the distillery site is new and appears they are actively looking to grow that side of the business. vertical integration is still the key to reducing costs on Wodka and improving GM which is essential since it is in the low priced Vodka ranges. looks like they are doing a refresh on Alibi as well which has won some small acclaim but i certainly havent seen it anywhere i travel or even talked about (unlike Wodka).
more importantly is the complete slashing of the now realized useless overhead of the past mgmt team. the company has removed almost $2MM in overhead and should have slightly increased revenues based on last report and some assumptions on increased production at the distillery (more activity at the actual site).
if the clock is more than just a new website and provides some details on strategy/operating results going forward - this could see a quick rebound. right now - the market cap is just over $1MM and it had sales year end of $3.9MM in 2013 and should be around $2.3-3.0MM 2014 year end depending on ramp up at distillery and going back to their original distribution channels for Wodka. through 3Q14 they were at $1.9MM in revenues. while i dont expect them to get close to the $3.9MM of 2013 - looking at QoQ - they should have an impressive trend continuing and possibly a breakout quarter (relative to the last 4 in revenue):
Period Ending Jun 30, 2014 Mar 31, 2014 Dec 31, 2013 Sep 30, 2013
Total Revenue 656 635 545 306
if they are in the $700-900MM range - that would certainly look impressive on a YoY and QoQ basis and demonstrate an exponential increase in revenues on a R12 basis. while that alone wont be cause for lofty evaluations - it should remove the BK concerns, and provide a more fundamental valuation for the stock. right now - it is priced below BK levels considering the hard assets.
still very speculative and the company will need to address shareholders and provide some numbers but it does provide an interesting buying point for new/former investors. for me, it is an attractive pp to average down. i liked it more under $0.02 but if it goes back to the $0.30 range where it was with similar revenues, no distillery revenues, and significant decrease in SG&A - than this is still attractive.
if they look like they are on pace to do $4-5MM in revenues and possibly show positive net income on a F12 basis - this becomes a very attractive buy. for a growing company - 4-10x revenues is common. assuming $4MM in revenues - that would put market cap at $16MM with a 4X revenue valuation or 16X today's price. at that multiple - fair value today would be $0.64. if they are going to show positive net income - that would provide significant justification for a higher valuation.
from a mgmt standpoint - Dale was a marketer and brand specialist. while he put Wodka on the map as he did with other brands - it now seems obvious he was severely lacking in the mgmt/business skills to move this forward. Romer on the other hand has a background on both the operations and brand sides. addressing shareholders directly and getting numbers out along with some basic numbers/strategy would go a long way into restoring investor enthusiasm and bring around a faster turnaround in stock price.
