Reed's, Inc. Stock

Good morning, and welcome to Reed's Second Quarter 2026 Earnings Conference Call for the three months ended June 30, 2026.

My name is Mark, and I will be your conference call operator for today. Today's call will include prepared remarks from Neal Cohane, Reed's Interim Chief Executive Officer; and Douglas McCurdy, Reed's Chief Financial Officer.

Following the remarks, we will open the call for questions.

Before we begin, please take note of the company's cautionary statement. Today's call will include forward-looking statements, including statements about Reed's business strategy, growth initiatives, financial projections, operational improvements, the impact of corrective efforts, financing plans, and liquidity. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, August 12, 2026.

Reed's assumes no obligation and does not intend to update these forward-looking statements except as required by law. For more information, please refer to the Risk Factors section of the company's annual report filed with the Securities and Exchange Commission on March 25, 2026, and in other filings that the company makes from time to time with the SEC.

When discussing results, the presenters may refer to non-GAAP measures which exclude certain items from reported results. Please refer to Reed's second quarter 2026 earnings release on Reed's investor website at investor.reedsinc.com, and the company's quarterly report on Form 10-Q for the quarter ended June 30, 2026, expected to be available on the website soon, for definitions and reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

While we believe the non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

I will now turn the call over to Mr. Cohane. Please, go ahead.

Thanks, Mark, and good morning, everyone. We're now halfway through 2026, and I want to speak very plainly about where we stand. The second quarter results reflect early progress from corrective actions initiated earlier this year.

Net sales increased 5% compared to the first quarter. Gross margin expanded as well, and we expect continued expansion in the mid-30% area over time. Selling, general, and administrative costs decreased 18% compared to the first quarter, and we will continue to better balance these expenses.

Net loss decreased, and we are focused on achieving profitable growth. While these results represent improvement from the first quarter, the work is not finished, and the results are not where we want them to be. We need to continue improving sales execution, retail placement, and operating efficiency.

Let me give you some context on the key areas of progress during the second quarter. The first area is inventory. In the first quarter, inventory write-offs had a significant impact on our margins. In the second quarter, those write-offs declined materially as we substantially completed the portfolio rationalization work. We have liquidated underperforming and non-strategic SKUs, and we are now operating with a leaner, more focused inventory position. Overall, we reduced inventory to $7 million and improved our cash conversion cycle.

The second area is commercial execution. We regained shelf space and grew doors by reengaging national and regional retail accounts and restored our heritage glass bottle packaging. We have also invested in our national broker partner, which now has more than 75 sales professionals partnering with us to achieve success across key channels by increasing retail coverage and non-in market execution -- I'm sorry, improving in-market execution.

The third area is cost structure. We have taken action to better align SG&A with the current size of the business and improve trade spend efficiency, which is contributing to higher gross margins. We will continue to review the cost structure and prioritize spending that supports commercial execution.

On the product side, we have several initiatives building for the second half of the year. Our new mixer line is just about ready to hit the streets, and many retailers across the country are clearing space for our new 4-pack, 7.5-ounce mini cans of tonic, club, and grapefruit mixers. All have a hint of ginger. Our top-selling ginger ale in cans will soon be available in glass bottles. We expect this to be one of the most successful SKUs in our portfolio. We're also currently working on the most unique line of premium ginger beer in several unique exotic flavors.

Moving on to the ops side of the business. Damian Warshall, our Chief Operating Officer, has now completed his first full quarter with Reed's. His initial focus was on inventory control, supply chain management, vendor relationships, and production efficiency. During this time, we launched a comprehensive review of our contract manufacturing network, consolidating production to align each item with the optimal facility and region. We believe that work is already producing results. We rationalized 2 co-manufacturers in our legacy network whose combined production and outbound logistics costs were running well above the benchmarks we were achieving elsewhere, tightening our cost structure and reinforcing our foundation as we scale.

We've also deployed new operations software that we believe meaningfully strengthens how we forecast and manage raw material purchasing on a national basis, enabling us to operate leaner, reducing the aggregate inventory we carry ahead of production while preserving our ability to serve demand.

Stepping back, the second quarter demonstrated sequential progress in gross margin, inventory management, and overall operating performance, but we recognize that substantial work remains. As we move through the second half of the year, we are focused on disciplined commercial execution, continued margin improvement, and positioning Reed's for profitable and sustainable growth.

In the third quarter, we see continued opportunity to bring national inventory levels down further as we make efforts to build out our inventory planning and management capabilities. All this work is expected to free up working capital and improve the efficiency of our production footprint. Over the past 2 months, our team has taken the initiative to develop an in-house proprietary sales and demand planning tool purposely built for how this organization plans, tracking the baseline needs of our customers, while dynamically accounting for seasonality and the distribution gains we expect to capture through the annual sales cycle. We believe this positions us for continued working capital gains as we keep optimizing inventory across the network.

Finally, we are also evaluating financing alternatives to support our growth going forward.

With that, I'll turn the call over to Doug, our CFO, who will discuss the second quarter results in greater detail. Doug?

Thank you, Neal. Turning to our results for the second quarter of 2026. All variance commentary is on a year-over-year basis unless otherwise noted.

Net sales for the second quarter of 2026 were $7.5 million, compared to $9.5 million in the prior year period. The decrease was primarily driven by lower volumes with recurring national customers. On a sequential basis, net sales increased 5% from the first quarter of 2026, reflecting early progress with our profitable growth initiatives.

Gross profit for the second quarter increased to $1.8 million, compared to $0.8 million in the prior year period. Gross margin increased to 24% compared to 8% in the prior year period. The improvement was primarily driven by lower inventory write-offs, which declined to $0.1 million from $1.6 million in the prior year period.

Delivery and handling costs decreased 30% to $1.1 million during the second quarter of 2026, compared to $1.6 million in the second quarter of 2025, primarily driven by continued improvements in logistics efficiency and freight optimization. Delivery and handling costs were 15% of net sales or $2.54 per case compared to 17% of net sales or $2.95 per case during the same period last year.

Selling, general, and administrative expenses decreased 6% to $4.7 million, compared to $5.0 million in the prior year period. The decrease was primarily driven by lower legal settlements and continuing efforts to optimize selling, general, and administrative expenses, offset by investment in personnel and related services to support our Asia growth initiative.

Net loss during the second quarter of 2026 decreased 29% to $4.3 million, or negative $0.36 per share, compared to a net loss of $6.0 million, or negative $0.78 per share, in the prior year period.

