Reed's, Inc. (NASDAQ:REED) (OTCBB:REEDP), maker of the top-selling sodas in natural food stores nationwide, today announced its financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Highlights:
- First quarter sales increased 17% to a record $4.0 million.
- Gross profit in the first quarter increased 26% to $1.1 million.
- Gross margin in the first quarter increased by 200 basis points to 27%.
- Operating expenses in the first quarter decreased by $86,000, or 7% to $1.2 million.
- EBITDA for the first quarter was $172,000, as compared to an EBITDA loss of $159,000 in the first quarter of 2009 (See EBITDA table at end of this release for further non-GAAP information).
- Cash plus revolving LOC availability was $1.3 million at March 31, 2010, as compared to $1.5 million at December 31, 2009.
- Working capital increased by approximately $500,000 during the quarter, to $2.5 million
- Ramped up private label business with the addition of third private label customer.
- Began production/shipment of new ‘Reed’s Rx’ Remedy for Nausea and Motion Sickness.
- ‘Reed’s Rx’ Natural Ginger Nausea Relief gained placements in over 7,000 CVS/Pharmacy locations nationwide.
- Expanded relationship with Kroger’s and Woodman’s Food Market; and established new relationship with Associated Wholesale Grocers (AWG).
“The first quarter is usually the weakest, but the fact that the Company was EBITDA positive makes it clear to us that we have moved into profitability,” said Chris Reed, Founder and CEO of Reed’s, Inc. “Our strategic plans are unfolding and are boosted by the improving economy. In the first quarter, revenues from our existing brands provided a solid base while our new branded products and private label sales took us to a 17% sales increase over last year, with higher margins. As we go into the second quarter, sales of all of our brands continue to outpace last year, and we anticipate substantial increases in private-label product sales throughout 2010. Gross profits from private-label sales will fuel our promotions of branded products. We project 20%-plus overall revenue increases for 2010.”
Reed's Chief Financial Officer, Jim Linesch, commented, "We currently have $1.3 million cash available and we are cash flow positive. Our ability to run lean has helped us weather the economic downturn in 2009 and to reach profitability faster in 2010. Reed’s is nimble and quick, enabling us to seize opportunities that others cannot.”
See financial statements and EBITDA schedule at the end of this release.
Conference Call
Jim Linesch and Chris Reed will review the Company’s first quarter financial report in a conference call following the close of the market today. Time and dial-in information for the Company’s conference call will be available later in the day.
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. In 2009, Reed’s started producing Private Label natural beverages for select national chains. 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. Recently, Reed's introduced its ‘Reed’s Rx’ line of ginger-based nausea relief products for the drug store market and acquired the Sonoma Sparkler brand, a sparkling juice 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, 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.reedsgingerbrew.com or call 800-99-REEDS.
Follow Reed's on Twitter at: http://www.twitter.com/reedsgingerbrew
Reed's Facebook Fan Page at: http://www.facebook.com/pages/Reeds-Ginger-Brew-and-Virgils-Natural-Sodas/57143529039?ref=nf
Subscribe to Reed's RSS feed at: http://www.irthcommunications.com/REED_rss.xml
More information can be found at: http://www.irthcommunications.com/clients_REED.php
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.
REEDS, INC. CONDENSED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2010 and 2009 (Unaudited) | ||||||||||||||
| Three months ended March 31, | ||||||||||||||
| 2010 | 2009 | |||||||||||||
Sales | $ | 4,012,000 | $ | 3,417,000 | ||||||||||
| Cost of sales | 2,946,000 | 2,570,000 | ||||||||||||
| Gross profit | 1,066,000 | 847,000 | ||||||||||||
| Operating expenses: | ||||||||||||||
| Selling and marketing expense | 524,000 | 659,000 | ||||||||||||
| General and administrative expense | 652,000 | 603,000 | ||||||||||||
| Total operating expenses | 1,176,000 | 1,262,000 | ||||||||||||
| Loss from operations | (110,000 | ) | (415,000 | ) | ||||||||||
| Interest expense | (149,000 | ) | (83,000 | ) | ||||||||||
| Net loss | (259,000 | ) | (498,000 | ) | ||||||||||
| Preferred stock dividend | (14,000 | ) | - | |||||||||||
| Net loss attributable to common stockholders | $ | (273,000 | ) | $ | (498,000 | ) | ||||||||
| Loss per share available to common stockholders - basic and diluted | $ | (0.03 | ) | $ | (0.06 | ) | ||||||||
| Weighted average number of shares outstanding - basic and diluted | 9,834,696 | 9,041,483 | ||||||||||||
REED’S, INC. EBITDA SCHEDULE (Unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2010 | 2009 | |||||||||||||
| Net loss | $ | (259,000 | ) | $ | (498,000 | ) | ||||||||
| EBITDA adjustments: | ||||||||||||||
| Depreciation and amortization | 148,000 | 109,000 | ||||||||||||
| Interest expense | 149,000 | 83,000 | ||||||||||||
| Stock option compensation | 421,000 | 142,000 | ||||||||||||
| Impairment of assets | 134,000 | 147,000 | ||||||||||||
Total EBITDA adjustments | 431,000 | 339,000 | ||||||||||||
| EBITDA income (loss) from operations | $ | 172,000 | $ | (159,000 | ) | |||||||||
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.
