Reed's, Inc. (NASDAQ: REED), maker of the top-selling sodas in
natural food stores nationwide, today announced the financial
results for its first fiscal quarter ending March 31, 2012.
Financial Highlights for the Quarter:
- Revenues increased 27% to $6.5 million in 2012, compared to
2011.
- Gross profit increased to $2.0 million, an increase of 40% from
2011. The gross profit percentage increased to 30% of sales, an
increase from 28% in 2011.
- Earnings before non-cash items and finance costs (modified
EBITDA) increased to $268,000 during 2011, as compared to $31,000
in the prior year period. (See EBITDA table at end of this release
for further non-GAAP information).
- Net loss for 2012 was $124,000, or $0.01 per share, compared to
a loss of $365,000 a year earlier.
- Working capital at March 31, 2012 was $2.6 million, as compared
to $2.7 million at December 31, 2011.
The Company also announced that the credit limit on their
revolving line of credit has been increased from $3 million to $4
million, effective May 11, 2012.
Operational Highlights:
- Expanded distribution into Michigan and Tennessee markets.
- Entered into an enhanced distribution partnership with largest
distributor, UNFI.
- Gained entry into Spartan stores (estimated 70 to start) based
out of Grand Rapids, MI.
- Gained new distribution into TJX Stores (Home Goods Division -
est 290+ stores).
- DECA Military approves authorization of Reed's/Virgil's skus to
be sold in commissaries across the US. Product to be sold in by
Reed's current DSD network.
- Continued upgrading Los Angeles plant to increase capacity and
efficiency.
"This is our 10th quarter in a row of double-digit growth,"
stated Chris Reed, Founder, Chairman and CEO of Reed's, Inc. "We
are pleased with the continued, strong, top-line revenue growth on
our brands and private label. We are also excited by the results of
our margin improvement program started in the fourth quarter of
2011. Significant increases in both revenues and gross profit
margins are pushing us quickly to profitability."
James Linesch, Chief Financial Officer, stated, "Our overall
working capital is sufficient for our current business expansion
and is anticipated to increase through cash positive operations.
Our drop in cash to $101,000 at March 31, 2012, with an additional
$213,000 available, is largely due to a buildup of certain
inventory items and a short term increase in our receivables. We
are focusing on inventory reductions by planning our productions
closer to our sales. We have reduced our inventory levels by more
than $500,000 since quarter-end, and we anticipate further
reductions in the months ahead. Along with an increased limit on
our revolving line of credit, we believe that we will not require
additional capital to carry out our current business plans for
2012."
The Company will conduct a conference call @ 4:15PM EDT on
Monday, May 14th to discuss its 2012 first quarter results and
outlook for the remainder of 2012. 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 Months Ended March 31, 2012 and 2011
(Unaudited)
Three months ended March 31,
----------------------------
2012 2011
------------- -------------
Sales $ 6,539,000 $ 5,140,000
Cost of tangible goods sold 4,185,000 3,321,000
Cost of goods sold - idle capacity 369,000 402,000
------------- -------------
Gross profit 1,985,000 1,417,000
------------- -------------
Operating expenses:
Delivery and handling expenses 479,000 388,000
Selling and marketing expense 722,000 580,000
General and administrative expense 740,000 655,000
------------- -------------
Total operating expenses 1,941,000 1,623,000
------------- -------------
Income (loss) from operations 44,000 (206,000)
Interest expense (168,000) (159,000)
------------- -------------
Net loss (124,000) (365,000)
Preferred stock dividend (9,000) (11,000)
------------- -------------
Net loss attributable to common stockholders $ (133,000) $ (376,000)
============= =============
Loss per share available to common
stockholders - basic and diluted $ (0.01) $ (0.04)
============= =============
Weighted average number of shares outstanding
- basic and diluted 10,921,076 10,619,242
============= =============
MODIFIED EBITDA SCHEDULE
Three Months Ended March 31,
----------------------------
2012 2011
------------- -------------
Net loss $ (124,000) $ (365,000)
------------- -------------
Modified EBITDA adjustments:
Depreciation and amortization 183,000 144,000
Interest expense 168,000 159,000
Stock option compensation 26,000 50,000
Other stock compensation for services 15,000 43,000
------------- -------------
Total EBITDA adjustments 392,000 396,000
------------- -------------
Modified EBITDA income from operations $ 268,000 $ 31,000
============= =============
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
March 31, December 31,
2012 2011
------------- -------------
ASSETS (unaudited)
Current assets:
Cash $ 101,000 $ 713,000
Inventory 6,212,000 6,099,000
Trade accounts receivable, net of allowance
for doubtful accounts and returns and
discounts of $135,000 and $135,000,
respectively 2,090,000 1,626,000
Prepaid inventory 238,000 168,000
Prepaid and other current assets 150,000 123,000
------------- -------------
Total Current Assets 8,791,000 8,729,000
Property and equipment, net of accumulated
depreciation of $1,891,000 and $1,739,000,
respectively 3,470,000 3,512,000
Brand names 1,029,000 1,029,000
Deferred financing fees, net of amortization
of $69,000 and $50,000, respectively 67,000 85,000
------------- -------------
Total assets $ 13,357,000 $ 13,355,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,543,000 $ 2,310,000
Accrued expenses 200,000 196,000
Dividends payable 84,000 83,000
Recycling fees payable 84,000 111,000
Line of credit 3,021,000 3,095,000
Current portion of long term financing
obligation 76,000 71,000
Current portion of capital leases payable 58,000 56,000
Current portion of term loan 157,000 152,000
------------- -------------
Total current liabilities 6,223,000 6,074,000
Long term financing obligation, less current
portion, net of discount of $614,000 and
$626,000, respectively 2,240,000 2,247,000
Capital leases payable, less current portion 137,000 153,000
Term loan, less current portion 535,000 576,000
------------- -------------
Total Liabilities 9,135,000 9,050,000
------------- -------------
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,
72,310 and 80,415 shares issued and
outstanding, respectively 723,000 804,000
Common stock, $.0001 par value, 19,500,000
shares authorized, 10,960,088 and
10,885,797 shares issued and outstanding,
respectively 1,000 1,000
Additional paid in capital 23,055,000 22,924,000
Accumulated deficit (20,023,000) (19,890,000)
------------- -------------
Total stockholders' equity 4,222,000 4,305,000
------------- -------------
Total liabilities and stockholders' equity $ 13,357,000 $ 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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