Reed’s Inc at Small Cap Growth Conference: Strategic Growth and Innovation

On Thursday, 26 June 2025, Reed’s Inc (NYSE Amex:REED) participated in the Small Cap Growth Virtual Investor Conference, where company leaders outlined strategic initiatives. The discussion highlighted Reed’s focus on growth, innovation, and market expansion, though challenges remain in aligning investments with revenue growth.

Key Takeaways

• Reed’s aims to capitalize on its strong brand and recent recapitalization to drive growth.
• The company is targeting mid-30s gross margins with aspirations to approach 40%.
• Distribution wins with major retailers like Duane Reade, Costco, and Kroger were noted.
• Reed’s plans to expand its functional beverage line, responding to consumer trends.
• International market entry is being considered as a strategic opportunity.

Financial Results

• Recapitalization: Completed in Q4 2024, reducing debt and infusing equity, enabling working capital reinvestment.
• New Credit Facility: Secured $10 million to support growth initiatives.
• Gross Margin Targets: Aiming to maintain and improve margins to mid-30s, with a goal of reaching high 30s and approaching 40%.
• Revenue Growth: Anticipating sequential growth in both gross and net sales, with an emphasis on managing trade spend and discounts.
• SG&A Expenses: Currently elevated due to growth investments, but expected to balance as revenue catches up.

Operational Updates

• Strategic Initiatives: Focused on driving growth, improving margins, and managing operating expenses.
• Sales Velocity: Monitoring product sales through existing channels.
• Channel Expansion: Efforts underway to broaden distribution channels.
• Margin Expansion: Aiming for efficiencies in raw materials and distribution.
• Logistics and Warehouse: Cost reduction efforts, resolving previous logistical inefficiencies.

Future Outlook

• Revenue and Margins: Expecting sequential revenue growth and targeting improved margins.
• International Markets: Exploring selective international market opportunities.
• Innovation: Continued development of functional beverages with new flavors planned for 2026.
• Distribution: Expanding into new channels and increasing core product distribution.

Q&A Highlights

• New Product Distribution: Early successes with Duane Reade, Costco, and Kroger, with positive feedback from sales teams and customers.
• Distribution Strategy: Expanding into new channels, building core product distribution, and leveraging new channel opportunities.
• Distributor Partnerships: Focused on expanding correctly and strategically.

Reed’s Inc’s leadership remains optimistic about their strategic path, leveraging a strong brand and a clean balance sheet to execute growth plans. For more details, please refer to the full transcript below.

Full transcript - Small Cap Growth Virtual Investor Conference:

Operator: Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our quarterly Small Cap Growth Virtual Conference. Our next presentation is from Reade’s. Please note, you may submit questions for the presenter in the box to the left of the slides. You can also view a company’s availability for a one on one meeting by clicking Book a Meeting in the top toolbar.

At this point, I’m very pleased to welcome Cyril Wallace, Chief Executive Officer and Doug McCurdy, Chief Financial Officer of REITs, which trades on the OTCQX best market under the symbol REED. Welcome Cyril and Doug.

Cyril Wallace, Chief Executive Officer, Reed’s: Thanks, Greg. Thank you. I appreciate it. Thanks for the intro. Yeah.

No. And it’s great to be here this afternoon. I appreciate everyone joining. Really excited to talk a little bit about, our business here with you all. So, let me just start off by saying that, you know, I’m really excited, you know, been here with the business now going on two months, a long standing career within the business and consumer packaged goods.

So really excited to come on and talk about, you know, our business here and some of the incredible things that we’re doing, with Reed’s. So, you know, Reed’s has, you know, just an incredible long standing history, and they started back in the eighties, and have grown into this, you know, very recognizable brand. And I think for most people that say that they tried, you know, our products that, you know, they’re really, really impressed, with the quality of the product and certainly, you know, the journey that our product has been on. And so I think, you know, as you look at some of the key milestones here, you know, we started back in the 80s. We’ve since we’ve added to our portfolio with Virgil’s back in 2000 excuse me, in 1999.

