JSDA - Earnings call 3 2023

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Operator

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the third quarter ended September 30, 2023.Before we begin, let me remind everyone of the company's safe harbor disclaimer. Certain portions of our comments today will concern future expectations, plans and prospects of the company that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.Forward-looking statements include all statements containing verbs such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects or targets and negatives of these words and similar words of expressions.Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our annual reports on Form 10-K, our quarterly report on Form 10-Q and our current report on Form 8-K.In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations of non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations.This call will be available for telco replay through November 16, starting at 7:30 p.m. tonight. ET turn will release via the of as I like replay in link company's Jones be to would press over today's well to Soda, also David webcast and the available provided website.Now the Knight. A President call CEO the as on

may You begin.

David Knight

of Thank in tuning the Soda. able today. to Jones integrate thank into Since the ago, joining for and you, months been everyone, the and I've confident I'm operations future Ranju you, in company X fully

We have in works some really exciting the share that stuff to wait with I can't all.

I Before to we velocity get to read did have out. channel channel. grocery unexpected the into more soda anticipated. bottled that, quarter.The was third And in Sales we challenging has important than our few foodservice wanted quarter a taken expected recap than headwinds most our within briefly longer

to innovation points establish around implemented strategic our across we've move continuing marketing. now a basis XXX pricing foundation initiatives areas of are to breakeven of bottom to the with of and of gross our are delivering my focus consistently towards of growth our margin allowed reporting while discussed goal costs supply with gross us both operational adjustments the improve to Mary expand and marching closer to chain, by on most Jones last coupled I to through behind onetime XX%, key efficiency However, us.As XX.X%.We margin line call, closer the X taste great our

some the dive like in are categories. But the setting to later exciting the surface detail. call. for those both to over results believe the Joe? in Joe financial our third of we scratch on these to greater initiatives I I'd We only stage into in discuss a And to coming opportunities growth begun have really pass few quarter quarters.I'll call during first of the firmly

Joe Culp

million in was velocity to decline along compared grocery the in channel a the Net last The third to third third and in of to Thank the XXXX. foodservice the sales quarter quarter due everyone. $X.X million company's you, good primarily afternoon, in of within channel, quarter decline the revenue year. David $X.X was compared the with decrease

increase manage $XXX,XXX of share the compared a line in insight with third G&A business cannabis-related in enhancements profit Jones million quarter marketing to per expansion decrease compared net This negative same sheet. quarter, improvement and our will a operating the $XXX,XXX Adjusted to negative and primarily into chain third to third in total the improved in as year-over-year. negative to with primarily to XX.X% in to XX.X% third a ago to $X.XX to success in in on approximately quarter $X.X to the balance was providing ago a driven to associated mostly seen.Gross generated of the bottom our negative ago for EBITDA of expenses.Now Jones Mary a Mary to compared improved XX% revenue $XXX,XXX lower in in gross per or moving loss brand.Net of startup improved more due which basis XXX the the give Our profit David This continued points increased pricing year represents same $X detail continued decrease more you adjustments.Operating million revenue supply in development brand the was costs of a period. lower be compared quarter. the the share in result year The our or our percentage loss costs, as has $XXX,XXX to quarter. the quarter. year prior $X.XX due by to expenses the quarter our million was better year costs $X.X along strategic increase

As I'll of $X.X XXXX. capital $X equivalents XXXX, $XX.X at David, into June the David, XXXX.Now at XXXX, cash the was XXXX, and overall who Working call compared million December to XX, throughout December we further the being September million cash were $X.X planned on insights provide to September million XX, over back XX, will XX, $X.X initiatives compared have you. progress and made to at XX, turn various million to back and organization. million growth

David Knight

Thanks, Joe. Hey,

jump starting sales performance. with it, our into Let's back

in I mentioned for a As business call, bottled start on headwind our quarters. been our grocery the has velocity this lower channel soda the at of sales core X past

customers market.While our in in to lost our of certainly contributed beverage towards solutions short-term major craft the soda believe are our further one and natural by still the discretionary to a indulgent core to looking return that to channel for disappointed specifically broader further impact.Although In solidify our the are consumer times. offers a for confident negative beverages. and I are strategy challenging quality growth these seeing return steps soda economic And within long-term craft cane enjoyable take position hiccups, and the addition, an these sodas we continue believe foodservice seen very Soda we during slowdown we consumers spending, will sugar higher environment that Jones a QX, we has legacy in during we treat

across few pursuing the are best-tasting important a to We the this, market.Given place. craft with accounts continuing growth key soda new incremental we be channel leaders recognized having to opportunities in and continue our adjustments make as in aggressively

