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SB

SPLASH BEVERAGE GROUP, INC. (SBEV)·Q2 2022 Earnings Summary

Executive Summary

  • Record Q2 gross sales of $4,861,700, up 41% year over year, driven by TapouT and e‑commerce, while net revenues rose to $4,498,940; sequential net revenue growth vs Q1 was ~14.6% but gross margin compressed significantly due to supply chain costs .
  • Net loss improved year over year to $(5,758,857) from $(6,560,600), with $3.0M in non‑cash items and $2.8M in cash items; diluted EPS from continuing operations was $(0.16), flat sequentially and better than $(0.25) in Q2 2021 .
  • Six new/expanded distribution agreements and announced intent to acquire 80% of Pulpoloco Sangria, a potential margin and revenue catalyst given CartoCan packaging and channel expansion .
  • Cash and equivalents were $4,206,208 at quarter‑end; liquidity supported by prior shelf takedown despite operating cash burn, while internal control remediation remains in progress and a Copa Di Vino share dispute was disclosed .
  • No formal guidance or Wall Street consensus from S&P Global was available for Q2; stock narrative catalysts center on distribution wins, e‑commerce scale, Pulpoloco acquisition, and gross margin pressure from freight/inputs .

What Went Well and What Went Wrong

What Went Well

  • Record quarter: “Revenues Increase 41% Year over Year with $4.8 Million in Gross Sales,” reflecting growth in TapouT and e‑commerce .
  • Commercial momentum: Six new or expanded distribution agreements in Q2; CEO: “producing another record quarter, and added 6 new agreements… more than 20 since our key November announcement” .
  • Strategic pipeline: Announced intention to acquire Pulpoloco, “which hold[s] potential to increase margins as well as open new channels… with CartoCan” .

What Went Wrong

  • Gross margin compression: Gross margin % fell to ~15.0% (gross profit $673,155 on net revenues $4,498,940) from ~27.5% in Q2 2021 and ~21.2% in Q1 2022, largely due to higher ingredient and freight costs .
  • Ongoing losses: Net loss remained high at $(5,758,857), with operating expenses of $6,502,304 and non‑cash share‑based comp of $2,772,369 impacting profitability .
  • Controls and legal overhangs: Material weaknesses in internal control persisted; Copa Di Vino litigation alleges 380,959 shares owed, though parties are pursuing resolution .

Financial Results

MetricQ2 2021Q1 2022Q2 2022
Gross Sales ($USD)$3,435,453 $4,071,356 $4,861,700
Net Revenues ($USD)$3,287,760 $3,926,573 $4,498,940
Cost of Goods Sold ($USD)$(2,382,707) $(3,094,571) $(3,825,785)
Gross Profit ($USD)$905,053 $832,002 $673,155
Gross Margin (%)27.5% 21.2% 15.0%
Operating Expenses ($USD)$(7,612,759) $(6,515,955) $(6,502,304)
Net Loss ($USD)$(6,560,600) $(5,994,408) $(5,758,857)
Diluted EPS - Continuing Ops ($USD)$(0.25) $(0.16) $(0.16)
Cash & Equivalents ($USD)$4,181,383 (12/31/21) $8,495,672 (3/31/22) $4,206,208 (6/30/22)

Segment Revenue Breakdown

SegmentQ2 2021Q1 2022Q2 2022
Splash Beverage Group ($USD)$1,565,865 $1,478,158 $1,355,388
E‑Commerce ($USD)$1,721,895 $2,448,415 $3,143,553
Total Net Revenues ($USD)$3,287,760 $3,926,573 $4,498,941

