Reed's (NASDAQ: REED) reported Q4 EPS of ($0.05), $0.01 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $10.7 million versus the consensus estimate of $9.26 million.

Highlights for the Fourth Quarter of 2020

• Net sales increased 49% to $10.7 million in the fourth quarter compared to $7.2 million in the prior year. The increase compared to the prior year reflects healthy volume growth of both the Reed’s® and Virgil’s® brands, including the impact from recent launches of new product innovation;
• Core brand gross sales increased 38% versus prior year period primarily driven by 49% volume growth of the Reed’s® brand and 38% growth of the Virgil’s® brand;
• Gross profit increased 490% to $3.5 million compared to $0.6 million in the prior year period, reflecting discreet charges for inventory write-downs and year end true-ups to inventory reserves in the fourth quarter of 2019. Gross margin increased to 33% from 8% for the fourth quarter. Excluding the discrete items in the fourth quarter of 2019, gross margin increased approximately 700 basis points on a normalized basis compared to 26% in the prior year period;
• Operating loss narrowed to $2.7 million compared to $3.5 million in the fourth quarter of 2019;
• Net loss improved to $3.3 million, or $0.05 per share, compared to $3.8 million, or $0.09 per share, in the prior year period; and
• Non-GAAP Modified EBITDA loss improved to $2.0 million in the fourth quarter of 2020 compared to a Modified EBITDA loss of $3.8 million in the prior year.

“Sales accelerated sharply in the fourth quarter driven by robust underlying demand across our product portfolio coupled with expanded distribution. Net sales for the fourth quarter increased 49% reflecting volume gains and reduced discounting. In addition, we continued to make progress improving profitability as gross margin reached 33% in the fourth quarter. Given the ongoing momentum, we are expecting net sales to increase 14% to 16% in the full year 2021. The improvements to our supply chain have been critical factors supporting our fourth quarter results and position us very well for the future. Our expanded footprint encompassing six co-packers ensures adequate capacity to support our growth trajectory for the next few years while also mitigating risk through diversification,” stated Norman E. Snyder, Chief Executive Officer of Reed’s, Inc. “We also remain focused on driving operational efficiencies and expect profitability trends to improve further as sales growth continues to outpace expenses. We remain confident with our brands and growth opportunity, and are proud of the entire Reed’s team and our valued partners who are working diligently to make sure we can deliver on the significant opportunity ahead of us amidst the challenging time of COVID-19.”

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