Splash Beverage Group Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 20, 2024

There are 2 speakers on the call.

Operator

Good afternoon, and welcome to the Splash Beverage Group First Quarter Conference Call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Robert Nistikko, Chairman and CEO of Slash Beverage Group. Sir, the floor is yours.

Speaker 1

Welcome fellow SplashBeverage shareholders. We appreciate everybody joining the call today and I hope that we can answer your questions at the end of this call. We really like to focus today on less of where we were in Q1 as Q1 wasn't ideal and really where we're heading in the future here. We are extremely excited as we move into the Q2 and into the summer. And I think the key subjects that we put in the update, I think deserve more attention.

Speaker 1

First one being funding activities. One of the reasons as we know and as we put in the update is we had a funding source that basically just disappeared on us. And the redundant funding source just took a little bit more time than we thought. That happens. It's a business.

Speaker 1

We're growing. We're still young and we're still investing cash and splash. So the good news is as funding is so important to any business, we have engaged a wealth management firm in upstate New York to assist in a specific financing that we believe will be the long term debt with limited dilution. I think that's extremely important as we move forward. Their clients consist primarily of large family office, high net worth individuals, much like those that have been investing in Splash for years, our legacy investors, myself included.

Speaker 1

We're committed to growing and protecting share price whenever possible and ensuring the company has sufficient resources to operate and grow the business. We believe this is the best path and we'll be able to answer a few more questions live on the Q and A piece. The other key subject is acquisition. I understand everyone is anxious to hear more about Western Fun Vodka. We're well down the path in that process of acquiring that brand.

Speaker 1

We understand there are numerous subjects that remain that need to be remained confidential. Things like HR considerations, not necessarily inside versus public information, but just corporate confidentiality. Other things like licensing that goes state by state by state. But the best news here is we remain engaged. Both parties are very excited.

Speaker 1

Definitive documents are going back and forth. I think we're almost in the last round and we believe that will happen here fairly soon. I don't want to give you a date because we don't control liquor boards and federal regulation agencies. But it's all in play and both sides are very excited about closing that thing up. Also, like a lot of questions about Popoloco, similar.

Speaker 1

International acquisition, we had to deal with the Spanish government, not a complaint, not an excuse, it just is what it is. There were some reasons why we've slowed that down a little bit, but that's back on track and we are excited to get that done as soon as possible as well. Also Bill Meisner gave us some good information regarding the chains. We have enormous chain and retail support coming. It's just going to help us really build out our footprint across the country as we continue to grow.

Speaker 1

We also have a very interesting international project. We really haven't focused anything international yet. But we had a partner pre COVID, if some of you might recall that was a Chinese based organization. That has resurfaced now finally that the business world is getting back to normal. And we have the opportunity to potentially package and sell water in our paper can and provide that through our European partner CartaCann.

Speaker 1

The bottom line everybody is we have enormous amount of opportunity in front of us. We continue to focus on acquisition, making sure the company has the resources it needs to function properly and most importantly shareholder value. No one's happy with share price the way it is right now of course. It's been a challenge. We are not putting our heads in the sand.

Speaker 1

We really truly believe we have 3 gating items here that will solve for that in the coming months and the rest of the year. 1, by bringing on the capital we need at the right pricing. 2, executing on larger acquisitions as you know about Western Sun and there are some others out there that we're currently evaluating And 3, reaching profitability. We do those three things and we truly believe that we will be in a much better position and from a share price standpoint. I'm keeping this opening statement brief, so we have time for questions on the Q and A section of this thing.

Speaker 1

So thank you for everybody joining and we look forward to hearing your questions now.

Operator

Thank you. The floor is now open for I'll now pass the floor back to the speaking panel for Q and A.

Speaker 1

Thank you, Tom. Robert here. Can you hear me, Tom, in my audio?

Operator

Yes. Sounding clear, Robert. Thank you.

Speaker 1

Okay, great. We have a question already regarding Western Sun. I'll try and speak a little bit more detail without breaking any confidentiality rules with that organization, but we are very far down the lender intent is in force. We are obviously going as quickly as we can to complete this acquisition. I think there are whole there are so many reasons why this is an exciting acquisition for us.

Speaker 1

Just moving our production logistics location to Mid Texas, just on better shipping lanes alone, we save just tons and tons, literally 1,000,000 of dollars building product in different locations around the country, sometimes that's necessary, but in this case, it will be really great for us that it's going to be quite beneficial to consolidate all that in one location. But once again, the question was a little vague, but yes, that acquisition is very much in play. We expect to close it up very near future. We have a question regarding capital structure that we're putting together with this group in Upstate New York. It's not completed yet.

Speaker 1

The discussions have been very clear, but it's not hasn't been signed. But fairly long term debt, a reasonable percentage of warrants and that's it. At this point, that's as much as I can say. But the idea being long term buy and hold investors in this group, None of them are in a hurry and it will be we believe it's going to be a minimum of 5 years before anything can be converted? Thank you.

Speaker 1

All right. So this window is a little small, I apologize. With regard to Popoloco acquisition, yes, it's been a long time. Like I said, we had some internal reasons between the organizations that we like to delay it a little bit. It's much less about finance than it was just a function of timing and working with international government, that's it.

Speaker 1

And the commitment on the financing, nothing is done until it's done. I say that all the time, but it looks extremely positive. I feel very confident in that. So there's that. Another question here about Buffalo Wild Wings.

