• Delivered net income of $8.6 million or $0.14 per diluted share; adjusted earnings per diluted share1 were $0.17
  • Achieved record Adjusted EBITDA2 of $20.2 million, or 24.2% of revenue, representing growth of over 135%
  • Strong results in quarter reflect strong execution of omni-channel, multi-brand strategy and success of acquisitions
  • Direct-to-consumer ("DTC") and business-to-business ("B2B") grew measurably and delivered over 30% operating margins in the quarter
  • Raising revenue guidance for fiscal 2022 to approximately $275 million to $285 million with expected adjusted EBITDA3 margin in range of $63 million to $66 million
  • Acquired Meier's Beverage Group in January 2022; expands production capabilities and provides better access into East Coast markets for recently acquired ACE Cider

Vintage Wine Estates, Inc. (Nasdaq: VWE) (Nasdaq: VWEWW) (TSX: VWE.U) (TSX: VWE.WT.U) (“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 second quarter fiscal year 2022 ended December 31, 2021. Results include Vinesse, LLC ("Vinesse") acquired on October 4, 2021 and ACE Cider, acquired on November 16, 2021.

Pat Roney, Founder and Chief Executive Officer, commented, “We delivered strong growth of 33%, or $20.6 million, in the quarter which was complemented with $7.6 million in revenue from the acquisitions of ACE Cider and Vinesse and is a testament to the successful execution of our growth strategy. Operationally, we are making great strides in our B2B market channel as we execute well for our customers on their exclusive label programs. We also are excited to have our DTC business continue to expand as the multitude of channels that we use to reach the consumer are all performing well. Tasting room traffic exceeded pre-pandemic levels, wine club membership continues to expand, customer retention remains strong and our ecommerce subscriber count keeps increasing. On the Wholesale front, our Bar Dog brand is hitting it out of the ballpark having sold nearly 100,000 cases in calendar 2021 demonstrating a very high velocity of turn and a relatively rare success rate in the wine industry. In terms of acquisitions, the recent additions of Vinesse, ACE Cider and Meier's Beverage Group are all highly complementary and our pipeline remains robust."

Mr. Roney continued, "While the opportunities for VWE are strong, operationally these are challenging times. We are operating in a tight labor market as well as facing challenges with the timing of deliveries of dry goods. We are working with our suppliers to prioritize our needs and carefully managing our customers' requirements. It takes an agile and resilient team to succeed in this environment. Inflation is impacting the industry and, while we will not be a leader in price changes, we are seeing the trend and we intend to systematically implement price increases as early as March to address the inflationary impact on input costs. We also expect to realize significant cost synergies from our acquisitions that should help offset these headwinds. Its typically about six to nine months following an acquisition that those benefits begin to be realized. Overall, the momentum in the business remains very strong and, as a result, we are increasing our revenue guidance for fiscal 2022 to a range of $275 million to $285 million and raising the upper band of our adjusted EBITDA guidance to $63 million to $66 million."

Second Quarter Fiscal 2022 Highlights and Financial Results Review (compared with prior-year period unless noted otherwise)

Highlights

  • Strong DTC revenue growth of $11.7 million, or 50.8%, to $34.8 million driven by increased customer engagement in tasting rooms and at events and a $4.6 million contribution from acquisitions. Tasting room traffic increased 11% from the prior year quarter. DTC also benefitted from gains in wine club membership, strong average retention rates, increased subscribers in eCommerce and digital channels. Combined Average Order Value (AOV) grew 8% across all DTC channels.
  • B2B revenue increased $4.6 million, or 22.2%, to $25.2 million reflecting timing of customer projects, execution on previous delayed shipments and strong responses and pull through on private label brands.
  • Wholesale revenue increased $2.9 million, or 15.1%, to $22.2 million mostly from acquired revenue of $2.9 million and a 93% increase in case volume. Across brands, VWE achieved depletion volume growth of 5.5% over the prior-year period, whereas for the Company’s priority brands, which represent approximately 52% of total depletion volume, depletions grew 10.6%. 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 $83.6 million was up $22.5 million, or 32.8%, over the prior-year period driven by significant increases in volume across all segments. Acquisitions contributed $7.6 million in net revenue for the period.

