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Vintage Wine Estates Reports Second Quarter Fiscal 2024 Results

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Vintage Wine Estates, Inc. reported financial results, generating $11.9 million in cash from operations in the quarter. The company aims to streamline operations, reduce debt through asset sales, and focus on high-quality wine products. Despite a decline in net revenue and increased interest expense, VWE is actively working on restructuring and transformation plans to enhance profitability. The company has been granted an additional 180-day extension to regain compliance with Nasdaq's minimum bid price requirement.
Positive
  • Generated $11.9 million in cash from operations in the quarter
  • Focus on streamlining operations and reducing debt through asset sales
  • Reported decline in net revenue and increased interest expense
  • Active efforts towards restructuring and transformation for enhanced profitability
  • Granted additional 180-day extension to regain compliance with Nasdaq's minimum bid price requirement
Negative
  • Net revenue decreased by $10.4 million across all business segments
  • Loss from operations in the quarter was $40.7 million
  • Increased interest expense of $6.1 million
  • Net loss attributable to VWE common stockholders was $49.4 million
  • Second quarter fiscal 2024 adjusted EBITDA was $(28.8) million

Examining the financial results of Vintage Wine Estates, the reported net loss attributable to VWE common stockholders of $49.4 million is a significant figure that warrants investor attention. Despite this loss, the company's ability to generate $11.9 million in cash from operations indicates a degree of operational efficiency in managing working capital and inventory. This cash generation could be seen as a positive signal in the short-term, suggesting that the company is taking steps to stabilize its financial position.

However, the increase in interest expense due to higher interest rates could pose a long-term challenge, as it may affect the company's cost of debt and ultimately its net earnings. Additionally, the adjusted EBITDA being negative at $(28.8) million is concerning, as it reflects the company's operating performance without the impact of non-cash expenses and is a commonly used metric to assess a company's profitability and financial health.

The strategic shift towards an omnichannel business model and the focus on a core portfolio of Super Premium+ products suggest that Vintage Wine Estates is attempting to adapt to changing market conditions and consumer preferences. The move to streamline operations and sell non-core assets is aimed at reducing costs and debt, which could potentially improve the company's competitive advantage in the long-term. The impact of these changes on the company's market position will depend on the successful execution of the turnaround plan and the ability to leverage its market access effectively.

It is also crucial to monitor the end market demand, as a softer demand can have a ripple effect on the company's sales and growth prospects. With the company's stock trading below the Nasdaq minimum bid price requirement, investor confidence could be influenced by the company's ability to meet the compliance deadline, which now has an extended timeframe until September 2024.

The forbearance agreement with lenders is a critical development, granting the company time to restructure its operations and address its debt obligations. The flexibility provided by the forbearance agreement is a temporary relief, but it underscores the urgent need for the company to amend its credit agreement and meet the terms of the forbearance to avoid acceleration of debt maturity. Investors should be aware of the risks associated with the company's current debt level of $305.6 million and the possibility of not having sufficient cash to repay the debt if the forbearance terms are not met.

The disclosure that approximately 40% of debt is hedged at a blended rate of 2.3% until 2025 provides some predictability regarding interest payments, which is a positive aspect in terms of financial planning. Nonetheless, the overall debt situation remains a critical factor in assessing the company's long-term financial stability and investor risk.

  • Generated $11.9 million in cash from operations in the quarter
  • Granted additional time to regain compliance with Nasdaq minimum bid price listing requirement

SANTA ROSA, Calif.--(BUSINESS WIRE)-- Vintage Wine Estates, Inc. (Nasdaq: VWE and VWEWW) (“VWE” or the “Company”), one of the top wine producers in the U.S., today reported its financial results for the three and six months ended December 31, 2023 ("second quarter fiscal 2024").

Seth Kaufman, President and CEO, commented, “We are intensely focused on our priorities to aggressively execute our turnaround plan as we transform into a nimble, omnichannel wine company that offers a unique portfolio of the highest quality Super Premium+ products in the U.S. Cash generation in the second quarter validates our efforts to monetize inventory and better manage working capital. We have accelerated our efforts to preserve cash through restructuring and have taken measurable steps towards streamlining the business to a competitively advantaged, defensible core portfolio. We are actively working to sell assets to reduce debt and continue to optimize operations to further improve cash generation.”

Mr. Kaufman went on to say, “I am encouraged with the progress we are making with our asset sales process given the quantity and quality of our discussions with prospective buyers. Our concerted effort has resulted in numerous attractive indications of interest, bids and a non-binding letter of intent across stand-alone DTC operations, certain production services businesses, and other non-core assets. The sale of these assets will provide cash to reduce debt and we believe will simultaneously help us to substantially reduce costs which have been elevated by these less profitable businesses. We expect the simplification of our operations will also enable us to better deploy human and financial resources to create an omnichannel business that leverages our market access across wholesale partners, tasting rooms, wine clubs and ecommerce in order to acquire, engage, retain, and delight consumers. We expect the restructured foundation of our enterprise that we are working toward will result in a meaningfully smaller revenue base that can ultimately support faster growth while delivering profitability more in line with best-in-class branded beverage alcohol businesses.”

