Lark Distilling quashes CEO speculation

Lark Distilling has dismissed speculation that current chairman David Dearie may be poised to assume its vacant CEO position.

Lark has been without a permanent CEO since the sudden exit of Geoff Bainbridge in February.

David Dearie last week resigned from his role as CEO of Ste Michelle Wine Estates in Oregon, USA, “to move closer to his family and pursue his other interests”.

But a Lark Distilling spokesperson this week told Drinks Adventures that Dearie is definitely not in the frame for the executive position.

The former Treasury Wine Estates boss will continue as company chair, a role he has held since 2019.

Non-executive director Laura McBain has been acting as interim CEO since February.

Lark identified the appointment of a new CEO as a “key strategic initiative” planned for this financial year in its FY22 results announcement in August.

The company reported record net sales of $20.3 million and EBITDA of $1.4 million, with 2.1 million litres of whisky now under maturation, up from 1.1 million litres at the end of FY21.

But the results did nothing to arrest the company’s sliding share price, which hit a new 12-month low of $1.91 this week, down from $5.40 in November 2021.

Investors low on confidence

Lark’s largest shareholder, Perennial Value Management, increased its stake in the company shortly after Bainbridge’s exit, noting the discrepancy between its $300 million market cap versus its whisky inventory valued at $430 million.

Chairman Dearie fancied the stock at $2.97 in May, when he snapped up another 67,267 shares for just under $200K.

But this was the last show of confidence, even as Lark’s whisky inventory surpassed $560 million in value, versus its market cap of $144 million on Wednesday.

The Shene Estate acquisition bolstered Lark’s inventory by 450,000 litres, while it also achieved a 25 per cent increase on its net sales value per litre to $269.

“The volume and diversity of our whisky bank, allows us to deliver a broad range of classic and limited release products, which this year included 20 year old Legacy together with innovative products such as Chinotto Cask and Dark Lark,” the company’s Annual Report says.

“These have contributed to continued growth of our net sales value per during the year.”

The incoming CEO is now expected to be someone with management pedigree in multinational spirits.

They will be confronted with the challenge of selling the market a compelling story that Lark has the strategic ability to execute on its promising fundamentals.

Chris Malcolm toasts well-timed exit

One investor that avoided the carnage is Chris Malcolm, founder of Hidden Lake Whisky and the former CEO of Australian Whisky Holdings, which was rebadged as Lark Distilling in May 2020.

“I sold out 100 per cent of my shares through the broker Barrenjoey the same day that Lark Distilling raised their $50-odd million through Barrenjoey,” he told the Drinks Adventures podcast in July.

“I was very happy to leave as the second largest shareholder at $5 a share, compared to where it is now.”