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. .

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 awareness of the environmental challenges created by single-use plastic packaging and demand for sustainable alternatives; number four, a greater focus on mitigating the impact of income and equality and a need for better-for-you products that are affordable; and lastly, number five, an ongoing shift to e-commerce as a primary venue where consumers discover, learn about and select consumer packaged goods products.

These factors have in part accounted for 10 years of rapid growth at Zevia and are indicative of what we see as ongoing shifts in global consumer attitudes and behavior. .

community, customers, environment, governance and workers as well as ongoing initiatives later on the call. .

As a Public Benefit Corporation, we exist not only to provide shareholder returns, but also for public benefits of health and sustainability. We believe that this codification of our value structure as a corporate entity strengthens our position in the beverage sector, providing lasting value to our consumers, retail customers and investors.

We believe that being one of the only publicly traded B Corps and PBCs within the consumer packaged goods space is a meaningful point of difference in viewing Zevia relative to competitors. .

Becoming a public company was an important milestone for all of our stakeholders, starting with our employee team. Every full-time employee of Zevia has an equity interest in the company, and our team's passion and dedication enabled the successful completion of this transaction.

At the same time, we know this is only the first step in a long and exciting journey to change global public health one can at a time. .

Our team, our mission and our passionate consumers are all reflected in our performance. In the second quarter of 2021, we continued the double-digit net sales growth that Zevia has achieved for a decade and made significant progress on key strategic initiatives. .

In addition, we made several important additions to the leadership team, including our colleague, Amy Taylor, who in addition to serving on our Board of Directors joined Zevia as President on June 28 and is with us on the call today. Amy spent 20 years at Red Bull North America, most recently as President and Chief Marketing Officer.

She brings a long track record of success, building a global resident beverage brand as well as incredible leadership talent and a deep commitment to our social impact mission, and she'll share some of our early results of her work in Zevia later on the call. .

Before I share our second quarter results and discuss strategic initiatives, I'd like to take a moment to outline what we believe makes Zevia uniquely positioned within the beverage space.

It all starts with a very large global total addressable market, or TAM, of over $700 billion across soda, energy drinks, ready-to-drink teas, mixers and kids' drinks. And we believe that this is a fantastic market for disruption as over 90% of U.S. households purchase our categories.

And while we believe that everyone loves the bubbles, sweetness and enjoyment that carbonated beverages offer, many consumers may not love or even trust the ingredients in conventional carbonated drinks. .

We believe the demand for beverages with zero sugar and plant-based ingredients is global, driven in part by the fact that more than 50 jurisdictions around the world have soda, sugar or sugary beverage taxes.

We believe consumers want beverages that win on taste and have no sugar and are made from simple, plant-based ingredients and that retailers are seeking products that align both with their regulatory structures and consumer needs. .

To address this opportunity, Zevia offers a platform of products and flavors with each product featuring the same simple, plant-based ingredients. There's a zero-sugar naturally sweetened Zevia solution for every household member and every time of day.

And because 47% of added sugar comes from beverages, the Zevia brand promise is that households can significantly reduce their added sugar intake by switching to Zevia. .

sugar, plastic, affordability and supporting the team of Zevia employees and our stakeholders. We will provide more on this topic later on the call. .

I'd like to turn now to results for the second quarter of 2021. In the second quarter, we continued our progress on a number of fronts. First, we continued our historical net sales growth and achieved 24% net sales growth versus the second quarter of 2020 as well as record net sales in the quarter of $34.4 million.

It's important to note that the second quarter of 2020 saw significant pantry loading activity in the at-home consumption channels in which Zevia is distributed. During the first half of 2021, we grew net sales 30% versus the same period in 2020, consistent with our 10-year historical compound annual net sales growth rate of 32%. .

Gross margin also expanded during the second quarter of 2021, reaching 47% of net sales, up 1% from the first quarter of 2021 and 2% higher than fiscal year 2020. Product line mix has been a key factor driving gross margin expansion. .