Second Quarter Fiscal 2024 Financial Results Review (compared with restated prior-year period unless otherwise noted)

Net revenue was $68.0 million, down $10.4 million across all business segments. Approximately 58%, or $7.0 million, of the decline was related to the impact of simplification and reallocation of resources including $3.6 million lower in bulk whiskey sales. Other factors impacting revenue were customer program timing and softer end market demand. Cost of goods sold was $83.0 million, which included a $32.3 million provision for inventory comprised of reducing the value of non-core products and aged inventory as well as bulk wine inventory related to the company’s narrowed brand focus.

SG&A, which excludes amortization expense, decreased $6.9 million to $25.3 million. Lower SG&A reflects lower stock-based compensation expense, reduced marketing expenses on non-core product lines, improved freight management and tighter cost controls. Loss from operations in the quarter was $40.7 million.

Interest expense was $6.1 million, an increase of $0.5 million, or 8.3%, on higher interest rates.

Net loss attributable to VWE common stockholders was $49.4 million, compared with $129.1 million in the prior-year period. On a per diluted share basis, net loss attributable to VWE common stockholders was $(0.83) compared with net loss of $(2.19) per diluted share in the prior-year period.

Second quarter fiscal 2024 adjusted EBITDA1 was $(28.8) million compared with adjusted EBITDA of $5.0 million in the prior-year period.

_____________________________________
1 As referenced here and throughout the release, adjusted EBITDA is a non-GAAP measure. Please see related disclosures regarding the use of non-GAAP measures in this news release.

Balance Sheet and Cash Generation

Cash from operations in the second quarter was $11.9 million reflecting inventory reductions, aggressive efforts to collect receivables and carefully managing payables. Inventories were down $44.1 million, or 22%, from September 30, 2023. The decline reflects the $32.3 million reserve as well as monetization of non-core and aged inventory. Property, plant and equipment was reduced by $27.5 million primarily as a result of $26.4 million in net assets being categorized as held for sale at December 31, 2023.

As of December 31, 2023, the Company had $21.4 million in cash and $305.6 million of current debt outstanding. Total debt increased $2.3 million from $303.3 million at June 30, 2023 but decreased $3.9 million from $309.5 million at September 30, 2023. The Company announced on March 5, 2024 that its lender group has accepted its plans to reorganize and dispose of certain assets and has provided an agreement to forbear exercising their rights and remedies under the Second Amended and Restated Loan and Security Agreement as amended on October 12, 2023 (the “Second A&R Loan and Security Agreement”), in respect of, or arising out of, certain defaults under the Second A&R Loan and Security Agreement until the earlier of March 31, 2024 or in the event of any other event of default other than those designated in the agreement. As previously disclosed, the Second A&R Loan and Security Agreement currently has principal amounts outstanding of $324.3 million at February 29, 2024. The forbearance agreement provides flexibility for the Company to continue executing the previously announced restructuring and transformation while working with its lenders on an amended credit agreement. If the Company does not meet the terms of the forbearance agreement or if the events of default continue past the term of the forbearance agreement, and if the agent and lenders accelerate the maturity of the debt thereunder, the Company does not have sufficient cash to repay the outstanding debt.

At December 31, 2023, approximately 40% of debt was hedged at a blended rate of 2.3% until 2025.

180-day extension to continue trading on Nasdaq and regain compliance

The Company’s application for transfer to the Capital Markets was approved by Nasdaq. VWE received confirmation today that it has been granted an additional 180-day extension for the Company to regain compliance with the minimum bid price requirement under Nasdaq Listing Rule 5450(a)(1), which requires the bid price of VWE Common Shares to close at or above US$1.00 per share for a minimum of 10 consecutive business days. The Company now has until September 9, 2024 to regain compliance. The Company filed a Form 8-K on September 19, 2023 regarding its receipt of notice from The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company was not in compliance with the minimum bid price requirement.

About Vintage Wine Estates, Inc.
Vintage Wine Estates brings to market a unique portfolio of cider and Super Premium+ wines at $15+ per bottle. The Company focuses on building enduring and differentiated brands that resonate with consumers to generate increasing organic demand in the U.S. It leverages brand-affiliated wine clubs, tasting rooms, and owned ecommerce sites in conjunction with deep wholesale relationships to offer consumers a holistic, omnichannel experience. VWE’s ambition is to be one of the fastest growing players in the branded wine space with best-in-class profitability and consistent cash generation to create value for all stakeholders. The Company is doubling down on a culture that is uniquely consumer-centric and intensely data-driven in service of over fifteen core wine brands spanning approachably priced lifestyle labels and high-scoring premium brands.

