Reed’s Inc. Reports First Profitable Quarter of 2012

Reed’s Inc. Reports Second Quarter 2012 First Profitable Quarter. 39% Gross Margin Improvement

LOS ANGELES, CA–(Marketwire – Aug 13, 2012) – Reed’s, Inc. (NASDAQ: REED) maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its second fiscal quarter ending June 30, 2012.Financial Highlights for the Quarter:

  • Revenues increased 27% to $7.8 million in 2012, compared to 2011.
  • Gross profit increased to $2.7 million in 2012, an increase of 39% from 2011. The gross profit percentage increased to 34% of sales, an increase from 31% in 2011.
  • Earnings before non-cash items and finance costs (modified EBITDA) increased to $831,000 during 2012, as compared to $395,000 in the prior year period. (See EBITDA table at end of this release for further non-GAAP information).
  • Net income for the 2012 second quarter was $444,000, or $0.04 per share, compared to a loss of $55,000 a year earlier.
  • Reduced inventory levels by over $1 million.
  • Working capital at June 30, 2012 was $3.1 million, as compared to $2.7 million at December 31, 2011.

Operational Highlights:

  • Developed and launched new Reed’s Culture Club Kombucha in four flavors.
  • Launched Reed’s Chocolate Crystallized Ginger candy.
  • New distribution partners in, South Carolina, Michigan, Utah and Tennessee.
  • Started shipping a new Private Label project for large national supermarket chain.
  • Increased sales team, adding new, experienced players in key markets to meet increased demand of our brands and to maintain and grow solid relationships with distributor and retail partners.

“This is our 11th quarter of double-digit revenue growth and has resulted in the company moving into a profitable position,” stated Chris Reed, Founder and CEO of Reed’s, Inc. “The second quarter results are confirmation that our 2012 business plan remains on track. Our branded and private label categories continue expand. We believe our momentum will continue in the second half of the year. Our new Kombucha line continues to roll out nationally. Early results are positive.”

James Linesch, Chief Financial Officer stated, “We have reached a profitable sales velocity and margin contribution by holding down costs and by investing in effective promotions. Our gross margins have increased mostly through higher effective prices and lower production and raw material costs overall, while also making a higher investment in promotions and discounts this year. We gained more liquidity by reducing our inventory levels and improving turnover through careful production scheduling and timing of raw materials purchases. We have aggressive plans for expansion on several fronts this year, and we believe that our company is well-capitalized to carry out our plans.”

The Company will conduct a conference call @ 4:15PM EDT today, August 13th, to discuss its 2012 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 (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:

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. 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. 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: or call 800-99-REEDS.

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