REED’S, INC. CONDENSED BALANCE SHEETS | ||||||||||||||
|
March 31,
2010 |
December 31,
2009 | |||||||||||||
| ASSETS | (unaudited) | |||||||||||||
| Current assets: | ||||||||||||||
| Cash | $ | 235,000 | $ | 1,306,000 | ||||||||||
| Inventory | 3,177,000 | 2,884,000 | ||||||||||||
| Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $90,000 | 1,197,000 | 866,000 | ||||||||||||
| Prepaid and other current assets | 534,000 | 99,000 | ||||||||||||
| Total Current Assets | 5,143,000 | 5,155,000 | ||||||||||||
| Property and equipment, net of accumulated depreciation of $833,000 and $727,000, respectively | 3,602,000 | 3,655,000 | ||||||||||||
| Brand names | 1,029,000 | 1,029,000 | ||||||||||||
| Deferred financing fees, net of amortization of $41,000 and $10,000, respectively | 100,000 | 131,000 | ||||||||||||
| Total assets | $ | 9,874,000 | $ | 9 ,970,000 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts payable | $ | 946,000 | $ | 954,000 | ||||||||||
| Accrued expenses | 137,000 | 127,000 | ||||||||||||
| Dividends payable | 14,000 | - | ||||||||||||
| Recycling fees payable | 467,000 | 456,000 | ||||||||||||
| Lines of credit | 881,000 | 1,415,000 | ||||||||||||
| Current portion of long term financing obligation | 44,000 | 40,000 | ||||||||||||
| Current portion of capital leases payable | 25,000 | 24,000 | ||||||||||||
| Current portion of note payable | 103,000 | 102,000 | ||||||||||||
| Total current liabilities | 2,617,000 | 3,118,000 | ||||||||||||
| Long term financing obligation, less current portion, net of discount of $714,000 and $726,000, respectively | 2,274,000 | 2,274,000 | ||||||||||||
| Capital leases payable, less current portion | 123,000 | 130,000 | ||||||||||||
| Note payable, less current portion | 45,000 | 71,000 | ||||||||||||
| Total liabilities | 5,059,000 | 5,593,000 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
Preferred stock, $10 par value, 500,000 shares authorized, 46,621 shares outstanding | 466,000 | 466,000 | ||||||||||||
Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 110,794 and 120,820 shares issued and outstanding, respectively | 1,108,000 | 1,208,000 | ||||||||||||
Common stock, $.0001 par value, 19,500,000 shares authorized, 10,128,206 and 9,606,127 shares issued and outstanding, respectively | 1,000 | 1,000 | ||||||||||||
Additional paid in capital | 21,014,000 | 20,203,000 | ||||||||||||
| Accumulated deficit | (17,774,000 | ) | (17,501,000 | ) | ||||||||||
| Total stockholders’ equity | 4,815,000 | 4,377,000 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 9,874,000 | $ | 9,970,000 | ||||||||||
<fc:contacts xmlns="http://www.w3.org/1999/xhtml"><b>Investor Relations:</b><br/>IRTH Communications, LLC<br/>Mr. Andrew Haag, Managing Partner<br/>Tel: +1-888-825-6456<br/>E-mail: <a href="mailto:reed@irthcommunications.com">reed@irthcommunications.com</a><br/>Website:<span class="bwunderlinestyle"/><a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.irthcommunications.com&esheet=6285844&lan=en_US&anchor=www.irthcommunications.com&index=8&md5=ee038b19e8d7a61253ad8416071d52c5">www.irthcommunications.com</a></fc:contacts>