The Artisanal Spirits Company plc (ART) Earnings Call Transcript & Summary

Now I'm delighted to introduce our full year 2021 results, our first full year results since our IPO in June of 2021. The Artisanal Spirits Company is the owner of the Scotch Malt Whiskey Society, which is a leading curator and provider of premium single-cask, single-malt scotch whiskeys, primarily for sale online to a discerning global membership. The operational results are underpinned in 2 distinct areas: firstly, membership and revenue growth, which is comfortably ahead of market expectations. Revenue is up 21% on the prior year; and membership is now over 33,000 members, up 18%. The second is strong growth against our strategic framework, which we set out at the time of IPO. We have decisive delivery on what we said we would do. And these pillars will ensure that we meet our stated aim of doubling sales between 2020 and 2024. The 5 strategic pillars of our framework are our primary focus, and these will drive the ambition of doubling our sales. So our membership growth were up 18% overall, but importantly, driven by China being up 57%; the U.S., being up 18%; and the U.K., being up 20%, all providing momentum as we lead into 2022 with that membership growth. Enhancing our digital experience. We have delivered new e-commerce platforms, in particular, SMWS.eu for the post-Brexit, also the new jgthomson.com, and we'll continue to roll out further platforms globally. Value creation. We have identified supply chain facilities being an important factor to improve margins, and we have a signed long-term lease for that. We've made significant investments in further mature stocks and also in new cask wood. Complementary new brands. We've launched J.G. Thomson, a small batch blended malt whiskey offering, and we've made considerable steps to capitalize on the fast-growing American whiskey opportunity. And talent and organization development. We've developed and embedded our company culture into the business called Spirited, and we continue to attract strong talent for new roles that we are creating.

Overall, it's been our best-ever year. So there's quite a few highlights to draw attention to. We've seen significant growth in both revenue and membership comfortably ahead of market expectations. And also pleasingly, the suspension of the U.S. tax has helped drive up our gross margin to over 61%. On membership, I'm really pleased to see an improving global retention now up to 77% as a worldwide average. And that sticky, high spending membership, combining with a high-margin model, generates a substantial expected member lifetime value of over GBP 1,400. Then on casks and spirit stock, we again see that multiplier effect of the growing volume, combining with increasing average selling prices to add an extra GBP 90 million to the retail value of our cask inventory this year. With our margins of, let's say, high over 60%, it generates the potential for over GBP 250 million of gross profit from our existing stock. And when you combine that with our current membership, which is the highest it's ever been, it gives us a great platform for the future.

Revenue growth is over 30% and in line with management expectations. Global membership to February this year is now over 34,000 members globally. We're making further big commerce rollouts as we upgrade e-commerce platforms globally, and our supply chain facility will be operational in the second half of this year. Good progress is being made to capitalize on the opportunity in the sizable and fast-growing American whiskey opportunity. So we continue to make decisive delivery against our 5 strategic pillars. We've got strong tailwinds in making further progress to achieve our doubling of sales in 2024.