Reed's, Inc. (NASDAQ:REED) (“Reed’s” or the “Company”), maker of the top-selling sodas in natural food stores nationwide, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2009. Significant highlights of the results include:
- Fourth quarter 2009 sales increased 21%, over the prior year, to a record $3.5 million.
- Sales for the year ended December 31, 2009, were $15.2 million, which did not decrease from 2008.
- Gross profit for the year ended December 31, 2009, increased to $3,612,000, a 7% increase from fiscal 2008.
- Operating expenses before asset impairment charges decreased by 27% in fiscal 2009.
- The Company’s EBITDA loss for 2009 was $542,000, as compared to $3,073,000 in 2008, a $2.5 million improvement (See EBITDA table at end of this release for further non-GAAP information).
- Cash balance plus unused revolving line of credit was approximately $1.5 million at December 31, 2009.
- Working capital increased to $2.0 million at December 31, 2009, from $636,000 at 2008 year-end.
- Long-term debt, aside from capitalized lease financing, decreased to $71,000 at year-end, from $1.7 million in 2008.
Operating expenses before asset impairment charges decreased by $1.9 million in fiscal 2009, over the prior year, with a 37% decrease in selling and marketing costs and a 16% decrease in general administrative costs. Asset impairment charges are a non-cash expense recorded in connection with the sale-leaseback transaction completed in June, 2009. The reduction in selling and marketing expenses of 37%, or $1.4 million, is primarily a result of re-focusing of our core sales efforts toward increasing grocery chain business.
Long-term debt includes $130,000 in capitalized equipment leases and $2.2 million of capitalized facilities lease. The Company is required to capitalize a long-term lease obligation, due to certain terms. This liability is diminished by the monthly lease payments for the facilities, in a pro-rata amortization computation, and does not represent a separate debt of the Company that must be repaid.
Reed’s reported a net loss attributable to common shareholders in fiscal 2009 of $2,582,000, or $0.28 per share, versus a net loss of $3,838,000 in 2008, or $0.43 per share.
“Our results reflect successful execution of our strategy for 2009,” said Mr. Chris Reed, Founder and Chief Executive Officer of Reed’s, Inc. “We reduced our expenses, improved our margins and developed a number of new customer relationships that will have an increasing positive impact on our sales. While our sales were flat in 2009, we weathered the recession of 2008-2009 without decreases, which is far ahead of our competitors. The carbonated soft drink category of beverages declined by over 2% last year, after declining 3% in the prior year. Specialty categories declined by higher rates. However, Reed’s is now on a sales uptick, and we are out-pacing our peers in the industry.”
Mr. Jim Linesch, Chief Financial Officer of Reed's, Inc., stated, “As a result of our efforts, Reed’s is well-capitalized going into 2010, with a minimal amount of debt. We have the working capital we need to continue our expansion and to introduce new products that are in high demand.”
Added Mr. Reed, “We are excited about the prospects for our business in 2010 and believe we have the right team in place to execute on our growth strategy and create substantial value for our shareholders. We achieved a number of milestones in 2009 that we that we are building on this year. These include the launch of our private label business, where we hope to increase the number of private label accounts to a total of 7 to 10 by the end of 2010, and the launch of our new ‘Reed’s Rx’ product line for the drug store market. This represents an exciting new avenue of growth as we begin to roll out the product in major drug stores and groceries nationwide.”
Concluded Mr. Reed, “In 2010, we expect to continue to experience strong organic growth from our existing brands, new product lines, and increasing number of private label agreements. Our business is healthy and picking up momentum as we successfully execute on the initiatives we have defined. Therefore, we are reiterating our guidance for double-digit growth in 2010 as we explore new opportunities to build the Company and increase shareholder value.”
About Reed's, Inc.
Reed's, Inc. makes the top selling sodas in natural food markets nationwide and is currently selling in 10,500 supermarkets in natural foods and mainstream. 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.
In addition, 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. Recently, Reed's added the Sonoma Sparkler brands to its line, a celebration drink with an established customer base. Other product lines include: Reed's Ginger Candies and Reed's Ginger Ice Creams.
Reed's products are sold through specialty gourmet and natural food stores, mainstream supermarket chains, retail stores and restaurants nationwide, and in Canada. For more information about Reed's, please visit the company's website at: http://www.reedsgingerbrew.com or call 800-99-REEDS.
