Vending

Jones Soda Q2 results fall to COVID-19, lower 7-Eleven sales

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August 7, 2020

Jones Soda Co.'s Q2 revenue fell from $3.5 million to $3.1 million compared to last year for the quarter ending June 30, translating into a net loss of $738,000 or 1 cent per share, compared to a net loss of $576,000, or 1 cent per share last year. Management blamed the decline on COVID-19 and declining orders from 7-Eleven.

The company's stock price was 18 cents today, having tumbled from 20.5 cents on June 28.

Jamie Colbourne, Jones Soda's interim CEO, cited progress during the quarter in a press release.

"The second quarter marked another period of progress, despite continued headwinds resulting from the COVID-19 pandemic," Colbourne said in the press release. "In fact, the resurgence in demand for our core bottled soda products continued through the quarter, particularly in June, but this was offset by the expected decline in 7-Select revenue. During the quarter, we also made it a point to clean up our balance sheet through the discounted sales of slow-moving inventory, and we are confident in where our balance sheet sits today.

The revenue decline was primarily due to the expected decrease of $384,000 in 7-Select revenue as a result of the declining number of 7-Eleven stores carrying Jones 7-Select and one-time promotions for 7-Select in the prior-year quarter that bolstered revenue in the prior period.

The decrease was partially offset by a 9% increase in revenues from Jones' core bottled soda products, which the company believes reflects continued positive momentum for this product line. Excluding the 7-Select segment, total revenue for the second quarter of 2020 remained flat at $2.9 million compared to the prior-year period.

"As we move into the second half of 2020, we intend to build on the momentum from the year over year growth in our core bottled soda line that we experienced in June," Colbourne said. "We are seeing this momentum continue into July, and based on our new increased commercial focus, we expect this growth to continue in the future. Additionally, we remain steadfast in our commitment to bolstering Jones Soda's brand awareness and driving growth in the core product lines.

"Although there are still uncertainties surrounding the global pandemic, our organization continues to be in constant contact with customers, distributors and supply chain partners to quickly respond to any changes that may arise. Everyone at Jones continues to be enthusiastic about the progress we have made so far and the various growth opportunities on the horizon."

Gross profit as a percentage of sales was 18.9% for the second quarter of 2020 compared to 22.6% in the same year-ago quarter. The decrease was primarily driven by the one-time sell-off of slow-moving inventory at a discount, which recorded a negative gross margin for those products.

On June 30, cash and cash equivalents totaled $4.3 million compared to $6.0 million at Dec. 31, 2019. Apart from an outstanding convertible debt instrument and its loan under the Paycheck Protection Program, the company did not have any substantial debt and continues to actively evaluate a new line of credit.