Jones Soda Q4 2024 Earnings Report

Jones Soda EPS Results

• Actual EPS: -$0.03
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Jones Soda Revenue Results

• Actual Revenue: $2.79 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Jones Soda Announcement Details

• Quarter: Q4 2024
• Date: 4/1/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 1, 2025
• Conference Call Time: 9:00AM ET

Jones Soda (OTCMKTS:JSDA) Co., together with its subsidiaries, engages in development, production, marketing, and distribution of beverages primarily in the United States, Canada, and internationally. The company provides craft sodas under the Jones Soda and Lemoncocco brands; and tetrahydrocannabinol infused cannabis products under the Mary Jones brand name. It also offers co-brand and private label products; fountain products, including cane sugar cola and sugar free cola, cane sugar sweetened ginger ale, orange and cream, root beer, and lemon lime; food products; and other products comprising teas, lemonade, vitamin enhanced waters, hydration beverages, and naturally flavored sparkling waters. The company sells and distributes its products through a network of independent distributors, and directly to national and regional retail accounts, as well as in grocery stores, convenience and gas stores, restaurants, delicatessens, sandwich shops, and burger restaurants; sells various products online, including soda with customized labels, wearables, candy, and other items; and licenses its trademarks for use on products sold by other manufacturers. Jones Soda Co. was founded in 1986 and is based in Seattle, Washington.

Jones Soda Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, 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 12/31/2024. 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 the 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 or expressions.

[Operator]

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 headings Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10 ks, our quarterly reports on Form 10 Q, and our current reports on Form eight ks. 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. A telco replay will be available after the call through 04/15/2025, and a webcast replay of today's webinar will also be available for one year via the link provided in today's press release as well as the company's website.

[Operator]

Now I would like to turn the call over to Jones Soda CEO, Scott Harvey.

[Scott Harvey, President & CEO at Jones Soda]

Thank you, Christine. Good morning, everyone, and thank you for joining. Before jumping into the full year 2024 results and progress of our strategic growth objectives, want to take a moment to introduce myself. I'm Scott Harvey, and I'm incredibly excited to step into the role of CEO at Jones Soda and lead the company through this evolution from a pure play craft soda brand to a high growth beverage company. My forty plus year career in CPG restaurants and manufacturing world has led me to top executive positions at renowned companies such as Black Rifle Coffee Company, Nathan's Famous, Einstein Noah Restaurant Group, Golden Cross Caribbean Bakery, and most recently as President of Dun Brothers Coffee.

[Scott Harvey, President & CEO at Jones Soda]

What excites me most about Joan's Soda is not just the company's rich legacy, but its incredible potential to grow and innovate with dynamic and multibillion dollar beverage industry. With such passionate customer base and brand that speaks to creativity and authenticity, I see countless opportunities for Jones to expand and elevate its impact. And I look forward to being part of its journey and working alongside the team to take the company to new heights. Now shifting to the business. While Jones started the year on a strong note, several operational challenges along with poor financial discipline in the back half of the year hindered our growth and tested the company's resilience.

[Scott Harvey, President & CEO at Jones Soda]

As our Chairman, Paul Norman discussed at length during the last quarterly update, immediate action has been taken to correct the company's trajectory and get us back on track towards capitalizing on the immense growth opportunities at hand. While Paul and the Board have brought me and our CFO, Brian Bedells on board to lead this next chapter of growth, are not deviating from the overarching strategy that Paul laid out a few months ago. In addition to the operational refinements that Brian will walk through in a few minutes, we have been hard at work putting in place to accelerate growth behind our focused strategy and capitalize on our three major channels of focus, core soda, modern soda and adult beverage. While the beverage industry provides immense growth potential, it takes strong operational rigor combined with leading product innovation and marketing tactics to keep up with the constantly evolving consumer habits and preferences. We believe within each of our three key areas of strategic focus, we will lead the way with an authentic brand that has stood the test of time and best in class flavor profiles that consistently outperform our competitors.

[Scott Harvey, President & CEO at Jones Soda]

I firmly believe that Jones Soda has not even come close to unlocking its true potential and I look forward to delivering predictable and profitable growth while providing durable shareholder value for the years to come. I'll dive into our strategic growth objectives and recent progress later during this call. But first, I'd like to pass our call to our new CFO, Brian Meadows, to introduce himself and to speak on some of the operational and financial initiatives that we've been working on. Brian, over to you.

