One year ago, in this end-of-year report, I said that for the first time, our annual sales had topped $2 million and after considerable market development and ongoing technology improvements, we’d finally reached profitability.
I called it a “milestone year” and went on to say that “without doubt, 2020 will be an interesting and exciting new year.” In retrospect I should have added the word challenging. Interesting, exciting, and challenging.
The good news, in a year like 2020, is that there actually is some good news. Once again, our revenues topped $2 million and despite cancellations for many of our events and periodic closures of bars and restaurants across all of our markets, we were actually up 12% over the previous year.
It took a lot of work and I’m ever so grateful for the team we have here at Cleveland Whiskey. We kept making whiskey the entire time, no layoffs, no furloughs, but also, like many of our industry colleagues, we shifted some of our production to hand sanitizer.
In early March, we partnered with the Cleveland Clinic and distilled, blended, and bottled enough sanitizer for thousands of their front-line health care workers while also taking our trucks on the road and making sanitizer deliveries to many of the places most in need, including nursing homes, fire stations and police stations across the region.
We never took a dime for any of that work but of course we were helped through some of the toughest times by a few low interest loans and a couple of competitive grants as well as the Payroll Protection Program. The people we pay money to, our lenders, our landlord and many of our vendors helped us out by deferring payments at a critical time and I thank them all for lending a hand when we needed it most.
It was indeed a challenging time but in the middle of all this we shifted our marketing programs, worked on implementing more efficiencies, actually added some sales staff, boosted production, and ultimately improved our gross margin. Bottom line, and despite the many hurdles we’ve all faced this year, it all came down to you. You kept buying our bottles off the shelves and once again we had profitable year.
You can see the numbers in the financials. When you get into the weeds, you’ll see that our reported profitability in 2019, once we adjusted for previously granted multi-year stock-based compensation put us at a GAAP net loss which we were able to flip to positive in 2020. Note that what is shown on our financials is pre-tax income as we do not yet have final tax provision from our outside tax accountants (BDO).
It’s not all good news of course. We’re still not exporting and unless the powers that be make some changes, the duties on exported whiskey to the European Union are scheduled to double (to 50%) later this year. That’s keeping us out of those markets.
On the plus side however, we introduced our newest product, a wheated bourbon with the name Wheat Penny 1958™ as well as a private label Bridge & Main™ (currently available in select Florida stores). Wheat Penny has already won two Gold medals and we’re now up to 101 total awards with 47 Gold, Double Gold, Platinum or Best in Class. For more on our Wheat Penny bourbon, including some background video, tasting notes and where you can buy it.,
More good news and something I’m very excited about is that we’ve found a new building and plan on moving our distillery operations later this year. That means of course that much of my days are now spent with architects, engineers, lawyers, accountants, and consultants. For a local television news story and some background on the build, click here:
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Once again, interesting, exciting, and challenging. I’ll send along updates in our quarterly reports, but I also suspect that once we start building more pictures will show up on social media.
Another thing before I forget. If you are still waiting for this year’s K-1, please remember that we changed our structure from an LLLC to a Delaware corporation at the beginning of the year. That means no more K-1’s. If you have any questions on this or any of the details on the financial statements, I’m going to suggest that you directly contact our CFO, Reese Edwards [email protected].
And while you can write to Reese, as always feel free to write to me with any questions, comments, or ideas. With almost 2,000 investors, it’s not always possible to reply to each message, I do however always try to read what you send and pay attention to what you say.