The Alkaline Water Company Inc. (NASDAQ:WTER) Q4 2019 Results Earnings Conference Call July 2, 2019 9:00 AM ET
Andrew Haag - Managing Partner, IRTH Communications
Richard Wright - Chief Executive Officer
Ronald DaVella - Executive Vice President, Finance
- Andrew Haag - IRTH Communications的执行合伙人
- Richard Wright - 首席执行官
- Ronald DaVella - 财务执行副总裁
Neal Gilmer - Haywood Securities
Raveel Afzaal - Canaccord Genuity
Michael Brcic - National Securities
Aaron Grey - Alliance Global Partners
- 尼尔吉尔默 - 海伍德证券
- Raveel Afzaal - Canaccord Genuity
- Michael Brcic - 国家证券
- Aaron Gray - Alliance Global Partners
Greetings. And welcome to The Alkaline Water Company Fourth Quarter Fiscal 2019 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]
As a reminder, this call is being recorded. Now I would like to turn the call over to Andrew Haag, Managing Partner at IRTH Communications. Mr. Haag, you may begin.
问候。 欢迎来到碱性水公司第四季度2019财年财务业绩和业务更新电话会议。 此时，所有参与者都处于只听模式。 一个简短的问答环节将在正式的演讲之后进行。 [操作说明]
提醒一下，正在录制此通话。 现在我想把这个电话转给IRTH Communications的执行合伙人Andrew Haag。 哈格先生，你可以开始吧。
Welcome to The Alkaline Water Company fourth quarter 2019 financial results and business update conference call. With us today are The Alkaline Water Company’s CEO, Richard Wright; and Executive Vice President of Finance, Ronald DaVella.
Before I turn the call over to Ricky, I would like to remind you that on this call, management’s prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements during the question-and-answer session. Therefore the Company claims the protection of the Safe Harbor for forward-looking statements that are contained in the Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those contemplated by any forward-looking statements as a result of certain factors, including but not limited to general economic and business conditions, competitive factors, changes in business strategy or development plans, ability to attract or retain qualified professionals, as well as changes in legal and regulatory requirements.
In addition, any projections as to the Company’s future performance represent management’s estimates as of today, July 2, 2019. The Alkaline Water Company assumes no obligations to update these projections in the future as market conditions change.
The Company issued a press release, announcing its financial results and filed the 10-K with the SEC, so participants in this call who may not have already done so, may wish to look at those documents as the Company will provide a summary of the results discussed on today’s call.
Today’s call may include non-GAAP financial measures. When required, reconciliation to the most directly comparable financial measure calculated and presented in quarters with GAAP can be found in the Company’s Form 10-K annual filing at sec.gov, which is also available on their website at www.thealkalinewaterco.com.
I will now turn the call over to The Alkaline Water Company CEO, Ricky Wright, who’ll give an overview of the Company’s fourth quarter 2019 financial results and business outlook for fiscal 2020. Ricky Wright will then turn the call over to Ronald DaVella, The Alkaline Water Company’s Executive Vice President of Finance. Ronald DaVella, who will then provide an overview of the Company’s fourth quarter operating results. Ricky Wright will follow Ronald DaVella again, providing closing remarks. We will then open the call for Q&A after managements update. Ricky, go ahead.
欢迎来到碱性水公司2019年第四季度财务业绩和业务更新电话会议。今天和我们一起是The Alkaline Water Company的首席执行官Richard Wright;和财务执行副总裁Ronald DaVella。
在我将电话转交给Ricky之前，我想提醒您，在此电话会议上，管理层准备的评论可能包含前瞻性陈述，这些陈述受风险和不确定因素的影响，管理层可能会在问题期间提出额外的前瞻性陈述 - 和回答会议。因此，公司要求保护安全港，以获得1995年“私人证券诉讼改革法案”中包含的前瞻性陈述。
我现在将把这个电话转给The Alkaline Water Company首席执行官Ricky Wright，他将概述公司2019年第四季度的财务业绩和2020财年的业务前景.Ricky Wright随后将把电话转交给Ronald DaVella，碱性水公司的财务执行副总裁。 Ronald DaVella，随后将概述公司第四季度的经营业绩。 Ricky Wright将再次跟随Ronald DaVella，提供闭幕词。然后，我们将在管理层更新后打开问答电话。瑞奇，继续吧。
Thank you, Andrew. Hello, everyone. And welcome to The Alkaline Water Company’s first ever earnings conference call. As many of you are aware, our flagship brand Alkaline88 is the number one bought Alkaline Water brand in the whole country.
According to Nielsen data, on the list of the top 30 value-added water brands in the U.S., Alkaline88 was ranked as the fastest growing alkaline water with a 52-week period, ending March 23, 2019. Also according to Nielsen, our gallon size is now the number one bulk water HQU [ph] within the value-added water segment in the entire country.
We are very proud of both of these achievements is that we have grown from the product from a regional brand to a national highly recognized brand. For the fifth consecutive year, we’ve experienced an unprecedented growth of 50% or greater.
For the fiscal 2019, our sales were up over 62%. We continue to achieve these results through a very lenient structure and broad distribution of cost and grocery in other channels. As of today, we have distribution over 55,000 stores in the U.S. and growing, including the majority of the top-50 grocery retailers, the largest national food chain and the last 12 months we are proud to have expanded into Walmart and CVS nationwide.
Over the next 12 months our omnipresent strategy for our flagship brand is to continue growing our national footprint with further expansion of drug stores. Getting new distribution in the club’s, conveniences, home delivery and e-commerce channels. We are very optimistic that this strategy will help us achieve our vision to provide consumers across the country with multiple ways to gain awareness of the brands and this easily facilitates a trial of our products.
Our fiscal 2020 objectives include the following major initiatives. Number one, we will continue to build out our national footprint across all channels. Two, we plan to successfully introduce our newest product Alkaline88 infused flavored water. And three, we now for the first time ever plan to launch our new national marketing campaign.
