LOS ANGELES, CA -- (Marketwire) -- 08/10/10 -- Reed's, Inc. (
Financial Highlights:
-- Second quarter sales increased 16% to a record $4.9 million. Fiscal six
month 2010 sales were 17% ahead of 2009. Branded product sales
represented approximately 75% of the overall sales increases.
-- Gross profit was 24% of sales during the quarter and 25% for the six
month period, as compared to 26% in 2009.
-- Operating expenses decreased during both the second quarter and six
month periods in 2010 as compared to 2009.
-- EBITDA income for the second quarter 2010 was $209,000, as compared to
a loss of $488,000 in the second quarter of 2009. For the six month
period, EBITDA income was $414,000, as compared to a loss of $483,000
in the prior year period. (See EBITDA table at end of this release for
further non-GAAP information).
-- Net loss for the quarter narrowed sharply to $164,000, compared to net
loss of $873,000 during 2009.
-- Working capital increased by approximately $370,000 during the quarter
to $2.4 million.
-- Cash was $1.1 million at June 30, 2010, as compared to $1.3 million at
December 31, 2009. Additionally, there was $206,000 available on the
revolving line of credit at June 30, 2010.
Second Quarter Developmental Highlights:
-- Reached fourth private label agreement with a national wholesale
grocer.
-- Began shipment of selected Reed's and Virgil's brands to all Fresh &
Easy locations.
-- New Distribution agreement in South Korea.
-- Expanded branded product sales in Canada, primarily to Quality Foods.
-- Meijer Stores agreed to carry selected Reed's and Virgil's brands in
all of its stores.
-- Expanded product placement into Harris Teeter Food Markets.
-- Natural Ginger Nausea Relief product has experienced initial consumer
acceptance in CVS, with expansion into Fred Meyers, Publix and Ralphs.
"Our positive results reflect the payoff from all the hard work of our seasoned sales team over the past year, as we gained a stronger foothold in mainstream grocery stores," said Chris Reed, Founder, Chairman and CEO of Reed's, Inc. "We achieved record second quarter revenues, driven primarily by increasing sales of our branded products, which we anticipate will continue for the balance of the year. Sales of all our brands continue to outpace last year. We have a very active private label program and expect to land a number of additional national accounts soon. This aspect of our business has not yet had a significant impact on our financials. We expect increasing sales of our private label products as we go into the third and fourth quarters. In addition, we will be introducing new diet sodas shortly, and we have several other new exciting product lines in development." Added Mr. Reed, "Our basket of goods is expanding and improving, and we have the talent to execute our vision. We plan to continue our double-digit growth rates and accelerate into 2011."
Reed's Chief Financial Officer, Jim Linesch, commented, "We've held our operating costs low while increasing our revenues, indicating the scalability of our business. Our organization is nimble and opportunistic, taking full advantage of dynamic changes in the marketplace. The Company is adequately capitalized to execute the new business initiatives that are currently on our plate. We plan to finance our current growth through internally-generated funds, unless we have a super opportunity that needs additional financing. We took a little hit to our margins in Q2, as a percent of sales, primarily due to overhead costs as we improve and document our plant procedures for food quality and safety. Our direct margins on products sold, however, remained constant from last year despite a very competitive environment."
Added Mr. Linesch, "EBITDA income in 2010 exceeded interest expense during both the three and six month periods, indicating the positive contribution made to working capital from our operations. As we proceed into Q3, we have experienced record sales for July and a strong backlog going into August."
See financial statements and EBITDA schedule at the end of this release.
Conference Call
The Company will conduct a conference call at 4:15 p.m. Eastern Daylight Time on Tuesday, August 10, 2010 to discuss its second quarter 2010 results. To participate in the call, please dial the following number five to ten minutes prior to the scheduled call time: 888-240-4700. International callers should dial 512-225-9559. The conference ID for this call is 936603#.
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 All Natural Ginger Nausea Relief product for the over-the-counter stomach aisle for all retail channels 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.