$X combined sales key programs strong Ace implemented In seeing digital coupon Canada, Difficulty] as with season. dollar bottle trade to are initial national we orders during reduction improving progress national the execute enter a listing team holiday drive a sales.In variety [Technical Kroger unit. we We Costco holiday in both and The the secured to in Hardware with pack their XX-ounce feature to continues $X, price team steady with show. attended periods QX, and with at temporary

the the increase sold in XX with picked SF Naturals pallets Soda stores.On distribution and ranging Featherstone both We Spartan their through Jones expected distributors grocery the far over Jones up have branch. ]. to in some in Pender over the by QX, In JK chains. and West XXX welcome DSD come Group so [ as securing new to have have distributors and started new team with secured these Distributors XXX they and store distribution key Midwest, Coast, picked regional selling drive and direct We Northeast through also we distributors continues new more accounts up we QX.Sales we capability.In Amazon

and direct-to-consumer opportunities. now this We fourth our are of on report quarter growing

on placement Kona to a Kona in very we fast through with stock started is Group as soda For the Jones Root and approach.We Beer into is and and City are start SKU in now increasing product ranked test new on also [indiscernible]. highest-margin which of excited all recent X on has nationwide. now off it more to very at sodas partnership Kroger locations are offered notable sales number a sales fountain and X we offerings, stores progress and Hospitality. on this are foodservice, have with our our fixed making to our aggressive hand craft we now channel.We opportunities Within Kroger at remain with increase for expanded sales leader is being a top tactical the Grill X,XXX as Grill What bullish flavors One our with the our Lake brought Salt

Group core are we dining and One as expecting So with XXXX been build the products relationship success on Soda to our Group's in the now STK has selling more marketing Kona to to our soda with a we in Grill One is in far, steakhouses come into nationwide. like fine huge proving our both Jones QX and offering channel be success.Now efforts. I'd a dive high-margin the to be

we is of special our most release of that team chocolate flavors. flavor. I again we in announced orange with October, it the you the Jones park As the our know, at all knocked special pillars latest once out are proud believe release

release create sugar result green amazing fall things truth flows Jones on come this proud iconic and new only on soon.In feedback cane of flavor is this we to and also a to combo your a version be that to works QX, This enjoy sure and a we've very Jones for to company we and way classic already Lemonade, ability a Not start been that look carbonated day. MF caffeine in at with our [Technical called coffee Cola holiday celebrated its As This XX-ounce some winter first forward own, great holidays. year combination of flavors, have Energy that that Plus great with version as occasion be the in say soda.I'm special to memories. a of tested believe Jones beverage associated with sweetened XXXX is core the is third natural Difficulty] its the was has is and reminiscent we to tasty option from never cocktails favorite and natural of Soda be and that combo announcing of XXX had this Green a to sugar developed milligrams believe to holiday soda. gatherings. great has a special we for introduced caffeine our can Blueberry cane Grape Apple, a your We beans

We are about for moving the XXXX.Now and excited ahead early the opportunities operations. results to

XX%. increase our to continue of target profile margin our towards We gross

of more associated we've us to into the the driver to and shore clear manage that goods absolutely target goal.Our supply XXXX up I allow main the we it believe business to to be important pricing with and expenses ultimately fewer behind from an due a really is raw been to that in create While year-over-year cost our we freight continued and means also and this.This have SG&A make building insight for our we predictable Jones. because material foundation costs achieving decline manageable our will Mary good adjustments, have chain benefited to sold accordingly work want the done has distinction

have efficient margin capture healthy Mary without structure, ever more structure let's to believe allows bottom fund initiatives us overall in line. to going that an cost profile revenue expense a are much positioned we I appropriately and forward.With profitability having growth to We and place cut improving turn With we that a to that, our into confident growth our remain more Jones.