EBITDA loss decreased 30% to $4.0 million in the second quarter of 2026 compared to $5.7 million in the year-ago period.

Cash used in operations decreased to $2.2 million in the second quarter of 2026 compared to cash used in operations of $5.0 million in the year-ago period.

As of June 30, 2026, Reed's had $2.4 million of cash and $9.2 million of total debt, net of deferred financing fees. This compares to $10.4 million of cash and $9.2 million of total debt, net of deferred financing fees at December 31, 2025.

As Neal noted, we are evaluating financing alternatives to support the business going forward.

This concludes our prepared remarks. Operator, you may open the line for questions.

[Operator Instructions] Your first question comes from Aaron Grey from Alliance Global Partners.

I guess, first one from me. Regarding some of the vendor relationships that you referred to, maybe talk about where those stand? I know there's been some changes, probably some disruption. So how do some of those key relationships stand today in terms of retaining or maybe gaining back some shelf space for some of those key partners?

Yes, Aaron, this is Neal. That's a great question. And I have to tell you, we reduced the size of our sales team because we now have a broker partner. I can tell you I've got the 4 best salespeople in the country today. I would match them up to any other small beverage company like ourselves. We've touched almost every one of our big customers, not completed yet, some are still ready to go, but we've touched and spoken with, and myself personally involved: Food Lion, Publix, Sprouts, Kroger, Wegmans, Ingles, Harris Teeter, Albertsons. Across the country, we've talked to everybody.

Everybody loves the brand. Everybody wanted to make sure we were, A, staying in stock and we could handle their business. Two, some want the glass bottle back, so we're bringing glass bottles back into some locations, which will be extremely helpful.

I think it was very, very tough. This brand was born on glass bottles back in 1986, '87. It was our legacy, was the glass bottle, and it was eliminated overnight, which hurt us and impacted our business significantly at places like Whole Foods, just one of our largest volume per outlet customers, completely hurt us there. We have a meeting coming up with Whole Foods in October, personally with the buyer. And I can tell you, I believe that's going to be a very, very effective meeting. We have a lot to talk about.

So, long answer to a short question. Yes, our relationships are very much intact, and our business is only going to get better. And we're seeing the results right now. While we're getting commitments now, we'll start seeing those commitments come to fruition sometime around the end of this third, mid-third to going into first quarter of next year.

Okay, great. Really appreciate that color and glad to hear in terms of some of that progress there. I guess, assuming that we get some of these accounts back and get some shelf space, how should we think about then ensuring that you're properly inventoried and capitalized on those growth opportunities, particularly as we think about where the balance sheet stands today and there might be some constraints?

Yes, the one thing that, you know, bringing Damian on. Damian knew our system very, very well. Damian also knows our bottling network very, very well. We have also met with the bottlers. We've met with our production houses. And we also are using Chris Reed, the founder of the company, and his production facility out on the West Coast. It's allowing us to reduce our minimum order quantities. So as we start bringing on new SKUs, we're not going to have to have and produce 20,000 and 30,000 cases per new SKU.

We're going to be able to get it to a very, very reasonable amount, which will preserve cash, and it'll allow us kind of to see the market, test the market, see where we need to make improvement. We're much smarter about how we do things in terms of creating -- rather than creating tons of inventory which will tie up cash. We're going to be very strategic how we do it. We're probably one of the best things we have going right now is our relationships with these guys.

Okay, that's great to hear. Maybe last question from me, just on the gross margin, right? Nice to see some of the sequential improvement during the quarter. Given all the puts and takes of what you're just talking about, being able to be more nimble and efficient in terms of the new SKU launches, and obviously having a big prioritization in terms of profitable sales as you now go forward and look for growth, how should we think about the evolution of the gross margin profile over the next 12 months?

Aaron, we have implemented and installed a system right now that is best-in-class. I would hold it up against any major beverage company in the country. We're using AI in a very strategic way to help us look and evaluate how our business is in every single one of our -- and I'll just say start with our top 25 customers because those customers drive a big part of our business, 85% to 90% of our business. We now can look and perform an ROI in minutes when it used to take a little while longer than that and not be as accurate. So we can see what our mix looks like, we can see what's driving the business quickly, we'll know it, we have it at our fingertips.

But we're also working on some strategic price increases. It's not across the board, but across SKUs that we know need to have a slight more bit of a little push so we can get our margins into the, as Doug said, into the 30s and mid-30s and above range.

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Mr. Cohane for closing remarks. Please continue.

Thanks, Mark. Thanks for joining the call today. We believe the actions we are taking will position Reed's for continued improvement going forward and long-term sustainable growth. We appreciate your continued interest in Reed's, and we look forward to updating you on progress during the next call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect your lines. Have a good day.

Good morning, and welcome to Reed's First Quarter 2026 Earnings Conference Call for the 3 months ended March 31, 2026.

My name is Joelle, and I will be your conference call operator for today. Today's call will include prepared remarks from Neal Cohane, Reed's Interim Chief Executive Officer; and Doug McCurdy, Reed's Chief Financial Officer. Following their remarks, we will open the call for questions.

Before we begin, please take note of the company's cautionary statement. Today's call will include forward-looking statements, including statements about Reed's business plan, growth initiatives, operational improvements, including the company's belief that its first quarter results are not indicative of future performance and the impact of its corrective efforts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, May 13, 2026. Reed's assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

For more information, please refer to the risk factors section of the company's annual report filed with the Securities and Exchange Commission on March 25, 2026, and in other filings that the company makes from time to time with the SEC. When discussing results, the presenters may refer to non-GAAP measures, which exclude certain items from reported results.

Please refer to Reed's first quarter 2026 earnings release on Reed's investor website at investor.reedsinc.com and the company's quarterly report on Form 10-Q for the quarter ended March 31, 2026. Expected to be available on the website soon. For definitions and reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. While we believe the non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

I will now turn the call over to Mr. Cohane.

Thanks, Joelle, and good morning, everyone. I first would like to say the company's operating performance in Q1 should not be viewed as indicative of our expanded performance for the balance of the year. Several factors contributed to the quarter's results, many of which we believe are transitional and are already being addressed through corrective actions initiated early in 2026. We see 5 factors that impacted our performance in Q1. They are as follows: number one, inventory liquidation and write-offs. The company incurred significant charges related to liquidation of underperforming discontinued and aged SKUs as well as write-offs associated with excess raw material inventory.