 

 

Three Months Ended December 31,

 

 

 

 

 

 

 

(in thousands)

 

2021

 

 

2020

 

 

Unit Change

 

 

% Change

 

Wholesale

 

 

506

 

 

 

262

 

 

 

244

 

 

 

93.1

%

B2B

 

 

212

 

 

 

141

 

 

71

 

 

 

50.4

%

DTC

 

 

160

 

 

 

135

 

 

25

 

 

 

18.5

%

Total case volume

 

 

878

 

 

 

538

 

 

 

340

 

 

 

63.2

%

Case volume was up 63.2% for the quarter. Wholesale volume increases were primarily driven by the ACE Cider acquisition and success with the Company's priority brands. Volume growth was also the result of strong growth in B2B, which included shipments that had been delayed in the trailing first quarter, and solid performance in the DTC channel.

Gross Profit and Margin

Gross profit was up $15.0 million to $38.5 million, an increase of 63.9%. Gross margin expanded 873 basis points to 46.0% from the leverage gained from higher volumes and improved efficiencies from the new bottling and packaging facilities.

Operating Expenses

Operating expenses increased $13.6 million, or 111.7%, to $25.8 million. Higher selling, general and administrative expenses reflected approximately $1.8 million of higher professional fees primarily related to public company costs, as well as investments in marketing and talent. In addition, variable selling expenses, which increase with volume and are typically approximately 10% of revenue, were $3.7 million in the quarter. Incremental SG&A from the acquisitions was $2.3 million and does not yet represent expected synergies.

Operating and Net Income

Income from operations during the quarter increased $1.4 million, or 12.5%, to $12.7 million in the second quarter of fiscal 2022. Operating margin for the quarter was 15.2%, compared with 18.0% in the prior-year period. Higher operating income of $6.5 million from the three primary operating segments did not fully offset the $5.1 million of incremental costs related to the public company structure reflected in the Corporate and Other segment. The Company plans to invest further in its operating infrastructure to enable growth and scale, but expects certain initial costs related to the being public will be reduced in fiscal 2023. This includes approximately $0.9 million in unusually high D&O insurance and professional fees.

Interest expense for the second quarter fiscal 2022 was $3.5 million, up $1.5 million, or 79.1%, as a result of higher rates and borrowings.

Net income available to VWE common shareholders for the quarter was $8.6 million, up from $7.8 million in the prior-year period. On a per diluted share basis, net income available to VWE common shareholders was $0.14 for the quarter compared with $0.27 per diluted share in the prior-year period.

Adjusted Non-GAAP cash net income, which excludes amortization of intangible assets related to acquisitions, was $10.0 million, or $0.17 per diluted share. NOTE: Adjusted non-GAAP cash net income and adjusted non-GAAP cash 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 137% to $20.2 million, or 24.2% of net revenue, from $8.6 million, or 13.6% of net revenue, reflecting the overall strong performance of VWE in the quarter. The incremental benefit of ACE Cider and Vinesse were minimal for the quarter as synergies were not yet realized.

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 $274.2 million in liquidity available for organic investments and acquisitions. This included $75.1 million in unrestricted cash, approximately $99.1 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 second quarter were $3.4 million primarily for ongoing maintenance and barrel purchases. Capital expenditures for fiscal 2022 are expected to be approximately $12 million to $14 million, which includes approximately $5.4 million related to the bottling and warehouse facility expansion. The total estimated spend for capital expenditures excludes spend for newly acquired entities.

Fiscal Year 2022 Outlook

Mr. Roney noted, "We are executing well on our strategy for growth and are raising our expectations for fiscal 2022 even as we address headwinds associated with the pandemic and resulting supply chain and labor constraints. I am extremely encouraged about VWE's future. We have a strong acquisition pipeline, we are delivering robust growth, and we anticipate we will be able to capture price to overcome the inflationary headwinds. We will continue to invest in our digital marketing strategies, channels to market and talent to build a much larger, more profitable enterprise over time. Our acquisition pipeline remains robust as we continue our strategy to identify and acquire complementary "tuck-in" businesses.”

