Strong export revenue drives improved
winery performance
NIAGARA-ON-THE-LAKE, ON,
Feb. 23, 2018 /CNW/ - Diamond Estates
Wines & Spirits Inc. ("Diamond Estates" or "the Company")
(DWS-TSX Venture) today announced its financial results for the
three and nine-month periods ended December
31, 2017 ("Q3 2018" and "YTD 2018" respectively).
Q3 2018 Highlights:
- Revenue was $10.4 million, an
increase of 17.4% from $8.8 million
for the three months ended December 31,
2016 ("Q3 2017");
- Gross margin was $4.8 million, up
40.6% from $3.4 million in Q3 2017,
due primarily to revenue growth. Gross margin as a percentage of
revenue increased to 46.7% from 39.0% in Q3 2017;
- EBITDA1 was $1.0
million compared to $0.6
million in Q3 2017;
- Net income increased to $0.5
million, up from a slightly positive amount in Q3 2017;
- Cash flow from operating activities, before changes in non-cash
working capital items, increased 7.8% to $2.6 million in YTD 2018, compared to
$2.4 million in the nine months ended
December 31, 2016 ("YTD 2017");
- Working capital was $17.0 million
as at December 31, 2017, an increase
of $8.6 million from $8.4 million as at March
31, 2017; and
- On November 7, 2017, the Company
announced that Christopher Terrio, a
seasoned beverage industry executive, was named President of
Kirkwood Diamond Canada, the
Company's agency division.
"I'm pleased to say that we delivered improved financial
performance during the third quarter, while overcoming some of the
short-term challenges that impacted us in the second quarter," said
Murray Souter, President and CEO.
"In the winery division, export revenue increased more than 90%
year-over-year as overseas demand for our products remains
extremely robust. Following a record harvest in 2017, we have begun
to re-introduce several products into the LCBO that were
temporarily de-listed due to the short-crop issues we encountered
earlier in the year. We have also increased promotional activity in
the LCBO to accompany those re-introductions. As a result of these
measures, our sales velocity improved significantly in the LCBO
during the third quarter, and we expect a return to growth in this
channel in fiscal 2019."
"In the agency division, we have continued to implement
restructuring initiatives and targeted investments in order to
generate sustained improvements in operating performance. As part
of that process, we restructured our workforce, eliminating a
number of redundant sales and marketing positions. This resulted in
a restructuring charge of $0.8M
during the third quarter. Our efforts to turn this business around
are beginning to bear fruit, and with this behind us, I am
confident that Chris Terrio, the new
president of the agency business, is the right person to oversee
this process and implement a more focused strategy."
"A one-time severance benefit of $0.6M recorded by our agency division during the
third quarter came from a foreign producer that chose to
consolidate its North American business under another agency. We
expect that cost savings and organic growth, including a new
supplier relationship we just recently established, will more than
offset this lost business."
Conference Call
Murray Souter, CEO, and
Alan Stratton, CFO, will host a
conference call for the investment community today, Friday, February 23 at 10:00 a.m. (ET). The call-in numbers for
participants are (416) 764-8688 or (888) 390-0546. In
addition, the call will be webcast live at:
http://event.on24.com/wcc/r/1610282-1/55F108DBDAB81162F1DF938E7F58D14C.
A replay of the call will be available until Friday, March 2, 2018. To access the replay, dial
(416) 764-8677 or (888) 390-0541 (Passcode: 224798). A transcript
of the call will be archived on the Company's website.
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high
quality wines and a sales agent for over 120 beverage alcohol
brands across Canada. The company operates two wineries in
the Niagara region of Ontario
producing VQA and blended wines under such well-known brand names
as 20 Bees, EastDell Estates, Lakeview Cellars, Dois Amigos,
Dan Aykroyd, Benchmark and Seasons.
Through its subsidiary, Kirkwood Diamond
Canada, the Company is the sales agent for top selling
international brands in all regions of the country as well as being
a distributor in the western provinces. These recognizable
brands include Deutsch Family Wines (Josh Cellars) from the
USA, Fat Bastard wines from
France, Kaiken wines from
Argentina, Marston's beers from England, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois
Lurton wines from France
and Argentina, Blue Nun wines from
Germany, coolers and spirits from
Independent Distillers in New
Zealand, Brick Brewing from Canada, Evan Williams Bourbon from USA, Iceberg Vodka from Canada and many
others. For further information on the company, please visit the
company's SEDAR profile at www.sedar.com.
Forward Looking Statement
This press release contains forward-looking statements. Often,
but not always, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Diamond Estates Wines and Spirits
Inc. to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Actual results and developments are
likely to differ, and may differ materially, from those expressed
or implied by the forward-looking statements contained in this
press release. Such forward-looking statements are based on a
number of assumptions which may prove to be incorrect, including,
but not limited to: the economy generally; consumer interest in the
services and products of the Company; financing; competition; and
anticipated and unanticipated costs. While the Company acknowledges
that subsequent events and developments may cause its views to
change, the Company specifically disclaims any obligation to update
these forward-looking statements. These forward-looking statements
should not be relied upon as representing the views of the Company
as of any date subsequent to the date of this press release.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
Non IFRS Financial Measure
Management uses net income (loss) and comprehensive income
(loss) as presented in the unaudited interim condensed consolidated
statements of net income (loss) and comprehensive income (loss) as
well as "EBITDA" as a measure to assess performance of the Company.
EBITDA is another financial measure and is reconciled to net income
(loss) and comprehensive income (loss) under "Results of
Operations" in the Company's MD&A.
EBITDA is a supplemental financial measure to further assist
readers in assessing the Company's ability to generate income from
operations before taking into account the Company's financing
decisions, depreciation of property, plant and equipment and
amortization of intangible assets. EBITDA comprises gross margin
less operating costs before financial expenses, depreciation and
amortization, non-cash expenses such as share based compensation,
one time and other unusual items, and income tax. Gross margin is
defined as gross profit excluding depreciation on property, plant
and equipment used in production. Operating expenses excludes
interest, depreciation on property, plant and equipment used in
selling and administration, and amortization of intangible
assets.
EBITDA does not represent the actual cash provided by the
operating activities nor is it a recognized measure of financial
performance under IFRS. Readers are cautioned that this measure
should not be considered as a replacement for those as per the
unaudited interim condensed consolidated financial statements
prepared under IFRS. The Company's definitions of this non IFRS
financial measure may differ from those used by other
companies.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
______________________________ 1
See Non IFRS Financial Measure
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SOURCE Diamond Estates Wines & Spirits Inc.