We have since completed comprehensive physical inventory counts and implemented enhanced inventory controls designed to minimize the likelihood of similar charges recurring. Number two, elevated SG&A expenses. SG&A expenses were not appropriately aligned with the size and current priorities of the business. We have taken action to rightsize the cost structure, and we remain focused on rebuilding trust with retail and distributor partners while reengaging consumers and supporting brand growth initiatives.

Third, sales execution challenges. Q1 sales performance was negatively impacted by several operational commercial factors, including the discontinuation of our heritage glass bottle packaging. The execution -- two, the execution challenges associated with the transition from sleek cans to standard cans. Three, we had limited promotional trade activity during the quarter. Four, underperformance and evolving strategic focus behind Virgil's Zero platform, which is currently being restaged for future relaunch and growth. Five, we missed category review windows that resulted in reduced shelf placement for certain Reed's and Virgil's SKUs at key retail accounts, right?

The fourth, gross margin pressure. Gross margins were negatively affected by rising input costs and wholesale selling costs on certain packages that were insufficient to optimize margin contribution. Fifth, distributor and retail partner engagement. The company experienced inconsistent engagement with certain distributor and retail partners, which contributed to weakened communication, reduced alignment, top line pressures across portions of the business. So beginning in early Q1 in 2026, management initiated a series of corrective actions intended to stabilize the business, improve execution and position the company for profitable growth in the future.

First thing we did was we reengaged with our retail and distributor partners nationwide to strengthen relationships, secure new SKU placements and develop promotional plans for the remainder of 2026. On the product side of things, we canceled the planned elimination of the Reed's and Virgil's heritage glass bottles and Virgil's Zero Sugar cans. Consumer and retail partner demand contributed to our decision to reverse course on those discontinuations. We also expanded our retail media and e-commerce support. The company launched sponsored product and retail media initiatives across key e-commerce platforms, including Instacart, walmart.com, albertsons.com and kroger.com, among others.

We also initiated cost reduction. We implemented meaningful reductions in headcount and marketing-related SG&A expenses and postponed a planned brand restage initiative until the business demonstrates sustained growth and momentum. We also -- to expand our retail and consumer reach, we retained one of the nation's largest commission-based sales agencies to present the Reed's portfolio of brands across all channels of business in the U.S. This partnership immediately expanded our retail coverage and field presence with more than 80 sales professionals working alongside Reed's sales management. We liquidated tens of thousands of cases of low-margin and nonstrategic inventory to improve working capital efficiency and streamline portfolio.

We also restructured Amazon. We exited a third-party Amazon fulfillment warehouse arrangement that had been generating approximately $1 million in annual losses and simultaneously partnered with a leading Amazon marketplace operator focused on driving profitable growth. On the gross margin improvement, management conducted a comprehensive review of cost of goods and portfolio level gross profit margins. Following our analysis, we began implementing strategic pricing actions designed to improve profitability and support long-term financial performance.

Finally, to support the execution of the above initiatives, we've recently appointed Damian Warshall as Chief Operating Officer. Damian has a history with Reed's, and we believe his operational experience positions him well to lead this next phase of improved operating performance. The team's immediate priority has been to stabilize the business, improve execution, and rebuild confidence across all aspects of the organization. While our first quarter results clearly fell short of expectations, we have moved quickly and decisively to address operational inefficiencies, strengthen customer and distributor relationships, streamline our cost structure and refocus the company down the path of profitability.

Reed's and Virgil's remain highly recognizable brands with strong consumer awareness and significant untapped potential in both retail and e-commerce channels. We believe the actions taken over the past several months are laying the foundation for improved execution, stronger margins and renewed top line momentum as we move through 2026. Although there is still substantial work ahead, I am encouraged by the early progress we are seeing across the business and remain confident in our ability to reposition the company for long-term sustainable growth and shareholder value creation.

Thanks to all today. Appreciate your time. Our CFO, Doug, will now cover the financial highlights for the quarter in more detail.

Doug?

Thank you, Neal. Turning to our results. All variance commentary is on a year-over-year basis, unless otherwise noted. Net sales for the first quarter of 2026 were $7.1 million compared to $10.0 million in the prior year period. The decrease was primarily driven by lower volumes with recurring national customers and higher promotional and other allowances. Gross profit for the first quarter of 2026 was $0.7 million compared to $3.4 million in the prior year period. Gross margin was 10% compared to 34% in the prior year period. The decrease in gross margin was primarily driven by liquidation of select slow-moving product and inventory write-offs related to changes in product portfolio optimization.

Delivery and handling costs decreased by 31% to $1.1 million during the first quarter of 2026 compared to $1.6 million in the first quarter of 2025, primarily driven by continued improvements in logistics efficiency and freight optimization. Delivery and handling costs were 16% of net sales or $2.57 per case compared to 16% of net sales or $3.17 per case during the same period last year. Selling, general and administrative expenses were $5.8 million compared to $3.5 million in the prior year period. The increase was primarily driven by investments in personnel, marketing and related services to support our Asia growth initiative.

Net loss during the first quarter of 2026 was $6.5 million or negative $0.55 per share compared to a net loss of $2.0 million or negative $0.27 per share in the prior year period. EBITDA was negative $6.2 million in the first quarter of 2026 compared to negative $1.7 million in the year ago period. For the first quarter of 2026, cash used in operations was $5.8 million compared to cash used of $5.4 million in the year ago period. As of March 31, 2026, Reed's had approximately $4.6 million of cash and $9.2 million of total debt net of deferred financing fees. This compares to $10.4 million of cash and $9.2 million of total debt net of deferred financing fees at December 31, 2025.

I will now turn the call back to Neal for closing remarks.

Thanks, Doug. Obviously, Q1 was challenging and our results reflect that. But it was also a real important quarter, one in which we made deliberate investments in building a stronger foundation for the business. We believe that the work will serve us well as we move through the year. We look forward to showing you that progress in the quarters ahead.

With that, operator, we're ready to open the call for some questions.

[Operator Instructions] Your first question comes from Aaron Grey with Alliance Global Partners.

First question for me, just -- I guess, how do we think -- you talked some of the remedies before. How do we think about the progress and how long it will take for the remediation to take force? And are you already seeing some improvement in 2Q about halfway through the quarter? Any type of KPIs that you can help provide us to show there's been some progress in that?

Yes. Aaron, thanks for the question. Yes, we absolutely -- we got on this very early in Q1. So we've been working on all those fronts that I just went through and covered. So we -- obviously, we've reduced and restructured our inventory and got the majority of the inventory situation cleaned up. We're seeing margin improvement immediately and early. And we are -- we did a very deep analysis on what we were charging customers, what we were charging our distributors for wholesale costs. The -- we needed to rightsize that. So we've taken immediate action on that.

