Good morning, and welcome to Reed's First Quarter 2025 Earnings Conference Call for the three months ended March 31, 2025. My name is Angeline, and I will be your conference call operator for today. We have prepared remarks from Cyril Wallace, Reed's Chief Executive Officer; and Doug McCurdy, Reed's Chief Financial Officer. Following their remarks, they 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, May 14, 2025, 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 first quarter 2025 earnings release on Reed's investor website at investor.reedsinc.com, and its Quarterly Report on Form 10-Q for the period ended March 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. Wallace. Please go ahead.

Thank you, operator and good morning, everyone. We appreciate you joining us today to discuss our first quarter 2025 results. I would like to begin by expressing how honored I am to address our shareholders and prospective investors for the first time as the new CEO of Reed. While I'm still early in the stages of shaping our long-term strategy and vision, I've been incredibly encouraged by what I've seen so far. I'm excited to collaborate closely with Doug and the rest of the leadership team, as we work to drive sustainable growth and profitability. I would also like to take this opportunity to personally thank Norman for his years of leadership. His efforts have laid the foundation for the improvements we are building upon today. During the first quarter, we began to make meaningful progress across key operational areas, driven by the strategic initiatives implemented over the past year as well as the recent strengthening of our balance sheet. In December, we closed a $10 million private placement, which has provided the necessary capital to execute our plans. We began deploying these funds in mid-January to improve our inventory position, reinvest in personnel, double down on our sales and marketing efforts. Inventory constraints have been leading our ability to fully meet retail demand for some time now. However, this capital infusion has enabled us to invest in inventory and materially improve fulfillment rates. As a result, short shipments, which were approximately 20% at the start of the quarter were reduced to under 2% by April. This operational progress goes beyond improved inventory levels. It reflects a fundamental shift in how we operate. For the first time in years, production is keeping pace with sales, enabling us to proactively meet demand rather than react to it. These fulfillment improvements have…

Thank you, Cyril. Turning to our results. All variance commentary is on a year-over-year basis unless otherwise noted. Net sales for the first quarter of 2025 increased 4.5% to $10 million compared to $9.6 million in the year ago quarter. The increase was primarily driven by higher volumes, with recurring national customers, particularly through favorable secondary display opportunities. Gross margin -- I'm sorry gross profit for first quarter 2025 was flat at $3.4 million compared to the year ago period. Gross margin was 33.9% compared to 35.6% in the year-ago quarter. The decrease in gross margin was primarily driven by higher cost of goods sold, as we increased operating capacity and inventory amount to more effectively fulfill customer demand. Delivery and handling costs were $1.6 million during the first quarter of 2025, compared to $1.5 million in the first quarter of 2024. Delivery and handling costs were 16.2% of net sales or $3.13 per case compared to 15.7% of net sales or $3.01 per case during the same period last year. Selling, general and administrative costs were $3.5 million during the first quarter of 2025 compared to $2.6 million in the year ago quarter. The increase in SG&A was primarily driven by investment in people, marketing and related services to support growth initiatives. Altogether, operating expenses were $5.1 million compared to $4.1 million in the year ago period. Operating loss during the first quarter of 2025 was $1.7 million or negative $0.04 per share compared to $0.7 million or negative $0.16 per share in the first quarter of 2024. Modified EBITDA loss was $1.6 million in the first quarter of 2025, compared to $0.4 million in the first quarter of 2024. For the first quarter of 2025, we used approximately $5.4 million of cash from operating activities compared to cash used of $2.4 million for the same period in 2024. This increase was primarily driven by higher inventory purchases as we ramped production to support improved fulfillment rates and anticipated demand. As of March 31, 2025, we had approximately $4.9 million of cash and $9.6 million of total debt net 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 Cyril for closing remarks.

Thanks, Doug. While I'm still early in my tenure, I'm encouraged by the operational improvements being made and the strong alignment I've seen across the team. We are building momentum across our core and emerging product lines, restoring the trust of our key partners and laying the groundwork for profitable growth. I'm optimistic about the opportunities ahead and I look forward to updating you on our progress in the quarters to come. With that, operator, we're ready to open up the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Sean McGowan with ROTH Capital Partners. Please go ahead.

Good morning, Doug. I have a couple of questions. Operating expenses, those were higher than we had expected. It's the first time in a while that we've seen lines like delivery and sales and marketing go up year-over-year. And I think part of that is the growth in sales, but they're also higher as a percent. So, can you tell us, what we should expect from those two operating expense lines going forward?

Yes. First of all Sean, I appreciate the question. I'll turn it over to Doug to take this one.

Good morning, Sean. The increase in SG&A is largely attributed to upfront investments in personnel and marketing as I mentioned in my remarks to support strategic initiatives and restore some operational momentum. Cash used this quarter was primarily due to delivered investment and inventory. We believe that the right set of steps to support improved cash flow performance in the second half of 2025. So we're focused on both delivery and handling and SG&A. And I would expect to see us continue to be disciplined and possible in that area as we move forward.

Okay. And then Doug a quick follow-up. When you said second quarter gross margin could be pressured do you mean down year-over-year or not as high as they might otherwise be?

Yes. I think that was a comment that was in Cyril's remark. Our expectation on the gross margin side is that we may see some seasonal compression particularly in trade discounts or trade spend. There's some ordinary seasonality that you'll see and there's also some additional investment in the functional beverage launch as well.

Okay. Thank you.

Thank you. The next question comes from Will Abanduha [ph], Private Investor. Please go ahead, sir.

Good morning, Cyril. First off, welcome aboard. Congrats on a good quarter. Two quick questions. Can you guys provide any sort of kind of revenue guidance of what you're kind of targeting for the year? And then a follow-up on that do you have any time line to get the stock relisted on a major exchange?

Hey, Will. First of all, I appreciate the question. No comment on the stock listing on the New York Stock Exchange. As it relates to -- sorry what was your first question again?

Yes. I mean do you have a revenue kind of guidance that you can provide?

Doug, I'll turn that over to you on the revenue guidance.

Yes, sure. As a general approach in the past and going forward, we haven't provided guidance. So we'll just no comment there. But the thing that we would guide is as we move forward we're very focused on growth and we're very focused on operating efficiency. And so what we would expect is to see continued focus on improving in both of those key areas.

Okay. Awesome. Appreciate it.

Thank you. At this point there are no further questions. I would now like to turn the call over to Cyril Wallace for closing remarks. Please go ahead.

Okay. Great. Thank you, operator. I'd like to thank everyone for joining this morning's earnings call and extend our sincere appreciation to our employees, customers and shareholders for their continued support. We value your partnership and wish you all a great day. Thank you so much.

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