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Reed's Inc (REED)
OTHER OTC:REED
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Reed's
(OTC:REED)
36Underperform
Reed's (REED) vs. S&P 500 (SPY)
Market Cap
$54.56M
Dividend YieldN/A
Average Volume (3M)4.32K
Price to Earnings (P/E)―
Beta (1Y)-0.33
Revenue Growth-16.95%
EPS Growth26.58%
CountryUS
Employees21
SectorConsumer Defensive
Sector Strength79
IndustryBeverages - Non-Alcoholic
Share Statistics
EPS (TTM)-4.06
Shares Outstanding45,371,246
10 Day Avg. Volume3,930
30 Day Avg. Volume4,315
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.30
Price to Cash Flow (P/CF)2.80
P/FCF Ratio0.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Reed's Business Overview & Revenue Model
Company DescriptionReed's Inc. (REED) is a leading producer of natural and handcrafted beverages, primarily known for its premium ginger beer and ginger candy products. The company operates within the food and beverage sector, focusing on delivering high-quality, all-natural and innovative beverages to health-conscious consumers. Reed's emphasizes the use of real ginger and other natural ingredients in its product offerings, which include a variety of ginger beers, ginger ales, and other specialty drinks.
How the Company Makes MoneyReed's Inc. generates revenue primarily through the sale of its beverage products to retailers, distributors, and directly to consumers. The company utilizes a multi-channel distribution strategy, which includes grocery stores, specialty and natural food retailers, convenience stores, and online platforms. Key revenue streams include wholesale sales to distributors, direct sales to retail outlets, and online sales through the company's e-commerce platform. Strategic partnerships with major retail chains boost product visibility and availability, contributing significantly to Reed's earnings. Additionally, the company's focus on innovative and health-oriented beverages allows it to tap into the growing demand for natural and organic products, further driving sales and revenue growth.
Reed's Financial Statement Overview
Summary
Reed's financial performance is severely challenged, with declining revenues, significant profitability issues, and a weak balance sheet characterized by negative equity and persistent cash outflows. These factors indicate high financial risk and instability.Income Statement
Reed's demonstrates declining revenue and persistent losses. The TTM (Trailing-Twelve-Months) revenue decreased by 10.72% from the previous year, indicating a negative growth trajectory. The gross profit margin is low at 22.37%, while the net profit margin is negative at -39.16%, showing significant profitability challenges. Negative EBIT and EBITDA margins further highlight operating inefficiencies.35
Negative
Balance Sheet
Reed's balance sheet shows financial instability with a negative equity position of -21.95 million. The debt-to-equity ratio is not applicable due to negative equity, signaling financial distress. The equity ratio is also negative, reflecting more liabilities than assets, posing a solvency risk.25
Negative
Cash Flow
The cash flow statement highlights substantial cash outflows with negative operating cash flow of -2.44 million. While the free cash flow has improved, it remains negative at -2.50 million. The operating cash flow to net income ratio is 0.16, showing minor efficiency in converting income to cash.40
Negative
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 39.91M | 44.71M | 53.04M | 49.60M | 41.62M | 33.82M | Gross Profit |
| 8.93M | 9.71M | 12.11M | 13.60M | 12.77M | 7.88M | EBIT |
| -9.41M | -9.42M | -13.99M | -15.97M | -8.62M | -14.90M | EBITDA |
| -9.13M | -9.28M | -14.73M | -14.96M | -8.67M | -14.67M | Net Income Common Stockholders |
| -15.63M | -15.52M | -19.11M | -17.60M | -11.48M | -17.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 624.00K | 603.00K | 533.00K | 49.00K | 595.00K | 913.00K | Total Assets |
| 12.49M | 18.88M | 26.32M | 26.32M | 20.06M | 15.99M | Total Debt |
| 11.99M | 27.58M | 21.89M | 10.78M | 1.46M | 8.65M | Net Debt |
| 11.37M | 26.97M | 21.36M | 10.73M | 860.00K | 7.74M | Total Liabilities |
| 19.23M | 38.06M | 33.96M | 22.12M | 9.65M | 14.85M | Stockholders Equity |
| -6.74M | -19.18M | -7.63M | 4.20M | 10.40M | 1.15M |
| Cash Flow | Free Cash Flow | ||||
| -2.50M | -4.35M | -15.44M | -17.92M | -9.66M | -18.48M | Operating Cash Flow |
| -2.44M | -4.27M | -15.43M | -17.59M | -9.50M | -18.16M | Investing Cash Flow |
| -61.00K | -20.00K | -2.00K | -335.00K | -161.00K | -277.00K | Financing Cash Flow |
| 1.80M | 4.36M | 15.92M | 17.38M | 9.34M | 18.73M |
Reed's Technical Analysis
Neutral
1.20
Price Trends
1.11
Positive
1.03
Positive
1.23
Positive
Market Momentum
0.06
Positive
50.00
Neutral
51.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For REED, the sentiment is Neutral. The current price of 1.2 is below the 20-day moving average (MA) of 1.37, above the 50-day MA of 1.11, and below the 200-day MA of 1.23, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 50.00 is Neutral, neither overbought nor oversold. The STOCH value of 51.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for REED.
