded as an offset against customer accounts receivable, and is included under Accounts receivable, net in the accompanying consolidated balance sheets. The customer incentives and allowances were $ 4.1 million and $ 5.6 million as of December 31, 2023 and 2022 , respectively. |
Revenue recognition | Revenue recognition The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred either upon shipment or delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods, net of accruals for customer incentives and allowances. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers. Customer incentives and allowances are estimated based on agreed upon terms as well as historical trends and current economic and market conditions, while cash discounts are based on trade terms and require management judgment with respect to estimating customer participation and performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. The Company accounts for costs associated with shipping and handling activities that occur after the transfer of control as a fulfillment activity, instead of a separate performance obligation. The Company excludes from the transaction price those amounts which relate to sales and other taxes that are assessed by governmental authorities and that are imposed and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. |
Cost of goods sold | Cost of goods sold Cost of goods sold consists of all costs to acquire and manufacture the Company’s products including the cost of the various ingredients, packaging, in-bound freight and logistics, and third-party production fees—which are typically incurred at a flat rate per case produced—and all other costs incurred to bring the product to salable condition. The Company’s cost of goods sold is generally subject to price fluctuations in the marketplace for aluminum, logistics costs such as fuel, inbound freight, bottling tolling fees, as well as shifting product mix. |
Selling and marketing expenses | Selling and marketing expenses Selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss include warehousing and distribution costs, shipping and handling costs, advertising, and marketing costs, which generally are expensed as incurred. Warehousing and distribution costs include storage, transfer, repacking and handling fees, and out-bound freight and delivery charges. The Company has elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss. Such costs amounted to approximately $ 14.2 million and $ 15.4 million for the years ended December 31, 2023 and 2022, respectively. The Company expenses sales and marketing costs as incurred. Advertising and marketing expenses represent costs associated with the promotion of the Zevia® brand and products as outlined in ASC Topic 730-25, Other Expenses – Advertising Costs , such as those for digital and other forms of advertising. Advertising and marketing expenses amounted to approximately $ 10.5 million and $ 11.1 million for the years ended December 31, 2023 and 2022 , respectively. |
General and administrative expenses | General and administrative expenses General and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss include personnel-related expenses, including salaries, bonuses, and benefits, technology expenses, professional fees, facility costs, including insurance, utilities and rent relating to our headquarters, and overhead costs. These costs are expensed as incurred. |
Equity-based compensation expense | Equity-based compensation expense The Company records equity-based compensation expense for employees and nonemployees under the provisions of ASC Topic 718, Compensation—Stock compensation (“ASC 718”), using a Black-Scholes-Merton option pricing model to calculate the fair value of stock options by date granted. The determination of the grant date fair value of stock options issued is affected by a number of variables, including the fair value of the Company’s common stock, the expected common stock price volatility over the expected life of the options, the expected term of the stock option, risk-free interest rates, and the expected dividend yield of the Company’s common stock. The Company derived its expected volatility for grants issued prior to July 21, 2023 (which is the two-year anniversary of the Company’s IPO) based on the average historical volatilities of several peer public companies over a period equivalent to the expected term of the awards, and its expected volatility for grants issued subsequent to July 21, 2023 based on historical volatility of the Company’s stock. The Company estimates the expected term based on the simplified method prescribed by guidance provided by the Securities and Exchange Commission. This decision was based on the lack of relevant historical data due to the Company’s limited experience for the Company’s common stock. The risk-free interest rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. Expected dividend yield is 0.0 % as the Company has not paid and does not anticipate paying dividends on its common stock. The fair value of stock options is recognized as expense on a straight-line basis over the requisite service period, which is typically four years. Equity-based compensation cost for restricted stock awards is measured based on the fair market value of the Company’s common stock at the date of grant and is recognized as expense over the requisite service period, which is the vesting period on a straight-line basis. Forfeitures are recognized as incurred. |
Depreciation and Amortization | Depreciation and Amortization Depreciation is primarily related to building and related improvements, computer equipment, quality control and marketing equipment, and leasehold improvements. Intangible assets subject to amortization consist of customer relationships and software applications. Non-amortizable intangible assets consist of trademarks, which represent the Company’s exclusive ownership of the Zevia® brand used in connection with the manufacturing, marketing, and distribution of its beverages. The Company also owns several other trademarks in both the U.S. and in foreign countries. |
