Reed's, Inc. · AMEX:REED
Reed's — Non-Deal Roadshow (November 2020)
53 slides from Reed's's roadshow presentation, Nov 19, 2020
Slide 1: Reed's Inc November 2020
Slide 2: Cautionary Note Regarding Forward Looking Statements
REED’S? EGE on ey viRElts ‘CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This presentation includes “forward-looking statements,” within the meaning of the U.S. Securities Act of 1933, 5 amended and the U.S, Securities Exchange Act of 1934, 35 ‘amended, ofthe “Exchange Act.” Forward looking s
Slide 3: Offering Summary
REED’S INC OFFERING SUMMARY i «ells Company Reed's, Inc. Exchange / Ticker Nasdaq: REED Transaction Type Confidentially Marketed Follow-On Offering $11 million Share Price (as of 11/9/2020) $0.87 Sole Manager Roth Capital Partners Use of Proceeds Pay off Harbor Raptor Note, Working Capital and Gener
Slide 4: Company Snapshot
3a0eREa COMPANY SNAPSHOT sites Share Price (as of 11/9/2020) 52 Week High 52 Week Low Average Volume (3 month)! Fully-Diluted Shares Outstanding? Market Capitalization? Debt (as of 9/30/2020) Cash (as of 9/30/2020) Preferred Stock (as of 9/30/2020) Enterprise Value? Enterprise Value / 2020 Net Sales
Slide 5: Management team
REED’S? (DEY) 4iRGltg INC ION Norman E. Snyder Chief Executive Officer = Joined Reed’s in September 2019 = 20+ years of operations experience in the beverage industry = Experience working alongside John Bello at SoBe and NFL Properties = Has experience in all facets of beverage industry — sales, mar
Slide 6: Opportunity of Shifting Consumer Behavior
REED’S INC OPPOR Y OF SHIFTING CONSUMER BEHAVIOR Reed’s believes Consumers have moved from the initial shock of COVID and pantry loading to self assessment and the acceleration of consuming better-for-you products... v >: || SSS SSNS tis Natural — desire for all-natural products is going mainstream
Slide 7: Financial Highlights — Q3 2020 Results
aera FINANCIAL HIGHLIGHTS — Q3 2020 RESULTS Gorrie senate aanneeass aos See «See apes 32.1% Ue Pecrea LZ $10.6 : $69 e8se 28.6% So $(2.0) re ($3.3) 032019 32020 932019 32020 32019 © Q3 2020 32019 32020 78.7% 53.6% Operating Expenses as a % of Net Sales
Slide 8: Financial Highlights — Q4 2020 Guidance
REED‘ wi INC FINANCIAL HIGHLIGHTS — Q4 2020 GUIDANCE ‘Quarter ended December 31 Sin ailions ‘quarter ended december 31 ‘S'siamilions 32.0% $9.2 $72 $(1.8) $(2.0) 8.3% wk ae we (38) “a a 042019 Q4 2020E 04 2019 4 2020E a4 2019 04 2020 ee ——_ laa New Guidance New Guidance New Guidance + Includes $0.8M
Slide 9: Financial Highlights — Annual Guidance
INC aoeeEs FINANCIAL HIGHLIGHTS — ANNUAL GUIDANCE & RCs scl year ended December 31 ‘S'siamilions Fiscal year ended December 31 30.0%
Slide 10: Balance Sheet Improvement
NaRREs BALANCE SHEET IMPROVEMEN iRGlts RELA Conversion st-Offering and Maturity Interest Rate Price As of 9/30/2020 R&R Refinance Debt Rosenthal & Rosenthal Line of Credit 3/30/2021 6.8% NIA $46 2 Harbor Raptor Convertible Note 4/21/2021 12.0% $1.50 5.1! “ Total Debt $97 : Availability Rosenthal & R
Slide 11: Driving Growth to Profitability
REED’S INC DRIVING GROWTH TO PROFITABILITY kGlts v Continue Top Line Revenue Growth =" Organically through closing distribution voids and improving execution = Velocity growth = Channel expansion = Product introductions and packaging initiatives v Margin Enhancement = Formula optimization = Procurem
Slide 12: Accelerating Growth — IRI Data
REED’S ACCELERATING GROWTH — IRI DATA INC Period Ended October 4, 2020 $ Sales vs. Prior Year 4-Weeks Year-to-Date 49.4% 33.2% 27.5% 23.0% Metric % Growth | ACV 39,1 Points 74% Pricing | + $0.44 / Unit 9.1% Source: IRI Worldwide, US multi-outlet channel scan data
Slide 13: How We Hit Our 2021 Plan
30 REa HOW WE HIT OUR 2021 PLAN iRGlts $46.2" mai 2020Net Ginger Ale Reed's Core Reed's Zero. Virgil's Core © 200zPET — Virgil's Zero. Virgil's Innov. Candy & Shots 2021 Net Revenue Extra Cans Cans Revenue Guidance Guidance 13 + assumes midpoint of new guidance range.
