SEATTLE–(BUSINESS WIRE)–Jones Soda Co. (the “Company“ or “Jones“) today announced results for fiscal year ended December 31, 2007 and the fourth quarter of 2007.
Gross sales increased 14.7% from $39.5 million to $45 million for the year ended December 31, 2007 over the prior year. For the same period, case equivalent sales increased 21.8% from 4.8 million to 5.8 million.
Stephen Jones, Interim Chief Executive Office stated, “Jones Soda went in a bold new direction in 2007 to increase its long term capability to generate new sources of growth.
Our major initiatives for 2007 were
| 1) | entry into the concentrate business in partnership with National Beverage Corporation to distribute multipack cans to regional & national grocery chains and mass merchandisers; | |||
| 2) | continued growth in our signature bottle business, which allowed the Jones Soda to reach new highs in gross revenues; | |||
| 3) | major investment in listing fees to expand our points of availability, and we ended the year with Jones Soda cans on the shelves in approximately 15,000 new outlets that gave us an in-store presence in 25% of the market for canned soda; | |||
| 4) | Conversion from high fructose corn syrup to pure cane sugar, which we believe is a much healthier and better tasting sweetener system and gives Jones the opportunity to transforms itself into an important national player; and | |||
| 5) | Launch of the functional beverage 24C. |
Unfortunately, we were unable to execute the details of our expansion to a level that satisfies the team at Jones Soda, which resulted in lower net revenues and unanticipated losses in 2007.
We need to do a much better job of executing our new initiatives at the store level and managing our internal systems.
While we achieved much, we are not satisfied with our full year or fourth quarter financial results and we are confident we can do a better job executing our business going forward.“
2007 review
Net revenue for fiscal 2007 was $39.8 million compared to $39.0 million in fiscal 2006. Net revenues reflect a reduction of $5.5 million on account of slotting fees and promotional allowances for the CSD and DSD channel, compared to a reduction of $479,000 of similar costs in 2006.
Gross margin for 2007 decreased to 23.7% versus 39.2% in the prior year. Included in the 2007 gross margin are inventory provisions of approximately $1.7 million related the transition of the HFCS conversion, and discontinuance of the 16oz cans, specialty packs and certain flavors in the CSD channel. Excluding the impact of inventory provisions, gross margins for 2007 would be 27.98%.
Operating expenses for fiscal 2007 increased to $20.8 million from $13.2 million in the prior year. Included in the 2007 operating expenses are charges of approximately $1.2 million related to severance costs and increased expenses related to promotion and advertising, salary and benefits, legal, audit and SOX fees.
As a result of the losses incurred during the fourth quarter of 2007 and potential losses in 2008, the Company recognized a full valuation allowance against its net U.S. deferred tax assets in the amount of approximately $5,532,000.
For fiscal 2007, the Company reported a net loss of $11,629,026, or $0.45 loss per diluted share, compared to net income of $4,574,439, or $0.19 per diluted share in the year ended December 31, 2006.
Excluding the impact of recording the valuation allowance against the net U.S. deferred tax assets in the fourth quarter of 2007, the loss for fiscal 2007 would be $0.23 per diluted share.
Fourth Quarter Review
Net revenue for the fourth quarter of 2007 was $5.9 million compared to $10.0 million in the fourth quarter of 2006. Net revenues for the fourth quarter reflect a reduction of $3.8 million of slotting fees and promotional allowances for the CSD and DSD channels compared to a reduction of $322,000 in the comparable three-month period in 2006.
Gross margin for the fourth quarter of 2007 decreased to negative 29.1% versus positive 47.4% in the fourth quarter of fiscal 2006. Included in the fourth quarter 2007 gross margin are inventory provisions of approximately $1.0 million of discontinued inventory in the fourth quarter related to the 16oz cans, specialty packs and certain flavors in the CSD channel.
Operating expenses for the fourth quarter of 2007 increased to $5.7 million from $3.1 million in the corresponding period in the prior year. Included in the fourth quarter of 2007 operating expenses are charges of approximately $1.2 million related to severance costs and increased promotion and advertising, head count costs, legal, audit and SOX fees.
For the fourth quarter of 2007, the Company reported a net loss of $10,204,590, or $0.39 loss per diluted share, compared to net income of $2,063,328, or $0.08 per diluted share in the fourth quarter ended December 31, 2006.
Excluding the impact of recording the valuation allowance against the net U.S. deferred tax assets in the fourth quarter of 2007, the loss for the fourth quarter 2007 would be $0.18 per diluted share.
As at December 31, 2007, the Company had $27.8 million of cash on hand.
Stephen Jones, Interim Chief Executive Officer stated, “We will succeed by focusing on an upgrade of our distribution infrastructure; merchandising in store sales; enhancing our marketing and promotional programs;; developing new innovative products; and strengthening our sales team, our organization structure and providing everyone with tools and systems to perform at a higher level. We will continue to invest in the future of the business and pursue the strategic initiatives we began in 2007. As a result of the continued investments in 2008, we may incur losses on our way to solidifying a platform for future profitability. As we move ahead, our entire organization is energized and fully committed to growing and evolving our business and improving our execution across the board.“
About Jones Soda Co.
Headquartered in Seattle, Washington, Jones Soda Co. markets and distributes premium beverages under the Jones Soda, Jones Pure Cane Soda, Jones 24C, Jones Energy, Jones Organics, Jones Naturals and Whoopass brands and sells through its distribution network in markets across North America. A leader in the premium soda category, Jones is known for its variety of flavors and innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers and everywhere you‘d never expect to find a soda. For more information visit jonessoda.com and myjones.com