Foreign currency transactions | Foreign currency transactions The functional currency of the Company is the U.S. dollar. The Company sells and distributes its products to Canadian customers, who are invoiced and remit payment in Canadian dollars. All Canadian dollar transactions are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for net sales and expenses. Foreign currency transaction losses for the years ended December 31, 2023 and 2022 amounted to approximately $ 0.0 million and $ 0.2 million, respectively, and are included under other income, net in the accompanying consolidated statements of operations and comprehensive loss. |
Income Taxes | Income Taxes The Company is the managing member of Zevia LLC and, as a result, consolidates the financial results of Zevia LLC in the consolidated financial statements. Zevia LLC is a pass-through entity for U.S. federal and most applicable state and local income tax purposes. As an entity classified as a partnership for tax purposes, Zevia LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Zevia LLC is passed through to its members, including the Company. The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on the Company’s economic interest in Zevia LLC, which was 75.8 % and 68.7 % as of December 31, 2023 and 2022, respectively. Subsequent changes in economic ownership in Zevia LLC of the Company can occur as Zevia LLC holders may convert their shares of Class B common stock into an equivalent number of shares of Class A common stock with income (loss) allocated to the Company based on the economic interest applicable during each reporting period. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and deferred tax liabilities (“DTAs” and “DTLs,” respectively) for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If we determine that we would be able to realize our DTAs in the future in excess of their net recorded amount, we would make an adjustment to the DTA valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize both accrued interest and penalties, when appropriate, in provision for income taxes in the accompanying consolidated statements of operations and comprehensive loss. |
Recent accounting pronouncements | Recent accounting pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recently Issued Accounting Pronouncements – Recently Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU provides for a new impairment model that requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for private companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. The Company adopted ASU No. 2016-13 as of January 1, 2023. The adoption of ASU No. 2016-13 did not have a significant impact on the Company’s financial statements. In April 2021, the FASB issued ASU No. 2021-04, which included Topic 260, Earnings Per Share and Topic 718, Compensation - Stock Compensation . This guidance clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options due to a lack of explicit guidance in the FASB Codification. This ASU is effective for all entities for fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company adopted ASU 2021-04 as of January 1, 2022. The adoption of ASU 2021-04 did not have a significant impact on the Company’s financial statements as the Company does not have freestanding equity-classified written call options. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes . This ASU improves areas of U.S. GAAP and reduces cost and complexity while maintaining usefulness. The main provisions remove certain exceptions, including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the amendments simplify income tax accounting in the areas such as income based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This ASU is effective for private companies for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. The Company adopted ASU 2019-12 as of January 1, 2022. The adoption of ASU 2019-12 did not have a significant impact on the Company’s financial statements. Recently Issued Accounting Pronouncements – Not Yet Adopted In November 2023, the FASB issues ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU requires entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance. In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures . The guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The ASU is effective for private companies for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of adopting this guidance while early adoption is permitted. Any other recently issued accounting pronouncements are neither relevant, nor expected to have a material impact on the Company’s financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Changes in the Allowance for Doubtful Accounts | Changes in the Allowance for Doubtful Accounts were as follows: Year Ended December 31, 2023 2022 Balance, beginning of the year $ — $ 10 Recovery of bad debt — ( 10 ) Balance, end of the year $ — $ — |
Summary of estimated useful lives of the assets | Depreciation and amortization are computed using the following estimated useful lives of the assets: Asset Years Leasehold improvements Shorter of lease term or estimated useful life Computer equipment 3 Furniture and equipment 4 - 7 Vehicles 5 Quality control equipment 2 - 5 Buildings and improvements 7 - 30 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation of Revenue | Year Ended December 31, (in thousands) 2023 2022 Retail sales $ 148,299 $ 145,041 Online/e-commerce 18,125 18,140 Net sales $ 166,424 $ 163,181 The following table disaggregates the Company’s sales by geographic location of the respective customers: Year Ended December 31, (in thousands) 2023 2022 U.S. $ 149,466 $ 145,180 Canada 16,958 18,001 Net sales $ 166,424 $ 163,181 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consist of the following as of: (in thousands) December 31, 2023 December 31, 2022 Raw materials $ 4,714 $ 7,527 Finished goods 29,836 20,049 Inventories $ 34,550 $ 27,576 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment | Property and equipment consist of the following as of: (in thousands) December 31, 2023 December 31, 2022 Land $ — $ 336 Leasehold improvements 1,167 463 Computer equipment and software 677 796 Furniture and equipment 785 544 Vehicles — 197 Quality control and marketing equipment 1,782 1,635 Buildings and improvements — 1,610 Assets not yet placed in service 101 1,128 4,512 6,709 Less accumulated depreciation ( 2,403 ) ( 2,068 ) Property and equipment, net $ 2,109 $ 4,641 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Summary of Intangible Assets | The following table provides information pertaining to the Company’s intangible assets as of: December 31, 2023 (in thousands) Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Software 1.4 $ 1,164 $ ( 978 ) $ 186 Customer relationships 1.7 3,007 ( 2,670 ) 337 4,171 ( 3,648 ) 523 Trademarks N/A 3,000 — 3,000 Intangible assets, net $ 7,171 $ ( 3,648 ) $ 3,523 December 31, 2022 (in thousands) Weighted-Average Remaining Useful Life Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Software 2.0 $ 2,277 $ ( 1,429 ) $ 848 Customer relationships 2.7 3,007 ( 2,470 ) 537 5,284 ( 3,899 ) 1,385 Trademarks N/A 3,000 — 3,000 Intangible assets, net $ 8,284 $ ( 3,899 ) $ 4,385 |
Summary of Expected Amortization Expense for Intangible Assets with Definite Lives | Amortization expense for intangible assets with definite lives is expected to be as follows: (in thousands) 2024 346 2025 170 2026 7 Expected amortization expense for intangible assets with definite lives $ 523 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Summary of Lease Cost | In January 2023, the Company entered into an amendment to the lease for its corporate headquarters offices to extend the term through December 31, 2026. The Company’s recognized lease costs include: Year Ended December 31, (in thousands) 2023 2022 Statements of Operations and Comprehensive Loss Operating lease cost (1) $ 734 $ 705 (1) Operating lease cost is recorded within general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. Year Ended December 31, 2023 2022 Weighted-average remaining lease term (months) 36.0 12.0 Weighted-average discount rate 7.6 % 7.6 % |
Summary of Maturities of Lease Payments Under Non-Cancellable Leases | (in thousands) December 31, 2023 2024 $ 702 2025 729 2026 756 Total lease payments 2,187 Less imputed interest ( 239 ) Present value of lease liabilities $ 1,948 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following as of: (in thousands) December 31, 2023 December 31, 2022 Accrued employee compensation benefits $ 1,526 $ 3,409 Accrued direct selling costs 1,113 1,593 Accrued customer paid bottle deposits 1,734 1,253 Accrued other 1,600 2,153 Total $ 5,973 $ 8,408 |
Equity Based Compensation (Tabl
Equity Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule for Fair Value of Stock Options Granted Estimated on the Date of Grant Using the Black-Scholes Option | Year Ended December 31, 2023 2022 Stock price $ 2.90 $ 3.40 Exercise Price 2.90 3.93 Expected term (years) (1) 6.25 6.25 Expected volatility (2) 65.4 % 62.7 % Risk-Free interest rate (3) 3.6 % 2.7 % Dividend yield (4) 0.0 % 0.0 % (1) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (2) Expected volatility for grants issued prior to July 21, 2023 (which is the two-year anniversary of the Company’s IPO) is based on the historical volatility of a selected peer group over a period equivalent to the expected term, and expected volatility for grants issued subsequent to July 21, 2023 is based on historical volatility of the Company’s stock. (3) The risk-free interest rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. (4) We have assumed a dividend yield of zero as the Company has no plans to declare dividends in the foreseeable future. |
Summary of Stock Option Activity | year ended December 31, 2023: Shares Weighted average exercise price Weighted average remaining life Intrinsic value (in thousands) Outstanding Balance as of January 1, 2023 2,769,754 $ 3.36 Granted 1,472,639 $ 2.90 Exercised ( 142,783 ) $ 0.19 Forfeited and expired ( 1,018,707 ) $ 3.00 Balance as of December 31, 2023 3,080,903 $ 3.40 7.7 $ 1,230 Exercisable at the end of the period 1,111,816 $ 2.67 5.6 $ 1,230 Vested and expected to vest 3,080,903 $ 3.40 7.7 $ 1,230 The total intrinsic values of options exercised during the year ended December 31, 2023 was $ 0.4 million. |
Summary of Restricted Stock Unit Activity | year ended December 31, 2023: Shares Weighted average grant date fair value Aggregate Intrinsic Value (in thousands) Balance unvested shares at January 1, 2023 2,560,590 $ 3.90 Granted 1,276,876 $ 3.08 Vested ( 1,103,160 ) $ 3.92 Forfeited ( 560,253 ) $ 2.84 Balance unvested at December 31, 2023 2,174,053 $ 3.68 $ 4,370 Expected to vest at December 31, 2023 2,174,053 $ 3.68 $ 4,370 |
Major Customers, Accounts Rec_2
Major Customers, Accounts Receivable and Vendor Concentration (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | |
Concentration Risk [Line Items] | |
Summary Sales to Significant Customers | The table below represents the Company’s major customers that accounted for more than 10 % of total net sales for the periods: Year Ended December 31, 2023 2022 Customer A 13 % 15 % Customer B 10 % * |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |
Concentration Risk [Line Items] | |
Summary Sales to Significant Customers | The table below represents the Company’s customers that accounted for more than 10 % of total accounts receivable, net as of: December 31, 2023 December 31, 2022 Customer B 13 % * Customer D * 10 % Customer E * 17 % Customer H * 12 % Customer I 18 % * |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | |
Concentration Risk [Line Items] | |