Regarding profitability, we experienced some of the inflationary headwinds facing many other beverage companies, particularly in the area of transportation costs as well as new costs associated with becoming a public company. These resulted in an adjusted EBITDA loss of $0.4 million and an adjusted net loss in the second quarter of $0.7 million.

For the first half of 2021, adjusted EBITDA was positive $0.1 million and adjusted net loss was $0.4 million. Our CFO, Bill Beech, will discuss these trends further later in the call. .

Our financial performance in the second quarter resulted from continued progress across key retail initiatives, starting with distribution growth.

In the food or conventional supermarket channel, Zevia's total distribution points, or TDP, on our core soda line grew 13.5% versus a year ago based on SPINS/IRI data for the 12 weeks ended June 13, 2021 versus the same period a year ago.

This came from a combination of 4% TDP growth in 6-pack soda, our most broadly distributed packaging format; and 56% TDP or distribution growth in 10-pack soda, our larger multipack format. .

Coupled with TDP, velocity or sales per store also grew. For the 12-week period ended June 13, 2021, Zevia's dollars per store selling or velocity grew 11.2%, driven by the increased portion of our mix attributable to the higher-velocity 10-pack format.

We also attribute these gains in velocity to continued improvements in shelf positioning as well as gains in consumer awareness of the Zevia brand. .

In terms of new channels, in the second quarter of 2021, Zevia began expanding into warehouse club with regional rotations or temporary placements in the 2 leading warehouse club retailers. From a trial perspective, warehouse clubs use variety packs to bring new consumers to the brand, generating a profitable and efficient transaction. .

Zevia also continues to generate strong consumer purchasing metrics, the why behind the buy, underpinning our net sales growth. First off, penetration or the percentage of U.S. households purchasing the Zevia brand, grew to 2.1% for the 52 weeks ended July 4, 2021 versus 1.9% for the same period a year ago, according to SPINS/IRI consumer panel data.

During this period, repeat purchasing grew to 54% versus 51% in the year ago period. More households are trying Zevia, and a significant and increasing portion of those trying the Zevia brand become repeat purchasers, meaning that they purchased the Zevia brand again after their initial trial purchase. .

In addition, we continue to see growth in our consumer spending metrics, and dollar sales per household grew 25%, the strongest growth among our peer set of zero-calorie carbonated soft drink category leaders according to SPINS/IRI consumer panel data.

This robust growth was a combination of increased purchasing frequency as we grew purchase occasions per household by 19% and increased dollar purchases per occasion as Zevia buyers increase their dollar purchases per occasion by 5%. .

Finally, Zevia's category-leading loyalty rate or share of stomach continued to increase. We define loyalty as the portion of spending for a given brand purchasers on that brand versus the overall category.

In this case, the overall category is zero-calorie carbonated soft drinks, and households purchasing Zevia allocated 45.2% of their spending to our brand for the 52 weeks ended July 4, 2021, an increase versus the 44.7% loyalty we generated in the prior 52-week period.

Importantly, this was ahead of the category-leading zero-calorie cola brand and more than twice the average of zero-calorie carbonated soft drink leaders. We believe the Zevia brand is a sticky brand.

And as households are exposed to new flavors and categories, all with great taste and the same simple, plant-based ingredients, their purchasing increases accordingly. .

We've seen this phenomenon historically in our data as well. Consumer panel data from Numerator for the 52 weeks ended June 30, 2021 saw that households buying one Zevia flavor spent $15 on average; 2-flavor households spend $36 on average; 3-flavor households spend $95; and those households buying 4 or more Zevia soda flavors spent $189 on average.

Qualitatively, mom may like cola, dad likes ginger ale and the Kidz drink, cream soda and grape. Households that drink Zevia loves Zevia, and their spending trends reflect that loyalty. .

We also see the same pattern when households are exposed to additional Zevia categories. Zevia soda household spend $27 on average. Those buying 2 Zevia categories, such as soda and energy, spend $84. And those buying 3 categories, such as soda, energy and organic tea, spend $105 on average.

This is the definition of a sticky consumer brand as we win on taste, build trust through our platform brand with common, simple, plant-based ingredients and keep those households in the Zevia franchise. .