We're starting to see some early syndicated data that says some of our kind of, we'll call it, Instacart and walmart.com and places where we're investing, we're starting to see a good return on ad spend on that, and that's reflecting in some of the syndicated data. But on all fronts, we're making very quick, swift progress. It's going to take a little while, but it's not going to take -- by the end of this quarter we're in, we will have gotten ourselves back on the right track.

Yes, Aaron, just a couple of quick notes. Obviously, first quarter was a transition quarter as we get into and continue through second quarter, our expectation is that we'll get back on the path of sequential improvement quarter-to-quarter, and we expect to see that in net sales, gross margin and net loss.

Okay. I appreciate that. More specifically, just on the missed category review windows with some of the national retailers. I know shelf resets are very important. So given that window was missed, like how hard is it to get back that shelf space that might have been lost? Do you need to wait another year or until fall shelf reset? Just give us some color in terms of the progress and how potentially you win back some shelf space with those national retailers.

Yes. So Aaron, we're going back and I have a long-standing relationship with lots of retailers, lots of distributors. We're going back immediately to where we can, where we can affect change. That's the first places we're going to now, where we can affect change now, and we're having success. But the other really good point that has happened is we've kind of unleashed a large national sales broker agency with, as I said in the script, the 80 people, and they're all engaging right now. So it's -- we're going for the low-hanging fruit now. There are some that are -- there are some retailers that are dead set on their category reviews happening at a certain period of time. But we're already speaking with them. It doesn't hold us up from speaking with them about the future and upcoming new business. So we're moving forward on it.

Okay. Great. That's helpful. And my third question was going to be on that in terms of the new commission-based sales force that you brought online. So first quick question. So the 80, how does that compare to the number that you guys had internally? And then secondly, do you feel like the inventory is in the right position to kind of, as you said, unleash this type of sales force and that you have the product available to complement the gunpowder, if you will, of the increased sales force base?

Yes. Yes. Inventory, we're very confident that we're going to be secure in inventory. So that is not a worry of mine at this moment. As far as where we were, we were -- when I came into the company in January, it was probably about 12 sales -- field sales folks. And now we have what I call them, I call them we have field sales generals out there now that are aligned and attached to the hip with our field brokers. So it's -- the only thing we're doing right now, Aaron, is we're creating KPIs, right, key performance indicators for all in the company for the -- for our broker partner. So that we're hitting milestones and we're measuring success and fixing things that we need to fix as we move along.

Yes, Aaron, just a note on the inventory piece and having product available to support. We continue to have short ships be essentially 0. And we're managing inventory probably more efficiently than the company has managed in many years, but we have the inventory to support the growth.

There are no further questions at this time. I will now turn the call over to Neal for closing remarks.

Thank you. Thank you for joining us today. We appreciate everybody's continued support, right? We look forward to updating you on our progress. We'll be completely transparent as we move forward. But we're looking forward to nothing but success in the future. So thank you.

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning, and welcome to Reed's Fourth Quarter and Full Year 2025 Earnings Conference Call for the 3 and 12 months ended December 31, 2025.

My name is Joelle, and I will be your conference call operator for today. We will have prepared remarks from Neal Cohane, Reed's Interim Chief Executive Officer and Chief Operating Officer; and Doug McCurdy, Reed's Chief Financial Officer. Following their remarks, we will take your questions.

Before we begin, please take note of the company's cautionary statements. Today's call will include forward-looking statements, including statements about Reed's business plans. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, March 25, 2026, and the company is under no obligation to update them. When discussing results, the presenters may refer to non-GAAP measures, which exclude certain items from reported results.

Please refer to Reed's fourth quarter and full year 2025 earnings release on Reed's investor website at investor.reedsinc.com and its annual report on Form 10-K for the 2025 fiscal year for the period ended December 31, 2025, expected to be available on the website soon for definitions and reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

I will now turn the call over to Mr. Cohane.

Thank you, Joelle, and appreciate everybody joining us today for the call, the fourth quarter and full year 2025 results. Before diving in to our results, I'd like to briefly address the leadership transition.

As announced in our earnings press release, Cyril Wallace has stepped down as CEO. I will assume the additional role of Interim CEO while continuing as Chief Executive Officer -- as Chief Operating Officer, and I will also join Reed's Board of Directors. On behalf of the entire Reed's team, I want to thank Cyril for his contribution and wish him all the best in his future endeavors.

I'm honored to step into this role at an important time for the company. Reed's is a strong brand with long heritage, a loyal consumer base and robust operational foundation. Having spent many years with the business and recently returning as COO, I have a clear understanding of both the opportunities ahead and the work required to improve execution and performance.

The Board has initiated a search for a permanent CEO. And in the interim, I am focused on advancing the operational priorities necessary to support profitable growth.

Let's turn to our results. We made important strides during the fourth quarter to stabilize the business and reinforce the operational framework needed to support sustainable growth. We also saw sequential improvements in net sales, gross margin and net loss, which we view as early indicators that the actions we have taken are starting to gain traction.

We saw encouraging sequential sales improvements across several channels, including natural specialty, grocery, mass and e-commerce. This was driven by a combination of increased sales velocity and seasonal product launches during the quarter. A couple of the retailers helping to drive this growth with Sprouts, Costco, Walmart and our Amazon and Shopify business.

While we're still early in the process, these results reflect meaningful progress in improving execution. We are rebuilding and expanding distribution relationships, strengthening our presence on the shelf and driving greater efficiency across our supply chain and product portfolio to support more consistent performance over time.

From a production and supply chain standpoint, we're making meaningful progress in driving efficiencies and reducing costs across the business. This includes optimizing our manufacturing network, improving plant productivity and implementing tighter operational controls to better align production with demand.

We're also enhancing our sourcing strategy by leveraging scale, renegotiating key supplier relationships and improving procurement discipline. At the same time, we are actively identifying additional opportunities to lower our per unit cost structure, including packaging optimization, freight and logistics efficiencies and SKU rationalization.

As we continue to streamline the supply chain and improve throughput, we expect these initiatives to expand margins, improve service levels with our retail partners and position the business for more scalable and consistent performance over time.

