Reed's (REED) Misses Q1 EPS by 2c, Revenues Beat

Reed's (NASDAQ: REED) reported Q1 EPS of ($0.05), $0.02 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $12.1 million versus the consensus estimate of $10.9 million.

Highlights for the First Quarter of 2021

• Net sales increased 28% to $12.1 million in the first quarter compared to $9.5 million in the prior year. The increase compared to the prior year reflects continued volume growth of both the Reed’s® and Virgil’s® brands, including the impact from the recent launch of Reed’s Real Ginger Ale products;
• Core brand gross sales increased 27% versus prior year period primarily driven by 37% volume growth of the Reed’s® brand and 29% growth of the Virgil’s® brand;
• Gross profit increased 34% to $3.9 million compared to $2.9 million in the prior year period. Gross margin increased to 32% from 30% for the first quarter;
• Operating loss was $4.3 million compared to $2.3 million in the first quarter of 2020;
• Net loss was $4.5 million, or $0.05 per share, compared to $2.6 million, or $0.05 per share, in the prior year period; and
• Non-GAAP Modified EBITDA loss was $3.4 million in the first quarter of 2021 compared to a Modified EBITDA loss of $1.4 million in the prior year.

Management Commentary

“Strong momentum continued throughout the first quarter as net sales increased by 28% to over $12 million, the highest quarterly level in Company history. Demand remained broad based and our increase in net sales was largely reflective of volume gains across existing and new customers,” said Norman E. Snyder, Chief Executive Officer of Reed’s, Inc. “We made further progress improving gross margin reporting a 160 basis point increase versus last year; however, this was more than offset by unexpectedly sharp increases in delivery expenses to ensure supply chain continuity due to very challenging conditions in the transportation markets. While many of these adverse factors were outside of our control during the first quarter, we are not satisfied with our net results and have identified several areas where we expect to realize immediate expense savings, drive scale related efficiencies and implement initiatives to mitigate freight and supply chain risks over the balance of the year. With net sales growth in the first three months of 2021 nicely ahead of our full-year guidance range, our recently completed financing transaction solidified our balance sheet, providing incremental working capital to support our anticipated trajectory. We remain comfortable we will meet or exceed the 2021 outlook we introduced in March and are confident in the significant long-term growth opportunity for our overall brand portfolio.”

For earnings history and earnings-related data on Reed's (REED) click here.

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