Jones Soda Co

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the fourth quarter and full year ended December 31, 2022. 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 Security Certification 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, predicts, or targets, and negatives of these words and similar words or 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 report on Form 10-K, our quarterly reports under Form 10-Q, and our current reports on the Form 8K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the company's website under investor relations. I would like to remind everyone that this call will be available for replay through March 16, 2023, starting at 7 p.m. ET tonight. A webcast replay will also be available via the link provided in today's press release, as well as on the company's website. Now, I would like to turn the call over to the President and CEO of Jones Soda, Mark Murray. Please go ahead, sir.

Thank you operator and thank you everyone for joining us today. Closing out the year, we delivered our 10th consecutive quarter of year over year revenue growth. Looking at our results, our revenue during the fourth quarter of 2022 has grown 28% compared to the same quarter in 2021 and 29% for the year ended 2022 compared to 2021. To provide additional context, this follows a very strong 2021 when we grew revenue by 26% compared to 2020. Also, in 2022, we both sustained and gained incremental market share with the addition of new outstanding partners as we continue to lean on our core bottled business to fuel our sales growth. Despite facing challenges posed by inflationary pressures, we stayed laser-focused on expanding our points of distribution, optimizing cost management, and strategically allocating our trade and marketing dollars, which we believe have enabled us to capitalize on growth opportunities in today's volatile market. 2023 marks the third year of our three-year plan and turnaround strategies. We entered the new year ahead of internal expectations. We've made enormous strides in our transformation efforts during the last two years. To name a few of the highlights we've accomplished since this implementation of our turnaround strategy in 2020, we've grown our annual net revenue by 80%. We expanded our gross margin by 650 basis points. doubled our direct-to-consumer e-commerce business, increased our points of distribution in all commodity volume by 100%, and leveraged our brand and flavor equity to build a new cannabis business called Mary Jones. Not only were we able to achieve these milestones ahead of plan, but we did so in the face of persistent macroeconomic headwinds associated with global pandemic, significant supply chain issues, and the highest inflation in decades. I am extremely proud of our team for never making excuses and staying focused on executing our multi-year plan. During today's call, I will deliver details on our sales performance, upcoming marketing initiatives, updates to our supply chain and operations, and exciting progress within our Canada segment. Lastly, we'll conclude the call by addressing the questions submitted by shareholders in the past few weeks. Before I dive in, I'd like to hand the call over to Joe to discuss our strong financial results for the fourth quarter in more detail. Joe?

Thank you, Mark, and good afternoon, everyone. Net revenue in the fourth quarter increased 28% to $3.7 million compared to $2.9 million in the fourth quarter of 2021. This increase was primarily due to the continued expansion of our primary bottled soda business in retail and alternative channels, coupled with the successful launch of our cannabis products in March of 2022, which generated approximately $353,000 in revenue during this year. Gross profit as a percentage of revenue was 24.8% compared to 26.5% in the prior year period. The decrease was primarily due to a one-time write-off related to discontinued programs, including the Mike Tyson and Costco root beer programs, and an increase in material costs being partially offset by price increases for our products. Despite the year-over-year margin compression, we are proud of the team's ability to manage our supply chain costs and exceed our internal expectations. Operating expenses in the fourth quarter were $2.6 million compared to $2.1 million in the same quarter a year ago. The increase was primarily due to costs associated with the development of cannabis-infused beverages and related products. Higher marketing expenditures aimed at promoting special promotions for our core bottled soda business and the recruitment of strategic personnel to support the ongoing growth of our food service and fountain business. Net loss in the fourth quarter was $1.6 million or negative two cents per share compared to a net loss of $1.3 million or negative two cents per share for the same quarter of 2021. The increase in net loss was primarily due to the before-mentioned operating and development expenses related to the build-out of our cannabis business, as well as the hiring of additional personnel to drive the growth of our food service and fountain business. Adjusted EBITDA in the fourth quarter was negative $1.3 million compared to negative $1.2 million in the year-ago quarter. Lastly, as a result of some changes with one specific counting treatment, we are not disclosing balance sheet figures until audit process has been complete and the 10-K is filed with the SEC, which we expect to happen in the coming weeks before the deadline of March 31, 2023. We do not anticipate this having an impact to the financial figures on our income statement that we disclose today. When we file the 10K with the SEC, we anticipate reporting cash and cash equivalents of approximately $8 million as of December 31st, 2022. I'll now hand the call back over to Mark to dive deeper into the drivers behind these results and the overall progress we continue to make here at Jones. Mark, back to you.