Reed's, Inc. recently announced the financial results for its fiscal year ending Dec. 31, 2012.
The company increased revenues by 20 percent to $30 million in 2012 compared to 2011. Gross profit increased 23 percent to $9.1 million in 2012. Earnings before non-cash items and finance costs (modified EBITDA) increased to $1 million during 2012. Net loss for the 2012 fiscal year was $524,000 compared to a loss of $941,000 a year earlier. Working capital at Dec. 31, 2012 was $2.3 million, as compared to $2.7 million at Dec. 31, 2011
The company introduced its Culture Club Kombucha in July 2012 and increased distribution into a minimum of 800 new retailers throughout the U.s. and into select Whole Foods Markets. The volume of branded Reed’s and Virgil’s products shipped grew at a rate of 20 percent over last year. The company expanded its network of direct store delivery (DSD) distribution in numerous key regions increasing sales through this distribution channel by approximately 50 percent. It expanded its distributor sales by more than 30 percent by partnering in marketing efforts and focusing on sales support for distributors. The company also secured three new private label brand contracts with some of the largest retailers in the U.S.
"2012 represents another solid year of growth here at Reed's," stated Chris Reed, founder and CEO at Reed's Inc in a prepared statement. "We have introduced an entirely new product line in our Culture Club Kombucha while we also expanded sales and distribution channels for our Reed's Ginger Brew and Virgil's branded products. Our EBITDA positive results have enabled us to fund our product rollouts and increased promotional spend without the requirement of additional equity or debt financing. We expect 2013 to be a great year."
James Linesch, chief financial officer, stated, "Our strong business model is producing continually improving results in key areas. Our branded product revenues continue to increase at strong organic growth rates, while we also improved our gross margins. During 2012, our direct gross margin percentage, before promotional discounts, improved by an average of about 2 percent. Recurring general and administrative costs, before one-time costs, increased by less than 10 percent in 2012 while sales and gross profit contribution increased at over twice that rate, indicating improved economies of scale. Sales and marketing costs in 2012 were approximately 10 percent of net revenues, the same as in 2011. Our organizational structure is healthy and we have excellent brands that we are promoting in effective ways.
Linesch continued, "Our fourth quarter losses were primarily due to continued production challenges on our kombucha, resulting in higher unallocated plant costs, and to lighter than expected private label revenues from one customer. We have addressed the production issues surrounding our kombucha in our current quarter and we anticipate increased margin contribution going forward. Our underlying business is stronger than ever, however, and we feel that we have laid the foundation for improved financial performance in 2013."