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DATE

Wednesday, May 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Amy E. Taylor
  • Chief Financial Officer and Principal Accounting Officer — Girish Satya
  • Investor Relations — Jean Fontana

TAKEAWAYS

  • Net Sales -- $46.1 million, up 21.2%, primarily driven by expansion in the club channel and volume gains in mass and e-commerce channels.
  • Gross Margin -- 48.4%, down 170 basis points from 50.1%, reflecting higher aluminum costs and a greater club sales mix, partially offset by improved selling prices.
  • Selling and Marketing Expenses -- $14.5 million, or 31.5% of net sales, down from $15.3 million, or 40.3%, with efficiency gains from automation and a shift in campaign timing.
  • General and Administrative Expenses -- $9.1 million, or 19.7% of net sales, including $2.3 million in litigation expenses; compares to $7.0 million, or 18.4%, previously.
  • Adjusted EBITDA -- $0.9 million profit, compared to a $3.3 million loss; marks a return to profitability following previous losses.
  • Cash and Credit Position -- $26.6 million in cash and cash equivalents with $20 million of undrawn revolving credit available.
  • Marketing Partnership -- Entered a campaign with Cardi B, resulting in a record-high organic social media reach and 152 million editorial impressions in the partnership’s first week.
  • Club Channel Activity -- National Costco rotation drove incremental reach and contributed materially to growth in emerging and permanent markets.
  • Distribution Expansion -- New space at Kroger, HEB, Publix, and expanded reach in Canadian Walmart stores increased visibility and national penetration.
  • Product Innovation Launch -- National rollout of fruit flavors, including Orange Creamsicle, Fruit Punch, and Peaches and Cream, with early velocity outperforming portfolio medians at two major national retailers.
  • Full-Year Net Sales Outlook -- Raised to $170 million–$175 million, implying 7% growth at the midpoint, incorporating planned tea line discontinuation.
  • Full-Year Adjusted EBITDA Outlook -- Guidance set between negative $2 million and negative $4 million, reflecting $11 million in incremental fuel and aluminum costs.
  • Second Quarter Outlook -- Net sales of $43 million–$45 million and adjusted EBITDA loss of negative $0.5 million to negative $1 million, assuming continued gross margin pressure and $1 million restructuring costs for distribution center relocation.
  • Cost Reduction Progress -- $20 million in total cost taken out of the business over the past two years; additional $3 million–$5 million in possible future savings identified, not yet realized.
  • Promotional Strategy -- Major promotional and marketing investments shifted to the third quarter to align with full rollout of new packaging and innovation launches.

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RISKS

  • Girish Satya stated that $11 million in incremental costs from fuel and aluminum "headwind to profitability." is fully reflected in guidance, contributing to a negative EBITDA outlook.
  • Gross margin declined by 170 basis points due to "higher aluminum costs" and increased club sales mix, with expectations for "slight pressure in the back half" per management’s outlook.
  • Adjusted EBITDA guidance for the full year remains negative, with management attributing this primarily to "significant cost pressures associated primarily with higher fuel prices as well as additional increases in aluminum costs."
  • $1 million in restructuring expenses are anticipated in the second quarter as a result of the distribution center relocation, impacting near-term earnings.

SUMMARY

Zevia PBC (ZVIA 4.80%) delivered record sales in the first quarter with a 21.2% net sales increase and positive adjusted EBITDA, as expanded distribution in mass, club, and e-commerce channels drove higher volumes and improved price realization. Management raised full-year net sales guidance to a midpoint of $172.5 million after a strong quarter, but expects continued negative EBITDA due to $11 million in new fuel and aluminum cost headwinds and temporary litigation expenses. The partnership with Cardi B generated immediate brand awareness growth, with the launch of new fruit flavors yielding outsized velocity at key accounts and distribution gains noted at Kroger, Canadian Walmart, HEB, and Publix. Investments in marketing and innovation are weighted toward the third quarter, with management anticipating the rollout of new packaging and targeted promotions to drive further acceleration in brand velocity and market share.

