Jones Soda Co

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the first quarter ended March 31, 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, projects, will, may, continue, projects 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 on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain no-gap financial measures, including adjusted EBITDA. The most directly comparable gap measures and reconciliations for no-gap 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 May 11, 2023, starting at 7.30 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'll turn the call over to the President and CEO of Jones Soda, Mark Murray.

Thank you, operator, and thank you, everyone, for joining us today. As we entered 2023, chasing our 11th consecutive quarter of year-over-year revenue growth, we knew we had our work cut out for us, given how well we performed in Q1 of last year. If you recall, revenue in Q1 of 2022 grew 58% to $4.5 million. aided by an outsized benefit from a one-time inventory stocking event with one of our largest customers in our core bottled soda business. While we certainly like to set our aspirations high here at Jones Soda, this was a challenging quarter to compare against, and we weren't able to show year-over-year revenue growth. However, we are by no means disappointed in the quarter's results. In fact, we still experience sequential revenue growth from Q4 with continued positive momentum across all channels while delivering improvements to our margin profile and bottom line. We are proud to report a 200 basis point year-over-year improvement in our gross margin for Q1 and a total increase of 1,040 basis points over the last 11 quarters. Furthermore, we made strides in optimizing our operations, leading to a decline in operating expenses and a bottom line that is getting closer to break even. Now, I want to address pricing right off the bat. Throughout the quarter, pricing in our core bottled soda business remain top of mind across all our accounts given the persistent inflationary environment that we continue to operate in. We have strategically implemented price increases to help offset unpredictable cost increases within the supply chain. While pricing is absolutely necessary to offset costs and maintain margins, We are acutely aware that persistently high prices can have a negative impact on our customer demand in the long run. Later on the call, I'll dive into great things we are doing to keep our consumers engaged across all channels. But I want to reiterate that we plan to continue to strategically manage pricing, promotion, and trade spin to ensure our efforts in dollars align with our sales velocity objectives. as well as maintaining and increasing margins. Overall, we are pleased with the progress we made in expanding our business with new and existing customers during the first quarter. Despite today's market challenges and the uncertainties around the current economic outlook, we remain confident that we are continuing to position Jones Soda and Mary Jones for long-term health. During this call, we will provide a detailed update on our sales performance, marketing initiatives, supply chain, and operations. We will also provide an update on the exciting development with the expansion of our cannabis business. Finally, we will address the questions submitted by shareholders over the past few weeks. Before I dive in, I'd like to hand the call over to Joe to discuss our financial results for the first quarter in more detail. Joe?

Thank you, Mark, and good afternoon, everyone. Net revenue in the first quarter was $3.9 million compared to $4.5 million in the first quarter of 2022. As Mark mentioned earlier, the decrease was largely due to a one-time inventory stocking event with one of our largest customers during the first quarter of 2022. The decrease in net revenue was partially offset by the continued expansion of our cannabis business, which generated approximately $200,000 in revenue during the first quarter. Gross profit as a percentage of revenue increased 200 basis points to 29.3% compared to 27.3% in the prior year period. The increase was primarily due to strategic pricing adjustments across our portfolio and lower freight costs during the quarter. Operating expenses in the first quarter were $2.5 million compared to $2.7 million in the same quarter a year ago. The decrease was primarily due to lower marketing and general and administrative costs. Driving this decrease was our continued progress with our efforts to bring more marketing initiatives in-house and eliminate several outsourced agencies. Net loss in the first quarter was $1.4 million or negative one cent per share compared to a net loss of $1.7 million or negative two cents per share for the same quarter of 2022. The improvement in net loss was primarily driven by increased growth, gross profit margin and decrease in total operating expenses. Adjusted EBITDA in the first quarter was negative $1 million compared to negative $1.1 million in the year-ago quarter. The improvement in adjusted EBITDA was primarily due to the previously mentioned improvement in gross profit margin and lower total operating expenses during the period that mostly offset reduced revenues. Now moving on to the balance sheet. As of March 31, 2023, cash and cash equivalents were $6.4 million compared to $8 million at December 31, 2022. Working capital was $10.5 million at March 31, 2023, compared to $11.6 million on December 31, 2022. Now I'll turn the call over to Mark, who will give further detail into the factors that contributed to these results and the overall progress we are achieving at Jones. Mark, back to you.