Reeds (NYSEAMERICAN:REED) reported lower third-quarter sales but narrowed its net loss as gross margins improved and operating expenses declined. Executives said the beverage company is focused on rebuilding revenue through expanded retail distribution, marketing and new products.
Net sales fell to $6.5 million for the three months ended Sept. 30, 2026, from $7.0 million a year earlier. Chief Financial Officer Doug McCurdy said the decline primarily reflected lower volumes with recurring national customers, partly offset by lower promotional and other allowances.
Interim Chief Executive Officer Neal Cohane said the company’s turnaround plan was beginning to produce a more efficient operating structure, though he acknowledged that restoring revenue growth remained a priority.
Margins Improve as Loss Narrows
Gross profit rose 34% to $1.6 million, while gross margin increased to 25% from 17% a year earlier and 24% in the second quarter. McCurdy attributed the year-over-year improvement primarily to lower allowances and a decline in cost of goods per case to $13.26 from $13.73.
Selling, general and administrative expenses decreased 15% to $3.6 million. Delivery and handling expenses fell 10% to $1.0 million, although the cost per case increased to $2.69 from $2.60.
The company’s net loss narrowed to $3.2 million, or $0.27 per share, from $4.0 million, or $0.48 per share, a year earlier. Its EBITDA loss improved to $2.9 million from $3.6 million.
Cohane said Reed’s expects fourth-quarter net sales and gross margin to improve both sequentially and from the prior-year period. McCurdy said he expects modest sequential margin improvement in the fourth quarter, with the company focused on reaching a gross margin in the mid-30% range around the second quarter of 2027.
Retail Expansion and Product Plans
Cohane said Reed’s had secured more than 3,000 new retail doors year over year and regained distribution with several national and regional accounts. He expects the new placements to contribute more meaningfully in the fourth quarter and throughout 2027 as products reach shelves and build sales.
Asked about the company’s current footprint, Cohane estimated that its products were in roughly 32,000 to 35,000 doors. He said some accounts that had left in 2025 had committed to bringing the products back, primarily in the first and second quarters of 2027.
The company is developing a mixer line and working toward an additional product launch in early 2027. Cohane declined to provide details about the latter product but said it would differ from the current lineup and play in a larger category than Reed’s craft soda and ginger beer business.
Reed’s plans to introduce the product through a controlled market test with local customers and selected retail partners before considering a broader rollout. Cohane said the company also expects to put greater emphasis on targeted marketing in 2027, including digital and social media engagement.
Financing and Liquidity
Reed’s had $2.1 million in cash and $9.25 million in total debt at the end of September. Cash used in operations fell to $0.3 million in the quarter from $2.8 million a year earlier.
On Sept. 30, the company refinanced its $9.25 million senior secured loan, extending its maturity to June 30, 2027, with an option for an additional three-month extension subject to conditions, McCurdy said.
After the quarter ended, Reed’s closed a $10 million private placement on Nov. 9, issuing 17,421,602 common shares. McCurdy said the transaction satisfied an equity contribution requirement under the amended credit agreement. The company intends to use net proceeds for working capital and other general corporate purposes.
About Reeds (NYSEAMERICAN:REED)
Reed’s, Inc. is a beverage company that develops, produces, markets and distributes natural and craft-oriented non-alcoholic drinks. Its portfolio has historically centered on Reed’s, a brand known for ginger beer and other ginger-based beverages, and Virgil’s, which offers specialty root beer and other craft sodas. The company’s products are sold through retail and food-service channels, including supermarkets, natural and specialty food stores, convenience outlets, restaurants and online retailers.