As consumers continue to shop across multiple channels and looking for products both online and offline, it’s very important that our focus this year is to make sure we pursue and close distribution wherever and whenever a consumer wants to buy the brand. As an example, growing our e-commerce presence is a significant priority to establishing this goal.
Based on a high consumer demand that we’ve been seeing on Amazon.com, we have formed a new agreement with one of the nation’s leading online groceries Peapod Inc., which is a wholly-owned subsidiary of Royal Ahold. This partnership will start with a pilot through their Chicago distribution center with national expansion soon to follow, as we achieve our mutual develops sales targets.
Online ordering and delivery of our gallon size is an important part of our strategy to expand on our consumer base. This channel will also serve as a platform to broadly launch our new infused flavor products in the coming quarters.
谢谢你，安德鲁。大家好。并欢迎参加The Alkaline Water Company的首次盈利电话会议。很多人都知道，我们的旗舰品牌Alkaline88是全国最畅销的碱性水品牌。
基于我们在亚马逊网站上看到的高消费需求，我们与全美领先的在线杂货Peapod Inc.签订了新协议，Peapod Inc.是Royal Ahold的全资子公司。这一合作伙伴关系将从他们的芝加哥配送中心试点开始，随后我们将实现共同开发的销售目标。
Another part of the multi-channel consumer access strategy will be home delivery. We are proud to say that we recently launched a home delivery with one of the nation’s largest home delivery water providers.
This represents a brand new vertical for our Company. It’s an important channel for us as home delivery actually represents 12% of the bottled water market according to the International Bottled Waters Association.
Under this new agreement, 1 liter and 3 liters sizes of Alkaline88 will be available for home delivery to customers across California. We are optimistic that the agreement will expand to include national distribution and more of our product portfolio.
Finally, one of the biggest opportunities we have to complete our national footprint is a convenience store channel. We see this initiative as a top priority for fiscal 2020. This quarter efforts, we are checking this opportunity on multiple fronts.
In fiscal year 2019, we launched our small chain Van program with E.A. Berg. I’m thrilled to announce that from the time we started that program, we have accelerated the growth of our single serving sizes in this channel by 65%.
We are also excited to announce a new partnership with Crossmark to represent our brand across the country to national convenience store channels. With a strong record of success and helping brands extend their coverage of market penetration, Crossmark represents a wide variety of major brands across several different food and beverage categories. Crossmark has an in-depth knowledge of retailer’s, major retail channels and product categories that will help them create an effective convenience stores strategy for a brand.
To complement our partnership with Crossmark, we’ve also entered into an agreement with Premier National Food Distributors. Our Premier DSD has over 25 years of distribution experience and a nationwide network of over 1,000 direct store deliveries.
Premier DSD will specifically strengthen our presence in the C store channel in the key northeastern markets, including New York, Connecticut, Pennsylvania, Massachusetts and New Jersey.
Premier DSD has extensive reach with thousands of retail and food service customers. The agreement is expected to have a major impact on our direct store delivery and on-shelf availability in these key markets.
All of these agreements represent an important step in our commitment to the convenience store strategy. As I mentioned earlier, making sure we make Alkaline88 brand available to our consumers whenever and wherever they would like to buy it. As the fastest growing water brand, alkaline water brand in the country, we still see significant growth potential.
We have start to realize that the sales of bottled water in convenience stores reached almost 4.3 billion in 2017 according to the market research firm IRI and that currently Alkaline88 is in less than 2% of the convenience stores in the U.S., you can see and imagine the opportunity we have.
As we continue to gain shelf space online and offline we intrinsic these new products including Alkaline88 infused flavored waters and when the hemp infused beverages are legally permitted to be sold, our hemp-infused brand Soothe.
为了完善我们与Crossmark的合作伙伴关系，我们还与Premier National Food Distributors达成了协议。我们的Premier DSD拥有超过25年的分销经验和遍布全国的1,000多家直营店铺网络。
Over the last four years it’s been in our retail presence and has been a major catalyst to our overall growth. The full year fiscal 2019 revenue were 4.5 times greater than the fiscal year 2016. We’ve grown from $7.1 million to $32.2 million in that period.
I’d like to spend a little minute -- a little bit of time talking about our latest initiative. Last year we launched an Infused Beverage division. This division currently includes both a zero calorie all natural flavored Alkaline88 water. And when the hemp-infused beverages are legally permitted to be sold, it will have our hemp-infused brands too. According to forecasts for the hemp CBD beverages, that market could exceed $1.6 billion by 2020.
The flavors of all our infused beverages are absolutely amazing. The infused flavored product began to be delivered last month and is off to a very strong start. As a result of our participation the recent 98 Annual Western Association of Food Chains Convention, we received at that convention signs of verbal commitments for initial orders of over 13 truckloads of our Alkaline88 flavored infused water.
Just last month we were the number one selling national brand out of 750 vendors at the recently completed KeHE Holiday show. We received an exceptional response from industry delegates attending both shows. Virtually everyone, loved our taste profiles and flavors and our branding.
The successful launch of infused water supports our C stores strategy as well and the overall plan to increase sales in our small single-serve bottled category. At both the WAFC convention and the KeHE show, we had literally 100’s of people try our flavors and their response was overwhelmingly positive.
In addition, many of the senior executives and distributors in attendance expressed interest in our hemp-based Soothe products and plan on placing orders when the hemp-infused beverages are legally permitted to be sold.
I want to emphasize that the Company intends to comply in full with all federal state and local laws, rules and regulations as the Company develops our hemp extract alkaline waters and other product lines. The Company will not pursue commercial production or sale of hemp extract-infused products until legally permitted. We’re closely watching and responding to all regulatory developments within the FDA and each individual U.S. state and plan to launch our Soothe brand accordingly.
To support our growing role in multiple beverage categories, we also are increasing our focus for the first time and promoting our brand through marketing. We have engaged ArchPoint Group to be our agency of record to help us develop our new brand strategy that will be launched in the fall of 2019. Our strategy will be and to invest in both the traditional and digital marketing, and to increase awareness of our brand, drive trials and build loyalty amongst our targeted consumers.