Looking ahead in 2026, we are focused on expanding our presence in under-penetrated channels, particularly food service and convenience, which represent meaningful white space opportunities for the Reed's brand. These channels are highly complementary to our core retail business, enabling us to reach consumers in new consumption occasions and drive incremental trial and brand awareness.

I'd like to share a few updates on our product portfolio. First, we are launching the Reed's -- new Reed's Ginger Ale Cranberry and Blackberry in Q2 2026 as a line extension to our #1 selling SKU, which is the Reed's Ginger Ale. The core item, the Reed's Ginger Ale, remains the #1 premium ginger ale in total U.S. and continues to grow and is plus 13.7% in dollar sales over the past 52 weeks.

Second, we are expanding into high-growth adjacent categories with the launch of nonalcoholic mixers in early Q3 2026, providing incremental sales opportunities in the back half of the year.

Third, we are amplifying visibility at the digital shelf. In March 2026, we went live across Instacart, walmart.com and albertsons.com, reaching over 4 million targeted shoppers monthly through sponsored search, sponsored product and banner advertising.

Finally, we launched a social media strategy in Q1 2026, targeting over 100,000 viewers per month. We partner with recognizable talent, including a retired NFL player, Hayden Hurst, alongside a network of high-reach influencers. This approach is designed to authentically integrate Reed's into our culture, driving awareness, engagement and trial in a scalable, cost-efficient manner.

Overall, these initiatives reflect a deliberate multipronged growth strategy, building on our core and expanding into high potential agencies and fully supporting the brand through digital and cultural relevance.

Now let me take you through a couple of the fourth quarter operational highlights. During the quarter, we continued our efforts to evaluate and manage finished goods inventory, including actions to address slower moving and obsolete product as part of our effort to simplify the portfolio and focus on higher-performing items.

On the logistics and supply chain front, we continued executing our rebalancing initiatives to optimize inventory placement across regions and improve overall delivery efficiency. These efforts are focused on reducing freight distances, enhancing service levels and minimizing out of stocks in key markets.

We are beginning to see the tangible benefits from these actions with delivery and handling expenses declining 35% year-over-year in the fourth quarter. While still early in the process -- while still early, the process reinforces that we are moving in the right direction, and we remain focused on further refining our logistics network to drive continued efficiency gains and cost reductions over time.

We continue expansion into the Asian market and we'll be exhibiting at the sugar and wine trade show in Chengdu, China, one of the biggest food and beverage trade events in the world.

We will be launching our latest take on new modern energy drink called [ U Oxygen ], Reed's U Oxygen. U Oxygen will be making its debut for the first time, introducing innovative flavors to key industry retailers and distributors. Reed's U Oxygen builds on Reed's natural ginger base and innovatively integrates the classic eastern herbs of astragalus and ginseng to deliver clean, balanced energy for today's health-conscious consumer.

During the fourth quarter, we completed a $10 million underwritten public offering and uplisted our shares to the New York Stock Exchange American, marking a significant milestone in the evolution of Reed's. This transaction strengthens our balance sheet and enhances our financial flexibility providing additional capital to support key growth initiatives across the business, including distribution expansion, brand investment and continued operational improvements.

Additionally, uplisting to the New York Stock Exchange American meaningfully elevates our visibility within the investment community and broadens access to institutional investors while improving overall trading liquidity for our shareholders. As we continue to execute against our strategic priorities, we believe this enhanced capital markets platform, combined with our stronger financial foundation, provides Reed's to accelerate growth and drive long-term value creation.

Looking ahead, our priorities remain centered on improving overall operating performance and driving more consistent, profitable growth. We see a clear path to margin expansion through a combination of more disciplined trade spend, improved pricing and promotional effectiveness and continued operational efficiency gains across our supply chain and organization.

We're also continuing to invest in our international expansion in Asia, where we see a significant long-term opportunity to extend the reach of Reed's brand and capture incremental growth. We believe the combination of these initiatives will enable us to execute our growth and profitability objectives ahead.

Before wrapping up with closing remarks, our CFO, Doug, will cover financial highlights and fourth quarter and full year in more detail. Doug?

Thank you, Neal. Turning to our results. All variance commentary is on a year-over-year basis, unless otherwise noted.

Net sales for the fourth quarter of '25 were $7.5 million compared to $9.7 million in the year ago quarter. The decrease was primarily driven by lower volumes with recurring national customers and higher promotional and other allowances.

Gross profit for the fourth quarter of 2025 was $1.5 million compared to $2.9 million in the year ago quarter. Gross margin was 20% compared to 30% in the year ago quarter. The decrease in gross margin was primarily driven by inventory write-offs and higher cost of goods sold.

Delivery and handling costs were reduced by 35% to $1.1 million during the fourth quarter of 2025 compared to $1.7 million in the year ago quarter. As a percentage of net sales, delivery and handling costs were 14% or $2.46 per case in Q4 2025 compared to 17% or $3 per case in the year ago quarter.

Selling, general and administrative expenses were reduced by 19% to $4.0 million compared to $4.9 million in the year ago quarter. The decrease was primarily driven by lower contract proceedings and asset impairments.

Net loss during the fourth quarter of 2025 improved to $3.8 million or negative $0.44 per share compared to $4.1 million or negative $1.33 per share in the year ago quarter. EBITDA was negative $3.6 million in the fourth quarter of 2025 compared to negative $3.1 million in the year ago quarter.

For the fourth quarter of 2025, we used $3.8 million of cash from operating activities compared to cash used of $3.9 million in the year ago quarter. As of December 31, 2025, we had approximately $10.4 million of cash and $9.3 million of total debt, net of capitalized financing fees. This compares to $10.4 million of cash and $9.6 million of total debt, net of capitalized financing fees at December 31, 2024.

I will now turn the call back to Neal for closing remarks.

Thanks, Doug. Our fourth quarter reflects important strides in stabilizing the business and reinforcing the operational foundation needed to support sustainable growth. While there is still work to do, we are encouraged by the sequential improvement in several key financial metrics and remain focused on executing against our priorities to drive profitable growth for our shareholders.

With that, Joelle, we're ready to open the line for any questions.

[Operator Instructions] Your first question comes from Aaron Grey with Alliance Global Partners.

This is [ John ] on for Aaron. So how best is it to think about the cadence of distribution gains in 2026 and whether the spring resets have presented any opportunities?

John, thanks for the question. I think we have some work to do when it comes to getting placements right now. We're working on it as we speak. We have the sales team aligned. We're bringing on people to help and support, picking up and gaining more placements, and we're also working on velocities, to improve velocities at store level.

