Vintage Wine Estates, Inc. (Nasdaq: VWE and VWEWW) (“VWE” or
the “Company”), one of the top wine producers in the U.S. with an
industry leading direct-to-customer platform, today reported that
total non-cash impairment charges for the second quarter of fiscal
2023 that ended December 31, 2022 is expected to be in the range of
$130 million to $145 million. The total is comprised of
approximately $120 million to $130 million in estimated goodwill
impairments driven by changes in performance of certain lines of
business in the Wholesale and B2B segments, and an estimated $10
million to $15 million write down in indefinite-lived tradename and
trademark assets primarily related to revised expectations of
future net sales for the Layer Cake brand and the expected future
cash flow from the ACE Cider business.
At September 30, 2022, the Company had total intangible assets
of approximately $218 million which included $155 million in
goodwill and $30 million in indefinite-lived tradenames and
trademarks. Total assets at September 30, 2022 were approximately
$809 million which included $236 million in net property, plant and
equipment at book value. The Company’s bank credit agreement is
based on collateral recently appraised at approximately $227
million which included vineyards and wineries but does not include
inventory and the majority of machinery and equipment used for
production, processing and storage. The Company’s lead lender is
Bank of the West, a BMO company.
Liquidity and Financial Condition
Even assuming an impairment loss on the high end of the
estimate, VWE expects to remain in compliance with each of the
covenants required by its bank credit agreement at December 31,
2022, including its maximum debt to capitalization ratio covenant
of 0.60.
With the refinancing of its credit agreement in December, one of
the Company’s lending group banks exited the group which provided
VWE the opportunity to sell interest rate swaps in the third fiscal
quarter. This resulted in net cash proceeds of approximately $6
million. Subsequent to the swap sale, approximately 40% of the
Company’s debt remains hedged at a rate of 1.37%. The expiration
dates of the remaining swap agreements range from March 2025 to
July 2026.
Including the proceeds from the sale of its Tenma assets, as of
March 31, 2023, the Company had approximately $308 million of total
debt, $25 million of cash and approximately $40 million available
under its revolving credit facility.
Executed on Immediate Cost Reduction and Revenue
Improvement Actions
To date, VWE has executed actions to realize approximately $10
million of annualized profit improvement through a combination of
price increases, cost recovery actions and expense reductions. VWE
has reduced its full-time headcount by approximately 4%,
strategically raised prices across the Direct to Consumer (“DTC”)
segment, is taking pricing on select wholesale brands and increased
DTC shipping fees over 50% on average as well as restructured a B2B
customer contract to reduce freight costs. Estimated costs for
executing the plan were approximately $2 million which will be
recognized in the third quarter of fiscal 2023.
The Company is in the process of developing a comprehensive
business development and restructuring plan including the
evaluation of several options for further cost reductions including
customer contract renegotiations, simplification of the business,
focus on key brands and SKU (stock keeping unit) reductions. As
part of the process, VWE is also evaluating further asset
monetization opportunities.
As previously announced, the Company expects to file its second
quarter financial results by the end of April 2023, following the
filing of its restated first quarter 2023 results. The Company
expects to file its third quarter financial results on May 10,
2023.
About Vintage Wine Estates, Inc.
Vintage Wine Estates (Nasdaq: VWE and VWEWW) is a family of
wineries and wines whose singular focus is producing the finest
quality wines and 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 14th 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 60 brands ranging from $10 to $150 USD at
retail, its primary focus is on the fastest growing luxury segment
of the U.S. wine industry with the majority of brands selling in
the range of $10 to $20 per bottle. The Company regularly posts
updates and additional information at
www.vintagewineestates.com.
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,” “estimate,” “expect,”
“future,” “intend,” “may,” “plan,” “project,” “should,” “will,” or
other similar expressions that indicate future events or trends.
These forward-looking statements include, but are not limited to,
statements regarding results of the fair value evaluation of
goodwill and indefinite-lived intangible assets, the anticipated
filing of VWE’s results for the second quarter ended December 31,
2022 and third quarter ended March 31, 2023, the Company’s
compliance with each of the covenants required by its bank credit
agreement, and VWE’s future plans regarding its asset management
strategies, and business plans and strategies, including strategic
cost cutting efforts and asset monetization opportunities. 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
limited experience operating as a public company and its ability to
remediate its material weaknesses in internal control over
financial reporting and to maintain effective internal control over
financial reporting; the ability of the Company to hire and 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; 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.
Contacts:
InvestorsDeborah
K. Pawlowski / Patty Yahn-UrlaubKei Advisors
LLCdpawlowski@keiadvisors.com/ pyahnurlaub@keiadvisors.comPhone:
716.843.3908 |
MediaMary Ann
VangrinMVangrin@vintagewineestates.com |
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