Stated simply, the Zevia brand generates tremendous loyalty. A high percentage of those households that try our brand continue to purchase and increase their spending over time.

Over the past year, an increased percentage of households purchased Zevia products, they purchased more frequently than in the prior year, and they spent more per purchase occasion on the Zevia brand. We believe these purchasing metrics help explain the continued growth of the Zevia brand in the second quarter of 2021. .

I'd like to also share the progress we've made across a number of key ESG or social impact metrics. Let's start with removing sugar from the diets of shoppers across North America, which is our primary mission.

In the second quarter of 2021, we estimate that we eliminated nearly 3,000 metric tons of sugar from our consumers' diets by selling our zero-sugar naturally-sweetened products and replacing legacy sugar sodas.

On a year-to-date basis in the first half of 2021, we estimate that we eliminated more than 5,500 metric tons of sugar from our consumers' diets. These are exciting metrics as they represent a demonstrable impact on the diets of our consumers and more broadly, a path to improved health and well-being for Zevia drinkers.

In our history, we estimate that we have eliminated over 47,000 metric tons of sugar from the diets of North American consumers. .

But it is not enough to offer a great-tasting beverage with simple, plant-based ingredients. If you're shipping it thousands of miles across the ocean in a single-use plastic bottle, I'm not sure what you're doing to help the world. Accordingly, we are so proud to have never sold a plastic bottle in our history.

And in the second quarter of 2021, we estimate that we eliminated 44 million plastic bottles from littering our roadways, our waterways in our communities. On a year-to-date basis, in the first half of 2021, we estimate that we eliminated approximately 84 million plastic bottles.

And in our history, we estimate that we've replaced over 1 billion plastic bottles by selling our beverages in aluminum cans. Aluminum cans have the highest recycling rate of any beverage packaging format and a low carbon footprint in the supply chain. .

To date, we have also removed the plastic range from our packaging in the Canadian market, converting our 6-pack packaging format to a cardboard overlap, and thus, reducing plastic packaging. .

Lastly, affordability is a critical priority for the Zevia brand. We believe that affordability is one of the key barriers for consumers around the world as they seek better-for-you beverage options.

And I am proud to say that our products are priced at an average retail price per ounce of $0.07, which represents the 37th percentile across all nonalcoholic, ready-to-drink beverages, excluding dairy and nondairy protein.

As such, Zevia products are affordable for a broad range of income brackets, making Zevia an economically attractive option for a wide range of consumers. That means that in this product set, Zevia is today less expensive than 63% of nonalcoholic beverage options. .

In addition, among nonalcoholic beverages offered by companies that are certified B Corps like Zevia, our products are at the 20th percentile on price, meaning that 80% of these products are more expensive than Zevia on a price per ounce basis. .

In a world in which we see increasing gaps between the haves and the have-nots and in which income and equality could be the biggest barrier to a healthy population, Zevia is a brand that is affordable for a broad range of income levels. And so you can see, we believe that in today's market, winning on taste is necessary but not sufficient.

Brands also need to win on clean ingredients as well as ESG or social impact policies. Zevia is dedicated to making the world a better place, and our B Corp certification as well as our corporate status as a Public Benefit Corporation reflect that deep commitment. .

But this is not a company and not a team that is in any way satisfied with what we've achieved to date on ESG. We continue to identify ways to raise the bar, not only for our own brand and team, but also to set an example for other companies to follow.

And on that note, I am very proud today to announce a commitment that I'm making personally that underscores how our social impact goals not only help bring awareness and solutions to pressing social issues, but also provide tangible shareholder benefits. .

income and equality. We are in an environment in which we believe CEO compensation is moving in the wrong direction relative to worker pay. And in so many successful companies, rewards are not being shared broadly across the employee base.

Income and equality is a top-of-mind concern for me and our leadership team, and we are committed to making a change starting now. .

Our commitment to supporting our employee team and to allocating resources to drive shareholder value is also reflected in our broader people policies. First off, all full-time Zevia employees have an equity interest in the company, and through equity participation, share in the rewards of our growth.

