Jones Soda Co.
Q1 2021 Earnings Call Transcript

Published: 9 May 2021

[Operator:]

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Jones Soda's Financial Results for the First Quarter Ended March 31, 2021. 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, predicts, 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.

[Mark Murray:]

Thank you, Emma, and good afternoon. We appreciate everyone joining us on the call today, and we are grateful for your time. So after returning to revenue growth in the third quarter of last year, our team has done an excellent job staying focused on our three-year turnaround plan. We closed our first quarter of 2021 strong providing best-in-class products and service to our customers and partners, and we remain committed to continuing to improve the fundamentals of our business. We are proud of all that, we have already accomplished in the first quarter. And as we began to celebrate Jones Soda's 25th anniversary, we are very excited about the things we have in store for the balance of the year. On the call today, I'll review our sales performance, marketing initiatives, and lastly operations. We'll then wrap-up with a Q&A session to close out the call. But first, I'd like to hand the call over to Joe to discuss our financial results for the quarter.

[Joe Culp:]

Thank you, Mark, and good afternoon, everyone. Total revenue in the first quarter increased 2% to $2.9 million compared to $2.8 million in the year ago quarter. As a reminder, our Q1 2020 revenue included a strong pre-COVID-19 food revenue – foodservice revenue a business channel that we all know has suffered greatly as a result of pandemic-related sales restrictions. Despite these factors, we were still able to increase total revenue for the quarter, and delivered substantial growth in our core bottled soda business. Gross profit as a percentage of revenue increased 610 basis points to 26.9% compared to 20.8% in the prior year period. The substantial improvement was a result of continued shift to a more favorable product mix, and our focus on optimizing costs across our supply chain.

[Mark Murray:]

Thank you, Joe. Really great financial results, especially when you add some context. When looking at our first quarter sales results, seeing a 2% growth may not seem that impressive. However, as Joe mentioned earlier, the first quarter of last year had substantially stronger tailwinds driving revenue particularly with a very strong foodservice business. Despite the reductions to that business as a result of the pandemic, we still finished the quarter with year-over-year growth. This very solid growth exceeded our internal expectations and can be attributed to both our dedicated sales team and our successful digital and marketing initiatives. We have a great sales team that continues to do a phenomenal job working with key national and regional accounts in the US and Canada. In fact we are seeing growth in SKUs across all channels and larger key accounts in the US including Walmart, Safeway-Albertsons and Kroger.

[A - Joe Culp:]

Sorry about that Mark. Before wrapping up the call, Mark and I would like to address some of the questions that we've received from investors via e-mail over the last week. We have selected what we believe to be the most important and relevant questions to answer. Starting with question one. Do you have an inflection point on the horizon when you expect to start to see sales volume increase exponentially, or do you expect the turnaround to be continued incremental progress over the next few years?

[Mark Murray:]

Well, as we stated we have allocated resources and are working on some big opportunities that we believe will have a significant impact on the growth of our business. However, at a minimum, we believe we will continue to see incremental progress. We feel very confident in our three-year strategic plan, and we believe strongly in our abilities to continue bringing value to the organization.

[Joe Culp:]

And question number two. Are you actively seeking additional capital that could propel your growth trajectory, or are you comfortable funding growth activities from current operations? As this question is financial-related, I'll take this one Mark. And while we are comfortable with funding our growth activities from current operations, we do look ahead to possible additional future capital needs and we will continue to evaluate this as the business evolves and develops. And then moving on to question three. You mentioned on your last call that you had identified 35 national and regional foodservice accounts that were complementary matches for your brand. When do you anticipate we can expect to see some of these potential partnerships come to fruition?

[Mark Murray:]

Yes. Well, first, we have a very talented and experienced team focused against this particular channel. We realized that this would take some time under normal circumstances. And with COVID, restaurants are starting to get back to normal and just stabilize their business. Once they get back on their feet, we believe they will be looking at new menu items and innovation to help build and grow their business.

[Joe Culp:]

All right. Question number four. As more of the population continues to focus on health and wellness products, especially in this global pandemic, do you have any concerns about general demand for soda products and your ability to grow with consumer preferences moving away from your product category?

[Mark Murray:]

Well, we believe there will always be a place for special treats in the consumers' lives from candy to cookies to certainly craft soda. Our products bring comfort and indulgence to consumers looking for something special. They are meant for being just that a treat. However, we will continue to diversify our portfolio and support our brands in products like Lemoncocco, a product that is all natural, lower in calories and more closely associated with other products in the health and wellness categories.

[Joe Culp:]

All right. And this concludes our Q&A session. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our second quarter 2021 results. Thanks again for joining us.

[Operator:]

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.