Drinks Americas Reports Record Revenue of $6.1 Million, an Increase of 278% in Fiscal Year-End 2007
Drinks Americas Holdings, Ltd. (OTCBB: DKAM), an owner, developer and marketer of premium beverages associated with renowned icons, reported results for fiscal fourth quarter and year ended April 30, 2007. Reflecting the second year of operations, the year-end results include the commencement of shipments of Trump Super Premium Vodka, which was launched in mid-October 2006, and the national expansion of the sales of Newman’s Own Sparkling Fruit Juices, which commenced in April 2007.
Revenue for the 2007 fiscal year was $6.1 million, a 278% increase over the $1.6 million in revenues for the year ended April 30, 2006. The Company is on track to ship 100,000 cases of Trump Super Premium Vodka in the first 12-month period ending in November 2007. As of the end of the fiscal fourth quarter, the Company shipped $5.2 million, or 46,000 cases of Trump Super Premium Vodka. Subsequently, the Company has shipped new 50 ml and 1.75 liter sizes. Drinks Americas is extending the line with Trump Super Premium Vodka flavors in the second fiscal quarter. These flavors will include lemon, orange, raspberry, grape and one to be determined. The Company is waiting on governmental approvals for product formulation and labels.
Gross margin increased for the year to 41.1% compared with 28.2% for the same time last year. This was driven by a higher sales mix of alcoholic products, mainly Trump Super Premium Vodka, as well as cost of goods improvements across the entire portfolio.
SG&A expenses increased 109% to $10.0 million compared with $4.8 million for the same period last year. These expenses include a one-time $4 million investment in the launch of Trump Super Premium Vodka.
Net loss for the 2007 fiscal year was $9.4 million, or $0.14 per basic and diluted share, compared with a net loss of $5.8 million, or $0.10 per basic and diluted share for the fiscal year ended 2006. In addition to the impact of the Company’s investment in the third quarter launch of Trump Vodka, there were additional one-time non-cash charges of $1.8 million related to the retirement of debt as well as the conversion of debt into equity.
Revenue for the fiscal 2007 fourth quarter increased 65% to $826,000 compared with $502,000 for the fourth quarter of last year. The fourth quarter reflects the seasonal shift from alcoholic to non-alcoholic beverages, with higher shipments of Newman’s Own Sparkling Fruit Juices and Waters as the result of a national marketing expansion.
Shipments of Trump Super Premium Vodka’s new 1.75 liter product were delayed as a result of production issues related to the complexities of bottle engineering and design. The Company has since produced 12,000 cases of inventory, and is now shipping to the U.S. market.
J. Patrick Kenny, President & Chief Executive Officer of Drinks Americas, stated, “Our fiscal 2007 was a year of transition from a development stage to commercialization phase of our business. Our strategic positioning in 2006 to strengthen our balance sheet, develop national distribution for Trump Super Premium Vodka and Newman’s Own, and launch a national sales and marketing campaign, all laid the groundwork for several promising initiatives announced in the first two quarters of 2007, including our Trump Super Premium Vodka flavor extensions and our landmark partnership with Interscope Geffen A&M Records.”
Mr. Kenny continued, “Our goal is to build a major beverage company with an enormous collection of premium beverages with global distribution and marketing resources, creating highly valuable brand assets in a well-balanced product portfolio. Trump Super Premium Vodka and Willie Nelson’s Old Whiskey River Bourbon are already very valuable by industry metrics.”
Gross margin in the fourth quarter 2007 was 18.7% compared with 34.0% in the fourth quarter of 2006. The decline is attributed to a change in the sales mix, as Newman’s Own products are sold at significantly lower margins compared with the Company’s alcoholic brands.
SG&A expenses in the fourth quarter 2007 were $2.5 million compared with $1.7 million in the fourth quarter of 2006. The increase is mainly due to marketing and advertising expenditures related to Trump Super Premium Vodka.
Net loss for the fourth quarter was $1.8 million, or $0.02 per basic and diluted share, compared with a net loss of $2.4 million, or $0.04 per basic and diluted share for the fourth quarter of 2006.
First quarter and early second quarter 2008 highlights include:
— Signed joint venture with Interscope Geffen A&M Records, part of Universal Music Group, the largest record company in the world. — Announced the upcoming launch of Trump Super Premium Vodka flavors in fiscal second quarter. — Trump Super Premium Vodka awarded a four-star rating from pre-eminent reviewer F. Paul Pacult’s Spirits Journal, one of the most respected and independent authorities in evaluating spirits products. — Commenced shipping Trump Super Premium Vodka 1.75 liter size to all major markets. — Trump Super Premium Vodka sold to over 50,000 outlets, including both retail chains and on-premises accounts. All distributors in key markets have reordered. — Willie Nelson’s Old Whiskey River Bourbon marketing program in Florida driving $150,000 in incremental sales 50% ahead of last year. — Newman’s Own Sparkling Fruit Juices & Waters growing at 150% versus last year. — Drinks Americas premium wine business shipped $350,000 or 203% increase from last year.
Fourth quarter 2007 business highlights include:
— Signed agreement with prominent Hollywood producers for cross- marketing and product placement of Drinks Americas’ beverages in movie and television productions. — Announced the start of the company media and promotional plan for Trump Super Premium Vodka to drive sales with consumer pull-through programs. — Added Trump 24K Super Premium Vodka bottle with 24 karat gold label and pre-sold 1,000 cases to distributors for premium clubs and key luxury accounts. — Elected new board member, Hubert Millet, who brings extensive global branding expertise from Seagram’s to maximize the Drinks Americas’ international growth opportunities. — Added and commenced shipping of 50 ml ‘mini’ bottle of Trump Super Premium Vodka.
