Reeds Inc

Thank you. Thank you. © transcript Emily Beynon

Good morning and welcome to Reed's fourth quarter and full year 2025 earnings conference call for the three and 12 months ended December 31st, 2025. My name is Joelle and I will be your conference call operator for today. We will have prepared remarks from Neil Cohen, Reed's interim chief executive officer and chief operating officer, and Doug McCurdy, Reed's chief financial officer. Following their remarks, they will take your questions. Before we begin, please take note of the company's cautionary statements. Today's call will include forward-looking statements, including statements about Reid's business plans. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, March 25, 2026, and the company is under no obligation to update them. When discussing results, the presenters may refer to non-GAAP measures, which exclude certain items from reported results. Please refer to Reed's fourth quarter and full year 2025 earnings release on Reed's investor website at investor.reedsinc.com and its annual report on Form 10-K for the 2025 fiscal year for the period ended December 31st, 2025. Expected to be available on the website soon. For definition, the reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause Actual results materially differ from forward-looking statements. I will now turn the call over to Mr. Cohane.

Thank you, Joelle, and appreciate everybody joining us today for the call, the fourth quarter, and full year 2025 results. Before diving in to our results, I'd like to briefly address the leadership transition. As announced in our earnings press release, Cyril Wallace has stepped down as CEO. I will assume the additional role of interim CEO while continuing as chief executive officer, as chief operating officer, and I will also join Reed's board of directors. On behalf of the entire Reed's team, I want to thank Cyril for his contribution and wish him all the best in his future endeavors. I'm honored to step into this role at an important time for the company. Reed's is a strong brand with long heritage a loyal consumer base and robust operational foundation. Having spent many years with the business and recently returning as COO, I have a clear understanding of both the opportunities ahead and the work required to improve execution and performance. The board has initiated a search for a permanent CEO, and in the interim, I am focused on advancing operational priorities necessary to support profitable growth. Let's turn to our results. We made important strides during the fourth quarter to stabilize the business and reinforce the operational framework needed to support sustainable growth. We also saw sequential improvements in net sales, gross margin, and net loss, which we view as early indicators that the actions we have taken are starting to gain traction. We saw encouraging sequential sales improvements across several channels, including natural specialty, grocery, mass, and e-commerce. This was driven by a combination of increased sales velocity and seasonal product launches during the quarter. A couple of the retailers helping to drive this growth was Sprouts, Costco, Walmart, and our Amazon and Shopify business. While we're still early in the process, these results reflect meaningful progress in improving execution. We are rebuilding and expanding distribution relationships, strengthening our presence on the shelf, and driving greater efficiency across our supply chain and product portfolio to support more consistent performance over time. From a production and supply chain standpoint, we're making meaningful progress in driving efficiencies and reducing costs across the business. This includes optimizing our manufacturing network, improving plant productivity, and implementing tighter operational controls to better align production with demand. We're also enhancing our sourcing strategy by leveraging scale, renegotiating key supplier relationships, and improving procurement discipline. At the same time, we are actively identifying additional opportunities to lower our per unit cost structure, including packaging optimization, freight and logistics efficiencies, and skew rationalization. As we continue to streamline the supply chain and improve throughput, we expect these initiatives to expand margins, improve service levels with our retail partners, and position the business for more scalable and consistent performance over time. Looking ahead in 2026, we are focused on expanding our presence in under-penetrated channels, particularly food service and convenience. which represent meaningful white space opportunities for the Reed's brand. These channels are highly complimentary to our core retail business, enabling us to reach consumers in new consumption occasions and drive incremental trial and brand awareness.