[Brian Meadows, CFO at Jones Soda]

Thank you, Scott, and good morning, everyone. As the new CFO of Jones Soda, I'm excited to join a company with such a rich history of innovation and creativity. With over twenty five years of experience as a CFO and senior financial executive across CPG, food ingredients, telecommunication, other industries, including several small caps public companies. I've developed deep expertise in managing and financially supporting growth, managing cash flow, and driving process driven operational efficiencies. Most recently, served as the CFO of Simply Better Brands Corporation, where I drove the financial and operational strategies for a high growth brand accelerator and a health focused protein based nutrition category.

[Brian Meadows, CFO at Jones Soda]

Now I look forward to contributing to Jones Soda's success, collaborating with his incredible team and ensuring we maintain strong financial discipline to create lasting value for all our stakeholders. Before diving into the priorities that Scott and I have been focusing on since stepping into our new roles, let's review our 2024 financials. Net revenue increased 15% to $19,100,000 in 2024 compared to $16,700,000 in the prior year. Full year 2024 net revenues include approximately $17,800,000 from the company's beverage segment compared to approximately $15,400,000 in 2023 or 15.6% growth over the prior period. The beverages segment saw strong growth from its hemp derived HD9 products during 2024 as such products generated $1,700,000 in net revenues during the year compared to nil in 2023.

[Brian Meadows, CFO at Jones Soda]

The company has generated $1,300,000 in revenue from its cannabis THC segment, compared to approximately $1,200,000 in 2020 mostly driven by THC sales in Canada. Gross profit as a percentage of revenue was 21.3% compared to 29.1% in the prior period. The decrease was primarily driven by a $1,200,000 onetime inventory impairment charge in the fourth quarter twenty twenty four, along with the continued overhang of the distributor transition in Canada, which we now put behind us. Both of these issues were onetime in nature and we expect an improving gross margin in the coming quarters. Total operating expenses were $14,000,000 in 2024 compared to $9,700,000 in 2023.

[Brian Meadows, CFO at Jones Soda]

The increase was primarily due to increased selling and marketing expenses in 2024. '20 '20 four's selling and marketing expenses were $6,800,000 compared to 3,700,000.0 in 2023. The $3,100,000 increase was related to onetime product development and innovation expenses, increases in marketing, specifically sponsorships and trade shows and advertising and promotions. An over the marketing initiatives will not be repeated in 2025, and a careful review of our spend is underway under Scott and my watch already. We'll be looking at it for a clear ROI on the spend in 2025.

[Brian Meadows, CFO at Jones Soda]

Additionally, general and admin expenses increased from $5,300,000 in 2023 to 5,900,000.0 in 2024 or $600,000 increase. This increase is primarily due to increased legal expenses totaling approximately $1,000,000 in 2024 over the prior year. The matter that drove this expense in 2024 has been settled in February of twenty twenty five and is also one time in nature. Scott and I have also changed the internal process for contract review and approval, and only Scott and I are approving contracts after legal review. Our net loss for 2024 increased to $9,900,000 or $09 a share compared to a net loss of $4,900,000 or $05 a share in 2023.

[Brian Meadows, CFO at Jones Soda]

The $5,000,000 increase in net loss in 2024 was driven by three main issues: the write down of inventory of 1,200,000 one time litigation expenses of $1,000,000 an increase in product innovation, advertising promotion, including sponsorships of 3,100,000.0 on ensuring they do not repeat in 2025. Jones does have the right products now to focus on. We have our contract review processes buttoned down. Marketing spend is only approved with clear ROI. And Scott and I are very focused on working with the team on improved supply chain management processes and inventory management.

[Brian Meadows, CFO at Jones Soda]

Lastly, adjusted EBITDA was negative $8,700,000 compared to negative $4,600,000 Full year 2024 adjusted EBITDA included an aggregate of approximately $2,000,000,000 in litigation costs, inventory write downs, which are onetime expenses, along with the aforementioned sales and marketing increase of $3,100,000 For those interested in our fourth quarter financial performance, you can view a breakdown of those financials in the press release we issued earlier today. Stepping back and looking at the bigger picture, our focus is laser sharp on operational discipline, strong cash management and ROI driven strategic investments in high impact growth opportunities. Through this focus, we are committed to maintaining a lean approach, avoiding overinvestment inventory while strengthening our supply chain management to improve go to market timelines, customer responsiveness, while simultaneously focusing on reducing our cost of goods sold. Furthermore, we are viewing all aspects of our manufacturing partner base with a focus on enhancing overall efficiency and maximizing our margins to position us for long term sustainable growth. Lastly, wanted to touch on our balance sheet.

