FORT LAUDERDALE, FL - (NewMediaWire) - May 15, 2024 - Splash Beverage Group, Inc. (NYSE American: SBEV) ("Splash" or the "Company"), a portfolio company of leading beverage brands, today issued a letter to shareholders from Robert Nistico, Chairman and CEO of Splash Beverage Group.
Dear Fellow Splash Beverage Group Shareholders,
As we release Q1 results, I wanted to take a moment and provide some additional color on the numbers for the last two quarters and other projects, such as acquisition(s) as our published results have caused recent inquiries from shareholders.
Additionally, we will be hosting a conference call on Monday the 20th at 4:00pm. We will send the link as soon as it is provided to us.
As you may or may not be aware, we report revenue from shipments to distributors and our distributors are required to maintain certain levels of inventory, 60-90 days being the average. Distributors continued to ship to retail to keep the shelves stocked to avoid any out of stocks for consumers. As reported in our 2023 10K annual report and today Q4 2023 and Q1 2024 those shipments were below projections due to low levels of inventory on the Splash side due to funding arriving late.
Q1 Numbers
Branded beverage division (SALT Tequila, Copa Di Vino, Pulpoloco) sales were $1.2MM vs. $1.9MM over the same period last year, as inventory levels were too low to meet robust distributor order demand.
Our eCommerce division, Qplash, endured the largest impact from the inventory funding gap, with shipments well below its demand and capabilities. The decision was taken to prioritize our branded beverage division with the inventory funding we did have, as our beverage eCommerce revenue can easily be ramped back up as inventory levels are restored.
The good news is our strong distribution network had sufficient stock of our products to properly supply our retailers and on-premise operators during this challenging period. With our recently announced capital raise we are now able to rebuild inventories to replenish distributor inventories and supply what has developed into significant additional demand from, new distributor geographic footprint expansion, chain authorizations announced at years end AND new authorizations obtained in Q1. We believe the incoming orders and our restored ability to supply will be sufficient to make up for the previous two quarters' results and still post full-year, year-over-year gains for the branded beverage division as we restock distribution. We anticipate having the capability to fund inventories again for the eCommerce division before the end of Q2 allowing us to post year over year gains for H2 at Qplash.
Funding Activities
Funding is critical to run any business. We have engaged a wealth management firm in upstate New York to assist in a specific financing that we believe will be long-term debt with limited dilution. Their clients consist primarily of large family offices and high net worth individuals, much like those who have been investing in Splash for years. We are committed to growing and protecting share price while ensuring the company has sufficient resources to operate and grow the business. We believe this is the best path for all shareholders and the company and while we do not control share price, we believe this should alleviate some of the downward pressure on the stock. As more details become public, we will immediately share the relevant details.
Acquisition Update
I understand that everyone is anxious to hear more about Western Son Vodka. We are well down the path in the process of acquiring that brand. Please understand that there are numerous subjects that must remain confidential. That said, both parties are highly engaged in the process, working with each other weekly and definitive documents are going back and forth as we speak. We are extremely excited about this opportunity and working with their tem and look forward to closing this as soon as possible.
Regarding Pulpoloco, we delayed this for some internal and legal reasons. Keep in mind this is a foreign entity which adds complexity. There are no issues we are aware of currently and fully intend to complete this transaction asap.
Our strategy of growth through building our legacy brands and acquisition is very much in play. Deal flow is exceptionally high, and we are evaluating potential targets that are presented to us daily/weekly.
Chain Execution
One or more of our brands such as Copa Di Vino have been authorized in several key chains including tests with Walmart and Walgreens and multiple regions of Circle K
We have additional large retail and venue support approved and will release those details as soon as the respective buyer's give us permission to do so
Additionally, we have some exciting CartoCan and Tequila innovation(s) and I look forward to sharing with you in the coming months.
We are building a business that is serving a large and growing market, offering unique and compelling products. While we remain, laser focused on day-to-day execution and reaching profitability. We are always keeping an eye on the broader market and analyzing all the trends we see developing. We are committed to remaining flexible and agile so that we can respond to opportunities that present themselves.
We would like to thank all our shareholders and supporters. We appreciate the confidence you have shown in us to date, and we look forward to earning your continued support.
About Splash Beverage Group, Inc.:
Splash Beverage Group, an innovator in the beverage industry, owns a growing portfolio of alcoholic and non-alcoholic beverage brands including Copa di Vino wines by the glass, SALT flavored tequilas, Pulpoloco sangras, and performance hydration and recovery drinks. Splash's strategy is to rapidly develop early-stage brands already in its portfolio as well as acquire and then accelerate brands that have high visibility or are innovators in their categories. Led by a management team that has built and managed some of the top brands in the beverage industry and led sales from product launch into the billions, Splash is rapidly expanding its brand portfolio and global distribution.
Forward-Looking Statement:
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue" and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results and, consequently, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements and factors that may cause such differences include, without limitation, the risks disclosed in the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2021, and in the Company's other filings with the SEC. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release.