-- FINANCIAL TABLES FOLLOW --
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2010 and 2009
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Sales $ 4,905,000 $ 4,214,000 $ 8,917,000 $ 7,631,000
Cost of sales 3,736,000 3,114,000 6,682,000 5,684,000
----------- ----------- ----------- -----------
Gross profit 1,169,000 1,100,000 2,235,000 1,947,000
----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing
expense 538,000 548,000 1,062,000 1,207,000
General and
administrative expense 672,000 670,000 1,324,000 1,273,000
Impairment of assets - 641,000 - 641,000
----------- ----------- ----------- -----------
Total operating
expenses 1,210,000 1,859,000 2,386,000 3,121,000
----------- ----------- ----------- -----------
Loss from operations (41,000) (759,000) (151,000) (1,174,000)
Interest expense (123,000) (114,000) (272,000) (197,000)
----------- ----------- ----------- -----------
Net loss (164,000) (873,000) (423,000) (1,371,000)
Preferred stock
dividend (36,000) (23,000) (50,000) (23,000)
----------- ----------- ----------- -----------
Net loss attributable
to common stockholders $ (200,000) $ (896,000) $ (473,000) $(1,394,000)
=========== =========== =========== ===========
Loss per share -
available to common
stockholders basic
and diluted $ (0.02) $ (0.10) $ (0.05) $ (0.15)
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - basic
and diluted 10,215,185 9,119,099 10,025,991 9,080,506
=========== =========== =========== ===========
EBITDA SCHEDULE
For the Three Months and Six Months Ended June 30, 2010 and 2009
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
Net loss $ (164,000) $ (873,000) $ (423,000) $ (1,371,000)
------------ ------------ ------------ ------------
EBITDA adjustments:
Depreciation and
amortization 156,000 109,000 305,000 239,000
Interest expense 123,000 114,000 272,000 197,000
Stock option
compensation 46,000 122,000 154,000 269,000
Other stock
compensation for
services 48,000 40,000 106,000 183,000
------------ ------------ ------------ ------------
Total EBITDA
adjustments 373,000 385,000 837,000 888,000
------------ ------------ ------------ ------------
EBITDA income
(loss) from
operations $ 209,000 $ (488,000) $ 414,000 $ (483,000)
============ ============ ============ ============
The Company defines EBITDA (a non-GAAP measurement) 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
June 30, December 31,
2010 2009
------------ ------------
ASSETS (unaudited)
Current assets:
Cash $ 1,142,000 $ 1,306,000
Inventory 3,609,000 2,884,000
Trade accounts receivable, net of allowance
for doubtful accounts and returns and
discounts of $105,000 and $90,000,
respectively 1,376,000 866,000
Prepaid and other current assets 345,000 99,000
------------ ------------
Total Current Assets 6,472,000 5,155,000
Property and equipment, net of accumulated
depreciation of $946,000 and $727,000,
respectively 3,671,000 3,655,000
Brand names 1,029,000 1,029,000
Deferred financing fees, net of amortization
of $71,000 and $10,000, respectively 70,000 131,000
------------ ------------
Total assets $ 11,242,000 $ 9,970,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,506,000 $ 954,000
Accrued expenses 137,000 127,000
Dividends payable 48,000 -
Recycling fees payable 393,000 456,000
Line of credit 1,795,000 1,415,000
Current portion of long term financing
obligation 47,000 40,000
Current portion of capital leases payable 36,000 24,000
Current portion of note payable 104,000 102,000
------------ ------------
Total current liabilities 4,066,000 3,118,000
Long term financing obligation, less current
portion, net of discount of $702,000 and
$726,000, respectively 2,274,000 2,274,000
Capital leases payable, less current portion 166,000 130,000
Note payable, less current portion 18,000 71,000
------------ ------------
Total liabilities 6,524,000 5,593,000
------------ ------------
Commitments and contingencies
Stockholders' equity:
Series A Convertible Preferred stock, $10 par
value, 500,000 shares authorized, 46,621
shares issued and outstanding,
respectively 466,000 466,000
Series B Convertible Preferred stock, $10 par
value, 500,000 shares authorized, 95,479
and 120,820 shares issued and outstanding,
respectively 955,000 1,208,000
Common stock, $.0001 par value,
19,500,000 shares authorized, 10,268,453
and 9,606,127 shares issued and
outstanding, respectively 1,000 1,000
Additional paid in capital 21,270,000 20,203,000
Accumulated deficit (17,974,000) (17,501,000)
------------ ------------
Total stockholders' equity 4,718,000 4,377,000
------------ ------------
Total liabilities and stockholders' equity $ 11,242,000 $ 9,970,000
============ ============
Add to Digg Bookmark with del.icio.us Add to Newsvine
Investor Relations Contact:
Mr. Andrew Haag
Managing Partner
IRTH Communications, LLC
Tel: +1-888-825-6456
E-mail: Email Contact
Website: www.irthcommunications.com