We also provide fair wages, which in the Los Angeles market, for example, means that every full-time Zevia employee receives a minimum of $50,000 annual base compensation. And we are continuing to examine how we can do better, starting with the role of women on the Zevia team, from both a representation and a pay perspective. .

Today at Zevia, at the manager level and above, 48% of the Zevia team are women and at the Vice President and above level, 40% of our leaders are women. That is a good start, but we are aiming for gender parity.

And at the Board of Directors level, we have a Board comprised of talented, experienced leaders who also reflect the diversity of the communities in which we operate and the consumers we serve. Of our 10 directors, 4 are women and 4 are diverse individuals, either racially diverse or members of the LGBTQ community.

We still have continued opportunities to improve, but we are proud of the progress we've made. .

I would like to now turn to some additional accomplishments in the second quarter. First, I cited a number of policies that Zevia has in place that we believe support our team and results in a workforce with low turnover and high job satisfaction. But an additional indicator of our success in this regard is employee feedback.

And on that note, I am proud to announce that we have been recognized in 2021 with 6 employee engagement awards from the career website, Comparably, based on anonymous employee feedback.

These include second quarter awards for Best CEO for Diversity, Best CEO for Women and Best Career Growth, in addition to our first quarter of 2021 awards for Best Places to Work in Los Angeles, Best Operations Team and Best Company Outlook. .

In the second quarter, we also made significant new additions to the Zevia team, starting with our new President, Amy Taylor, from whom we will hear shortly. We also added Lorna Simms, an attorney with significant securities and public company experience as Senior Vice President, General Counsel and Corporate Secretary. We added Dr.

Mel Jackson, who holds multiple patents in stevia beverage formulation and worked on our products for a decade as Head of Innovation with our stevia supplier, Sweet Green Fields, and joined Zevia as Senior Vice President of Innovation. .

And in the finance and accounting functions, we added a number of experienced public company executives to support our transition to a public company. These include Hany Mikhail, our Chief Accounting Officer; Ashley [ Higa ], our Director of Financial Planning and Analysis; and Wonill Kim, our Director of Tax.

And last but not least, as we continue to enhance our already robust supply chain network, we added a leader with significant beverage experience, Amy Merideth, as Vice President of Warehousing. .

In terms of supply chain, we are continuing to operate as an asset-light business and, at the same time, have identified discrete investments in facilities that will allow us to add efficiency to the Zevia network as well as support continued growth.

In May, we completed the purchase of a warehouse facility in Indiana, our first company-owned facility. With this owned warehouse, we have the opportunity to remove costs from our supply chain by deploying automation equipment through variety packs. .

Lastly, we've continued to innovate and create delicious new additions to the Zevia product line. This summer, we launched Creamy Root Beer, our latest soda flavor and the first extension to our Zevia root beer franchise.

Already after only a few weeks at retail, Creamy Root Beer has become the best-selling Zevia 10-pack flavor in several of our major retail customers. And we've added 2 great-tasting new Kidz flavors, Watermelon and Cran-Raspberry, to that product line.

As we've shared, the Zevia brand has generated impressive historical metrics in terms of repeat purchase frequency, spending rates and loyalty. .

To share more about our intentions regarding the Zevia brand, I'd now like to turn it over to my colleague, Amy Taylor, our President. .

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 largest player in that space.

The continued focus of retailers to develop brick-and-click strategies will result in ongoing e-commerce adopted by consumers, and we have the right strategies in place in light of that trend. .

And finally, we're making trade investments and building organizational capability to step-change our total brand presence across multiple beverage categories, taking this brand from the niche to the mainstream at retail. After spending 20 years at Red Bull, I bring both passion and experience in doing exactly that. .

So on the marketing front, we have an opportunity to engage in meaningful, long-term brand strategy work. More immediately though, this summer saw a focus on scaling short-term marketing strategies with strong results and key learnings. We returned to sampling activity on July 22, listing day for us on the New York Stock Exchange.