Non-GAAP Financial Measures
In addition to reporting net income/(loss) and net income/(loss) margin prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), VWE uses adjusted EBITDA, adjusted EBITDA margin, adjusted net income/(loss) and adjusted net income/(loss) per share to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies. Beginning for the three months ended September 30, 2023, Adjusted EBITDA is defined as net income (loss) attributable to common stockholders before interest, income taxes, depreciation and amortization, stock-based compensation expense, casualty losses or gains, impairment losses, changes in the fair value of derivatives, restructuring related income or expenses, acquisition and integration costs, and certain non-cash, nonrecurring, or other items that are included in net income that VWE does not consider indicative of its ongoing operating performance. Prior to the three months ended September 30, 2023, we used net income (loss) in our calculation of Adjusted EBITDA. We believe the use of net income (loss) attributable to common stockholders in our calculation of Adjusted EBITDA is more helpful than net income (loss) in evaluating our operating performance because it excludes amounts attributable to non-controlling interests. Adjusted EBITDA margin is the ratio of adjusted EBITDA to net revenue. Presentations of Adjusted EBTDA EBITDA and Adjusted EBTDA EBITDA margin for prior periods have been recast to conform to the current period presentation. Adjusted net income/(loss) is defined as net income/(loss) attributable to common stockholders as reported adjusted for the impacts of amortization of intangible assets, acquisition integration costs, gains or losses on disposition of assets, gain on litigation of proceeds, COVID impact, and inventory acquisition basis adjustment and also adjusted for a normalized tax rate. Adjusted net income/(loss) per share is calculated based on the weighted average shares outstanding for the period.

Adjusted EBITDA, adjusted EBITDA margin, adjusted net income/(loss) and adjusted net income/(loss) per share are not recognized measures of financial performance under GAAP. VWE believes these non-GAAP measures provide investors with additional insight into the underlying trends of VWE’s business and assist in analyzing VWE’s performance across reporting periods on a consistent basis by excluding items that VWE does not believe are indicative of its core operating performance, which allows for a better comparison against historical results and expectations for future performance. Adjusted EBITDA, adjusted EBITDA margin, adjusted net income/(loss), and adjusted net income/(loss) per share have certain limitations as analytical tools, and they should not be considered in isolation or as a substitute for analysis of results as reported under U.S. GAAP. These non-GAAP measures, as presented, may produce results that vary from the most comparable GAAP measure and may not be comparable with a similarly defined non-GAAP measure used by other companies.

In evaluating adjusted EBITDA, adjusted EBITDA margin, adjusted net income/(loss), and adjusted net income/(loss) per share, be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. VWE’s presentation of adjusted EBITDA, adjusted EBITDA margin, adjusted net income/(loss), and adjusted net income/(loss) per share should not be construed as an implication that future results will be unaffected by the types of items excluded from the calculation of these non-GAAP measures.

Key Performance Indicators
A key performance indicator ("KPI") is generally defined as a quantifiable measurement or metric used to gauge performance, specifically to help determine strategic, financial, and operational achievements, especially compared to those of similar businesses.

Case volume represents the number of 9-liter equivalent cases of wine that we sell during a particular period. Case volumes are an important indicator of what is driving gross margin. This metric also allows us to develop our supply and production targets for future periods.