in believe incredibly I to home forefront the a the State of presence Washington end at and want legislation in for and our growth strongly state having state be address have long-term valuable quarter. our We excited our our cannabis incredibly expansion. that the launched the of First potential. cannabis at was will We're foremost, to that geographic

live are Ontario XXXX. So in launch province working we're Canada which market, in we are expected sodas.We the Washington of is hard large in with cannabis-infused month next QX of to for on this our core range our scheduled and Michigan

in grew shelves with our as on agreement of to to formats, are looking I and we our dispensaries all to our licensing we Mary we XXXX.Overall, and very strategic cannabis-related with signed to of meantime, year-over-year and QX. seeing sales plan with Canada our same in as across terms initiatives.In in Mary a the have perspective, about And seeing current $XXX,XXX Canada approximately for I In create Jones. XX% success. we We progress Tilray categories product are the new expand remain momentum partner revenue continuing excited forward from Jones believe are marketing

make We soda we've to little This also risen been and be scratch in cannabis-infused captured a Jones. quarter.Overall, from to to firmly one bottle. lightning expansion able Mary progress We with California. this accomplish impressed a already the a year ago we've to our in business what I started category believe top over brands of has continue in with continue

need we the scale to Now business.

our of to contributor has XXXX. expand member finally, through Mary we presence, on as Mary Jones. company.And a for as category that, beyond.With growth Ranju, and are the the sales to a will and the to team board listeners have operator our being front, of a develop the be that Jerry plans worked today. to foodservice, growth sales channel professional. marketing over growth is you. for He We're key confident be continue major Officer announce He Chief consummate pass the leading and to as see excited well we Goldner. we're key Growth as from to overall our call lead startups there Jones CPG on will to XXXX growth revenue and geographic the As growth if team, excited are in him convenience over has questions several Kellogg's to our started and Jerry our our with new we the initiatives highly I'll any teams

Operator

[Operator question investor. of Instructions] The from ], line first Keel [ comes a the Daniel private

Unknown Attendee

Q&A. live state a you to lot taking David, I'd that first I like That appreciate to us. means

Jones if curious was I is that alcohol, in Soda into exploring background space? your Given an entry

David Knight

commitment I'm and really communication your excited to to Soda. Look, the investors our appreciate really firstly, about Jones putting Yes. channel

XX the we I'm have.I excited and beverage in a resonates plays think brand at guy. it I'm really So category. over that that

to Jones plans as it's on is I instance, the that next for for yet Jones but consumers But our functional Mary should we previously has So the looking team a out Spiked for The are and beverages. really perfect beyond. firm play we an as play that radar do year opportunity.It's no think currently build next space scattered in. engage a innovation,

Unknown Attendee

appreciate Mary expansion I very you further into into in any Jones? insight excited share entry U.S. you the insight David. a), that, more Okay. Canada. And can about share state Could the into, for more here any

David Knight

We're excited too. absolutely. about Yes, Canada,

capabilities takes, doing costs our really As it a we the what opportunities of kind ground-up of it look through assessment what regulated what are. and markets, we're of

some I depending on moving into beyond but decision quite is also Michigan as and states Washington will that market.And now be beverages.So we're we're on really the well. evaluation. the for you're innovating next focusing we're about in of California a aware, would month, and this just in QX that costs expensive so first that team ground-up As in are kind launch excited say made we're launched is startup Canada the edibles as doing of the No year. yet, our

for of to markets Canada year. in, to in state-by-state currently, add go we're very that which strategy in then the states agenda So the next do deep a we'll is evaluation and expand the

Unknown Attendee

to makes That's you edibles into any exciting line into for additional to Would the That hear we're that like. be expectations time able edibles getting to Mary Okay. sense. clarify and a and Jones? getting anything

David Knight

would I Daniel. be out it, that our should edibles. by some fast-tracking roll QX, starting We're of think we to

fast-tracking We're as looking in the other Again, partners to alternatives. at QX about produce right? conversations candy each state we're excited the point well.So we're So and having. [indiscernible] it. basics, starting kind So trust it's doing we're finding some the as in a of me, we're and right the

So our now. it's investor We'll a target it right in call. up next firm

Unknown Attendee

have, question portfolio. Jones an the previously, hog noticed a time. with know had brand space, deal and Okay. Bob Great. get the to your mentioned company no is I Blair, last into then that And licensing sparkling interview company something who sorry I to leveraging Is flavor who's pursuing? I longer water the still

David Knight

testing we're about there. the excited in We're quarter We're that progress Absolutely. making. into to this ensure concept the have just that going we won succeed right to