  • The national club channel rotation at Costco increased reach in underpenetrated regions and opened future pathways for expanded permanent and rotational distribution.
  • CEO Amy E. Taylor described the company as in "the second inning" regarding new packaging rollout, which is expected to be broadly complete by the end of the second quarter and potentially boost acceleration entering the back half of the year.
  • Adjusted EBITDA returned to nearly breakeven on a trailing twelve-month basis despite industry-wide cost shocks, due to cost discipline and productivity initiatives.
  • Management is not planning additional price increases for the remainder of the year, with recent gains in price realization expected to support margins as new cost-saving opportunities are pursued.

INDUSTRY GLOSSARY

  • Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding certain nonrecurring or non-operational costs, used to evaluate ongoing business performance.
  • Club Channel: Large-scale, membership-based retailers such as Costco that typically sell in bulk and are characterized by rotational or permanent merchandising agreements.
  • DSD (Direct Store Delivery): Distribution model where products are delivered directly to retail stores, enhancing shelf placement and promotional execution, particularly on the West Coast for Zevia PBC.
  • Velocity: The rate at which products sell through a given retail channel or store, used as a key performance indicator for new product and distribution success.
  • Spring Reset: Periodic update cycles at retail during which new products, packaging, and shelving arrangements are established, impacting in-store visibility and product trial opportunities.

Full Conference Call Transcript

Operator: Greetings, and welcome to Zevia PBC First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jean Fontana, Investor Relations. Thank you, Ms. Fontana. You may begin.

Jean Fontana: Thank you, and welcome to Zevia PBC’s First Quarter 2026 Earnings Conference Call. On today's call are Amy E. Taylor, President and Chief Executive Officer, and Girish Satya, Chief Financial Officer and Principal Accounting Officer. By now, everyone should have access to the company's First Quarter 2026 earnings press release and investor presentation made available this afternoon. This information is available on the Investor Relations section of Zevia PBC’s website at investors.zevia.com. Before we begin, please note that all financial information presented on today's call is unaudited. Certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will have some non-GAAP financial measures as we describe business performance.

The SEC filings, as well as the earnings press release and presentation slides that accompany today's comments, and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures, are all available on our website at investors.zevia.com. Now I would like to turn the call over to Amy E. Taylor.

Amy E. Taylor: Thank you, Jean. Good afternoon, everyone, and thanks for joining our First Quarter 2026 earnings conference call. We are off to a strong start to the year, with record sales growth of 21% and adjusted EBITDA of approximately $1 million, both exceeding our expectations for the quarter. This is clear evidence that our strategy is gaining meaningful traction. Across channels, we are seeing encouraging momentum spanning from consumers discovering Zevia PBC for the first time to longtime Zevia PBC drinkers enjoying our new flavors. Importantly, this performance reflects the deliberate actions we have taken over the past several quarters to rightsize our cost structure and reinvest in marketing, sharpen our innovation pipeline, and drive new distribution.

Taken together, these efforts are translating into a strong setup for the remainder of the year. The momentum we are seeing today reinforces our confidence that we are on the path to long-term growth and profitability. Now I would like to walk through our progress across our core pillars, starting with marketing, continuing through product innovation, and rounding out with distribution updates. On the marketing front, we delivered two engaging brand campaigns to start the year, as we bring to life Zevia PBC’s distinction as the radically real people's champion. First, our ZTOX campaign in January invited consumers to detox from artificial soda with a simple swap: choose a zero-artificial, better-for-you alternative.

The campaign came to life through experiential marketing, sampling, and digital and influencer activations and helped kick off a strong start to the year. Second, our timely and shareable Real Soda for Real Humans campaign ran in March and April, making it clear that only robots should drink chemical cola and Zevia PBC is the soda for humans. Paid advertising across digital platforms and live TV, including a March Madness game, was the primary driver of reach. High-profile events like South by Southwest, where consumers had to prove they were human to get ZDS swag, further amplified the campaign. Sweepstakes activated on social generated thousands of entrants and engaged new consumers.

