LOS ANGELES, CA--(Marketwired - Nov 14, 2013) - Reed's, Inc. (NYSE MKT: REED), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its third fiscal quarter ended September 30, 2013.
Financial Highlights:
- Revenues increased 28% in the third quarter to $10.1 million in 2013, compared to 2012. Nine month revenues increased 25% to $27.7 million.
- Gross profit Increased 29% to $3.2 million in the third quarter 2013. The gross profit percentage increased to 32% in 2013, from 31% in 2012
- Net income for the 2013 third quarter was $34,000 compared to net income of $22,000 a year earlier.
- Income from operations in the 2013 third quarter was $214,000, as compared to $183,000 in 2012.
- Loss before non-cash items and finance costs (modified EBITDA) was $372,000 during the 2013 third quarter. (See EBITDA table at end of this release for further non-GAAP information).
Operational Highlights:
- Reed's Culture Club kombucha sales volume increased by 18% in the third quarter over the second quarter 2013. Secured #2 position nationally in kombucha sales.
- Completed most of the plant capital improvements in Los Angeles, leading to higher production output to come.
- Reed's Culture Club Kombucha now available at all Giant Eagle stores, Kroger and Kroger banners nationally, Wegmans, and Jewel-Osco stores.
- Reed's announces that all Reed's and Virgil's products are GMO free
"Our third quarter results illustrate the ongoing success of our current business model" stated Chris Reed, Founder and CEO at Reed's Inc. "We have a healthy mix of great brands that are all growing well. We accent that growth with a private label business that continues to expand and enhance our relationship with key customers. Looking forward, we see continued growth with all our brands and private label business. Our kombucha is still in its infancy and we expect to see a significant increase in sales in 2014. Also, we expect to make strong in-roads with new distribution channels for our Reed's and Virgil's natural sodas."
"Our 28% net sales gain actually translates to a 33% increase in our gross revenues; before promotional deductions." stated James Linesch, Chief Financial Officer at Reed's Inc. "We are promoting all of our branded products at higher rates than in 2012, especially our kombucha. Our promotions have been effective for increasing sales and market share, and we are constantly striving toward the best combinations to create ongoing and increasing demand for our products. Despite our higher promotional activity, we have been able to increase our gross profits at a higher rate than sales increases in our third quarter. We are delivering on performance as well as accelerated revenue growth."
The Company will conduct a conference call @ 4:15PM EST on November 14th to discuss its 2013 third 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) 578-1005. 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 and Nine months Ended September 30, 2013 and 2012 |
|
| (Unaudited) |
|
| |
|
| |
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
| |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
| Sales |
|
$ |
10,076,000 |
|
|
$ |
7,888,000 |
|
| $ |
27,721,000 |
|
|
$ |
22,258,000 |
|
| Cost of tangible goods sold |
|
|
6,399,000 |
|
|
|
4,975,000 |
|
|
|
18,028,000 |
|
|
|
13,993,000 |
|
| Cost of goods sold - idle capacity |
|
|
501,000 |
|
|
|
456,000 |
|
|
|
1,525,000 |
|
|
|
1,126,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Gross profit |
|
|
3,176,000 |
|
|
|
2,457,000 |
|
|
|
8,168,000 |
|
|
|
7,139,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Delivery and handling expenses |
|
|
1,040,000 |
|
|
|
763,000 |
|
|
|
2,900,000 |
|
|
| 1,827,000 |
|
| Selling and marketing expense |
|
|
1,159,000 |
|
|
|
818,000 |
|
|
|
2,999,000 |
|
|
|
2,239,000 |
|
| General and administrative expense |
|
|
763,000 |
|
|
|
693,000 |
|
|
|
2,663,000 |
|
|
|
2,238,000 |
|
| |
|
Total operating expenses |
|
|
2,962,000 |
|
|
|
2,274,000 |
|
|
|
8,562,000 |
|
|
|
6,304,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Income (loss) from operations |
|
|
214,000 |
|
|
|
183,000 |
|
|
|
(394,000 |
) |
|
|
835,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
(180,000 |
) |
|
|
(161,000 |
) |
|
|
(469,000 |
) |
|
|
(493,000 | ) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
34,000 |
|
|
|
22,000 |
|
|
|
(863,000 |
) |
|
|
342,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred stock dividends |
|
|
- |
|
|
|
(8,000 |
) |
|
|
(5,000 |
