Zevia PBC

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earnings conference call, and webcast. On today's call are Amy Taylor, President and Chief Executive Officer, and Girish Satya, Chief Financial Officer. By now, everyone should have access to the company's second quarter 2024 earnings press release and investor presentation made available this morning. This information is available on the investor relations section of Xebia's website at investors.xebia.com. Before we begin, please note that all the financial information presented on today's call is unaudited Certain comments made on this call include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, presentation slides that accompany today's comments, and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investors.xevia.com. And now I'd like to turn the call over to Amy Taylor.

Thanks, Reed, and good morning, everyone. Welcome to the Q2 2024 earnings call for XebiaPbc. I'll start out by grounding us in our mission and position and then cover second quarter results at a high level before turning it over to Girish. As a pioneer in natural soda, the fastest growing subset within the soda category, Xebia's focus remains taking better for you beverages mainstream. Our mission focuses on global health for people and the planet. In Q2, we removed another 2.9,000 metric tons of sugar from consumers' diets, never having sold a plastic bottle. Zevia is more affordable now than 66% of non-alcoholic beverages in North America and more accessible than recent functional entrants into the carbonated soft drinks category. Now, recall that in May, we discussed a new productivity initiative, announced the launch of our first regional direct store delivery distribution partners, and launched new marketing investments rooted in an evolved brand positioning. We've started to see the impact of these three strategic initiatives as we are making progress against reducing costs, strengthening the balance sheet via working capital management, improving unit economics, and accelerating retail sales. We've increased the effectiveness of our retail promotions as well as up-leveling marketing and specifically brand building. Our focus is now on accelerating growth in a competitive environment and improving profitability. In Q2, net sales finished at the top end of guidance driven by investment in promotion and brand marketing. Volume and revenue in the first half of the year were impacted by skewed distribution setbacks following challenges we encountered with our supply chain transition in 2023, following rotational distribution losses in clubs, and following portfolio rationalization as we focus on our top performing categories. We have promising results to share in our most strategic channels, positive indicators around marketing efficacy, and ambitious plans for increased distribution and accelerated product innovation. Creamy root beer and vanilla cola continue to outperform as new SKUs, still with distribution upside, and we have successfully launched a new flavor in Cran Raspberry this year. We have an exciting and surprising seasonal limited-time offer flavor coming in the next few months. and ambitious plans for flavor and variety pack innovation in 2025, which should help drive incrementality in terms of distribution, volume, and household. Consumer demand has remained strong. Across retail channels, Zevia soda scan dollars were up 6% for the 12 weeks ending July 14th, and units were up 2%. Growth accelerated sequentially over each four-week period across the quarter, with dollars closing plus 10%, and units closing at plus 11% in the latest read across four weeks ending July 14th, which was the highest retail sales month in Zevia history. Growth was led by food, which is our largest channel, at 16% growth over 12 weeks and up 20% over the last four-week period, outpacing the carbonated soft drink and diet and zero soda categories in dollars and unit growth for the quarter and even with a greater gap in the latest four-week period. We intend to build on this momentum to close the gap between strong scan results and our shipments, and thus net sales results, and have a number of drivers to do so. And our most strategic channels will continue elevated promotion and marketing support in an increasingly competitive environment. We implemented a 4.5% price increase in Q2 on soda multipacks with strong retailer and consumer acceptance. Note, Zevia is priced a few cents per ounce above conventional soda, a price we continue to see consumers will pay for great tasting, clean label product, but often half the price per ounce and per can of other new natural sodas, a key competitive advantage within natural soda as this category continues to grow. And finally, we have exciting new retail distribution news coming in the next few months, supporting visibility and availability for households across North America and across income levels. We believe we are well positioned for breakout growth as we invest in marketing, introduce trial packages, and expand distribution. Speaking of which, we launched our initial direct store delivery rollout in the Pacific Northwest this quarter. Recall that Xevia has grown for over a decade, featuring only multipacks and selling to a loyal base in the natural channel and in natural sections in grocery. The launch of DSD will enable single distribution and channel expansion plus improve in-store presence and promotional effectiveness in our existing distribution footprint. This move to broad availability for trial package supported by brand marketing is key to accelerating market penetration. While it's still in its early stages, we have seen pressing signs of adoption in the convenience channel as we activate plans to expand geographically. I'll turn it over to Girish to step through our productivity initiative to provide an overview of Q2 financial results and to speak to guidance And I'll be back to share closing thoughts.