We believe our mix of advertising and grassroots marketing—and more than ever, our differentiated brand voice—is proving efficient and effective in building awareness, trial, and ultimately demand. In March, we announced Zevia PBC’s biggest marketing news to date: a partnership with Grammy and Billboard Music Award–winning artist, Cardi B. She, like Zevia PBC, is a champion for the radical real. Famous for her humor, honesty, and openness, she has the 25th most-followed Instagram account, with over 200 million social media followers in total spanning across demographics and interests. Cardi B joins us at the perfect time as we roll out our new packaging in-store, our 2026 innovation with spring resets, and our improved taste across most of the portfolio.

This will be a step change in reach and awareness for Zevia PBC, supporting our objective to expand the user base. Between Cardi B and other marketing programs during the month of March, Zevia PBC saw its highest-ever organic social media reach and the highest level of social media engagement of any month since the brand's launch. The partnership announcement alone generated 152 million editorial impressions in just the first week. To kick things off, Zevia PBC was a key sponsor of the Little Miss Drama Tour, with a superfan giveaway and a brand presence at each stop.

We plan to fully activate this partnership through social media, event activations, sampling, a paid media campaign, and at retail, including potential new product innovation in the future. We look forward to sharing more on our broadest-reaching brand campaign plan yet, debuting in the next couple of months. Turning to product innovation. We are pleased with the overall response to our on-trend fruit flavors as they continue to roll out nationally. While still early, initial reads show that our new items are outperforming median velocities for our broader portfolio. At two top national retailers, for example, these items are driving incrementality of 38% and 53%, respectively.

Orange Creamsicle, Fruit Punch, and Peaches and Cream launched with spring resets at the end of the first quarter. These flavors are on shelves now, attracting new consumers and providing variety for our loyal base. Package design is our most efficient communication vehicle and a key driver of trial. Our new, more vibrant designs look delicious and bring to life our points of difference as a clean label, great-tasting soda with zero sugar and zero fake ingredients.

Along with our innovation and our enhanced taste profile in stores as of Q2, this refresh has supported space gains as it bolsters retailer confidence in Zevia PBC’s ability to bring in even more new, valuable shoppers, drive repeat purchases, and, finally, deliver incrementality. Looking ahead, we will continue to surprise and delight consumers with seasonal offerings, such as a forthcoming holiday limited-edition pack—more to come on that in the future. Now to our third growth pillar: distribution. We are pleased with our results across channels, especially our same-store distribution gains in existing channels such as grocery and our new activity in the club channel. The club channel is expected to help accelerate household penetration and growth.

In the first quarter, we executed a successful national Costco rotation, broadening our reach to new consumers in emerging markets where we see potential for year-round distribution or additional rotations. In our more penetrated permanent markets, we saw strong velocities continue. In the mass channel, we saw an acceleration in velocity with notable outperformance in sales through digital platforms, a key priority for Walmart. Additionally, we are pleased with the expansion into Canadian Walmart stores, and momentum in Walmart chain-wide bodes well for future opportunities with other customers in the mass channel. In grocery, spring resets are underway and Zevia PBC has made strong space gains. Kroger has expanded our in-store distribution, adding incremental flavors and boosting Zevia PBC’s visibility.

The brand made similar gains through new item distribution and improved shelf sets at major regional players such as HEB and Publix. These developments help the brand drive market penetration nationally and in underdeveloped regions, such as the South and the East Coast. Finally, Zevia PBC’s e-commerce business continues to grow at an impressive rate, outperforming expectations. The introduction of smaller packs across multiple flavors has helped to drive trial and fits the strategy of major e-commerce operators as they seek to compete with grocery and mass. We also see strong performance from our existing 24-pack and variety pack offerings, with our subscription business super-serving a heavy user.

As the only zero-sugar, clean label offering at an accessible price point, Zevia PBC plays a unique role in modern soda. We are positioned to win as young consumers increasingly reject conventional carbonated soft drinks and choose better-for-you options. In closing, we have made tremendous strides in advancing our strategic growth pillars and strengthening Zevia PBC’s financial position. While we see uncertainty in the macro, we are focused on what we can control, and that is capitalizing on the opportunity to leverage Zevia PBC’s distinct market position as a great-tasting, zero-sugar, clean label, and affordable better-for-you option.

