Jones Soda Co. (JSDA, Financial) filed Quarterly Report for the period ended 2010-06-30.
Jones Soda Co. has a market cap of $29.7 million; its shares were traded at around $1.12 with and P/S ratio of 1.2. JSDA is in the portfolios of Jim Simons of Renaissance Technologies LLC.
For the quarter ended June 30, 2010, promotion allowances and slotting fees, which are a reduction to revenue, totaled $344,000, a decrease of $540,000, or 61.0%, from $884,000 a year ago. The decrease in promotion allowances and slotting fees was primarily attributable to a decrease in promotion allowances in our DSD channel and to a lesser extent, a decrease in our DTR channel due to pricing strategies which lowered the use of promotion allowances in exchange for lower delivered pricing. We believe using promotional allowances as a way to promote our core products, while judiciously using slotting fees to gain access on new products, is a more balanced strategy under current economic conditions.
For the quarter ended June 30, 2010, gross profit decreased by approximately $762,000, or 37.1%, to $1.3 million as compared to $2.1 million in gross profit for the quarter ended June 30, 2009. This decrease was primarily a result of lower sales volumes in our core product, Jones Soda glass bottles coupled with the impact to our DTR channel due to discontinuance of Jones Organicstm and Jones Naturals® brands as a result of the loss of significant DTR customers in early 2010. Additionally, this decrease was attributed to an additional $178,000 write-down of excess GABA inventory. These decreases to gross profit were offset by a reduction in promotion allowances and slotting fees. For the quarter ended June 30, 2010, gross profit as a percentage of revenue decreased to 24.1% from 27.5% compared to the second quarter of 2009, caused primarily the effect of the GABA write-off which contributed 3.3% to the decline.
Promotion and selling expenses for the quarter ended June 30, 2010 were approximately $1.1 million, a decrease of $1.2 million, or 51.9%, from $2.2 million for the quarter ended June 30, 2009. Promotion and selling expenses as a percentage of revenue decreased to 20.1% for the quarter ended June 30, 2010, from 30.0% in the same period in 2009. The decrease in promotion and selling expenses was primarily due to a decrease in selling expenses year over year of $497,000, to $545,000, or 10.2% of revenue. This decrease resulted primarily from decreases in sales personnel in conjunction with the strategic refocus and cost containment efforts during 2009, which included reductions in workforce and our realigned channel focus, contributing to a decrease in promotional expenses. Although we anticipate some continued effects of the prior years workforce reductions on 2010 in reducing ongoing promotion and selling expenses compared to 2009, we are in the process of hiring additional sales personnel to support our strategy of securing and growing larger distributor and national retail accounts. Also contributing to the decrease in promotion and selling expenses was a $666,000 decrease in trade promotion and marketing expenses from $1.2 million to $533,000, or 9.9% of revenue for the quarter ended June 30, 2010, due in part to our cost containment efforts.
Net loss for the quarter ended June 30, 2010 decreased to $1.6 million from a net loss of $2.0 million for the quarter ended June 30, 2009. This was due to decreases in promotion and selling expense of $1.2 million as a result of decreases in salaries and benefits primarily due to headcount reductions and cost containment efforts. Offsetting these decreases was a reduction in gross profit of $762,000 as a result of lower sales in our DSD and DTR channels due to a reduction in sales of our core product, Jones Soda glass bottles coupled with the impact of the loss of significant DTR customers in early 2010, respectively.
For the six months ended June 30, 2010, gross profit decreased by approximately $1.4 million, or 40.0%, to $2.1 million as compared to $3.5 million in gross profit for the six months ended June 30, 2009. This decrease was primarily a result of reduction in Jones GABA shipments subsequent to its launch in February 2009 and lower sales volumes in our core product, Jones Soda glass bottles coupled with the impact to our DTR channel due to discontinuance of Jones Organicstm and Jones Naturals® brands as a result of the loss of significant DTR customers in early 2010. Additionally, this decrease was attributed to an additional $178,000 write-down of excess GABA inventory. These decreases to gross profit were offset by a reduction in promotion allowances and slotting fees and a significant reduction in storage costs per case due to lower inventory levels. For the six months ended June 30, 2010, gross profit as a percentage of revenue decreased to 22.7% from 24.1% compared to the first six months of 2009, caused primarily by the effect of the GABA write-off which contributed 1.9% to the decline.