We also recently formed a new agreement with Wonder Woman Run Series to provide Alkaline88 water at the finish line in nine of the Wonder Woman 5K races and marathons in 2019, with an option to renew in 2020.
我想花一点时间 - 一点时间谈论我们的最新举措。去年我们推出了Infused Beverage部门。该部门目前包括零卡路里全天然风味的Alkaline88水。当合法地允许出售大麻饮料时，它也将拥有我们的大麻品牌。根据对大麻CBD饮料的预测，到2020年该市场可能超过16亿美元。
And I cannot emphasize enough the marketing benefits of our Van program. E.A. Berg representatives make their store visits and deliveries in a rap van [ph], the primary displays our name, logo, products portfolio as they drive through their territories.
I’m sure you’ve seen this kind of vans advertising other products. The American Truckers Association has done research that says vans generate 16 million impressions annually. And we have 11 of those vans displaying our products and product information in Texas and California. And stay tuned, this is just the start as we look for new initiatives and new innovative ways to promote our growing product portfolios.
Moving on to another important topic. As we previously announced, we have decided to offer revenue guidance on this call, the initiative of following our strong fiscal 2019 results. For the fifth year in a row the Company continues to grow at over 50% per year. We owe this tremendous growth to our team, our strategies, our valued retail partners and the expanded acceptance by the customers.
We have continued to make Alkaline88 the number one selling bulk alkaline water in the entire country. We do expect this momentum to carry over into our first quarter of fiscal 2020 and I’ll expand on this in a few minutes.
We feel that we are in a position to offer some insights into our near-term revenue trends and we have visibility in order to flow from retailers. This comes on the heel of an announcing record sales of $3.8 million for the month ending May 31, 2019 and achieving a record 2020 first quarter of over $10 million.
We expect our fiscal year 2020 revenue to be between $46 million and $50 million. We anticipate the new flavor infused water to contribute approximately $3 million to $4 million in revenue over the remaining three quarters in fiscal 2020. Please note that the revenue projections do not include any revenue from our hemp-infused product.
We have finished our formulations and have completed the initial run on our trademarked hemp Soothe water. But we are waiting until the hemp-infused beverages are given regulatory clearance. Most of our current customers are also waiting for similar clearance. We have presented our hemp-infused Soothe product suppliers and distributors who representing over 30,000 stores nationwide and we’ve had tremendous reception.
Now let’s comment on our packing and the Soothe brand, but more importantly to our buyers is that Alkaline88 is a trusted brand, both by the retailers and the consumer. And none like others in the competitive space, our product Soothe is great tasty. We monitor daily the regulatory environment and are prepared to begin sales the moment the regulators give us the green light.
We have significant growth in across all class of trade, including within the newly emphasized C store group. We continue to accelerate growth in both our bulk and single serving sizes. Importantly, on fused product line has begun to gain traction. But it always earlier, based on what we’re seeing and our discussions with retailers, we expect the infused flavored water to contribute significantly to our sales over the next three quarters. We are working and we will be rolling out new brand strategies that we believe will further accelerate our growth.
我相信你已经看过这种面包车在宣传其他产品。美国卡车司机协会（American Truckers Association）做过研究，称货车每年产生1600万次印象。我们有11辆货车在德克萨斯州和加利福尼亚州展示我们的产品和产品信息。请继续关注，这只是一个开始，因为我们正在寻找新的举措和新的创新方法，以促进我们不断增长的产品组合。
I’d like now to pass the call on to Ron DaVella, our EVP of Finance and our most recent member of our team, so he can take you through the fourth quarter financial results. Ron?
Thank, Ricky. I’m really excited to be a part of this Company and this team as we continue to grow this Company. Before I begin, I would like to encourage interested listeners to review the press release announcing our financial results issued yesterday and our form 10-K that we filed yesterday with the SEC, for more detailed explanation of some of the year-over-year variances as I will highlighting -- I will be highlighting just a few.
Our revenues from sales of our product for the year ended March 31, 2019 were $32.2 million, up from $19.8 million reported for the prior fiscal year ended March 31, 2018. This represents an amazing increase to 63% generated by sales of our alkaline water. The increase reflects the expanded distribution of our products to additional retailers throughout the country.
For the year ended March 31, 2019, we had cost of sales of $19.3 million or 60% of sales, as compared to the cost of goods sold of $11.7 million or 59% of sales for the year ended March 2018. A slight increase in cost of goods sold as a percentage of net sales was due to increased raw material costs and associated freight as a result of our East Coast expansion.
Total operating expenses were $21 million during the year ended March 2019, as compared to $14.1 million for the prior year. Sales and marketing expenses increased by $5.8 million, primarily as a result of increased outbound freight costs of $2.7 million and increased marketing spend of $1.9 million, which was primarily due to the 63$ increase in revenues.
General and administrative expenses increased by $1 million, primarily resulting from an increase in professional, media and legal fees for new stock exchange listings on NASDAQ and the Toronto Exchange of $3.9 million, offset by a decrease in stock comp expenses of $2.9 million.
For the three months ended March 31, 2019, we reported $8 million in total revenues, as compared to $6 million for the same period in 2018. Our gross profit from sales in the fourth quarter of 2019 was $3 million versus gross profit of $2 million in 2018.
Selling and marketing expenses were $3.2 million in fiscal ‘19 fourth quarter versus $2.2 million in the prior year fourth. And G&A expense for the fourth quarter of 2019 was $2.3 million versus $0.8 million in the prior year fourth quarter.
We used cash in operations during the year, including changes in working capital of $8.1 million, as compared to $2.6 million in fiscal 2018. We successfully increased our cash position by $10 million, which resulted primarily from completed finances. We will continue to keep a watchful eye on costs as we continue to grow our business.
With that, I’d like to turn the call back over to Ricky.
