House & Home
House and Home
House and Home 
Mon, May 14, 2012
May 14, 2012 07:50 ET
Reed's, Inc. Gross Profits Increase 40%
LOS ANGELES, CA--(Marketwire - May 14, 2012) - Reed's, Inc. (
Financial Highlights for the Quarter:
- Revenues increased 27% to $6.5 million in 2012, compared to 2011.
- Gross profit increased to $2.0 million, an increase of 40% from 2011. The gross profit percentage increased to 30% of sales, an increase from 28% in 2011.
- Earnings before non-cash items and finance costs (modified EBITDA) increased to $268,000 during 2011, as compared to $31,000 in the prior year period. (See EBITDA table at end of this release for further non-GAAP information).
- Net loss for 2012 was $124,000, or $0.01 per share, compared to a loss of $365,000 a year earlier.
- Working capital at March 31, 2012 was $2.6 million, as compared to $2.7 million at December 31, 2011.
The Company also announced that the credit limit on their revolving line of credit has been increased from $3 million to $4 million, effective May 11, 2012.
Operational Highlights:
- Expanded distribution into Michigan and Tennessee markets.
- Entered into an enhanced distribution partnership with largest distributor, UNFI.
- Gained entry into Spartan stores (estimated 70 to start) based out of Grand Rapids, MI.
- Gained new distribution into TJX Stores (Home Goods Division - est 290+ stores).
- DECA Military approves authorization of Reed's/Virgil's skus to be sold in commissaries across the US. Product to be sold in by Reed's current DSD network.
- Continued upgrading Los Angeles plant to increase capacity and efficiency.
"This is our 10th quarter in a row of double-digit growth," stated Chris Reed, Founder, Chairman and CEO of Reed's, Inc. "We are pleased with the continued, strong, top-line revenue growth on our brands and private label. We are also excited by the results of our margin improvement program started in the fourth quarter of 2011. Significant increases in both revenues and gross profit margins are pushing us quickly to profitability."
James Linesch, Chief Financial Officer, stated, "Our overall working capital is sufficient for our current business expansion and is anticipated to increase through cash positive operations. Our drop in cash to $101,000 at March 31, 2012, with an additional $213,000 available, is largely due to a buildup of certain inventory items and a short term increase in our receivables. We are focusing on inventory reductions by planning our productions closer to our sales. We have reduced our inventory levels by more than $500,000 since quarter-end, and we anticipate further reductions in the months ahead. Along with an increased limit on our revolving line of credit, we believe that we will not require additional capital to carry out our current business plans for 2012."
The Company will conduct a conference call @ 4:15PM EDT on Monday, May 14th to discuss its 2012 first quarter results and outlook for the remainder of 2012. 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/investor-relations/ ]
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 the top-selling cola line in natural foods, the China Cola product line.
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, 2012 and 2011 | |||||||||||
| (Unaudited) | |||||||||||
| Three months ended March 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| Sales | $ | 6,539,000 | $ | 5,140,000 | |||||||
| Cost of tangible goods sold | 4,185,000 | 3,321,000 | |||||||||
| Cost of goods sold - idle capacity | 369,000 | 402,000 | |||||||||
| Gross profit | 1,985,000 | 1,417,000 | |||||||||
| Operating expenses: | |||||||||||
| Delivery and handling expenses | 479,000 | 388,000 | |||||||||
| Selling and marketing expense | 722,000 | 580,000 | |||||||||
| General and administrative expense | 740,000 | 655,000 | |||||||||
| Total operating expenses | 1,941,000 | 1,623,000 | |||||||||
| Income (loss) from operations | 44,000 | (206,000 | ) | ||||||||
| Interest expense | (168,000 | ) | (159,000 | ) | |||||||
| Net loss | (124,000 | ) | (365,000 | ) | |||||||
| Preferred stock dividend | (9,000 | ) | (11,000 | ) | |||||||
| Net loss attributable to common stockholders | $ | (133,000 | ) | $ | (376,000 | ) | |||||
| Loss per share available to common stockholders - basic and diluted | $ | (0.01 | ) | $ | (0.04 | ) | |||||
| Weighted average number of shares outstanding - basic and diluted | 10,921,076 | 10,619,242 | |||||||||
| MODIFIED EBITDA SCHEDULE | |||||||||
| Three Months Ended March 31, | |||||||||
| 2012 | 2011 | ||||||||
| Net loss | $ | (124,000 | ) | $ | (365,000 | ) | |||
| Modified EBITDA adjustments: | |||||||||
| Depreciation and amortization | 183,000 | 144,000 | |||||||
| Interest expense | 168,000 | 159,000 | |||||||
| Stock option compensation | 26,000 | 50,000 | |||||||
| Other stock compensation for services | 15,000 | 43,000 | |||||||
| Total EBITDA adjustments | 392,000 | 396,000 | |||||||
| Modified EBITDA income from operations | $ | 268,000 | $ | 31,000 | |||||
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.
