Splash Beverage Group - Q1 2024

Transcript

Operator (participant)

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 Nistico, Chairman and CEO of Splash Beverage Group. Sir, the floor is yours.

Robert Nistico (Chairman and CEO)

Welcome, fellow Splash Beverage 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 second quarter and into the summer, and I think the key subjects that we put in the update, I think deserve more attention. The first one being funding activities. One of the reasons, as we know, we put in the update, is we had a funding source that basically just disappeared on us. The redundant funding source just took a little bit more time than we thought. That happens. It's a business.

We're growing, we're still, we're still young, and we're still investing cash in 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. 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&A piece. The other key subject is acquisition.

I understand everyone is anxious to hear more about Western Son Vodka. We're well down the path in that process of acquiring that brand. We understand there are numerous subjects that remain that need to remain 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. 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 wanna 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, there's a lot of questions about Pulpoloco. Similar 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 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 Meissner gave us some good information regarding the chains. We have enormous chain and retail support coming. It's just gonna help us really build out our footprint across the country as we continue to grow. 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 coming back to normal. We have the opportunity to potentially package and sell water in our paper can and provide that through our European partner at CartoCan. The bottom line, everybody, is we have an 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're not putting our heads in the sand. We really, truly believe we have three gating items here that will solve for that in the coming months and the rest of the year. One, by bringing on the capital we need at the right pricing.

Two, executing on larger acquisitions, as you know about Western Son, and there are some others out there that we're currently evaluating. Three, 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&A section of this thing. Thank you for everybody joining, and we look forward to hearing your questions now.

Operator (participant)

Thank you. The floor is now open for questions. If you wish to join the queue to submit your question at this time, please press star one on your telephone keypad. Once again, if you wish to join the queue to submit your question at this time, please press star one on your telephone keypad to join the queue. I'll now pass the floor back to the speaking panel for Q&A.

Robert Nistico (Chairman and CEO)

Thank you, Tom. Robert here. Can you hear me, Tom? Am I audible?

Operator (participant)

Yes, sounding clear, Robert. Thank you.

Robert Nistico (Chairman and CEO)

Okay, great. We have a question already regarding Western Son. 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 road. You know, letter of intent is in force. We are obviously going as quickly as we can to complete this acquisition. You know, I think there are a whole-- my God, there's so many reasons why this is an exciting acquisition for us. You know, just moving our production logistics location to Mid-Texas, just on better shipping lanes alone, we save just tons and tons of, I mean, literally $ millions.

You know, building product in different locations around the country, sometimes that's necessary, but in this case, it'd be really great for us, and it's gonna be quite beneficial to consolidate all that in one location. But once again, I... You know, the question was a little vague, but yeah, that acquisition is very much in play. We expect to close it up here in the very near future.

Operator (participant)

As a reminder, should anyone wish to join the queue at this time, you may press star one on your telephone keypad.

Robert Nistico (Chairman and CEO)

We have a question regarding capital structure that we're putting together with this group in Upstate New York. It's not completed yet. The discussions have been very clear, but it hasn't been signed. But we're fairly long-term debt with 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. It'll be a, we believe it's gonna be a minimum of five years before anything can be converted. Thank you. All right, so this window is a little small, I apologize. Anyhow, Western Son acquisition. Oh, with regard to Pulpoloco acquisition, yeah, it's been a long time.

Like I said, there were some internal reasons between the organizations that we elected to lay it a little bit. Much less about much less about finance than it was, just a function of timing and working with international government. That's it. And the commitment on the financing, you know, nothing's done till it's done. I say that all the time, but it looks extremely positive. I feel very confident in that. So there's that. There's another question here about Buffalo Wild Wings. Yeah, 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 it looks good at this point.

Operator (participant)

Just as a reminder, it'll be star one, should anyone wish to join the queue to submit their question at this time, and we are collecting another question as we speak.

Robert Nistico (Chairman and CEO)

We have another question regarding growth in the second half of the year on our branded product. As I mentioned in the in my 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 our actual internal projections. We feel very good about that. Pulpoloco is really starting to move now in 7-Eleven. We're gaining more and more Copa Di Vino authorizations across the country. Again, you'll learn more about that here in the near future. It's all it's all very, very positive outlook. Okay, somebody asked a question about a little bit more about the water, potential water agreement in Europe. It's really interesting.

We with the Asian group that we met, that we dealt with and had an agreement with a few years back that I mentioned in the opening statement. They tons of export products on the train that runs between Asia and Europe, the Silk Express, it's called. That train hits Europe, it gets unloaded, and it gets sent back virtually empty. So the term in the shipping business is called backhauling. 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 bit large, but the idea of shipping some paper can water in our paper can technology back to that part of China is very, very positive idea, very exciting idea, and we'll have positive results for it. This has not been papered up yet, but we've met physically, and we've been invited to China by the actual 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. 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.

Operator (participant)

Once again, it'll be star one on your telephone keypad. If you wish to join the queue to ask a question at this time, please press star one if you wish to join the queue to submit your question. We are collecting another question.

Robert Nistico (Chairman and CEO)

While, I can see a couple of questions incoming, while I'm waiting for those to be clear on my screen here, there is also I'd like to formally welcome Julius as our new CFO. Julius comes to us with a great deal of experience. We're very, very happy to have him. Already made a tremendous contribution impact in the organization. So welcome, Julius, who's 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 TapouT for right now, and that'll become more clear as to why here in the near future. Stand by, as 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, you know, we're still too small, I think, to provide guidance and do, you know, formal, formal earnings calls, but our intent now is to do this. Each quarter, we will provide a written update with the quarterly results as you would expect. And then twice a year, we'll do a conference call. We'll 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, 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, you know, I've said this a million times over the year, over the recent years, we're obviously going to grow our business through our legacy brands, but significant growth will come through larger acquisitions. I'll also tell you that, each acquisition, just like Western Son and this potential second one, are accretive and they're meaningful revenue. So very, very important. You know, 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 we'll have a much higher revenue number and we'll be, 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, to cover our current base of operations, so we don't have to keep going back to the well. Those are our three objectives, and if we achieve those three, that's it. You know, we really feel very, very good about, where the company sits, and everybody will be happy. And I also believe, can't...

On the crystal ball, I don't know, we don't control share price, but I also believe 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. Yeah, 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. 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 for-

Operator (participant)

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.