Reeds Q2 2026 Earnings Results & Report

Reeds EPS Results

• Actual EPS: -$0.36
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 8 quarters

Reeds Revenue Results

• Actual Revenue: $7.49 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Reed’s, Inc. is a beverage company that develops, manufactures and markets natural and craft soft drinks. Its product portfolio has historically included Reed’s Ginger Beer, Ginger Ale and other ginger-based beverages, as well as Virgil’s handcrafted root beer and other specialty sodas.

The company’s beverages have been sold through grocery stores, natural-food retailers, convenience stores, restaurants, distributors and online channels, primarily in the United States. Reed’s has positioned its brands around distinctive flavors and, in some cases, natural ingredients and premium beverage formulations.

Founded in 1987 by Christopher J. Reed, the company built its business around ginger beverages before expanding through the Virgil’s brand and additional product offerings. Its portfolio and corporate leadership may change over time, so current management and distribution details should be confirmed through the company’s latest public filings.

Reeds Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Sequential improvement continued in Q2: Net sales rose 5% from Q1, gross margin expanded to 24% from 8% a year ago, and net loss narrowed 29% to $4.3 million. Management said the results reflect early progress from corrective actions, although sales remained below the prior-year level.
• Positive Sentiment: Inventory and operating efficiency improved. Inventory declined to $7 million as portfolio rationalization neared completion, while delivery and handling costs fell 30% year over year to $1.1 million. Reed’s also consolidated two high-cost co-manufacturers and deployed new planning software.
• Positive Sentiment: Management is rebuilding retail distribution and expanding products. The company said it has regained shelf space, restored glass bottle packaging, expanded broker coverage to more than 75 sales professionals, and plans to launch mini-can mixers, glass-bottled ginger ale, and new premium ginger beer flavors in the second half.
• Negative Sentiment: Revenue and liquidity remain significant concerns. Q2 net sales fell to $7.5 million from $9.5 million a year earlier, while cash declined to $2.4 million from $10.4 million at year-end with $9.2 million of debt outstanding. The company is evaluating financing alternatives to support operations and growth.
• Neutral Sentiment: Further margin gains depend on execution. Reed’s is targeting gross margins in the mid-30% range through selective price increases, improved trade-spend efficiency, and better sales and demand planning, but management acknowledged that substantial work remains and that retail gains may not materialize until late Q3 or Q1 2027.

Presentation

[Operator]

Good morning, and welcome to Reed's Q2 2026 Earnings Conference Call for the three months ended June 30, 2026. My name is Mark, and I will be your conference call operator for today. Today's call will include prepared remarks from Neal Cohane, Reed's interim Chief Executive Officer, and Douglas McCurdy, Reed's Chief Financial Officer. Following the remarks, we will open the call for questions. Before we begin, please take note of the company's cautionary statement. Today's call will include forward-looking statements, including statements about Reed's business strategy, growth initiatives, financial projections, operational improvements, the impact of corrective efforts, financing plans, and liquidity. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, August 12, 2026.

[Operator]

Reed's assumes no obligation and does not intend to update these forward-looking statements except as required by law. For more information, please refer to the Risk Factors section of the company's annual report filed with the Securities and Exchange Commission on March 25, 2026, and in other filings that the company makes from time to time with the SEC. When discussing results, the presenters may refer to non-GAAP measures, which exclude certain items from reported results. Please refer to Reed's Q2 2026 earnings release on Reed's investor website at investor.reedsinc.com and the company's quarterly report on Form 10-Q for the quarter ended June 30, 2026, expected to be available on the website soon, for definitions and reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

[Operator]

While we believe the non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. I will now turn the call over to Mr. Cohane. Please go ahead.

[Neal Cohane, Interim CEO at Reed's]

Thanks, Mark, and good morning, everyone. We're now halfway through 2026, and I want to speak very plainly about where we stand. The Q2 results reflect early progress from corrective actions initiated earlier this year. Net sales increased 5% compared to the Q1. Gross margin expanded as well, and we expect continued expansion in the mid 30% area over time. Selling, general, administrative costs decreased 18% compared to the Q1, and we will continue to better balance these expenses. Net loss decreased, and we are focused on achieving profitable growth. While these results represent improvement from the Q1, the work is not finished, and the results are not where we want them to be. We need continued improving sales execution, retail placement, and operating efficiency. Let me give you some context on the key areas of progress during the Q2. The first area is inventory.

[Neal Cohane, Interim CEO at Reed's]

In the Q1, inventory write-offs had significant impact on our margins. In the Q2, those write-offs declined materially as we substantially completed the portfolio rationalization work. We have liquidated underperforming and non-strategic SKUs, and we are now operating with a leaner, more focused inventory position. Overall, we reduced inventory to $7 million and improved our cash conversion cycle. The second area is commercial execution. We regained shelf space and grew doors by re-engaging national and regional retail accounts and restored our heritage glass bottle packaging. We have also invested in our national broker partner, which now has more than 75 sales professionals partnering with us to achieve success across key channels by increasing retail coverage and improving in-market execution. The third area is cost structure.

