A few of my consolidated thoughts on the Q.
ROX's fractional GAAP black news is very good.
Being GAAP black on sequentially lower revenues Q-to-Q is a VERY positive piece of information. More so since the previous Q was ROX's all time record.
Moreover, being GAAP black on $18.3 million means our breakeven point is much lower than previously thought. The major variable are advertising spend and inventory set aside for aging.
ROX has exceeded $18.3 million 3 times before (maybe 4) and only been fractionally GAAP black one of those times. That was on revenues of $19.963 million in the 4th fiscal Q a year ago the year end on March 31st.
For a better perspective, look at what happened last year. For the same Q a year ago, we saw a 2% YoY gain which was our lowest YoY bump in years. Sequentially Q-to-Q there was a big drop. The following Q set an-all-time-revenue-Q, and was our first ever GAAP black Q. I'm not saying the same thing will happen again but it is our latest trend.
ROX has been fractionally GAAP black for 2 of the past 4 quarters. That bodes well for the next 4 quarters.
ROX should finally bust through annual revenues of $80 million for the 2017 "calendar" year. GAAP black Q's should start happening more often.
I expect the street to react unfavorably to the sequential Q-to-Q drop. It's short sighted in my opinion.
ROX is a seasonal business. Lots of DOW companies normally have sequential Q-to-Q drops. The major difference is analysts expect and predict them. Companies give guidance.
ROX is followed by one company and it's the same one that handles the S3's. They maintain a $2 PT. Personally, I think that is ridiculous at the moment since the O/S keeps growing and the PT has not been amended.
ROX provides no guidance. Perhaps they should. Since there was no seasonal expectation I expect the PPS to drop today because of the sequential Q-to-Q drop.
The distributors obviously altered their purchase habits last year and did the same this year. They loaded up for the holiday Q by September 30th. If that's the new normal, we will know better when we see the year end numbers in June. Until then the PPS may be on a down trend.
Several things I did notice during the summer was retail stocks were down. During the period leading up to Thanksgiving, Christmas and New Years the shelves were bursting with inventory. Then I noticed "shelf-inventory" dropping in several stores that I visited as the year end approached. If that observation is accurate, then distributor purchases this quarter may indicate we will see a YoY bump when the K comes out in June.
That would set an all time record and likely push us over $20 million for the first time ever.
I feel that is likely since for as long as I've been following ROX, since 2009, they have never reported a YoY quarter that was less than the prior year.
Of note regarding inventory:
Inventories— net of allowance for obsolete and slow moving inventory of $391,596 and $331,008 at December 31 and March 31, 2016, respectively ... 2017-12-31 ... $30,943,596 ... 2017-03-31 ... $27,233,322
That's almost a $3.7 million jump. That probably all came out of S3 equity-raise-money. Expect more of that to come.
Expect insiders to buy more on the open market as they have always done when that's been going on.
Of note regarding overall sales:
1) International sales are down considerably. That may have something to do with the foreign exchange. Don't know for certain.
2) USA sales are killing it.
Up $4.4 million 2016 9-months over 2015 9-months.
Internationally there's no telling what's going on foreign exchange-wise i.e. Brexit for example. They have to be our biggest foreign market.
Today, 1 British Pound equals 1.25 US Dollar. It's one of the best times ever to visit the UK.
When I went to England in September of 2016, 1 British Pound equaled $1.60.
It used to buy much more, so that might have a big effect on our international sales of all USA and foreign produced products.
Case sales were actually down YoY but here's my thought.
With regards to revenues here's what I saw and determined:
Whiskey 2016Q ... $7,656,767 ... 2015Q ... $6,686,512
That's a VERY impressive revenue jump. It probably has something to do with product mix; the different and more expensive extensions. They may be cannibalizing the regular Jefferson's case sales and up-selling the more expensive bottles. That's what they say they are trying to do. So the lower case sales numbers don't concern me. I'll tip my cap to them and say it's going as planned.
Ginger Beer is killing it.
Liqueur and Tequila were marginally up. That's a year's long trend reversal and really nice to see. It's almost insignificant but nice to see case sales up.
RUM 2016Q ... $3,392,725 ... 2015Q ... $4,625,872
On the surface, Goslings looks like they are killing it in the marketing department. The numbers don't lie. Something is happening that I cannot explain. I'm hopeful it's centered in the international case sales, because here in the USA we're growing.
These are total case sales numbers for the Q:
United States 2016Q ... 73,816 ... 2015Q ... 72,320
International 2016Q ... 19,541 ... 2015Q ... 32,560
Very interesting to see. For sure, domestic consumption is our strength.
GO ROX
Let's have some FUN