As we continue to execute across marketing, product, and distribution, we are confident in our ability to deliver sustainable, profitable growth over the long term. With that, I will turn it over to Girish. Thank you.

Girish Satya: Afternoon, everyone, and thanks for joining our call today. The reinvestments we have made across product, packaging, and marketing, enabled by our productivity initiative, led to a return to growth in 2025 and fueled first-quarter growth of 21%, our highest growth rate since becoming a public company. In addition to accelerated top-line growth, we drove vast improvement in our adjusted EBITDA. We are proud of what we have accomplished, as we believe that Zevia PBC has tremendous long-term growth opportunity. With that, let us turn to our results and an updated outlook for 2026. For the first quarter, net sales grew 21.2% to $46.1 million.

The increase versus the prior year was primarily due to expanded distribution in the club channel and higher volume gains in the mass and e-commerce channels. Gross margin was 48.4%, a 170-basis-point decline from a record high of 50.1% in the first quarter of last year. The decline reflects the impact of higher aluminum costs and, to a lesser degree, the higher mix of club sales. This was partially offset by a higher average selling price related to a shift in promotional timing as well as higher price realization. Selling and marketing expenses were $14.5 million, or 31.5% of net sales in 2026, compared to $15.3 million, or 40.3% of net sales, in 2025.

Breaking it down, selling expense was $9.4 million, or 20.4% of net sales in 2026, compared to $9.1 million, or 24.1% of net sales, in the first quarter of 2025. The 370-basis-point improvement was due to better warehousing and efficiency gains from automation. Marketing expense was $5.2 million, or 11.2% of net sales in 2026, compared to $6.2 million, or 16.2% of net sales, in 2025. The lower marketing expense as a percentage of sales was due to a shift in timing of our national campaigns relative to last year. We continue to balance brand and performance marketing with the objective of driving more awareness for Zevia PBC.

General and administrative expenses were $9.1 million, or 19.7% of net sales in 2026, compared to $7.0 million, or 18.4% of net sales, in 2025. This includes $2.3 million, or 490 basis points, in litigation expenses in 2026. Adjusted EBITDA was approximately $0.9 million compared to an adjusted EBITDA loss of $3.3 million in the prior-year period. Turning to our balance sheet, we ended the quarter with approximately $26.6 million in cash and cash equivalents and have an undrawn revolving credit line of $20 million. Looking ahead, we will continue to build upon the strong progress we have made across our strategic pillars.

Our revised outlook reflects the record performance in the first quarter, balanced with the ongoing uncertainty in the macro environment. In addition, our guidance reflects significant cost pressures associated primarily with higher fuel prices as well as additional increases in aluminum costs. Now turning to our outlook. Based on our first-quarter results and incorporating increasing macro uncertainty, we are raising our full-year net sales guidance to between $170 million and $175 million, reflecting 7% growth at the midpoint of the range. As a reminder, our net sales outlook reflects the planned discontinuation of our tea line, which we expect to impact growth by 1 to 1.5 points.

We continue to expect the first and third quarters to deliver the biggest growth of the year due to timing of promotional and marketing investments. Turning to profitability, we now expect full-year adjusted EBITDA in the range of negative $2 million to negative $4 million. This incorporates an incremental $6 million in costs, two-thirds of which are related to the surge in fuel prices and the remainder of which are related to higher fuel-related aluminum costs. This is on top of the $5 million in incremental cost related to aluminum prices that we outlined on our previous earnings call. So combined, an $11 million headwind to profitability.

This guidance assumes gross margin will be roughly in line with our Q1 gross margin rate, with slight pressure in the back half. The aforementioned fuel charges outside of aluminum costs will impact selling expense. Worth mentioning, if you back out the $11 million of incremental costs, our adjusted EBITDA outlook would have been $7 million to $9 million for 2026—roughly a mid–single-digit margin rate. While we expect these elevated prices to come down over time, we are also taking proactive steps to offset these higher costs. We have already taken $20 million of costs out of the business over the last two years.