Summary Sales to Significant Customers | The table below represents raw material vendors that accounted for more than 10 % of all raw material purchases for the periods: Year Ended December 31, 2023 2022 Vendor A 21 % 27 % Vendor B 15 % 18 % Vendor C 12 % 13 % Vendor E 16 % * * Less than 10 % of total net sales, accounts receivable, net or raw material purchases in the respective periods. |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Summary of Computation of Basic and Diluted Earnings per Share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Year Ended December 31, 2023 2022 (in thousands, except for share and per share amounts) Net loss per share: Numerator: Net loss and comprehensive loss $ ( 28,322 ) $ ( 47,647 ) Less: net loss attributable to non-controlling interests 6,828 13,790 Add: adjustment to reallocate net loss to controlling interest 800 (1) ( 1,298 ) (1) Net loss to Zevia PBC - basic $ ( 20,694 ) $ ( 35,155 ) Denominator: Weighted-average shares of Class A common stock outstanding – basic 49,898,784 41,739,061 Add: weighted average shares of vested and unreleased RSUs 719,974 (2) 1,730,322 (2) Weighted-average basic and diluted shares 50,618,758 43,469,383 Loss per share of Class A common stock – basic $ ( 0.41 ) $ ( 0.81 ) Loss per share of Class A common stock – diluted $ ( 0.41 ) $ ( 0.81 ) (1) The numerator for the basic and diluted loss per share is adjusted for additional losses being attributed to controlling interest as a result of the impacts of vested but unreleased RSUs being included in the denominator of the basic and diluted loss per share. (2) The denominator for basic and diluted loss per share includes vested and unreleased RSUs as there are no conditions that would prevent these RSUs from being issued in the future as shares of Class A common stock except for the mere passage of time. |
Summary of Antidilutive Securities Excluded From Computation of Earnings Per Share | The following weighted average outstanding shares were excluded from the computation of diluted loss per share available to Class A common stockholders as they were anti-dilutive: Year Ended December 31, 2023 2022 Zevia LLC Class B Common Units exchangeable to shares of Class A common stock 20,891,366 26,023,476 Stock options 3,407,679 2,239,025 Restricted stock units 2,647,975 3,473,655 |
Income Taxes And Tax Receivab_2
Income Taxes And Tax Receivable Agreement (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense | Income tax expense consists of the following: Year Ended December 31, 2023 2022 Current Federal $ — $ — State 52 65 Total 52 65 Deferred Federal — — State — — Total — — Provision for income taxes $ 52 $ 65 |
Summary of Reconciliation Between the Effective Tax Rate and the Applicable U.S. Federal Statutory Income Tax Rate | A reconciliation between the Company’s effective tax rate and the applicable U.S. federal statutory income tax rate is summarized as follows: Year Ended December 31, 2023 2022 Tax computed at federal statutory rate 21.0 % 21.0 % State tax, net of federal tax benefit 1.0 % 0.8 % Permanent items and other ( 0.6 )% ( 0.8 )% Non-controlling interests ( 8.7 )% ( 5.8 )% Equity-based compensation ( 3.5 )% ( 9.2 )% Valuation allowance ( 9.5 )% ( 6.1 )% Effective Tax Rate ( 0.3 )% ( 0.1 )% |
Schedule of Components that Comprise Net Deferred Tax Assets | The components that comprise the Company’s net DTAs s consist of the following: Year Ended December 31, 2023 2022 Deferred tax assets Investment in Zevia LLC $ 53,081 $ 53,427 Net operating loss carryforwards 20,488 15,970 Equity-based compensation 1,795 3,161 Other temporary differences 177 104 Total deferred tax assets 75,541 72,662 Valuation allowance for deferred tax assets ( 75,541 ) ( 72,662 ) Net deferred tax assets $ — $ — |
Summary of Activity Related to Valuation Allowance | The following table summarizes the activity related to the Company’s valuation allowance: Year Ended December 31, 2023 2022 Balance, beginning of the year $ 72,662 $ 58,940 Increases related to current year positions 2,879 13,722 Balance, end of the year $ 75,541 $ 72,662 |
Unaudited Quarterly Informati_2
Unaudited Quarterly Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Unaudited Quarterly Financial Data | The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2023 (amounts may not sum due to rounding): (in thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 43,300 $ 42,241 $ 43,089 $ 37,794 Gross profit 20,105 19,692 19,572 15,389 (2) Loss from operations ( 3,251 ) ( 5,377 ) ( 11,420 ) (1) ( 8,895 ) (3) Loss before income taxes ( 2,911 ) ( 4,974 ) ( 11,255 ) (1) ( 9,130 ) (3) Net loss and comprehensive loss ( 2,912 ) ( 5,009 ) ( 11,250 ) (1) ( 9,151 ) (3) Net loss attributable to Zevia PBC ( 2,091 ) ( 3,931 ) ( 8,217 ) ( 7,255 ) Basic earnings per share ( 0.03 ) ( 0.08 ) ( 0.16 ) ( 0.14 ) Diluted earnings per share ( 0.04 ) ( 0.08 ) ( 0.16 ) ( 0.14 ) Weighted-average shares of Class A Common Stock - basic 49,372,874 50,094,096 50,754,470 52,220,804 Weighted-average shares of Class A Common Stock - diluted 72,250,338 50,094,096 50,754,470 52,220,804 (1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses. (2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2022 (amounts may not sum due to rounding): (in thousands, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Net sales $ 38,034 $ 45,542 $ 44,239 $ 35,366 Gross profit 15,879 19,321 19,168 15,653 Loss from operations ( 17,555 ) ( 14,743 ) ( 9,221 ) ( 6,349 ) Loss before income taxes ( 17,473 ) ( 14,787 ) ( 9,195 ) ( 6,127 ) Net loss and comprehensive loss ( 17,485 ) ( 14,796 ) ( 9,196 ) ( 6,170 ) Net loss attributable to Zevia PBC ( 10,898 ) ( 11,090 ) ( 7,484 ) ( 4,385 ) Basic earnings per share ( 0.28 ) ( 0.27 ) ( 0.16 ) ( 0.09 ) Diluted earnings per share ( 0.28 ) ( 0.27 ) ( 0.16 ) ( 0.09 ) Weighted-average shares of Class A Common Stock - basic 38,371,713 42,051,987 45,938,507 47,368,849 Weighted-average shares of Class A Common Stock - diluted 38,371,713 42,051,987 45,938,507 47,368,849 |
Description of Business - Addit
Description of Business - Additional Information (Detail) - ZEVIA PBC [Member] - IPO [Member] - Common Class A [Member] | Jul. 21, 2021 $ / shares shares |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Stock issued during period shares new issues | shares | 10,700,000 |