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Jones Soda Co. has a market cap of $29.7 million; its shares were traded at around $1.12 with and P/S ratio of 1.2. JSDA is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
For the quarter ended June 30, 2010, revenue was approximately $5.4 million, a decrease of $2.1 million, or 28.3% from $7.5 million in revenue for the three months ended June 30, 2009. The decrease in revenue was primarily attributable to a decrease in total case sales of 41.9% to 474,500 cases. Case sales through our DTR and DSD channels decreased 36.2% to 390,500 cases. A decline in case sales of our core product, Jones Soda glass bottles, of approximately 95,100 cases contributed to the reduced case sales, and we believe this was caused primarily by reduced demand resulting from the impact of the economic downturn on consumer spending levels. We expect economic conditions to continue to have a negative impact on our business during 2010. Also contributing to the decline was a reduction in 24C shipments of 52,200 cases. In addition, the loss of significant DTR customers in early 2010, contributed to a lesser extent to the decline in case sales and resulted in our decision to discontinue the Jones Organicstm and Jones Naturals® brands. Case sales of concentrate to National Beverage decreased to 84,000 cases, or 59.0%, compared to the same period of 2009. As part of managements strategic refocus, we intend to continue to emphasize our higher-margin core products, including our Jones Pure Cane Soda glass bottle business and the product extensions initiated in 2009 including Jones Zilchtm, with less emphasis on our CSD channel, which is a lower margin business for us. We expect our strategy to focus on our higher margin core products and the loss of these significant DTR customers will have a negative impact on 2010 case sales compared to prior periods.For the quarter ended June 30, 2010, promotion allowances and slotting fees, which are a reduction to revenue, totaled $344,000, a decrease of $540,000, or 61.0%, from $884,000 a year ago. The decrease in promotion allowances and slotting fees was primarily attributable to a decrease in promotion allowances in our DSD channel and to a lesser extent, a decrease in our DTR channel due to pricing strategies which lowered the use of promotion allowances in exchange for lower delivered pricing. We believe using promotional allowances as a way to promote our core products, while judiciously using slotting fees to gain access on new products, is a more balanced strategy under current economic conditions.
For the quarter ended June 30, 2010, gross profit decreased by approximately $762,000, or 37.1%, to $1.3 million as compared to $2.1 million in gross profit for the quarter ended June 30, 2009. This decrease was primarily a result of lower sales volumes in our core product, Jones Soda glass bottles coupled with the impact to our DTR channel due to discontinuance of Jones Organicstm and Jones Naturals® brands as a result of the loss of significant DTR customers in early 2010. Additionally, this decrease was attributed to an additional $178,000 write-down of excess GABA inventory. These decreases to gross profit were offset by a reduction in promotion allowances and slotting fees. For the quarter ended June 30, 2010, gross profit as a percentage of revenue decreased to 24.1% from 27.5% compared to the second quarter of 2009, caused primarily the effect of the GABA write-off which contributed 3.3% to the decline.
Promotion and selling expenses for the quarter ended June 30, 2010 were approximately $1.1 million, a decrease of $1.2 million, or 51.9%, from $2.2 million for the quarter ended June 30, 2009. Promotion and selling expenses as a percentage of revenue decreased to 20.1% for the quarter ended June 30, 2010, from 30.0% in the same period in 2009. The decrease in promotion and selling expenses was primarily due to a decrease in selling expenses year over year of $497,000, to $545,000, or 10.2% of revenue. This decrease resulted primarily from decreases in sales personnel in conjunction with the strategic refocus and cost containment efforts during 2009, which included reductions in workforce and our realigned channel focus, contributing to a decrease in promotional expenses. Although we anticipate some continued effects of the prior years workforce reductions on 2010 in reducing ongoing promotion and selling expenses compared to 2009, we are in the process of hiring additional sales personnel to support our strategy of securing and growing larger distributor and national retail accounts. Also contributing to the decrease in promotion and selling expenses was a $666,000 decrease in trade promotion and marketing expenses from $1.2 million to $533,000, or 9.9% of revenue for the quarter ended June 30, 2010, due in part to our cost containment efforts.
Net loss for the quarter ended June 30, 2010 decreased to $1.6 million from a net loss of $2.0 million for the quarter ended June 30, 2009. This was due to decreases in promotion and selling expense of $1.2 million as a result of decreases in salaries and benefits primarily due to headcount reductions and cost containment efforts. Offsetting these decreases was a reduction in gross profit of $762,000 as a result of lower sales in our DSD and DTR channels due to a reduction in sales of our core product, Jones Soda glass bottles coupled with the impact of the loss of significant DTR customers in early 2010, respectively.
For the six months ended June 30, 2010, gross profit decreased by approximately $1.4 million, or 40.0%, to $2.1 million as compared to $3.5 million in gross profit for the six months ended June 30, 2009. This decrease was primarily a result of reduction in Jones GABA shipments subsequent to its launch in February 2009 and lower sales volumes in our core product, Jones Soda glass bottles coupled with the impact to our DTR channel due to discontinuance of Jones Organicstm and Jones Naturals® brands as a result of the loss of significant DTR customers in early 2010. Additionally, this decrease was attributed to an additional $178,000 write-down of excess GABA inventory. These decreases to gross profit were offset by a reduction in promotion allowances and slotting fees and a significant reduction in storage costs per case due to lower inventory levels. For the six months ended June 30, 2010, gross profit as a percentage of revenue decreased to 22.7% from 24.1% compared to the first six months of 2009, caused primarily by the effect of the GABA write-off which contributed 1.9% to the decline.
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