And then, you know, we’ve expanded the innovation in 2011. And then we launched, you know, what I believe is, you know, one of the corner stores or one of the best ginger ale’s out on the marketplace, in 2020. And then really excited, and I’ll talk to you in just a little bit about some incredible innovation that we just launched this year that’s on par, I believe, where consumers are headed. So, you know, you think about, you know, our our our business, right, I mean, you know, ginger ale, ginger beer, and this, you know, F and B or flavored malt beverage is certainly an area that consumers are continuing to lean into. And certainly, as you know, we continue to evolve and think through innovation, I think there’s areas within each one of these that still within The U.

S. Market still has legs and that are growing and it’s growing exponentially. And so I think here at Reed’s, we are thinking of ways how do we continue to position our brands, position our products and position our innovation for the future to be relevant and continue to capture sales. So if you look at our overall product portfolio, this is just a quick snapshot of our brands and the different places that we play in, Reed’s, Ginger Ale, Ginger Beer. We started Ginger Beer, then we expanded to Ginger Ale.

We know ginger just in terms of how we manufacture and produce our ginger ale. We then have this incredible brand in Virgil’s, which is more of this craft soda. And so if you haven’t tried it, it’s a really good craft soda. And then in terms of this, you know, F and B, right? I mean, I think this is an area that consumers are certainly continuing to lean into, and it’s an area that we’re that we continue to invest and lean into as well.

And then for those that really good fans of Reed’s and really know our brands and know how we operate, certainly during the holiday season time, we offer these holiday seasonal items that our consumers love, and they write into us about, and they’re really excited about launching these every year. But if we think about ginger beer, right? I mean, this is obviously a fan favorite. It’s what Reed’s does extremely well. Can see the overall share in terms of what we represent in the marketplace, but also the fact that ginger beer in traditional and nontraditional channels is still an area that continues to grow.

And it’s an area that here within The U. S, we feel like we have an opportunity and a right to win and continue to expand in different channels in different places. And ginger ale, right? Mean, like I said, we talked about ginger ale. Ginger ale is still on the search here in The U.

S. It’s a market and a sub cat that continuously performs well. And we’re continuing to expand into different and unique spaces. And certainly, when I think about food service, on premise, convenience, even in dollar stores, there’s this enormous opportunity for us to build upon our current distribution and ACV beyond where we are today, just given where the category continues to grow and outperform. And it’s a unique formula, right?

It’s really all natural, and our ginger is sourced from some of the highest quality gingers in the world in terms of how we produce and make our product. And it is just absolutely incredible. And it’s functional, right? It’s we know that consumers are using ginger ale or ginger based products for multifunctional uses, in The U. S.

And so we were excited to also to be on par in terms of where consumers, you know, are headed launching our our our, zero sugar ginger ale as well too. But then there’s this other places. F and B or, you know, flavor of all beverages, continues to be an area that continues to grow in The U. S. We’re excited to be a part of this category, Subcat, with certain flavor offerings here like ginger ale, our ginger meals that have really done a nice job.

They’ve come on board here. We recently have our ultimate meal here, which is a zero based classic meal. We know that flavor mall beverages and on premise restaurant bar locations, and even in general general retail is certainly, you know, has legs and has an opportunity for us to grow. And I think for us, it’s, you know, how do we, you know, take what we’re currently doing today and figure out niche ways to build upon that. And I think for us, we’re uniquely in a really good spot as it relates to how we produce our products with Ginger base.

And there’s a wide variety of different innovations different directions that we could go with our products, and we’re really excited about that. And then we have this incredible brand in terms of Virgil’s, right? And we’ve recently expanded we continue to expand and leverage We know that consumers are really focused on healthy habits, zero sugar, zero base products. And so our portfolio in our can and our packaging is, I think, adequately, you know, positioned to, you know, continue to, you know, outperform, and do extremely well.

I’d say, certainly, we probably got an incredible opportunity to continue to place these items and others in different locations. But it’s definitely a really great lineup of full sugar or cane sugar and then also, our zero based items as well too in the different flavors that we offer. I think it’s really incredible product. It’s doing well. I think our sales team is focused on putting in new places so consumers can enjoy it.