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:

 

$275 million to $285 million

FY22 Adjusted EBITDA:

 

$63 million to $66 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 Information 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 178539. 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, February 21, 2022, and can be accessed by dialing +1.866.813.9403 and entering the conference ID number 517337. 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.

Non-GAAP Financial Measures

In addition to reporting net income prepared in accordance with accounting principles generally accepted in the United States, VWE uses Adjusted EBITDA and Adjusted Net Income to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies. Adjusted EBITDA is defined as earnings 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. Adjusted net income is defined as net income 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 EBITDA and Adjusted net income are not a recognized measure of financial performance under GAAP. VWE believes these non-GAAP measure provides investors with additional insight into the underlying trends of VWE’s business and assists 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 and Adjusted net income have certain limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of results as reported under U.S. GAAP. Adjusted EBITDA and Adjusted net income, as presented, may produce results that vary from the GAAP measure and may not be comparable with a similarly defined non-GAAP measure used by other companies.

In evaluating Adjusted EBITDA and Adjusted net income, 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 and Adjusted net income 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.

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 “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “may,” “model,” “outlook,” “plan,” “pro forma,” “project,” “seek,” “should,” “will,” “would” or other similar expressions that indicate future events or trends. These forward-looking statements include, but are not limited to, estimates and forecasts of financial and performance metrics, projections of market opportunity and market share, business plans and strategies, expansion and acquisition opportunities, growth prospects and consumer and industry trends. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of VWE’s management and are not guarantees of actual performance. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, 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 remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting, the effect of economic conditions on the industries and markets in which VWE operates, including financial market conditions, fluctuations in prices, interest rates and market demand; risks relating to the uncertainty of the 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 the ongoing COVID-19 pandemic on VWE’s business and the U.S. economy; declines or unanticipated changes in consumer demand for VWE’s products; the impact of environmental catastrophe, natural disasters, disease, pests, weather conditions and inadequate water supply on VWE’s business; VWE’s significant reliance on its distribution channels; 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; changes in applicable laws and regulations and the significant expense to VWE of operating in a highly regulated industry; VWE’s ability to make payments on its indebtedness; and those factors discussed in the Company’s Annual Report on Form 10-K and in future 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 press 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.

___________________________ 1 Adjusted earnings per diluted share is a non-GAAP measure. Please see related disclosures regarding the use of non-GAAP measures in this news release. 2 Adjusted EBITDA is a non-GAAP measure. Please see related disclosures regarding the use of non-GAAP measures in this news release. 3 Expected Adjusted EBTIDA is a forward-looking non-GAAP measure. Please see related disclosures regarding the inability of reconciling forward-looking non-GAAP measures.

Vintage Wine Estates, Inc. Condensed Consolidated Balance Sheets (Unaudited)

 

 

December 31, 2021

 

 

June 30, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

75,145

 

 

$

118,879

 

Restricted cash

 

 

6,600

 

 

 

4,800

 

Accounts receivable, net

 

 

25,815

 

 

 

14,639

 

Other receivables

 

 

18,740

 

 

 

14,044

 

Inventories

 

 

222,341

 

 

 

221,145

 

Prepaid expenses and other current assets

 

 

16,066

 

 

 

8,538

 

Total current assets

 

 

364,707

 

 

 

382,045

 

Property, plant, and equipment, net

 

 

221,139

 

 

 

213,673

 

Goodwill

 

 

148,211

 

 

 

109,895

 

Intangible assets, net

 

 

60,265

 

 

 

36,079

 

Other assets

 

 

4,140

 

 

 

1,806

 

Total assets

 

$

798,462

 

 

$

743,498

 

Liabilities, redeemable noncontrolling interest, and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

125,152

 

 

$

87,351

 

Accounts payable

 

 

19,063

 

 

 