Speaker 1

Yes, the original test for Buffalo Wild Wings in Florida, the product is selling well. We have not received a further authorization across the country yet, but looks good at this point.

Operator

Another question as we speak.

Speaker 1

We have another question regarding growth in the second half of the year on our branded product. As I mentioned in the eye opening statement, we have a very good level of support with distribution and retail and more and more coming as we speak. You'll see some announcements here over the next few weeks. We're quite confident that branded growth will really exceed our actual internal projections. We feel very good about that.

Speaker 1

Populocos really starting to move now in 711. We're gaining more and more Copelino authorizations across the country. Again, you'll learn more about that here in the near future. It's all very, very positive outlook. Okay.

Speaker 1

Somebody asked a question about a little bit more about the water potential water agreement in Europe. It's really interesting. With the Asian group that we dealt with and had an agreement with a few years back that I mentioned in the opening statement, they ton of export products on the train that runs between Asia and Europe, the Sook Express call. That train hits Europe, gets unloaded and it gets sent back virtually empty. So the term in the shipping business is called back hauling.

Speaker 1

So we met with you'll learn more about this here in the very near future, but we met with a senior executive of the Chinese government who runs this particular part of China and the idea of filling well, filling is a large, the idea of shipping some paper can water and paper can technology back to that part of China is very, very positive, very exciting idea and we'll have positive results for it. This has not been papered up yet, but we've met specifically and we've been invited to China to by the actual by the Chinese government. In fact, we've also reached out to the U. S. Department of Commerce and they've even helped they've even offered to help involve their local ground in Beijing to join us.

Speaker 1

So this could turn into a big project right now. It's just something exciting that we're working on and can only help with revenue and margin. While I can see a couple of questions incoming, while I'm waiting for those to be clear on my screen here. There is a also like to formally welcome Julius as our new CFO. Julius comes to us with a great deal of experience.

Speaker 1

We're very, very happy to have him, already made a tremendous contribution in the organization. So welcome Julius, who is sitting next to me here. You'll hear more from him in the near future. And here comes the next question. I'm going to decline the question on tap out for right now and that will become more clear as to why here in the near future.

Speaker 1

Standby, it's another incoming question. While I'm waiting for this question to come in, I want to make sure this is clear as well. Our intent now, we're still too small, I think, to provide guidance and do formal earnings calls. But our intent now is to do this. Each quarter, we will update with the quarterly results as you would expect.

Speaker 1

And then twice a year, we'll do a conference call, do a half year and then an end of year call like this, and to answer a little bit any more specific questions that we have. And okay, that question didn't come all the way through. So we'll stand by and wait for that to finish. One second. Okay.

Speaker 1

Another question about it looks like our last question so far for the day. People are asking someone's asking about other acquisitions. We are significantly down the path of something else. I can only say something else right now because it affects distribution, it affects human resources on their end. So but the point being is, I've said this a 1000000 times over the recent years, we're obviously going to grow our business through our legacy brands, but significant growth will come through larger acquisitions.

Speaker 1

I'll also tell you that each acquisition just like Western Sun and this potential second one are accretive and they're meaningful revenue. So very, very important. So we're not taking on anybody else's mouth to feed, if you will, or anybody else's debt. So we're very, very, very positive that by this time, by the end of the year, we will certainly have one of these under our belt, hopefully both and one of the much higher revenue number and we'll be significantly closer to profitability. Again, as I said in the beginning opening statement, profitability, large acquisition and in the short term, bringing on the funding that's not as non dilutive as possible to cover our current base of operations, so we don't have to keep going back to the well.

Speaker 1

Those are our 3 objectives. If we achieve those 3, that's it. We really feel very, very good about where the company sits and everybody will be happy. And I also believe we can't on the crystal ball, I don't know, we don't control share price, but I also believe we'll achieve these three things, we'll be rewarded with a much more exciting share price for all of us. That looks like our last question.

Speaker 1

Yes, I think that's our last question for the day. Nothing else is incoming. I wanted to say thank you one more time and really appreciate you all for joining us. We appreciate every shareholder large and small. It's been a difficult challenging couple of years, but we are very, very, very optimistic about where we're headed.

Speaker 1

The vision is clear, it's precise and we know what we're doing, we know how to get there. So thank you for believing in the organization and investing your dollars in the open market. We appreciate it very much. I wish all of you a tremendous week and thank you.

Operator

Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you for your participation.

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Key Takeaways

  • They have engaged a New York wealth management firm to arrange long-term debt with limited dilution, aiming to secure stable funding from family offices and high-net-worth investors.
  • The company is finalizing the acquisition of Western Sun Vodka to consolidate production in Mid-Texas for significant cost savings, and remains active on the Popoloco and other international deals.
  • SplashBeverage is expanding its retail and chain distribution footprint, with strong support in 7-Eleven, positive test sales at Buffalo Wild Wings, and more national rollouts planned.
  • An international water project is in development to ship paper-can beverages on Asia-Europe backhaul rail routes, with engagement from the Chinese government and U.S. Commerce Department.
  • Management’s three key priorities to boost shareholder value are securing right-priced capital, executing on accretive acquisitions, and reaching profitability by year-end.
AI Generated. May Contain Errors.
Earnings Conference Call
Splash Beverage Group Q1 2024
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