While we see additional savings opportunities, they will take time to realize and will not be taken at the expense of growth. Turning to our outlook for the second quarter of 2026, we expect net sales of between $43 million and $45 million. Once again, this guidance reflects the planned discontinuation of our tea offering, the lapping of sell-ins to Walgreens and Albertsons in the second quarter of last year, the impact of planned price increases, as well as a shift in marketing and promotional dollar spend from Q2 to Q3. We expect an adjusted EBITDA loss of between negative $0.5 million and negative $1 million, reflecting a gross margin rate similar to the first quarter.

In addition to higher fuel costs, we also expect to incur approximately $1 million in restructuring costs related to relocation of one of our distribution centers. In closing, we are very pleased with the overall momentum of our business, which demonstrates strong execution against our strategic growth pillars. Early reads on our enhanced product portfolio, incorporating new fruity flavors, are resonating with consumers, and we look forward to the rollout of our enhanced classic flavors and new packaging in the second quarter. This, coupled with intentional investments in marketing through which we are amplifying brand awareness and driving trial, positions us well to unlock future growth.

As we move past these cost pressures over time, we are confident in our ability to drive healthy profitability for this business. I will now turn it over to the operator to begin Q&A. Operator?

Operator: Thank you. We will now open the call for questions. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star. One moment, please, while we poll for questions. The first question comes from the line of Sarang Vora with TAG. Please go ahead.

Sarang Vora: Thank you. Great quarter, guys. Congratulations. I wanted to start with the new brand ambassador Cardi B relationship. Can you talk a little bit about how you figured out the brand and the fit, as well as how this changes your market approach as you go into the second half of the year? Does the guidance include a little bit of an increase in marketing as well, with all the plans that you talked about? Just a little bit on marketing and the brand evolution would be helpful. Thank you.

Amy E. Taylor: Sure. Thanks, Sarang Vora. So Cardi B came on board as a part of our broader plan for 2026, so therefore within planned budgets. And, as you may have noted in our remarks, we talked about shifting promo dollars at retail out of Q1 this year to focus on the summer. So if you think about our focus at retail, the timing of the rollout of our new packaging, the new flavors in market with spring resets, the improved taste profile across our core—all of that with the tailwinds that Cardi will provide through increased awareness and the engagement that she will bring—it is all timed very nicely.

What you should expect from the partnership is an always-on social media approach from both sides. Not only does Cardi have a really strong reach, but she is highly engaged in social, and then her fan base is very engaged with her, so we will find her to be very supportive of product messaging in a really organic and authentic way. We are also going to overlay a campaign spend against the partnership right out of the gate, so you will see an advertising campaign this summer inclusive of traditional and over-the-top streaming television and digital that we are really excited about. That will really help step-change our reach and support our number one priority, which is expanding the base.

There is a lot more to the partnership within grassroots and driving trial and at retail, but we are excited immediately out of the gates about the always-on social media nature of this partnership given her engagement, and then the big summer advertising campaign that comes just at the right time for the business.

Sarang Vora: That is cool. And just one quick question. I know there are a lot of cost pressures you talked about, especially tariffs and fuel prices and such. Can you talk about the pricing approach to it? Is there a thought to raise prices in the back half of the year to mitigate some of these costs? Is that baked into your guidance as well?

Operator: Thank you.

Girish Satya: From a pricing perspective, as a reminder, we passed through a price increase in the first quarter. We have been pleased with the uptick in higher price realization. We are focused on ensuring we can balance value to the consumer and the P&L as well. We are unlikely to be passing through incremental pricing in the back half of the year. We do believe that the cost pressures, although immediate in 2026, will subside over time, and we are proactively addressing it via other levers within the business.

Operator: Thank you. Next question comes from the line of Analyst with Craig-Hallum Capital Group. Please go ahead.

Analyst: Great. Thanks for taking my questions, and congrats on a very strong quarter here and very strong outlook. Factoring in the significant cost pressure that you guys are facing, it is a very impressive outlook and nice job done. My first question is just trying to level-set where we are in the overall rollout of the new packaging and new flavors. Certainly nice progress and some nice callouts in the prepared remarks and in the presentation, but could you give us the overall standing of where you are and how long we should look for the rollout of new packaging and new flavors to continue before we effectively reach full nationwide distribution?