谢谢，瑞奇。随着我们继续发展这家公司，我很高兴能成为这家公司和这个团队的一员。在开始之前，我想鼓励有兴趣的听众审阅宣布我们昨天发布的财务业绩的新闻稿以及我们昨天向美国证券交易委员会提交的10-K表格，以便更详细地解释一些年度差异正如我要强调的那样 - 我将突出几点。
Thanks, Ron. In conclusion, let me say that the tailwinds and the underlying momentum for Alkaline Water Company has never been stronger. The returns on the different elements of our strategy are compelling and we are delivering value for our shareholders.
Not only is revenue growing impressively, but we have also focused on maintaining the efficient cost structure in order to drive efficiencies and in turn bring shareholder value. Overall, fiscal 2020 is going to represent another year of robust revenue growth for Alkaline Water Company. We’re going to do it with a lean organization that is focused on servicing our retail partners, customers and delivery value to our shareholders.
I want to thank all of our current customers, brokers, distributors, our dedicated employees and shareholders for making our story so exciting. I don’t think I can stress enough that the opportunity ahead of us right now is great. The future of The Alkaline Water Company is bright. We look forward to keeping you informed on our progress. Thank you.
[Operator Instructions] Thank you. Our first question comes from the line of Neal Gilmer with Haywood Securities. Please proceed with your questions.
[操作员说明]谢谢。 我们的第一个问题来自Neal Gilmer与Haywood Securities的合作。 请继续你的问题。
Yeah. Good morning, guys, and thanks very much for the prepared remarks. You certainly covered off a lot which was insightful. So I just want to follow-up on a couple of the comments made and maybe I’ll start with your hemp-infused product. So you did state that your guidance does not include any sales for that. I’m just wondering whether you have any sense or any color on any particular states you think might be closed to where you could enter? And I think the second part of my question would be assuming you get the clearance from a regulatory perspective on whatever date. What’s the realistic timeline to actually have product available into the marketplace and starting to record sales on that product line?
是啊。 大家早上好，非常感谢准备好的评论。 你当然很多东西都很有见地。 所以我只想跟进几条评论，也许我会从你的大麻产品开始。 所以你确实声明你的指导不包括任何销售。 我只是想知道你认为你可以进入的任何特定状态是否有任何意义或颜色？ 而且我认为我的问题的第二部分是假设你从任何日期的监管角度获得许可。 实际将产品推向市场并开始在该产品线上记录销售的现实时间表是什么？
Neal, thank you for that question, both good questions. The first one is we are monitoring the state legislation taxes. Illinois have put up some legislation. We are working around with our counsel and the regulatory bodies that we report to get clear path on those.
In addition Constellation Brand came out this morning. The President and CEO, they probably even have better insight than we do. They stated that they think that by the fourth quarter of this year, the CBD will become available in the U.S. on a consumable, so that’s exciting.
We’ve also track the legislation with respect to what’s going on in Congress and there seems to be a mandate. I think, Mitch, the Senator met with the Head of the FDA this week and McConnell indicated that he’s putting pressure as well.
So we think that by the end of this year, which would be our second half of our year, we would have some availability. Our product has been shown to the various retailers. We will up here some books this summer. So it will appear that we are available for sale, but obviously we would not be. So those are going to the nature food channel which is very exciting for us.
We’ve also shown this to other major, major retailers. We’ve gone through some testing at their facilities as well for quality, et cetera. We believe that we could be on the shelves within a month of having regulatory clearance.
So we think that we’ve got some very strong product ordain in the hopper. We have a great taste profile. We believe we have the best taste hemp water in the country and literally we think it’s a 30-day run once we get the green light on the regulatory whether to be a state regulatory, NASDAQ regulatory or FDA regulatory guidance.
Okay. That’s quite helpful. Thank you. Maybe wanted to again ask for little more color on the Van program and given the success you’ve had with that. My understanding from your comment so that it’s just in Texas and California. Are you looking to expand that to potential other geographies or even increase in those two states given the success you’ve seen so far?
好的。 这非常有帮助。 谢谢。 也许想再次要求在Van计划上获得更多颜色，并给予你成功。 我对你的评论的理解，以便它只在德克萨斯州和加利福尼亚州。 鉴于迄今为止您所看到的成功，您是否希望将其扩展到潜在的其他地区，甚至在这两个州增加？
Well, we’ve got both those states pretty well covered. We represent -- they represent 13,700 stores within that program itself. The easy answer is yes to the extent that we continue to see an ROI. We obviously we’ll make that expansion. They had the ability to go to 57,000.
We picked those two states originally. Neal, just to give a little bit more color, because we thought that they would be the first to give us the clearest guidance with the CBD product as well. So there is -- the hemp-based CBD was picked those two states. Illinois is obvious another choice as they continue to have very favorable legislation. We do work with four different law firms to continue to get guidance in this area.
好吧，我们已经很好地覆盖了这两个州。 我们代表 - 他们代表该计划本身的13,700家商店。 在我们继续看到投资回报率的情况下，答案很简单。 我们显然会进行扩张。 他们有能力达到57,000。
我们最初选择了这两个州。 Neal，只是为了提供更多的颜色，因为我们认为他们将是第一个给我们CBD产品最清晰的指导。 因此，基于大麻的CBD被选为这两个州。 伊利诺伊州显然是另一种选择，因为他们继续拥有非常有利的立 我们与四家不同的律师事务所合作，继续在这一领域获得指导。
Okay. And then maybe just my last question is more sort of on the financial model. With your comments with respect to expanding your marketing campaign that you’re going to launch this fall, in the past I think your marketing and promotion line sort of range from sort of 35% to 40% of revenues, closer to 40, I guess, for last year. Are you expecting similar sorts of levels of marketing spend or should we expected to sort of increase in that line on -- at least on a percentage of revenue basis?
好的。 然后也许我的最后一个问题就是财务模型。 根据您对今年秋季即将推出的营销活动的评论，过去我认为您的营销和推广线的收入范围从收入的35％到40％，接近40，我猜 ，去年。 您是否期望出现类似的营销支出水平，或者我们是否应该预计会增加该项目的增长率 - 至少在收入的百分比基础上？
I am going to turn that one over to Ron.
