Reed's, Inc. (NASDAQ: REED) Maker of the top-selling sodas in
natural food stores nationwide today announced the financial
results for its third fiscal quarter ending September 30, 2011.
Financial Highlights:
- Revenues during the third quarter of 2011 increased by 18% to
6.4 million from 5.5 million 2010. Branded product sales comprised
over 90% of sales and expanded by 19% over the prior year.
- Gross profit increased by 28% in the quarter to $2.0 million,
as compared to $1.6 million in 2011. As a percentage of sales,
gross profit margin improved to 32% during the third quarter, as
compared to 29% in 2010.
- Sales and marketing costs remained unchanged overall during the
third quarter, as compared to 2010, resulting in a lowering of the
ratio of sales costs to gross revenues to 9% of sales, from 11% in
2010.
- General and administrative expenses, before one-time charges,
decreased by approximately 10% during the third quarter, compared
to 2010.
- Earnings before non-cash items and finance costs (modified
EBITDA) increased to $269,000 during the third quarter, as compared
to $32,000 in the prior year period. (See EBITDA table at end of
this release for further non-GAAP information).
- Net loss for the quarter was $174,000, or $0.02 per share,
compared to a loss of $398,000 a year earlier.
- Working capital at September 30, 2011 was $2.2 million, as
compared to $1.8 million at December 31, 2010.
Operational Highlights:
- Expanded distribution by adding key DSD distributors in Nevada,
Michigan, Alabama and Louisiana
- New private label partnerships with 2 retail chains in the
greater Southeast marketplace
- Completed initial production of Light 55 Calories Reed's Extra
Ginger Brew
- Established a stronger partnership with our largest natural
foods distributor (UNFI), which is anticipated to lead continued
brand growth for 2011 and beyond
"This is our eighth quarter of significant growth," stated Chris
Reed, Founder, Chairman and CEO of Reed's Inc. "We believe we will
see continued sales growth and increasing margins moving forward
for the foreseeable future."
"Aside from one-time charges during the quarter, our ongoing
business earned proforma net income," stated James Linesch, Reed's
Chief Financial Officer. "We are moving into profitability at these
sales levels, as we leverage our operations over a wider business
base."
Conference Call
The Company will conduct a conference call @ 4:15 EST on
Tuesday, November 15th to discuss its 2011 third quarter results
and outlook for the rest of 2011. To participate in the call,
please dial the following number 5 to 10 minutes prior to the
scheduled call time 1-877-283-1603. International Callers should
dial 512-225-9559. The conference ID is 885913#. Conference Call
will be recorded and be available on www.reedsinc.com.
About Reed's, Inc.
Reed's, Inc. makes the top selling natural sodas in the natural
foods industry sold in over 10,500 natural food markets and
supermarkets nationwide. Its six award-winning non-alcoholic Ginger
Brews are unique in the beverage industry, being brewed, not
manufactured and using fresh ginger, spices and fruits in a brewing
process that predates commercial soft drinks. The Company owns the
top selling root beer line in natural foods, the Virgil's Root Beer
product line, and the top selling cola line in natural foods, the
China Cola product line. Other product lines include: Reed's Ginger
Candies and Reed's Ginger Ice Creams. In 2009, Reed's started
producing private label natural beverages for select national
chains.
Reed's products are sold through specialty gourmet and natural
food stores, mainstream supermarket chains, retail stores and
restaurants nationwide, and in Canada, as well as through private
label relationships with major supermarket chains. For more
information about Reed's, please visit the company's website at:
http://www.reedsinc.com or call 800-99-REEDS.
Follow Reed's on Twitter at
http://twitter.com/reedsgingerbrew
Reed's Facebook Fan Page at:
http://www.facebook.com/ReedsGingerBrew
SAFE HARBOR STATEMENT
Some portions of this press release, particularly those
describing Reed's goals and strategies, contain "forward-looking
statements." These forward-looking statements can generally be
identified as such because the context of the statement will
include words, such as "expects," "should," "believes,"
"anticipates" or words of similar import. Similarly, statements
that describe future plans, objectives or goals are also
forward-looking statements. While Reed's is working to achieve
those goals and strategies, actual results could differ materially
from those projected in the forward-looking statements as a result
of a number of risks and uncertainties. These risks and
uncertainties include difficulty in marketing its products and
services, maintaining and protecting brand recognition, the need
for significant capital, dependence on third party distributors,
dependence on third party brewers, increasing costs of fuel and
freight, protection of intellectual property, competition and other
factors, any of which could have an adverse effect on the business
plans of Reed's, its reputation in the industry or its expected
financial return from operations and results of operations. In
light of significant risks and uncertainties inherent in
forward-looking statements included herein, the inclusion of such
statements should not be regarded as a representation by Reed's
that they will achieve such forward-looking statements.