Slide 14: How Reed's Intends to Grow
aa0Rera HOW REED’S INTENDS TO GROW Bia Expand Distribution Em -- @ oO = “PUT” — Presence / Ubiquity / Tonnage = Direct Store Delivery (“DSD”) — Close the gaps QuikTrip. = Supers — C-Stores — Club = Drug — Dollar — Food Service af Wey) viRGIts Accelerate Velocity Innovate & Relevant Launches —_—. ae
Slide 15: Distribution
Distribution
Slide 16: Distribution Expansion Continues in 2020
a0 era DISTRIBUTION EXPANSION CONTINUES IN 2020 a * New distributors, sales resources, merchandising tools helping increase reach = Investment in slotting, trade spend, point of sale, couponing, racks and sampling US Channel 2020 Reed’s Doors? 2020 New Doors Gained NATURAL / SPECIALTY 8,000 6,600 GR
Slide 17: Footprint — Close White Space
REED’S? (DiS FOOTPRINT — CLOSE WHITE SPACE wor RCs v Align Anheuser-Busch Network (“AB Network”) to service v Open new channels of distribution Publix & Southeastern Grocers = C-Store = Liquor store = On-premise = Food service PUbNX. aa Focers v Sales Incentives and Spiffs v Close DSD distribution i
Slide 18: 2020 Portfolio — Core Innovation
39D REa 2020 PORTFOLIO — CORE INNOVATION toa REED’S® INTRODUCES, REALLY REAL GINGER ALE™ Q2 Launched Estimated 6,000 doors Reed’s believes it will be in well over 10,000 doors by end of 20201 FA Yst0psstor sartham PUbLIX @\ Albertsons lita al ACME saw Walmart >| pA United Smart&Final. Aashat CED rog
Slide 19: C-Store Execution
IR REa C-STORE EXECUTION 20 Z 1 Mi ior Seek to close one chain per region in Q1 2021 Bonus tied to execution & success Include shots/candy Leverage McLane & CoreMark Leverage DSD Network 200z PET NEEDS TO RIP OUT OF COOLERS NORTHEAST SOUTHEAST MIDWEST CENTRAL SOUTHWEST NORTHWEST pod . Racelrac GT CI
Slide 20: Velocity
Velocity
Slide 21: Q4 Holiday Promotions
REED’S? KeleYePWTSTET Re $sTOP&SHOP STOP & SHOP BARGAIN AISLE = Holiday Time Frame (entire Q4) = Halloween, Thanksgiving, Christmas and New Years = 2 shelves (one ZERO & one Full Sugar) = $3.99 everyday — 2/$7.00 on Feature Potential 5,000 Cases Q4 ROLLER PROMOTION EDL PRICE $3.99 ROLLER PRICE $2.99
Slide 22: New Ginger Ale vs Reed's Extra
aaRera NEW GINGER ALE VS REED’S EXTRA New ginger ale driving velocity almost as strong as 30 year extra in less than 6 months... Launched April 15, 2020 Velocity Comparison (units sold per store per week) 301 | S15" | 36 4.6 4.5 4.2 sh a Rg GROCERY RS Albertsons 4.6 Biol 4.5 7.9 B72 5.) * 8 Packs eq
Slide 23: Trader Joe's
REEDS? TRADER JOE'S Strong performance despite cycling heavy pipeline fill on new SKUs Reed’s Zero Extra and Virgil’s Zero Root Beer... Soa ikGltg seEDE Trader Joe's Cases LY Cases TY % Diff SLY STY % Diff Virgil's Root Beer 67,279 65,842 (2)% $1,141,162 $1,185,718 A% Virgil's Zero Root Beer 20,251
Slide 24: Increase Velocity in Each Chain Through 2021
a9 B ere INCREASE VELOCITY IN EACH CHAIN THROUGH 2021 vitor VIRGIL Estimated Total Estimated # of Stores Estimated % Active Estimated Units Sold Account Store Universe Selling Reed's / Virgil's Stores per Store per Week ‘Whole Foods’ 500 480 96.0% 418 Fred Meyer 133 132 99.2% 387 Wegmans 103 103 100
Slide 25: Marketing
Marketing
Slide 26: Marketing priorities
REED’S? (aia ee ie ikGlts BREEDS RE WIN WITH GINGER ALE WIN IN ZERO SUGAR GINGER BEER LEADERSHIP RING THE FUN 26
Slide 27: Position Reed's vs Mainstream on Quality Ingredients
13309 B Rea CONTINUE TO POSITION REED’S VS MAINSTREAM ON QUALITY INGREDIENTS. 27
Slide 28: Go Hard Against Better-for-You Converts
9B REE ..BUT GO HARD AGAINST THOSE WHO HAVE CONVERTED TO BETTER-FOR-YOU! WIN WITH TASTE & QUALITY 28
Slide 29: Quantitative Study Shows Opportunity With Key Targets
