Jones Soda (JSDA) Earnings Call: What to expect

Jones Soda Co. (NASAQ:JSDA), whose stock price took a meteoric rise to $32 a share in April – only to come crashing back down to $10 since, is due to report earnings on November 2nd. They haven’t formally announced their earnings date; I’m guesstimating November 2nd because its 3 months after their last earnings call. But whether they release earnings in 2 weeks or 3 weeks isn’t the question here. The million dollar question is how much Soda did Jones sell in Q3?

I can’t remember a more anticipated announcement since Dendreon’s (DNDN) FDA response letter back in May.

If you don’t know the Jones Soda Story, here is in a nutshell: they announced a huge distribution deal in back in spring, sending the company’s share price to $32… but the announcement was premature. They had a rough time growing their distribution channel of 1,440 to 15,200 in 6 month’s time. These delays caused them to not get enough shelf space by the Memorial Day to take advantage of early summer sales. In fact, they missed 2 straight quarters in a row because of their distribution delays. Then the shareholder lawsuits started trickling in. Not a pretty sight.

In spite of their setbacks, Jones Soda is still very much in the game. On September 18th, CEO Peter Van Stolk made an announcement at the Think Equity conference that the average retailer in its distribution list has sold Jones Soda for 131 days or just over 4 months. This is, of course, great news that their product is now fully stocked in stores like the Kroger Company (KR), and the largest retailer on the face of the planet – Wal-Mart (WMT).

Back to the million dollar question - how much Soda did Jones sell in Q3? Let the speculation begin:
After scouring their last 10-Q for quarter ending June 30th, I found that total combined case sales (including all their beverages, not just cans) was 3,445,000. Revenue increased 29.8% to $13.0 million compared to $10.0 million a year ago. You can do the math; on average they are selling each case for $3.77 each.

I’ll give you 3 scenarios for Q3:

This is complete speculation here, but I’m going to go with #1. $24.50 Million in revenue. With margins of 34%, that leaves them with $8.3 million in Gross Profit. Let’s just say their Operating expenses increased by 10% to $5.5 million for the quarter, which leaves them with $2.8 million or $.10 a share. Again, this is pure speculation – they still have licensing revenue to account for, interest income – and on the downside, Jones started an ad campaign this quarter which could increase their operating expenses more than my estimate. Plus, margins may be adversely impacted by their new distribution deals.

So that’s it America – if Jones Soda can increase their Q3 total case sales by 190% over Q2, they will beat estimates. Sounds a little scary, doesn’t it? Not when they increased their distribution channels by 1,047%.

There are a lot of unknowns this quarter, but we’re expecting Jones to open up a can of Whoop-Ass and beat analyst estimates of .03 a share.

But what if Jones misses that target? There are thousands of blood-sucking lawyers out there ready to take every penny from Jones' Directors should they 'mislead the public' yet again, then what?

Is the American consumer really embracing Jones Soda products? How can we be sure and how much money are you willing to bet that Jones can pull off the quarter?

If they beat estimates, it's going to be a Galactic Kegger pumped with Jones Rootbeer. But if they miss and don't have a positive outlook, shares will go to $7 in a no time.

Article written by Eric Cheshier

Co-Founder of theStockMasters.com

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