17,301

 

Accrued liabilities and other payables

 

 

28,971

 

 

 

25,078

 

Current maturities of long-term debt

 

 

24,321

 

 

 

22,964

 

Total current liabilities

 

 

197,507

 

 

 

152,694

 

Other long-term liabilities

 

 

11,428

 

 

 

2,767

 

Long-term debt, less current maturities

 

 

177,460

 

 

 

183,541

 

Interest rate swap liabilities

 

 

9,778

 

 

 

13,807

 

Deferred tax liability

 

 

17,688

 

 

 

16,752

 

Deferred gain

 

 

11,333

 

 

 

12,000

 

Total liabilities

 

 

425,194

 

 

 

381,561

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

1,690

 

 

 

1,682

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, no par value, 2,000,000 shares authorized, and none issued and outstanding at December 31, 2021 and June 30, 2021.

 

 

-

 

 

 

-

 

Common stock, no par value, 200,000,000 shares authorized, 60,461,611 and 60,461,611 issued and outstanding at December 31, 2021 and June 30, 2021.

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

360,732

 

 

 

360,732

 

Retained earnings

 

 

11,396

 

 

 

-

 

Total Vintage Wine Estates, Inc. stockholders' equity

 

 

372,128

 

 

 

360,732

 

Noncontrolling interests

 

 

(550

)

 

 

(477

)

Total stockholders' equity

 

 

371,578

 

 

 

360,255

 

Total liabilities, redeemable noncontrolling interest, and stockholders' equity

 

$

798,462

 

 

$

743,498

 

Vintage Wine Estates, Inc. Condensed Consolidated Statements of Operations (Unaudited)

 

 

Three Months Ended December 31,

 

 

Six Months Ended December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

$

70,146

 

 

$

52,084

 

 

$

106,433

 

 

$

94,847

 

Nonwine

 

 

13,465

 

 

 

10,893

 

 

 

32,865

 

 

 

21,965

 

 

 

 

83,611

 

 

 

62,977

 

 

 

139,298

 

 

 

116,812

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

 

39,076

 

 

 

33,213

 

 

 

59,664

 

 

 

58,618

 

Nonwine

 

 

6,072

 

 

 

6,293

 

 

 

17,734

 

 

 

12,193

 

 

 

 

45,148

 

 

 

39,506

 

 

 

77,398

 

 

 

70,811

 

Gross profit

 

 

38,463

 

 

 

23,471

 

 

 

61,900

 

 

 

46,001

 

Selling, general, and administrative expenses

 

 

25,993

 

 

 

18,233

 

 

 

43,627

 

 

 

32,554

 

Gain on sale of property, plant, and equipment

 

 

(251

)

 

 

(1,321

)

 

 

(591

)

 

 

(1,677

)

Gain on litigation proceeds

 

 

-

 

 

 

(4,750

)

 

 

-

 

 

 

(4,750

)

Income from operations

 

 

12,721

 

 

 

11,309

 

 

 

18,864

 

 

 

19,874

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,493

)

 

 

(1,950

)

 

 

(7,096

)

 

 

(5,332

)

Net unrealized gain on interest rate swap agreements

 

 

2,636

 

 

 

1,777

 

 

 

4,029

 

 

 

2,623

 

Other, net

 

 

(51

)

 

 

167

 

 

 

(12

)

 

 

356

 

Total other income (expense), net

 

 

(908

)

 

 

(6

)

 

 

(3,079

)

 

 

(2,353

)

Income before provision for income taxes

 

 

11,813

 

 

 

11,303

 

 

 

15,785

 

 

 

17,521

 

Income tax provision

 

 

3,261

 

 

 

2,028

 

 

 

4,454

 

 

 

2,884

 

Net income

 

 

8,552

 

 

 

9,275

 

 

 

11,331

 

 

 

14,637

 

Net income (loss) attributable to the noncontrolling interests

 

 

(40

)

 

 

(13

)

 

 

(65

)

 

 

291

 

Net income attributable to Vintage Wine Estates, Inc.

