|By Marketwired .||
|August 12, 2014 04:00 PM EDT||
LOS ANGELES, CA -- (Marketwired) -- 08/12/14 -- 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 second quarter ended June 30, 2014.
Financial Highlights: Second Quarter 2014 Compared to Second Quarter 2013
- Net revenue increased 18% to a record $11.2 million
- Gross profit increased 51% to $3.7 million
- Gross profit margin increased 700 basis points to 33% from 26%
- Plant Idle Capacity costs improved from 5% of net sales to 4%
- Company achieved net income of $633,000 versus a net loss of ($494,000)
- Earnings per diluted share of $0.05 versus loss of ($0.04) per diluted share
- Modified EBITDA was $1.1 million during the 2014 second quarter versus a negative $100,000 during the same period last year. (See EBITDA table at end of this release for further non-GAAP information).
Operational Highlights: Second Quarter 2014 Compared to Second Quarter 2013
- Reed's Ginger Brew sales increased by 34%
- Virgil's craft sodas sales increased by 10%
- Reed's Culture Club Kombucha sales increased by 35%
- Driven by plant improvements in Los Angeles in 2013, production was 221,000 cases during the second quarter 2014, an increase of 28% over the second quarter 2013
- Reed's announced that Reed's and Virgil's premium craft sodas are now authorized at SpartanNash stores throughout the Midwest
- Reed's announced that Reed's and Virgil's premium craft sodas are now authorized at Food Lion grocery stores in the Mid-Atlantic and Southern states
- Reed's announced the rollout of Reed's Culture Club Kombucha into Dierbergs throughout Missouri and Illinois
- Reed's announced a new distribution partnership with Haralambos Beverage Company in Southern California
- Reed's announced that Reed's and Virgil's premium craft sodas are now authorized at Books-A-Million, Inc.
"Our sales momentum continues and we achieved profitability, not only in the second quarter, but also year-to-date. Sales for the quarter were driven by a 34% increase in sales of Reed's Ginger Brews that grew organically at an accelerated clip without any new marketing programs. Our Kombucha sales slowed while we changed packaging, but still racked up 35% sales growth for the quarter. We estimate that our Kombucha growth rate would have been approximately double this rate had we not experienced these production delays. We are second in market share and continue to believe that there is significant growth opportunity in this beverage category that is estimated to be $500 million in annual retail sales," commented Chris Reed, Founder and CEO of Reed's, Inc.
"Our second quarter sales were driven by a 21% increase in our core brands (Reed's & Virgil's) and a 35% increase in the sales of our Kombucha beverages. Our private label sales were off by $749,000 in the second quarter, accounting for only 5% of our gross sales, although we anticipate that the category will experience decent growth in the back half of the year. Our gross margin increased 100 basis points to 33% versus the first quarter of 2014 and 700 basis points when compared to the prior year when we had a contractual issue with a private label product offering. Year over year we had a 51% increase in gross profit dollars for the quarter," stated Larry Tomsic, Interim CFO at Reed's, Inc.
Chris Reed, CEO and Founder, continued, "We kicked off the third quarter with the launch of our first national TV advertising campaign targeted at foodies who can appreciate the taste and quality of our Reed's Extra Ginger Brew. We believe that in addition to increasing brand awareness it will ultimately drive sales to the doors that carry Reed's products. We continue to focus our efforts on driving sales and improving gross margins to fund our growth. Although our foundation was built in the natural grocery channel, we have seen significant growth coming from the traditional grocery channel where carbonated soft drinks are struggling and consumers are increasingly looking for unique and all natural beverages like our Reed's Ginger Brew and Virgil's craft sodas."
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 40 to 50%; and our other product category, that includes private label, candy and non-core beverage assortments, is expected to be approximately flat. EBITDA is expected to range between $1.5 and $2.0 million for the year and the Company expects to generate a modest net income.
The Company will conduct a conference call @ 4:30PM EDT today, August 12th, to discuss its 2014 second 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 (800) 758-5606. International callers should dial +1 (212) 231-2939.
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.
For more information about Reed's, please visit the Company's website at: http://www.reedsinc.com or call 800-99-REEDS.