Hi, Neal. Nice to meet you on the phone.
You as well.
Yeah. I think we’re expecting to maintain marketing around that range. It will really depend on how quickly we can launch the CBD, because we’re going to be investing in that, and obviously, with the flavors. But we expect percent of revenue to remain pretty consistent.
是啊。 我认为我们期望在这个范围内保持营销。 这实际上取决于我们推出CBD的速度有多快，因为我们将投资于这一点，显然，还有这些风味。 但我们预计收入的百分比将保持相当稳定。
Okay. Great. Thanks very much guys. Congrats on the quarter and talk to you soon.
好的。 大。 非常感谢你们。 祝贺本季度，并尽快与您交谈。
Our next question comes from line of Raveel Afzaal with Canaccord Genuity. Please proceed with your question.
我们的下一个问题来自Raveel Afzaal和Canaccord Genuity。 请继续你的问题。
Good morning, guys. Thank you for taking our questions. So, just first of all with respect to gross margins, we saw a small decline in the gross margin, but it seems like we’ll be back at 40% gross margin based on your guidance. Can you tell us why we saw this dip in gross margin and why you expect that to improve again?
早上好家伙。 感谢您提出我们的问题。 因此，首先就毛利率而言，我们看到毛利率略有下降，但根据您的指引，我们似乎将恢复40％的毛利率。 您能否告诉我们为什么我们看到毛利率下降以及您希望再次改善的原因？
Yeah. We had -- This is Ron. We had to spend a little bit more money in the Northeast on freight and some marketing to promote that as we’re expanding there a very significantly. But we are anticipating the margins to remain around the 40% level this coming year.
是啊。 我们有 - 这是罗恩。 我们不得不在东北地区花费更多的钱来运费和一些营销来促进这一点，因为我们正在那里非常显着地扩张。 但我们预计未来一年利润率将保持在40％左右。
Got it. So the margins declined primarily because of freight, but not marketing, right? Marketing is below the gross profit line?
得到它了。 所以利润下降主要是因为运费，而不是营销，对吧？ 营销低于毛利润线？
Yeah. Because of the promotions -- so a little bit of promotions so in the Northeast.
是啊。 因为促销活动 - 所以在东北地区进行一点促销活动。
Okay. Got it. Okay. And then just moving on to my second question, with respect to single-serve bottles, how much does that represent of your revenues right now? And is it possible for you to quantify what sort of growth we have seen in the revenues coming from the single-serve bottles?
好的。 得到它了。 好的。 然后再谈谈我的第二个问题，关于单瓶装，现在你的收入代表了多少？ 您是否有可能量化我们从单一服务瓶中获得的收入增长？
Yes. We’re still in that 11% or 12% range. However, I’m happy to say that in the first five months we did more this year than we did all of last year and we continue to see that ramp-up. Obviously, only being in 2% of 150,000 convenience stores, we’ve got a lot of runway. We expect our single-serve to do very well in the convenience store markets as well.
So we see that as a major initiative for this year. We have done an unbelievably good job with our retailers in terms of adding additional SKUs and our six-pack has been greatly accepted in one of the largest retailers in the country. We’re almost up to over a thousand cases a week on that -- in that particular retailer. So we feel very good about everything we’re doing on that.
是。 我们仍处于11％或12％的范围内。 但是，我很高兴地说，在今年的前五个月，我们比去年全年做得更多，我们继续看到这种情况。 显然，只有150,000个便利店的2％，我们有很多跑道。 我们希望我们的单一服务在便利店市场也能做得很好。
所以我们认为这是今年的一项重大举措。 在增加额外的SKU方面，我们在零售商方面做得非常出色，我们的六包装已经在该国最大的零售商之一得到了极大的认可。 在那个特定的零售商中，我们每周差不多有一千多箱。 所以我们对我们正在做的一切感到非常满意。
Got it. But -- and you said that it represents 11% to 12% of your revenues right now and that was the same number about 11% to 12% the previous year. So we have seen growth on an absolute dollar number than?
得到它了。 但是 - 你说它现在占你收入的11％到12％，这个数字与前一年相同，约为11％到12％。 所以我们看到绝对美元数量的增长超过了？
Got it. Okay. And then just moving on to my next question, so $46 million to $50 million in revenue guidance, did I hear you guys right that you expect about $4 million to come from the infused beverages line?
得到它了。 好的。 然后继续我的下一个问题，那么4600万美元到5000万美元的收入指导，我是否听说过你们，你们期望大约400万美元来自注入饮料系列？
Okay. And so the remaining growth, how much of that is coming from the convenience store versus just your traditional grocery store or retail strategy?
We’re hoping for some upward surprises in the convenience. Obviously, that’s a little slower build. We’ve had some really tremendous success so far. But I would say that it’s going to be relatively small portion. Most of our growth will be organic through additional SKUs in our current stores, additional consumer demand.
If you noted we’ve been up significantly in Walmart this year already, Kroger as well. We see that the Northeast will also be a big expansion. So I would say somewhat limited in the first year. But if you look at our internal projections by next year, it’s going to be a huge part of our portfolio and part of our sales success. If we get lucky we’re already way ahead of our current internal financing projections on the convenience. So if we get lucky we may see a significant amount there.
我们希望在便利性方面有一些惊喜。 显然，这是一个有点慢的构建。 到目前为止，我们取得了一些非常大的成功。 但我会说这将是相对较小的一部分。 我们的大部分增长将通过我们目前商店的额外SKU来增加，增加消费者需求。
如果你注意到我们今年已经在沃尔玛大幅增加，Kroger也是如此。 我们看到东北也将是一个大的扩张。 所以我会说第一年有些限制。 但如果你看一下明年我们的内部预测，它将成为我们投资组合的重要组成部分，也是我们销售成功的一部分。 如果我们运气好的话，我们已经远远超出了我们目前对方便性的内部融资预测。 所以，如果我们幸运的话，我们可能会看到很多。
Got it. And how much does Northeast represent of your revenues now compared to the previous year?