We're Soda the can. water Jones brand, sparkling developing the X-calorie and we're So about confident which that excited partnership conversations a having. pretty we're strategic of we're we some

innovation probably So on for list of XXXX, agenda of yes, top our the 'XX. the that's

Unknown Attendee

and Fantastic. appreciate to the energy you're time I that company. the your bringing appreciate

David Knight

the is the as plans have exciting going getting yes, And that you. look things more forward. with these appreciate want forward really doing reason questions. we can to as live opening Daniel, we're up I The transparent be I that and mic to I that

company. and the you appreciate your team for and the support So

Operator

question [ Lazar the private investor. [Operator a of Pat from Instructions] comes line ], Next

Unknown Attendee

Lager once $XXX,XXX David, about in that Mary guys you Excited recent that a you this a most got there's that. obviously, -- to speak effort is ]. [ number right, quarter to we've Really taking sales, going been the the again. general well, last grow in Pat little told quarter-over-quarter about drop there's in XX% calls Jones if to from an $XXX,XXX been and appreciate in I've Can bit quarter? sales been

David Knight

Yes.

what Joe, can check reality do me just on is? a John's confirm the overlap with you Mary let So Joe.

Joe Culp

Yes.

QX comparison in Yes, did, the the QX -- California. so so question, So we $XXX,XXX come to -- comparing to California the for that's QX that from in down $XXX,XXX market Pat. in from number fact, he's thanks in for

David Knight

market the Pat, et line, we some of as firstly for have ]. Ocana Tinley we production California California load with I And for our earlier, over kind Hey, key facility of obviously. mentioned moved a question. we've also to to plans for we're exciting little [ add QX, thanks cetera.And the bit as got edibles, dealing Okay. is with us, in pipeline a but from

in we opportunity So there there are changes got some what doing of again, But need that we're California. growth in to focus terms we've some on. significant

the I So question. appreciate

Operator

line ], question comes the Oleg private next a investor. [ from of The Gal

Unknown Attendee

about, now. I from $X.X all is recall to the with spoken I million, appreciate the be in transparent. sparkling industry, partnership you I excited with know it the doing If just this business. go don't like investments some required very to initiatives seems the Canada, well. the as the going comments being it's any Tilray water but up Very, beverage I know open live very group appreciate to that balance, into regards to it but there's there cash

feeling Just curious that? the and in balance guys regards are cash how you to about

David Knight

at like Joe, question you a and Hey, that sounds comment the for then I'll end.

Joe Culp

Thanks Yes, Yes. our -- balancing our as is the working balance. sure. We minds on and for constantly cash question. yes, for capital. That absolutely

needs we everything put possible for is mind or give, XXXX the does plan together credit sort raise now that to together plans point, evaluating at information our top no and we're future. are happen. We that as to as further But the maybe we're but other growth of that there's right of any it putting discussions certainly with of this line ready include for

David Knight

is cash have one would discussion I number Yes. the that. to priority I the position Board. one add that and on just we mean, have number we probably the the with

we that be that requirement do as and from a we're Mary with the new what future growth and maybe and back may innovation, confident understand investments.So successful and ideal the behind disciplined scoping and some in out market what an we test as we feel of into.As be other very be we categories. the come it's we a for where need super do to in excitement scenario we We learn, kind enter the progress is would those opportunity see categories our to opportunity understanding and Jones we're at today. may So standpoint, that my profitability revenue then opportunity again, approach to there

Joe plans see tail. So our but said, a it's if by tiger screen got yet, radar as we've the on no to

Any So Oleg, for question. you more? thank the

Unknown Attendee

looking quarter. Awesome. in up the straightforward. forward And to next pretty very what's That's It sounds coming exciting.

Operator

investor. private from Keel, question line the comes Next a Daniel of

Unknown Attendee

David, I'm back.

previous merger Better about Sorry, I a sort merger probably ago Simply Is accepted to that Jones something with my any currently a this Brands, of over I lied year previously is you know last. being question Jones acquisition exploring? the sale at or point.

David Knight

now. Daniel, nothing channel on the horizon. nothing on are no find now right focusing What in opportunities But different Best aware in, segments acquisitions discussions. Simply on radar. that can resonate radar brand categories of is right the the innovation the and I was to Brands the we merger on but

Unknown Attendee

Okay. to the the hear In alone I'm Jones Jones has... well. stands I that. glad like very Soda past, feel brands

David Knight

Yes, I agree.