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 Six Months Ended June 30, 2014 and 2013 (Unaudited) Three months ended June Six months ended June 30, 30, ------------------------ ------------------------ 2014 2013 2014 2013 ----------- ----------- ----------- ----------- Sales, net $11,187,000 $ 9,519,000 $20,136,000 $17,645,000 Cost of goods sold 7,483,000 7,062,000 13,530,000 12,653,000 ----------- ----------- ----------- ----------- Gross profit 3,704,000 2,457,000 6,606,000 4,992,000 ----------- ----------- ----------- ----------- Operating expenses: Delivery and handling expenses 926,000 954,000 1,821,000 1,860,000 Selling and marketing expense 1,049,000 960,000 2,117,000 1,840,000 General and administrative expense 913,000 912,000 1,885,000 1,900,000 ----------- ----------- ----------- ----------- Total operating expenses 2,888,000 2,826,000 5,823,000 5,600,000 ----------- ----------- ----------- ----------- Income (loss) from operations 816,000 (369,000) 783,000 (608,000) Interest expense (178,000) (125,000) (365,000) (289,000) ----------- ----------- ----------- ----------- Net income (loss) 638,000 (494,000) 418,000 (897,000) Preferred stock dividends (5,000) (5,000) (5,000) (5,000) ----------- ----------- ----------- ----------- Net income (loss) attributable to common stockholders $ 633,000 $ (499,000) $ 413,000 $ (902,000) =========== =========== =========== =========== Income (loss) per share available to common stockholders, basic $ 0.05 $ (0.04) $ 0.03 $ (0.07) =========== =========== =========== =========== Weighted average number of shares outstanding - basic 13,046,631 12,543,983 13,025,195 12,413,958 =========== =========== =========== =========== Income (loss) per share available to common stockholders, diluted $ 0.05 $ (0.04) $ 0.03 $ (0.07) =========== =========== =========== =========== Weighted average number of shares outstanding - diluted 13,256,624 12,543,983 13,298,114 12,413,958 =========== =========== =========== ===========
The Company defines modified EBITDA (a non-GAAP measurement) as net income or (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.
MODIFIED EBITDA SCHEDULE Three Months Ended June 30, --------------------------- 2014 2013 ------------- ------------- Net income (loss) $ 638,000 $ (494,000) ------------- ------------- Modified EBITDA adjustments: Depreciation and amortization 153,000 153,000 Interest expense 178,000 125,000 Stock option compensation 119,000 69,000 Other stock compensation for services 10,000 - ------------- ------------- Total EBITDA adjustments 460,000 347,000 ------------- ------------- Modified EBITDA income (loss) $ 1,098,000 $ (147,000) ============= ============= Six Months Ended June 30, --------------------------- 2014 2013 ------------- ------------- Net income (loss) $ 418,000 $ (897,000) ------------- ------------- Modified EBITDA adjustments: Depreciation and amortization 304,000 298,000 Interest expense 365,000 289,000 Stock option compensation 218,000 188,000 ------------- ------------- Total EBITDA adjustments 887,000 775,000 ------------- ------------- Modified EBITDA income (loss) $ 1,305,000 $ (122,000) ============= ============= REED'S, INC. CONDENSED BALANCE SHEETS December 31, June 30, 2014 2013 ------------- ------------- (unaudited) ASSETS Current assets: Cash $ 1,213,000 $ 1,104,000 Trade accounts receivable, net of allowance for doubtful accounts, returns and discounts of $310,000 and $324,000, respectively 2,881,000 2,143,000 Inventory, net of reserve for obsolescence of $118,000 and $176,000, respectively 5,499,000 6,293,000 Prepaid inventory 886,000 256,000 Prepaid and other current assets 160,000 178,000 ------------- ------------- Total Current Assets 10,639,000 9,974,000 Property and equipment, net of accumulated depreciation of $3,099,000 and $2,796,000, respectively 3,537,000 3,686,000 Brand names 1,029,000 1,029,000 Deferred financing fees, net of amortization of $58,000 and $40,000, respectively 34,000 60,000 ------------- ------------- Total assets $ 15,239,000 $ 14,749,000 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,131,000 $ 3,612,000 Accrued expenses 144,000 136,000 Line of credit 3,982,000 4,524,000 Current portion of long term financing obligation 122,000 111,000 Current portion of capital leases payable 45,000 79,000 Current portion of term loan 177,000 165,000 ------------- ------------- Total current liabilities 8,601,000 8,627,000 Long term financing obligation, less current portion, net of discount of $501,000 and $526,000, respectively 2,109,000 2,147,000 Capital leases payable, less current portion 86,000 106,000 Term loan, less current portion 390,000 482,000 ------------- ------------- Total Liabilities 11,186,000 11,362,000 ------------- ------------- Commitments and contingencies Stockholders' equity: Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding 94,000 94,000 Common stock, $.0001 par value, 19,500,000 shares authorized, 13,050,252 and 12,922,832 shares issued and outstanding, respectively 1,000 1,000 Additional paid in capital 25,529,000 25,276,000 Accumulated deficit (21,571,000) (21,984,000) ------------- ------------- Total stockholders' equity 4,053,000 3,387,000 ------------- ------------- Total liabilities and stockholders' equity $ 15,239,000 $ 14,749,000 ============= =============
The following table sets forth key statistics for the three months ended June 30, 2014 and 2013, respectively.