We sampled products across the Zevia portfolio at the Exchange as well as in Times Square, and we're excited to put cans in hands nationwide next to allow consumers to experience our great-tasting products. .

As Paddy mentioned, we have an exciting new product in the market performing very well in Creamy Root Beer, which was supported in Q2 with paid social media campaigns, selected major metro out-of-home advertising and targeted influencer and editorial media activations.

The results are very strong in trial and conversion at retail and in e-commerce, and the activities bolstered followership on our social channels for total brand Zevia, where our net audience grew significantly from Q1 to Q2. .

The go-forward plan includes expanding sampling programs nationally, launching a new and scaled influencer and social media program, expanding digital advertising, investing in marketing infrastructure and launching selected below-the-line initiatives, including sponsorships and experiential marketing activations, all to reach consumers, not just where they shop, but where they live, work and play.

A full marketing mix is a huge and so far untapped opportunity for Zevia. .

Longer term, the exciting opportunity is building a truly resonant brand through positioning, pack design, continued product innovation and a full marketing mix to support it, combining brand image and awareness building with expanded visibility and availability through distribution. So the path forward is quite clear. .

With that, I'd like to turn the call over to Bill Beech, our CFO, to review our financial results. .

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%. While our Q2 2021 performance was lower than this, our gross margin is on a long-term trajectory higher. .

In addition, I'd like to note that we believe that this gross margin performance reflects lower exposure to inflationary headwinds on commodity ingredients. Zevia is a brand that uses simple, plant-based ingredients, contracts for most of our inputs and as such is less subject to pricing swings for commodity inputs. .

One portion of our cost of goods sold that has been impacted by a combination of inflationary headwinds and supply tightness is aluminum cans.

As investors may know, the aluminum can market in North America has experienced significant supply shortages over the past 18 months, impacting beverage companies from the category leaders to the smallest emerging brands. .

We're very proud of our performance during this time. Diversification initiatives in early 2020 broadened our supplier base and expanded the geographic footprint of our sourcing. We built additional inventory of empty cans for safety stock, which allowed Zevia to continue to meet demand from our retail customers.

We believe the can market will begin to loosen in 2022, and we anticipate beginning to benefit from cost tailwinds on both cost of goods sold and supply chain costs through a combination of lower-priced cans and lower inventory carrying costs. .

Turning to operating costs. Selling and marketing expenses were $5 million higher than in prior year. Zevia experienced $2.5 million of increased transportation costs due to overall net sales growth and higher freight costs amidst the challenging transportation market in many areas of the U.S.

And marketing expense increased by $2 million, reflecting our investments in growing the Zevia brand. .

General and administrative expenses were $1.4 million higher than prior year primarily from increased staff, equipment and support services in connection with our growth and in preparation to become a public company. .

Our net loss in the second quarter was $0.7 million versus positive $3.1 million of net income in the second quarter of 2020.

Adjusted EBITDA loss was $0.4 million for the second quarter versus positive $3.5 million in the second quarter of 2020, reflecting the unusual combination of lower promotional activity and lower marketing spend in the second quarter of 2020 due to factors stemming from COVID-19. .

We'd like to point out that our Q2 2021 balance sheet reflects Zevia as a private company prior to our IPO, which occurred in July. As of June 30, 2021, our cash balance was $6.4 million. Beyond cash, our net working capital increased to support our growth.

As previously mentioned, we are holding elevated levels of inventory to ensure high service levels in the midst of a global aluminum can shortage. On the liability side, we had no debt. .

Moving to cash flow. For the 6 months ended June 30, 2021, net cash used in operating activities was almost $0 compared to $2.7 million in the first half of 2020. Capital expenditures totaled $2 million for the first half of 2021, primarily as a result of the warehouse purchase we completed in the second quarter.

This compares with $0.5 million of capital expenditures in the year ago period.

We also paid $3.8 million of IPO-related costs in the first half to be booked as transaction costs and reduction to equity on the balance sheet and $2.7 million of distributions to unitholders for tax payments required by the Zevia LLC operating agreement because of pass-through profits earned in 2020. .

With that, I'll turn the call back over to Paddy. .

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..