So we're going to be completely focused in 2026 on the customer and on our distributors. And it's going to be all about velocities and increasing shelf placement.

Okay. Great. And how should we think about the path to profitability and some of the margin initiatives you have in place starting to flow through the P&L?

The path to profitability is -- Doug and I have been meeting extensively on this. And we're looking at a couple of things here. It's one, we're looking to reduce expenses, which we are doing year-over-year, quarter-over-quarter, we're reducing expenses. But at the same time, we're driving -- we're going to be driving growth this year.

So I think what you see today is going to look a lot different than in, say, Q4 of this year. But it's going to be a combination, like I said, of reducing expenses and driving volume at store level.

Okay. Great. And then just lastly, is there any additional detail you can provide on the timing of the Smarter Soda (sic) [ SodaSmarter ] launch or color on learnings from the past launch to improve the product, flavor, packaging or otherwise?

On which launch, I'm sorry?

The SodaSmarter.

Yes. The SodaSmarter launch right now is -- that is one of the first things that I spoke with our flavor house that helps us with launches as I want to improve flavors. But at the same time, we're launching our new mixer line. And our new mixer line, which I think is going to be a great addition to what we're all about as a Reed's brand, we're working on that line and that launch at this moment.

And then we're coming back to the SodaSmarter, and we're going to be looking at improving flavors, improving formulas, and then we're going to improve execution on that at the same time.

There are no further questions at this time. I will now turn the call over to Mr. Cohane for closing remarks.

Well, thank you, everybody. I appreciate everybody joining today. We appreciate your continued interest in Reed's. We look forward to updating you on our progress, and we'll do that on further calls. We have a lot of work to do, and we're getting it done. But thanks for everybody and their time today.

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning, and welcome to Reed's Third Quarter 2025 Earnings Conference Call for the 3 and 9 months ended September 30, 2025. My name is Lilly, and I will be your conference call operator for today.

We will have the prepared remarks from Cyril Wallace, Reed's Chief Executive Officer; and Doug McCurdy, Reed's Chief Financial Officer. Following their remarks, we will take your questions.

Before we begin, please take note of the company's cautionary statement. Today's call will include forward-looking statements, including statements about Reed's business plans. Forward-looking statements inherently involve risks and uncertainties and only reflect management's view as of today, November 4, 2025, and the company is not under obligation to update them.

When discussing results, the presenter may refer to non-GAAP measures, which exclude certain items from the reported results. Please refer to Reed's Investors website at investors.reedsinc.com and its quarterly report on Form 10-Q for the period ended September 30, 2025. This should be expected to be available on the website soon.

For definitions and reconciliations of non-GAAP measures and additional information regarding results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements.

I will now turn the call over to Mr. Wallace.

Thank you, operator, and good morning, everyone. We appreciate you joining us today to discuss our third quarter 2025 results. Q3 marked another period of steady operational progress as we continue executing our plan to strengthen our foundation for sustainable long-term growth and profitability.

We advanced our manufacturing initiatives to better align production capacity and capabilities with current demand, enabling us to meet customer needs more efficiently while maintaining a strong focus on quality and operational discipline. At the same time, we're identifying additional opportunities to streamline processes, enhance scalability and drive further improvements in overall performance.

During this quarter, we saw higher-than-anticipated trade spend as we leaned on 2 large distributors to help fulfill order volume and ensure on-time delivery to key customers following prior supply chain challenges. This approach enabled us to maintain strong customer relationship and service levels.

However, it did not yield the expected efficiencies, and we have since begun redefining our approach with these distributors. We're evaluating our strategy to move away from short-term 3-month promotions to a fully integrated 52-week strategy that aligns more closely with retailer planning cycles and support stronger year-round execution.

With a more disciplined approach, we expect greater predictability and control over trade spend. We're already seeing early signs of improvement in Q4. And as we transition away from legacy distributor arrangements, we believe these actions will support continued gross margin expansion going forward.

From a production standpoint, we are working to drive greater efficiency and cost reduction through enhanced manufacturing processes, tighter operational controls and improved sourcing discipline. We are actively identifying new opportunities to lower unit costs and enhance overall performance across the supply chain.

Turning to our core product sales. During the third quarter, our sales team continued to execute against our refined commercial strategy, driving meaningful wins across both new and existing retail partners. These successes reflect stronger alignment between our sales, marketing and operation teams and demonstrate the progress we're making in rebuilding placements and expanding distribution within key national and regional accounts.

We achieved notable retail gains this quarter, highlighted by our partnership with Costco to develop a winner Ginger Ale variety pack, expanding seasonal innovation opportunities. Core distribution grew 4% year-over-year across top accounts, including Kroger, Sprouts, Ahold Delhaize, reinforcing momentum within our core Ginger Ale, Ginger Beer and Virgil's portfolio.

A successful Walgreens test further validated consumer demand and merchandising performance, paving the way to broader expansion discussions in priority small format channels such as drug and convenience. Additionally, we remain focused on regaining lost distribution with key regional wins at Harmons, Fashes and Festival Foods.

Looking ahead, we're focused on expanding our presence in underrepresented channels and particularly food service and convenience, which represent meaningful long-term opportunities to expand the reach and visibility of Reed's brand. I'd like to share a few updates on our product portfolio, starting with our core categories.

We're reinvigorating the Ginger core with full packaging and brand restage across Reed's Ginger Beer and Ginger Ale, launching July 2026. The update introduces new Ginger ale flavors, cranberry, blackberry and reformulated Zero Sugar offerings plus new club soda and tonic mixers.

Together, these moves simplify our lineup, sharpen shelf presence and strengthen Reed's leadership in authentic craft ginger beverages across retail and on-premise channels. A complete restage of our functional soda line also slated for July 2026 will reestablish Reed's as a category disruptor. Designed to leapfrog the modern service space, the new platform delivers wellness proposition with purposeful ingredients, elevated design and a bold innovation pipeline targeting incremental consumption occasions.

We're optimizing Virgil's and Flying Couldron, transitioning from glass to cans with full restate slated for 2027 and reformulating our RTD range, Reed's Mules and Hard Ginger Ale to enhance quality, flavor and consistency.

Internationally, Reed's launches its Ginger core in Greater China and Japan, followed by broader Asia in 2026. To support our next phase of growth and brand evolution, we've strengthened our leadership team with several key additions who bring deep expertise across marketing, commercial execution and governance.

