Reed's (REED) investor relations material

Executive summary

• Net sales declined to $7.1 million in Q1 2026 from $10.0 million year-over-year, driven by lower volumes and higher promotional allowances, resulting in a 29% decrease.

• Gross margin fell to 10% from 34% year-over-year, primarily due to inventory write-offs, liquidation, and increased cost per case.

• Net loss widened to $6.5 million ($0.55 per share) from $2.0 million ($0.27 per share) year-over-year, with operating loss at $6.2 million versus $1.7 million.

• Management initiated corrective actions early in Q1 2026 to stabilize operations, improve execution, and position for profitable growth.

• Strategic investments continued in Asia Pacific expansion, though these subsidiaries did not generate material sales in the period.

Financial highlights

• Net sales for Q1 2026 were $7.1 million, down from $10.0 million year-over-year, with gross billing at $8.5 million.

• Gross profit was $0.7 million, an 80% drop from the prior year; cost of goods sold was $6.4 million, 90% of net sales.

• SG&A expenses rose to $5.8 million from $3.5 million, mainly due to investments in personnel and marketing for Asia growth.

• EBITDA was -$6.2 million, compared to -$1.7 million in Q1 2025; cash used in operations was $5.8 million.

• Cash at quarter-end was $4.6 million, with total debt of $9.2 million, compared to $10.4 million cash at year-end 2025.

Outlook and guidance

• Management expects sequential improvement in net sales, gross margin, and net loss starting in Q2 2026, with early signs of margin improvement and positive returns on e-commerce ad spend.

• Full recovery and stabilization are anticipated by the end of Q2, with ongoing KPI tracking for sales and broker performance.

• Management expects existing cash and committed financing to fund operations for at least twelve months, but additional funding may be needed for further growth initiatives.

• Continued focus on product portfolio optimization, sales strategies, and operational efficiencies to improve performance.

• Q1 2026 performance is not viewed as indicative of full-year expectations due to transitional factors.