Reed's Earnings Miss Due To Tight Credit Terms, Expects To Turn Cash Flow Positive

Reed’s Inc (OTC:REED) reported a first-quarter FY23 sales decrease of 8.4% year-on-year to $11.16 million, missing the analyst consensus estimate of $14.12 million.

• The decrease was primarily driven by tightened credit terms from several suppliers, impacting inventory.
• EPS of $(1.70) missed the analyst consensus of $(1.02).
• The gross margin expanded by 10 basis points to 24.2%
• Gross profit declined 6.8% to $2.7 million.
• Selling, general and administrative expenses declined 27% to $3.2 million.
• Operating loss improved to $(2.6) million compared to $(4.2) million last year.
• The company held $467,000 in cash and equivalents as of March 31.
• "We continued to see solid order demand from our retail partners, however we were unable to fulfill orders due to tightened credit terms from several suppliers that impacted our ability to purchase inventory, which resulted in an inflated rate of short-order shipments, said CEO Norman E. Snyder. 
• Outlook: Reed sees FY23 net sales growth and gross margin to surpass 30%.
• The company also expects to turn cash flow positive in the second half of 2023.

Price Action: REED shares closed higher by 11.15% at $3.39 on Wednesday.