Reed's (REED) investor relations material

Executive summary

• Q2 2026 results showed early progress from corrective actions, with sequential improvements in net sales, gross margin, and reduced net loss compared to Q1 2026, driven by inventory rationalization, cost controls, and regained retail presence.

• Focus remained on profitable sales growth, gross margin improvement, and cost optimization, with continued investment in Asia Pacific expansion despite no material sales yet from the region.

• Operational improvements included regaining shelf space, expanding retail doors, restoring glass bottle packaging, and optimizing costs.

• Supply chain challenges, inflation, and volatile freight costs impacted operations, but logistics efficiency improvements reduced delivery and handling expenses.

• Inventory rationalization completed, leading to a leaner inventory and improved cash conversion cycle.

Financial highlights

• Net sales for Q2 2026 were $7.5 million, down 21% year-over-year, but up 5% sequentially from Q1 2026; six-month net sales were $14.6 million, down 25%.

• Gross profit increased to $1.8 million from $0.8 million year-over-year; gross margin rose to 24% from 8%.

• Net loss for Q2 2026 was $4.3 million (-$0.36/share), down from $6.0 million (-$0.78/share) year-over-year; six-month net loss was $10.7 million.

• EBITDA loss for Q2 2026 was $4.0 million, down from $5.7 million year-over-year; six-month EBITDA was $(10.1) million.

• Cash used in operations dropped to $2.2 million from $5.0 million year-over-year; cash at quarter-end was $2.4 million, with total debt at $9.2 million.

Outlook and guidance

• Management expects continued gross margin expansion toward the mid-30% range and ongoing optimization of SG&A expenses.

• Focus on disciplined commercial execution, further margin improvement, and sustainable growth in the second half of 2026.

• Anticipated further reduction in national inventory levels and improved working capital efficiency in Q3.

• Strategic price increases planned for select SKUs to support margin goals.

• The company is evaluating financing alternatives to support future growth.