- Demonstrated growth in all channels with business-to-business (“B2B”) growing to $33.7 million as a result of the Meier’s acquisition and timing of private label programs
- Consistently growing traffic in tasting rooms drove 11% organic growth in direct-to-consumer (“DTC”)
- Reported net income of $2.8 million or $0.05 per diluted share; adjusted earnings per diluted share1 was $0.08
- Achieved adjusted EBITDA2 of $14.0 million, or 17.7% of revenue
- Increasing revenue guidance for fiscal 2022 to approximately $290 million to $295 million with expected adjusted EBITDA3 of approximately $62 million to $64 million
INCLINE VILLAGE, NV, May 16, 2022 – Vintage Wine Estates, Inc. (Nasdaq: VWE and VWEWW) (“VWE” or the “Company”), one of the fastest growing wine producers in the U.S. with an industry leading direct-to-customer platform, today reported its financial results for its third quarter fiscal year 2022 ended March 31, 2022. Results include Vinesse, LLC (“Vinesse”) acquired on October 4, 2021, ACE Cider, acquired on November 16, 2021, and Meier’s Wine Cellars, Inc. acquired on January 18, 2022.
Pat Roney, Founder and Chief Executive Officer, commented, “We overdelivered on the quarter with revenue up 68%, or $32.0 million. Organic growth was 44% and was the result of strong execution while acquisitions contributed $11.4 million in revenue. Our DTC channel is a hallmark of Vintage Wine Estates and continues to validate the success of our omnichannel strategy by reaching the consumer through multiple touch points. Our tasting room traffic is outperforming as more people are exploring new entertainment options and we deliver a great experience. Importantly, this activity has not cannibalized our ecommerce traffic, which has held relatively stable. The acquisition of Meier’s at the beginning of the quarter drove our B2B results, as well as our ability to deliver for our customers’ private label programs. We are ecstatic about the continued success of our Bar Dog brand, but equally excited regarding the strong market appeal for our Firesteed, Photograph and Clos Pegase brands, as well. We believe that, similar to our omnichannel marketing strategy, a multibrand portfolio will help drive our growth.”
Mr. Roney continued, “The headwinds of supply chain and labor constraints have been persistent, but our team is demonstrating the agility it takes to continue to produce and deliver in these adverse conditions. The deep experience of our team enables our ability to quickly pivot on bottling schedules and brands and our very collaborative culture links our production and marketing teams which enables rapid decision making to keep operations running. Inflation is yet another issue we are addressing. We are expecting price to begin to flow through and help offset rising costs beginning in the fiscal fourth quarter. We are being creative in other ways as well to help offset costs such as in packaging. Despite the challenges, we are energized by the achievements of our team to drive growth, deliver for our customers and create an enduring enterprise.”
Third Quarter Fiscal 2022 Highlights and Financial Results Review (compared with prior-year period unless noted otherwise) Highlights
- Robust DTC revenue growth of $4.9 million, or 33.5%, to $19.6 million was due to strong organic growth and acquisitions, which added $3.3 million in revenue. Organic growth of 11% was driven by tasting room traffic which increased 45% as recovery from COVID restrictions continues and customers increase their onsite engagement which also drove wine club membership gains. Combined Average Order Value (AOV) was stable across all DTC channels.
- B2B revenue increased $22.6 million, or 205.3%, to $33.7 million as customers’ private label projects were delivered. Acquisitions contributed $3.1 million in the quarter.
- Wholesale revenue increased $3.5 million, or 16.4%, to $24.6 million primarily from acquired revenue of $5.0 million which helped against the strong comparator quarter for off premise market demand. Across brands, VWE achieved depletion volume growth of 2.4%
Vintage Wine Estates Reports Revenue Growth of 68% to $78.9 million in Third Quarter Fiscal 2022 May 16, 2022
over the prior-year period, whereas for the Company’s priority brands, which represent approximately 55% of total depletion volume, depletions grew 7.6%. Case volume increases were primarily driven by the ACE Cider acquisition.
Revenue and Volume (See additional segment data in the attached tables)
Net revenue in the quarter of $78.9 million was up $32.0 million, or 68.3%, over the prior-year period driven by significant increases in volume across all segments. Acquisitions contributed $11.4 million in net revenue for the period.
Three Months Ended March 31,
(in thousands) 2022 2021 Unit Change % Change Wholesale 357 318 39 12.3% B2B 113 85 28 32.9% DTC 87 52 35 67.3% Total case volume 557 455 102 22.4%
Case volume was up 22.4% for the quarter and was strong across all channels.
Gross Profit and Margin
Gross profit was up $9.8 million to $28.0 million, an increase of 53.6%. Gross margin decreased 340 basis points to 35.5% as higher costs due to inflation and supply chain challenges were not yet offset from pricing actions.
Selling, General and Administrative Expenses (SG&A)
SG&A increased $8.7 million, or 47%, to $27.0 million, but declined as a percentage of revenue to 34.3% compared with 39.2% in the prior-year period. The higher level of SG&A represents public company costs, investments in talent and incremental SG&A from acquisitions of $5.8 million including amortization expense of $2.0 million, which does not yet represent expected synergies.
Operating and Net Income
Income from operations during the quarter increased $0.7 million, or 380.4%, to $0.9 million in the third quarter of fiscal 2022. Operating margin for the quarter was 1.1%, compared with 0.4% in the prior-year period. Operating income and margin were impacted by the acquisitions, which have not yet been fully integrated, as well as inefficiencies related to labor, logistics and supply chain challenges. While the Company plans to invest further in its operating infrastructure to enable growth and scale, it also expects certain initial public company costs to be reduced beginning in fiscal 2023. This includes approximately $0.9 million in annual D&O insurance and professional fees.