For further details and a discussion of these and other risks
and uncertainties, please see our most recent reports on Form
10-KSB and Form 10-Q, as filed with the Securities and Exchange
Commission, as they may be amended from time to time. Reed's
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events,
or otherwise. -- FINANCIAL TABLES FOLLOW
REED'S, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine months Ended September 30, 2011 and 2010
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
Sales $ 6,400,000 $ 5,428,000 $17,731,000 $14,345,000
Cost of tangible goods
sold 3,970,000 3,583,000 11,053,000 9,034,000
Cost of goods sold -
idle capacity 405,000 268,000 1,300,000 822,000
----------- ----------- ----------- -----------
Gross profit 2,025,000 1,577,000 5,378,000 4,489,000
----------- ----------- ----------- -----------
Operating expenses:
Delivery and handling
expenses 587,000 514,000 1,519,000 1,191,000
Selling and marketing
expense 570,000 570,000 1,751,000 1,632,000
General and
administrative expense 867,000 742,000 2,198,000 2,066,000
----------- ----------- ----------- -----------
Total operating
expenses 2,024,000 1,826,000 5,468,000 4,889,000
----------- ----------- ----------- -----------
Income (loss) from
operations 1,000 (249,000) (90,000) (400,000)
Interest expense (175,000) (149,000) (504,000) (421,000)
----------- ----------- ----------- -----------
Net loss (174,000) (398,000) (594,000) (821,000)
Preferred stock
dividends (11,000) (12,000) (55,000) (62,000)
----------- ----------- ----------- -----------
Net loss attributable to
common stockholders $ (185,000) $ (410,000) $ (649,000) $ (883,000)
=========== =========== =========== ===========
Loss per share available
to common stockholders,
basic and diluted $ (0.02) $ (0.04) $ (0.06) $ (0.09)
=========== =========== =========== ===========
Weighted average number
of shares outstanding -
basic and diluted 10,835,858 10,298,739 10,758,529 10,117,906
=========== =========== =========== ===========
MODIFIED EBITDA SCHEDULE
Three months ended Six months ended
September 30, September 30,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net loss $ (174,000) $ (398,000) $ (594,000) $ (821,000)
---------- ---------- ---------- ----------
Modified EBITDA adjustments:
Depreciation and
amortization 164,000 160,000 472,000 465,000
Interest expense 175,000 149,000 504,000 421,000
Stock option and warrant
compensation 59,000 35,000 189,000 139,000
Other stock compensation
for services 45,000 86,000 122,000 170,000
---------- ---------- ---------- ----------
Total EBITDA adjustments 443,000 430,000 1,287,000 1,195,000
---------- ---------- ---------- ----------
Modified EBITDA $ 269,000 $ 32,000 $ 693,000 $ 374,000
========== ========== ========== ==========
The Company defines modified EBITDA (a non-GAAP measurement) as net loss
before interest, taxes, depreciation and amortization, and non-cash
expense for securities. Other companies may calculate modified EBITDA
differently. Management believes that the presentation of modified EBITDA
provides a measure of performance that approximates cash flow before
interest expense, and is meaningful to investors.
REED'S, INC.
CONDENSED BALANCE SHEETS
September 30, December 31,
2011 2010
------------- -------------
ASSETS (unaudited)
Current assets:
Cash $ 554,000 $ 1,084,000
Inventory 6,121,000 4,555,000
Trade accounts receivable, net of allowance
for doubtful accounts and returns and
discounts of $135,000 and $105,000,
respectively 2,164,000 1,295,000
Prepaid inventory 392,000 138,000
Prepaid and other current assets 77,000 78,000
------------- -------------
Total Current Assets 9,308,000 7,150,000
Property and equipment, net of accumulated
depreciation of $1,586,000 and $1,178,000,
respectively 3,606,000 3,650,000
Brand names 1,029,000 1,029,000
Deferred financing fees, net of amortization
of $34,000 and $8,000, respectively 55,000 47,000
------------- -------------
Total assets $ 13,998,000 $ 11,876,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,742,000 $ 2,586,000
Accrued expenses 177,000 162,000
Dividends payable 96,000 44,000
Recycling fees payable 147,000 325,000
Line of credit 2,789,000 2,038,000
Current portion of long term financing
obligation 67,000 55,000
Current portion of capital leases payable 54,000 39,000
Current portion of note payable - 71,000
------------- -------------
Total current liabilities 7,072,000 5,320,000
Long term financing obligation, less current
portion, net of discount of $639,000 and
$677,000, respectively 2,254,000 2,268,000
Capital leases payable, less current portion 168,000 146,000
------------- -------------
Total Liabilities 9,494,000 7,734,000
------------- -------------
Commitments and contingencies
Stockholders' equity:
Series A Convertible Preferred stock, $10
par value, 500,000 shares authorized,
46,621 shares issued and outstanding 466,000 466,000
Series B Convertible Preferred stock, $10
par value, 500,000 shares authorized,
80,415 and 85,766 shares issued and
outstanding, respectively 804,000 858,000
Common stock, $.0001 par value, 19,500,000
shares authorized, 10,859,813 and
10,446,090 shares issued and outstanding,
respectively 1,000 1,000
Additional paid in capital 22,766,000 21,701,000
Accumulated deficit (19,533,000) (18,884,000)
------------- -------------
Total stockholders' equity 4,504,000 4,142,000
------------- -------------
Total liabilities and stockholders' equity $ 13,998,000 $ 11,876,000
============= =============
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Investor Relations Contact: Reed's, Inc. (310) 217-9400
ext.72 Email: Email Contact www.reedsinc.com
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