Jones Soda Co.
Q4 2020 Earnings Call Transcript

Published: 10 Mar 2021

[Operator:]

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Jones Soda's financial results for the fourth quarter and full year-end December 31, 2020. 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:]

Yes. Thank you, Telari, and good afternoon. We appreciate everyone joining us on the call today. I'd like to start by reflecting on my first few months as President and CEO and thank our team for their hard work, dedication and focus. Our team has done an excellent job over the past few months, remaining committed to our core business and providing best-in-class service to our customers and partners. This hard work translated into closing out the year with a very strong fourth quarter and a renewed sense of excitement around our brand as we celebrate our 25th year as a company. On the call today, we'll start with Joe to discuss our financial results for the fourth quarter. Then I'll review our sales performance, marketing initiatives and lastly, operations. Finally, we'll wrap up with a Q&A session to close out the call. So with that, let me hand it over to Joe.

[Joe Culp:]

Thank you, Mark, and good afternoon, everyone. Total revenue in the fourth quarter increased 14% to $2.5 million compared to $2.2 million in the year ago quarter. Similar to the past few quarters, this growth came from our core bottled sales as we continue to focus on our core competencies and drive sales through our various marketing campaigns. Gross profit as a percentage of revenue increased 670 basis points to 23.9% compared to 17.2% in the prior year period. The improvement was the result of a continued shift to a more favorable product mix and further optimizing costs in our supply chain. With these optimization improvements, we expect to sustain a stronger margin profile going forward.

[Mark Murray:]

Thank you, Joe. As I mentioned earlier, really great Q4 financial results. We start with our sales performance. We saw a 14% year-over-year increase in total revenue for the fourth quarter and a 3% annual increase. With our recently revamped digital marketing and social media initiatives driving overall awareness across our markets, the demand for Jones products continued to accelerate throughout the quarter. In fact, in the last 12 weeks, we saw Jones outpacing the category in both dollars and units. Our intense focus around the organization to maximize sales of our core products has been critically important to the company's turnaround and return to revenue growth.

[A - Joe Culp:]

Yes. 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 selected what we believe to be the most important and relevant questions to answer. So starting with the first question. Is there an update on a CBD-infused beverage? If so, what stage of development are you at? And when do you anticipate launching?

[Mark Murray:]

Yes. So we continue to be very excited about the opportunity with CBD. We are locked and loaded and ready to go, but we're still waiting for the FDA guidelines.

[Joe Culp:]

My question two, given you are intensely focused on selling their core product offerings, what is the rationale for introducing special release flavors? Shouldn't the focus be on continuing to increase sales of your current offerings before expanding into new flavors?

[Mark Murray:]

Yes. I really love the special release program. Our customers expect Jones to lead in innovation, and it is important for us to keep the category exciting and fresh with variety. Special release is a great solution to offer our customers the opportunity to bring excitement to the category by offering new flavors as pass-through items without a lot of additional resources required to secure shelf space. So it's a win for our customers, it's a win for the consumer and certainly a win for Jones.

[Joe Culp:]

All right. Question three. On the past several conference calls, you've mentioned that you are evaluating a line of credit. Can you provide any more details around this? And what time line may look like to get one in place? And actually, I'll take this one, Mark. We do continue to evaluate securing a new line of credit. And while we can't provide any details at this time, we can confirm that we are actively exploring our best options. So more to come on this. And that takes us to question 4. Is there a specific profile for food service restaurants you are looking to penetrate for your fountain business as the industry rebounds from the effects of the pandemic?

[Mark Murray:]

Yes. It's a really good question. It's a big food service industry. But as I mentioned, we have a very experienced team focus against this channel. We have identified 35 national and regional accounts that we will be targeting to expand our fountain and packaged goods business. There were a lot of variables that came into play in terms of the selection process, but these accounts were selected as complementary matches for our brand, and we believe we also have an opportunity to help them grow their beverage sales. We also like small regional chains like pizza and subs shops. They want to make a statement and offer something that sets them apart from working with the big national brands. And there are also tremendous opportunities in the business and industry channel where organizations want something different for their employees. So there are many opportunities across multiple platforms as it relates to food service.

[Joe Culp:]

All right. And that brings us to our last question, #5. Do you remain confident in your supply chain partners for 2021?

[Mark Murray:]

The quick answer is, yes, we do. We're very grateful for our relationships with our supply chain partners. And while we currently don't expect any disruption, we will continue to monitor very, very closely.

[Joe Culp:]

Yes. 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 first quarter of 2020 results. Thanks for joining.

[Operator:]

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