Interest expense for the third quarter fiscal 2022 was $3.7 million, down $0.1 million, or 3.0%, on lower outstanding balances.
Net income available to VWE common shareholders for the quarter was $2.8 million, up from a loss of $0.9 million in the prior-year period. On a per diluted share basis, net income available to VWE common shareholders was $0.05 for the quarter compared with a loss of $0.04 per diluted share in the prior-year period.
Adjusted net income, which excludes amortization of intangible assets related to acquisitions, was $4.9 million, or $0.08 per diluted share. NOTE: Adjusted net income and adjusted net income per diluted share are non-GAAP metrics. Please see the relevant disclosures and reconciliations of GAAP to non-GAAP measures in the tables that accompany this release.
Adjusted EBITDA
Adjusted EBITDA increased 38.2% to $14.0 million, from $10.1 million, on higher revenue. As a percentage of net revenue, adjusted EBITDA was 17.7% compared with 21.6% in the prior-year period as the combination of certain acquisitions not being fully integrated and higher costs not yet covered by pricing actions.
NOTE: Adjusted EBITDA and adjusted EBITDA margin are non-GAAP metrics. Please see the relevant disclosures and reconciliations of GAAP to non-GAAP measures in the tables that accompany this release.
Strong Balance Sheet with Financial Flexibility
Liquidity
At quarter end, the Company had approximately $246.1 million in liquidity available for organic investments and acquisitions. This included $69.1 million in unrestricted cash, approximately $77.0 million available under its revolving line of credit and $100.0 million available under the accordion feature of the lending agreement for acquisitions.
Capital Investments
Capital expenditures in the fiscal 2022 third quarter were $4.5 million and $15.7 million for the year. This was higher than previously expected due to opportunistic investments in productivity and the acquisitions. Capital expenditures for fiscal 2022 are now expected to be approximately $19 million to $20 million, which includes expected capital investments related to acquisitions.
Vintage Wine Estates Reports Revenue Growth of 68% to $78.9 million in Third Quarter Fiscal 2022 May 16, 2022
Fiscal Year 2022 Outlook
Mr. Roney noted, “We continue to outperform in the face of tough headwinds and the team is executing well on all fronts. We have a very full pipeline of potential acquisitions and continue to sift through for those that provide the best synergistic potential gained by leveraging our production facilities, marketing channels and leadership experience. We are very encouraged with the progress we are making with our current acquisitions as well as the excellent performance of our organic business.”
The Company is increasing its revenue guidance for fiscal year 2022 and refining adjusted EBITDA expectations to reflect impacts of inflation and supply chain challenges. Margin expectations also accommodate for the costs of consolidation for acquisitions which create a short term drag on margins until synergies start to be realized after about six months of ownership. The Company now expects results to be in the following approximate ranges:
Updated Guidance
- FY22 Net Revenue: $290 million to $295 million
- FY22 Adjusted EBITDA: $62 million to $64 million
Note regarding forward looking non-GAAP metrics: VWE cannot provide a reconciliation between its forecasted adjusted EBITDA and net revenue metrics to the nearest GAAP measure without unreasonable effort or expense due to the inherent difficulty of forecasting and providing reliable estimates for certain items. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end and yearend adjustments. These items reside outside the Company’s control and may vary greatly between periods and could significantly impact future financial results. For more information regarding the use of non-GAAP measures, please see discussion provided under Non-GAAP Financial Measures in this news release and the Company’s filings with the SEC.
Conference Call and Webcast
The Company will host a conference call and live webcast today at 4:45 PM ET/ 1:45 PM PT, at which time management will review the Company’s financial results and strategy. The review will be accompanied by a slide presentation, which will be available on the Company’s website at https://ir.vintagewineestates.com/. A question-and-answer session will follow the formal discussion.
The conference call can be accessed by dialing from the U.S.: +1.844.200.6205 or International: +1.929.526.1599 and entering the passcode 108213. The listen-only audio webcast can be monitored at https://ir.vintagewineestates.com. The telephonic replay will be available from 7:45 PM ET / 4:45 PM PT on the day of the call through Monday, May 30, 2022, and can be accessed by dialing +1.866.813.9403 and entering the conference ID number 311764. Alternatively, an archived webcast of the call can be found on the Company’s website in the investor relations section. A transcript of the call will be posted to the website once available.
About Vintage Wine Estates, Inc.
Vintage Wine Estates is a family of wineries and wines whose mission is to produce the finest quality wines and provide incredible customer experiences with wineries throughout Napa, Sonoma, California’s Central Coast, Oregon and Washington State. Since its founding 20 years ago, the Company has grown to be the 15th largest wine producer in the U.S. selling more than two million nine-liter equivalent cases annually. To consistently drive growth, the Company curates, creates, stewards and markets its many brands and services to customers and end consumers via a balanced omni-channel strategy encompassing direct-to-consumer, wholesale and exclusive brand arrangements with national retailers. While VWE is diverse across price points and varietals with over 50 brands ranging from $10 to $150 at retail, its primary focus is on the fastest growing premium segment of the wine industry with the majority of brands selling in the $10 to $20 price range. The Company regularly posts updates and additional information at www.vintagewineestates.com.
