LOS ANGELES, May 11, 2015 (GLOBE NEWSWIRE) -- Reed's, Inc. (NYSE MKT: REED), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its fiscal first quarter ending March 31, 2015.
Financial Highlights for 2015 First Quarter versus 2014 First Quarter:
-
Net sales increased 19% to a record $10.6 million driven by:
- 33% gross sales growth of Reed's Ginger Brew line representing 44% of sales
- 12% gross sales growth in Virgil's craft soda line representing 33% of sales
- 23% gross sales growth in Private Label representing 7% of sales
- Topline promotional spend decreased to 6% of 2015 first quarter sales versus 12.0% in the first quarter of 2014
- Gross profit dollars increased 12% to $3.3 million versus $2.9 million in the first quarter of 2014
- Adjusted EBITDA for the first quarter of 2015 improved to $354,000 versus $106,000 in the first quarter of 2014
- Operating expenses decreased to 31% percent of net sales from 33% in the first quarter of 2014
- Operating loss for first quarter 2015 was $271,000 versus a loss of $220,000 in the first quarter of 2014
- Loss per share was ($0.02), flat with the prior year first quarter
Operational Highlights:
- New DSD distribution expansion with Wonderland Distributing Co. in Northern California
- Sonoma Sparklers launches in all 4600 Rite Aid locations nationwide
- Mark Beaton, Former VP of Operations at Dr. Pepper/Snapple Group, appointed Chief Operating Officer
- Daniel Miles appointed Chief Financial Officer to replace Interim CFO, Larry Tomsic
- Mark Costa fills newly created position, Director of Operations for Reed's
- Reed's Ginger Brew line driving +35% growth in latest 52 week Spins/IRI syndicated data
- Stronger Ginger Brew product introduction at Expo West in March leads to increased distribution and retail opportunities.
- Continued plant upgrades to increase plant capacity
- Reed's enters 1,300+ new doors in on premise and independent stores, and 900+ new doors in conventional supermarkets in first quarter
- Same store sales growth in conventional supermarkets is strong and brand momentum continues as measured by Spins/IRI syndicated data in conventional supermarkets over latest 52 weeks
- Exhibition at Nightclub & Bar show leads to partnership with one of the largest wine & spirits leaders in the spirits industry
Chris Reed, Founder and CEO of Reed's, Inc., stated, "Our momentum continues as evidenced by our twenty plus quarters of double digit sales growth. Consumer demand is strong across all channels for our premium craft sodas and we are capitalizing on these opportunities. Of particular strength was the Reed's Ginger Brew line that achieved record sales of $5 million in the first quarter. Gross margins recovered significantly versus the fourth quarter last year as we saw improvement in commodity prices that impacted margins in the last half of 2014."
"We continue to build out our management team infrastructure that is now led by experienced beverage industry veterans with the expertise to operationally support the sales growth that we are experiencing. Leading the charge to drive our operational capabilities as we accelerate, we hired Mark Beaton to serve as our new Chief Operating Officer. Mark was previously VP of Operations at Dr. Pepper Snapple Group. Today we announced that Dan Miles has been appointed Chief Financial Officer. Dan has 30 plus years of financial management experience starting at Ernst & Young, and includes almost 20 years of beverage experience with Pepsi Bottling and Miller Coors where he held senior finance positions in both the field and in the corporate offices."
"The beverage market continues to trend in our favor as major retailers look to Reed's to supply the next generation of all natural GMO-free premium craft sodas. I'm beefing up management to handle the acceleration in sales that these conversations are creating. We continue to be excited about the response to our latest line extension, Reed's Stronger Ginger Brew. I would not be surprised if it eventually becomes our top beverage based on early responses. We expect to see steady growth in 2015 and margins should continue to improve throughout the year due to our new plant projects and favorable commodity price trends," Reed concluded.
For the full year 2015, the company's net sales target is $50 million with moderate profitability.
The Company will conduct a conference call at 4:30 PM EDT on May 11th to discuss its 2015 fiscal 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:
Domestic callers should dial - (800) 763-5728
International callers should dial +1 (212) 231 2931.
A replay of the call will be available by the following day 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 15,000 natural food and mainstream supermarkets nationwide. In addition, Reed's products can be found in convenience stores, bars, restaurants and gourmet retailers. The company's products can also be found in Canada, Mexico and other international markets. 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.