The Northeast is probably up about 10% versus the prior year.
Perfect. Awesome, guys. Great quarter here. I look forward to touching base again next quarter.
完善。 太棒了，伙计们。 这里很棒。 我期待下个季度再次触及基地。
[Operator Instructions] Our next question comes from line of Michael Brcic with National Securities. Please proceed with your question.
[操作员说明]我们的下一个问题来自Michael Brcic和National Securities。 请继续你的问题。
Good morning. Thank you. I’m new to the story, so hopefully I don’t have too many inane questions. But how much market share do you have of the alkaline water category?
早上好。 谢谢。 我是这个故事的新手，所以希望我没有太多无聊的问题。 但是你对碱性水类的市场份额有多大？
I’m going to say we have about 20% market share. So we are…
We’re not with a good solid number two in the country. We believe that the market this year will approach within the branded categories, 500 million, somewhere in that range, in the non-branded maybe 1 billion. So, we’ve got 20%, I would say, the actual branded. We dominate the bulk arena. I’m not sure that anybody even has 5% of what we have in the bulk, which is a gallons of 3 liters.
我们在这个国家并不是一个好的第二名。 我们认为，今年的市场将接近品牌类别，5亿，在该范围内的某个地方，非品牌可能达到10亿。 所以，我会说实际品牌的价格是20％。 我们主宰了大片竞技场。 我不确定任何人甚至拥有我们所拥有的5％的体积，这是一加仑3升。
We’re only about 30% of the ACV. So, we’re relatively small with respect to the total numbers of stores we could be in. And that’s one of the main reasons we’ve gone to this focused strategy on getting into convenient markets.
How -- what is the general growth rate of the category?
怎么样 - 该类别的总体增长率是多少？
I would say the growth rate of the category has been in the 30% and 40%.
Okay. And that makes up how much of the -- where do you put these under premium water or?
好的。 这构成了多少 - 你把它们放在优质水下或者哪些地方？
Yeah. It’s a value-added water category.
I think there is -- I think in the top 30 brands there are three of us in that that would be use consider alkaline brand.
我认为有 - 我认为在前三十个品牌中我们有三个人会考虑使用碱性品牌。
Okay. Cool. You mentioned you had $11 million in cash at the end of calendar Q1, I guess. And you had a credit facility. How big is the facility and how much is outstanding on that?
好的。 凉。 你提到你在Q1日历结束时有1100万美元的现金，我猜。 你有一个信用额度。 设施有多大，有多少优秀呢？
We have just increased it from $4 million to $5 million. And right now we have about $2.5 million outstand -- $2.3 million outstanding on it.
我们刚刚将其从400万美元增加到500万美元。 现在我们有超过250万美元的优秀奖金 - 230万美元。
Cool. Do you have any other debt outstanding?
No. No other debt.
Okay. Great. The -- have you made any projections on cash usage for the next three quarters?
好的。 大。 - 您对未来三个季度的现金使用情况做了任何预测吗？
Yes. We’re expecting cash usage to be pretty consistent with the current year. It really depends on how much we decide to invest in marketing costs…
是。 我们预计现金使用量与当年相当。 这真的取决于我们决定投入多少营销成本......
Yeah. All right.
… and then media bias, which is a variable that we can turn on and off as necessary.
So we fully believe we’ll be in a solid cash position by the end of the year. And if we need to raise capital we can do that, but we’re not -- we don’t need to at this point.
因此，我们完全相信，到今年年底，我们将处于稳固的现金状态。 如果我们需要筹集资金，我们可以做到这一点，但我们不是 - 我们现在不需要。
Got it. Just real quick come in on the -- you mentioned that best tasting hemp water. If it’s not out I mean, how that you compare -- what are you comparing it to?
得到它了。 真正快速进入 - 你提到最好品尝大麻水。 如果它不是我的意思，你的比较 - 你要比较什么？
No. It’s available. We just -- there’s security in the FDA rules. Okay, so there’s tons of FDA -- there’s tons of hemp water where you go online tomorrow and buy some, I think, on Amazon.
不，它可用。 我们只是 - 在FDA规则中有安全性。 好的，所以有大量的FDA - 大量的大麻水，你明天上线，我想，在亚马逊上买一些。
Okay. Okay. So you’re actually -- okay. Good. Now, is -- is it -- is CBD water or whatever let’s call is it legal in Canada or not?
好的。 好的。 所以你真的 - 好的。 好。 现在，是 - 它是 - 是CBD水还是其他任何让我们称之为加拿大合法的水？
I don’t have all the rules on Canada. I believe by the end of December they just made an announcement. I think by December it will be available in Canada. Obviously, Canada has a bunch of provinces and it’s a provincial thing just like the U.S. state to state.
So, we are looking at Canada. We have opportunity to also move into Canada and we have a lot of support in Canada. So we have looked at that and we are moving in that direction as well. It is not a primary focus right now in that. We haven’t put up a facility up there and this is a hot field product so we would not -- we would need to find a facility to be able to put this product up there.
我对加拿大没有所有规定。 我相信到12月底他们刚刚宣布了这一消息。 我想到12月它将在加拿大上市。 显然，加拿大有很多省份，这就像美国州所说的那样省级。
所以，我们正在考虑加拿大。 我们也有机会进入加拿大，我们在加拿大有很多支持。 所以我们已经看过了，我们也正朝着这个方向前进。 它现在不是主要关注点。 我们还没有在那里建立一个设施，这是一个热门产品，所以我们不会 - 我们需要找到一个能够将这个产品放在那里的设施。
Right. Great. Look, thank you very much and I apologize for taking up so much time.
对。 大。 看，非常感谢，我为花费这么多时间而道歉。
Pleasure to talking to you. Glad to have you listen in.
Our next question comes from the line of Aaron Grey with Alliance Global Partners. Please proceed with your question.
