My last comments centered around brand building and I am increasingly confident that we are well-positioned to accelerate brand marketing. With the new brand visualization and market, we have product back in stock and much improved in-store visibility, while awareness of the better-for-you beverage proposition is on the rise. And as we announced last month, we added a sharp and experienced marketer to our leadership in our CMO, Kirsten Suarez, who brings experience from P&G, Taco Bell and, most recently from an early stage growth brand in the better-for-you space. Kirsten is already making an impact on how we think about brand building, consumer marketing, retail activation, and also portfolio management. We can share more tactically and regarding marketing investment levels on future calls.
I’ll turn it over to Florence, our Interim CFO for additional color to our financial results and I’ll return to wrap the big picture.
Florence Neubauer: Thank you, Amy. Good morning and thanks for joining the call today. I will now provide an overview of our third quarter financial results, discuss guidance, and then pass it back to Amy for final remarks. As mentioned earlier, in the third quarter of 2023, we delivered net sales of $43.1 million, down 2.6% versus same time prior year. This was caused by impact from the strong implementation of our price increase in the second quarter, coupled with our price increase from August 2022, which deliver a positive impact of $1.5 million, offset by declining volumes of 8.2% or $2.7 million, reflecting a supply chain challenging, resulting in lower order fulfillment. Gross margin remained strong at 45.4%, up 2.1 percentage points versus the same quarter a year ago, due to the impact of price increases and favorable cost of goods sold from improved rates and product mix.
This was partially offset by higher inventory losses related to exit of our legacy warehouses and brand [ph] and refresh rollout. Selling and marketing expenses increased by 58.4% to $20.5 million, entirely due to selling expenses, leaving our immediate supply chain remediation actions, freight to customer, and site transfer costs were temporarily elevated as expected. Our increased production levels also impacted our warehousing costs, with higher income in handling charges and additional charge fee. G&A expenses were $8.3 million or 19.1% of net sales, which is essentially flat compared to $8.3 million or 18.8% of net sales versus same time prior year. Stock-based compensation and non-cash expense was $1.9 million as compared to $6.8 million same period in prior year.
Net loss was $11.3 million compared to a net loss of $9.2 million last year, a decline of $2.1 million or 22.3%, primarily driven by the supply chain logistics challenges. Loss per share was 16% per diluted share to Zevia’s Class A common shareholders, flat with last year. Adjusted EBITDA loss was $9.1 million compared to an adjusted EBITDA loss of $2.1 million. Our balance sheet remains healthy with $38.5 million in cash and cash equivalents and no outstanding debt as of the end of the third quarter 2023 as well as an unused credit line of $20 million. Turning to guidance, we are narrowing our full year annual net sales guidance and reaffirming the high end of the range expecting to be between $165 million $168 million with the fourth quarter projections in the range of $36 million to $39 million, equivalent to an increase of 2% to 10% over prior year respectively.
Well, we do not provide guidance on adjusted EBITDA. We do expect costs associated with the supply chain stabilization and transformation to continue to negatively impact us in the fourth quarter, but to a lesser extent versus the third quarter as we complete the corrective action. Turning back the call to Amy.
Amy Taylor: Thank you, Florence. I’ll close up here with a few comments before turning it over to Q&A. Zevia has a very healthy brand and business model and continue to experience robust consumer demand. We are realizing price in the market with strong consumer acceptance and delivering improving gross margins. We are quickly returning to growth in legacy retail partners and winning distribution by category and by channel. We look forward to sharing more on our next call after Q4 and looking ahead to 2024. Our number one priority in the meantime, is to continue to stabilize and improve our supply chain returning it to our best-in-class service levels and putting the network transformation back on track so that it supports our long-term objective of driving sustainable and profitable growth. So, this concludes our prepared remarks. We will now open the call to your questions. Operator?
Q – Bonnie Herzog: Hi. Thank you. Good morning.
Amy Taylor: Good Morning, Bonnie.
Bonnie Herzog: Good morning. My first question has to do with your supply chain disruption. I guess I was maybe hoping for just a little bit more color on the progress you’ve made to improve this. I’d be curious to hear how things are trending relative to your internal expectations. And then, you mentioned, you’re seeing progress in improved on-time and in-full deliveries in the quarter, so is there a way to quantify that? And then, curious if things have possibly accelerated in October and so far in November related to that?
Amy Taylor: Sure, sure. Thanks, Bonnie. So the supply chain fixes in short required organizational changes supply chain transformation adaptations and then investments in inventory and thus warehouse and transfer. And well, we don’t provide exact fill rates. We can give a sense of progression. Our low point from a service perspective was due in July. And in recent weeks, we’ve reflected material improvement, specifically in approaching service levels from Q1 at the start of this transformation. And we are seeing improvement literally week-over-week. So we anticipate being back at, what I’ll call optimal service levels by year-end. So that’s in sight right now. And we’re hearing positive feedback accordingly from retail partners to confirm what we see on our side. And in parallel, we’re able to return to optimal promotional levels to support the return to growth and of course, protection of market share growth in November.
Bonnie Herzog: Okay. That’s encouraging. And then my second question, I just wanted to, of course, ask you about your presence at the NACS show this year. It’s the first time you were there and I saw you. So you guys had a great boost. I was just hoping to hear any early read on some of the meetings that you had with a lot of the retailers and just the opportunity you still see for getting into the C-store channel next year possibly with spring shelf resets. And then the second part of that Amy would just be maybe an update on progress you’re making with DSD partners. I know you guys signed new advantage solutions but any more progress with signing up more DSD partners. Thanks.
Amy Taylor: Perfect. Yes, you know the story well Bonnie. I think you kind of reported it there. So we were excited about having a presence at NACS this year for the first time ever and made a lot of very relevant introductions there, also had the opportunity to trial products. And I think there’s always a positive surprise. The consumer or retail actually tries Zevia, including our new taste cola, which we’re excited about and really great tasting energy drinks that we really sell on taste and clean ingredients as points of differentiation within the better-for-you space. And so, in terms of speaking with retailers in convenience, it’s too early to provide like quantities or timelines on our rollout. But there’s been very good receptivity for test partners.
