Release Date: March 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reed's Inc (REED, Financial) completed a $10 million private placement, enhancing financial flexibility and enabling inventory rebuilding.
- The company launched a new multifunctional soda line, which has been well-received by retailers, securing over 8,000 points of distribution.
- Gross margin improved significantly to 30% in Q4 2024, up from 4% in the previous year, driven by supply chain optimizations.
- Reed's Inc (REED) expanded its distribution network, gaining over 1,100 new placements across major retailers.
- The transition from glass bottles to cans has been positively received, reducing delivery and handling costs by 10%.
Negative Points
- Net sales declined to $9.7 million in Q4 2024 from $11.7 million in the previous year, primarily due to inventory constraints.
- Operating expenses increased to $6.6 million in Q4 2024, up from $5.4 million in the previous year.
- The company experienced significant short order shipments, impacting its ability to meet customer demand.
- Modified EBITDA was negative $0.7 million in Q4 2024, compared to positive $43,000 in the previous year.
- Reed's Inc (REED) continues to face challenges in transitioning Virgil's Full Sugar line from glass to cans, affecting sales velocity.
Q & A Highlights
Q: Can you provide more details on the new products and their positioning in the non-alcoholic beverage market?
A: Norman Snyder, CEO, explained that the new multifunctional soda line is designed to cater to the growing demand for health-conscious beverages. The products are plant-based, featuring organic ginger, adaptogens, and prebiotic fiber, appealing to millennials and Gen Z consumers. This aligns with the trend of expanding shelf space for functional beverages in retail, positioning Reed's at the forefront of this fast-growing category.
Q: What is the status of Reed's alcohol portfolio, and why wasn't it mentioned in the call?
A: Norman Snyder, CEO, stated that the alcohol portfolio has not been a primary focus due to inventory challenges. The company has concentrated on key retail partners like Whole Foods and Trader Joe's, where Reed's has strong brand recognition. With inventory issues being addressed, there is renewed interest, especially with upcoming rotations at Costco in L.A. and Hawaii.
Q: With revenue down significantly over the past two years, is this solely due to inventory constraints, or is there a lack of demand for Reed's products?
A: Norman Snyder, CEO, attributed the revenue decline primarily to inventory constraints, not demand issues. Orders have been consistent, and recent replenishments have shown strong sales growth. The company is focused on improving inventory management to meet demand and expects to see growth in the second quarter.
Q: What is the plan for getting Reed's relisted on a major stock exchange?
A: Norman Snyder, CEO, mentioned that with the restructuring of the balance sheet, Reed's now meets most requirements for relisting. The company is focused on achieving sustained positive performance over the next few quarters to meet all criteria and begin the application process for uplisting.
Q: Why did SG&A expenses increase significantly in Q4 2024 compared to the previous year?
A: Norman Snyder, CEO, explained that the increase was due to non-cash accounting adjustments required by auditors, such as reserves against equipment investments. These are not indicative of increased cash spending and will be reflected in financial statements as non-cash items.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