Unknown Attendee

the Yes, towards as looking goals as are there past, hasn't you guys or Is forecasts XXXX? looking far provided all. QX apologies. to Jones or anything forward-looking at In forecast share

David Knight

terms commitment I me I'm this day, not every in and it. forward They in believer wrestle gives with are great destiny. precarious to a Dan. it of discuss setting It's projections. a a on opportunity the a question

don't forward-looking success. not the conversation think in I what doesn't of it into that moderate up certainly we're us categories ideas, us sets set channels, a organization we're are think statements. a but do We potential innovation, best is good get risk.So for as share high terms at for to into prepared I have up to and walking looking and what leader of

Unknown Attendee

thought. question appreciate this time. I My real Well, last Understood. the for

share have a customer that is? be QX you off. able core that mentioned in to who QX large Would fallen bottle You and

David Knight

agreements that foodservice get was a say account. We're with aggressively that business trying we're nondisclosure back, not. team. Unfortunately so. would It under But I large to

Operator

question investor. from a the Next comes private Oleg line of Gal,

Unknown Attendee

this we being to Yes, David. lied. live. platform also just Similar how It's to Daniel, I have excited are

are out mind and you in of does HSS. cannabis with legalization suggestions if don't could And now -- your global been across movement of the level specifically. little plan that?And the market, coming with it your your comment of because if to speed descheduling to a you Mary not there that's a on the I bit more some nice is sharing very expansion Just state, a has cautious if Canada brief up climate guys where Jones? overall a kind of you just assuming X, very is go thoughts the thoughts I'm U.S. stable, on guess, being there right recently kind

David Knight

Oleg, It's great Look, Yes. question. a something really with. struggle we it's

again, of as more be bets, take enter cautious As categories to need legislation, the I states we of kind we and confident rim think these right? are at that mean would see moving wrapped forward prudent, I we we're yet and XXXX cons. THC state around federal our level.The have side, the a climate we this at the on descheduling think. eye political lot election, But hemp-derived in beverages. It's pros also I

we again, track.So going beyond. Mary it I drivers therefore, this several it think potentially is years It's Mary the -- for the at one huge what's and and also key Bill kicked a attuned next to of Jones. for the that's team the think day. down our growth think like opportunity And Jones is very bill space an play or every looking being Farm to there's the We we're interesting also farmer sounds on we're in. with

-- we're very are special. like We

what to proud I think we very Jones Soda all has. be need of

be we're to that traded and that the and that's cannabis publicly we're into assess by So to with behind best to has attraction beverage. huge now from agile. the in a good we the business it in brand and what grow a have and that one. California publicly the tasting We and adoption Point consumers terms and a soda a Washington to knowledge stepped synergy state-by-state do Jones of actually as two my us is in standpoint.So to show The have can the soda of market. is the opportunity. regulated we point the ignited marketing nimble the is traded We a versus are Mary through cost going it we news company, power business very innovation.We solid return. Jones need gives ears But a of brand performed lot We ground. eyes only see entry

So Orange consumer you market because they rupia, Green the Cola, play in consuming Apple, mode well name taste a and not they flavors, THC core Blueberry a necessarily that's calorie-conscious, an it, great.It's cannabis especially our cream, so alcohol or Lemonade, either the in beverage. of

So Trust are lots opportunity. of we me, it. on

it. We focusing are on

We have team. the right

right We and and that's product an regulations. have state-by-state state keeping really opportunity the eye on federal both the

answers So hopefully, that your question, Oleg.

Unknown Attendee

appreciate It does. Really do it.

Operator

question-and-answer I would now concludes Knight today's back to closing like call the David to This for over session. comments. turn

David Knight

really Hey, March.We and a our such to you, about hey, today. be Firstly, say report excited today team.I'm forward great and just you of want questions this and the today for and great encourage ahead. a everybody full And I'm results asked proud that forward. more And that call thank leading do thank say, working about this listen. great brand Ranju, their opportunity going would taking have fourth thank we're and wanted everybody ahead I excited am and to speaking I team just with I to I on. such leading opportunity would time just navigating the in for I to would quarter to look obviously lot year with We humbled to stuff

time. So everybody, you and again. to next thanks, great Have a day speak

Operator

teleconference. today's concludes this gentlemen, and Ladies you. Thank

lines Thank your time. this you participation. You your may for disconnect at

Jones Soda (JSDA) 9 Nov 232023 Q3 Earnings call transcript