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>>> Reed's, Inc. Announces Record Third Quarter Results



Raises EBITDA Outlook for 2014



Nov 13, 2014)


http://finance.yahoo.com/news/reeds-inc-announces-record-third-210000545.html



(NYSE MKT: REED), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its fiscal third quarter ended September 30, 2014.

Financial Highlights:
•Modified EBITDA, a non-GAAP measurement was up 28% for the third quarter and was up 637% year to date. EBITDA was $1,880,000 for the first nine months of 2014 as compared to $255,000 for the first nine months of 2013*
•Net revenue increased 22% to a record $12.3 million for the third quarter 2014 from $10.1 million in the third quarter 2013.
•Gross profit increased 22% to $3.9 million
•Operating Income increased 15% to $246,000 from $214,000 in the third quarter last year
•Plant Idle Capacity costs improved from 5% of net sales to 4%
•Sales for the first nine months in 2014 increased 17% to $32.5 million, as compared to $27.7 million in the first nine months of 2013;
•Gross Profit for the first nine months of 2014 increased 28% to $10.5 million, as compared to $8.2 million in the first nine months of 2013.
•Working capital was $1,999,000 at September 30, 2014 and was $1,347,000 at December 31, 2013
•Earnings per diluted share for the third quarter was flat and $0.03 per share for the nine months ended September 30, 2014 versus a loss of ($0.07) per diluted share for the nine months ended September 30, 2013
*(See EBITDA table at end of this release for further non-GAAP information).



Operational Highlights:
•Reed's Top Selling Ginger Brew brands grew 16% led by Extra Ginger Brew that grew 26 % for the third quarter 2014 versus same quarter last year
•YTD Reed's #1 sku (Reed's Extra Ginger Brew) posted 31% growth
•Virgil's full line of beverages grew at 18% for the third quarter
•Dr. Better soda sales increased 414% for quarter and could surpass $1 million by year end
•Kombucha sales increased by 19% in the third quarter, and increased 51% in the nine months ended September 30, 2014, as compared to 2013
•Private label brands sales increased 37% in the third quarter
•Los Angeles plant upgrades designed to triple capacity and increase efficiency and margins continue
•Reed's first-ever national television ad campaign launches on Food Network, HGTV, etc.
•Biography Channel's Food Factory show highlights the brewing and bottling process of Virgil's Root Beer featuring Chris Reed
•Launched our 25th Anniversary Sweepstakes and have received over 500,000 entries to date
•Began production of coffee flavored Reed's Culture Club Kombucha; we now offer nine great tasting flavors
•Sponsorship of the VANS International Surf Event at Huntington Beach with over 750,000 attendees
•Established distribution partnership with RC Asheville in North Carolina
•Reed's Extra 7 ounce pony bottles authorized at distributors around the U.S. for bar and restaurant sales
•Received Kosher Certification on all Reed's Inc branded products
•Reed's & Virgil's are authorized at Lowes Foods Supermarkets of North Carolina
•BJ's Wholesale Club Stores authorize 3 pack Virgil's Root Beer and Virgil's Root Beer 5 Liter party kegs
•Gained distribution of Culture Club Kombucha into HyVee grocery stores.



Chris Reed, Founder and CEO of Reed's, Inc., stated, "Consumers are reevaluating their commitment to the status quo, high-tech, chemically-laden sodas. As sales of mainstream sodas continue their year-over-year drop, consumers are increasingly migrating to Reed's for a new alternative. A recent analysis of soda sales at one of our largest retail customers found that Reed's products, with their higher margins, are generating more gross profits per shelf placement than most of the soft drinks on their shelves. We are seeing increased interest from retailers in multiple sales channels who are reaching out to us to provide them with the next generation of soft drinks -- the craft soda revolution has begun."

"Our first national TV commercial launched during the third quarter on channels that included the Food Network and HGTV. As we become more profitable, we foresee an acceleration of marketing programs that will drive more volume and awareness in the future."

"During the third quarter, we added new innovation to our kombucha line called Reed's Culture Club Coffee Kombucha. The first $5 billion of kombucha category market sales have been traditionally fermented and grown using a tea base. Reed's newest innovation is grown and fermented in a coffee base. Sales will begin on December 1st, and we already have significant commitments for this new product."

"We are currently focused on two projects that we anticipate will ultimately improve gross margins significantly in the back half of 2015. These projects are the renovation and tripling of the west coast plant's line speed, and a new streamlined 'Brewed Soda' production technique that will cut production costs significantly. Both projects are expected to be online by mid-2015," Reed concluded.

Larry Tomsic, Interim CFO at Reed's, Inc., commented, "Reed's has delivered their twentieth consecutive quarter of successful growth. Third Quarter Net Sales and Gross Profit for 2014 both Increased 22% compared to the same quarter in 2013. Net Income for the nine months ended September 30, 2014 was $461,000 which is a $1,329,000 improvement over the nine months ended September 30, 2013 which posted a $863,000 loss."

"We are also very pleased to announce the EBITDA for the nine months ended September 30, 2014 was $1,880,000 versus $255,000 for the same period in 2013. The EBITDA improvement year over year was a $1,625,000 (637%) improvement. Additionally, the company is currently in discussions with financial institutions to negotiate new loan agreements that we anticipate will reduce the company's effective borrowing costs by more than 50% annually. The continued plant upgrades to significantly increase our production capacity, along with streamlining our brewing techniques will dramatically improve our efficiencies, leading to much improved margins in 2015. We are pleased to report the third quarter results and look forward to a strong fourth quarter."

2014 Outlook

The Company expects revenue growth of 15-20% in fiscal 2014. Core brands (Reed's & Virgil's) are expected to grow 15-20%; Kombucha is expected to grow 35 to 40%; and our other product categories, that includes private label, candy and non-core beverage assortments, is expected to be approximately flat. The Company is raising its EBITDA expectations and now expects EBITDA to range between $2.0 and $2.50 million for the year.

The Company will conduct a conference call @ 4:30PM EST today, November 13th, to discuss its 2014 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 [phone]. International callers should dial [phone].

A replay of the call will be available on the Reed's website at www.reedsinc.com in the "Investors" section following the earnings call within a day.

About Reed's, Inc.

Reed's, Inc. makes the top-selling natural sodas in the natural foods industry and is sold in over 15,000 natural and mainstream supermarkets nationwide. In addition, Reed's products are sold through specialty gourmet, natural food stores, retail stores, convenience stores and restaurants nationwide and select 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. The company is celebrating 25 years of hand crafting the best sodas in the world, naturally, in 2014.

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