Amy E. Taylor: Sure. As we sit here today in May, I would say we are in the second inning. The Q1 result was pregame as it relates to the rollout of new package design. By the end of the second quarter, you should find shelves that are stocked with almost all new packaging. We have some early green shoots—accelerating velocities and some nice results at retail.

It is too early to attribute those directly to the new packaging, but qualitatively and anecdotally, both in feedback from consumers and retailers, the new packaging performs very well for us in terms of communicating the Zevia PBC points of distinction and being very clear about our positioning, which is a step change over the packaging of the past, as well as popping well on shelves and doing justice to the variety and deliciousness of all of our flavor options. It is early going, but we will be all the way to bright going into the back half of the year, and that is partially baked into our presumptions of some acceleration of velocity in the back half.

Analyst: Great. So did you say that you expected to be largely complete entering the back half of the year? And then, I think, this informs my next question: there were comments on the pace of revenue growth throughout the year. It was especially strong in Q1, of course, and I think you called out Q3. Could you help close the loop on what is driving that acceleration in Q3? Is it just stepping on the gas on this distribution rollout? Or are there any other forces at play—shelf resets, etc.—that we should be aware of?

Girish Satya: Several things factor into growth rates being higher in Q1 and Q3. We are shifting not only promotional dollars but also marketing dollars into Q3 to coincide with the peak that Amy alluded to. The packaging will be fully rolled out by the end of Q2, and we are expecting a bit of an acceleration given those factors in Q3, which is why we have been calling out Q1 and Q3 as the higher-growth quarters for the year.

Analyst: Awesome. Those are all my questions. Congrats again on the very strong quarter and strong outlook here, including the cost environment. Thank you very much.

Girish Satya: Thanks.

Operator: Thank you. Next question comes from the line of James Ronald Salera with Stephens Inc. Please go ahead.

James Ronald Salera: Hey, good afternoon. Thanks for taking our question. I wanted to start with some discussion around club. You mentioned you just completed the rotation at Costco. Contemplated in your outlook for the rest of the year, is there any incremental club rotations in the back half of the year? Or anything that we should be thinking about in terms of visibility there? And maybe as a second part to that question, can you talk about the incrementality of the rotation in Costco and how many either new households or maybe lapsed users that helped you engage?

Amy E. Taylor: It is early to quantify the household penetration impact of the Costco national rotation in Q1, but it certainly was additive to the quarter—incremental and reflected in our growth. The advantage of the national rotation does a couple of things. It strengthens our velocities based on increased presence in-store in the markets in which we have permanent distribution, helps spur discussions about future rotations for the regions in which we have rotational distribution, and opens up conversations about increased permanent distribution and/or future national rotation. Those are all on the table and represent upside to the plan. When we perform well in existing markets, it helps us to move from rotation to permanent.

The hope is that we would get another national rotation in the balance of the year. All of that is promising and largely incremental, but it represents upside in the plan. Right now, we are not making a lot of assumptions in the back half of the year around incremental distribution at club beyond where we are today.

James Ronald Salera: Great. A follow-up on the DSD network: any updates there and how that is trending? And as we have some of this new packaging that should improve on-shelf visibility, how do you anticipate that impacting the West Coast portion of your business that is supported by the DSD network?

Amy E. Taylor: We are really bullish on this summer window with DSD for our ability to drive incremental displays in this critical window. We are focused on getting singles in front of the consumer on display, leveraging the new excitement around Cardi B as part of the reason why, as well as focusing promotional dollars for the summer. DSD will have a role in outperforming display execution versus the rest of market there, and we are happy with their ability to do that so far. In terms of an outlook on DSD, we are focused on execution in our regional-type pilots today, which are in the Northwest and the Southwest, focused on the West Coast where we are a bit more developed.