Forward-Looking Statements
Some of the statements contained in this press release are forward-looking statements within the meaning of applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements are all statements other than those of historical fact, and generally may be identified by the use of words such as “believe,” “intent,” “may,” “plan,” “should,” “can,” “expect,” “continue,” “working,” “will,” or other similar expressions that indicate future events or trends. These forward-looking statements include, but are not limited to, statements related to business plans and strategies; the ability of the company to monetize non-core assets and for such monetization to generate cash to reduce debt and optimize operations; the timing and expectations related to the sales process including the work to sell stand-along DTC operations, certain production service businesses, and other non-core assets including through indications of interests, bids, and the non-binding letter of intent; the ability of the Company to simplify its business and for such simplification to allow it to leverage its human and financial resources; the ability of the Company to restructure its foundation and for such foundation to support faster growth and deliver profitability; the grant of an additional compliance period to regain compliance with Nasdaq listing requirements; the ability of the company to remain in compliance with the forbearance agreement and cure its events of default before the term of the forbearance agreement; the ability of and timing related to VWE entering into an amendment to its credit agreement with its lenders. These statements are based on various assumptions, whether or not identified in this news release, and on the current expectations of VWE’s management. These forward-looking statements are not intended to serve as, and should not be relied on by any investor as, a guarantee of actual performance or an assurance or definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ materially from those contained in or implied by such forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the control of VWE. Factors that could cause actual results to differ materially from the results expressed or implied by such forward-looking statements include, among others: the Company’s ability to continue as a going concern; the Company’s ability to deleverage within the anticipated time frame or at all and its ability to regain and remain in compliance with the covenants in its credit agreement, or satisfy its other contractual arrangements, including the forbearance agreement with its lenders; the ability of the Company to regain compliance with Nasdaq continued listing requirements; the Company’s limited experience operating as a public company; the time and expense associated with any necessary remediation of control deficiencies; the ability of the Company to effectively execute its strategic plans to reimagine the Company; the ability of the Company to retain key personnel; the effect of economic conditions on the industries and markets in which VWE operates, including financial market conditions, rising inflation, fluctuations in prices, interest rates and market demand; risks relating to the uncertainty of projected financial information; the effects of competition on VWE’s future business; risks related to the organic and inorganic growth of VWE’s business and the timing of expected business milestones; the potential adverse effects of pandemics, or other outbreaks that could disrupt VWE’s business and the U.S. economy; declines or unanticipated changes in consumer demand for VWE’s products; VWE’s ability to adequately source grapes and other raw materials and any increase in the cost of such materials; the impact of environmental catastrophe, natural disasters, disease, pests, weather conditions and inadequate water supply on VWE’s business; VWE’s level of insurance against catastrophic events and losses; VWE’s significant reliance on its distribution channels, including independent distributors; potential reputational harm to VWE’s brands from internal and external sources; possible decreases in VWE’s wine quality ratings; integration risks associated with recent acquisitions; possible litigation relating to misuse or abuse of alcohol; changes in applicable laws and regulations and the significant expense to VWE of operating in a highly regulated industry; VWE’s ability to maintain necessary licenses; VWE’s ability to protect its trademarks and other intellectual property rights; risks associated with the Company’s information technology and ability to maintain and protect personal information; VWE’s ability to make payments on its indebtedness; and those factors discussed in the Company’s most recent Annual Report on Form 10-K and in subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. There may be additional risks including other adjustments that VWE does not presently know or that VWE currently believes are immaterial that could also cause actual results to differ from those expressed in or implied by these forward-looking statements. In addition, forward-looking statements reflect VWE’s expectations, plans or forecasts of future events and views as of the date and time of this news release. VWE undertakes no obligation to update or revise any forward-looking statements contained herein, except as may be required by law. Accordingly, undue reliance should not be placed upon these forward-looking statements.

Financial Tables Follow.

Vintage Wine Estates, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

December 31, 2023

 

 

June 30, 2023

 

Assets

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

21,412

 

 

$

18,233

 

Restricted cash

 

 

200

 

 

 

-

 

Accounts receivable, net

 

 

22,970

 

 

 

24,561

 

Other receivables

 

 

443

 

 

 

507

 

Inventories

 

 

155,255

 

 

 

201,363

 

Assets held for sale, net

 

 

35,878

 

 

 

511

 

Current interest rate swap asset

 

 

4,048

 

 

 

4,669

 

Prepaid expenses

 

 

11,831

 

 

 

14,895

 

Total current assets

 

 

252,037

 

 

 

264,739

 

Property, plant, and equipment, net

 

 

187,768

 

 

 

215,967

 

Operating lease right-of-use assets

 

 

28,783

 

 

 

32,945

 

Finance lease right-of-use-assets

 

 

516

 

 

 

630

 

Intangible assets, net

 

 

28,117

 

 

 

38,994

 

Interest rate swap asset

 

 

2,092

 

 

 

4,317

 

Other assets

 

 

3,195

 

 

 

3,562

 

Total assets

 

$

502,508

 

 

$

561,154

 

Liabilities, redeemable noncontrolling interest, and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

121,731

 

 

$

115,444

 

Accounts payable

 

 

27,425

 

 

 

20,413

 

Accrued liabilities and other payables

 

 

17,936

 

 

 

19,668

 

Accrued employee compensation

 

 

8,956

 

 

 

6,618

 

Current operating lease liabilities

 

 

6,194

 

 

 

6,243

 

Current finance lease liabilities

 

 

259

 

 

 

304

 

Current maturities of long-term debt

 

 

183,872

 

 

 

14,449

 

Total current liabilities

 

 

366,373

 

 

 

183,139

 

Other long-term liabilities

 

 

351

 

 

 

4,196

 

Long-term debt, less current maturities

 

 

-

 

 

 

173,409

 

Long-term operating lease liabilities

 

 

24,186

 

 

 

26,792

 

Long-term finance lease liabilities

 

 

265

 

 

 

334

 

Deferred tax liability

 

 

465

 

 

 

506

 

Total liabilities

 

 

391,640

 

 

 

388,376

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

252

 

 

 

262

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, no par value, 2,000,000 shares authorized, and none issued and outstanding at December 31, 2023 and June 30, 2023.