Sale of stock, price per share | $ / shares | $ 14 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Investments | $ 0 | $ 0 | |
Impairment charges | 0 | 0 | |
Net debt issuance cost | 200,000 | 300,000 | |
Customer incentives and allowances | 4,100,000 | 5,600,000 | |
Cost and expenses | 14,200,000 | 15,400,000 | |
Foreign currency transaction (losses) gains | 0 | 200,000 | |
Marketing and advertising expense | 10,500,000 | 11,100,000 | |
Impairment charges | 0 | 0 | |
Fair value Transfer | $ 0 | 0 | |
Dividend yield | [1] | 0% | |
Customer Relationships [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful lives | 15 years | ||
Computer software [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Useful lives | 3 years | ||
Fair value measurements recurring member | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fair value net asset liability | $ 0 | $ 0 | |
Zevia L L C [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Percentage of ownership and economic interest held by parent | 75.80% | 68.70% | |
[1] (4) We have assumed a dividend yield of zero as the Company has no plans to declare dividends in the foreseeable future. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Changes in the Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Balance, beginning of the year | $ 0 | $ 10 |
Recovery of bad debt | 0 | (10) |
Balance, end of the year | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of estimated useful lives of the assets (Details) | Dec. 31, 2023 |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | us-gaap:UsefulLifeTermOfLeaseMember |
Computer Equipment and Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 3 years |
Furniture and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 7 years |
Furniture and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 4 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 5 years |
Quality Control Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 5 years |
Quality Control Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 2 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 30 years |
Buildings and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated Useful Life (In Years) | 7 years |
Revenues - Summary of Disaggreg
Revenues - Summary of Disaggregation of Revenue (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 166,424 | $ 163,181 |
Retail sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 148,299 | 145,041 |
Online/e-commerce [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 18,125 | 18,140 |
U.S. [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 149,466 | 145,180 |
Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 16,958 | $ 18,001 |
Revenues - Additional Informati
Revenues - Additional Information (Detail) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Revenue, remaining performance obligation, amount | $ 0 | $ 0 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,714 | $ 7,527 |
Finished goods | 29,836 | 20,049 |
Inventories | $ 34,550 | $ 27,576 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 4,512 | $ 6,709 |
Less accumulated depreciation | (2,403) | (2,068) |
Property and equipment, net | 2,109 | 4,641 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 0 | 336 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 1,167 | 463 |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 677 | 796 |
Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 785 | 544 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 0 | 197 |
Quality Control and Marketing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 1,782 | 1,635 |
Buildings and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 0 | 1,610 |
Assets not yet Placed in Service [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 101 | $ 1,128 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 1 | $ 0.7 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Schedule Of Intangible Assets [Line Items] | ||
Finite-Lived intangible assets, gross | $ 4,171 | $ 5,284 |
Accumulated amortization | (3,648) | (3,899) |
Finite-Lived Intangible Assets, Net, Total | 523 | 1,385 |
Intangible assets, net | 3,523 | 4,385 |
Intangible assets, net | 7,171 | 8,284 |
Trademarks [Member] | ||
Schedule Of Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, excluding goodwill | $ 3,000 | $ 3,000 |
Software [Member] | ||
Schedule Of Intangible Assets [Line Items] | ||
Weighted-Average Remaining Useful Life | 1 year 4 months 24 days | 2 years |
Finite-Lived intangible assets, gross | $ 1,164 | $ 2,277 |
Accumulated amortization | (978) | (1,429) |
Finite-Lived Intangible Assets, Net, Total | $ 186 | $ 848 |
Customer Relationships [Member] | ||
Schedule Of Intangible Assets [Line Items] | ||
Weighted-Average Remaining Useful Life | 1 year 8 months 12 days | 2 years 8 months 12 days |
Finite-Lived intangible assets, gross | $ 3,007 | $ 3,007 |
Accumulated amortization | (2,670) | (2,470) |
Finite-Lived Intangible Assets, Net, Total | $ 337 | $ 537 |
Intangible Assets, Net - Summ_2
Intangible Assets, Net - Summary of Expected Amortization Expense for Intangible Assets with Definite Lives (Detail) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
2024 | $ 346 | |
2025 | 170 | |
2026 | 7 | |
Finite-Lived Intangible Assets, Net, Total | $ 523 | $ 1,385 |
Intangible Assets, Net - Additi
Intangible Assets, Net - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Schedule Of Intangible Assets [Line Items] | ||
Amortization expense | $ 600,000 | $ 700,000 |
Impairment losses on intangible assets | 0 | 0 |
Software [Member] | ||
Schedule Of Intangible Assets [Line Items] | ||
Amortization expense | $ 400,000 | $ 400,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Millions | Feb. 22, 2022 USD ($) |
Line of Credit Facility [Line Items] | |
Fixed Charge Coverage Ratio | Thereafter, the Borrower must satisfy a financial covenant requiring a minimum fixed charge coverage ratio of 1.00 to 1.00 |
Loan and Security Agreement [Member] | Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Applicable Margin | 1.50% |
