Hello, and welcome to the Q2 2021 Zevia PBC Earnings Conference Call. My name is Charlie, and I will be coordinating your call today. I will now hand you over to the Zevia team to begin. Please go ahead.

Thank you, and welcome to Zevia's Second Quarter 2021 Earnings Conference Call and Webcast. On today's call are Paddy Spence, Chair and Chief Executive Officer; Amy Taylor, President; and Bill Beech, Chief Financial Officer. By now, everyone should have access to the company's second quarter earnings press release filed today after market close. This information is available on the Investor Relations section of Zevia's website at investors.zevia.com. Before we begin, please note that all the 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 use some non-GAAP financial measures as we describe business performance. The SEC filings as well as the earnings press release, 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. And now I'd like to turn the call over to Paddy Spence, Chair and Chief Executive Officer.

Thank you, Reed. Good afternoon. I invite you to open a cold can of Zevia, and welcome to the second quarter fiscal 2021 earnings call for Zevia PBC for the 3-month period ended June 30, 2021. We appreciate you joining our call today, and we hope that all of our listeners and their families remain safe and healthy. We are excited to share our results on our first earnings call as a public company. On July 22, Zevia PBC began trading on the New York Stock Exchange under the ticker symbol, ZVIA. I would also like to announce that we are now the official zero-sugar naturally sweetened beverage of the New York Stock Exchange, a partnership of which we are quite proud. On today's call, I will review Zevia's social impact mission and brand promise, discuss our financial results and ESG milestones for the second quarter and then turn to our President, Amy Taylor to share growth initiatives and our CFO, Bill Beech, to discuss financial results in more detail. But first, I'd like to make some broad observations regarding macro consumer trends and how Zevia fits into these. We believe the world is changing rapidly, driven by the increasing power of consumers to access information on the Internet to take control of their own health. At Zevia, we've identified 5 macro consumer trends that we believe are transforming consumer packaged goods, and we believe that Zevia is well positioned to benefit from these ongoing changes. These are: number one, an increasing shift to health and wellness and self-care as consumers are seeking ways to take control of their own health amidst the COVID-19 pandemic; number two, a global desire by consumers to reduce their sugar intake, given the myriad health challenges created by excess sugar consumption; number three, increasing…

Thanks, Paddy. After just 6 weeks here, I can see why and how this group has delivered a brand with a passionate loyal base. Zevia's loyalty is greater than that of category-leading, multibillion-dollar zero-calorie brands. The organization delivers a great-tasting product, building on the portfolio and improving flavor options every year, year-over-year and have approached distribution in a thoughtful, disciplined way. This brand was a 10-year, 32% net sales compound annual growth rate with loyal consumers and very high repurchase rate, has very low national awareness. So in short, as I've spoken about right out of the gate on our road show prior to the IPO and now, it's time to focus on brand building and driving visibility and availability. We put into place clear strategies to grow distribution, step-change in-store presence and grow visibility at retail and across our e-commerce platform. These are push strategies with trade, some of which will show up in impact immediately and others in 2022 as retailers reset stores. In the second quarter, we made shelf space gains in both natural and conventional grocery, winning incremental distribution on our high-velocity soda 10-packs at leading retailers in the food channel. We continue to close distribution gaps now, and we'll be leveraging our velocity, market share and retailer margin story across our customer base for a stronger brand block in grocery nationwide. There's a very clear story here on how we go forward to drive this change. And so now on to new channels. As Paddy mentioned, our first entrance into the club channel featuring regional rotations at 2 leading club retailers in Q2 and through the summer, has performed very well. We have a consistent e-commerce business with the largest e-commerce marketplace in North America, and Q2 brought us a new customer and the second…

Thanks, Amy. I'm happy to be here today to discuss our financial results for the second quarter of 2021. Since this is our first earnings call and we're mid-year, we'd like to start the financial results discussion with an overview of the first half ended June 2021. As Paddy mentioned earlier, Zevia net sales have grown at a compound annual growth rate of 32% over the past 10 years. This rate of growth continued in the first half with net sales of $65 million, 30% higher than in the first half of 2020. Our gross margin also continued to improve, from 46% in the first half of 2020 to 47% in the first half of 2021. Partially offsetting this were increased selling and marketing and G&A expenses. The result was positive adjusted EBITDA of $0.1 million for the first half of 2021 compared with positive $1.3 million adjusted EBITDA in the first half of 2020. Now we'll turn to the second quarter results. We continued our net sales growth in the second quarter of 2021, increasing net sales 24% versus the second quarter of 2020, achieving record net sales of $34.4 million. It is also meaningful to note that second quarter growth was achieved despite lapping year ago COVID-related pantry loading trends and having to overcome outbound shipment disruptions that temporarily impacted our e-commerce sales in connection with implementing a more efficient freight program. Second quarter gross margin reached 47% of net sales, up from 46% in the first quarter of 2021 and 45% in the 2020 fiscal year. Our gross margin expansion primarily stemmed from higher promotional price realization. In Q2 2020, with the onset of the pandemic and consumer pantry loading, promotions were temporarily curtailed on an industry-wide basis, giving us a temporary gross margin lift to 50%.…

Thanks, Bill. As you've heard today, Zevia is an exciting brand with what we believe are a range of compelling attributes. As you can tell, we are passionate about not only our business opportunity, but also our mission to make the world a better place. And we believe these are complementary areas of focus for our team. Our combination of an asset-light business model offering high gross margins with a 10-year track record of 32% compound annual net sales growth and a commitment to changing global public health with great tasting, zero-sugar naturally sweetened beverages made with simple, plant-based ingredients, positions Zevia uniquely within the beverage space. And with that, we'd like to conclude our second quarter earnings call for 2021.

Thank you, everyone, for joining. This concludes today's call. You may now disconnect your lines. Have a brilliant day.