[Brian Meadows, CFO at Jones Soda]

Our cash at the end of twenty twenty four totaled $1,500,000 And as you may have seen, subsequent to end of twenty twenty four, we entered into a new $5,000,000 revolving credit facility. Overall, I believe we are making the right moves to turn our business around and position Jones for sustained growth in years ahead, for shareholder value being at the top of our priority list. With that, I'll turn the call back over to Scott to share an update on our key initiatives and growth strategy. Scott?

[Scott Harvey, President & CEO at Jones Soda]

Thank you, Brian. As we look forward to the rest of 2025 and beyond, we remain committed to driving growth across our key focus areas, core soda, modern soda and the adult beverage category. Within core soda, we continue to expand our presence by securing more distribution partners. Over the past year, we have increased our distribution network to 81 partners, driving penetration in key national and regional retailers, including Kroger, Albertsons Safeway, Meijer, Ivy, Market Basket, Wakefern ShopRite and others across 37 states. Looking ahead, we also remain committed to increasing our customer base through the rollout of limited edition products.

[Scott Harvey, President & CEO at Jones Soda]

For example, we recently signed an exclusive agreement with Crayola to launch an exciting custom pack with Jones core soda flavors that mimic the strong and vibrant color palette of the Crayola pack of crayons. This initiative is set to hit shelves later this year as we look to capitalize on back to school timeframe. We're also very excited to introduce our Zero Colas adapting the brand to one of our most beloved core flavors to meet evolving consumer preferences. The new Zero Colas will cater to a variety of needs offering a healthier option for soda lovers. You can already find these Zero Colas that has exceeded our expectations in 10,000 plus national and regional grocery stores with plans to introduce additional zero calorie flavors including Jones Zero Root Beer and Zero Doctor.

[Scott Harvey, President & CEO at Jones Soda]

Jones later in 2025. Additionally, we have introduced many size versions of these drinks further enhancing experience by meeting their desire for a smaller quantity of soda. Moving to the rapidly growing modern soda category, we continue to execute our focused strategy to innovate and invest in this up to date coming billion dollar industry. The category is headlined by two of our new products, Pop Jones and Fiesta Jones. Pop Jones is now available in five Jones original flavors with just 30 calories per 12 ounce can and through a regular blind taste testing consistently performs better than any comparable product.

[Scott Harvey, President & CEO at Jones Soda]

It contains only four grams of sugar and only two grams of added sugar, and this is only one twelfth that of a standard soda. In addition, Pop Jones provides fiber and immune support with a blend of apple cider vinegar, agave inhuman, and 20% of recommended daily intake of zinc. Overall, we are incredibly bullish on the future of the functional soda segment as it has experienced explosive growth in capturing significant consumer attention and market share. Brands like Ollipop and Poppy have surged in popularity, driven by increasing demand for health focused functional beverages. Retailers are responding with expanded shelf space reinforcing the category's momentum.

[Scott Harvey, President & CEO at Jones Soda]

Within modern sodas, we also have Fiesta Jones, a line crafted specifically for convenience stores, featuring Latin inspired flavors like watermelon strawberry, mango passion fruit, coconut lime, guava berry, all in resealable aluminum bottles. Each flavor contains just 80 calories and 19 grams of sugar per bottle with no artificial colors or caffeine. It's now available in over 2,000 convenience stores. Fiesta Jones reflects our commitment to meeting the evolving consumer preferences in this growing market. As the consumer interest continues to rise, modern soda remains a key focus for our team and we are committed to seizing the opportunity and driving growth in this dynamic billion dollar industry.

[Scott Harvey, President & CEO at Jones Soda]

Now on to our third focus, adult beverage. This encompasses our Mary Jones brand, including regulated cannabis infused products and our HD-nine products as well as our alcoholic beverage brand Spike Jones. Since the launch of Mary Jones' Hemp Delta nine line in January 2024, we've signed 32 distribution partners, including four in the first quarter of twenty twenty five to expand into two new states. We also introduced HD9 Cola and Zero Cola in September 24, bringing the world's favorite soft drink flavor to the cannabis category in 12 ounce cans with either a five milligram or ten milligram of infused THC. As Brian mentioned earlier, our Mary Jones business has seen a nearly 150% year over year growth further validating the potential for Jones to expand its footprints in cannabis and hemp derived beverage industry.