Loan and Security Agreement [Member] | Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Applicable Margin | 2% |
Secured Revolving Line of Credit [Member] | |
Line of Credit Facility [Line Items] | |
Aggregate Principal Amount | $ 20 |
Amount of line of credit use for letter of credit issuances | 2 |
Commitment of secured line of credit | 10 |
Liquidity commitment | 7 |
Borrowing base secured revolving line of credit | $ 3 |
Borrowing Base | 17.50% |
Secured Revolving Line of Credit [Member] | Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Applicable Margin | 0.50% |
Secured Revolving Line of Credit [Member] | Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Applicable Margin | 1% |
Leases - Summary of Lease Costs
Leases - Summary of Lease Costs As Follows (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | ||
Statements of Operations and Comprehensive Loss | |||
Operating lease cost | [1] | $ 734 | $ 705 |
Other Information | |||
Weighted-average remaining lease term (months) | 36 months | 12 months | |
Weighted-average discount rate | 7.60% | 7.60% | |
[1] Operating lease cost is recorded within general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. |
Leases - Summary of Maturities
Leases - Summary of Maturities of Lease Payments Under Non Cancellable Leases Were As Follows (Detail) $ in Thousands | Dec. 31, 2023 USD ($) |
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract] | |
2024 | $ 702 |
2025 | 729 |
2026 | 756 |
Total lease payments | 2,187 |
Less Imputed Interest | (239) |
Present value of lease liabilities | $ 1,948 |
Employee Benefit Plan-Additiona
Employee Benefit Plan-Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined contribution plan, employer matching contribution, percent | 4% | |
Contribution expense | $ 0.5 | $ 0.5 |
Maximum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Define contribution plan, percentage of contribution by employees | 90% | |
Minimum [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Define contribution plan, percentage of contribution by employees | 1% |
Balance Sheet Components - Summ
Balance Sheet Components - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued employee compensation benefits | $ 1,526 | $ 3,409 |
Accrued direct selling costs | 1,113 | 1,593 |
Accrued customer paid bottle deposits | 1,734 | 1,253 |
Accrued other | 1,600 | 2,153 |
Total | $ 5,973 | $ 8,408 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Remaining service period of the awards | 13 months | |||
Aggregate intrinsic value | $ 0.4 | |||
Stock compensation expense | $ 8.2 | |||
Equity Incentive Plan 2021 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
The amount of common stock available under the plan for future grants and/or issuances | 2,700,000 | |||
Percentage of increase in shares available for issuance | 5% | |||
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Estimated weighted average period over which expense is expected to be recognized | 2 years 2 months 12 days | |||
Share-based Payment Arrangement, Plan Modification, Incremental Cost | $ 48.9 | |||
Number of Monthly Installments Granted Equally Following The Termination Of Lockup Period | 36 months | |||
Settlement period on vesting of RSUs | 30 days | |||
Amount of cost to be recognized for non-vested award under share-based payment arrangement | $ 5.2 | |||
RSUs outstanding | 2,174,053 | 2,560,590 | ||
Restricted Stock Units (RSUs) [Member] | Two Thousand Twenty Two 1 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs outstanding | 593,672 | 1,345,800 | ||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized unit compensation expense on unvested unit options | $ 3.3 | |||
Estimated weighted average period over which expense is expected to be recognized | 2 years 9 months 18 days | |||
Granted (in dollars per share) | $ 1.81 | $ 1.97 | ||
Restricted Phantom Class A Common Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of RSUs that were modified during the period | 2,422,644 | |||
Share-based Payment Arrangement, Plan Modification, Incremental Cost | $ 33.9 |
Equity Based Compensation - Fai
Equity Based Compensation - Fair Value of Stock Options Granted Estimated on the Date of Grant Using the Black-Scholes Option (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Stock price | $ 2.9 | ||
Exercise Price | $ 2.9 | ||
Expected term (years) | [1] | 6 years 3 months | |
Expected volatility | [2] | 65.40% | |
Risk-Free interest rate | [3] | 3.60% | |
Dividend yield | [4] | 0% | |
2022 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Stock price | $ 3.4 | ||
Exercise Price | $ 3.93 | ||
Expected term (years) | [1] | 6 years 3 months | |
Expected volatility | [2] | 62.70% | |
Risk-Free interest rate | [3] | 2.70% | |
Dividend yield | [4] | 0% | |
[1] (1) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (2) Expected volatility for grants issued prior to July 21, 2023 (which is the two-year anniversary of the Company’s IPO) is based on the historical volatility of a selected peer group over a period equivalent to the expected term, and expected volatility for grants issued subsequent to July 21, 2023 is based on historical volatility of the Company’s stock. (3) The risk-free interest rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. (4) We have assumed a dividend yield of zero as the Company has no plans to declare dividends in the foreseeable future. |
Equity Based Compensation - Sum
Equity Based Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
Share-Based Payment Arrangement [Abstract] | |
Outstanding Balance as of January 1, 2023 | shares | 2,769,754 |
Granted | shares | 1,472,639 |
Exercised | shares | (142,783) |
Forfeited and expired | shares | (1,018,707) |
Balance as of December 31,2021 | shares | 3,080,903 |
Exercisable at the end of the period | shares | 1,111,816 |
Vested and expected to vest | shares | 3,080,903 |
Weighted average exercise price, Beginning balance | $ / shares | $ 3.36 |
Weighted average exercise price, Granted | $ / shares | 2.90 |
Weighted average exercise price, Exercised | $ / shares | 0.19 |