 

 

8,592

 

 

 

9,288

 

 

 

11,396

 

 

 

14,346

 

Accretion on redeemable Series B stock

 

 

-

 

 

 

1,478

 

 

 

-

 

 

 

3,314

 

Net income allocable to common stockholders

 

$

8,592

 

 

$

7,810

 

 

$

11,396

 

 

$

11,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share allocable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

 

$

0.30

 

 

$

0.19

 

 

$

0.42

 

Diluted

 

$

0.14

 

 

$

0.27

 

 

$

0.19

 

 

$

0.39

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

60,461,611

 

 

 

21,920,583

 

 

 

60,461,611

 

 

 

21,920,583

 

Diluted

60,461,611

24,516,984

60,461,611

24,493,615

Vintage Wine Estates, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Six Months Ended December 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

11,331

 

 

$

14,637

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

9,670

 

 

 

5,328

 

Amortization of deferred loan fees and line of credit fees

 

 

199

 

 

 

238

 

Amortization of label design fees

 

 

241

 

 

 

215

 

Litigation proceeds

 

 

-

 

 

 

(4,750

)

Stock-based compensation expense

 

 

-

 

 

 

458

 

Provision for doubtful accounts

 

 

75

 

 

 

30

 

Impairment of inventory

 

 

-

 

 

 

3,302

 

Net unrealized gain on interest rate swap agreements

 

 

(4,029

)

 

 

(2,623

)

(Benefit) provision for deferred income tax

 

 

(6,030

)

 

 

-

 

Gain (loss) on disposition of assets

 

 

76

 

 

 

(1,010

)

Deferred gain on sale leaseback

 

 

(667

)

 

 

(667

)

Deferred rent

 

 

238

 

 

 

250

 

Change in operating assets and liabilities (net of effect of business combinations):

 

 

 

 

 

 

Accounts receivable

 

 

(11,251

)

 

 

629

 

Related party receivables

 

 

-

 

 

 

28

 

Other receivables

 

 

(4,696

)

 

 

238

 

Litigation receivable

 

 

-

 

 

 

4,750

 

Inventories

 

 

2,656

 

 

 

(4,847

)

Prepaid expenses and other current assets

 

 

(7,528

)

 

 

(6,375

)

Other assets

 

 

(2,491

)

 

 

906

 

Accounts payable

 

 

(2,167

)

 

 

14,531

 

Accrued liabilities and other payables

 

 

8,899

 

 

 

11,118

 

Related party liabilities

 

 

-

 

 

 

(1,196

)

Net cash (used in) provided by operating activities

 

 

(5,474

)

 

 

35,190

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from disposition of assets

 

 

6

 

 

 

976

 

Purchases of property, plant, and equipment

 

 

(11,278

)

 

 

(19,743

)

Label design expenditures

 

 

(149

)

 

 

(339

)

Acquisition of businesses

 

 

(61,768

)

 

 

-

 

Net cash used in investing activities

 

 

(73,189

)

 

 

(19,106

)

Cash flows from financing activities

 

 

 

 

 

 

Principal payments on line of credit

 

 

(36,964

)

 

 

(15,700

)

Proceeds from line of credit

 

 

74,765

 

 

 

3,600

 

Outstanding checks in excess of cash

 

 

3,929

 

 

 

(4,010

)

Principal payments on long-term debt

 

 

(4,856

)

 

 

(5,431

)

Proceeds from long-term debt

 

 

-

 

 

 

6,548

 

Payments on acquisition payable

 

 

(145

)

 

 

(173

)

Net cash provided by financing activities

 

 

36,729

 

 

 

(15,166

)

Net change in cash and restricted cash

 

 

(41,934

)

 

 

918

 

Cash and restricted cash, beginning of period

 

 

123,679

 

 

 

1,751

 

Cash and restricted cash, end of period

 

$

81,745

 

 

$

2,669

 

Supplemental cash flow information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

6,146

 

 

$

2,280

 

Income taxes

 

$

189

 

 

$

4

 

Noncash investing and financing activities:

 

 

 

 

 

 

Contingent consideration in a business combination

 

$

3,560

 

 

$

-

 

Accretion of redemption value of Series B redeemable cumulative stock

 

$

-

 

 

$

3,314

 

Accretion of redemption value of Series A redeemable stock

 

$

-

 

 

$

7,943

 

Offering costs

 

$

-

 

 

$

178

 

Vintage Wine Estates, Inc. Segment Data (Unaudited)

 

Three months ended December 31,

 

 

 

 

 

 

 

Net Revenue

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Wholesale

$

22,171

 

 

$

19,263

 

 

$

2,908

 

 

 

15.1

%

Direct to Consumer

 

34,806

 

 

 

23,079

 

 

 

11,727

 

 

 

50.8

%

Business to Business

 

25,225

 

 

 

20,635

 

 

 

4,590

 

 

 

22.2

%

Corporate and Other/ Non-Allocable

 

1,409

 

 

 

0

 

 

 

1,409

 

 

*

 

Total

$

83,611

 

 

$

62,977

 

 

$

20,634

 

 

 

32.8

%

*Not meaningful

 

Six Months Ended December 31,

 

 

 

 

 

 

 

Net Revenue

2021

 

 

2020

 

 

$ Change

 

 

% Change

 

Wholesale

$

38,374

 

 

$

34,308

 

 

$

4,066

 

 

 

11.9

%

Direct to Consumer

 

49,721

 

 

 

33,975

 

 

 

15,746

 

 

 

46.3

%

Business to Business

 

49,692

 

 

 

46,451

 

 

 

3,241

 

 

 

7.0

%

Corporate and Other/ Non-Allocable

 

1,511

 

 

 

2,078

 

 

 

(567

)

 

 

(27.3

%)

Total

$

139,298

 

 

$

116,812

 

 

$

22,486

 

 

 

19.2

%

 

Three months ended December 31,

 

 

 

 

 

 

 

Operating Income

2021

 

 

2020

 

 

Dollar Change

 

 

Percent Change

 

Wholesale

$

5,196

 

 

$

5,634

 

 

$

(438

)

 

 

(7.8

%)

Direct to Consumer

 

11,379

 

 

 

6,894

 

 

 

4,485

 

 

 

65.1

%

Business to Business

 

8,303

 

 

 

5,877

 

 

 

2,426

 

 

 

41.3

%

Corporate and Other/ Non-Allocable

 

(12,157

)

 

 

(7,096

)

 

 

(5,061

)

 

 

71.3

%

Total

$

12,721

 

 

$

11,309

 

 

$

1,412

 

 

 

12.5

%

 

Six Months Ended December 31,

 

 

 

 

 

 

 

Operating Income

2021

 

 

2020

 

 

Dollar Change

 

 

Percent Change

 

Wholesale

$

9,383

 

 

$

8,622

 

 

$

761

 

 

 

8.8

%

Direct to Consumer

 

13,918

 

 

 

8,012

 

 

 

5,906

 

 

 

73.7

%

Business to Business

 

15,817

 

 

 

14,661

 

 

 

1,156

 

 

 

7.9

%

Corporate and Other/ Non-Allocable

 

(20,254

)

 

 

(11,421

)

 

 

(8,833

)

 

 

77.3

%

Total

$

18,864

 

 

$

19,874

 

 

$

(1,010

)

 

 

(5.1

%)

Case Volume

 

Six Months Ended December 31,

 

 

 

 

 

 

 

(in thousands)

 

2021

 

 

2020

 

 

Unit Change

 

 

% Change

 

Wholesale

 

 

715

 

 

 

464

 

 

 

251

 

 

 

54.1

%

B2B

 

 

339

 

 

 

352

 

 

-13

 

 

 

-3.7

%

DTC

 

 

220

 

 

 

188

 

 

32

 

 

 

17.0

%

Total case volume

 

 

1,274

 

 

 

1,004

 

 

 

270

 

 

 

26.9

%

Vintage Wine Estates, Inc. Reconciliation of Non-GAAP Net Income to Adjusted EBITDA (Unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