[Scott Harvey, President & CEO at Jones Soda]

This is particularly exciting given the trend that shows over the next three years, one every $5 spent within the beverage category will be spent on alternative products like Mary Jones, serving as substitutes for traditional adult beverages like beer and wine. To continue capitalizing on the momentum, we're proud to have expanded in the country's fifth largest legal cannabis market, the State of Missouri, through a manufacturing distribution partnership with Kansas City based Clover. As of January 14, Mary Jones products, starting with our one hundred milligram THC infused sodas, have been available at dispensaries across the state. We have additional plans to roll out our twenty milligram THC infused sodas and one hundred milligram THC zero sugar infused sodas as we look to capitalize on our product portfolio in this large and growing regulated cannabis market. Partnering with Clover ensures that our products will be manufactured the highest standards and proactively marketed to local dispensaries, helping us take full advantage of the growing interest in alcohol alternatives and new cannabis consumption formats along the state's consumers.

[Scott Harvey, President & CEO at Jones Soda]

Lastly, with Spike Jones, our alcohol beverage brand is available in both 12 ounce and 19.2 ounce slimline cans with flavors such as strawberry berry lemonade, grape, and orange and cream. Spike Jones brings consumers the delicious classic taste of Jones Craft soda with spike of 8.4 alcohol by volume. We are thrilled to announce in Q2, it will be available in additional states on a national convenience store chain. Overall, we are highly optimistic about the future of Jones. We are diligently working to optimize and enhance our operations across the business to drive growth of our three key areas of focus.

[Scott Harvey, President & CEO at Jones Soda]

Jones is a historic brand that has been a staple in the soda industry for years. Our strong and brand equity and rich history uniquely position us to capitalize on rapid growth of the evolving beverage industry, presenting an exciting opportunity for our customers and shareholders. I'm

[Scott Harvey, President & CEO at Jones Soda]

eager

[Scott Harvey, President & CEO at Jones Soda]

to see what the future holds as we continue refining our operations and investing in areas that will drive long term profitable growth for our stakeholders. Lastly, I'd like to recognize and thank everyone at the company for their unwavering commitment to Jones and to each other every day. There's certainly been a lot of challenges as we navigated this management transition, but our team has remained steadfast in delivering exceptional beverages to our customers and I'm excited to see what the future brings. With that, we're going to finish the call by addressing some of questions we received from our stakeholders via email recently. We have selected what we believe to be the most important and relevant questions to answer.

[Scott Harvey, President & CEO at Jones Soda]

I'll pass it back to Brian to start out with the first question. Brian?

[Brian Meadows, CFO at Jones Soda]

Thanks, Scott. First question is, with broader concerns about a slowdown in the economy, do you think you'll be able to accomplish your growth objectives if consumer spending continues to slow down or things get worse?

[Scott Harvey, President & CEO at Jones Soda]

Yes. We completely understand the concerns around the broader economy. But to date, we have not seen the material slowdown in the categories we are operating in. In fact, with the channel and categories I just walked through, we're seeing demand growth, especially within our initiatives outside of core soda. In addition, we're being confident in our future growth opportunities and we are actively looking to improve our cost basis and supply chain to improve overall margin profile and better manage the P and L going forward.

[Brian Meadows, CFO at Jones Soda]

Thanks Scott. The next question is, how does Jones intend to navigate the shifting landscape of the HD-nine playing field with many state attorney generals and congressional bodies taking steps to address this growing category?

[Scott Harvey, President & CEO at Jones Soda]

We're closely monitoring the evolving landscape of the HD-nine category. We understand the regulating shifts being considered by the state's attorneys general and congressional bodies. We're committed to ensuring that our products remain compliant with all regulations while continuing to meet expectations of our consumers. We recognize that the regulatory environment is evolving rapidly and it's crucial for us to stay ahead of any changes. To navigate this, we're proactively engaging with regulatory bodies, ensuring that we have a thorough understanding of potential impacts on our business.

[Scott Harvey, President & CEO at Jones Soda]

This allows us to quickly adapt our strategy and make any necessary adjustments to protect to our product offerings and marketing practices to maintain compliance.

[Brian Meadows, CFO at Jones Soda]

Thanks Scott. The next question is, what is the status of the Mary Jones launch in Michigan that was announced months ago? Are there any plans to expand into new states?

[Scott Harvey, President & CEO at Jones Soda]

Mary Jones launched Jones Syrups in Michigan during the fourth quarter of twenty twenty four and launched three Mary Jones sodas in the state on March twelve of this year. I'm proud to report that the launch of our sodas broke our distributors record for all KPIs except average order value, which is tied with our Jones Syrups launch. Mary Jones is evaluating several other states and we will be launching additional high value states in 2025.

[Brian Meadows, CFO at Jones Soda]

Thanks Scott. Next question is where do you see this company in five years and why should investors believe in this management team over the next over the previous ones?