QR REe QUANTITATIVE STUDY SHOWS A OPPORT TY WITH OUR KEY TARGE Primary: Health Conscious Consumer ‘AGE: 30 “something” HH INCOME: $100K+ STATUS: Married/in Relationship, no kids Gender Split: 52% Mal Female Secondary: Zevia Drinker AGE: late 30s HH INCOME: $75K - $200k STATUS: Married/in Relationshi
Slide 30: Win With Ginger Ale and Ginger Beer
WIN WITH + Target 2% of $1.1 B (+11.2%) Ginger Ale Category f GINGER ALE * Source volume from CD and Zevia GA GINGER BEER Ginger beer category $94M (15.8% YAG) Zero Sugar Ginger Beer $21M (+41%) LEADERSHIP Target Bundaberg $23M (+24%) Category Expansion (shots, Candy, RTD Mule) and BRING THE FU resu
Slide 31: Reed's Innovation 2021
aa0RRra REED’S INNOVATION 2021 Give Consumers Relevant Products Where They Want It CORE Ecommerce/ Club Packs CHANNEL PACKS aay ye ee LIMITED EDITIONS
Slide 32: 2021 Innovation — PET 20 oz
Ua0Rera 2021 INNOVATION — PET 20 OZ BUSINESS OBJECTIVE: C-Store channel / E-Commerce opportunities OPPORTUNITY: Launch a line of 20 oz PET bottles to break into massive channel for CSDs * E.g., Dr. Pepper alone is a $245 million business in C-Stores CONCEPT: The classic bold soda flavor that you lov
Slide 33: 2021 Innovation — PET Liter
Ua0DeEa 2021 INNOVATION — PET 1 LITER BUSINESS OBJECTIVE: Grocery/Natural/Ecommerce OPPORTUNITY: Capitalize on more at-home consumption with 1-liter PET “family pack” TREND SET OPPORTUNITY + Magic Kombucha introduced a2 Liter Kombucha, the only kombucha in this pack size in SPINS’ database + The bra
Slide 34: Innovation by Channel
aa — era INNOVATION BY CHANNEL (IN ORDER OF PRIORITY) 2021 PACKAGE AND CHANNEL STRATEGY TO BUILD UBIQUITY ACROSS THE US ce bi é e " x Mixer J cold shots Gs ~seeg” 0S" a0 ° atti” BE Cast ii Ht C-STORE . ie 4 = AAA a= i aeag shit HOSPITALS LIQUOR 38 FE AIRLINES eB bn
Slide 35: Historical Financials
Historical Financials
Slide 36: Historical Income Statement
yey : EEE HISTORICAL INCOME STATEMENT RG Fiscal Year Ended December 31, Nine Months Ended 2018 2019 9/30/2019 9/30/2020 Net Sales $36,102,000 $33,820,000 $26 669,000 $30,938,000 % Growth ‘1.0% (11.2)% 16.0% Cost of Goods Sold $27,424,000 __$ 25,944,000 $19,390,000 __$ 21,694,000 Gross Profit $10,678
Slide 37: Modified EBITDA
REED’S INC MODIFIED EBITDA : Net Income Modified EBITDA Adjustments: Fiscal Year Ended December 31, Nine Months Ended 2018 72019 ‘9/30/2019 ‘9/30/2020 $(20,225,000) (16,112,000) $(12,289,000) (6,920,000) Depreciation and Amortization $ 108,000 $152,000 $108,000 $145,000 Interest Expense 2,201,000 1,
Slide 38: Balance Sheet
daBEEa BALANCE SHEET ‘As of December 31, As of 2018 2019 9/30/2020 Assets Current Assets Cash $624,000 $913,000 $875,000 Accounts Receivable 2,608,000 2,098,000 4,647,000 Receivable from Related Party 195,000 356,000 391,000 Inventory 7,380,000 10,508,000 9,436,000 Prepaid Expenses and Other Current
Slide 39: NATURAL
NATURAL GINGER 1 7. (59 ML
Slide 40: Strong Supporting Team
waa RTa STRONG SUPPORTING TEAM iRGlts Neal Cohane Chief Sales Officer = Joined Reed’s in 2007 as SVP Sales & Marketing = Over 30 years in beverage industry = Has served in multiple senior-level sales and managerial positions at PepsiCo, South Beach Beverage Company, and Coca-Cola of New York. Lindsa
Slide 41: Current Co-Packer Network
ADEE CURRENT CO-PACKER NETWORK om Noel Canning (Pepsi) @ Full sail Brewing! @ Total Bottle Capacity Clinton's Ditch (Pepsi) (Mules/Glass) East (3.0M Cases) e @ Lion erewery West (4.0M Cases) Castle Co-Packers sonoma Beverage @ (Langer) Total Can Capacity coo @ East (3.0M Cases) West (1.0M Cases) @ E
Slide 42: Distribution Across the Entire U.S.
