Reed's Inc (NASDAQ:REED) Q2 2020 Earnings Conference Call - Final Transcript
Aug 10, 2020 • 04:30 pm ET
At this time, we'll be conducting a question-and-answer session. [Operator Instructions]Our first question comes from the line of David Bain with ROTH Capital. You may proceed with your question.
Great. Thank you. Congratulations on basically consistently strong product momentum and the structure that you guys are doing that with. First, I guess I'm hoping we can delve a little bit more deeply into top line guidance. It certainly indicates stronger than maybe the stock multiple gives it credit for, but it also seems somewhat conservative just given the first two quarters and our checks for continued momentum. Can you delve a little bit more deeply and give us a little sense as to what were some of the factors when you used to net out year-end top-line guidance, given that your margin guidance is a little higher than we expected? And can you also let us know if that includes anything in terms of like new products or categories? Thank you.
Good afternoon, Dave. It's Norm here. Good question. I ask myself the same question. So I think I've got an answer for you here. So when you look at our business, you really need to look into the various components and then the dynamics of what's going on. So what I did was I said, okay, if you look at the most recent IRI data in the MULO category, and it's showing like a 32% dollar growth. So I went back and I said, Well, I was going to ask, why aren't you taking your guidance up? And why is the IRI number so high, but your numbers aren't as high? And there's a few things going on here. One, I break our sales into measured sales and unmeasured sales. And then the measured sales, obviously, I can break down into further components to get a little bit more granular. And our measured sales are all up very strong. Unfortunately, our non measured, which really services the segment of the business which was really significantly impacted by COVID-19, it's down almost 24%. So that's like a drag on our earnings. And you would expect the independent markets, the delis, quick-serve restaurants, on-premise accounts have all been significantly impacted by what's going on. And obviously, that's going to translate into a reduced amount of sales for us.
So when I look at the measured data, which is up very strongly, one of the things that we said last quarter was because of retailers focus on keeping stocks, their shelves well-stocked, there's been very little price promotion going on and very little any sort of promotional activity. They just couldn't handle it. So their dollar sales have been incredibly strong and much more stronger than ours.
So I went back and looked at and match us up at case volume, and we're tracking on case volume. Obviously, we've had stronger pricing, too. So our pricing is up. But at retail, it's been magnified even greater. So when we look at that, they're