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, 2012.
Financial Highlights for the Quarter:
- Revenues increased 23% to $7.9 million in 2012, compared to
2011.
- Gross profit increased to $2.5 million in 2012, an increase of
21% from 2011.
- Earnings before non-cash items and finance costs (modified
EBITDA) increased to $395,000 during 2012, as compared to $269,000
in the prior year period (See EBITDA table at end of this release
for further non-GAAP information).
- Net income for the 2012 second quarter was $22,000 compared to
a loss of $175,000 a year earlier.
- Working capital at June 30, 2012 was $3.2 million, as compared
to $2.7 million at December 31, 2011.
Operational Highlights:
- Volume of branded Reed's and Virgil's products shipped grew at
a rate of 16% versus same quarter prior year and is up over 20% YTD
over last year.
- New distribution partnership with Central Beverage of
Chicago.
- New distribution arrangement with Geyser Beverage of the
Greater San Francisco Bay area market.
- Expanded Reed's and Virgil's into Tops Friendly Markets located
upstate NY and PA.
- New distribution agreement with Zip Beverage of Montana.
- Secured three new private label brand contracts with some of
the largest retailers in the US.
- Introduced Reed's and Virgil's products to the Asian market
attending the Natural Products Expo Asia show for first time.
- Reed's introduces Culture Club Kombucha in Baltimore, MD,
becoming a title sponsor of Natural Products Show Expo East and
sampling more than 10,000 retailers, distributors and
attendees.
- Gained Culture Club Kombucha distribution into a minimum of
800+ new retailers throughout the US and into select Whole Foods
regions with more to come.
- Snoop Lion Partners With Reed's Ginger Brew and Causes.com to
Raise Awareness for the Mind Gardens Project in Jamaica.
- Continued Los Angeles plant upgrades designed to increase
capacity and efficiency, including doubling tank capacity to
accommodate fast expansion of the new Kombucha line.
"We have now expanded our business at over 20% for the last
twelve quarters. Brand growth continues to be the main driver for
this expansion. Our recent launch of Reed's Culture Club Kombucha
has taken off and could possibly be our biggest growth driver for
2013 and beyond. We have set our goal at being the number one or
two in this $250-300 million fast growing Kombucha category,"
stated Chris Reed, Founder and CEO at Reed's Inc.
Chris Reed further commented, "Additionally, our private label
business is accelerating as we become more accepted as a reliable
supplier. Revenues from private label brands grew twofold over same
quarter prior year due to the development of two new partnerships
with national retail chains."
James Linesch, Chief Financial Officer, stated, "Our business
has continued its healthy organic expansion in the third quarter.
Gross margins on our branded products improved slightly over last
year and gross margins on our private label products are running
about 5% higher than last year. Our kombucha launch has involved an
increase in production costs as well as promotional costs, both of
which affected our overall margins and profitability in the
quarter. As our kombucha rollout progresses, however, these
start-up costs will come down. We anticipate that all of our
product lines will contribute strong net margins in 2013."
The Company will conduct a conference call @ 4:15PM EST today,
November 14th, to discuss its 2012 third quarter results and
outlook for the future. To participate in the call, please dial the
following number 5 to 10 minutes prior to the scheduled call time
(866) 240-5139. International callers should dial (713)
481-0091.
A replay will be available within a few days after the meeting
in the investor relations section of the Company's website at:
http://www.reedsinc.com/investor-relations/.
About Reed's, Inc.
Reed's, Inc. makes the top-selling natural sodas in the natural
foods industry sold in over 13,000 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
https://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-K 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.