Reed's Risk Analysis
Reed's disclosed 28 risk factors in its most recent earnings report. Reed's reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Reed's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $307.31B | 29.03 | 41.86% | 2.71% | 1.96% | -0.45% | |
74 Outperform | $6.40B | 61.55 | 12.54% | ― | 2.85% | -43.53% | |
69 Neutral | $3.98B | 21.46 | 40.81% | ― | 0.34% | 9.48% | |
63 Neutral | $20.96B | 13.82 | -10.55% | 7.37% | 1.44% | 9.09% | |
52 Neutral | $155.10M | ― | -25.77% | ― | -6.83% | 19.09% | |
48 Neutral | $25.83M | ― | -87.45% | ― | 17.44% | -33.47% | |
36 Underperform | $54.56M | ― | 71.20% | ― | -16.95% | 26.58% |
* Consumer Defensive Sector Average
Performance Comparison
REED
Reed's
1.30
-0.35
-21.21%
KO
Coca-Cola
71.04
12.33
21.00%
JSDA
Jones Soda
0.22
-0.01
-4.35%
FIZZ
National Beverage
42.12
-2.85
-6.34%
CELH
Celsius Holdings
27.83
-63.24
-69.44%
ZVIA
Zevia PBC
2.19
0.85
63.43%
Reed's Earnings Call Summary
Earnings Call Date: Nov 14, 2024 | % Change Since: -4.00% | Next Earnings Date: Mar 27, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook for Reed's. While there were significant challenges such as a decline in sales and gross profit, the company made strategic moves to secure financing and expand distribution, with positive developments in new products and e-commerce growth.Highlights
Introduction of New Product Line
Reed's is in the final phases of developing a new line of better-for-you beverages featuring organic ginger, adaptogens, and lower calorie and sugar content. The feedback from key retailers has been positive, and the company plans to launch this line early next year.
Expansion of Distribution Points
Reed's has gained over 5,000 new points of distribution through retailers like Safeway Albertsons, Giant Eagle, and Cracker Barrel, which is expected to propel growth into 2025.
New Financing Secured
The company secured a $10 million revolving credit facility with Whitebox, expected to alleviate production challenges and allow Reed's to build inventory levels to meet demand.
E-Commerce Channel Growth
E-commerce sales have exceeded $70,000 per month for the past two months, with projections to generate over $1 million in 2025.
Lowlights
Significant Decline in Net Sales
Net sales for Q3 2024 were $6.8 million, down from $11.9 million in the same quarter last year, primarily due to production limitations and short shipments impacting sales by over $4 million.
Gross Profit and Margin Decline
Gross profit for Q3 2024 was $1.2 million compared to $4 million in the previous year, with gross margins decreasing from 34% to 18%.
Increased Operating Loss
The operating loss for Q3 2024 was $3.1 million compared to $0.1 million in Q3 2023, with a modified EBITDA loss of $3 million compared to $0.2 million last year.
Withdrawal of Full-Year Outlook
Reed's withdrew its previously issued full-year 2024 outlook due to inventory challenges.
Company Guidance
During Reed's Q3 2024 earnings call, CEO Norman Snyder highlighted several key metrics and strategic initiatives aimed at overcoming recent challenges and positioning the company for growth. The company experienced a significant impact on net sales, which were reduced by over $4 million due to production limitations and short shipments, with Q3 net sales totaling $6.8 million compared to $11.9 million in the previous year. In response, Reed's secured a $10 million revolving credit facility to address liquidity constraints and enhance inventory levels. The company is focusing on expanding its product lines, including a new better-for-you beverage line expected to launch early next year, and has amassed over 5,000 new points of distribution, with significant authorizations from major retailers such as Safeway Albertsons, Giant Eagle, and Harris Teeter. Despite a challenging quarter with an operating loss of $3.1 million and a modified EBITDA loss of $3 million, Reed's is optimistic about its strategic actions to improve its balance sheet and meet growing consumer demand, particularly in the high-growth functional beverage category.Reed's Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Reed’s Strengthens Market Position with New Credit Facility
Positive
Nov 19, 2024
Reed’s, Inc. has secured a $10 million revolving credit facility through a Senior Secured Loan Agreement with Whitebox Advisors and Cantor Fitzgerald Securities, offering financial flexibility with an 8% interest rate. The funds will address existing credit obligations and support business operations, while a significant stock exchange increases D&D’s ownership stake to 87.8%. This strategic financial maneuver aims to stabilize and enhance Reed’s market position.
Private Placements and FinancingFinancial Disclosures
Reed’s Reports Q3 Sales Drop, Secures Credit Facility
Neutral
Nov 14, 2024
Reed’s, Inc., a leading ginger beverage producer, reported a challenging third quarter in 2024 with net sales dropping to $6.8 million from $11.9 million the previous year, impacted by credit and inventory issues. Despite financial hurdles, Reed’s secured a $10 million credit facility and restructured secured notes through its majority stockholder, aiming to enhance liquidity and inventory levels. The company is optimistic about leveraging these strategic moves to overcome production challenges and drive future growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.