KPIs

KPIQ2 2021Q1 2022Q2 2022
New/Expanded Distribution Agreements (count)4 in/after Q3 2021; 13 incremental in H2 2021 leading into AB ONE (context) 12 6
Non‑cash Share‑based Compensation ($USD, quarter)$4,150,044 $2,355,542 $2,772,369
TapouT Minimum Royalty Obligation ($USD, annual)$653,400 (2022) $653,000 (2022) $653,400 (2022)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/QuarterNot provided Not provided Maintained: no formal guidance
MarginsFY/QuarterNot provided Not provided Maintained: no formal guidance
OpExFY/QuarterNot provided Not provided Maintained: no formal guidance
OI&EFY/QuarterNot provided Not provided Maintained: no formal guidance
Tax RateFY/QuarterNot provided Not provided Maintained: no formal guidance
Segment GuidanceFY/QuarterNot provided Not provided Maintained: no formal guidance
DividendsFY/QuarterNot applicable/not provided Not applicable/not provided Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2021 and Q1 2022)Current Period (Q2 2022)Trend
Distribution expansionAB ONE transformative deal; Walmart authorization; 13 additional agreements H2 2021 6 new/expanded agreements added; total authorizations since November exceed 20 Improving footprint
E‑commerce (Qplash)Q1 growth contribution; B2B/B2C on Amazon/Shopify Primary driver of revenue growth; segment revenue up to $3,143,553 Strengthening
Supply chain costsNoted rising costs in freight/inputs in Q1 Higher COGS driven by ingredient and freight costs; margin pressure Worsening
Product performance (TapouT/CdV)Expect TapouT revenue contribution to increase in 2022 TapouT cited among growth drivers Building
Regulatory/legalNo new risk factors; no material legal issues in Q1 Copa Di Vino litigation over 380,959 shares alleged New headwind
Internal controlsMaterial weaknesses noted; remediation plan initiated Material weaknesses persist; remediation steps ongoing In progress
M&A pipelineNone specific in Q1/Q4 beyond historical acquisitions Intent to acquire 80% of Pulpoloco Positive optionality

Note: No Q2 2022 earnings call transcript was located in our document corpus; themes are drawn from 8‑K press releases and the 10‑Q .

Management Commentary

  • CEO: “Our 2022 second quarter results reflect our ongoing efforts to grow the business through key distribution agreements and retail authorizations… producing another record quarter… We also announced our intention to acquire Pulpoloco… with CartoCan” .
  • CEO on playbook: “We continue to execute a business plan that relies on 4 key pillars… strong management team… diverse portfolio… marketing strategy… financial flexibility” .
  • CFO appointment: “Ron’s impressive financial and operational experience… especially his deep knowledge of the beverage sector… is exactly what we need at exactly the right time” .
  • Liquidity commentary: Cash of $4,206,208; net cash used in operations of $(7,107,851) for six months; financing provided $7,132,676 YTD via shelf .

Q&A Highlights

  • No publicly available Q2 2022 earnings call transcript was found; no Q&A highlights could be extracted. We searched for “earnings-call-transcript” for SBEV in Q2 2022 and found none in the available filings [ListDocuments showed none].

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2022 EPS and revenue was unavailable due to data access limits; therefore, beat/miss versus estimates cannot be determined at this time. Values retrieved from S&P Global were unavailable.
MetricConsensus (S&P Global)ActualSurprise
Revenue ($USD)Unavailable$4,498,940 N/A
Diluted EPS - Continuing Ops ($USD)Unavailable$(0.16) N/A

Key Takeaways for Investors

  • Revenue mix is shifting toward e‑commerce (Qplash), now 70% of Q2 net revenues, offset by softer Splash Beverage Group segment revenue; scaling e‑commerce supports topline but compresses margins amid freight/input inflation .
  • Gross margin headwinds are material (15.0% vs 27.5% YoY); near‑term thesis must incorporate ongoing freight and ingredient cost pressure and the royalty structure on TapouT .
  • Losses narrowed year over year and EPS improved to $(0.16) from $(0.25), but sustained operating cash burn and share‑based compensation burden remain watchpoints for dilution and path to profitability .
  • Commercial execution continues: six Q2 distribution wins, building on AB ONE and national retail authorizations—expect revenue benefits as activation continues through 2H 2022 .
  • Pulpoloco acquisition (80%) represents a margin and channel expansion lever; diligence on transaction terms and integration timing is key for modeling uplift .
  • Governance/controls: material weaknesses and Copa Di Vino litigation create execution/legal overhang; monitor remediation milestones and litigation resolution .
  • With no formal guidance or available consensus, traders should key on near‑term catalysts: additional distributor wins, Pulpoloco deal closure, and sequential gross margin stabilization as supply chain costs normalize .