) |
|
|
(39,000 |
) |
| Net income (loss) attributable to common stockholders |
|
$ |
34,000 |
|
|
$ |
14,000 |
|
|
$ |
(868,000 |
) |
|
$ |
303,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) per share available to common stockholders, basic |
|
|
- |
|
|
|
- |
|
|
$ |
( 0.07 |
) |
|
$ |
0.03 |
|
| Weighted average number of shares outstanding - basic | |
|
12,627,864 |
|
|
|
11,501,152 |
|
|
|
12,498,935 |
|
|
|
11,155,860 |
|
| Income (loss) per share available to common stockholders, diluted |
|
|
- |
|
|
|
- |
|
|
$ |
( 0.07 |
) |
|
$ |
0.03 |
|
| Weighted average number of shares outstanding - diluted |
|
|
13,496,714 |
|
|
|
12,288,503 |
|
|
|
12,498,935 |
|
|
|
11,706,186 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| MODIFIED EBITDA SCHEDULE |
| |
| |
|
Three months ended September 30, |
|
Nine months ended September 30, |
| |
|
2013 |
|
2012 |
|
2013 |
|
|
2012 |
| Net income (loss) |
|
$ |
34,000 |
|
$ |
22,000 |
|
$ |
(863,000 |
) |
|
$ |
342,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Modified EBITDA adjustments: |
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Depreciation and amortization |
|
|
89,000 |
|
|
184,000 |
|
|
387,000 |
|
|
|
556,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Interest expense |
|
|
180,000 |
|
|
161,000 |
|
|
469,000 |
|
|
|
493,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Stock option compensation |
|
|
69,000 |
|
|
26,000 |
|
|
257,000 |
|
|
|
81,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other stock compensation for services |
|
|
- |
|
|
2,000 |
|
|
5,000 |
|
|
|
23,000 |
| |
|
|
Total EBITDA adjustments | |
|
338,000 |
|
|
373,000 |
|
|
1,118,000 |
|
|
|
1,153,000 |
| |
|
Modified EBITDA income from operations |
|
$ |
372,000 |
|
$ |
395,000 |
|
$ |
255,000 |
|
|
$ |
1,495,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
| |
|
| |
|
September 30,
2013 |
|
|
December 31,
2012 |
|
| ASSETS |
|
(unaudited) |
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| |
Cash |
|
$ |
1,046,000 |
|
|
$ |
1,163,000 |
|
| |
Inventory |
|
|
6,705,000 |
|
|
|
5,794,000 |
|
| |
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $375,000 and $399,000, respectively |
|
|
3,185,000 |
|
|
|
1,961,000 |
|
| |
Prepaid inventory |
|
|
499,000 |
|
|
|
201,000 |
|
| |
Prepaid and other current assets | |
|
348,000 |
|
|
|
212,000 |
|
| |
|
Total Current Assets |
|
|
11,783,000 |
|
|
|
9,331,000 |
|
| |
|
|
|
|
|
|
|
|
| Property and equipment, net of accumulated depreciation of $2,662,000 and $2,351,000, respectively |
|
|
3,571,000 |
|
|
|
3,422,000 |
|
| Brand names |
|
|
1,029,000 |
|
|
|
1,029,000 |
|
| Deferred financing fees, net of amortization of $64,000 and $26,000, respectively |
|
|
37,000 |
|
|
|
54,000 |
|
| |
|
Total assets |
|
$ |
16,420,000 |
|
|
$ |
13,836,000 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
| |
Accounts payable |
|
$ |
5,215,000 |
|
|
$ |
3,368,000 |
|
| |
Accrued expenses |
|
|
134,000 |
|
|
|
233,000 |
|
| |
Dividends payable |
|
|
- |
|
|
|
74,000 |
|
| |
Line of credit |
|
|
4,313,000 |
|
|
|
3,023,000 |
|
| |
Current portion of long term financing obligation |
|
|
100,000 |
|
|
|
90,000 |
|
| |
Current portion of capital leases payable |
|
|
80,000 |
|
|
|
69,000 |
|
| |
Current portion of term loan |
|
|
159,000 |
|
|
|
176,000 |
|
| |
|
Total current liabilities |
|
|
10,001,000 |
|
|
|
7,033,000 |
|
| |
|
|
|
|
|
|
|
|
| Long term financing obligation, less current portion, net of discount of $538,000 and $576,000, respectively |
|
|
2,170,000 |
|
|
|
2,208,000 |
|
| Capital leases payable, less current portion |
|
|
48,000 |
|
|
|
98,000 |
|
| Term loan, less current portion |
|
|
525,000 |
|
|
|
399,000 |
|
| |
|
Total Liabilities |
|
|
12,744,000 |
|
|
|
9,738,000 |
|
| |
|
|
|
|
|
|
|
|
| Commitments and contingencies |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
|
|
|
|
| |
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 and 10,411 shares issued and outstanding, respectively |
|
|
94,000 |
|
|
|
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, 12,809,992 and 12,084,673 shares issued and outstanding, respectively |
|
|
1,000 |
|
|
|
1,000 |
|
| |
Additional paid in capital |
|
|
24,908,000 |
|
|
|
23,996,000 |
|
| |
Accumulated deficit |
|
|
(21,327,000 |
) |
|
|
(20,459,000 |
) |
| |
|
Total stockholders' equity |
|
|
3,676,000 |
|
|
|
4,098,000 |
|
| |
|
Total liabilities and stockholders' equity |
|
$ |
16,420,000 |
|
|
$ |
13,836,000 |
|
| |
|
|
|
|
|
|
|
|