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 BALANCE SHEETS | ||
| March 31, 2015 | December 31, 2014 | |
| (Unaudited) | ||
| ASSETS | ||
| Current assets: | ||
| Cash | $ 1,221,000 | $ 959,000 |
| Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $252,000 and $253,000, respectively | 2,978,000 | 2,500,000 |
| Inventory, net of reserve for obsolescence of $75,000 and $90,000, respectively | 8,360,000 | 6,306,000 |
| Prepaid inventory | 813,000 | 1,287,000 |
| Prepaid and other current assets | 529,000 | 447,000 |
| Total Current Assets | 13,901,000 | 11,499,000 |
| Property and equipment, net of accumulated depreciation of $3,604,000 and $3,405,000, respectively | 5,035,000 | 4,572,000 |
| Brand names | 1,029,000 | 1,029,000 |
| Total assets | $ 19,965,000 | $ 17,100,000 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts payable | $ 7,161,000 | $ 5,894,000 |
| Accrued expenses | 141,000 | 130,000 |
| Line of credit | 4,113,000 | 3,009,000 |
| Current portion of long term financing obligation | 134,000 | 134,000 |
| Current portion of capital leases payable | 125,000 | 125,000 |
| Total current liabilities | 11,674,000 | 9,292,000 |
| Long term financing obligation, less current portion, net of discount of $1,017,000 and $1,031,000, respectively | 1,491,000 | 1,508,000 |
| Capital leases payable, less current portion | 443,000 | 476,000 |
| Capital Expansion Loan | 1,233,000 | 672,000 |
| Term loan | 1,500,000 | 1,500,000 |
| Total Liabilities | 16,341,000 | 13,448,000 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding | 94,000 | 94,000 |
| Common stock, $.0001 par value, 19,500,000 shares authorized, 13,081,947 and 13,068,058 shares issued and outstanding, respectively | 1,000 | 1,000 |
| Additional paid in capital | 26,543,000 | 26,300,000 |
| Accumulated deficit | (23,014,000) | (22,743,000) |
| Total stockholders' equity | 3,624,000 | 3,652,000 |
| Total liabilities and stockholders' equity | $ 19,965,000 | $ 17,100,000 |
| REED'S, INC. | ||
| CONDENSED STATEMENTS OF OPERATIONS | ||
| For the Three Months Ended March 31, 2015 and 2014 | ||
| (Unaudited) | ||
| Three months ended March 31, | ||
| 2015 | 2014 | |
| Sales | $ 10,672,000 | $ 8,950,000 |
| Cost of goods sold | 7,413,000 | 6,047,000 |
| Gross profit | 3,259,000 | 2,903,000 |
| Operating expenses: | ||
| Delivery and handling expenses | 1,169,000 | 895,000 |
| Selling and marketing expense | 1,193,000 | 1,068,000 |
| General and administrative expense | 968,000 | 972,000 |
| Total operating expenses | 3,330,000 | 2,935,000 |
| Loss from operations | (71,000) | (32,000) |
| Interest expense | (200,000) | (188,000) |
| Net loss | $ (271,000) | $ (220,000) |
| Loss per share – basic and diluted | $ (0.02) | $ (0.02) |
| Weighted average number of shares outstanding – basic and diluted | 13,068,675 | 12,965,314 |
| REED'S, INC. | ||||||||
| CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||
| For the Three Months Ended March 31, 2015 | ||||||||
| (Unaudited) | ||||||||
| Series A | Additional | Total | ||||||
| Common Stock | Preferred Stock | Paid-In | Accumulated | Stockholders' | ||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||
| Balance, January 1, 2015 | 13,068,058 | $ 1,000 | 9,411 | $ 94,000 | $ 26,300,000 | $ (22,743,000) | $ 3,652,000 | |
| Common shares issued upon exercise of warrants | 13,889 | -- | -- | -- | 31,000 | -- | 31,000 | |
| Fair value vesting of options issued for bonuses and services | -- | -- | -- | -- | 212,000 | -- | 212,000 | |
| Net loss | -- | -- | -- | -- | -- | (271,000) | (271,000) | |
| Balance, March 31, 2015 | 13,081,947 | $ 1,000 | 9,411 | $ 94,000 | $ 26,543,000 | $ (23,014,000) | $ 3,624,000 | |
| REED'S, INC. | ||
| CONDENSED STATEMENTS OF CASH FLOWS | ||
| For the Three Months Ended March 31, 2015 and 2014 | ||
| (Unaudited) | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| Cash flows from operating activities: | ||
| Net (loss) | $ (271,000) | $ (220,000) |
| Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 213,000 | 181,000 |
| Fair value of stock options issued to employees | 212,000 | 99,000 |
| (Decrease) increase in allowance for doubtful accounts | 1,000 | (14,000) |
| Changes in assets and liabilities: | ||
| Accounts receivable | (479,000) | (404,000) |
| Inventory | (2,054,000) | 217,000 |
| Prepaid Inventory | 474,000 | (117,000) |
| Prepaid expenses and other current assets | 168,000 | (3,000) |
| Accounts payable | 1,267,000 | 356,000 |
| Accrued expenses | 11,000 | (10,000) |
| Net cash provided by (used in) operating activities | (458,000) | 85,000 |
| Cash flows from investing activities: | ||
| Purchase of property and equipment | (351,000) | (73,000) |
| Net cash used in investing activities | (351,000) | (73,000) |
| Cash flows from financing activities: | ||
| Proceeds from stock option and warrant exercises | 31,000 | 20,000 |
| Payment of deferred financing fees | -- | (7,000) |
| Principal repayments on long term financing obligation | (31,000) | (25,000) |
| Principal repayments on capital lease obligation | (33,000) | (30,000) |
| Principal repayments on term loan | -- | (39,000) |
| Net draw down (repayment) on line of credit | 1,104,000 | 69,000 |
| Net cash (used) provided by financing activities | 1,071,000 | (12,000) |
| Net (decrease) increase in cash | 262,000 | -- |
| Cash at beginning of period | 959,000 | 1,104,000 |
| Cash at end of period | $ 1,221,000 | $ 1,104,000 |
| Supplemental disclosures of cash flow information: | ||
| Cash paid during the period for: | ||
| Interest | 201,000 | 188,000 |
| Non Cash Investing and Financing Activities | ||
| Property and equipment acquired through capital expansion loan | 311,000 | -- |
| Other current assets acquired through capital expansion loan | 250,000 | -- |
Modified EBITDA
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.
| MODIFIED EBITDA SCHEDULE | ||
| Three Months Ended March 31, | ||
| 2015 | 2014 | |
| Net loss | $ (271,000) | $ (220,000) |
| Modified EBITDA adjustments: | ||
| Depreciation and amortization | 213,000 | 181,000 |
| Interest expense | 200,000 | 188,000 |
| Stock option compensation | 212,000 | 99,000 |
| Total EBITDA adjustments | 625,000 | 468,000 |
| Modified EBITDA income from operations | $ 354,000 | $ 248,000 |
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