[Neal Cohane, Interim CEO at Reed's]

We have taken action to better align SG&A with the current size of the business and improve trade spend efficiency, which is contributing to higher gross margins. We will continue to review the cost structure and prioritize spending that supports commercial execution. On the product side, we have several initiatives building for the second half of the year. Our new mixer line is just about ready to hit the streets, and many retailers across the country are clearing space for our new four-pack 7.5-ounce mini cans of tonic, club, and grapefruit mixers. All have a hint of ginger. Our top-selling ginger ale in cans will soon be available in glass bottles. We expect this to be one of the most successful SKUs in our portfolio. We are also currently working on the most unique line of premium ginger beer in several unique exotic flavors.

[Neal Cohane, Interim CEO at Reed's]

Moving on to the ops side of the business. Damian Warshall, our Chief Operating Officer, has now completed his first full quarter with Reed's. His initial focus was on inventory control, supply chain management, vendor relationships, and production efficiency. During this time, we launched a comprehensive review of our contract manufacturing network, consolidating production to align each item with the optimal facility and region. We believe that work is already producing results. We rationalized two co-manufacturers in our legacy network whose combined production and outbound logistics costs were running well above the benchmarks we are achieving elsewhere, tightening our cost structure and reinforcing our foundation as we scale.

[Neal Cohane, Interim CEO at Reed's]

We have also deployed new operation software that we believe meaningfully strengthens how we forecast and manage raw material purchasing on national basis, enabling us to operate leaner, reducing the aggregate inventory we carry ahead of production while preserving our ability to serve demand.

[Neal Cohane, Interim CEO at Reed's]

Stepping back, the Q2 demonstrated sequential progress in gross margin, inventory management, and overall operating performance. We recognize that substantial work remains. As we move through the second half of the year, we are focused on disciplined commercial execution, continued margin improvement, and positioning Reed's for profitable and sustainable growth. In the Q3, we see continued opportunity to bring national inventory levels down further as we make efforts to build out our inventory planning and management capabilities. All this work is expected to free up working capital and improve the efficiency of our production footprint.

[Neal Cohane, Interim CEO at Reed's]

Over the past two months, our team has taken the initiative to develop an in-house proprietary sales and demand planning tool purposely built for how this organization plans, tracking the baseline needs of our customers while dynamically accounting for seasonality and the distribution gains we expect to capture through the annual sales cycle. We believe this positions us for continued working capital gains as we keep optimizing inventory across the network. Finally, we are also evaluating financing alternatives to support our growth going forward. With that, I'll turn the call over to Doug, our CFO, who will discuss the Q2 results in greater detail. Doug?

[Douglas McCurdy, CFO at Reed's]

Thank you, Neal. Turning to our results for the Q2 of 2026. All variance commentary is on a year-over-year basis unless otherwise noted. Net sales for the Q2 of 2026 were $7.5 million, compared to $9.5 million in the prior year period. The decrease was primarily driven by lower volumes with recurring national customers. On a sequential basis, net sales increased 5% from the Q1 of 2026, reflecting early progress with our profitable growth initiatives. Gross profit for the Q2 increased to $1.8 million, compared to $0.8 million in the prior year period. Gross margin increased to 24%, compared to 8% in the prior year period. The improvement was primarily driven by lower inventory write-offs, which declined to $0.1 million from $1.6 million in the prior year period.

[Douglas McCurdy, CFO at Reed's]

Delivery and handling costs decreased 30% to $1.1 million during the Q2 of 2026, compared to $1.6 million in the Q2 of 2025, primarily driven by continued improvements in logistics efficiency and freight optimization. Delivery and handling costs were 15% of net sales, or $2.54 per case, compared to 17% of net sales, or $2.95 per case during the same period last year. Selling general and administrative expenses decreased 6% to $4.7 million, compared to $5.0 million in the prior year period. The decrease was primarily driven by lower legal settlements and continuing efforts to optimize selling general and administrative expenses, offset by investment in personnel and related services to support our Asia growth initiative.

[Douglas McCurdy, CFO at Reed's]

Net loss during the Q2 of 2026 decreased 29% to $4.3 million, or -$0.36 per share, compared to a net loss of $6.0 million, or -$0.78 per share in the prior year period. EBITDA loss decreased 30% to $4.0 million in the Q2 of 2026, compared to $5.7 million in the year-ago period. Cash used in operations decreased to $2.2 million in the Q2 of 2026, compared to cash used in operations of $5.0 million in the year-ago period. As of June 30, 2026, Reed's had $2.4 million of cash and $9.2 million of total debt, net of deferred financing fees. This compares to $10.4 million of cash and $9.2 million of total debt, net of deferred financing fees at December 31, 2025. As Neal noted, we are evaluating financing alternatives to support the business going forward. This concludes our prepared remarks.

[Douglas McCurdy, CFO at Reed's]

Operator, you may open the line for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a pump that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Aaron Grey of Alliance Global Partners. Please go ahead.

