Reed's, Inc.

Second quarter 2026 net sales were $7.5 million versus $9.5 million in the prior-year period. Gross profit was $1.8 million, up from $0.8 million, and gross margin was 24% versus 8% a year ago. Net loss improved to $4.3 million, or negative $0.36 per share, from $6.0 million, or negative $0.78 per share; EBITDA loss narrowed to $4.0 million from $5.7 million. Cash used in operations was $2.2 million versus $5.0 million, and cash at June 30, 2026 was $2.4 million with $9.2 million of total debt. For guidance, management did not give formal quarterly or full-year financial targets, but said gross margin is expected to continue expanding over time toward the mid-30% area, inventory should come down further in Q3, and the company is evaluating financing alternatives to support growth.

Neal Cohane said the quarter showed early progress from corrective actions, but stressed that the company is still not where it wants to be. His focus was on better sales execution, retail placement, operating efficiency, and a leaner inventory model after substantially completing portfolio rationalization. He also pointed to regained shelf space, the return of heritage glass bottles, new product launches, and a more disciplined commercial and operations setup as the basis for second-half improvement.

Douglas McCurdy highlighted the year-over-year improvement in gross profit, margin, and losses, tying the margin rebound mainly to lower inventory write-offs. He cited delivery and handling costs of $1.1 million, down 30%, and SG&A of $4.7 million, down 6%, while noting that personnel investment for the Asia growth initiative partly offset savings. He also said cash used in operations improved to $2.2 million, cash ended at $2.4 million, debt was $9.2 million, and the company is evaluating financing alternatives.

Analyst questions focused on vendor relationships, shelf-space recovery, inventory readiness, and whether Reed's can support growth given the balance sheet. Neal Cohane said relationships with major accounts remain intact, named several chains the company has already contacted, and said commitments should start showing up toward the end of Q3 and into Q1 next year. He also said new production arrangements should lower minimum order quantities and help preserve cash, while pricing actions and an AI-supported system are intended to push margins into the 30s and mid-30s.