Supercubes and Tonik

Okay. Let’s get some dialogue going on this fast growing part of the Keytone business:

What we know about Supercubes:

Oct-2019

1. Purchased business.

2. 12 months of sales to 30 June 2019 (pre acquisition) of $650k.

3. Monthly run rate of $55k but possibly higher as:

“significant distribution and sales only achieved in the last quarter of FY19” Source: 17/10/2019 Announcement

“In the two months to date in the FY20 year, Super Cubes has achieved 40% of FY19’s full year result” Source: 18/09/2019 Announcement

Let’s assume we at this point were running at a very conservative $25k a month.

4. Initial order of $165k for Wholefood bars:

“First order for the wholefoods bars has a value in excess of $165,000 with the bars expected to be ranged from late October 2019” Source: 17/10/2019 Announcement

Dec-2019

1. 54% month-on-month growth in sales since acquisition.
“The sales of the Company’s proprietary products under its Super Cubes brand continued to grow at an average of 54% month-on-month since acquisition” Source: 29/01/2020 Announcement Dec-19 4C
So assuming we were running at (a conservative) $25k a month in October means we are at $60k in December ($25k x 1.54^2)

Mar-2020

“the monthly revenue from Super Cubes specifically is now greater than 4.8x the revenue in the month immediately following the acquisition of the business, being less than six months ago” Source: 30/04/2020 Announcement Mar-20 4C

1. We know that the month following acquisition was November-19. Assuming we were at $25k in October-19 and November had grown to $38k ($25k x 1.54) then the monthly revenue at the end of March has now grown to c.$182k ($38k x 4.8)

Let’s see if this makes sense based on the annual report:

November - $38k
December - $58k
January - $90k (assumed)
February - $140k (assumed)
March - $182k (extrapolated from Nov)
Total = $508k
This seems reasonable given the $651k from Australian Proprietary products in the Annual report, allowing a slower start for Tonik?

Jun-2020

“The sales of the Company’s proprietary products under its Super Cubes and Tonik brands have continued to scale and gather momentum. Sales for the proprietary products were 200% greater than the prior quarter” Source:15/07/2020 Announcement Jun-20 4C

1. Prior quarter we estimated Supercubes at $420k and Tonik at possibly $100k?

2. If this is correct, then sales in June for both Supercubes and Tonik would have increased significantly to $1,560k ($520k + 200%) or about $500k a month.

Summary

As we can see from the above, it is very easy for these kinds of products to scale in revenue quickly and add a considerable amount to the top (and bottom) line. Higher margins also expected from these products.

At the recent AGM, the Chairman spoke of “week-on-week sales growth”. This statement alone is very encouraging to know they are tracking the growth weekly. This to me suggests that the growth rates have continued.

The CEO also spoke of being on track for “another record breaking quarter” and if all goes to plan “profitability and cash generation” in the second half of this year (1 October 2020 to 31 March 2021)

If anyone is running their own set of numbers on the proprietary products please feel free to share and we can compare notes.

Cheers,
TT