[Aaron Grey, Analyst at Alliance Global Partners]

Good morning, and thank you very much for the questions. First one for me, regarding some of the vendor relationships that you referred to, maybe talk about where those stand. I know there's been some changes, probably some disruption. How do some of those key relationships stand today in terms of retaining or maybe gaining back some shelf space with some of those key partners? Thank you.

[Neal Cohane, Interim CEO at Reed's]

Yeah, Aaron, this is Neal. That's a great question, and I have to tell you, we reduced the size of our sales team because we now have a broker partner. I can tell you I've got the four best salespeople in the country today. I would match them up to any other small beverage company like ourselves. We've touched almost every one of our big customers. Not completed yet. Some are still ready to go. We've touched and spoken with, and myself personally involved, Food Lion, Publix, Sprouts Farmers Market, Kroger, Wegmans, Ingles Markets, Harris Teeter, Albertsons. Across the country, we've talked to everybody. Everybody loves the brand. Everybody wanted to make sure we were, A, staying in stock, and we could handle their business.

[Neal Cohane, Interim CEO at Reed's]

Two, some want the glass bottle back, so we're bringing glass bottles back into some locations, which will be extremely helpful. I think it was very tough.

[Neal Cohane, Interim CEO at Reed's]

This brand was born on glass bottles back in 1986, 1987. It was our legacy, was the glass bottle, and it was eliminated overnight, which hurt us and impacted our business significantly at places like Whole Foods, just one of our largest volume per outlet customers, completely hurt us there. We have a meeting coming up with Whole Foods in October, meeting personally with the buyer, and I can tell you, I believe that's going to be a very effective meeting. We have a lot to talk about. Long answer to a short question, yes, our relationships are very much intact, and our business is only going to get better, and we're seeing the results right now. While we're getting commitments now, we'll start seeing those commitments come to fruition sometime around the end of this mid-third to going into Q1 of next year.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, great. Really appreciate that color and glad to hear in terms of some of that progress there.

[Neal Cohane, Interim CEO at Reed's]

Yeah.

[Aaron Grey, Analyst at Alliance Global Partners]

I guess, just assuming that we get some of these accounts back and get some shelf space, how should we think about then ensuring that you're properly inventoried and can capitalize on those growth opportunities, particularly as we think about where the balance sheet stands today, and there might be some constraints. Thanks.

[Neal Cohane, Interim CEO at Reed's]

Yeah. The one thing that, bringing Damian on, Damian knew our system very well. Damian also knows our bottling network very well. We have also met with the bottlers. We've met with our production houses. We also are using Chris Reed, the founder of the company, and his production facility out in the West Coast. It's allowing us to reduce our minimum order quantities. As we start bringing on new SKUs, we're not going to have to have and produce 20,000 and 30,000 cases per new SKU. We're going to be able to get it to a very reasonable amount, which will preserve cash, and it'll allow us to kind of seed the market, test the market, see where we need to make improvement.

[Neal Cohane, Interim CEO at Reed's]

We're much smarter about how we do things in terms of creating. Rather than creating tons of inventory, which will tie up cash, we're going to be very strategic how we do it. Probably one of the best things we have going right now is our relationships with these guys.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, that's great to hear. Maybe last question from me, just on the gross margin. Nice to see some of the sequential improvement during the quarter. Given all the puts and takes of what you're just talking about, being able to be more nimble and efficient in terms of the new SKU launches. Obviously having a big prioritization in terms of profitable sales as you now go forward and look for growth. How should we think about the evolution of the gross margin profile over the next 12 months?

[Neal Cohane, Interim CEO at Reed's]

Aaron, we have implemented and installed a system right now that is best in class. I would hold it up against any major beverage company in the country. We're using AI in a very strategic way to help us look and evaluate how our business is in every single one of our, I'll just say, start with our top 25 customers, because those customers drive a big part of our business, 85%-90% of our business. We now can look and perform an ROI in minutes when it used to take a little longer than that, and not be as accurate. We can see what our mix looks like. We can see what's driving the business quickly. We'll know it, we have it at our fingertips, but we're also working on some strategic price increases.

[Neal Cohane, Interim CEO at Reed's]

It's not an across the board, but across SKUs that we know need to have a slight more bit of a little push so we can get our margins into the, as Doug said, into the 30s and mid-30s and above range.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, thanks for the color there. I'll go ahead and jump back in the queue.

[Operator]

All right. Thank you. As a reminder, if you wish to ask a question, please press star one. There are no further questions at this time. I will now turn the call over to Mr. Cohane for the closing remark. Please continue.

[Neal Cohane, Interim CEO at Reed's]

Thanks, Mark. Thanks for joining the call today. We believe the actions we are taking will position Reed's for continued improvement going forward and long-term sustainable growth. We appreciate your continued interest in Reed's, and we look forward to updating you on progress during the next call. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect your lines. Have a good day.

Participants

Analysts

• Neal Cohane, Interim CEO at Reed's
• Douglas McCurdy, CFO at Reed's
• Aaron Grey, Analyst at Alliance Global Partners