May 14, 2012 at 07:50 AM EDT
Reed's, Inc. Gross Profits Increase 40%

LOS ANGELES, CA -- (Marketwire) -- 05/14/12 -- Reed's, Inc. (NASDAQ: REED), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its first fiscal quarter ending March 31, 2012.

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,     December 31,
                                                    2012           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
                                               =============  =============

Add to Digg Bookmark with del.icio.us Add to Newsvine

Contact:
Investor Relations
Reed's, Inc.
(310) 217-9400 ext. 18
Email: Email Contact
www.reedsinc.com

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here