Weighted average exercise price, Forfeited and cancelled | $ / shares | 3 |
Weighted average exercise price, Ending balance | $ / shares | 3.40 |
Weighted average exercise price, Exercisable | $ / shares | 2.67 |
Weighted average exercise price, Vested and expected to vest | $ / shares | $ 3.40 |
Weighted average remaining life Outstanding | 7 years 8 months 12 days |
Weighted average remaining life Exercisable | 5 years 7 months 6 days |
Weighted average remaining life Vested and expected to vest | 7 years 8 months 12 days |
Aggregate intrinsic value | $ | $ 1,230 |
Aggregate intrinsic value, Exercisable | $ | 1,230 |
Aggregate intrinsic value, Vested and expected to vest | $ | $ 1,230 |
Equity Based Compensation - S_2
Equity Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Balance nonvested shares at January 1, 2021 | shares | 2,560,590 |
Restricted stock units, Granted | shares | 1,276,876 |
Restricted stock units, Vested | shares | (1,103,160) |
Restricted stock units, Forfeited | shares | (560,253) |
Balance non vested at December 31, 2022 | shares | 2,174,053 |
Vested and expected to vest at December 31, 2022 | shares | 2,174,053 |
Weighted average grant date fair value, Beginning balance | $ / shares | $ 3.90 |
Weighted average grant date fair value, Granted | $ / shares | 3.08 |
Weighted average grant date fair value, Vested | $ / shares | 3.92 |
Weighted average grant date fair value, Forfeited | $ / shares | 2.84 |
Weighted average grant date fair value, Ending balance | $ / shares | 3.68 |
Weighted average grant date fair value, Vested and expected to vest at December 31, 2021 | $ / shares | $ 3.68 |
Aggregate intrinsic value, Non vested | $ | $ 4,370 |
Aggregate intrinsic value, Vested and expected to vest | $ | $ 4,370 |
Major Customers, Accounts Rec_3
Major Customers, Accounts Receivable and Vendor Concentration - Summary Sales to Significant Customers (Detail) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 13% | 15% |
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 13% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer D [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer E [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 17% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer H [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 12% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer I [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 18% | |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Vendor A [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 21% | 27% |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Vendor B [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 15% | 18% |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Vendor C [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 12% | 13% |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Vendor E [Member] | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 16% |
Major Customers, Accounts Rec_4
Major Customers, Accounts Receivable and Vendor Concentration - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2023 | |
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | Minimum [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 10% |
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member] | Customers [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 10% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customers [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 10% |
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member] | Customers [Member] | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 10% |
Loss Per Share - Summary of Com
Loss Per Share - Summary of Computation of Basic and Diluted Earnings per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | ||||
Basic net loss per share: | |||||||||||||
Net loss and comprehensive loss | $ (28,322) | $ (47,647) | |||||||||||
Loss attributable to noncontrolling interest | $ 6,828 | $ 13,790 | |||||||||||
Net Income (Loss) | $ (9,151) | [1] | $ (11,250) | [1] | $ (5,009) | $ (2,912) | $ (6,170) | $ (9,196) | $ (14,796) | $ (17,485) | |||
Weighted average common units outstanding, basic | 52,220,804 | 50,754,470 | 50,094,096 | 49,372,874 | 47,368,849 | 45,938,507 | 42,051,987 | 38,371,713 | 50,618,758 | 43,469,383 | |||
Weighted average common units outstanding, diluted | 52,220,804 | 50,754,470 | 50,094,096 | 72,250,338 | 47,368,849 | 45,938,507 | 42,051,987 | 38,371,713 | 50,618,758 | 43,469,383 | |||
Basic earnings per share | $ (0.14) | $ (0.16) | $ (0.08) | $ (0.03) | $ (0.09) | $ (0.16) | $ (0.27) | $ (0.28) | $ (0.41) | $ (0.81) | |||
Diluted earnings per share | $ (0.14) | $ (0.16) | $ (0.08) | $ (0.04) | $ (0.09) | $ (0.16) | $ (0.27) | $ (0.28) | $ (0.41) | $ (0.81) | |||
Common Class A [Member] | |||||||||||||
Basic net loss per share: | |||||||||||||
Net loss and comprehensive loss | $ (28,322) | $ (47,647) | |||||||||||
Loss attributable to noncontrolling interest | 6,828 | 13,790 | |||||||||||
Adjustment to reallocate net loss to controlling interest | [2] | 800 | (1,298) | ||||||||||
Net Income (Loss) | $ (20,694) | $ (35,155) | |||||||||||
Weighted average common units outstanding, basic | 49,898,784 | 41,739,061 | |||||||||||
Weighted average common units outstanding, diluted | 50,618,758 | 43,469,383 | |||||||||||
Basic earnings per share | $ (0.41) | $ (0.81) | |||||||||||
Diluted earnings per share | (0.41) | (0.81) | |||||||||||
Restricted Stock Units (RSUs) [Member] | Common Class A [Member] | |||||||||||||
Basic net loss per share: | |||||||||||||
Weighted average shares of vested and unreleased RSUs | [3] | $ 719,974 | $ 1,730,322 | ||||||||||
[1] (1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses. (2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (1) The numerator for the basic and diluted loss per share is adjusted for additional losses being attributed to controlling interest as a result of the impacts of vested but unreleased RSUs being included in the denominator of the basic and diluted loss per share. (2) The denominator for basic and diluted loss per share includes vested and unreleased RSUs as there are no conditions that would prevent these RSUs from being issued in the future as shares of Class A common stock except for the mere passage of time. |
