Reed’s Net Sales Rebound in Q4

Financial woes for Reed’s Inc. are finally on the mend with the company reporting a 5.7 percent increase in net sales in Q4 2017 during earnings call on Wednesday.

The increase, to $9.7 million, is the first in the black following three straight quarters of decline last year. Despite the positive quarter, however, Reed’s year end sales were down 11.2 percent to $37.7 million.

The company saw an operating loss of $6.1 million for the quarter, which includes a $3.9 million non-cash impairment resulting from the pending sale of the L.A. facility. The quarter saw a net loss of $10.9 million, up from a $2.4 million net loss in Q4 of 2016.

The sales uptick came shortly after the appointment of Val Stalowir as CEO, taking the top role from company founder Chris Reed last July after production problems resulted in out of stock issues and loss of shelf space. Under Stalowir’s management, Reed’s is in the process of reforming its entire business model by moving away from self-manufacturing and focusing on sales and marketing. The company is selling its Los Angeles production facility, partnering with new brokers, and rebranding the company’s core Reed’s Ginger Beer and Virgil’s lines.

“…[We’re] pleased with the improving core brand performance and our early progress on the first phase of our transformation and value creation plan,” Stalowir said during a call with investors Wednesday. “The first phase includes new leadership, which is now in place; a new strategic focus, which is also in place and complete; optimizing our business model, which we are in the process of now completing; and improving our capital structure, which is well underway.”

According to Stalowir, “100 percent” of Reed’s resources have been directed toward growing the Reed’s and Virgil’s brands. Stalowir also discussed plans to improve the company’s capital structure with funds raised from a $14 million rights offering completed in December, which he said will be used to cover stretch payables and secure improve commercial vendor terms.

Reed’s has also established multiyear contracts with Owens-Illinois to serve as its exclusive glass supplier and R.C. Moore as its logistics partner, Stalowir said.

“To summarize, we’ve made very good progress on our transformation to date, and we have significant opportunity to continue to capture moving forward,” Stalowir said. “We’ve already stemmed the sale declines with our early initiatives; begun to improve margins; received the [letter of intent] to sell the plant; and raise the capital necessary to enhance our balance sheet and support our plans.”

Earlier this week, Reed’s announced plans to seek a new national spokesperson for Virgil’s ahead of the April launch of the Virgil’s Zero Sugar line. Looking to consumers to fill the role, the company is hosting a contest where applicants can like and follow the Drink Virgil’s Facebook page and by a May 1 deadline post a short video stating why they would be a good face for the brand.

The call, held after the market closed Wednesday, preceded slight stock growth today. The stock closed at $1.70 per share Thursday, up 6.25 percent following weeks of decline.