ZVIA earnings call transcript, November 4, 2026

in addition the four percent increase in dollar velocity in the food channel suggests acceptance of our recent price actions flavors such as fruit punch peaches and cream or the cream skull are hitting the mark with improved sales ranks within natural channel our most mature distribution channel sherry line has emerged as another proof point of our success initially launched as a walmart.com exclusive the limited time offering sold out within four weeks and became the number one ZVIA product at walmart.com this success has generated strong retailer interest which we believe opens the door to incremental placements and broader innovation opportunities as we build our clean-to-n-s pipeline now trying to highlight from the key focus areas we shared in on our last call including enhancing our go-to-market strategy and sharpening our identity first our go-to-market strategy which remains our largest opportunity to create long-term value as we discussed on our last call we see three primary levers to improve reach and productivity building on singles platform expanding distribution and driving strong in-store execution starting with singles a top priority and representing one of the most compelling growth opportunities in our business to drive trial and household penetration with improved singles offering across format price points and flavor assortment we see an opportunity to accelerate trial attract new consumers and expand use occasions during the quarter we worked closely with the retail partners on plans to meaningfully expand singles distribution over the next several quarters

including additional grocery doors across the U.S. and Canada while increasing visibility within the natural channel. We plan to support this expansion with improved merchandising, strategic promotions and code placement. Our objective is clear. Make ZVIA easier to find, easier to buy, is easier to choose. We believe this can accelerate consumer trial and use occasions as well as drive higher conversion into larger multi-tax purchases. The second component of our go-to-might strategy is distribution expansion. We continue to see meaningful white space opportunities across mass, club, value, food service, and e-commerce channels. We are... Re-entering both Target and Sons Club with the test programs. At Target, we will launch a national limited edition offer that will include NCAT placement in more than 900 stores beginning in February. At Sons Club, we will participate in a three-month rotation beginning in March across... ...the locations. Beyond traditional retail, we recently partnered with Adopt Foods to expand ZVIA's reach into no traditional channels, including food service. We believe that increasing availability of whatever consumer shop and... ...consuming beverage with the food creates additional opportunities to build awareness and drive trials. Our third priority is improving productivity within existing doors. We have ample opportunity to drive improved productivity.

...through better and more consistent in-store execution. This includes and strength our approach to merchandising, category management, and retail oversight. First, we are building upon our DST initiatives with a deeper internal... ...team and more robust engagement with our Western DST network. Second, we have entered into new partnership with... ...the merchandise agencies to strengthen shelf placement and display execution across most important regions. ...outside of our DST network. We believe that through enhancements to our DST strategy paired with these new partnerships, we can drive higher velocity over time. Moving to our second strategic focus... ...sharpening our brand identity and scaling our brand. We have made meaningful progress in executing a disciplined ROI-driven marketing strategy, using a full funnel scorecard to connect brand building activity with... ...consumer engagement and sales. Looking ahead, we plan to place greater emphasis on retailer activation and engagement with more investment in digital platforms such as Amazon, Walmart, and Instacart, and the launch of our new... ...flavor in collaboration with Accard B in January. Building on that, we are pleased with our partnership with Accard B. Although the campaign is still its early stage, its initial awareness focus phase delivers a strong top of... ...results, including more than 1.8 billion impressions, 63% increase in daily active ZVIA.com users, a 13% increase in net new social followers, and more than 70...

...thousand email sign-ups. We are encouraged to see the improved brand awareness metrics with a five-point increase to 25% as of September, 2026. Post Card B campaign, the same year, the last year with... ...in the 18 and 34-year-old age group. Our efforts to appear to our young consumers are bearing fruit. While it is too soon to quantify conversion and retail velocities, retailers respond positively. And believe the campaign will help support a successful 2027 reset. Future phase will shift toward the launch of a flavor collaboration with Accard D to excite fans to try ZVIA and support distribution growth. Now, turning to our long-term strategic objectives. Over the last several quarters, we have strengthened our product portfolio, started to sharpen our brand position, improved our go-to-market capabilities, and enhanced our financial flexibility. While we still see a long runway ahead within our core. Better for you sort of business, we also see significant opportunity to expand into larger faster growing categories across the better for you beverage market. With that opportunity in mind, over the last year, we evaluate a range of strategic options. and ultimately close a $20 million growth equity investment with the GFE Investments. The partnership brings not only capital, but also access to strategic resource and operational expertise at the board level that can help accelerate our growth agenda over the coming years. Our strategic plan is centered on three growth levers. First, accelerate product innovation. We see a meaningful opportunity to build upon our core

better for your solar business to reach more consumers, more usage occasions, and new channels. With additional capital, we believe we have the potential to triple the size of our business over time. Going forward, we intend to be more proactive and faster in bringing complementary products and brands to market, leveraging the learnings from ZVIA and we believe we have the potential to improve our business over time. We believe we have the potential our existing distribution network and scalable supply chain infrastructure. At the same time, we will continue to strengthen our core Better For You Soda offering. Taken together, we believe these initiatives can meaningfully broaden our addressable market, diversify our growth drivers, and position us to respond more

Thank you very much.

quickly to evolving consumer demand back on scale, a digital first consumer ecosystem, supplementing branded levels, investments in new product offerings, we will build a target digital marketing. to drive consumer engagement and demand creation across the portfolio. We plan to prioritize spending lower and mid funnel digital channels where we believe we can bring greater efficiencies and a strong ROI. This includes increased use of creators and micro influencers to reach target audience. Through deeper cultural relevance and expanding our share of conversation, we believe we can drive engagement across a broader consumer set, particularly among younger consumers. By pairing a strong innovation pipeline. With a more effective demand generation, we believe we can accelerate awareness and trial, deepen engagement, and create a more powerful platform for long-term growth. First, execute a hybrid go-to-market model. I believe sustainable growth requires greater visibility, broader distribution, and easier purchase occasions. Building on my comments earlier, we will leverage our distribution network to build our market presence in new products. This includes continuing investment in our proven West Coast DSD infrastructure, strategic merchandise support in no DSD markets, expanded e-commerce and food service capabilities, and a scale singles strategy design. Time to drive discovery, trial, and repeat purchase.

