Q2 - Review - 2016-11-10
Keep this Q all in context.
Last year, revenue growth increased so significantly that it appears ROX growth has slowed SOMEWHAT. Remember in the last Q, Mr. Lampen explained distributors were selling down their inventory and postponed restocking. As for the current Q's 5% YoY growth, continue reading below for a explanation about that.
Take note, last year's 2nd quarter was a blockbuster: 2015: $18,536,509 versus 2014 $13,381,704. That was approximately a 28% YoY bump.
The 2015 second quarter was the all time revenue king (up until that point).
So jumping by 5% this year YoY, is no small amount of WOW considering how last year was the biggest YoY gain ever, and the revenue king quarter of all time, at that slice of time.
Until this quarter, last year's second quarter was our second highest all time revenue king quarter. This quarter is only surpassed by about $300K when our $19.963 million Q4 2016 03/31/16 was fractionally GAAP black.
Additional one time expense: The Goslings America's Cup USA and European tour was expensed this quarter as regular travel and marketing expenses.
Add the 1,800 barrel bourbon purchase which you can read about further below, and you can see why the B/E this quarter has to be higher.
So that's why I am very encouraged. For a two year average, YoY for this Q, we are showing double digit (about a 17%) 2-YoY gain. Any way you cut it, that takes distributor buying habits which is out of our control, out of the equation. Just look at the raw revenue growth.
ROX's Irish whiskeys, Jefferson's Bourbon (plus all of the extensions) and Goslings RUM are becoming more and more a regular part of loyal customers' traditional go to drinks. The brands are spreading internationally too. We even know it's been introduced to Australia, New Zealand and Japan which very well may have a lot to do with Goslings America's Cup sponsorship.
It's evident that Gosling got big exposure boost from the America's Cup tour in New York City, Chicago, England and France. That bodes well for the 1st fiscal quarter of 2018 this spring.
The America's Cup is from May 12th through June 27th. It will attract thousands of (if not tens of thousands) fans from around the world. Many will take home a fond "lifestyle-vacation" memory of Goslings Dark n Stormy, Bermuda's national drink.
It's like planting seeds. America's Cup vacationers will introduce Goslings and Dark n Stormy's to the friends "back home" all around the world..
Bourbon Purchase
This turns out to be very significant because of how long we can project forward the supply will last.
In October 2016, we acquired an additional $1.6 million in aging bulk bourbon in support of our current and near term needs for the Jefferson’s brand. We paid for $1.4 million of this purchase using funds from the Purchased Inventory Sublimit of our Credit Facility, each as defined below under “Liquidity and capital resources – Existing Financing.”
One thing that means is we paid $200,000 cash which reduced EBITDA by the same. As EBITDA continues to increase we will borrow less or use S3 equity raises less, paying more and more for inventory out of current operations. That's very good.
In addition to continuing its new fill programs, the Company purchased an additional 1,800 barrels of aged bourbon to support the continued growth of Jefferson's.
27,111 Whiskey cases sold in the last 3 months (per the Q). That's ALL Whiskies (INCLUDING Bourbon) combined.
1,800 barrels of bourbon equals approximately 63,600 cases of "bourbon only". That sounds like it may be close to a whole year's supply of growing bourbon sales since we learned that Bourbon and Whiskey sales were nearly even.
I bet the purchased inventory will be used for "known" extensions, and the new ones Mr. Lampen announced will be introduced during the holiday quarter.
Great gift items I'm sure that are high priced.
Inventories
(net of allowance for obsolete and slow moving inventory of $364,705 and $331,008
At September 30, 2016...$28,017,837 and March 31, 2016...$27,233,322 respectively
Once again, ROX is setting aside more bourbon inventory to "finish" and age.
Tequila
Tequila is a very small portion of sales but, it is on a tiny upswing which is way better than the down trend it's been on ...
Tequila cases 9-30-2016 ... for 6 months ... 681 ... up from ... 9-30-2015 ... for 6 months 627
Tequila for the whole year in 2015 ... 1,106 cases versus 2014 ... 1,153
Tequila for the whole year in 2014 ... 1,153 cases versus 2013 ... 1,337
They may beat 2013 which would be a good trend.
Outstanding Shares
O/S Sept 30, 2016...160,698,696 versus Sept 30, 2015...159,774,811
That's only a .0057% increase.
ROX has hardly tapped the equity market for money.
That's 923,885 shares issued over 12 months to raise money (The S3 is for $10 million).
EBITDA
EBITDA, as adjusted Sept 30, 2016 ... $1,026,651 versus Sept 30, 2015 ... $891,307
Getting better.
ROX looks great.
AI