 

 

-

 

 

 

-

 

Common stock, no par value, 200,000,000 shares authorized, 62,761,784 issued and 59,889,890 outstanding at December 31, 2023 and 62,234,028 issued and 59,362,134 outstanding at June 30, 2023.

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

384,260

 

 

 

381,689

 

Treasury stock, at cost: 2,871,894 shares held at December 31, 2023 and June 30, 2023.

 

 

(26,034

)

 

 

(26,034

)

Accumulated deficit

 

 

(246,717

)

 

 

(182,308

)

Total Vintage Wine Estates, Inc. stockholders' equity

 

 

111,509

 

 

 

173,347

 

Noncontrolling interests

 

 

(893

)

 

 

(831

)

Total stockholders' equity

 

 

110,616

 

 

 

172,516

 

Total liabilities, redeemable noncontrolling interest, and stockholders' equity

 

$

502,508

 

 

$

561,154

 

Vintage Wine Estates, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three Months Ended December 31,

 

 

Six Months Ended December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

2022

 

Net revenue

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

$

46,838

 

 

$

53,706

 

 

$

99,501

 

$

105,976

 

Nonwine

 

 

21,151

 

 

 

24,695

 

 

 

41,762

 

 

50,505

 

Total revenue

 

 

67,989

 

 

 

78,401

 

 

 

141,263

 

 

156,481

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

 

67,393

 

 

 

36,655

 

 

 

102,328

 

 

69,676

 

Nonwine

 

 

15,579

 

 

 

16,000

 

 

 

29,218

 

 

31,529

 

Total cost of revenue

 

 

82,972

 

 

 

52,655

 

 

 

131,546

 

 

101,205

 

Gross (loss) profit

 

 

(14,983

)

 

 

25,746

 

 

 

9,717

 

 

55,276

 

Selling, general, and administrative expenses

 

 

25,262

 

 

 

32,139

 

 

 

54,011

 

 

63,588

 

Amortization expense

 

 

1,888

 

 

 

1,805

 

 

 

3,524

 

 

3,616

 

Goodwill impairment losses

 

 

-

 

 

 

125,285

 

 

 

-

 

 

125,285

 

Intangible impairment losses

 

 

4,742

 

 

 

12,643

 

 

 

4,742

 

 

12,643

 

Gain on remeasurement of contingent liability

 

 

(6,179

)

 

 

(3,474

)

 

 

(5,208

)

 

(3,289

)

Restructuring (benefit) expense

 

 

(158

)

 

 

-

 

 

 

3,844

 

 

-

 

Loss (gain) on insurance and litigation

 

 

148

 

 

 

-

 

 

 

148

 

 

(530

)

(Gain) loss on sale of assets

 

 

(2

)

 

 

4,430

 

 

 

(799

)

 

4,430

 

Loss from operations

 

 

(40,684

)

 

 

(147,082

)

 

 

(50,545

)

 

(150,467

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(6,119

)

 

 

(5,650

)

 

 

(11,044

)

 

(9,031

)

Net (loss) gain on interest rate swap agreements

 

 

(2,726

)

 

 

(839

)

 

 

(2,821

)

 

8,488

 

Loss on extinguishment of debt

 

 

-

 

 

 

(479

)

 

 

-

 

 

(479

)

Other, net

 

 

(53

)

 

 

216

 

 

 

(26

)

 

487

 

Total other (expense) income, net

 

 

(8,898

)

 

 

(6,752

)

 

 

(13,891

)

 

(535

)

Loss before provision for income taxes

 

 

(49,582

)

 

 

(153,834

)

 

 

(64,436

)

 

(151,002

)

Income tax (benefit) provision

 

 

(199

)

 

 

(23,652

)

 

 

45

 

 

(22,178

)

Net loss

 

 

(49,383

)

 

 

(130,182

)

 

 

(64,481

)

 

(128,824

)

Net loss attributable to the noncontrolling interests

 

 

(32

)

 

 

(1,047

)

 

 

(72

)

 

(1,221

)

Net loss attributable to common stockholders

 

$

(49,351

)

 

$

(129,135

)

 

$

(64,409

)

$

(127,603

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share allocable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.83

)

 

$

(2.19

)

 

$

(1.08

)

$

(2.17

)

Diluted

 

$

(0.83

)

 

$

(2.19

)

 

$

(1.08

)

$

(2.17

)

Weighted average shares used in the calculation of earnings per share allocable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

59,721,395

 

 

 

58,941,899

 

 

 

59,567,221

 

 

58,880,529

 

Diluted

 

 

59,721,395

 

 

 

58,941,899

 

 

 

59,567,221

 

 

58,880,529

 

Vintage Wine Estates, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

Six Months Ended December 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(64,481

)

 

$

(128,824

)

Adjustments to reconcile net loss to net cash from operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

8,126

 

 

 

7,856

 

Non-cash operating lease expense

 

 

2,799

 

 

 

2,638

 