And then one of the things we talked about talked about at the outset is this whole notion of prebiotics and innovation that we just recently launched this year. It’s our functional beverage line. And we’re already starting to see repeat orders come in on this product. Consumers are really leaning into this functional use beverage, prebiotic beverage, right? And so I think for us, very similar to what I said as it relates to F and B, this is yet another area with, you know, ginger where we do ginger really well that really kind of makes sense and adds this functional use, to, you know, to enjoy and carbonated soda in a in a in a different way.

And so, you know, our four flavors here and then there’s a few other flavors that we’re looking to launch as we head into 2026 that we’re super excited about. So we’ll continue to lean into this place and monitor it, but we’re really excited about what our sales team has been able to do with this brand. And then you can see our broad distribution, right? We’ve had some huge wins here and our products are distributed in a lot of places, name brand retailers, large scale retailers across The U. S.

And certainly within that 32,000 doors, we know here at Reed’s that there’s still more opportunity out there. There’s still more channels that we have to get into. There’s more consumers that are out there that we still have to bring underneath our umbrella. We’re just excited about the future and where we’re headed with this product and our brand. So with that, I will turn it over to Doug to kind of walk you through a little bit of our performance.

Doug McCurdy, Chief Financial Officer, Reed’s: All right. Thanks so much, Cyril. You know, so let me just, navigate through a few of the strategic initiatives that we’ve taken to strengthen the liquidity position. If we look back to fourth quarter of twenty twenty four, the company did a recapitalization. That recapitalization, reduced debt, and also recapitalize the company with an infusion of equity, through a PIPE transaction that actually closed, right at the end of the year, at the December.

And so, that recapitalization reset the balance sheet and allowed us to reinvest in working capital in a way that the company hadn’t been able to do in the past. And it allowed us to rebuild our, what I’ll call, our operating ecosystem at the same time, and get ourselves to a, more efficient system, a little bit more efficient, capacity structure, and build inventory to a place where we had what we need to meet our customer demand. So debt obligations materially reduced, new $10,000,000 credit facility, and, you know, brought in some new management team, you know, and and adjusted what I’ll call board and leadership and, you know, put a real focus on profitable growth. You know, that that idea of profitable growth, the company has not achieved yet, at least at least what I’ll call in in, you know, the current year period with a new management team. But that idea of moving forward towards, breakeven and profitability, net profitability, is a very important milestone for the company.

You know, the initiatives that we’ve taken, or or are taking to drive growth and and better balance ourselves towards profitability, you know, the top line growth piece, you know, sales velocity, we’re looking very closely, from a sales perspective at our existing, customer base and what the velocity is off shelves, and and through those channels. And we’re also looking at channel expansion and taking some steps with channel expansion. Innovation, particularly around the functional products that Cyril had mentioned earlier, in addition to some of the other Zero Sugar, Ginger Ale or things like that. Margin expansion is certainly very important for us. You know, margins in the past have been somewhat compressed.

And as we look with the recapitalized balance sheet and and, you know, some of the benefits that we have with that, we’re also looking to drive efficiencies through, the margin piece of the puzzle. And it affects the raw materials from ingredients to packaging, through co packing and distribution. OpEx management, candidly our SG and A, is a little bit on the higher side that was shown in the first quarter. And what that really reflects is investment in growth initiatives, particularly on the human resources side, that growth needs to catch up to some of that investment, as we look to balance the SG and A piece of the puzzle out, for the overall company. And logistics and warehouse cost reductions, we’re very focused on that.

And anecdotally, one of the things that we saw early in the first quarter when the company didn’t have the inventory position balanced properly or as we wanted to grow into. We saw a little bit of logistics, that instead of East Coast production, being centered on the East Coast for distribution as well. There was a little bit of cross country zigging and zagging that, we’ve been able to grow out of, after the first few months of first quarter. So we’re excited about some opportunity to see continued improvement there. Key performance indicators in the form of revenue, EBITDA and gross margin.