In closing, we believe ZVIA is entering an exciting new chapter. We have strengths our foundation. They're going to see encouraging early proof points across our focus area. And now have additional capital and strategic support to accelerate our ambitions. Our vision is simple to make our portfolio the most relevant and accessible Better for You beverage brand for the next generation of consumers and maximize values to check holders. As we move into 2020, our focus will shift from simply being available to become impossible to ignore through differentiated innovation, superior taste, stronger cultural relevance, and the best in class retail execution. We look forward to updating you on our progress in the months ahead. With that, I will turn the call over to Girish.

Good afternoon, everyone, and thanks for joining our call today. Our strong third... Quarter results reflect growing momentum across the business and meaningful progress against our key priorities, with both net sales and adjusted EBITDA exceeding our expectations. As a result of the momentum in our business and the progress we are making on strengthening our foundation, in addition to lower than previous... ...expected fuel costs, we are raising our full year net sales and adjusted EBITDA guidance, which I will speak to in more detail shortly. This stronger foundation, combined with the equity investment in our business, is expected to help us accelerate investment... behind our next phase of growth. The additional resources position us to more intentionally accelerate product innovation with a focus on the functional beverage space, scale our digital first ecosystem, and execute a hybrid go-to-market strategy. Turning to our financial results in more detail, third quarter net sales increased 18.4% to 48.3 million, primarily driven by our national rotation in the club channel and strength in our e-commerce channels. We are also pleased to see higher net average selling price, reflecting acceptance of pricing actions taken last quarter. As expected, the reset of our club business created some fluctuations in growth over the past several quarters. However, with those transitions largely behind us, we expect

the club channels contribute more consistently going forward. Gross margin was 46.4%, an 80 basis point increase from 45.6% in the prior year quarter. As a reminder, in last year's third We'll see you next week. quarter, we recorded an $800,000 write down related to obsolete inventory associated with the package redesign. In our third quarter of 2026, we were impacted by higher aluminum costs as previously expected. Selling and marketing expenses were 15.1 million or 31.3% of net sales. In the third quarter of 2026, compared to 12.7 million or 31% of net sales in the third quarter of 2025. Breaking it down, selling expense was 8 million or 16.5% of net sales in the third quarter. 2026, compared to 7.7 million or 18.9% of net sales in the third quarter of 2025. The increase was largely given by higher freight expense related to increased volumes and elevated fuel costs. The increase was largely offset by savings from warehousing efficiencies. Fuel costs were lower than initially expected by approximately 900,000. Marketing expense was 7.2 million or 14.8% of net sales in the third quarter of 2026, compared to 4.9 million or 12.1% of net sales in the third quarter. As anticipated, marketing expense of the percentage of sales increased year over year, reflecting targeted investments to broaden brand reach and elevate consumer awareness, particularly through the launch of our Cardi B campaign.

As Alessandre mentioned, we are seeing strong engagement and an increase in brand awareness, which bodes well for our future revenue opportunity. General and administrative expenses were $8.3 million or 17.1% in net sales in the third quarter of 2020.

The increase was driven largely by higher compensation-related expenses, including higher accrued variable compensation, partially offset by lower professional services costs. For the third quarter, adjusted EBITDA loss was $900,000, compared to an adjusted EBITDA loss of $1.7 million in the prior year period. Turning to our balance sheet, we ended the quarter with approximately $29.5 million in cash and cash equivalents and have an undrawn revolving credit line of $20 million. Subsequent to the third quarter, we closed the GP equity investment and will have cash on hand of approximately $50 million. Now turning to our outlook. For the full year, we are raising our 2026 net sales guidance to a range of $177 to $179 million, reflecting approximately 10% growth at the midpoint of the range. As a reminder, the discontinuation of T impacted our net sales outlook by approximately 2%. Turning to profitability, we are advising our full year 2026 adjusted EBITDA outlook to a range of breakeven to negative $400,000. This outlook now reflects approximately $8.5 million in incremental costs related to the surge in fuel prices and higher aluminum related costs versus our prior expectation of $11 million. We remain on track to achieve $3 to $5 million in additional cost savings. beginning in Q1, 2027 that we plan to reinvest in our strategic reset. Turning to the fourth quarter, we expect net sales of between $37.5 million to $39.5 million, reflecting approximately 2% growth at the

midpoint of the range. The fourth quarter is typically the seasonal low for the business, and our guidance reflects the potential impact of retailer adjustments to the timing of shipments and inventory levels. We expect fourth quarter adjusted EBITDA loss to be between points. $5 million and $0.9 million. This assumes gross margin remains approximately flat to last year. In closing, we believe this is a pivotal moment for the company. We delivered a strong quarter, raised our outlook, and announced a growth equity investment. That enhances our ability to accelerate the execution of our strategic reset. With a stronger foundation and additional liquidity, we believe we are well positioned to capture the opportunities to lie ahead and create sustainable long-term value.

Our first question comes from Jim Solera with Stevens. Please proceed with your...