Amortization expense

 

 

3,680

 

 

 

3,742

 

Amortization of deferred loan fees and line of credit fees

 

 

862

 

 

 

220

 

Goodwill and intangible assets impairment losses

 

 

4,742

 

 

 

137,928

 

Stock-based compensation expense

 

 

2,546

 

 

 

6,690

 

(Benefit) provision for credit losses

 

 

(84

)

 

 

360

 

Provision for inventory reserves

 

 

32,474

 

 

 

497

 

Deferred income tax provision (benefit)

 

 

(41

)

 

 

(22,212

)

(Gain) loss on disposition of assets

 

 

(799

)

 

 

4,430

 

Loss on extinguishment of debt

 

 

-

 

 

 

479

 

Remeasurement of contingent consideration liabilities

 

 

(5,208

)

 

 

(3,289

)

Net loss (gain) on interest rate swap agreements

 

 

2,821

 

 

 

(8,488

)

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

1,353

 

 

 

1,485

 

Other receivables

 

 

64

 

 

 

3,066

 

Inventories

 

 

7,484

 

 

 

(4,837

)

Prepaid expenses and other current assets

 

 

3,064

 

 

 

(12,186

)

Other assets

 

 

(421

)

 

 

619

 

Accounts payable

 

 

5,386

 

 

 

12,001

 

Accrued liabilities and other payables

 

 

4,329

 

 

 

2,081

 

Net change in lease assets and liabilities

 

 

(1,291

)

 

 

(3,206

)

Net cash provided by operating activities

 

 

7,405

 

 

 

1,050

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sale of assets

 

 

1,366

 

 

 

8,692

 

Purchases of property, plant and equipment

 

 

(6,348

)

 

 

(8,312

)

Net cash (used in) provided by investing activities

 

 

(4,982

)

 

 

380

 

Cash flows from financing activities

 

 

 

 

 

 

Principal payments on line of credit

 

 

(10,791

)

 

 

(120,820

)

Proceeds from line of credit

 

 

17,078

 

 

 

101,903

 

Payment of deferred financing costs

 

 

-

 

 

 

(1,975

)

Change in outstanding checks in excess of cash

 

 

1,685

 

 

 

(467

)

Loan fees

 

 

(564

)

 

 

(377

)

Principal payments on long-term debt

 

 

(3,986

)

 

 

(58,497

)

Proceeds from long-term debt

 

 

-

 

 

 

72,619

 

Principal payments on finance leases

 

 

(156

)

 

 

(133

)

Payments of minimum tax withholdings on stock-based payment awards

 

 

(103

)

 

 

(976

)

Distributions to noncontrolling interest

 

 

-

 

 

 

(66

)

Repurchase of public warrants

 

 

-

 

 

 

(172

)

Payments on acquisition earnout

 

 

(2,207

)

 

 

(334

)

Net cash provided by (used in) financing activities

 

 

956

 

 

 

(9,295

)

Net change in cash, cash equivalents and restricted cash

 

 

3,379

 

 

 

(7,865

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

18,233

 

 

 

49,558

 

Cash and cash equivalents, and restricted cash, end of period

 

$

21,612

 

 

$

41,693

 

 

 

 

Six Months Ended December 31,

 

 

 

2023

 

 

2022

 

Supplemental cash flow information

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

 

Increase in operating lease assets and liabilities upon adoption of ASC 842

 

$

-

 

 

$

37,759

 

Increase in finance lease assets and liabilities upon adoption of ASC 842

 

$

-

 

 

$

67

 

Operating lease assets obtained in exchange for operating lease liabilities

 

$

118

 

 

$

-

 

Finance lease assets obtained in exchange for finance lease obligations

 

$

53

 

 

$

-

 

Issuance of shares in lieu of payment to consultant

 

$

129

 

 

$

-

 

Accrued interest on term loan and line-of credit refinanced to principal

 

$

-

 

 

$

1,726

 

Line of credit refinanced as term debt

 

$

-

 

 

$

9,646

 

Term debt refinanced with line of credit proceeds

 

$

-

 

 

$

3,823

 

Financing costs deducted from long-term debt proceeds

 

$

-

 

 

$

474

 

Financing costs deducted from line of credit proceeds

 

$

-

 

 

$

532

 

Vintage Wine Estates, Inc.