Three Months Ended June 30, Pct. ------------------------ 2014 2013 Change ----------- ----------- ------ Gross sales, net of discounts & returns* $12,324,000 $11,125,000 11% Less: Promotional and other allowances** 1,137,000 1,606,000 -29% ----------- ----------- Net sales 11,187,000 9,519,000 18% ----------- ----------- Cost of tangible goods sold 7,037,000 6,630,000 6% As a percentage of: Gross sales 57% 60% Net sales 63% 70% Cost of goods sold - idle capacity 446,000 432,000 3% As a percentage of net sales 4% 5% ----------- ----------- Gross profit $ 3,704,000 $ 2,457,000 51% ----------- ----------- Gross profit margin as a percentage of net sales 33% 26%
* Gross sales is used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and overall Company performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross sales provides a useful measure of our operating performance. Gross sales is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.
** Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform with GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company's distributors or retail customers including, but not limited to the following: (i) reimbursements given to the Company's distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company's agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company's distributors and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances constitute a material portion of our marketing activities. The Company's promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ...
Oct. 23, 2016 12:00 PM EDT Reads: 8,327
@ThingsExpo has been named the Top 5 Most Influential M2M Brand by Onalytica in the ‘Machine to Machine: Top 100 Influencers and Brands.' Onalytica analyzed the online debate on M2M by looking at over 85,000 tweets to provide the most influential individuals and brands that drive the discussion. According to Onalytica the "analysis showed a very engaged community with a lot of interactive tweets. The M2M discussion seems to be more fragmented and driven by some of the major brands present in the...
Oct. 23, 2016 11:30 AM EDT Reads: 11,309
In the next forty months – just over three years – businesses will undergo extraordinary changes. The exponential growth of digitization and machine learning will see a step function change in how businesses create value, satisfy customers, and outperform their competition. In the next forty months companies will take the actions that will see them get to the next level of the game called Capitalism. Or they won’t – game over. The winners of today and tomorrow think differently, follow different...
Oct. 23, 2016 11:00 AM EDT Reads: 925
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...
Oct. 23, 2016 10:30 AM EDT Reads: 1,446
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Oct. 23, 2016 09:45 AM EDT Reads: 784
Virgil consists of an open-source encryption library, which implements Cryptographic Message Syntax (CMS) and Elliptic Curve Integrated Encryption Scheme (ECIES) (including RSA schema), a Key Management API, and a cloud-based Key Management Service (Virgil Keys). The Virgil Keys Service consists of a public key service and a private key escrow service.
Oct. 23, 2016 09:45 AM EDT Reads: 1,013
The Internet of Things (IoT), in all its myriad manifestations, has great potential. Much of that potential comes from the evolving data management and analytic (DMA) technologies and processes that allow us to gain insight from all of the IoT data that can be generated and gathered. This potential may never be met as those data sets are tied to specific industry verticals and single markets, with no clear way to use IoT data and sensor analytics to fulfill the hype being given the IoT today.
Oct. 23, 2016 09:45 AM EDT Reads: 2,488
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Oct. 23, 2016 09:30 AM EDT Reads: 3,811
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Oct. 23, 2016 08:30 AM EDT Reads: 1,337
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
Oct. 23, 2016 08:15 AM EDT Reads: 4,434
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to impr...
Oct. 23, 2016 08:00 AM EDT Reads: 5,676
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Oct. 23, 2016 07:00 AM EDT Reads: 4,104
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Oct. 23, 2016 06:30 AM EDT Reads: 4,747
SYS-CON Events announced today that SoftNet Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. SoftNet Solutions specializes in Enterprise Solutions for Hadoop and Big Data. It offers customers the most open, robust, and value-conscious portfolio of solutions, services, and tools for the shortest route to success with Big Data. The unique differentiator is the ability to architect and ...
Oct. 23, 2016 06:00 AM EDT Reads: 703
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
Oct. 23, 2016 05:30 AM EDT Reads: 3,926
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Oct. 23, 2016 05:15 AM EDT Reads: 1,837
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
Oct. 23, 2016 03:45 AM EDT Reads: 1,698
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue an...
Oct. 23, 2016 03:30 AM EDT Reads: 2,955
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
Oct. 23, 2016 02:30 AM EDT Reads: 853
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Oct. 23, 2016 02:30 AM EDT Reads: 9,659