| REED'S, INC. | ||||||||||
| CONDENSED BALANCE SHEETS | ||||||||||
| March 31, 2012 | December 31, 2011 | |||||||||
| ASSETS | (unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash | $ | 101,000 | $ | 713,000 | ||||||
| Inventory | 6,212,000 | 6,099,000 | ||||||||
| Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $135,000 and $135,000, respectively | 2,090,000 | 1,626,000 | ||||||||
| Prepaid inventory | 238,000 | 168,000 | ||||||||
| Prepaid and other current assets | 150,000 | 123,000 | ||||||||
| Total Current Assets | 8,791,000 | 8,729,000 | ||||||||
| Property and equipment, net of accumulated depreciation of $1,891,000 and $1,739,000, respectively | 3,470,000 | 3,512,000 | ||||||||
| Brand names | 1,029,000 | 1,029,000 | ||||||||
| Deferred financing fees, net of amortization of $69,000 and $50,000, respectively | 67,000 | 85,000 | ||||||||
| Total assets | $ | 13,357,000 | $ | 13,355,000 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 2,543,000 | $ | 2,310,000 | ||||||
| Accrued expenses | 200,000 | 196,000 | ||||||||
| Dividends payable | 84,000 | 83,000 | ||||||||
| Recycling fees payable | 84,000 | 111,000 | ||||||||
| Line of credit | 3,021,000 | 3,095,000 | ||||||||
| Current portion of long term financing obligation | 76,000 | 71,000 | ||||||||
| Current portion of capital leases payable | 58,000 | 56,000 | ||||||||
| Current portion of term loan | 157,000 | 152,000 | ||||||||
| Total current liabilities | 6,223,000 | 6,074,000 | ||||||||
| Long term financing obligation, less current portion, net of discount of $614,000 and $626,000, respectively | 2,240,000 | 2,247,000 | ||||||||
| Capital leases payable, less current portion | 137,000 | 153,000 | ||||||||
| Term loan, less current portion | 535,000 | 576,000 | ||||||||
| Total Liabilities | 9,135,000 | 9,050,000 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 46,621 shares issued and outstanding | 466,000 | 466,000 | ||||||||
| Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 72,310 and 80,415 shares issued and outstanding, respectively | 723,000 | 804,000 | ||||||||
| Common stock, $.0001 par value, 19,500,000 shares authorized, 10,960,088 and 10,885,797 shares issued and outstanding, respectively | 1,000 | 1,000 | ||||||||
| Additional paid in capital | 23,055,000 | 22,924,000 | ||||||||
| Accumulated deficit | (20,023,000 | ) | (19,890,000 | ) | ||||||
| Total stockholders' equity | 4,222,000 | 4,305,000 | ||||||||
| Total liabilities and stockholders' equity | $ | 13,357,000 | $ | 13,355,000 | ||||||