Reed's, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the three months ended September 30, 2026, were $6.5 million, a decrease from $7.0 million in the prior year period.
• Gross profit increased to $1.6 million from $1.2 million in the prior year period, with gross margin expanding to 25% from 17%.
• Selling, general and administrative (SG&A) expenses decreased 15% to $3.6 million from $4.2 million in the prior year period.
• Net loss improved to $3.2 million (or $(0.27) per share) compared to a net loss of $4.0 million (or $(0.48) per share) in the prior year period.
• EBITDA loss improved to $2.9 million from $3.6 million in the prior year period.
• Delivery and handling expenses were $2.69 per case, up from $2.60 per case in the prior year period, though total delivery and handling expenses decreased 10% to $1.0 million from $1.1 million.
• Cost of goods per case decreased to $13.26 from $13.73 in the prior year period.
• Cash used in operations for the quarter improved to $0.3 million from $2.8 million in the year-ago period.
• As of September 30, 2026, the Company held $2.1 million in cash and $9.25 million in total debt, compared to $10.4 million in cash and $9.2 million in total debt net of deferred financing fees as of December 31, 2025.
• For the nine months ended September 30, 2026, net sales were $21.1 million compared to $26.6 million in the prior year period, and net loss was $13.9 million compared to $12.1 million.

Guidance and Future Outlook:

• Management expects to deliver sequential operating improvements by focusing on strengthening sales execution, expanding gross margins, and maintaining cost discipline.
• The Company aims to reposition for profitable growth following corrective actions initiated earlier in the year.

Business Segments and Product Lines:

• The Company expanded retail coverage through its national broker network, adding new placements and doors, and regained distribution with several national and regional retail accounts.
• E-commerce operations were restructured by transitioning to a third-party fulfillment model to reduce costs.
• The Company reduced promotional and other allowances, which contributed to gross margin expansion.
• Investments were made in personnel and related services to support the Company's Asia growth initiative.

Market and Competitive Landscape:

• The Company is a category leader in craft beverages with products sold in over 32,000 stores nationwide under the Reed's, Virgil's, and Flying Cauldron brand names.
• The press release does not provide specific market share data or detailed competitor analysis.

Risks and Challenges:

• Forward-looking statements highlight risks including inventory shortages, new product release risks, inflation impacts, fluctuating customer demand, and the ability to collect unbilled contractual commitments.
• Risks also include the ability to compete successfully, attract and retain qualified personnel, expand distribution channels, dependence on third-party suppliers and co-packers, and rising fuel and freight costs.
• The Company faces risks related to business expansion, international operations, intellectual property protection, and evolving government regulations.

Management Commentary and Tone:

• Neal Cohane, interim CEO, stated the third quarter marked continued progress on gross margin and cost discipline, noting quarter-over-quarter improvements in gross margin (100 basis points), SG&A expenses (24%), and net loss (26%).
• Management expressed confidence in the balance sheet strengthening and the execution of corrective actions to stabilize the business.

Other Key Points:

• The Company refinanced its $9.25 million senior secured loan on September 30, 2026, extending maturity to June 30, 2027, with an option to extend for an additional three months.
• Subsequent to the quarter end on November 9, 2026, the Company closed a private placement, issuing 17,421,602 shares of common stock for aggregate gross proceeds of $10.0 million.
• The proceeds from the private placement were intended to satisfy the equity contribution requirement under the Company's amended credit agreement, with net proceeds to be used for working capital and general corporate purposes.
• A conference call to discuss results was scheduled for November 11, 2026, at 8:30 a.m. ET.