Loss Per Share - Summary of Ant
Loss Per Share - Summary of Antidilutive Securities Excluded From Computation of Earnings Per Share (Detail) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Common Class A [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 20,891,366 | 26,023,476 |
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,407,679 | 2,239,025 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,647,975 | 3,473,655 |
Income Taxes And Tax Receivab_3
Income Taxes And Tax Receivable Agreement (Additional Information) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 16, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Contingency [Line Items] | |||
Valuation allowance | $ 75,500 | $ 72,700 | |
Deferred Tax Assets Liabilities Net | 0 | 0 | |
Unrecognized Tax Benefits, Ending Balance | 0 | ||
Provision for income taxes | 52 | $ 65 | |
Corporate alternative minimum tax | 15% | ||
Average applicable income limit under I R A | $ 1,000,000 | ||
Percent of excise tax on net stock repurchases | 1% | ||
COVID-19 | |||
Income Tax Contingency [Line Items] | |||
Provision for income taxes | 0 | ||
State | |||
Income Tax Contingency [Line Items] | |||
Operating Loss Carry forwards | 55,400 | ||
federal | |||
Income Tax Contingency [Line Items] | |||
Operating Loss Carry forwards | 83,700 | ||
Effective Income Tax Rates reconciliation Tax Cuts and Jobs Act Percent 1 | 80% | ||
Tax Receivable Agreement [Member] | |||
Income Tax Contingency [Line Items] | |||
Deferred Tax Assets Liabilities Net | $ 56,200 | $ 55,800 | |
Common Class B [Member] | Tax Receivable Agreement [Member] | |||
Income Tax Contingency [Line Items] | |||
Income tax benefit percentage attributable to exchange for class A common stock | 85% | ||
Zevia LLC [Member] | |||
Income Tax Contingency [Line Items] | |||
Economic interest percentage | 75.80% | 68.70% |
Income Taxes and Tax Receivab_4
Income Taxes and Tax Receivable Agreement - Schedule of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current | ||
Federal | $ 0 | $ 0 |
State | 52 | 65 |
Total | 52 | 65 |
Deferred | ||
Federal | 0 | 0 |
State | 0 | 0 |
Total | 0 | 0 |
Provision for income taxes | $ 52 | $ 65 |
Income Taxes and Tax Receivab_5
Income Taxes and Tax Receivable Agreement - Summary of Reconciliation Between the Effective Tax Rate and the Applicable U.S. Federal Statutory Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Tax computed at federal statutory rate | 21% | 21% |
State tax, net of federal tax benefit | 1% | 0.80% |
Permanent items and other | (0.60%) | (0.80%) |
Non-controlling interests | (8.70%) | (5.80%) |
Equity-based compensation | (3.50%) | (9.20%) |
Valuation allowance | (9.50%) | (6.10%) |
Effective Tax Rate | (0.30%) | (0.10%) |
Income Taxes and Tax Receivab_6
Income Taxes and Tax Receivable Agreement - Schedule of Components that Comprise Net Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | |||
Investment in Zevia LLC | $ 53,081 | $ 53,427 | |
Net operating loss carryforwards | 20,488 | 15,970 | |
Equity-based compensation | 1,795 | 3,161 | |
Other temporary differences | 177 | 104 | |
Total deferred tax assets | 75,541 | 72,662 | |
Valuation allowance for deferred tax assets | (75,541) | (72,662) | $ (58,940) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes and Tax Receivab_7
Income Taxes and Tax Receivable Agreement - Summary of Activity Related to Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Balance, beginning of the year | $ 72,662 | $ 58,940 |
Increases related to current year positions | 2,879 | 13,722 |
Balance, end of the year | $ 75,541 | $ 72,662 |
Unaudited Quarterly Financial I
Unaudited Quarterly Financial Information - Summary of Unaudited Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |||
Net sales | $ 37,794 | $ 43,089 | $ 42,241 | $ 43,300 | $ 35,366 | $ 44,239 | $ 45,542 | $ 38,034 | $ 166,424 | $ 163,181 | ||
Gross Profit | 15,389 | 19,572 | 19,692 | 20,105 | 15,653 | 19,168 | 19,321 | 15,879 | 74,758 | 70,021 | ||
Loss from operations | (8,895) | [1] | (11,420) | [1] | (5,377) | (3,251) | (6,349) | (9,221) | (14,743) | (17,555) | (28,943) | (47,868) |
Loss before income taxes | (9,130) | [1] | (11,255) | [1] | (4,974) | (2,911) | (6,127) | (9,195) | (14,787) | (17,473) | (28,270) | (47,582) |
Net loss and comprehensive loss | (9,151) | [1] | (11,250) | [1] | (5,009) | (2,912) | (6,170) | (9,196) | (14,796) | (17,485) | ||
Net loss attributable to Zevia PBC | $ (7,255) | $ (8,217) | $ (3,931) | $ (2,091) | $ (4,385) | $ (7,484) | $ (11,090) | $ (10,898) | $ (21,494) | $ (33,857) | ||
Basic earnings per share | $ (0.14) | $ (0.16) | $ (0.08) | $ (0.03) | $ (0.09) | $ (0.16) | $ (0.27) | $ (0.28) | $ (0.41) | $ (0.81) | ||
Diluted earnings per share | $ (0.14) | $ (0.16) | $ (0.08) | $ (0.04) | $ (0.09) | $ (0.16) | $ (0.27) | $ (0.28) | $ (0.41) | $ (0.81) | ||
Weighted average common units outstanding, basic | 52,220,804 | 50,754,470 | 50,094,096 | 49,372,874 | 47,368,849 | 45,938,507 | 42,051,987 | 38,371,713 | 50,618,758 | 43,469,383 | ||
Weighted average common units outstanding, diluted | 52,220,804 | 50,754,470 | 50,094,096 | 72,250,338 | 47,368,849 | 45,938,507 | 42,051,987 | 38,371,713 | 50,618,758 | 43,469,383 | ||
Common Class A [Member] | ||||||||||||
Net loss and comprehensive loss | $ (20,694) | $ (35,155) | ||||||||||
Basic earnings per share | $ (0.41) | $ (0.81) | ||||||||||
Diluted earnings per share | $ (0.41) | $ (0.81) | ||||||||||
Weighted average common units outstanding, basic | 49,898,784 | 41,739,061 | ||||||||||
Weighted average common units outstanding, diluted | 50,618,758 | 43,469,383 | ||||||||||
[1] (1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses. (2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. (3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes. |