 

December 31,

2021

 

 

December 31,

2020

 

 

December 31,

2021

 

 

December 31,

2020

 

Net income

$

8,552

 

 

$

9,275

 

 

$

11,331

 

 

$

14,637

 

Interest expense

 

3,493

 

 

 

1,950

 

 

 

7,096

 

 

 

5,332

 

Income tax provision

 

3,261

 

 

 

2,028

 

 

 

4,454

 

 

 

2,884

 

Depreciation and amortization

 

5,757

 

 

 

2,758

 

 

 

9,911

 

 

 

5,543

 

Stock-based compensation expense

 

-

 

 

 

128

 

 

 

-

 

 

 

458

 

Net unrealized/(gain) loss on interest rate swap agreements

 

(2,636

)

 

 

(1,777

)

 

 

(4,029

)

 

 

(2,623

)

(Gain)/loss on disposition of assets

 

(251

)

 

 

(1,321

)

 

 

(591

)

 

 

(1,677

)

Gain on litigation proceeds

 

-

 

 

 

(4,750

)

 

 

-

 

 

 

(4,750

)

Deferred rent adjustment

 

110

 

 

 

125

 

 

 

238

 

 

 

250

 

Incremental public company costs

 

936

 

 

 

-

 

 

 

2,148

 

 

 

-

 

COVID Impact

 

-

 

 

 

100

 

 

 

-

 

 

 

100

 

Acquisition integration costs

 

400

 

 

 

-

 

 

 

400

 

 

 

-

 

Inventory acquisition basis adjustment

 

622

 

 

 

34

 

 

 

1,059

 

 

 

89

 

Adjusted EBITDA

$

20,244

 

 

$

8,550

 

 

$

32,017

 

 

$

20,243

 

Revenue

 

83,611

 

 

$

62,977

 

 

 

139,298

 

 

$

116,812

 

Adjusted EBITDA margin

 

24.2

%

 

 

13.6

%

 

 

23.0

%

 

 

17.3

%

Reconciliation of Non-GAAP Net Income to Adjusted Net Income (Unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

 

December 31,

2021

 

 

December 31,

2020

 

 

December 31,

2021

 

 

December 31,

2020

 

Net income

$

8,552

 

 

$

9,275

 

 

$

11,331

 

 

$

14,637

 

Amortization of intangible assets

 

1,083

 

 

 

25

 

 

 

1,614

 

 

 

50

 

Acquisition integration costs

 

400

 

 

 

-

 

 

 

400

 

 

 

-

 

(Gain)/loss on disposition of assets

 

(251

)

 

 

(1,321

)

 

 

(591

)

 

 

(1,677

)

Gain on litigation proceeds

 

-

 

 

 

(4,750

)

 

 

-

 

 

 

(4,750

)

COVID Impact

 

-

 

 

 

100

 

 

 

-

 

 

 

100

 

Inventory acquisition basis adjustment

 

622

 

 

 

34

 

 

 

1,059

 

 

 

89

 

Tax effect of above

 

(390

)

 

 

1,242

 

 

 

(521

)

 

 

1,299

 

Non-GAAP net income

$

10,017

 

 

$

4,605

 

 

$

13,292

 

 

$

9,748

 

Non-GAAP net income per diluted share

$

0.17

 

 

$

0.19

 

 

$

0.22

 

 

$

0.40

 

Use of Non-GAAP Measures

In addition to results determined in accordance with GAAP, the Company uses EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies. These metrics are also frequently used by analysts, investors and other interested parties to evaluate companies in the industry, when considered alongside other GAAP measures.

Adjusted EBITDA is defined as earnings 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, non-recurring, or other items included in net income that the Company does not consider indicative of its ongoing operating performance, including COVID-related adjustments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net revenue.

Investors Deborah K. Pawlowski, Kei Advisors LLC dpawlowski@keiadvisors.com Phone: 716.843.3908

Media Mary Ann Vangrin MVangrin@vintagewineestates.com

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