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SPLASH BEVERAGE GROUP, INC. (SBEV)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 2022 delivered strong top-line growth: net revenues rose 72% year over year to $4.87M, with gross sales up 73% to $5.10M, driven by e-commerce and new retail authorizations .
  • Profitability metrics improved: gross profit increased 40% YoY to $1.15M and the net loss from continuing operations narrowed to $(5.18)M vs. $(12.17)M in Q3 2021; diluted EPS (continuing) improved to $(0.14) from $(0.40) YoY .
  • Sequentially, losses and EPS improved vs. Q2 2022 (loss from continuing operations $(5.90)M; diluted EPS $(0.16)), while gross margin rebounded as distribution scaled and OpEx declined vs. prior year .
  • Strategic momentum: nine new/expanded distribution agreements in Q3; management is evaluating traditional credit facilities to fund inventory as growth accelerates .
  • No formal guidance or earnings call transcript was available for Q3 2022; Wall Street consensus estimates via S&P Global were unavailable in our session, limiting beat/miss analysis .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth across channels: net revenues +72% YoY to $4.87M, with gross sales +73% to $5.10M, reflecting e-commerce strength and retail authorizations .
  • Margin and loss improvement: gross profit +40% YoY to $1.15M; net loss from continuing operations narrowed to $(5.18)M vs. $(12.17)M a year ago; diluted EPS (continuing) improved to $(0.14) vs. $(0.40) in Q3 2021 .
  • Distribution buildout as a growth lever: “Distribution is key… we continue to focus expanding our distribution network with (9) nine new distribution/sales agreements…” – Robert Nistico, CEO .

What Went Wrong

  • Cash burn and liquidity: cash fell to $2.60M at quarter-end from $4.18M at year-end; operating cash flow for the nine months was $(10.63)M, reflecting inventory build and losses .
  • Supply chain cost pressures: higher cost of goods driven by ingredient and freight inflation; Q3 gross margin (~23.6%) below prior-year Q3 (~29.0%) despite revenue growth .
  • Internal controls remained a focus area: management disclosed material weaknesses in disclosure controls and procedures with remediation initiatives underway .

Financial Results

MetricQ3 2021Q1 2022Q2 2022Q3 2022
Net Revenues ($USD Millions)$2.83 $3.93 $4.50 $4.87
Gross Profit ($USD Millions)$0.82 $0.83 $0.67 $1.15
Total Operating Expenses ($USD Millions)$12.89 $6.52 $6.50 $6.26
Loss from Continuing Operations ($USD Millions)$(12.07) $(5.68) $(5.83) $(5.11)
Net Loss ($USD Millions)$(12.19) $(5.99) $(5.76) $(5.14)
Diluted EPS - Continuing Operations ($USD)$(0.40) $(0.16) $(0.16) $(0.14)
MarginsQ3 2021Q1 2022Q2 2022Q3 2022
Gross Profit Margin %29.0% (0.82/2.83) 21.2% (0.83/3.93) 15.0% (0.67/4.50) 23.6% (1.15/4.87)
Net Income Margin % (Continuing)−430.5% (−12.07/2.83) −147.0% (−5.77/3.93) −131.1% (−5.90/4.50) −106.3% (−5.18/4.87)
Segment Net Revenues ($USD)Q3 2021Q1 2022Q2 2022Q3 2022
Splash Beverage Group (Brands)$0.96 $1.48 $1.36 $1.15
E-Commerce (Qplash)$1.87 $2.45 $3.14 $3.72
Total Continuing Ops$2.83 $3.93 $4.50 $4.87
KPIsQ1 2022Q2 2022Q3 2022
New/Expanded Distribution Agreements (count)12 6 9
Cash & Equivalents (period end, $USD Millions)$8.50 $4.21 $2.60
Inventory, Net (period end, $USD Millions)$2.06 $2.64 $3.58
Weighted Avg Basic Shares (Continuing)35,188,404 36,675,323 37,364,031

Notes: Press release highlighted “$5.1M gross sales” and “gross profit +40% YoY,” consistent with 10-Q statements; the company corrected prior press release references to Q2 vs. Q3 periods .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue, EPS, Margins, OpEx, Tax, Segment, DividendsFY/Q3 2022None disclosedNone disclosedMaintained (no formal guidance)

No formal guidance was provided in the Q3 2022 press release or 10-Q; management commentary focused on distribution growth and evaluating credit facilities rather than quantitative outlook .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2022)Current Period (Q3 2022)Trend
Distribution expansionQ1: 12 new/expanded agreements; Q2: 6 agreements as AB ONE expansion continued Q3: 9 new/expanded agreements; distribution emphasized as key success driver Positive momentum; broadening footprint
E-commerce scaling (Qplash)Q1/Q2: Significant YoY growth; key driver of revenue increases Q3: Continued growth; segment revenue reached $3.72M Strengthening mix shift to e-commerce
Supply chain cost inflationQ1/Q2: Higher COGS due to ingredients/freight; margin pressure Q3: COGS increase persists; gross margin improved sequentially but below prior-year Moderating vs. Q2, still a headwind
Capital structure/financingQ1/Q2: Shelf takedowns and equity raises; debt reduction Q3: Evaluating traditional credit facilities to fund inventory; cash balance decreased Transitioning toward credit lines; liquidity tight
Regulatory/legalQ2: Copa lawsuit disclosed Q3: Copa settlement via issuance of 380,959 shares; TapouT license extended to 2028 post-Q3 Resolved litigation; license extended
Internal controlsQ1/Q2: Material weaknesses, remediation plan initiated Q3: Material weaknesses persist; actions ongoing Work-in-progress remediation

Management Commentary

  • “We continue to execute our business strategy, and our third quarter results reflect those efforts. Distribution is key… we continue to focus expanding our distribution network with (9) nine new distribution/sales agreements…” – Robert Nistico, CEO .
  • “Inventory build is a vital component of growth as we add more retail and distribution partners… we intend to activate various traditional credit facilities… We will keep a close eye on expenses… as we work towards a revenue neutral/positive position.” – Robert Nistico, CEO .
  • Liquidity narrative: cash $2.60M, inventory build supporting authorized retail orders; management pursuing credit facilities to support growth .

Q&A Highlights

No Q3 2022 earnings call transcript or Q&A was identified in our search; disclosures came via 8-K press release and 10-Q filings .

Estimates Context

Wall Street consensus estimates (revenue and EPS) via S&P Global were unavailable in our session; as a result, beat/miss analysis versus consensus could not be performed for Q3 2022 .

Key Takeaways for Investors

  • Revenue trajectory is positive, with e-commerce (Qplash) driving mix and scale; segment revenue rose to $3.72M in Q3 vs. $1.87M in Q3 2021 .
  • Sequential margin recovery suggests improved cost discipline and mix, but inflation in ingredients/freight remains a headwind; gross margin rose to ~23.6% in Q3 from ~15.0% in Q2 .
  • Liquidity is the central near-term risk/catalyst: cash down to $2.60M; activating credit facilities to fund inventory could unlock revenue from new retail authorizations .
  • Losses narrowed materially YoY; continued OpEx efficiencies and scaling distribution are key to driving toward breakeven (management pointed to expense controls in Q3) .
  • Litigation overhang removed (Copa settlement) and TapouT license extended post-Q3; reduces execution risk around brand portfolio and manufacturing/licensing .
  • Near-term trading: watch for announcements on credit lines and additional distribution agreements; medium-term thesis hinges on sustained e-commerce growth and margin stabilization as scale improves .