REED’S2 DISTRIBUTION ACROSS THE ENTIRE U.S. © CH- = - 2 ) wm), GD 35,000+ SUPER/NATURAL DOORS AND GROWING KROUNDYS] so tiyvee roger sl United Walmart > < supermarkets Esa Es ‘ARocheBr Bros, & SHOP. Shaws 42
Slide 43: Top Functional Ingredients
Dollars (M), Top Functional Ingredients 3: $200 sis0 $100 $50 *Unknown, Private Label, and Uncoded values are excluded REED'S? whey -viRGlts Dollar % Change, Yago Dollar Change (M), Yago SPRULNA BLUE GREEN ALGAE I = ProTEIN- ANIMAL PLANT COMBO | ——————— rama ores. I = brosioncsurriewenr | | HE 20100
Slide 44: Transformation Roadmap
NaRREa TRANSFORMATION ROADMAP silor “ibis Transition Business Assessment New Strategy Price Increase i SKU Rationalization oy a, & Turnaround Optimize Operating Model Sell LA Plant New Credit Line Build Marketing & Sales Infrastructure and Refresh R&A K Brand Build/Sell-Thru Velocity Brand Refresh C
Slide 45: 2021 Innovation — New Ginger Ale Flavors
Ware 2021 INNOVATION — NEW GINGER ALE FLAVORS BUSINESS OBJECTIVE: Grocery/Natural/Ecommerce TRANSFUSION SHIRLEY TEMPTING OPPORTUNITY: Growth of Mocktails and Interest in Flavors Q@EEDS REAL REAL’ GINGER ALE GINGER ALE CONCEPT: Now get your favorite Ginger Ale Cocktail as a Mocktail. Drink straight o
Slide 46: 2021 Innovation — Re-Introduction of Premium Ginger Beer
aR era 2021 INNOVATION — RE-INTRODUCTION OF PREMIUM GINGER BEER BUSINESS OBJECTIVE: Grocery/Natural/Ecommerce OPPORTUNITY: Consumers have told us they don’t want it to go. We are moving to refresh the last Classic Reed’s SKU vs. discontinue. CONCEPT: 100% Honey and Pineapple Sweetened PRICING: TBD 4
Slide 47: 2021 Innovation — Pack Dr. Better
Ua0Rera 2021 INNOVATION — 12 PACK DR. BETTER BUSINESS OBJECTIVE: Grocery/Natural/Ecommerce OPPORTUNITY: Consumer Feedback limited time offer of another old popular brand CONCEPT: This Dr. is just Better. Now a Dr. Better Flavor PRICING: TBD 47
Slide 48: 2021 Innovation — Virgil's Zero Sugar Flavors
tara 2021 INNOVATION — VIRGIL’S ZERO SUGAR FLAVORS 32, viRGlts BUSINESS OBJECTIVE: Expand all commodity volume (“ACV”), Velocity in high-turning/ fast-growing segments OPPORTUNITY: Launch new flavors as ammunition to attract Zevia users * 769% of Zevia drinkers are very (or extremely) likely to try
Slide 49: 2021 Innovation — Alternative Packaging
Wa0R era 2021 INNOVATION — ALTERNATIVE PACKAGING BUSINESS OBJECTIVE: Incremental placement OPPORTUNITY: Leverage limited edition packs to gain in-store display and bring news and excitement to the brand CONCEPT: Now special editions of the brews you love in a unique pack! - Virgil’s Bavarian Nutmeg
Slide 50: 2021 Innovation — Crystalized Ginger Clip Strips
Qa era 2021 INNOVATION — CRYSTALIZED GINGER CLIP STRIPS BUSINESS OBJECTIVE: Incremental placement OPPORTUNITY: Gain in-store display and bring news and excitement to the brand PRICING: Premium priced/oz
Slide 51: New Ginger Ale Merchandising Excellence
NEW GINGER ALE MERCHANDISING EXCELLENCE STACKS, RACKS, END CAPS LOADED FOR THE HOLIDAYS = ; : @sTopzSHOP BARGAIN AISLE THE BEST DEALS FROM 11/8/20 TO 1/31/21 a EPPS
Slide 52: Halloween Execution
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