我们的下一个问题来自Aaron Gray与Alliance Global Partners的合作。 请继续你的问题。
Hi. Good morning and thanks for the questions.
So first just, I think, a little bit higher level on the single-serve and expanding and convenience stores. How do you feel about your brand appeal in the channel? Given the core consumer might be a little bit different from your traditional consumer buying the bulk products. So with that difference can you talk about your efforts on how you plan to increase brand awareness in those in those new C store channels with the single-serve?
首先，我认为，单一服务，扩展和便利店的水平稍高一些。 您对渠道中的品牌吸引力有何看法？ 鉴于核心消费者可能与您购买散装产品的传统消费者略有不同。 因此，您可以通过这种差异来谈谈您计划如何通过单一服务提高那些新C商店渠道中的品牌知名度的努力吗？
Yeah. That’s part of the overall strategy. Obviously, we’ll do the same as some other people do. We’ll do the stickers. We’ll have the cool box stickers. We’ll have some promotion. We do believe that one of our big distinctions is that we are moving Alkaline88 into a flavor infused.
We have worked on this for 24 months. We think again that our flavor profile is better than most people. You finish -- our core product has a really smooth finish at the end. I don’t know any other way to describe it. We’ve done that same thing with our flavor infused in our hemp. It’s a product that doesn’t linger. You get to taste it. You get to enjoy it.
So we think that we’ll be able to gain some shelf space just by having a product differentiation in the flavored side. And then, obviously, that may allow us to also move our core product in there as well. We also know that convenience stores, believe it or not are also beginning to pay more attention to the bulk. We got into loves this last year with our gallons, believe it or not.
我们已经为此工作了24个月。我们再次认为我们的风味特征比大多数人更好。你完成了 - 我们的核心产品在最后完成了非常顺利的完成。我不知道有任何其他方式来描述它。我们用大麻的味道做了同样的事情。这是一个不会流连忘返的产品。你可以品尝它。你会喜欢它。
Okay. Great. Thanks. That’s helpful. And then on CBD or hemp, with you and many competitors waiting for regulatory clarity before entering the market, how do you feel about your positioning, well, it looks like we’ll be a rather crowded category once hemp and CBD kind of clear those FDA hurdles on the infused beverage side, sort of one why would you feel like you’re build to fit in the category? And number two, with consumers you seem to be still a lot of confusion in terms of what they’re consuming on the CBD/hemp side in terms of broad base or full spectrum. So how do you feel about sort of just like a consumer education making sure they’re aware of what products they are consuming and how that help the category grow over time? Thank you.
好的。 大。 谢谢。 这很有帮助。 然后在CBD或大麻上，你和许多竞争对手在进入市场之前等待监管清晰度，你对你的定位感觉如何，好吧，看起来我们将成为一个相当拥挤的类别，一旦大麻和CBD清楚那些 美国食品和药物管理局（FDA）在饮用过的饮料方面遇到了障碍，一种为什么你觉得你的品质适合这个类别呢？ 第二，对于消费者而言，就广泛的基础或全谱而言，他们在CBD /大麻方面的消费似乎仍然存在很多混乱。 那么，您如何看待消费者教育，确保他们了解他们正在消费哪些产品以及如何帮助该类别随着时间的推移而增长？ 谢谢。
Yeah. That’s a really good question and we think we have a really good answer for that. Number one, we’re trusted brand, the same guy that we are presenting to our core product that we’ve had tremendous success with -- some of these places we are the number one water. Five years ago we didn’t even exist on their shelves. So they trust Alkaline88.
Number two, we’re presented the same buyers that are buying our core products, our flagship product, our infused water-flavored product. They’re also looking at our Soothe. They don’t trust a lot of other brands.
The second thing that we’ve done is we have actually working with three of the top guys in the world in the sector, so we’ll have greater buyer availability. We’ll be able to document that. So as the consumer begins to educate themselves the difference between an isolate and full spectrum or broad spectrum hemp, we will actually have some science behind that. We expect that science out sometime in August and we’ll be able to make an announcement around what will be in our water then as well.
But I really think it comes down to trust. I can’t tell you how many people have told us that it’s a brand that their consumers trust. You’ve got to remember we sold $100 million of this brand without any real nationwide or traditional marketing and we have a very, very loyal consumer following.
是啊。这是一个非常好的问题，我们认为我们有一个非常好的答案。第一，我们是值得信赖的品牌，我们向我们的核心产品展示了我们已经取得巨大成功的同一个人 - 其中一些地方我们是头号水。五年前，我们甚至没有在货架上存在。所以他们相信Alkaline88。
Great. Thanks very much and best of luck.
Your next question is a follow-up question from Raveel Afzaal with Canaccord Genuity. Please proceed with your question.
你的下一个问题是来自Raveel Afzaal和Canaccord Genuity的后续问题。 请继续你的问题。
Yes, guys. Just a couple of follow up. First of all, how many co-packers do you have on the CBD side signed up already and how does it work right now? I mean do you get a firm commitment from them that you -- you’ll have availability on a line if and when the regulations are passed. How does that work and how many co-packers do you have on that front?
是的，伙计们。 只需几个跟进。 首先，您在CBD方面有多少联合包装商已经注册了，现在它是如何运作的？ 我的意思是，你得到了他们的坚定承诺 - 如果法规通过，你就可以在线上获得。 这有什么用？你在这方面有多少合作包装工？
We have two currently. We have conversations with two additional. So we will have when -- if and when, there’s not if now, it’s just a when. We’ll have four. We try to become as people that have co-pack for us, we try to become a trusted partner and we try to become candidly their number one client.
We have commitments at least on one of our plants for half of their production capabilities. So we feel pretty good about out the door being able to meet whatever demand we have. In addition to that the other ones that we’re bringing online, they have tremendous capabilities as well.
So we feel pretty good just like we modeled up with our plan 88. One thing that we haven’t discussed is we do have a greater potential for maybe not a margin increase but we’ll make more dollars per can or buy dollars per bottle. So we’ll have some flexibility to just spend some money on the shipping if demand hits hard and we’ll just add an additional ship. We’ve already had those conversations with those plans.