Segment Data

(in thousands)

 

Segment Revenue

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

Net Revenue

2023

 

2022

 

 

$ Change

 

 

% Change

 

Direct-to-Consumer

$

23,651

 

$

26,472

 

 

$

(2,821

)

 

(10.7

%)

Wholesale

 

17,786

 

 

23,083

 

 

 

(5,297

)

 

(22.9

%)

Business to Business

 

26,552

 

 

28,814

 

 

 

(2,262

)

 

(7.9

%)

Other/ Non-Allocable

 

-

 

 

32

 

 

 

(32

)

 

(100.0

%)

Total

$

67,989

 

$

78,401

 

 

$

(10,412

)

 

(13.3

%)

 

Six Months Ended December 31,

 

 

 

 

 

 

 

Net Revenue

2023

 

2022

 

 

$ Change

 

 

% Change

 

Direct-to-Consumer

$

41,633

 

$

46,464

 

 

$

(4,831

)

 

(10.4

%)

Wholesale

 

36,930

 

 

47,070

 

 

 

(10,140

)

 

(21.5

%)

Business to Business

 

62,700

 

 

62,994

 

 

 

(294

)

 

(0.5

%)

Other/ Non-Allocable

 

-

 

 

(47

)

 

 

47

 

 

(100.0

%)

Total

$

141,263

 

$

156,481

 

 

$

(15,218

)

 

(9.7

%)

Segment Operating Income

 

 

Three Months Ended December 31,

 

 

 

 

 

Operating Income

2023

 

2022

 

Dollar Change

 

Percent Change

 

Direct-to-Consumer

$

(8,400

)

$

1,424

 

$

(9,824

)

(689.9

%)

Wholesale

 

(19,729

)

 

(126,896

)

 

107,167

 

n/m

 

Business to Business

 

(1,305

)

 

(1,167

)

 

(138

)

n/m

 

Other/ Non-Allocable

 

(11,250

)

 

(20,443

)

 

9,193

 

n/m

 

Total

$

(40,684

)

$

(147,082

)

$

106,398

 

(72.3

%)

n/m - Not meaningful

 

Six Months Ended December 31,

 

 

 

 

 

 

 

Operating Income

2023

 

 

2022

 

 

Dollar Change

 

 

Percent Change

 

Direct-to-Consumer

$

(6,186

)

 

$

3,393

 

 

$

(9,579

)

 

 

(282.3

%)

Wholesale

 

(20,764

)

 

 

(124,608

)

 

 

103,844

 

 

n/m

 

Business to Business

 

3,335

 

 

 

9,366

 

 

 

(6,031

)

 

n/m

 

Other/ Non-Allocable

 

(26,930

)

 

 

(38,618

)

 

 

11,688

 

 

n/m

 

Total

$

(50,545

)

 

$

(150,467

)

 

$

99,922

 

 

 

(66.4

%)

n/m - Not meaningful

 

Segment Case Volume

 

 

Three Months Ended December 31,

 

 

(in thousands)

2023

 

2022

Unit Change

% Change

Direct-to-Consumer

106

125

-19

-15.2

%

Wholesale

357

453

-96

-21.2

%

Total case volume

463

578

-115

-19.9

%

 

Six Months Ended December 31,

 

 

(in thousands)

2023

2022

Unit Change

% Change

Direct-to-Consumer

182

224

-42

-18.8

%

Wholesale

806

992

-186

-18.8

%

Total case volume

988

1,216

-228

-18.8

%

Vintage Wine Estates, Inc.

Reconciliation of Net Income Attributable to Common Stockholders to Adjusted EBITDA

(Unaudited, in thousands)

 

 

Three Months Ended

 

Six Months Ended

 

(in thousands)

December 31, 2023

 

 

December 31, 2022

 

December 31, 2023

 

 

December 31, 2022

 

Net (loss) income attributable to common stockholders

$

(49,351

)

 

$

(129,135

)

$

(64,409

)

 

$

(127,603

)

Goodwill and intangible asset impairment losses

 

4,742

 

 

 

137,928

 

 

4,742

 

 

 

137,928

 

Interest expense

 

6,119

 

 

 

5,650

 

 

11,044

 

 

 

9,031

 

Depreciation Expense

 

3,995

 

 

 

3,860

 

 

8,126

 

 

 

7,856

 

Restructuring expenses*

 

(158

)

 

 

-

 

 

3,844

 

 

 

-

 

Amortization expense

 

1,888

 

 

 

1,805

 

 

3,524

 

 

 

3,616

 

Stock-based compensation expense

 

1,277

 

 

 

3,250

 

 

2,546

 

 

 

6,690

 

Income tax provision

 

(199

)

 

 

(23,652

)

 

45

 

 

 

(22,178

)

Net loss (gain) on interest rate swap agreements

 

2,726

 

 

 

839

 

 

2,821

 

 

 

(8,488

)

Loss (gain) on insurance and litigation proceeds

 

148

 

 

 

-

 

 

148

 

 

 

(530

)

(Gain) loss on disposition of assets

 

(2

)

 

 

4,430

 

 

(799

)

 

 

4,430

 

Adjusted EBITDA

$

(28,815

)

 

$

4,975

 

$

(28,368

)

 

$

10,752

 

Net revenues

$

67,989

 

 

$

78,401

 

$

141,263

 

 

$

156,481

 

Net Income (loss) attributable to common stockholders margin

n/m

 

 

(60.7

)%

n/m

 

 

(122.6

)%

Adjusted EBITDA margin

n/m

 

 

 

6.3

%

n/m

 

 

 

6.9

%

 

n/m - Not meaningful

* Restructuring expenses are primarily comprised of employee severance and related benefit costs.