[Scott Harvey, President & CEO at Jones Soda]

In five years, we see Jones evolving into a full fledged beverage company, expanding beyond our core offerings to capture new markets and consumer segments. Our focus will be on high growth channels, including expanding our product lines, enhancing distribution and leveraging our brand strength to drive sustained revenue growth. What sets this management team apart from is our commitment to financial discipline excellence. We are bringing a level of financial rigor that ensures smarter investments, improved margins and long term profitability. We're executing a clear strategic plan with measured goals, all aimed at scaling the business while maintaining the brand authenticity that makes Jones unique.

[Scott Harvey, President & CEO at Jones Soda]

Investors should believe in this team because we have the vision, the discipline, and the execution strategy to turn this vision into reality.

[Brian Meadows, CFO at Jones Soda]

Thanks, Scott. The next question is, what are you doing to improve shareholder value?

[Scott Harvey, President & CEO at Jones Soda]

Yes. We are focused on driving long term shareholder value by executing a disciplined growth strategy, expanding our product portfolio and optimizing financial performance. By transitioning into a full fledged beverage company, we are unlocking new revenue streams and tapping into high growth markets. At the same time, we're bringing financial rigor to the business, streamlining operations, improving margins and making strategic investments that will drive profitability. We're also strengthening our distribution channels and embracing brand visibility to accelerate sales growth.

[Scott Harvey, President & CEO at Jones Soda]

Ultimately, our management team is committed to creating sustainable value for shareholders by balancing innovation with strong financial discipline, ensuring that every decision we make supports long term growth and market leadership.

[Brian Meadows, CFO at Jones Soda]

Thank you, Scott. Next question is, would you be interested in expanding outside of North America?

[Scott Harvey, President & CEO at Jones Soda]

Absolutely. Expanding outside North America is a key part of our long term strategy. As we solidify our foundation here, we will look at international markets where there is a strong potential for growth, particularly in regions with increasing demand for unique and high quality beverage. Our approach will be strategic, targeting markets with growing consumer appetite for innovation, premium products and brands that offer a distinctive identity. We plan to enter into these markets gradually, focusing on building brand awareness, establishing key partnerships, and tailoring our offerings to local taste and preferences.

[Brian Meadows, CFO at Jones Soda]

Thank you, Scott. Given the incredible successes of Monster, C4, Celtius, Rockstar, Red Bull, etcetera, do you foresee a time when you bring back Jones WuFAS Energy Group drink?

[Scott Harvey, President & CEO at Jones Soda]

Yeah, thank you for the insightful question. While brands like Monster, Celsius and Red Bull have certainly set a strong precedent for energy drink space, our current focus is on driving growth through our core beverage channels. Specifically, we're concentrating on our traditional core beverages as well as our modern offerings like Pop Jones and Fiesta Jones and alternative adult beverages, including Spice Jones and Mary Jones HD9 products. These areas align with our long term vision for the brand, and we remain committed to innovation within these channels. As of now, we don't have any plans to revisit the What Bass Energy drink, but we're always keeping a pulse on the consumer trends and market dynamics.

[Scott Harvey, President & CEO at Jones Soda]

Should the right opportunity arise in the future, we'll definitely consider it. But for now, our focus on continuing to grow within our established categories.

[Brian Meadows, CFO at Jones Soda]

Thank you, Scott. Next question is, are you comfortable with your current liquidity position? And Scott, I'll take this one. As I'm sure you saw, in February 2025, we secured a new $5,000,000 credit facility to fuel our growth initiatives this year. This new facility was one of my first priorities to address as the new CFO.

[Brian Meadows, CFO at Jones Soda]

In order to support the higher sales we expect in 2025, we needed a larger credit facility that I've worked success and I have worked successfully with TwoShores team previously to support rapid sales growth. We now have a larger and more flexible credit line that allows us to borrow off a larger base of assets, including inventory, accounts receivable, and customer purchase orders. If we continue to see significantly expanding profitable growth opportunities to capitalize on, we of course will look to find the best source of capital to pursue those opportunities, including expanding our borrowing capacity within the new facility. Back to you, Scott.

[Scott Harvey, President & CEO at Jones Soda]

With that, those are all the questions we're going to answer at this time. We'd like to thank everyone for taking the time to listen today. I would welcome further questions. We'd be happy to take one on one calls later this week. Please direct any inquiries to jsdagateway grpgroup dot com.

[Scott Harvey, President & CEO at Jones Soda]

I'd be happy to address accordingly. If I don't speak to you soon, I look forward to addressing you all again when we report our first quarter results in May. Again, thanks and have a great day. Christine, back to you.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Participants

Executives

• Scott Harvey, President & CEO
• Brian Meadows, CFO