Generally, the company has reset the revenue piece of the puzzle as we’ve come into first quarter of twenty twenty five and really first half. And so what we expect to see going forward is sequential revenue growth on the gross sales side. And then as we manage our trade spend and discounts, we would expect to see net sales also have sequential growth. It’s really where we’re focused as we look to kind of balance operating performance on the top line going forward. On the margin side, we’re really trying to maintain and improve our margins to be somewhere in the mid-30s.

And as we move forward and what I’ll say this leadership team gets to know the business a little bit more and gets to drive the business a little bit more, we would hope that we can move those margins up to, the high 30s and at some point approach 40%. You know, investment highlights, just to kind of zip through this efficiently. You know, the company is a seasoned beverage company. It’s been around for a long time, almost forty years. And, you know, I think the exciting thing that, you know, the the new management team believes in is the strength of the brand and and how good the product is, craft, natural, premium.

And we’re very centered on continuing to make a great product, that is good for people, as they consider their beverage choices going forward. You know, the the new multifunctional line, Soda Soda Smarter, is is the tagline we have there, but that new functional line, it actually plays on what I’ll call the history of the company. And, you know, what I mean by that is, you know, the company with its ginger base has always been, a functional or better for you beverage. The channel partnerships, we’ve got a good base set. And as Cyril mentioned earlier, we’re very much focused on growing out that channel set and growing out our customer base, in The U.

S. And as we continue to build in The U. S, we’re also looking, at select international markets, from a strategic perspective. The newly appointed management team, you know, we’re about the opportunity. I think with that opportunity comes great responsibility to go out and actually actually execute and capture that, opportunity.

So we’re we’re focused on that. And, you know, the near term catalysts, you know, again, I I think what we what we’ve been given, by the board, is, you know, a nice opportunity, with the recapitalization and and cleaned up balance sheet, a great brand and an opportunity going forward. And we’re really excited about the opportunity to capitalize and go execute on that. And at this point, I think we have time for, the q and a. So

Cyril Wallace, Chief Executive Officer, Reed’s: there’s a couple of questions come in.

Doug McCurdy, Chief Financial Officer, Reed’s: There’s a

Cyril Wallace, Chief Executive Officer, Reed’s: question around distribution wins on on new products. I can tell you that, you know, focus on multifunctionals, has been the sales team’s focus since since we’ve launched. You know, we’ve had some, you know, wins, Duane Reade and Costco, and, you know, it’s in, Kroger in in certain divisions today. Obviously, you know, in terms of its performance, I mean, we’re seeing repeat orders still very new. You know, in a few weeks or so, we’ll have, you know, more of the, IRI data to be able to tell us a little bit more and give us a peek in the window of how it’s performing across the sub CAD.

Ideally, though, you you you kinda get a sense from, you know, what the sales what you’re hearing directly from your sales team, which is direct feedback, what you’re hearing from customers. And so far, it’s, all promising. So we’re we’re looking forward to, you know, getting more distribution on our construction alone and and seeing it in different places. And, you know, I think as a part of that too as well, I think there’s certainly work that, you know, we’re gonna do in terms of marketing the the product and making sure that it’s divisible to help draw some demand. And then there is a question on our distributors and different partners.

Listen, what would tell you is that, you know, we are working to build our business and do it the right way and expanding into new channels and new places. And obviously, there’s areas where we currently run and operate today. If you recall that one slide is in terms of customers that, you know, we partner with across the country. You know, with our core products, which, you know, we we can’t lose focus on, right, in terms of how do we continue to build for the future. Our core business is going to play a big part in that.

And even where we’re running and operating today, we still have an opportunity to build distribution among our core products and then certainly bring new channels, new places where we’re not where we don’t run and operate today. Spoke about that, that is going to generate huge upside for us. So we are really excited about continuing to lean into these spaces, and we feel like we have a right to given our products and how viable they are within the category. I think we touched on, quite a bit of the questions that have come in, but we certainly appreciate everyone taking the time to join and listen in to our presentation today, and we really appreciate you guys being in tuned. And certainly, if there’s anything that, you know, we have not answered over the course of the last fifteen to twenty minutes or so, then we’ll be happy to circle back, with anyone offline.

But thank you so much, for the opportunity to to share and hear a little bit more about our journey and where we’re headed.

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