In early September, we appointed Tina Reejsinghani as Chief Marketing Officer. Tina brings over 2 decades of global marketing leadership across lifestyle, spirits and consumer packaged goods. She has built a scaled iconic brands at Unilever, Pernod Ricard, and Remy Cointreau, delivering double-digit growth award-winning campaigns across multiple categories.

Her expertise in brand storytelling, innovation and premium positioning will be instrumental as we modernize and elevate Reed's Inc. portfolio on its path to becoming a high-growth beverage powerhouse. Next, we welcome Keith Johnson as Reed's Chief Go-To-Market and Customer Officer. Keith has almost 30 years of CPG beverage experience, spanning sales, distributor operations, marketing and revenue growth.

He spent 21 years in leadership positions at Coca-Cola, building high-performing collaborative teams. Over the past 10 years, Keith led national and regional customer teams at Molson Coors and most recently served as VP of Strategic Regional Accounts and Military at Diageo, driving channel strategy, joint customer supply growth and talent development.

We believe he is well positioned to lead our channel development strategy and go-to-market execution. Lastly, we appointed Michael Tu to our Board of Directors. Michael brings nearly 3 decades of experience in corporate governance and securities law, advising and representing boards, committees and executives at numerous public and private companies.

His deep understanding of regulatory framework, compliance and Board governance will help guide our long-term strategy and ensure we continue to build a strong transparent foundation of sustainable value creation.

Now let's dive into our third quarter operational highlights. Similar to Q2, we completed another review of our finished goods inventory and wrote down approximately 114,000 of obsolete product. This initiative is part of our broader effort to rationalize SKUs and sharpen our focus on high-velocity items that align with current demand and support a more efficient, profitable portfolio.

By streamlining our product mix, we can better concentrate resources on core SKUs that drive volume and margin expansion. On the logistics and supply chain front, we continued executing the rebalancing plan initiated last quarter to optimize inventory placement across regions. These actions are designed to improve deliver efficiency, reduce freight distances and minimize out of stocks in key markets.

We're beginning to see tangible benefits. Delivery and handling expenses declined 14% year-over-year in Q3, reflecting early progress from these operational improvements. We remain focused on refining our logistic network to further drive efficiency and reduce costs over time. We are advancing our transition from glass to cans across both Reed's and Virgil's portfolio, an initiative aimed at improving cost efficiency, sustainability and operational flexibility.

We expect this transition to strengthen margins while supporting continued consumer and retail adoption across our core brands. We also continue to strengthen our balance sheet through our recent financing repayment of approximately $650,000 of debt and the refinancing of our credit facility. These actions improved our liquidity and provided additional flexibility to execute on our core growth plan.

From a capital markets perspective, we're preparing for an uplift to a major exchange. We view this as an important milestone that will enhance visibility, improve liquidity and broaden our access to institutional capital as we enter our next phase of growth. As part of this process, we implemented a 1-for-6 reverse stock split effective October 31.

Looking ahead, our priorities are clear: improve margins, optimize operations and drive sales growth within our core Reed's and Virgil's portfolios. The investments we're making today, coupled with our recently fortified balance sheet, will accelerate our progress towards sustainable profitable growth ahead.

Before wrapping up and closing remarks, our CFO, Doug, will cover financial highlights for the third quarter in more detail. Doug, over to you.

Thank you, Cyril. Turning to our results. All variance commentary is on a year-over-year basis, unless otherwise noted. As Cyril mentioned, we affected a 1-for-6 reverse stock split and all per share data is on a post-split basis. Net sales for the third quarter of 2025 increased 4% to $7.0 million compared to $6.8 million in the year ago quarter.

The increase was primarily driven by higher volumes of Reed's branded products with recurring national customers. Gross profit for Q3 2025 remained flat at $1.2 million. Gross margin was 17% compared to 18% in the year ago quarter. The year-over-year decrease in gross margin was primarily driven by $0.1 million of inventory write-offs related to product portfolio optimization.

Excluding these inventory write-offs, gross profit for the third quarter of 2025 was $1.3 million or 19% of net sales. Delivery and handling costs were reduced by 14% to $1.1 million during the third quarter of 2025 compared to $1.3 million in the third quarter of 2024, primarily driven by lower transportation costs.

Delivery and handling costs were 16% of net sales or $2.50 per case compared to 19% of net sales or $2.99 per case during the same period last year. Selling, general and administrative costs were $4.2 million during the third quarter of 2025 compared to $3.1 million in the year ago quarter. The increase in SG&A was primarily driven by investments in personnel, marketing and related services to support growth initiatives.

Total operating expenses were $5.3 million compared to $4.4 million in the year ago period. Net loss during the third quarter of 2025 improved to $4.0 million or negative $0.48 per share compared to $4.2 million or negative $4.91 per share in the third quarter of 2024.

Modified EBITDA loss was $3.9 million in the third quarter of 2025 compared to $3.0 million in the third quarter of 2024. For the third quarter of 2025, we used $2.8 million of cash from operating activities compared to $1.1 million of cash provided by operating activities for the same period in 2024.

As of September 30, 2025, we had $4.1 million of cash and $9.2 million of total debt net of deferred financing fees. This compares to $10.4 million of cash and $9.6 million of total debt net of deferred financing fees at December 31, 2024.

I will now turn the call back to Cyril for closing remarks.

Thanks, Doug. Our third quarter reflects continued progress in strengthening Reed's operational foundation and advancing the key initiatives that will drive long-term growth and profitability. While there's still work to do, I'm encouraged by our team's focus and execution to build a strong foundation and position Reed's for accelerated organic growth in 2026 and beyond.

With that, operator, we're ready to open up the line for questions.

[Operator Instructions] Your first question comes from Aaron Grey from Alliance Global Partners.

First one for me. I just want to get in better color in terms of expectations for distribution gains and how best to think about how shelf resets might come into play and opportunities that might differ between Reed's traditional and Reed's functional beverages there.

Yes, it's a good question. Listen, I mean, our -- within the changes that we just recently made within the organization, we essentially restructured our entire sales team and added key positions so that we could focus on channels and customers or retailers that we're currently not focused on today.

So I think what you'll see here, coupled with focusing on and making sure that we understand the time lines in which resets to some of these key customers take place, we're in the process right now of building those relationships, building out that network to ensure that, one, that we're focused on the right time line and also have the right product mix to go after these customers with our core business and also our modern soda line.

Now as we -- as I discussed earlier, we are looking to take our current modern soda line and restage it, reformulate it, retool it and relaunch it to be in store July of 2026. So within that, right, that would constitute us to have to focus on for that particular line for fall resets. So think core, Ginger Ale, our 2 new flavors will come out in Q1 of this year.