Mr. Kenny concluded, “As we continue into our fiscal 2008, we are extremely excited with our joint venture with Interscope Geffen A&M Records, part of Universal Music Group, the largest music company in the world. Partnering with an established leader in a multi-billion dollar industry, it represents a landmark achievement for Drinks Americas. With limited investment on our part, we gain access to their enormous resources and marketing power that will result in accretive initiatives to fuel our revenue growth. The marketing of iconic partners accelerates consumer acceptance and further broadens channels of distribution.
“As a result of our partnership, we are in discussions with several of their artists and expect to reach a formal agreement shortly for the first of many new products. We are currently exploring the premium, high margin, large global growth categories, including the ultra and premium cognac and tequila category and the premium beer and craft beer segment and the non-alcoholic category where we can leverage under the cap resources. Looking over the longer term, we expect to launch up to four product initiatives in partnership with Interscope.
“As we continually evaluate the best uses of our capital, we also plan to be opportunistic with acquisitions. Our acquisitions strategy is targeting accretive EBITDA at a favorable multiple, combined with a scalable business opportunity to accelerate our introduction of premium beverages with global icons. We know these opportunities exist.”
Conference Call Details
A company-hosted teleconference will be held on Wednesday, August 8, 2007 at 10:00 AM ET. The dial-in number for the conference call is 1-866-425-6195, confirmation number 9086380. To listen to the live Webcast, log on to the investor relations section of the Company’s website at www.drinksamericas.com. The call will also be available for replay for seven days by dialing 1-877-519-4471, pin number 9086380.
About Drinks Americas
Drinks Americas develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages associated with renowned icon celebrities. Drinks Americas’ portfolio of premium alcoholic beverages includes Donald Trump’s Trump Super Premium Vodka and Willie Nelson’s Old Whiskey River Bourbon. The Company’s non-alcoholic brands include the distribution of Paul Newman’s Own Lightly Sparkling Fruit Juice Drinks and Flavored Waters.
Other products owned and distributed by Drinks Americas include award-winning Damiana Liqueur and Aguila Tequila from Mexico, Cohete Rum Guarana from Panama, and Rheingold Beer. Damiana, Old Whiskey River, Aguila Tequila and Cohete Rum are Gold and Silver Medal award winners respectively from the International Beverage Tasting Institute and the San Francisco International Wine and Spirits Competition. For further information, please visit our website at www.drinksamericas.com
Drinks Americas was founded in 2004 by J. Patrick Kenny, a leading expert in beverage sales and marketing. Mr. Kenny developed his industry expertise in a variety of management positions at the world’s leading beverage companies, including Joseph E. Seagram and Sons and The Coca-Cola Company. He has also acted as advisor to several Fortune 500 beverage marketing companies, and has participated in several beverage industry transactions.
Safe Harbor
Except for the historical information contained herein, the matters set forth in this press release, including the description of the company and its product offerings, are forward-looking statements within the meaning of the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the historical volatility and low trading volume of our stock, the risk and uncertainties inherent in the early stages of growth companies, the company’s need to raise substantial additional capital to proceed with its business, risks associated with competitors, and other risks detailed from time to time in the company’s most recent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. The company disclaims any intent or obligation to update these forward-looking statements.
DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES Consolidated Statements of Operations (Unaudited) Three Months Ended 12 Months Ended April 30, April 30, 2007 2006 2007 2006 (Restated) (Restated) ———— ———— ———— ———— Net sales $ 825,797 $ 501,906 $ 6,084,520 $ 1,607,606 Costs of sales 671,492 331,365 3,584,019 1,154,834 ———— ———— ———— ———— Gross margin 154,305 170,541 2,500,501 452,772 Operating Expenses: Selling, general and administrative expenses 2,459,939 1,655,946 9,981,588 4,766,120 ———— ———— ———— ———— Loss before other income (expense) (2,305,634) (1,485,405) (7,481,087) (4,313,348) Other income (expense): Interest (61,700) (153,099) (770,678) (926,243) Impairment of Intangible Asset – (804,161) – (804,161) Gain (Loss) on extinguishment of debt 548,022 – (1,103,735) – Other (14,236) 8,381 (33,750) 198,381 ———— ———— ———— ———— 472,086 (948,879) (1,908,163) (1,532,023) ———— ———— ———— ———— Net loss $ (1,833,548) $ (2,434,284) $ (9,389,250) $ (5,845,371) ———— ———— ———— ———— Net loss per share, basic and diluted $ (0.02) $ (0.04) $ (0.14) $ (0.10) ———— ———— ———— ———— ———— ———— ———— ———— DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES Consolidated Balance Sheet April 30, 2007 ———– ASSETS (unaudited) Current assets: Cash and cash equivalents $ 994,768 Accounts receivable, net 887,679 Inventory 2,252,374 Other current assets 966,872 ———– Total current assets 5,101,693 Property and Equipment 129,950 Investment in Equity Investees 61,636 Intangible Assets 860,399 Deferred loan costs 26,916 Other 404,601 =========== $ 6,585,195 ———– LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,494,176 Notes and loans payable 1,013,588 Accrued Expenses 1,255,708 Advances on shares to be issued 20,000 ———– Total current liabilities 3,783,472 ———– Stockholders’ equity $ 2,801,723 ———–
Investor Contacts: Stanley Altschuler / Ryan Daniels Strategic Growth International 150 East 52nd Street, 22nd Fl. New York, NY 10022 T: (212) 838-1444 Email Contact Media Contact: Charles Davidson T: (203) 762-7000 X18 Email Contact
SOURCE: Drinks Americas Holdings, Ltd.