We do not have plans to expand DSD outside of the footprint, but we are bullish on their ability to help us open up new channels—and specifically convenience—over time. Both the category and the brand are still in very early days in convenience, so we will pace ourselves there and focus more on same-store penetration and growth in independent channels in the meantime.

Sarang Vora: Appreciate the thoughts. I will hop back in queue.

Operator: Thank you. Next question comes from the line of Andrew Strelzik with BMO Capital Markets. Please go ahead.

Andrew Strelzik: Hey. Good afternoon. Thanks for taking the questions. First, on the quarter—obviously nice upside to your expectations and your guidance for sales and EBITDA in the first quarter. Could you talk about what played out more favorably than you initially expected?

Amy E. Taylor: I can talk about the sales side and then turn it over to Girish. The key point is that our base business was strong in Q1. As mentioned, we shifted promo out of the quarter to focus on the summer, and yet retail sales came back stronger than anticipated. We saw velocity acceleration even as we lap new distribution—across grocery, Whole Foods, and a few other accounts—where we are actually gaining share as well. In other cases, there was contribution to the quarter from new activity via the Costco national rotation and a few other same-store expansions within grocery. We were also pleased to see the price increase more fully realized and realized faster than anticipated.

On net sales, those were the major drivers. Girish can round us out.

Girish Satya: The other two factors were that the Costco rotation was less dilutive than we had anticipated, and we saw higher price realization, which helps flow through the rest of the P&L. We have continued to ratchet down expenses that are not consumer-facing and drive cost discipline throughout the organization. You see all of that playing out in Q1 results.

Andrew Strelzik: Great. Building on that, you beat your Q1 guidance by about $5 million and only raised the revenue outlook for the year by $1 million to $2 million. Are you seeing anything that is making you more cautious about the outlook? Is there anything from your internal plans that is changing, or is it just conservatism?

Girish Satya: We are really pleased with the outperformance thus far, and there is nothing in the business itself that makes us more cautious. As a reminder, we have a very broad demographic base, and we are seeing the K-shaped economy that others are, and the value consumer is getting squeezed. Out of an abundance of caution, we did not pass through all of the upside, and we are still early in the year. We have a lot of exciting new initiatives in front of us, which gives us positivity heading into the rest of the year. However, the macro continues to give us a little bit of pause, so we are trying to be prudent in our outlook.

Andrew Strelzik: If I can squeeze one more in: on the $6 million of cost, is that ratable through the year across the three remaining quarters? And in the past, you have done a nice job on incremental cost saves to offset that. How long will it take before you start to realize some of those potential offsets?

Girish Satya: We have already begun to see the impact of increased fuel expenses, primarily in our freight expenses. We started to see that in the back half of March and more fully in April, and you will see that impact in Q2. It will be ratable throughout the year. To the extent there is a ceasefire and diesel prices come down, it will take 90 to 120 days to see the full offset come back into the P&L. We have taken $20 million of cost out of the business. We see an incremental opportunity for $3 million to $5 million that probably will not begin to flow into the P&L until Q4, but most likely Q1 of next year.

We will continue to look for opportunities, but we are not going to do it at the expense of growth. As a reminder, on a trailing twelve-month basis, we are basically breakeven from an adjusted EBITDA standpoint despite the cost pressures. In the long run, this can be a very solidly profitable business, especially as we lap some of these macro cost shocks that are out of our control.

Andrew Strelzik: That makes sense. Thank you very much.

Operator: Thank you. A reminder to all participants that you may press star and 1 to ask a question. Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to turn the floor over to Amy E. Taylor for closing comments.

Amy E. Taylor: Thank you. Thanks for joining us, everyone. I will reiterate that we are encouraged about the progress we are making across our strategic growth pillars, and I am really proud of this team, from the leadership on down. 2026 will be a pivotal year for Zevia PBC as we introduce exciting new product innovation, powerful marketing campaigns, and pack design evolutions, all of which support our unique positioning within better-for-you beverage. While, as Girish mentioned, we are navigating macro-related cost pressures and some uncertainty, we believe we have laid the groundwork for long-term future growth and profitability, and Q1 is a reflection of that. We are excited about the future. Thanks very much.

Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.