Reconciliation of Net Income Attributable to Common Stockholders to Adjusted Net Income

(Unaudited, in thousands, except per share data)

 

 

Three Months Ended

 

 

Six Months Ended

 

(in thousands)

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Net (loss) income attributable to common stockholders

$

(49,351

)

 

$

(129,135

)

 

$

(64,409

)

 

$

(127,603

)

Restructuring expenses*

 

(158

)

 

 

-

 

 

 

3,844

 

 

 

-

 

Amortization expense

 

1,888

 

 

 

1,805

 

 

 

3,524

 

 

 

3,616

 

Net loss (gain) on interest rate swap agreements

 

2,726

 

 

 

839

 

 

 

2,821

 

 

 

(8,488

)

Loss (gain) on insurance and litigation proceeds

 

148

 

 

 

-

 

 

 

148

 

 

 

(530

)

(Gain) loss on disposition of assets

 

(2

)

 

 

4,430

 

 

 

(799

)

 

 

4,430

 

Adjusted EBITDA

$

(44,749

)

 

$

(122,061

)

 

$

(54,871

)

 

$

(128,575

)

Net (loss) income per share

$

(0.83

)

 

$

(2.19

)

 

$

(1.08

)

 

$

(2.17

)

Non-GAAP net income per share

$

(0.75

)

 

$

(2.07

)

 

$

(0.92

)

 

$

(2.18

)

 

* Restructuring expenses are primarily comprised of employee severance and related benefit costs.

 

Deborah K. Pawlowski, Kei Advisors LLC

dpawlowski@keiadvisors.com

716.843.3908

Source: Vintage Wine Estates, Inc.

FAQ

How much cash did Vintage Wine Estates generate from operations in the quarter?

Vintage Wine Estates generated $11.9 million in cash from operations in the quarter.

What was the reason behind the decline in net revenue for Vintage Wine Estates?

The decline in net revenue was primarily due to factors like simplification and reallocation of resources, lower bulk whiskey sales, customer program timing, and softer end market demand.

What was the loss from operations for Vintage Wine Estates in the quarter?

The loss from operations in the quarter was $40.7 million.

What was the net loss attributable to VWE common stockholders in the second quarter fiscal 2024?

The net loss attributable to VWE common stockholders was $49.4 million.

What was the adjusted EBITDA for Vintage Wine Estates in the second quarter fiscal 2024?

The adjusted EBITDA for Vintage Wine Estates in the second quarter fiscal 2024 was $(28.8) million.

What was the reason for the increased interest expense for Vintage Wine Estates?

The interest expense increased by $0.5 million due to higher interest rates.

What was the amount of current debt outstanding for Vintage Wine Estates as of December 31, 2023?

As of December 31, 2023, Vintage Wine Estates had $305.6 million of current debt outstanding.

What extension did Vintage Wine Estates receive related to compliance with Nasdaq's minimum bid price requirement?

Vintage Wine Estates received an additional 180-day extension to regain compliance with Nasdaq's minimum bid price requirement.

What was the deadline for Vintage Wine Estates to regain compliance with Nasdaq's minimum bid price requirement?

The deadline for Vintage Wine Estates to regain compliance with Nasdaq's minimum bid price requirement is September 9, 2024.

What was the reason behind Vintage Wine Estates' non-compliance with Nasdaq's minimum bid price requirement?

Vintage Wine Estates received notice from Nasdaq regarding non-compliance with the minimum bid price requirement.

What was the blended rate for Vintage Wine Estates' debt hedged until 2025?

Approximately 40% of Vintage Wine Estates' debt was hedged at a blended rate of 2.3% until 2025.

Vintage Wine Estates, Inc.

NASDAQ:VWE

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About VWE

vintage wine estates is a privately held collection of vintner family-owned winery estates and brands based in santa rosa, california. we are an industry leader across all sales channels and dedicated to providing wine consumers with a range of wine selections from $10 to $150 dollars. customer service is central in our culture, with focus on both our external and our internal customers. vintage wine estates is a dynamic, growing organization. we value individuals with an entrepreneurial spirit who enjoy working with a professional, results-driven team in a collaborative environment. careers: http://www.vintagewineestates.com/careers the portfolio includes clos pegase, cosentino winery, girard winery, viansa sonoma, windsor vineyards, b.r. cohn winery, cartlidge & browne, sonoma coast vineyards, ray’s station, swanson winery, cameron hughes wines, middle sister, wine sisterhood, pro-mis-q-ous, monogamy, girl & dragon, purple cowboy and a number of exclusive wine brands.