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


Supply Chain Restraints Impacted Record Demand

Now Resolved with Four Plants Producing Products



http://finance.yahoo.com/news/reeds-inc-announces-third-quarter-210700953.html



LOS ANGELES, Nov. 12, 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 third quarter ended September 30, 2015.

Sales and Marketing Overview:

•The Reed’s brands grew at +37% for the latest 52 weeks ending 10/4/15 according to the most recent SPINS syndicated scan data from national conventional supermarkets

•According to the SPINS syndicated scan data, Reed’s & Virgil’s combined grew 27%, making Reed’s, Inc. the fastest growing beverage brand out of the Top 50 carbonated soft drink brands in supermarkets

•Direct-Store-Delivery (DSD) distributors volume grew at +27% for the latest 52 weeks ending 11/4/15

•DSD distributors account base grew 43% for the latest 52 weeks

•Year to date, Reed’s Ginger Brews have posted 20% revenue growth while Virgil’s brands have declined 7% due to temporary product shortages that have now been resolved

•Kombucha sales decreased 14% in the nine months ended September 30, 2015, as compared to 2014

•Bar Business Magazine –July issue cover story touting the resurgence of the Moscow Mule focused on Reed’s Stronger Ginger Brew

•Progressive Grocer Magazine - 2015 Editors Pick “Reed’s Stronger Ginger Brew” – Represented only beverage selected

•Beverage World Magazine - 2015 Liquid Refreshment Power Players of the Year - Reed’s selected as one of the top five movers and shakers in the market

•Bar Biz Spirits 2015 Competition – Reed’s wins best carbonated mixer

Financial Overview:

For the third quarter 2015 compared to the third quarter 2014:

•Due to temporary supply constraints, net revenue decreased 13% to $10.7 million


•Gross profit margins decreased from 32% to 15% due to onetime charges of 7% for co-packer quality related issues, 4% for the disposal of dated product and 2% for product mix - Without these adjustments gross profit would have been 28%. The Company expects gross margins to return to normalized levels beginning in the current quarter

•Idle capacity expenses decreased 9% to $384,000 in the three months ended September 30, 2015 from $424,000 in 2014 due to west coast plant efficiencies

•Net loss was $2.1 million or $0.19 per share


For the first nine months of 2015 compared to the first nine months of 2014:

•Sales for the first nine months in 2015 increased 3.4% to $33.6 million, as compared to $32.5 million in the first nine months of 2014

•Gross Profit for the first nine months of 2015 was $8.5 million, as compared to $10.5 million in the first nine months of 2014.
This was directly due to sales demand exceeding our supply on hand

•Net loss per diluted share for the nine months ended September 30, 2015 was $(0.26) versus a gain of $0.04 per diluted share for the nine months ended September 30, 2014


Financing activity:

•Company obtained a new Term Loan B for $1,500,000 in the third quarter

•Subsequent to the quarter close, the company successfully restructured the new Term Loan B and the existing Term Loan A for a total of $3,000,000 to mature in 2017 and enable the Company to accumulate cash

•Cash at the end of the third quarter was $1.2 million vs $215,000 at the end of the second quarter

•Total inventory decreased by $1.6 million versus the previous quarter. The Company anticipates further inventory reductions of almost $1.0 million more in the fourth quarter


Chris Reed, Founder and CEO of Reed’s, Inc. stated, “We continued to see strong demand for our natural and craft beverages in the third quarter and estimate that the demand was there for at least an additional $5 million in sales. Unfortunately, our supply chain could not keep pace. We believe that with four plants now producing our products, our capacity constraint issues are behind us. In October, we had the best month in the Company’s history with sales that exceeded $5 million. We expect that not only will we be able to keep up with demand, but also significantly reduce shipping costs. It took longer than we expected, but now that we have increased our production capabilities, we will be able to keep up with the accelerated demand for our beverages.”

Reed continued, “After 26 years in the bottled premium soda business, we are expanding our scope to include soda fountain products. Although we are only at the early stages of this very exciting development, we believe that the time is right for an all-natural soda fountain alternative to the chemically-laced soda fountain products that are currently in the market. More and more fast-casual chains are looking at healthier alternatives for their customers and we believe that this new product offering we are currently developing will be a perfect pairing for their menu items. Our first test installations are going online this year,” Reed concluded.

Mark Beaton, Chief Operating Officer of Reed’s, Inc. stated, “Demand completely outpaced supply in the third quarter resulting in severe out-of-stocks. We accelerated our expansion plans, and early in the fourth quarter, we increased our production partnerships in both the mid-west and on the east coast. We began the fourth quarter with four production facilities, two of which are new partnerships. As a result, production output was at record levels for the month of October. Focus is now shifting towards our West Coast Plant upgrade and we are now positioned to meet the accelerated demand our brands are experiencing throughout the country.”

Dan Miles, Chief Financial Officer of Reed’s Inc., stated, “We have increased our production capacity, mitigated our production risk and significantly cleaned up our balance sheet. Just this week we completed a restructuring of our debt that will enable us to accumulate more cash for investment opportunities. Stringent focus on inventory enabled the company to decrease our total inventory by $1.6 million. As a result, the Company ended the quarter with approximately $1 million more in cash than what we started the quarter with and accomplished that in spite of the supply chain interruption. We are excited about the opportunities ahead for Reed’s and our all natural product offerings.”

The Company will conduct a conference call at 4:30PM EST today, November 12 to discuss its 2015 third quarter results. 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, which are 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 seven 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 its Reed's Culture Club Kombucha line of organic live beverages. Other product lines include Reed's Ginger Candies and Reed's Ginger Ice Creams. The company celebrated 25 years of hand crafting the best sodas in the world, naturally, in 2014.

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