REED'S, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Sales $ 7,888,000 $ 6,400,000 $22,258,000 $17,731,000
Cost of tangible goods
sold 4,810,000 3,970,000 13,691,000 11,053,000
Cost of goods sold -
idle capacity 621,000 405,000 1,428,000 1,300,000
----------- ----------- ----------- -----------
Gross profit 2,457,000 2,025,000 7,139,000 5,378,000
----------- ----------- ----------- -----------
Operating expenses:
Delivery and handling
expenses 763,000 587,000 1,827,000 1,519,000
Selling and marketing
expense 818,000 570,000 2,239,000 1,751,000
General and
administrative expense 693,000 867,000 2,238,000 2,198,000
----------- ----------- ----------- -----------
Total operating
expenses 2,274,000 2,024,000 6,304,000 5,468,000
----------- ----------- ----------- -----------
Income (loss) from
operations 183,000 1,000 835,000 (90,000)
Interest expense (161,000) (175,000) (493,000) (504,000)
----------- ----------- ----------- -----------
Net income (loss) 22,000 (174,000) 342,000 (594,000)
Preferred stock
dividends (8,000) (11,000) (39,000) (55,000)
----------- ----------- ----------- -----------
Net income (loss)
attributable to common
stockholders $ 14,000 $ (185,000) $ 303,000 $ (649,000)
=========== =========== =========== ===========
Income (loss) per share
available to common
stockholders, basic - $ (0.02) $ 0.03 $ (0.06)
=========== =========== =========== ===========
Weighted average number
of shares outstanding -
basic 11,501,152 10,835,858 11,155,860 10,758,529
=========== =========== =========== ===========
Income (loss) per share
available to common
stockholders, diluted - $ (0.02) $ 0.03 $ (0.06)
=========== =========== =========== ===========
Weighted average number
of shares outstanding -
diluted 12,288,503 10,835,858 11,706,186 10,758,529
=========== =========== =========== ===========
Reed's Inc.
MODIFIED EBITDA SCHEDULE
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Net loss $ 22,000 $ (174,000) $ 342,000 $ (594,000)
----------- ----------- ----------- -----------
Modified EBITDA
adjustments:
Depreciation and
amortization 184,000 164,000 556,000 472,000
Interest expense 161,000 175,000 493,000 504,000
Stock option and warrant
compensation 26,000 59,000 81,000 189,000
Other stock compensation
for services 2,000 45,000 23,000 123,000
----------- ----------- ----------- -----------
Total EBITDA
adjustments 373,000 443,000 1,153,000 1,288,000
----------- ----------- ----------- -----------
Modified EBITDA $ 395,000 $ 269,000 $ 1,495,000 $ 694,000
=========== =========== =========== ===========
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,
2012 2011
------------- -------------
ASSETS (unaudited)
Current assets:
Cash $ 1,429,000 $ 713,000
Inventory 5,963,000 6,099,000
Trade accounts receivable, net of allowance
for doubtful accounts and returns and
discounts of $200,000 and $135,000,
respectively 2,899,000 1,626,000
Prepaid inventory 314,000 168,000
Prepaid and other current assets 159,000 123,000
------------- -------------
Total Current Assets 10,764,000 8,729,000
Property and equipment, net of accumulated
depreciation of $2,199,000 and $1,739,000,
respectively 3,385,000 3,512,000
Brand names 1,029,000 1,029,000
Deferred financing fees, net of amortization
of $78,000 and $50,000, respectively 32,000 85,000
------------- -------------
Total assets $ 15,210,000 $ 13,355,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,354,000 $ 2,310,000
Accrued expenses 204,000 196,000
Dividends payable 71,000 83,000
Recycling fees payable 21,000 111,000
Line of credit 3,574,000 3,095,000
Current portion of long term financing
obligation 85,000 71,000
Current portion of capital leases payable 64,000 56,000
Current portion of term loan 170,000 152,000
------------- -------------
Total current liabilities 7,543,000 6,074,000
Long term financing obligation, less current
portion, net of discount of $589,000 and
$626,000, respectively 2,219,000 2,247,000
Capital leases payable, less current portion 104,000 153,000
Term loan, less current portion 445,000 576,000
------------- -------------
Total Liabilities 10,311,000 9,050,000
------------- -------------
Commitments and contingencies
Stockholders' equity:
Series A Convertible Preferred stock, $10
par value, 500,000 shares authorized,
25,411 and 46,621 shares issued and
outstanding, respectively 254,000 466,000
Series B Convertible Preferred stock, $10
par value, 500,000 shares authorized,
48,985 and 80,415 shares issued and
outstanding, respectively 490,000 804,000
Common stock, $.0001 par value, 19,500,000
shares authorized, 11,821,319 and
10,885,833 shares issued and outstanding,
respectively 1,000 1,000
Additional paid in capital 23,741,000 22,924,000
Accumulated deficit (19,587,000) (19,890,000)
------------- -------------
Total stockholders' equity 4,899,000 4,305,000
------------- -------------
Total liabilities and stockholders' equity $ 15,210,000 $ 13,355,000
============= =============
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Contact: Investor Relations Reed's, Inc. (310) 217-9400
ext. 18 Email: Email Contact www.reedsinc.com
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