The broader restage of our core functional Reed's will take place in the second half of next year. Along with that is the restaging of our modern soda line. So most of that will come into play within our fall resets on both our existing customers and also new customers where it makes sense that we're targeting.

That's helpful. On the switching right from bottles to cans across the portfolio, just help us understand and triangle that maybe are there some near-term kind of costs, obviously, long term, cost savings you're expecting. So just as we think about the P&L, potential impacts potentially on the near-term charges and how much benefits we should expect and when that kind of flows through the P&L?

Yes, sure. So for bottles to cans, it's a conversion that I think first is kind of in line with the trending of the industry as a whole. I think it's an opportunity to give the consumer a packaging set that they're interested in and is better for them in addition to better for you.

And then as we think about some of the efficiencies directly to the P&L, what we see is simply the cost of bottles versus the cost of cans is a nice shift improvement, and there's a benefit in margin as well. So we would anticipate that as we move forward with the transition, the transition will happen over some period of time that's measured in months and quarters.

But we would imagine that as we enter into first quarter, we'll be moving along smartly to affect that transition. And I would imagine that by the end of the second half -- by the end of the first half of 2026, we should be well into it.

And some of the considerations are we want to be mindful of the customer set and making sure that we're making that transition in partnership with our customer set and making sure that, one, the customers are pleased with the approach and invested in the approach. And two, we want to make sure that there's no disruption to the shelf space that we have and the P&L benefit that we're going to gain from it.

Appreciate that. Last one for me, if I could. As we think about marketing, obviously, beverages remains a competitive category. You guys have a focus on profitability. How best to think about the marketing spend line how -- and what levers you think are best available to the best bang for your buck to build up brand equity as you look to expand these different brands and product portfolios?

Yes. We want to be very targeted and strategic around how we're spending dollars on marketing. Now understand that from where we are today to where we're headed tomorrow, it will be an exponential shift in the strategy and also investment in terms of how we're thinking about marketing our core brand restage in the middle part of next year, along with our functional line, along with this new mixer line as well.

So I think what we're focused on is grassroots marketing campaign and building from there, right? So it will be very targeted. It will be very specific but it will be certainly exponential in terms of what we're spending today. And we feel like just given where we are, we've got a great opportunity to kind of build out this campaign given the -- already our high consumer appeal amongst consumers who tried our product and repeat purchasers as well.

So I think there's a story that we have to tell there, but we'll be very targeted and specific as how we use those dollars, which is -- it's a new area for us in terms of investing in marketing, but we'll do it grassroots and it will be very targeted.

Our last question comes from Sean McGowan from ROTH Capital Partners.

Actually, 2 questions. One quick housekeeping. Doug, do you have a sense of what the timing could be on the uplist? And whether those steps need to be taken to satisfy all those requirements?

And then more broadly, on the last call, we talked about maybe having lost some listings or some outlets. What progress have you made on kind of reestablishing some of the existing customer base that you had and getting back some listings that you may have lost?

Yes. Thanks, Sean. Nice to hear your voice. In terms of timing for all things uplifting and related, I think the first kind of milestone that we were able to achieve to move forward with that was affecting the 1-for-6 reverse stock split. So on Friday at 5:00 p.m., we were able to get ourselves in a place where we could affect that.

Our stock began trading under the ticker RED with an extra D, 2Ds, which signifies corporate action that there's a split. But we began trading yesterday morning at the open on a split-adjusted basis. So we'll kind of watch that settle out. We'll monitor the market and where we are in terms of some of the other preparation considerations.

But in an ideal world, we would be able to move forward prudently, but get to the point where we could uplist to the major exchange sooner rather than later because we think that there's nice value for our existing investor base and a nice opportunity for potential new investors as well.

And then, Sean, to answer your question around loss distribution, yes, we're doing some work to build that into our AOP for next year, and it's certainly a focal point for us. What I'm excited about is that we are starting to see some of that business come back, which I highlighted in my earlier comments around key regional wins at Harmons, Fashes and Festival Foods. There are some obviously larger, more strategic retailers that we're focused on regaining some of that lost distribution or also getting back in.

And I think Keith and the team are really going to be focused on that in the first quarter of next year. And I think the story to tell, which is where we saw successes already with winning back some of these regional accounts is we got to do what we say we're going to do, right, build -- leveraging the relationships, but also telling the story of how the team has done a nice job of kind of rebalancing and reentering our sales around our operational efficiency and maintaining that quarter-over-quarter and being able to prove it out to show the customer that they can count on us from an in-stock perspective. that, along with just continuing to rebuild these relationships, I think, will allow us to be able to get back in to some of these retailers.

Not only that, but I would also highlight we're now talking and moving in a position where we're building our innovation pipeline. So that will get customers and retailers excited about leaning in as well. And then this whole notion of this core restage of our Reed's functional line and also our core products is something that also that we're leaning on.

So I think we continue the course, stay focused on operational efficiency, continuing to maintain that, we'll be able to continue to regain some of these lost customers that we lost.

Okay. And if I could follow that up, at the risk of sounding maybe a little impolitic. Do you think that the experience that some of these guys have had with the past couple of years of some being late or not delivering on time? Is that going to make it harder to launch a new product? Or are they willing to give you kind of a fresh look?

No, I think -- I mean, obviously, I can't speak for retailers and put words in their mouth. But I think any time a CPG company goes to a buyer with a new proposition, right, they've got to make sure that it makes sense for the category and make sure it makes sense for the set, right? What is the innovation? Is it an A1 type innovation? Or how does it separate itself from anything else that we're currently selling.

So I think there's always a story to tell as it relates to trying to sell innovation or a new item or even your core flavor extension in where there may be already a flavor that exists today. So there's certainly work to be done to go tell that story. I don't think it makes it any easier or harder. I do believe that given our recent history, building that confidence in terms of operational stability helps us to kind of tell that story and shore up that end of the equation.

The other thing is just in terms of which is normal for any type of CPG that's going in talking to a buyer around innovation, how does this innovation work for me? How does it drive consumer engagement and appeal? And does it make sense for our sets.

There are no further questions at this time. I will now turn over the call to Mr. Wallace. Please continue.

Thank you, operator, and thank you for joining us today. I want to express our appreciation to our employees, customers and shareholders for their continued support. We're excited about the opportunities ahead, and we believe we are well positioned to execute on our 2026 plan. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.