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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. STATEMENTS OF OPERATIONS For the Years Ended December 31, 2009 and 2008 | ||||||||
| 2009 | 2008 | |||||||
Sales | $ | 15,178,000 | $ | 15,277,000 | ||||
| Cost of sales | 11,566,000 | 11,891,000 | ||||||
| Gross profit | 3,612,000 | 3,386,000 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing expense | 2,412,000 | 3,817,000 | ||||||
| General and administrative expense | 2,632,000 | 3,140,000 | ||||||
| Impairment of assets | 641,000 | - | ||||||
| Total operating expenses | 5,685,000 | 6,957,000 | ||||||
| Loss from operations | (2,073,000 | ) | (3,571,000 | ) | ||||
| Interest income | - | 1,000 | ||||||
| Interest expense | (486,000 | ) | (244,000 | ) | ||||
| Net loss | (2,559,000 | ) | (3,814,000 | ) | ||||
| Preferred stock dividend | (23,000 | ) | (24,000 | ) | ||||
| Net loss attributable to common stockholders | $ | (2,582,000 | ) | $ | (3,838,000 | ) | ||
| Loss per share available to common stockholders - basic and diluted | $ | (0.28 | ) | $ | (0.43 | ) | ||
| Weighted average number of shares outstanding - basic and diluted | 9,238,002 | 8,884,338 | ||||||
REED’S, INC. BALANCE SHEETS | ||||||||
|
December 31,
2009 |
December 31,
2008 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,306,000 | $ | 229,000 | ||||
| Inventory | 2,884,000 | 2,837,000 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $90,000 and $97,000, respectively | 866,000 | 897,000 | ||||||
| Prepaid and other current assets | 99,000 | 68,000 | ||||||
| Total Current Assets | 5,155,000 | 4,031,000 | ||||||
| Property and equipment, net of accumulated depreciation of $727,000 and $1,150,000, respectively | 3,655,000 | 4,133,000 | ||||||
| Brand names | 1,029,000 | 800,000 | ||||||
| Deferred offering costs | - | 62,000 | ||||||
| Deferred financing fees, net of amortization of $10,000 and $40,000, respectively | 131,000 | 77,000 | ||||||
| Total assets | $ | 9,970,000 | $ | 9,103,000 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 954,000 | $ | 1,592,000 | ||||
| Accrued expenses | 127,000 | 96,000 | ||||||
| Recycling fees payable | 456,000 | 337,000 | ||||||
| Line of credit | 1,415,000 | 1,354,000 | ||||||
| Current portion of long term debt | - | 16,000 | ||||||
| Current portion of long term financing obligation | 40,000 | - | ||||||
| Current portion capital leases | 24,000 | - | ||||||
| Current portion note payable | 102,000 | - | ||||||
| Total current liabilities | 3,118,000 | 3,395,000 | ||||||
| Long term financing obligation, less current portion, net of discount of $726,000 | 2,274,000 | - | ||||||
| Capital leases payable, less current portion | 130,000 | - | ||||||
| Note payable, less current portion | 71,000 | - | ||||||
| Long term debt, less current portion | - | 1,747,000 | ||||||
| Total Liabilities | 5,593,000 | 5,142,000 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 46,621 and 47,121 shares issued and outstanding, respectively | 466,000 | 471,000 | ||||||
Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 120,820 shares issued and outstanding at December 31, 2009 | 1,208,000 | - | ||||||
Common stock, $.0001 par value, 19,500,000 shares authorized, 9,606,127 and 8,979,341 shares issued and outstanding, respectively | 1,000 | 1,000 | ||||||
Additional paid in capital | 20,203,000 | 18,408,000 | ||||||
| Accumulated deficit | (17,501,000 | ) | (14,919,000 | ) | ||||
| Total stockholders’ equity | 4,377,000 | 3,961,000 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,970,000 | $ | 9,103,000 | ||||
REED’S, INC. EBITDA SCHEDULE (Unaudited) | |||||||||
| Year ended December 31, | |||||||||
| 2009 | 2008 | ||||||||
| Net loss | $ | (2,559,000 | ) | $ | (3,814,000 | ) | |||
| EBITDA adjustments: | |||||||||
| Depreciation and amortization | 469,000 | 355,000 | |||||||
| Interest expense | 486,000 | 244,000 | |||||||
| Stock option compensation | 421,000 | 142,000 | |||||||
| Impairment of assets | 641,000 | - | |||||||
| Total EBITDA adjustments | 2,017,000 | 742,000 | |||||||
| EBITDA income (loss) from operations | $ | (542,000 | ) | $ | (3,073,000 | ) | |||
| The Company defines EBITDA as net loss before interest, taxes, depreciation and amortization, and non-cash expense for securities. Other companies may calculate EBITDA differently. Management believes that the presentation of EBITDA provides a meaningful measure of performance that approximates cash flow before interest expense, and is meaningful to investors. | |||||||||
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