LOS ANGELES, CA--(Marketwired - May 14, 2013) - Reed's, Inc. (
Financial Highlights for the Quarter:
- Revenues increased 24% in the first quarter to $8.1 million in 2013, compared to 2012.
- Gross profit increased 28% to $2.5 million in 2013.
- Earnings before non-cash items and finance costs (modified EBITDA) decreased to $25,000 during the 2013 quarter. (See EBITDA table at end of this release for further non-GAAP information).
- Net loss for the 2012 first quarter was $403,000 compared to a loss of $124,000 a year earlier.
- Working capital at March 31, 2013 was $2.1 million, as compared to $2.3 million at December 31, 2012.
Operational Highlights:
- Added four new flavors of our Reed's Culture Club Kombucha doubling them to eight
- Commenced production for a significant new private label customer
"We are very pleased with our top line and margin growth for the quarter," stated Chris Reed, Founder and CEO at Reed's Inc. "Our branded sales continue to expand at a healthy rate. We doubled the number of flavors in our Reed's Culture Club Kombucha line to eight. The new flavors are some of our finest work with flavors like Coconut Water Lime Kombucha and Cabernet Grape Kombucha. In addition, we secured a large private label customer in the foodservice industry that has significant potential. This first quarter profits were reduced considerably by the west coast plant being turned off for production of our core brands while we geared up our Kombucha production. We have figured out how to run our Kombucha more efficiently and expect to see the first quarter inefficiencies fade as the year progresses. We expect our growth to continue."
James Linesch, Chief Financial Officer, stated, "Our delivery freight increased to excessive levels in the first quarter. Other than the normal freight rate increases, there are two primary factors contributing to the increase. First, due to our west coast plant being consumed with Kombucha production, we were producing most of our branded products on the east coast and had to use expensive temperature controlled shipping to protect the shipments from freezing in the winter. Second, we expanded our Pacific Northwest business at a faster rate than other regions, which is our highest freight cost region. We are currently upgrading our plant and our procedures to accommodate a significant increase in volume. We expect to start producing our core brands again in the west coast plant soon which will drive down freight costs and our unabsorbed plant costs will also reduce with the increased utilization improving margins."
The Company will conduct a conference call @ 4:15PM EDT on May 14th to discuss its 2013 first 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/investors/ .
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 a top-selling cola line in natural foods, the China Cola product line. In 2012, the Company launched Reed's Culture Club Kombucha line of organic live beverages. 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, 2013 and 2012 | |||||||||||
| (Unaudited) | |||||||||||
| Three months ended March 31, | |||||||||||
| 2013 | 2012 | ||||||||||
| Sales | $ | 8,126,000 | $ | 6,539,000 | |||||||
| Cost of tangible goods sold | 4,905,000 | 4,185,000 | |||||||||
| Cost of goods sold - idle capacity | 686,000 | 369,000 | |||||||||
| Gross profit | 2,535,000 | 1,985,000 | |||||||||
| Operating expenses: | |||||||||||
| Delivery and handling expense | 906,000 | 479,000 | |||||||||
| Selling and marketing expense | 880,000 | 722,000 | |||||||||
| General and administrative expense | 988,000 | 740,000 | |||||||||
| Total operating expenses | 2,774,000 | 1,941,000 | |||||||||
| (Loss) income from operations | (239,000 | ) | 44,000 | ||||||||
| Interest expense | (164,000 | ) | (168,000 | ) | |||||||
| Net loss | (403,000 | ) | (124,000 | ) | |||||||
| Preferred stock dividend | - | (9,000 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (403,000 | ) | $ | (133,000 | ) | |||||
| Loss per share available to common stockholders - basic and diluted | $ | (0.03 | ) | $ | (0.01 | ) | |||||
| Weighted average number of shares outstanding - basic and diluted | 12,320,516 | 10,921,076 | |||||||||
| MODIFIED EBITDA SCHEDULE | |||||||||
| Three Months Ended March 31, | |||||||||
| 2013 | 2012 | ||||||||
| Net loss | $ | (403,000 | ) | $ | (124,000 | ) | |||
| Modified EBITDA adjustments: | |||||||||
| Depreciation and amortization | 145,000 | 183,000 | |||||||
| Interest expense | 164,000 | 168,000 | |||||||
| Stock option compensation | 119,000 | 26,000 | |||||||
| Other stock compensation for services | - | 15,000 | |||||||
| Total EBITDA adjustments | 428,000 | 392,000 | |||||||
| Modified EBITDA income from operations | $ | 25,000 | $ | 268,000 | |||||
The Company defines modified EBITDA (a non-GAAP measurement) as net loss before interest, taxes, depreciation and amortization, and non-cash expense paid with company 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, 2013 | December 31, 2012 | |||||||||
| ASSETS | (unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash | $ | 726,000 | $ | 1,163,000 | ||||||
| Inventory | 6,301,000 | 5,794,000 | ||||||||
| Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $300,000 and $399,000, respectively | 2,228,000 | 1,961,000 | ||||||||
| Prepaid inventory | 190,000 | 201,000 | ||||||||
| Prepaid and other current assets | 251,000 | 212,000 | ||||||||
| Total Current Assets | 9,696,000 | 9,331,000 | ||||||||
| Property and equipment, net of accumulated depreciation of $2,471,000 and $2,351,000, respectively | 3,400,000 | 3,422,000 | ||||||||
| Brand names | 1,029,000 | 1,029,000 | ||||||||
| Deferred financing fees, net of amortization of $38,000 and $26,000, respectively | 42,000 | 54,000 | ||||||||
| Total assets | $ | 14,167,000 | $ | 13,836,000 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 3,396,000 | $ | 3,368,000 | ||||||
| Accrued expenses | 209,000 | 233,000 | ||||||||
| Dividends payable | - | 74,000 | ||||||||
| Recycling fees payable | 22,000 | 19,000 | ||||||||
| Line of credit | 3,665,000 | 3,023,000 | ||||||||
| Current portion of long term financing obligation | 95,000 | 90,000 | ||||||||
| Current portion of capital leases payable | 72,000 | 69,000 | ||||||||
| Current portion of term loan | 183,000 | 176,000 | ||||||||
| Total current liabilities | 7,620,000 | 7,033,000 | ||||||||
| Long term financing obligation, less current portion, net of discount of $563,000 and $576,000, respectively | 2,195,000 | 2,208,000 | ||||||||
| Capital leases payable, less current portion | 79,000 | 98,000 | ||||||||
| Term loan, less current portion | 350,000 | 399,000 | ||||||||
| Total Liabilities | 10,244,000 | 9,738,000 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 10,411 and 10,411 shares issued and outstanding, respectively | 104,000 | 104,000 | ||||||||
| Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 0 and 45,062 shares issued and outstanding, respectively | - | 456,000 | ||||||||
| Common stock, $.0001 par value, 19,500,000 shares authorized, 12,518,333 and 12,084,673 shares issued and outstanding, respectively | 1,000 | 1,000 | ||||||||
| Additional paid in capital | 24,680,000 | 23,996,000 | ||||||||
| Accumulated deficit | (20,862,000 | ) | (20,459,000 | ) | ||||||
| Total stockholders' equity | 3,923,000 | 4,098,000 | ||||||||
| Total liabilities and stockholders' equity | $ | 14,167,000 | $ | 13,836,000 | ||||||