我们目前有两个。我们与另外两个人进行了对话。因此，我们将拥有 - 如果和何时，如果现在不存在，它只是一个时间。我们将有四个。我们努力成为那些为我们共同打包的人，我们努力成为值得信赖的合作伙伴，我们努力成为他们的头号客户。
Perfect. And my last question, how much will a national marketing program cost, I know you mentioned that it’s going to remain pretty consistent 30% to 40% in terms of sales and marketing. I just wanted to see how much this national program itself is going to cost and whether it’s going to be front-end loaded or back-end loaded to your fiscal year?
完善。 我的最后一个问题是，全国营销计划的成本是多少，我知道你提到它在销售和营销方面将保持30％到40％的相当稳定。 我只是想知道这个国家计划本身会花多少钱，以及它是在你的财政年度加载前端还是后端加载？
They’ll be back-end loaded to the fiscal year. We have proposals online from anywhere from a 1.5 million to 3.5 million. But some of that just going to be -- we’re going to see what happens on a regional basis first. Obviously, we’re going to peg that to each region, the Northeast, because we’re not very well known there. We’ll have a different type of marketing program with respect to what media is we use and the Southwest, the Southern Cal area where we’ve been there for six years. We’ll use other types of media that we won’t be using in the Northeast.
So, we’re going to play that by year as Ron pointed out and we do have some flexibility. I realize what we’re looking on and all those spins and we have some ability to track that. That’s one of the reasons that we chose ArchPoint, because there’s sophistication with respect to being able to track the ROIs.
他们将在本财年进行后端加载。 我们的在线提案从150万到350万不等。 但其中一些事情将会发生 - 我们将首先看看区域基础上会发生什么。 显然，我们要把它钉在每个地区，即东北地区，因为我们在那里并不是很了解。 我们将使用不同类型的营销计划，我们使用的是什么媒体，以及我们在那里待了六年的西南部，南部加州地区。 我们将使用我们不会在东北部使用的其他类型的媒体。
因此，我们将按照罗恩指出的那样逐年播放，我们确实有一些灵活性。 我意识到我们正在寻找什么以及所有这些旋转，我们有能力跟踪它。 这是我们选择ArchPoint的原因之一，因为能够跟踪投资回报率方面的复杂程度。
Perfect. Thanks again.
Our next question is a follow-up question from Michael Brcic with National Securities. Please proceed with your question.
我们的下一个问题是Michael Brcic与National Securities的后续问题。 请继续你的问题。
Thank you. With this CBD infused or whatever or how much extra cost does that put into a bottle and what sort of selling price are we talking about?
So, we’re looking -- we’ve done some market surveys. We have some excellent people on our Board as well. Brian Sudano from Beverage Marketing Corp. is a member of our Board. So he helps us view the market. They have a pretty expansive view of what’s going on in the market.
We currently plan and price it at $3.99 [ph] on a retail basis. I don’t want to give away the rest of the inside juice to my competitors. But we will -- the contract we have signed gives us most favored nation status with our CBD supplier. So we think that we will be able to put it in a bottle cheaper than anybody else in the country.
And it’s just a question of getting to what know what the consumer wants. Do they want 20 milligrams? Do they want 15? Do they want 10? And what that’s going to be is yet to be determined. FDA will probably have a say in that candidly and that will obviously determine the final cost. But we feel pretty good about our margins. We feel pretty good about our price point and we love our product.
One other things that we have been able to do is and I didn’t emphasize earlier so you gave me another chance is our taste profile is unbelievably excellent. We use a masking agent that nobody else in the country really has access to. So we’re really happy about what we’ve created here.
所以，我们正在寻找 - 我们已经做了一些市场调查。我们董事会中也有一些优秀的人才。饮料营销公司的Brian Sudano是我们董事会的成员。所以他帮我们看市场。他们对市场上发生的事情有着非常广泛的看法。
我们目前的零售价格为3.99美元[ph]。我不想把剩下的内部果汁给我的竞争对手。但我们会 - 我们签署的合同为我们的CBD供应商提供了最惠国待遇。所以我们认为我们能够把它放在比国内任何其他人都便宜的瓶子里。
How big a bottle for $3.99?
All right. Thank you very much.
We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.
I want to thank everybody for being here today, supporting the Company. We appreciate it. We hope to be having another one of these in a couple of months with even greater and more exciting things going on. Please continue to watch our press releases. There is a lot of excitement in this Company. There is a lot of things that we’re doing to move this Company forward and add additional shareholder value. Thanks again.
我要感谢大家今天来到这里，支持公司。 我们很感激。 我们希望在几个月内能够拥有另外一个，并且会有更多更激动人心的事情发生。 请继续关注我们的新闻稿。 这家公司有很多令人兴奋的事情。 我们正在做很多事情来推动公司向前发展并增加额外的股东价值。 再次感谢。
Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a nice day.
女士们，先生们，这确实结束了今天的电话会议。 您可以在此时断开线路。 感谢您的参与，祝您有个愉快的一天。
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- 老虎证券开户教程 美股8折佣金， 港股免佣金, 如果入金3000美元，额外再赠送5次免佣卡
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- 富途牛牛证券开户教程 开户即可领取1股汇丰，入金达到2万港币即可领取1股腾讯；新股一键认购，最高支持10倍杠杆融资，免新股认购手续费，暗盘交易免佣；
- 华盛通开证券户教程 开通美股或者港股， 享受现金200元,美股8折奖励。
- 微牛证券开户教程 开通后 享有200元现金奖励
- 必贝证券开户教程 开通后 享有280元现金奖励
- 玖富证券开户教程 开通后 最低入金1W港币可以领218元红包
- e投睿开户教程 开通后 可获得25美金奖励
- 友信证券开户教程 注册随机领3股，注册后可随机抽取苹果、腾讯、阿里、京东等热门股票